TaxTMI Updates e-Newsletter
Jun 30,2021

Exemption for services provided to government under a training programme where total expenditure is borne by the government - Applicability of State notification entry for exemption of training services (Entry No. 72 of Notification No. 47/ST-2, HGST) - Registration not required under Section 23 where person is engaged exclusively in supplying services that are not liable to tax or are fully exempt

Exemption for services provided to government under a training programme where total expenditure is borne by the government - Applicability of State notification entry for exemption of training services (Entry No. 72 of Notification No. 47/ST-2, HGST) - Liability to pay GST/IGST on training services provided by the applicant to students at the behest of the Directorate of Welfare of Scheduled Caste and Backward Classes, Haryana, where the entire expenditure is borne by the State. - HELD THAT: - The Authority examined the applicant's submission that it provides JEE/NEET training to students selected and sponsored by the Directorate and that the entire fee/expenditure is borne by the State of Haryana. The Authority relied on the departmental communication (memo No. 2072/GST-2 dated 21-06-2018) which interprets Entry No. 72 of Notification No. 47/ST-2 (HGST) to exempt services provided to the Central/State/UT administration under any training programme for which total expenditure is borne by the government. Applying that entry, the Authority held that the training imparted by the applicant to students selected by the Directorate is covered by the exemption, subject to the condition that the whole expenditure is borne by the Centre/State. The Authority accordingly concluded that no GST/IGST is leviable on such training services in the stated circumstances.

Training services provided to students at the behest of the State, where the whole expenditure is borne by the State/Centre, are exempt from GST under Entry No. 72 of Notification No. 47/ST-2 (HGST).

Registration not required under Section 23 where person is engaged exclusively in supplying services that are not liable to tax or are fully exempt - Whether the applicant is liable to be registered in the State of Haryana under the GST law in respect of the exempt training services. - HELD THAT: - Having found that the training services fall within the exemption when the total expenditure is borne by the government, the Authority applied the principle embodied in Section 23 that persons engaged exclusively in the business of supplying goods or services that are not liable to tax or are wholly exempt are not liable to registration. Since the applicant's supplies, as adjudicated, are wholly exempt under the specified entry while the condition of government-borne expenditure is satisfied, the applicant is not required to obtain registration in Haryana for those supplies.

The applicant is not liable to be registered in Haryana for the exempt training services so long as it is engaged exclusively in supplies that are not liable to tax or are fully exempt under the GST Acts.

Final Conclusion: The Advance Ruling holds that the applicant's training services to students sponsored by the Directorate are exempt from GST under Entry No. 72 of Notification No. 47/ST-2 (HGST) provided the entire expenditure is borne by the government, and consequently the applicant is not liable for registration in Haryana for such exempt supplies.

Prematurity of anticipatory bail where only summons for evidence have been issued - Power to summon for production of evidence under the statute - Distinction between summons and power to arrest - Arrest permissible only after determination of tax liability and in accordance with statutory provisions - Inspection, search and seizure powers exercisable on belief of suppressed taxable transactions - Compounding of offence and post-determination penal consequences

Prematurity of anticipatory bail where only summons for evidence have been issued - Distinction between summons and power to arrest - Arrest permissible only after determination of tax liability and in accordance with statutory provisions - Anticipatory bail application is premature and not maintainable at the stage when only summons have been issued under the statute and material is being sought for determination of tax liability. - HELD THAT: - The court accepted the respondent's explanation that summons issued under the statute are intended to enable a person to give evidence and produce documents so that the authority may determine whether there has been suppression, mis statement or wrongful availment of input tax credit. The power to summon for production of evidence is not equivalent to a power to arrest; arrest or penal action arises only upon determination of liability and thereafter in accordance with the statutory machinery governing demand, recovery and penal consequences. The respondent gave an unequivocal undertaking that arrest will not be effected unless, after receipt and scrutiny of evidence and documents, satisfaction is reached regarding suppression or mis statement warranting action. In these circumstances, the court found that an anticipatory bail application filed solely on the basis of apprehension of arrest at the summons stage is premature and therefore not maintainable.

Application for anticipatory bail dismissed as premature; court relies on respondent's undertaking and the distinction between summons and arrest to refuse relief at this stage.

Final Conclusion: The application for anticipatory bail was dismissed as premature because only summons had been issued to produce evidence; the court accepted the respondent's undertaking that arrest would not be effected unless liability is first determined in accordance with the statute.

Reversal of input tax credit under Section 17(2) - Rule 42 determination of input tax credit attributable to exempt supplies - Rule 89 formula for refund of unutilised input tax credit on zero rated supplies - Adjusted Total Turnover excluding exempt supplies other than zero rated - Net ITC

Rule 89 formula for refund of unutilised input tax credit on zero rated supplies - Adjusted Total Turnover excluding exempt supplies other than zero rated - Net ITC - Rule 42 determination of input tax credit attributable to exempt supplies - Reversal of input tax credit under Section 17(2) - Whether the refund disallowance relating to August 2018 (on account of alleged non reversal of proportionate ITC for exempt supplies and consequent adjustment of refund) was justified and what recalculation, if any, was required under Rule 89 read with Rule 42 and Section 17(2). - HELD THAT: - The adjudicating authority rejected part of the refund on the ground that proportionate ITC attributable to exempt supplies (value shown as sale of MEIS scrips) had not been reversed under Section 17(2). Rule 89(4) prescribes the refund formula using Net ITC and Adjusted Total Turnover, and Clause (E) of Rule 89(4) excludes value of exempt supplies other than zero rated supplies from Adjusted Total Turnover. Rule 42(1) prescribes the method to determine and reverse ITC attributable to exempt supplies. The appellant produced computations showing ITC exclusively attributable to the exempt MEIS licence (Rs.14,362) and common ITC (Rs.1,951), totalling Rs.16,313, and deposited this amount and interest in the electronic ledger and filed DRC 03. Applying Rule 42, the Commissioner (Appeals) found Net ITC ought to be reduced from Rs.3,431,251 to Rs.3,414,938 (i.e., minus Rs.16,313) and recalculated the refund under Rule 89(4), resulting in a revised refund lower than the originally sanctioned amount. The recalculation yielded a difference of Rs.15,993 which the appellant had already deposited with interest. On this basis the appeal was allowed to the extent that the value of exempt supplies other than zero rated supplies was excluded in computing Adjusted Total Turnover and the refund adjusted in accordance with the Rule 89 formula after accounting for reversal under Rule 42/Section 17(2). The appellant's prior withdrawal/admission regarding the separate ITC amount (not reflected in GSTR 2A) was noted but did not affect the decision on the August 2018 refund recalculation. [Paras 7, 8, 9]

Appeal allowed in part: the value of exempt supplies other than zero rated supplies was excluded from Adjusted Total Turnover and Net ITC was reduced by the ITC attributable to exempt supplies (as determined under Rule 42), refund recalculated under Rule 89(4) accordingly; excess amount already deposited by the appellant was recognized.

Final Conclusion: The Commissioner (Appeals) allowed the appeal in part by holding that exempt supplies (other than zero rated) must be excluded from Adjusted Total Turnover and that ITC attributable to exempt supplies be reversed under Rule 42/Section 17(2), leading to recalculation of the August 2018 refund under Rule 89(4); the resulting minor excess sanctioned amount was found to have been deposited by the appellant and the appeal disposed accordingly.

Deduction under section 10B - deduction under section 10A - alternative claim for exemption - uniformity in numerator and denominator for computation under section 10A - precedential effect of Supreme Court decision

Deduction under section 10B - deduction under section 10A - alternative claim for exemption - Whether the assessee, having claimed exemption under section 10B but unable to produce Board approval, could have its alternative claim under section 10A examined and allowed. - HELD THAT: - The Court recorded that the Tribunal directed verification of the conditions under section 10A and allowed the assessee's claim. The High Court followed the binding ratio of the Supreme Court in Commissioner of Income-Tax III v. Mphasis Ltd., holding that the legal principle in that precedent governs the present facts and supports examining and allowing the alternative claim under section 10A when claim under section 10B could not be established. Applying that precedent, the Court decided the substantial question against the Revenue and in favour of the assessee, thereby affirming the Tribunal's approach to verify eligibility under section 10A rather than rejecting the alternative claim merely because section 10B approval was not produced. [Paras 2, 4, 8]

The Tribunal's direction to verify conditions under section 10A and allowance of the claim is sustained; the question is decided in favour of the assessee.

Precedential effect of Supreme Court decision - uniformity in numerator and denominator for computation under section 10A - Whether the Tribunal was correct in relying on the Special Bench decision in ITO v. Sak Soft when that decision was not final, and whether reliance on higher judicial precedent was appropriate. - HELD THAT: - The Court noted that the issue is governed by the Supreme Court's decision in Commissioner of Income-Tax III v. Mphasis Ltd., and by prior High Court authority explaining that the formula under section 10A requires consistency between components of the numerator and denominator. Given the Supreme Court's ruling and supporting High Court decisions, the Madras High Court held that reliance on the controlling Supreme Court precedent was determinative and displaced any pendency of the Special Bench decision. Accordingly, the challenge based on the non-finality of the Special Bench decision did not assist the Revenue. [Paras 4, 5, 6, 8]

The Tribunal's reliance on the law as expounded by higher authority is upheld; the question is decided against the Revenue.

Final Conclusion: Following the binding Supreme Court precedent and consistent High Court decisions, the Tax Case Appeal is dismissed and the questions of law are decided against the Revenue and in favour of the assessee.

Eligibility under the Direct Tax Vivad Se Vishwas Act, 2020 - appellant as pending before the specified date - deemed condonation of delay - effect of condonation of delay on pendency as on the specified date - specified date 31st January 2020 - Section 2(1)(a)(i) of the DTVSV Act

Appellant as pending before the specified date - deemed condonation of delay - effect of condonation of delay on pendency as on the specified date - Whether the petitioner was an eligible appellant under the DTVSV Act by reason of condonation of delay in filing the appeal to make the appeal treated as pending on the specified date 31st January 2020. - HELD THAT: - The Court examined Section 2(1)(a)(i) of the DTVSV Act which confines 'appellant' to a person whose appeal is pending before the specified date. The undisputed facts show the assessment order was passed on 26th December 2019, the appeal was filed on 6th February 2020 and an application for condonation of delay was filed on 20th February 2020. The department's affidavit subsequently recorded that the delay in filing the appeal was condoned (25th December 2020) and expressly stated that the petitioner is an eligible appellant and does not fall within the disqualification in Section 9 of the DTVSV Act. The Court accepted the department's stand and applied the principle that an order condoning delay in filing an appeal relates to the appeal's pendency; once delay is condoned the appeal is to be treated as having been filed in time for the purpose of the statute, thereby satisfying the requirement of pendency on the specified date and rendering the petitioner eligible to avail the DTVSV scheme. [Paras 5, 6]

The petitioner is an eligible appellant under the DTVSV Act because the delay in filing the appeal was condoned, which renders the appeal to be treated as pending as on 31st January 2020.

Final Conclusion: Writ petition allowed; order rejecting the petitioner's DTVSV declaration set aside and Respondent No.2 directed to verify and accept the petitioner's declaration dated 29.01.2021 and to issue Form No.3 determining the amount payable under the DTVSV Act.

Allowability of depreciation as application of income - application of income under section 11 - double deduction - precedent effect of superior court decisions

Allowability of depreciation as application of income - application of income under section 11 - Depreciation claimed by the charitable trust is allowable in computing application of income for charitable objects. - HELD THAT: - The Bench accepted the learned Senior Standing Counsel's concession that the substantial questions raised had been answered against the Revenue by earlier decisions of this Court and the Supreme Court. Applying those precedents, the Court upheld the Tribunal's conclusion that the assessee-trust is entitled to claim depreciation as an application of income despite the cost of the assets having been treated as application of income in the year of purchase. The Court therefore followed the earlier ratio and declined to disturb the Tribunal's allowance of depreciation. [Paras 6]

Tribunal's finding that depreciation is allowable as application of income is sustained and the claim of the assessee is upheld.

Double deduction - allowability of depreciation as application of income - Allowing the depreciation claim does not amount to a prohibited double deduction where the cost of the assets was earlier treated as application of income. - HELD THAT: - The Court, following the binding precedent relied upon by the parties and the Division Bench decisions of this Court, accepted that permitting depreciation in computation of application of income does not result in double deduction. The Revenue's contention to the contrary was rejected in light of the authorities applied by the Court and the Tribunal's concurrent conclusion on this point was left undisturbed. [Paras 6]

Tribunal's conclusion that allowance of depreciation does not result in double deduction is affirmed.

Precedent effect of superior court decisions - The appeal is to be disposed of in accordance with binding precedent and earlier Division Bench decisions answering the substantial questions against the Revenue. - HELD THAT: - The learned Senior Standing Counsel conceded that the substantial questions of law were already decided against the Revenue by the Supreme Court and followed by Division Bench judgments of this Court. In view of those precedents, this Bench declined to take a contrary view and dismissed the Revenue's appeal, adopting the earlier authoritative decisions as determinative. [Paras 4, 5, 6]

Substantial questions of law answered against the Revenue and the appeal dismissed following earlier precedents.

Final Conclusion: Following the binding precedents and earlier Division Bench decisions, the Tribunal's order allowing depreciation as an application of income and holding that such allowance does not result in double deduction is affirmed; the Tax Case Appeal is dismissed and the substantial questions of law are answered against the Revenue.

Attachment under Rule 11 of the Second Schedule and Section 226(3) of the Income tax Act - voidness of transfer under Section 281 of the Income tax Act - effect of pending proceedings under Section 158BD on subsequent transfers - summary jurisdiction under Article 226 and limits of interlocutory possession inquiry - laches and delay in invoking writ jurisdiction

Attachment under Rule 11 of the Second Schedule and Section 226(3) of the Income tax Act - voidness of transfer under Section 281 of the Income tax Act - effect of pending proceedings under Section 158BD on subsequent transfers - laches and delay in invoking writ jurisdiction - summary jurisdiction under Article 226 and limits of interlocutory possession inquiry - Whether the petitioner's challenge to the attachment notice dated 22.03.2007 succeeds on the ground of alleged ownership of the property. - HELD THAT: - The petition was dismissed. The Court found that (a) proceedings under Section 158BD for the Block Assessment Period from 01.04.1988 to 15.12.1998 were pending, and therefore transfers effected during that period fall within the mischief of Section 281 and are void as against the Department; (b) the petitioner failed to prove the alleged transfer of the undivided shares by his paternal uncles to his father and thereby failed to establish absolute ownership; (c) existence of prior attachments, encumbrances in favour of a bank and concurrent recovery proceedings (including before the Debt Recovery Tribunal) cast serious doubt on the petitioner's exclusive title; (d) the petitioner had delayed in seeking relief and had ongoing communications with the Department, rendering the writ belated and liable to be dismissed for laches; and (e) disputed intricate questions of title and competing encumbrances could not appropriately be resolved in summary writ proceedings under Article 226 and required determination in a civil forum. Applying these conclusions, the Court declined to interfere with the attachment or recovery proceedings initiated by the Income tax Department. [Paras 32, 33, 36, 38, 39]

Writ petition dismissed; no interference with the attachment and recovery proceedings and petitioner directed to seek relief in a civil court if he wishes to establish title.

Final Conclusion: The petition challenging the attachment notice dated 22.03.2007 is dismissed: the transfers relied upon by the petitioner were not proved and are, in any event, vulnerable to voidness under Section 281 in view of pending proceedings under Section 158BD; factual and title disputes and prior encumbrances preclude relief in summary writ jurisdiction.

Disallowance under Section 14A read with Rule 8D - applicability of Rule 8D to expenditure relating to exempt income - binding precedent of a Division Bench - precedential effect of Commissioner of Income-Tax and another vs. Sabari Enterprises

Disallowance under Section 14A read with Rule 8D - binding precedent of a Division Bench - Whether disallowance under Section 14A read with Rule 8D could be made in respect of the assessment year 2013-14. - HELD THAT: - The High Court accepted the Tribunal's conclusion that no disallowance was warranted and based its conclusion on the earlier Division Bench decision in Commissioner of Income-Tax and another vs. Sabari Enterprises . The court found the reasoning in that Division Bench judgment to be just and proper and not requiring reconsideration. Applying the binding precedent, the court answered the legal question against the revenue and in favour of the assessee, thereby upholding the Tribunal's order. [Paras 5, 6]

The substantial question of law was answered against the revenue; the appeal was dismissed and the Tribunal's order affirming no disallowance under Section 14A read with Rule 8D was upheld.

Final Conclusion: The appeal by the revenue challenging the Tribunal's order for AY 2013-14 was dismissed; the High Court upheld the Tribunal's finding of no disallowance under Section 14A read with Rule 8D, relying on the earlier Division Bench decision in Sabari Enterprises .

Definition of "charitable purpose" under section 2(15) - concept of a "section of the public" - registration under section 12A - exemption from taxation for charitable funds - binding effect of precedent on classification of welfare funds for public employees

Definition of "charitable purpose" under section 2(15) - concept of a "section of the public" - registration under section 12A - exemption from taxation for charitable funds - Whether a fund established to promote welfare and recreational activities of Delhi police personnel alone constitutes a charitable purpose as a "section of the public" and is eligible for registration under section 12A. - HELD THAT: - The Tribunal accepted that the activities-promotion of welfare and recreational amenities for police personnel-fall within purposes contemplated by section 2(15). The sole objection was that benefits are confined to police personnel and not the general public. Relying on the decision of the Andhra Pradesh High Court in CIT v. Andhra Pradesh Police Welfare Society and the Tribunal's earlier view in Bank of India Retired Employees Medical Assistance Scheme, the Tribunal held that where the employer is the public (as in public employment), beneficiaries who are public employees constitute a "section of the public". The employers (public authorities) act as representatives of the public, and benefits to such employees indirectly benefit the public at large; hence a fund for their welfare is charitable. The Tribunal noted that the issue is settled by higher judicial precedents and, absent any distinguishing facts or change in law, followed those precedents to conclude that the appellant's objects are charitable and attract exemption. Applying this ratio, the impugned rejection was set aside and registration under section 12A was directed. [Paras 6, 7, 8, 9]

The Tribunal held that the Delhi Police Welfare And Recreational Club Fund is charitable as a fund for the benefit of a "section of the public" and directed registration under section 12A.

Final Conclusion: Appeal allowed; impugned order rejecting registration set aside and the appellant directed to be registered under section 12A as a charitable fund benefiting a section of the public.

Deduction under section 10A - Export turnover - Exclusion of foreign currency expenses from export turnover - Allocation between software development services and technical services - Corresponding reduction from total turnover for items excluded from export turnover - Realisation period for export proceeds - Foreign tax credit - Remand for factual verification

Maintainability of appeal where tax effect is below threshold - Dismissal in limine of the revenue's cross-appeal for want of maintainability under CBDT Circular No.17/2019 - HELD THAT: - Both parties conceded that the tax effect in the revenue's appeal was below the threshold of Rs.50 lakhs specified in Circular No.17/2019 dated 08-08-2019 issued by the CBDT. The Tribunal accepted the concession and dismissed the revenue's appeal in limine on that basis.

Revenue's cross-appeal dismissed in limine for lack of maintainability.

Deduction under section 10A - Exclusion of foreign currency expenses from export turnover - Allocation between software development services and technical services - Remand for factual verification - Whether expenses incurred in foreign currency must be excluded from 'export turnover' when the assessee exports computer software and whether such expenses relate to 'technical services' rendered outside India - HELD THAT: - The Tribunal noted earlier coordinate-bench findings that exclusion of foreign-currency expenses from export turnover is permissible only if such expenses are in connection with providing technical services outside India. The factual record did not establish whether the foreign-currency expenditure related to technical services as distinct from on-site software development. Given absence of the necessary break-up and factual verification, the Tribunal concluded that the question cannot be finally decided on the record before it and that detailed examination is required by the CIT(A). Consistent with prior years of the assessee's case and the need to apply relevant High Court precedent where applicable, the Tribunal set aside the CIT(A)'s order on this point and restored the issue for fresh adjudication with directions to segregate receipts/expenses and examine whether the expenditures relate to technical services.

Order of the CIT(A) on exclusion of foreign-currency expenses from export turnover set aside and remanded to the CIT(A) for factual examination and fresh decision.

Corresponding reduction from total turnover for items excluded from export turnover - Deduction under section 10A - Remand for factual verification - Whether amounts deducted from export turnover must also be deducted from total turnover while computing deduction under section 10A - HELD THAT: - The Tribunal observed that this question is directly related to computation of the section 10A deduction and should be decided in accordance with binding decisions of the jurisdictional High Court and the Supreme Court (as identified in the order). In view of those authorities and for consistent application, the Tribunal restored this issue to the CIT(A) with a direction to follow the relevant Karnataka High Court and Supreme Court precedents in recomputing the deduction.

Issue remanded to the CIT(A) for fresh consideration in conformity with the cited High Court and Supreme Court decisions.

Realisation period for export proceeds - Deduction under section 10A - RBI general permission for realisation of export proceeds - Whether unrealised export proceeds not received within six months must be excluded from 'export turnover' for section 10A purposes in view of RBI guidance allowing longer realisation periods - HELD THAT: - The assessee relied on RBI Master Circular No.9/2008-09 granting 'general permission' to realise export proceeds within 12 months for exports on or after 1-9-2004. The CIT(A) had not adjudicated this point. The Tribunal held that the matter requires fresh consideration by the CIT(A), taking the RBI circular into account and examining whether the unrealised amount must be excluded from export turnover under section 10A.

Issue remanded to the CIT(A) for fresh adjudication after considering the RBI circular and relevant law.

Foreign tax credit - Admission of additional ground - Remand for adjudication at assessment level - Admissibility and remand of the assessee's additional ground claiming foreign tax credit - HELD THAT: - The Tribunal admitted the assessee's additional ground seeking grant of foreign tax credit, observing that it is a legal claim and that the factual material necessary for its adjudication is on record. As the assessment authority must examine and quantify the foreign tax credit claim, the Tribunal restored this issue to the file of the Assessing Officer for decision in accordance with law.

Additional ground admitted; matter remanded to the Assessing Officer for examination and decision on foreign tax credit.

Final Conclusion: The Tribunal dismissed the revenue's cross-appeal in limine for lack of maintainability and, on the assessee's appeal, set aside the CIT(A)'s determinations concerning (i) exclusion of foreign-currency expenses from export turnover, (ii) corresponding deductions from total turnover, and (iii) exclusion of unrealised export proceeds, remanding those issues to the CIT(A) for fresh factual and legal examination; the assessee's additional claim for foreign tax credit was admitted and remanded to the Assessing Officer for adjudication. The assessee's appeal is treated as allowed for statistical purposes.

Interim stay of assessment proceedings - prima facie case and balance of convenience - multiplicity of litigation - Explanation 1 to Section 153 - exclusion of period during stay by court - exercise of jurisdiction under Section 263 of the Act

Interim stay of assessment proceedings - prima facie case and balance of convenience - multiplicity of litigation - Application for restraining the Assessing Officer from framing a de novo assessment pursuant to the Principal Commissioner's order under Section 263. - HELD THAT: - The Tribunal, while noting it would not express any final view on merits, found prima facie substantial force in the assessee's contention that the core issue-whether the assessee was acting as an agent of the State Government-was covered by earlier Tribunal orders in the assessee's own cases. The bench balanced the statutory limitation on giving effect to an order under Section 263 (which ordinarily requires the Assessing Officer to complete a de novo assessment within the time prescribed by Section 153) against the risk of multiplicity of litigation. The Tribunal observed that the legislature's list of excluded periods for computation of limitation (set out in Explanation 1 to Section 153) expressly refers to stays by a court but does not provide for exclusion where proceedings are stayed by the Tribunal. Adopting a cautious approach, and while recognising the limited scope of its powers, the Tribunal declined to grant a broad stay but directed a limited restraint on passing the assessment order giving effect to the Section 263 direction to avoid unnecessary multiplicity of litigation pending disposal of the appeal against the Section 263 order. [Paras 7, 8, 9]

Restraint granted: Assessing Officer directed not to pass the assessment order giving effect to the Pr. CIT's order under Section 263 for a period of three months from the date of the Tribunal's order or until disposal of the appeal against the Section 263 order, whichever is earlier.

Final Conclusion: The application is allowed: a limited interim restraint is imposed on the Assessing Officer from framing the de novo assessment pursuant to the Principal Commissioner's order under Section 263 for three months from the date of this order or until the appeal against the Section 263 order is finally disposed of, whichever is earlier.

Validity of penalty proceedings - Omnibus/generic show cause notice - Non-striking off in show cause notice - Requirement of specific charge in statutory notice - Penalty under section 271(1)(c) - concealment vs furnishing inaccurate particulars - Natural justice and prejudice in penalty proceedings

Omnibus/generic show cause notice - Non-striking off in show cause notice - Requirement of specific charge in statutory notice - Validity of penalty proceedings - Penalty under section 271(1)(c) - concealment vs furnishing inaccurate particulars - Natural justice and prejudice in penalty proceedings - Whether the penalty order under section 271(1)(c) is vitiated by a show cause notice that did not strike off the inapplicable limb and thus was omnibus/generic - HELD THAT: - The Tribunal examined the show cause notices issued under section 274 r.w.s. 271(1)(c) and found that the assessing officer did not strike off the inapplicable limb(s) and therefore issued an omnibus/generic notice. The assessing officer later admitted in the remand report and the penalty order that the penalty was in fact initiated and levied for the offence of furnishing inaccurate particulars of income, but the statutory notice failed to specify that limb. Applying the Full Bench decision of the Bombay High Court in Mohammed Farhan A Shaikh and the Supreme Court's disapproval of omnibus printed notices in Dilip N. Shroff, the Tribunal held that penalty proceedings must stand on the statutory notice and cannot be cured by reliance on the assessment order. An omnibus notice betrays non-application of mind, creates ambiguity, and, given the mandatory and penal character of section 271(1)(c), such defect is fatal and must be resolved in favour of the assessee. Consequently, the penalty order, being founded on a defective notice, is invalid and without jurisdiction. [Paras 10, 11, 13, 15, 17]

Penalty order under section 271(1)(c) is vitiated by the defective omnibus show cause notice and is therefore invalid and quashed.

Final Conclusion: Following the Full Bench of the Bombay High Court in Mohammed Farhan A Shaikh and Dilip N. Shroff, the Tribunal held that the show cause notice was omnibus and defective for not striking off the inapplicable limb; the penalty under section 271(1)(c) is therefore invalid and quashed. Cross objection allowed; Revenue's appeal dismissed.

Revisionary jurisdiction under section 263 of the Income tax Act - time bar for giving effect to an order under section 263 as governed by section 153 - exclusion of period during stay by a court under Explanation 1 to section 153 - limited scope of Tribunal's powers under section 254(2A) with respect to stay - grant of interim restraint on framing de novo assessment pending disposal of appeal

Revisionary jurisdiction under section 263 of the Income tax Act - time bar for giving effect to an order under section 263 as governed by section 153 - exclusion of period during stay by a court under Explanation 1 to section 153 - grant of interim restraint on framing de novo assessment pending disposal of appeal - Whether the Tribunal could restrain the Assessing Officer from framing a de novo assessment pursuant to an order passed under section 263 and the temporal limits applicable to such relief. - HELD THAT: - The Tribunal recognised that an Assessing Officer directed to frame a de novo assessment pursuant to an order under section 263 must ordinarily give effect within the time limit prescribed by subsection (3) of section 153. The only statutory extension for giving effect to a section 263 order by the Assessing Officer (by way other than fresh assessment/re assessment) is found in the first proviso to subsection (5) of section 153, which does not apply where a de novo assessment is directed. Explanation 1 to section 153 expressly excludes periods during which assessment proceedings are stayed by an order or injunction of any court, but the legislature did not provide for exclusion where proceedings are stayed by an order of the Tribunal. Bearing these limits in mind, the Tribunal nonetheless recognised the possibility of multiplicity of litigation and, adopting a cautious approach, exercised its powers to grant a narrowly tailored interim restraint. The restraint was limited in duration so as not to frustrate the statutory timeline for assessments while affording the assessee reasonable protection pending disposal of its appeal against the section 263 order. [Paras 7, 9]

Assessing Officer directed not to pass the assessment order giving effect to the section 263 order for a period of three months from the date of the Tribunal's order or until disposal of the appeal against the section 263 order, whichever is earlier.

Prima facie weight of precedent from other High Courts - grant of interim restraint on framing de novo assessment pending disposal of appeal - Whether the assessee demonstrated a prima facie case justifying interim relief. - HELD THAT: - Without expressing a final view on merits, the Tribunal found prima facie substantial force in the assessee's contention that the legal position relied upon (as per the High Court of Karnataka in India Advantage Fund-VII) applied to its facts, namely that certain trust deed provisions rendered beneficiaries' shares determinate. The Tribunal noted supporting authority and the possibility that rejection of stay at the threshold could cause multiplicity of litigation. On that basis, and balancing the innate limitation posed by statutory time bars, the Tribunal was prepared to grant a limited interim restraint as a proportionate measure. [Paras 8, 9]

Tribunal held that the assessee had a prima facie arguable case and that interim relief in the form granted was justified.

Final Conclusion: Application allowed: the Tribunal directed that the Assessing Officer shall not pass the assessment order giving effect to the Principal Commissioner's order under section 263 for three months from the date of this order or until disposal of the appeal against the section 263 order, whichever is earlier, having found a prima facie case and having balanced statutory time limits against the risk of multiplicity of litigation.

Deduction under section 54 - genuine agreement of sale - colourable device/arranged transaction - proof of refund/withdrawal - specific performance suit

Deduction under section 54 - proof of refund/withdrawal - genuine agreement of sale - Allowability of Rs. 27 lakhs for deduction under section 54 where the assessee had withdrawn Rs. 27 lakhs from the seller's account and the AO/Commissioner treated it as refunded advance. - HELD THAT: - The Tribunal examined the assessment record, the remand report and additional evidence and accepted the finding of the Commissioner that the agreement of sale dated 19/05/2014 and the payment of advance of Rs. 90 lakhs were genuine and not an arranged transaction or colourable device. The only disputed sum was Rs. 27 lakhs which the AO treated as having been returned to the assessee. The Tribunal found no material in the assessment order or the record to support the conclusion that the seller had refunded Rs. 27 lakhs to the assessee. The assessee had filed a legal notice (28-01-2019) and the seller's reply (12-02-2019) which did not deny receipt of Rs. 90 lakhs and sought only the balance consideration of Rs. 60 lakhs; had a refund of Rs. 27 lakhs occurred, the seller would have raised that point in his reply. Further, a suit for specific performance (filed 14/11/2019) was on record and the revenue did not dispute it. In absence of evidence establishing that the advance was refunded, the mere withdrawal from the seller's account could not be construed as repayment to the assessee. Applying these findings, the Tribunal held that the Rs. 27 lakhs formed part of the investment in the residential house and was therefore eligible for deduction under section 54. [Paras 2, 3, 4]

Deduction of Rs. 27 lakhs under section 54 allowed; appeal allowed.

Final Conclusion: The Tribunal upheld the genuineness of the sale agreement and, finding no evidence that Rs. 27 lakhs was refunded by the seller, allowed the assessee the deduction of that amount under section 54; the appeal is allowed.

Treatment of sale consideration as long term capital gain and short term capital gain - deduction under Section 54F - entitlement to Section 54F despite non-deposit in notified Capital Gains Account where amount is invested in acquisition/construction within statutory period - entertaining fresh claim on appeal - liberal interpretation of beneficial tax provision

Treatment of sale consideration as long term capital gain and short term capital gain - Whether the amounts received on sale of the four flats are to be assessed as long term capital gain in respect of undivided land and short term capital gain in respect of superstructure and thus added to income. - HELD THAT: - The Tribunal noted there was no dispute as to the sale of four flats received under a development agreement and the rates adopted by the AO. The assessee did not place any evidence before the Tribunal to controvert the AO's factual findings or the valuation adopted. Applying the material on record, the Tribunal held that the AO and the Commissioner (Appeals) rightly treated the portion attributable to undivided land as long term capital gain and the consideration attributable to the constructed superstructure as short term capital gain and confirmed the computations made by the AO. [Paras 9]

Computations of long term capital gains at Rs. 4,91,800 and short term capital gains at Rs. 27,30,000 are upheld; the order of the lower authorities in respect of short term capital gains is confirmed.

Deduction under Section 54F - entitlement to Section 54F despite non-deposit in notified Capital Gains Account where amount is invested in acquisition/construction within statutory period - entertaining fresh claim on appeal - liberal interpretation of beneficial tax provision - Whether the assessee is entitled to deduction under Section 54F for reinvestment of long term capital gains in acquisition of a new flat, although no deposit was made in the notified Capital Gains Account. - HELD THAT: - The Tribunal examined the assessment and appellate records which showed that the assessee had invested the sale proceeds in acquiring a new flat within the statutory period. Relying on precedent of a coordinate bench and the principle that Section 54F is a beneficial provision to be interpreted liberally, the Tribunal observed that where the net sale consideration is actually utilized for acquisition/construction within the prescribed period, failure to deposit in the notified Capital Gains Account does not defeat the exemption. The Tribunal further held that appellate authorities are not barred from entertaining a fresh claim even if not made in the original return. Consequently, the Tribunal directed that the AO verify the facts concerning acquisition of the new asset and allow deduction under Section 54F in respect of the long term capital gains if the verification is favourable. [Paras 10]

The order in respect of long term capital gains is set aside and the matter is remitted to the AO to verify acquisition of the new asset and, if verified, allow deduction under Section 54F.

Final Conclusion: The appeal is partly allowed: the assessment in respect of short term capital gains is confirmed, while the order on long term capital gains is set aside and remitted to the Assessing Officer for verification of the acquisition of a new flat and grant of deduction under Section 54F if the facts are established; appeal disposed of partly in favour of the assessee for statistical purposes.

Unexplained cash credits - onus under section 68 - source of source requirement under the first proviso to section 68 - identity, genuineness and creditworthiness of investor - documentary proof alone not sufficient to discharge onus - accommodation entry

Unexplained cash credits - onus under section 68 - source of source requirement under the first proviso to section 68 - identity, genuineness and creditworthiness of investor - documentary proof alone not sufficient to discharge onus - accommodation entry - Whether the share capital of the assessee received from M/s Twinkle Commonsales Pvt. Ltd. amounting to Rs. 2,79,99,850/- could be treated as unexplained cash credits under section 68 of the Act. - HELD THAT: - The Tribunal upheld the findings of the Assessing Officer and the CIT(A) that the assessee failed to discharge the primary onus under section 68. Although the assessee produced investor documents, confirmations and bank statements, it did not prove the "source of source" as required by the first proviso to section 68 introduced w.e.f. 1.4.2013. The fact that notices under section 133(6) to the investor and related parties elicited no response, the investor's financials showed negligible business activity not commensurate with the investment, and bank entries indicated rotation of funds through other entities, supported the conclusion that the investment was not genuine but an accommodation entry. The Tribunal relied on the Supreme Court authority emphasising that mere filing of documents does not absolve the assessee from proving genuineness and creditworthiness, and held that payment through banking channels is not conclusive where there is evidence of a web of transactions suggesting contrivance. Having considered the material and authorities, the Tribunal agreed with the lower authorities' factual and legal conclusions and sustained the addition under section 68. [Paras 3]

Addition treating the share capital as unexplained cash credits under section 68 is upheld and the assessee's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the appeal for A.Y. 2014-15, affirming the treatment of the impugned share capital as unexplained cash credits under section 68 on the ground that the assessee failed to prove identity, genuineness and the source of source of the investor's funds.

Characterisation of franchisee fees as revenue expenditure - Enduring benefit test for capitalisation of payments - Inventory shortage deduction in retail trade - Proof and verification of stock discrepancies - Admission of explanations under rule 46A and remand for fresh consideration

Characterisation of franchisee fees as revenue expenditure - Enduring benefit test for capitalisation of payments - Franchisee fees paid by the assessee were held to be revenue expenditure and allowable, not capital expenditure. - HELD THAT: - The Tribunal accepted the finding that the agreements did not transfer any permanent business, commercial or intellectual property rights to the assessee, the rights to use the brand were limited to the term of the agreements and the payments were recurring and directly related to sales. Applying the principle that only where a payment results in an enduring accretion to capital or creates an asset or transferable right would it be capital in nature, the Tribunal followed coordinate precedents holding that licence/ franchise payments that do not confer enduring proprietary rights are revenue in nature. The Tribunal therefore found no infirmity in the CIT(A)'s deletion of the addition and dismissed the revenue's appeal; the assessee's cross-objection supporting the deletion became infructuous. [Paras 6, 7, 8, 9, 10]

Franchisee fee disallowance deleted; fees treated as revenue expenditure and allowable.

Inventory shortage deduction in retail trade - Proof and verification of stock discrepancies - The disallowance of the entire claimed shortage of inventory was set aside and the entire claim was allowed as deduction. - HELD THAT: - The Tribunal reviewed the physical stock verification carried out by the assessee's auditors across showrooms and warehouses, noting item-wise entries showing shortages and excesses and a net shortage equal to the claimed amount. Recognising that retail trade is prone to shoplifting, pilferage and transit/internal damages, and observing that shortages included very small amounts (e.g., Rs. 68), the Tribunal found no reason to suspect the genuineness of the claim or to restrict the deduction. The Tribunal disagreed with the AO's expectation of FIRs for such cumulative retail discrepancies and held that, on the facts and the detailed stock-taking report, the entire claimed shortage should have been allowed, setting aside the CIT(A)'s order which had restricted relief to 50%. [Paras 11, 12, 13, 14, 15]

Disallowance relating to shortage of inventory deleted; entire claim allowed.

Admission of explanations under rule 46A and remand for fresh consideration - The disallowance of expenditure claimed as exceptional items was remanded to the AO for fresh examination after allowing the assessee an opportunity to furnish and explain details. - HELD THAT: - The AO disallowed the remaining amount claimed under exceptional items because details were not furnished originally; the CIT(A) declined to admit the explanations on the ground that no reasonable cause was shown under rule 46A and drew adverse inference. Noting that neither the AO nor the CIT(A) had examined the claim on merits, the Tribunal in the interest of natural justice directed that the assessee be given another opportunity to produce details and explanations and the AO be directed to consider them afresh and decide in accordance with law. [Paras 16, 17, 18]

Matter restored to the file of the AO for fresh consideration after giving the assessee an opportunity to furnish explanations and supporting details.

Final Conclusion: The Tribunal dismissed the revenue appeal and upheld deletion of the franchisee fee addition; allowed the assessee's appeal by deleting the disallowance for inventory shortage in full; and remanded the issue of exceptional items to the AO for fresh examination after affording the assessee an opportunity to produce and explain the relevant details.

Jurisdiction under 153A resumed on discovery of incriminating material during search - disallowance of expenditure for failure to prove genuineness under section 37(1) - protective addition versus substantive addition and prevention of double taxation - reliability and admissibility of statements recorded under section 132(4) and cross-examination

Jurisdiction under 153A resumed on discovery of incriminating material during search - reliance on seized documents and statements recorded under section 132(4) - Validity of assumption of jurisdiction and framing of assessment under section 153A for assessment year 2011-12 - HELD THAT: - The Tribunal upheld the assessing officer's jurisdiction to proceed under section 153A for AY 2011-12, observing that incriminating material was seized during the search and that impounded material (bundle number 5) contained invoices and details indicating no actual work was carried out. The statement of the entry operator and other recorded statements corroborated that payments were accommodation entries. In these circumstances the AO was justified in resuming jurisdiction and requiring the assessee to prove identity, creditworthiness and genuineness of the subcontractors whose expenditures were claimed. [Paras 10]

Assumption of jurisdiction under section 153A was valid and properly exercised.

Disallowance of expenditure for failure to prove genuineness under section 37(1) - protective addition versus substantive addition and prevention of double taxation - Whether the expenditure of Rs. 125 crores could be disallowed in the hands of the assessee and whether the protective disallowance should be confirmed substantively - HELD THAT: - The Tribunal agreed with the AO and CIT(A) that the assessee failed to establish the genuineness of the development expenditure booked in its accounts; accordingly the expenditure was rightly disallowed under the principles applicable to section 37(1). The CIT(A)'s conversion of the AO's protective addition into a substantive disallowance in the assessee's hands was sustained in principle. However, the Tribunal remanded the matter to the AO to verify whether a substantive addition/disallowance on the same facts has already been sustained or made in the hands of PACL Ltd; if PACL Ltd has been charged tax on that income, the comparable disallowance in the assessee's hands would amount to double addition and would require deletion. If no substantive addition stood sustained against PACL Ltd, the substantive disallowance in the assessee's hands is to be confirmed. [Paras 10, 11]

Disallowance under section 37(1) is upheld but the matter is remitted for verification to avoid double addition; substantive disallowance to be deleted if PACL Ltd has already been charged, otherwise to be confirmed.

Reliability and admissibility of statements recorded under section 132(4) and cross-examination - Whether denial of opportunity to cross-examine the maker of a statement recorded under section 132(4) vitiates the addition - HELD THAT: - The Tribunal found that the disallowance was not based solely on the statement of the entry operator but rested on a matrix of incriminating documents and multiple statements corroborating that the payments were accommodation entries. Since the addition was founded on the assessee's failure to prove genuineness supported by seized material and other statements, there was no necessity to direct cross-examination of the entry operator as a precondition for making the disallowance. [Paras 10]

Denial of cross-examination of the entry operator does not vitiate the addition where disallowance is supported by seized material and other corroborative statements.

Deletion of addition made on mere surmise and conjecture - Validity of the commission addition of Rs. 1,250,000 made on estimated basis - HELD THAT: - The CIT(A) deleted the addition of commission because it was based on estimate, surmise and conjecture, and no incriminating material supported that specific addition. The Tribunal did not disturb this deletion. [Paras 4]

Addition of commission made on estimated basis was correctly deleted by the CIT(A).

Final Conclusion: Appeal disposed by upholding the AO's and CIT(A)'s conclusion that the assessee failed to prove genuineness of the claimed expenditure and that jurisdiction under section 153A was rightly exercised; the substantive disallowance is confirmed subject to verification on remand to the AO to ensure that no double addition arises if PACL Ltd has already been charged, while the estimated commission addition was deleted.

Merchandise Exports from India Scheme (MEIS) benefit - Electronic Data Interface (EDI) clerical error - Amendment of documents under Section 149 of the Customs Act, 1962 - Substantial benefit doctrine for inadvertent/technical errors - Delay in claim and reliance on grounds actually taken by authorities

Merchandise Exports from India Scheme (MEIS) benefit - Electronic Data Interface (EDI) clerical error - Substantial benefit doctrine for inadvertent/technical errors - Amendment of documents under Section 149 of the Customs Act, 1962 - The petitioner is entitled to MEIS benefit despite the EDI field being erroneously marked 'No' when the shipping bills clearly declared the intention to claim the benefit. - HELD THAT: - The shipping bills themselves, as evidenced by the sample bill placed on record, expressly recorded the petitioner's intention to claim MEIS benefits. The mismatch arose from an inadvertent human error while uploading particulars into the Customs Department's EDI system where the 'yes/no' field was wrongly entered as 'No'. Given that the shipping bills correctly reflect the substantive intention, the error in the EDI is a hyper-technical mistake which should not defeat the substantive right to the reward. Reliance on Section 149 of the Customs Act, 1962 for amendment was held unnecessary because no amendment of the shipping bills was required - the documents already embody the correct intention. The court therefore set aside the impugned rejection and directed grant of consequential benefits. [Paras 3, 4, 5, 6, 9]

Impugned order set aside; petitioner entitled to MEIS benefit and respondents directed to grant consequential benefits within eight weeks.

Delay in claim and reliance on grounds actually taken by authorities - Substantial benefit doctrine for inadvertent/technical errors - The respondents' contention of substantial delay in the petitioner's representation does not preclude relief where delay was not the ground on which the claim was rejected and denial would be harsh in the factual context. - HELD THAT: - Although the last shipping bill was dated 02.01.2018 and the representation was made on 04.10.2019, the rejection orders by the original and appellate authorities did not rely on delay as the reason for denial. In the factual matrix - where the substantive intention was recorded in the shipping bills and the error was technical during EDI upload - it would be unduly harsh to deny relief solely on account of the delay pleaded by respondents. Consequently, the argument based on delay was rejected and did not bar the grant of MEIS benefits. [Paras 7, 8, 9]

Argument of delay rejected; relief granted notwithstanding the elapsed time between shipments and representation.

Final Conclusion: Writ petition allowed; impugned order set aside and respondents directed to grant the petitioner MEIS benefits with consequential relief within eight weeks; no costs.

Customs Brokers Licensing Regulations - Regulation 17(3) of Customs Brokers Licensing Regulations, 2013 - G card holder - H card holder - written examination - oral examination - upgradation from H card to G card - judicial review of examination procedure - risk of bias in oral examination

G card holder - H card holder - written examination - oral examination - Customs Brokers Licensing Regulations - judicial review of examination procedure - Validity of conducting an oral examination for upgradation from an H card to a G card where the Regulations contemplate a written examination. - HELD THAT: - The Court examined the relevant regulatory scheme and practice at other Customs stations and found that the Regulations envisage qualification by the written examination for designation as a G card holder. The petitioner had passed the written test but failed an oral test which the respondent conducted. The Court concluded that conducting an oral examination for the purpose of rejecting candidates for upgradation was beyond the scope provided by the Regulations as interpreted and that other authorities had confined selection to the written test. The Court noted the absence of particulars about the nature and assessment criteria of the oral test in the respondent's affidavit and observed that oral examinations carry a risk of bias unless tightly circumscribed (including limited weight). On these determinative findings the Court held that the respondent had no authority under the applicable Regulations to conduct the oral examination in the manner adopted and that such practice could not stand as a basis for denying upgradation. [Paras 6, 8, 9]

The oral examination conducted for upgradation was beyond the scope of the Regulations and could not be the basis to deny the petitioner's claim to G card eligibility.

Regulation 17(3) of Customs Brokers Licensing Regulations, 2013 - upgradation from H card to G card - mandamus to consider representation - Relief to be granted in view of the invalidity of the oral examination and the petitioner's representation under Regulation 17(3). - HELD THAT: - Having found the oral examination improper, the Court directed administrative reconsideration rather than automatic certification. The respondent was ordered to consider the petitioner's representation dated 02.07.2020 under Regulation 17(3) of the CBLR, 2013 and to pass appropriate orders in the light of an earlier order of the Court referred to in the petition. The direction requires the respondent to act within a fixed and reasonable timeframe and to do so consistent with the Court's findings about the permissible mode of selection. [Paras 10, 11]

Respondent directed to consider the petitioner's representation under Regulation 17(3) and pass necessary orders within eight weeks; writ petition disposed of.

Final Conclusion: The Court held that conducting an oral examination for upgradation from H card to G card was beyond the scope of the Regulations and could not justify denial of upgradation; respondent is directed to reconsider the petitioner's representation under Regulation 17(3) and pass orders within eight weeks, and the writ petition is disposed of with no costs.

Provisional release of seized goods - maintainability of writ of mandamus for release - competent authority's power to consider provisional release - non-interference with ongoing DRI investigation - requirement of formal application before Commissioner of Customs

Maintainability of writ of mandamus for release - requirement of formal application before Commissioner of Customs - Whether the writ petition seeking blanket/provisional release of the seized consignments was maintainable in the absence of a formal application to the Commissioner of Customs. - HELD THAT: - The Court held that the petitioner's relief for a blanket release or provisional release was premature because no formal request for provisional release had been made to the competent authority, namely the Commissioner of Customs, Tuticorin. The representation made to the DRI for release could not be construed as an application for provisional release to the Commissioner. Given that the DRI was conducting an investigation, the appropriate course was for the appellant to approach the Commissioner with a proper application, which the Commissioner is obliged to consider in accordance with law. Consequently, issuance of a Writ of Mandamus at this stage was not justified. [Paras 5, 6, 11, 12]

The writ petition was premature and not maintainable insofar as it sought a blanket or provisional release without a formal application to the Commissioner of Customs; the interim direction was set aside.

Provisional release of seized goods - competent authority's power to consider provisional release - non-interference with ongoing DRI investigation - Procedure to be followed if the appellant files an application for provisional release and the extent of the Court's intervention while DRI investigation continues. - HELD THAT: - The Court directed that, upon filing a proper application for provisional release accompanied by submissions and supporting documents, the Commissioner of Customs, Tuticorin, shall fix a date for personal hearing (preferably by video conferencing) and decide the application in accordance with law. The Court emphasised that its directions would not interfere with the ongoing DRI investigation and merely require the Competent Authority to consider the provisional release application promptly. The Court also noted that if relevant orders or no-objection certificates from other ports exist, the appellant may place them before the Commissioner for consideration. [Paras 13, 14, 15]

Appellant to file a proper application for provisional release; Commissioner of Customs to hear and decide the application within ten days after the personal hearing; Court's directions do not affect the DRI investigation.

Final Conclusion: Writ appeal allowed; interim direction set aside. Appellant directed to file a formal application for provisional release before the Commissioner of Customs, Tuticorin, who shall hold a personal hearing and decide the application within ten days thereafter, without prejudice to the ongoing DRI investigation.

Breach of obligation to obtain authorization from the importer - due diligence and verification obligations of a customs broker - obligation to exercise speed and efficiency in discharge of customs broker duties - proportionality in disciplinary action against licensed customs broker - forfeiture of security deposit and imposition of monetary penalty as disciplinary measures

Breach of obligation to obtain authorization from the importer - due diligence and verification obligations of a customs broker - obligation to exercise speed and efficiency in discharge of customs broker duties - Whether the licensing authority rightly found breaches of the obligations imposed on a customs broker and which specific breaches were established against the appellant. - HELD THAT: - The inquiry under Customs Broker Licensing Regulations established several alleged breaches of regulation no. 11, but the inquiry authority itself found that failure to discharge duties with speed (regulation 11(m)) was not sustained. The Tribunal accepted that the appellant did not contact the importer on record and obtained authorization and documents from the beneficiary importer through an intermediary, thereby failing to obtain authorization from the company/firm or individual by whom they were temporarily employed. The Tribunal found no evidence of forgery or that the IEC was fraudulently obtained, and noted that the licensing authority departed from the inquiry's finding without adequate reasons when it held breaches of duties of speed and of giving advice to the client. Consequently, only the charge of failing to obtain proper authorization from the importer on record (the breach founded on regulation no. 11(a)) was sustained; the other alleged breaches, including that under regulation 11(m), 11(d) and 11(e), did not survive the Tribunal's scrutiny. [Paras 5, 6, 7]

Sustained only the finding that the appellant failed to obtain authorization from the importer on record; other alleged breaches under regulation no. 11 were not upheld.

Proportionality in disciplinary action against licensed customs broker - forfeiture of security deposit and imposition of monetary penalty as disciplinary measures - Whether revocation of the customs broker licence and the fiscal consequences imposed upon the appellant were proportionate and what relief, if any, should be granted. - HELD THAT: - The Tribunal observed that the appellant's deficiency consisted of dealing with the beneficiary importer without insisting on direct contact with the importer on record in respect of one bill of entry, and that there was no finding that the importer on record was fictitious or that Revenue had necessarily suffered an unrecoverable loss (recovery proceedings under section 28 had been initiated against the beneficiary importer). Given that the breach related to a single bill of entry and that the inquiry did not sustain several other alleged breaches, the Tribunal held that revocation of licence and complete forfeiture of livelihood were disproportionate. Applying a proportionality assessment, the Tribunal confirmed the forfeiture of the security deposit and the monetary penalty imposed, but set aside the revocation of the customs broker licence as excessive and unjustified in the circumstances. [Paras 7, 8, 9]

Forfeiture of the security deposit and imposition of the penalty are confirmed; the revocation of the customs broker licence is set aside.

Final Conclusion: The Tribunal upheld that the appellant failed to obtain proper authorization from the importer on record but rejected other alleged breaches; treating the disciplinary measures as disproportionate, it confirmed forfeiture of the security deposit and the monetary penalty while setting aside the revocation of the customs broker licence, and disposed of the appeal accordingly.

Suspension of customs broker licence pending inquiry - power to suspend licence under regulation 16(2) of CBLR, 2018 - prima facie misconduct and violation of CBLR regulations 10(a), 10(d), 10(e) and 10(n) - post-decisional hearing within prescribed timeline - proceedings under regulation 17 of CBLR, 2018 (revocation proceedings)

Suspension of customs broker licence pending inquiry - prima facie misconduct and violation of CBLR regulations 10(a), 10(d), 10(e) and 10(n) - power to suspend licence under regulation 16(2) of CBLR, 2018 - Validity of the suspension of the appellant's Customs Broker licence and whether interference with the suspension order was justified. - HELD THAT: - On prima facie scrutiny of material received from the Commissioner of Customs (P), Jamnagar and the submissions before the Commissioner, the adjudicating authority found sufficient prima facie evidence that the broker had committed acts of commission and omission amounting to misconduct and breaches of trust by allegedly facilitating fraudulent availing of IGST refund through inflated export invoices. The Commissioner concluded that continuation of the broker's licence during the pendency of a full inquiry would be prejudicial to the revenue and hence ordered suspension under regulation 16(2) of CBLR, 2018, later confirmed in the impugned order. The Tribunal observed that the appellant failed to produce evidence to negate the prima facie findings and that the Commissioner had complied with the timeline for post-decisional hearing; there was therefore no arbitrary exercise of power or breach of procedural timelines. The Tribunal also noted that revocation proceedings under regulation 17 had been initiated by issuance of a show-cause notice and directions for hearings. For these reasons the Tribunal declined to interfere with the suspension while emphasising that the Department must carry out the ongoing proceedings under regulation 17 after affording due opportunity to the appellant. [Paras 6, 7]

Suspension of the Customs Broker licence upheld; no interference with the order of suspension and confirmation; appellant directed to cooperate with pending proceedings under regulation 17 of CBLR, 2018.

Final Conclusion: The Tribunal dismissed the appeal against the suspension order, upheld the Commissioner's prima facie finding warranting continuation of suspension, and directed the appellant to cooperate with the revocation proceedings initiated under regulation 17 of CBLR, 2018.

Provisional release of seized goods - perishable agricultural imports - statutory duty to release goods under the Customs Act - admissibility of statement recorded under Customs Act - seizure proceedings versus interim release - conditions for provisional release (security, bond, storage) - time bound completion of enquiry

Provisional release of seized goods - perishable agricultural imports - statutory duty to release goods under the Customs Act - conditions for provisional release (security, bond, storage) - Petitioner granted ad interim/provisional release of imported consignments of black pepper subject to specified conditions. - HELD THAT: - The Court accepted that the consignments consist of black pepper, an agricultural product liable to spoilage if retained in humid conditions, that the petitioner had produced relevant documents and that continued detention imposed heavy charges. While the respondents had recorded a contrary commercial valuation and initiated seizure proceedings, the Court observed that keeping perishable goods unloaded benefits neither party and that a provisional release could be ordered subject to safeguards. Balancing the risk of spoilage and detention costs against the respondents' enforcement interest, the Court directed provisional release on conditions including deposit of security, execution of a bond, non alienation, specified local storage with intimation, production on demand and an automatic cancellation clause for breach of conditions.

Ad interim direction granted for provisional release of the imported pepper subject to the enumerated conditions.

Admissibility of statement recorded under Customs Act - seizure proceedings versus interim release - The Court declined to decide the applicability of a statement recorded by another purchaser under the Customs Act to the present petition and did not adjudicate the merits of the seizure. - HELD THAT: - Respondents relied on a statement recorded under the Customs Act from a different purchaser alleging under invoicing to circumvent minimum import price. The Court observed that the question whether that statement is applicable to the petitioner's consignments could not be decided in the writ petition seeking interim relief. Accordingly the factual and evidentiary contest relating to valuation and the seizure order was left open for determination in the appropriate proceedings.

Applicability of the third party statement and the merits of seizure not decided in the petition; left for determination in the enquiry/proceedings.

Time bound completion of enquiry - conditions for provisional release (security, bond, storage) - Respondents directed to complete the enquiry within a fixed period and to require production of goods as necessary. - HELD THAT: - As part of conditioning the provisional release, the Court mandated completion of the respondents' enquiry within two weeks from receipt of the order and required that the petitioner produce the products when demanded. This directional relief was intended to protect enforcement interests while minimising detention of perishable goods.

Enquiry to be completed within two weeks; petitioner to produce goods as and when required.

Final Conclusion: Writ petition admitted; ad interim provisional release of the imported black pepper ordered subject to security, bond, storage and other conditions, the admissibility and applicability of a third party statement and the merits of seizure left undecided, and respondents directed to complete their enquiry within two weeks.

Oppression and mismanagement - Investigation into the affairs of the company - Prima facie burden to justify statutory investigation under Sections 397-398 of the Companies Act, 1956 - Pre incorporation discussions and private Memorandum of Understanding vis a vis corporate rights - Allegations of diversion of corporate opportunities, siphoning of funds and employee poaching as grounds for relief

Oppression and mismanagement - Prima facie burden to justify statutory investigation under Sections 397-398 of the Companies Act, 1956 - Whether the petitioner proved oppression and mismanagement of the 1st respondent company warranting relief under Sections 397-398 of the Companies Act, 1956. - HELD THAT: - The Tribunal examined the pleadings, documents and authorities and held that mere allegations, without documentary or prima facie proof, do not suffice to establish oppression or mismanagement. Reliance was placed on authorities emphasising that intervention under Sections 397-398 is available when majority acts are against the articles or statute, or arbitrary use of majority powers causing or likely to cause financial loss or unfairness. The e-mail of 06.06.2006, exchanged prior to incorporation, was treated as preliminary discussion and not an enforceable corporate arrangement. Allegations of increased director remuneration, non inclusion of the petitioner in meetings, or running the company as a 'family fiefdom' were found to be unsupported by records demonstrating arbitrary or unlawful exercise of majority power that threatens the company's existence or causes prejudice actionable under the Act. Consequently, the material on record did not satisfy the requisite prima facie standard to establish oppression or mismanagement. [Paras 34, 37, 38, 44, 45]

Petitioner's allegations of oppression and mismanagement not established; relief under Sections 397-398 not warranted.

Pre incorporation discussions and private Memorandum of Understanding vis a vis corporate rights - Investigation into the affairs of the company - Whether the pre incorporation e mail and the Memorandum of Understanding could form the basis for statutory relief or for directing an investigation into the company's affairs. - HELD THAT: - The Tribunal held that the pre incorporation e mail amounted to preliminary discussions and, in absence of incorporation level record, could not be treated as creating enforceable corporate rights against the company. The Memorandum of Understanding executed between the petitioner and Respondent No.2 was treated as a private agreement; however, the MoU itself acknowledged the petitioner's 40% shareholding as of 1.10.2009 and therefore did not support the petitioner's claim to 50% shareholding. Regarding the prayer for investigation, the Tribunal reiterated the settled principle that an order for investigation requires prima facie proof of mismanagement or misappropriation; vague or unsubstantiated allegations cannot justify an investigation. As the petitioner failed to produce specific evidence to prima facie establish diversion of assets, siphoning or other improprieties, the request for investigation was refused. [Paras 39, 40, 41, 42, 43]

Pre-incorporation email treated as preliminary discussion; MoU establishes petitioner held 40% and does not support claim to 50%; no basis for directing investigation into company affairs.

Allegations of diversion of corporate opportunities, siphoning of funds and employee poaching as grounds for relief - Investigation into the affairs of the company - Whether the formation of related companies, alleged transfer of employees, domain ownership and product registration, or other alleged acts by respondents 2-5 constituted actionable misappropriation or unfair prejudice entitling the petitioner to relief. - HELD THAT: - The Tribunal considered allegations that Respondent No.2 created other entities, moved employees, and caused product/domain registrations to shift activity away from the 1st respondent company. The 4th and 5th respondents denied involvement; the 4th respondent specifically noted lawful employee mobility and lack of proprietary claims. The Tribunal observed that mere migration of employees, generic product names, or registration of domains in a name did not, without supporting documentary evidence, establish diversion of corporate assets or infringement of proprietary rights. The petitioner had not produced particulars (such as IP filings, source code, or financial records) to substantiate claims of misappropriation. Accordingly, these assertions were held to be insufficient to constitute unfair prejudice or misappropriation under the Companies Act. [Paras 19, 29, 43, 44]

Allegations regarding related companies, employee movement, domains and products are unsubstantiated and do not amount to misappropriation or unfair prejudice warranting relief.

Final Conclusion: On appreciation of pleadings, documents and authorities the Tribunal found that the petitioner failed to make out a prima facie case of oppression, mismanagement or misappropriation; the pre incorporation discussions and the MoU do not support the reliefs sought, no investigation was directed, and the Company Petition No. 68/KOB/2019 is dismissed with no order as to costs.

Scheme of Amalgamation - Dispensation of meetings of unsecured creditors - Convening and conduct of shareholder meetings - Service of notices on Regional Director/Registrar of Companies/Income Tax Authorities and sectoral regulators - Appointment of scrutinizer and chairperson for meetings - Assistance to Official Liquidator in scrutiny of books - Meetings by video-conferencing and preservation of raw footage - Filing of meeting results in Form CAA.4 and compliance reporting

Dispensation of meetings of unsecured creditors - Prayer for dispensation of convening and holding meetings of unsecured creditors of Applicant Company No. 1 and Applicant Company No. 2 allowed. - HELD THAT: - The Tribunal recorded that substantial consents in value were placed on record by the unsecured creditors of both Applicant Companies (initially and with further consents received subsequently) and, on that basis, granted dispensation from convening meetings of unsecured creditors of Applicant Company No. 1 and Applicant Company No. 2. The Tribunal therefore allowed the applicants' prayers to dispense with calling the unsecured creditors' meetings. [Paras 9, 14, 15]

Dispensation of the meetings of unsecured creditors of Applicant Company No. 1 and Applicant Company No. 2 allowed.

Convening and conduct of shareholder meetings - Service of notices on Regional Director/Registrar of Companies/Income Tax Authorities - Advertisement and proxy - Quorum and poll voting - Filing of meeting results in Form CAA.4 - Detailed directions issued for convening and conduct of the meeting of equity shareholders of Applicant Company No. 1 to consider the Scheme, including notice requirements, advertisement, service on authorities, quorum, proxy, voting by poll, electronic voting and filing of results. - HELD THAT: - The Tribunal directed Applicant Company No. 1 to hold the equity shareholders' meeting at the specified venue and date, or as otherwise directed, and to issue the prescribed notices (Form CAA.2 and CAA.3) at least 30 days prior to the meeting along with the Scheme and the Section 230(3) statement. The Company is to serve the Regional Director (Western Region), Registrar of Companies, and Income Tax Authorities (with PAN indicated) and provide opportunity of 30 days for representations to the Tribunal. Advertising in prescribed form in specified newspapers and service upon the Official Liquidator were mandated. The Tribunal fixed the quorum, permitted proxy and electronic/ postal voting, required that voting take place by poll, appointed a Chairperson (with named alternates) to conduct the meeting and empowered the Chair to decide procedural questions including amendments, and directed filing of results in Form CAA.4 within the stipulated time together with an affidavit of compliance. [Paras 6, 15, 16, 17, 18]

Applicant Company No. 1 to comply with the detailed directions for convening and conduct of the equity shareholders' meeting and to file the meeting result and compliance as directed.

Convening and conduct of shareholder meetings - Service of notices on Regional Director/Registrar of Companies/Income Tax Authorities - Advertisement and proxy - Quorum and poll voting - Filing of meeting results in Form CAA.4 - Detailed directions issued for convening and conduct of the meeting of equity shareholders of Applicant Company No. 2 to consider the Scheme, including notice requirements, advertisement, service on authorities, quorum, proxy, voting by poll, electronic voting and filing of results. - HELD THAT: - The Tribunal directed Applicant Company No. 2 to hold the equity shareholders' meeting at the specified venue and date, to issue the prescribed notices (Form CAA.2 and CAA.3) at least 30 days prior to the meeting along with the Scheme and the Section 230(3) statement, and to serve the Regional Director (Western Region), Registrar of Companies and Income Tax Authorities (with PAN indicated). The Company is also required to advertise the meeting, serve sectoral regulators, fix the quorum, permit proxy and electronic/postal voting, conduct voting by poll, appoint the named Chairperson (with alternates) to preside and decide procedural matters, appoint a scrutinizer for the poll, and to file the meeting result in Form CAA.4 within the prescribed period together with the required affidavit. [Paras 14, 15, 16, 17, 18]

Applicant Company No. 2 to comply with the detailed directions for convening and conduct of the equity shareholders' meeting and to file the meeting result and compliance as directed.

Assistance to Official Liquidator in scrutiny of books - PRASS & Associates appointed to assist the Official Liquidator in scrutinising Applicant Company No. 1's books for the last five years and to submit a report; fee directed to be paid by Applicant Company No. 1. - HELD THAT: - The Tribunal appointed PRASS & Associates, Chartered Accountants, to assist the Official Liquidator in scrutinising the books of accounts of Applicant Company No. 1 for the preceding five years and to submit their report to the Tribunal. The Tribunal specified the firm, its contact particulars as recorded and directed Applicant Company No. 1 to pay the indicated fees for this purpose. [Paras 15]

PRASS & Associates appointed to assist the Official Liquidator; Applicant Company No. 1 to pay the fees as directed.

Meetings by video-conferencing and preservation of raw footage - Filing of compliance report in lieu of customary affidavit of service - Meetings may be conducted through video conferencing or other audio visual means due to Covid 19; raw unedited footage to be preserved; compliance reporting directions modified in view of lockdown. - HELD THAT: - The Tribunal recognised the lockdown restrictions arising from the Covid 19 pandemic and permitted the equity shareholders' meetings to be conducted by video conferencing or other audio visual means if physical meetings are not feasible, with the requirement that raw unedited footage be preserved for verification. The Tribunal also permitted filing of a compliance report with the Registry in lieu of the customary affidavit of service owing to prevailing lockdown conditions, while otherwise maintaining the requirement of filing the chairman's report and affidavits as directed. [Paras 16, 17, 18]

Meetings may be conducted by video conferencing with preservation of raw footage; compliance report to be filed in lieu of customary affidavit of service as permitted.

Final Conclusion: The Tribunal allowed the company application under Section 230(1)(b) of the Companies Act, 2013, dispensed with meetings of unsecured creditors of both Applicant Companies on the basis of recorded consents, directed detailed procedures for convening and conducting the equity shareholders' meetings (including notices, service on authorities, advertisement, quorum, proxy, voting, scrutinizer and filing of Form CAA.4), appointed PRASS & Associates to assist the Official Liquidator in scrutiny of Applicant Company No. 1's books, and authorised meetings by video conferencing with adjusted compliance filings in view of the Covid 19 lockdown.

Jurisdiction under Section 60(5) of the IBC - locus standi of a prospective resolution applicant - necessity of impleading an affected party to challenge RP/CoC actions - commercial wisdom of the Committee of Creditors - validity and mandatory nature of Regulation 36-A(6) of the IBBI Regulations - principle of natural justice and opportunity to be heard - conduct and adverse remarks against the Resolution Professional

Jurisdiction under Section 60(5) of the IBC - Adjudicating Authority's jurisdiction to entertain I.A. No. 1029 of 2020 prior to approval under Section 31 of the IBC. - HELD THAT: - The Tribunal held that Section 60(5) empowers the Adjudicating Authority to decide "any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings" and therefore the Adjudicating Authority could entertain and decide the Application challenging RP and CoC actions prior to a Section 31 approval. The decision in Arecellor Mittal (paras cited) does not oust the power of the Adjudicating Authority to decide such questions arising in the CIRP; accordingly the preliminary objection that the Adjudicating Authority lacked jurisdiction was rejected. [Paras 19, 20]

Adjudicating Authority had jurisdiction under Section 60(5) to entertain and decide I.A. No. 1029 of 2020.

Locus standi of a prospective resolution applicant - Regulation 36-A(11) - right to object to provisional list - Whether GIACL had locus to challenge inclusion of DSKL in the list of Prospective Resolution Applicants. - HELD THAT: - The Tribunal found that Regulation 36-A(11) permits an objection to inclusion or exclusion in the provisional list and therefore GIACL possessed a vested procedural right to object to DSKL's inclusion. The factual matrix showed that DSKL sought to be included after the deadline and the RP attempted to induct DSKL in contravention of Regulation 36-A(6); hence GIACL's challenge to the actions of RP and CoC was maintainable and the Adjudicating Authority correctly entertained the application. [Paras 21, 22, 23]

GIACL had locus standi to challenge the inclusion of DSKL in the CIRP and the Adjudicating Authority rightly entertained the challenge.

Necessity of impleading an affected party to challenge RP/CoC actions - principle of natural justice and opportunity to be heard - Whether DSKL was a necessary party to I.A. No. 1029 of 2020 and whether non-impleadment violated natural justice. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's conclusion that DSKL was not a necessary party because no relief was sought directly against DSKL and DSKL's asserted rights had been extinguished by its failure to submit EOI by the deadline and by the CoC's earlier rejection. The challenge was to the actions of the RP and CoC; the question before the Adjudicating Authority was whether those actions were justifiable. Accordingly, the contention that DSKL was denied a hearing was rejected. [Paras 24, 25, 26, 27]

DSKL was not a necessary party to I.A. No. 1029 of 2020 and its non-impleadment did not vitiate the proceedings.

Commercial wisdom of the Committee of Creditors - validity and mandatory nature of Regulation 36-A(6) of the IBBI Regulations - Whether permitting DSKL to submit EOI after the due date was a commercial decision of the CoC immune from judicial interference. - HELD THAT: - The Tribunal distinguished the facts from precedents relied upon by DSKL and the RP (including Kalpraj and Brilliant Alloys). It held that a CoC's approval of a resolution plan is a commercial decision under Section 30, but permitting a PRA to be included after an earlier CoC decision rejecting its late EOI, particularly where Regulation 36-A(6) provides for rejection of late EOIs, is not a commercial decision protected from scrutiny. The 9th CoC decision was taken without any adequate reason to revisit the 7th CoC rejection, and the RP had misled and suppressed material facts when procuring the CoC's reversal. Therefore allowing DSKL after the due date at the RP's instance was not a protected commercial decision. [Paras 37, 38, 39, 40, 41]

Permitting DSKL to file EOI after the due date at the instance of the RP was not a commercial decision of the CoC and was susceptible to judicial review; the CoC's reversal lacked adequate justification and was procured by the RP's misconduct.

Conduct and adverse remarks against the Resolution Professional - principle of fair and impartial discharge of RP's duties - Whether the adverse remarks in paragraph 54 of the impugned order against the Resolution Professional were baseless. - HELD THAT: - The Tribunal noted an inadvertent factual inaccuracy in paragraph 54 stating that the RP accepted the plan after expiry of the deadline for submission of resolution plans; that specific factual statement was incorrect. However, upon reviewing the chronology and communications, the Tribunal found that the RP had acted improperly by overturning the 7th CoC decision on his own, failing to disclose receipt of the applicants' proposed application, promptly soliciting a late EOI, and misleading the CoC about the need for express permission. The RP failed to demonstrate bona fides and acted in a manner inconsistent with expectations of fairness; accordingly the adverse observations in the impugned order were not baseless and were necessary for appreciating the record. [Paras 43, 44, 45, 46, 47]

While one factual recital in paragraph 54 was incorrect, the Adjudicating Authority's adverse remarks against the RP were not baseless and were warranted by the RP's suppression of material facts and misconduct.

Final Conclusion: The Appeals are dismissed. The Adjudicating Authority had jurisdiction to decide the challenge to the CoC and RP actions; GIACL had locus to object; DSKL was not a necessary party; permitting DSKL's late EOI was not a protected commercial decision and the RP's conduct warranted the adverse observations. No order as to costs.

Quashing of criminal prosecution based on findings of Adjudicating Authority under PMLA - Interim attachment and scope of Adjudicating Authority under Section 8 of the PMLA - Binding effect of administrative/adjudicatory findings on criminal proceedings - Standard for taking cognizance under Section 204 CrPC - Proof of trade custom under Section 48 of the Evidence Act - Use and evidentiary weight of a forensic audit report in criminal prosecution

Quashing of criminal prosecution based on findings of Adjudicating Authority under PMLA - Binding effect of administrative/adjudicatory findings on criminal proceedings - Interim attachment and scope of Adjudicating Authority under Section 8 of the PMLA - Whether the criminal prosecution under the PML Act could be quashed on the basis of the Adjudicating Authority's order setting aside interim attachment of certain fixed deposits - HELD THAT: - The Court held that the Adjudicating Authority's order under Section 8, which is confined to confirming or setting aside an interim attachment made under Section 5, does not conclusively bind the criminal Court. The PMLA scheme vests only the power to confirm or vacate interim attachment in the Adjudicating Authority; confiscation and final determination of proceeds of crime remain within the Special Court's domain. The adjudicatory finding in favour of the petitioners was not treated as a conclusive bar to prosecution because (a) the Adjudicating Authority does not exercise the full adjudicatory power of the Special Court under the PMLA, (b) the amounts sought to be treated as proceeds formed only part of the alleged proceeds and prosecution could proceed in respect of the balance, and (c) the Adjudicating Authority's order had not attained finality and was under appeal. For these reasons, the Court declined to quash the criminal prosecution on the basis of the Adjudicating Authority's order. [Paras 9, 15, 17, 18, 19]

The Adjudicating Authority's order setting aside interim attachment does not preclude the criminal Court from independently enquiring into and prosecuting alleged money laundering; therefore prosecution cannot be quashed on that basis.

Standard for taking cognizance under Section 204 CrPC - Quashing of criminal prosecution based on findings of Adjudicating Authority under PMLA - Whether the order of cognizance dated 13.07.2018 was vitiated for want of application of mind and therefore liable to be quashed - HELD THAT: - Having examined precedent on the standard for taking cognizance, the Court observed that at the stage of taking cognizance under Section 204 CrPC the Magistrate is not required to examine merits or evaluate evidence in depth; the material filed with the complaint or police report may furnish 'sufficient ground for proceeding'. The Court noted decisions where failure to record detailed reasons did not vitiate cognizance and concluded that, given the complaint was supported by numerous documents and statements (56 documents and statements recorded under the PMLA), the cognizance order did not lack application of mind and was not liable to be quashed on that ground. [Paras 20, 23, 24, 25]

The cognizance order is not vitiated for want of application of mind and does not warrant quashing.

Proof of trade custom under Section 48 of the Evidence Act - Use and evidentiary weight of a forensic audit report in criminal prosecution - Whether the forensic audit report or the claimed trade custom established by the petitioners precluded prosecution as unfounded - HELD THAT: - The Court emphasised that customs or usages relied upon must be proved in the manner prescribed by Section 48 of the Evidence Act and cannot be judicially noticed. It also reiterated that a forensic audit report may trigger investigation but cannot by itself be the sole basis for conviction. The prosecution must be permitted to adduce evidence at trial to prove the offence. Consequently, neither the asserted trade practice nor the forensic audit report justified quashing the prosecution at the threshold. [Paras 16, 26]

The forensic audit report and asserted trade custom do not by themselves render the prosecution unfounded; prosecution must be allowed to proceed to lead evidence.

Final Conclusion: The petitions under Section 482 CrPC seeking quashing of the complaint are dismissed; the criminal prosecution against M/s. Mohanlal Jewellers Pvt. Ltd. and its managing director is not quashed and the trial may proceed.

Refund under section 11B of the Central Excise Act, 1944 - excess/double payment of excise duty - intimation of cancelled invoice (Para 12, Chapter IV, CBEC Excise Manual of Supplementary Instructions, 2005) - rebate claim - certificate of Chartered Accountant as admissible evidence

Refund under section 11B of the Central Excise Act, 1944 - intimation of cancelled invoice (Para 12, Chapter IV, CBEC Excise Manual of Supplementary Instructions, 2005) - excess/double payment of excise duty - Whether non-compliance with the administrative instruction to intimate cancellation of invoices can justify rejection of a refund claim for excess excise duty. - HELD THAT: - The Tribunal held that failure to follow the procedural instruction in Para 12 of Chapter IV of the CBEC Excise Manual is only an administrative lapse and cannot per se justify retention of duty which is not payable under law. The department raised the procedural non-compliance as a ground for rejection, but the Court found that mere non-intimation of cancelled invoices does not extinguish the appellant's right to a refund of duty actually paid in excess. The determinative legal principle applied is that the revenue cannot retain amounts not due under statute merely because an assessee omitted to follow an administrative procedure designed to facilitate departmental verification. [Paras 6]

Rejection of refund solely on the ground of non-compliance with the Para 12 intimation requirement is not justified; such procedural lapse cannot defeat a bona fide claim for excess duty paid.

Excess/double payment of excise duty - rebate claim - certificate of Chartered Accountant as admissible evidence - Whether the appellant furnished sufficient evidence to establish excess payment and that rebate was not claimed, thereby entitling them to refund. - HELD THAT: - On review of records and after directing production of the Range Officer's report and verification regarding rebate, the Tribunal found that the department did not produce contradicting details. The appellant furnished ARE-1 copies, gate passes, duty break-up, Cenvat ledger, a summary of exports and a Chartered Accountant's certificate expressly stating that the disputed invoices were cancelled, excess duty stood as receivable in their books and no rebate application had been made. The Tribunal treated these documents and the CA certificate as adequate proof of excess payment and absence of rebate, noting the decision in a similar earlier case relied upon by the appellant. Consequently the factual finding on sufficiency of evidence favoured the appellant. [Paras 7, 8]

The appellant produced sufficient documentary evidence, including a CA certificate and ARE-1 returns, to establish double payment and that rebate was not claimed; the refund claim must therefore be allowed.

Final Conclusion: The impugned order rejecting the refund claim is set aside; the appeal is allowed and the appellant is entitled to refund of the excess excise duty paid, with consequential reliefs, the Tribunal rejecting departmental reliance on mere non-compliance with the internal intimation procedure as a ground to deny the refund.

Definition of input service under Rule 2(l) of CCR - modernisation - banking and finance services as input service - allowability of cenvat credit for services used in expansion/modernisation - interpretation of omission of "setting-up" from inclusive clause

Definition of input service under Rule 2(l) of CCR - modernisation - banking and finance services as input service - Whether cenvat credit of service tax paid on banking and finance services attributable to setting up of the Pelletizing Plant is admissible as input service. - HELD THAT: - The Tribunal found as an admitted fact that the Pelletizing Plant was added to the assessee's existing manufacturing facility as an expansion/modernisation measure to improve efficiency and quality of outputs. The definition of "input service" in Rule 2(l) of the CCR is wide and covers any service used directly or indirectly in or in relation to the manufacture of final products, and expressly includes services used in relation to modernisation. Banking and finance services (processing fees, lead bank fee, upfront fee, legal fee, appraisal fee and inspection charges on term loans) fall within the inclusive description of financing-related services and therefore qualify as input services when used for modernisation of the manufacturing facility. The omission of the word "setting-up" from the inclusive part by the 2011 amendment does not exclude services used for modernisation or expansion that are integrally connected with the manufacturing activity; accordingly the Commissioner (Appeals) erred in disallowing the credit. Applying these principles to the admitted material, the Tribunal held that the credit of Rs. 25,14,532/- was properly taken and the order of the original adjudicating authority, which had dropped the proposed demand, was to be restored. [Paras 12]

Input credit of Rs. 25,14,532/- on banking and finance services used for installation/modernisation of the Pelletizing Plant is allowable; the order-in-appeal is set aside and the order-in-original is restored.

Final Conclusion: The Tribunal allowed the appellant's appeal, holding that banking and finance services used for the modernisation/expansion (Pelletizing Plant) qualify as "input service" under Rule 2(l) of the CCR and that the cenvat credit of Rs. 25,14,532/- was admissible; the Commissioner (Appeals) order disallowing the credit is set aside and the original order is restored.

Clandestine removal - statements not produced for cross-examination cannot be relied upon - uncorroborated third-party evidence inadmissible to fasten liability - onus of proof on the Revenue to link third-party records to assessee's premises - mandatory cross-examination of third-party witnesses under section 9D - need for corroborative evidence such as raw-material procurement, electricity consumption and transport records

Clandestine removal - statements not produced for cross-examination cannot be relied upon - uncorroborated third-party evidence inadmissible to fasten liability - onus of proof on the Revenue to link third-party records to assessee's premises - need for corroborative evidence such as raw-material procurement, electricity consumption and transport records - Whether penalty and demand for alleged clandestine removal could be sustained where the case rested primarily on third party records and statements which were not subjected to cross examination and were not corroborated by evidence linking removals to the assessee - HELD THAT: - The Tribunal applied settled precedent holding that allegations of clandestine removal cannot be sustained solely on documents and entries seized from third parties or on statements of brokers, transporters and labourers which the assessee was not permitted to cross examine. The reasoning, drawn from an earlier Tribunal order in the appellant's identical matter and authorities cited therein, emphasises that the onus is on the Revenue to establish movement of goods from the assessee's premises and that uncorroborated third party records or private diaries have no evidentiary value in isolation. The Tribunal noted absence of inquiries to identify buyers, proof of payments, procurement of excess raw materials, unusual electricity consumption or specific transport evidence linking removals to the assessee; in such circumstances the material at best creates doubt but does not discharge the Revenue's burden. The asserted distinction based on an admission in a sales manager's statement was held immaterial where the prior order was grounded on the legal infirmity of relying on uncross examined third party evidence. The appellate conclusion follows that without cross examination and corroboration the statements and third party records cannot sustain demand or penalty. [Paras 4, 5]

Appeal allowed; impugned orders sustaining demand and penalty set aside as the case was founded on uncorroborated third party records and uncross examined statements which cannot be relied upon.

Final Conclusion: The Tribunal allowed the appeal and set aside the demand and penalty because the allegation of clandestine removal was founded on third party records and statements that were not subjected to cross examination and lacked corroboration linking the removals to the appellant, thereby leaving the Revenue's case unproved.

Principles of natural justice - opportunity of hearing - remand for fresh adjudication - quashing of orders for procedural violation - exhaustion of appellate remedy - personal hearing

Principles of natural justice - opportunity of hearing - Whether the impugned revision orders were passed in breach of the principles of natural justice by not disposing of the petitioner's request for time to file documents and thereby depriving the petitioner of an opportunity to be heard. - HELD THAT: - The Court found that the petitioner had requested two months' time in its reply dated 17.09.2013 to file the certificate of payment and other documents and that no order accepting or rejecting that request was recorded before the final revision orders were passed. While the respondent contended that opportunity had been afforded and that the petitioner had not availed it, the impugned orders show no disposal of the specific request for time and therefore the petitioner was deprived of the opportunity it sought. The Court emphasised that procedural compliance in affording and recording disposal of requests for extension is essential to avoid procedural prejudice and to uphold the principles of natural justice. [Paras 6, 12]

The Court held that there was a violation of the principles of natural justice in that the request for time to file documents was not disposed of and the petitioner was deprived of the opportunity to file its documents.

Quashing of orders for procedural violation - remand for fresh adjudication - personal hearing - exhaustion of appellate remedy - What relief should follow from the procedural defect-whether the impugned orders should be quashed and the matters remanded for fresh consideration. - HELD THAT: - Having identified the procedural lapse, the Court exercised remedial relief by quashing the impugned revision orders and remanding the matters to the respondent for fresh consideration. The remand is directed to be undertaken by affording the petitioner an opportunity to file the certificate of payment, defence statements or any other documents within two weeks of receipt of the order, and the respondent is directed to pass final orders on merits within eight weeks thereafter, providing personal hearing if requested. The Court reiterated that ordinarily appellate remedies ought to be exhausted and writ relief is exceptional, but remedial intervention is warranted here to secure fresh adjudication in accordance with law. [Paras 12]

Impugned orders quashed; matters remanded for fresh adjudication with directions to allow filing of documents, grant personal hearing if requested, and pass final orders within stipulated time.

Final Conclusion: Writ petitions allowed: the revision orders for the tax periods 2008-09, 2009-10, 2010-11 and 2011-12 are quashed and the matters are remanded for fresh consideration after affording the petitioner the opportunity to file documents and seek personal hearing; final orders to be passed within the time directed.

Pre-deposit for stay in tax appeals - discretionary power of appellate authorities under Section 73(4) of the Gujarat Value Added Tax Act - interference under Article 226 in matters of tax recovery - consideration of financial position and turnover for interim relief

Pre-deposit for stay in tax appeals - discretionary power of appellate authorities under Section 73(4) of the Gujarat Value Added Tax Act - interference under Article 226 in matters of tax recovery - Validity of the Tribunal's order admitting second appeals on condition of a 15% pre-deposit and the scope for High Court interference under Article 226. - HELD THAT: - The Court held that Section 73(4) contemplates that appellate authorities ordinarily require satisfactory proof of payment of tax as a condition for entertaining appeals but may, for reasons recorded in writing, relax that requirement by allowing reduced payment or security. The first appellate authority had exercised its discretion by requiring a 25% pre-deposit; the Tribunal, also exercising its discretionary power on interim admission, reduced that requirement to 15% while granting stay against recovery. Such interim directions are discretionary and do not create a statutory or legal right whose infringement would attract interference under Article 226. Given the potential consequences for public revenue, the High Court will ordinarily not intervene in tax recovery matters by upsetting interim discretionary orders of the tribunal without strong legal grounds. [Paras 6, 7, 8]

The Tribunal's exercise of discretion in directing a 15% pre-deposit while admitting the second appeals is valid and not subject to interference under Article 226.

Consideration of financial position and turnover for interim relief - pre-deposit for stay in tax appeals - Whether the Tribunal erred in taking the petitioner's turnover and financial position into account when deciding the quantum of pre-deposit. - HELD THAT: - The Court found no error in the Tribunal considering details of sales and purchases to ascertain the petitioner's financial position. Such consideration was relevant to the exercise of its discretionary power to grant interim relief and to fix the amount of pre-deposit. The Tribunal thereby legitimately assessed the appellant's capacity to pay in fashioning an equitable interim direction, and the High Court declined to interfere with that exercise of discretion. [Paras 9]

No illegality in the Tribunal's taking turnover and financial position into account; the exercise of discretion in reducing the pre-deposit is sustainable.

Final Conclusion: Writ petition dismissed. The Tribunal's interim order admitting the second appeals on condition of a 15% pre-deposit (instead of 25%) and its consideration of the petitioner's turnover/financial position in fixing that amount are held to be discretionary and not amenable to interference under Article 226; the reassessment and appellate proceedings continue subject to the Tribunal's direction.

Principles of natural justice - effective opportunity of personal hearing - Section 27 - requirement of effective opportunity of personal hearing under the Tamil Nadu Value Added Tax Act, 2006 - remand for de novo assessment with time bound direction

Principles of natural justice - effective opportunity of personal hearing - Section 27 - requirement of effective opportunity of personal hearing under the Tamil Nadu Value Added Tax Act, 2006 - Impugned assessment order passed without affording an effective opportunity of personal hearing and in violation of principles of natural justice. - HELD THAT: - The Court found that the petitioner had responded to the notice and sought additional time to furnish further particulars, citing difficulties arising from the COVID-19 pandemic and medical records supporting the inability of the petitioner's consultant to procure documents. No personal hearing was afforded and the assessment order was passed. In light of the statutory requirement under Section 27, which courts have interpreted to include an effective opportunity of personal hearing, the absence of a personal hearing constituted violation of natural justice. The impugned order was therefore unsustainable on this ground. [Paras 5]

The assessment order dated 30.03.2021 for 2015-16 is set aside for failure to afford an effective opportunity of personal hearing.

Remand for de novo assessment with time bound direction - effective opportunity of personal hearing - The matter was remitted for fresh proceedings with a specified outer time limit for compliance and re-assessment. - HELD THAT: - Rather than directing an immediate hearing date, the Court recognised logistical difficulties arising from the pandemic and the petitioner's registered office being located in another State. The Court therefore directed that proceedings be initiated de novo, that pre assessment proposals be sent promptly to the petitioner to enable collation of data, and fixed an outer time limit for the initiation, solicitation of reply and passing of a fresh assessment order. This remand is for reconsideration and fresh adjudication, ensuring the petitioner is afforded the requisite opportunity to be heard. [Paras 6, 7]

Proceedings are to be initiated de novo and completed within sixteen weeks, with pre assessment proposals sent to the petitioner; the writ petition is allowed and the matter remitted for fresh consideration.

Final Conclusion: Writ petition allowed: the assessment order for 2015-16 is set aside for breach of natural justice; the matter is remitted for de novo proceedings and re assessment within sixteen weeks, with pre assessment proposals to be furnished to the petitioner.

Commercial quantity of a narcotic - weight of neutral material in a mixture - manufactured drug containing miniscule percentage of narcotic substance - Note 4 of S.O. 1055(E) dated 19-10-2001 - construction of Section 21 and Section 37 of the NDPS Act in relation to manufactured preparations - interim bail subject to conditions

Commercial quantity of a narcotic - weight of neutral material in a mixture - manufactured drug containing miniscule percentage of narcotic substance - Note 4 of S.O. 1055(E) dated 19-10-2001 - construction of Section 21 and Section 37 of the NDPS Act in relation to manufactured preparations - Reference to a larger Bench on whether, for manufactured preparations containing a miniscule percentage of a narcotic substance, the neutral material must be included in determining small/commercial quantity and the applicability/validity of Note 4 to such preparations. - HELD THAT: - The Single Judge found that the Supreme Court's three-Judge decision in Hira Singh holds that in a mixture the total weight of the manufactured drug or preparation, including neutral material, must be considered for determining small or commercial quantity. Noting the distinction drawn in a prior Single Judge decision (Iqbal Singh) between illicit mixtures and pharmaceutical preparations with miniscule narcotic content, the Court observed that conflicting approaches by Single Judges could arise. Consequentially, the Court framed specific questions (concerning manufactured drugs with miniscule narcotic percentage, and the applicability or inapplicability of Note 4 to such manufactured drugs) as requiring authoritative determination by a larger Bench of the High Court and thus referred those questions for consideration by a larger Bench. [Paras 21, 22]

Questions on whether and how Note 4 and the Hira Singh ratio apply to manufactured preparations with miniscule narcotic content are referred to a larger Bench for authoritative determination.

Interim bail - personal bond and surety conditions - conditions of release including stay in local jurisdiction and reporting - Grant of interim bail to the petitioner for 90 days on furnishing bond and surety, subject to specified conditions. - HELD THAT: - Having referred the substantive question to a larger Bench and noting the factual matrix (recovery of 110 bottles of cough syrup containing Codeine in small concentration), the Court exercised its discretion to grant interim bail. The bail is limited to 90 days and conditioned upon execution of a personal bond with surety, residence and address disclosure in Delhi, requirement to remain in Delhi, alternate-day reporting to police, maintaining an operational mobile number with the investigating officer, and surrender after the bail period. The Court directed placement of the matter before the Chief Justice for constitution of a larger Bench. [Paras 23, 24]

Interim bail granted for 90 days on specified bond, surety and operational conditions; matter listed for constitution of a larger Bench.

Final Conclusion: The High Court referred determinative questions concerning inclusion of neutral material and applicability of Note 4 to manufactured drugs with miniscule narcotic content to a larger Bench, and in the interim granted the petitioner conditional bail for 90 days subject to bond, surety and reporting conditions.

Liability under Section 138 of the Negotiable Instruments Act - signatory to the cheque as a precondition for prosecution - inapplicability of Section 141 of the Negotiable Instruments Act to private individuals - abuse of process - inherent jurisdiction under Section 482 of the Code of Criminal Procedure to quash proceedings - quashing of criminal complaint where legal bar is apparent on the face of the complaint

Signatory to the cheque as a precondition for prosecution - liability under Section 138 of the Negotiable Instruments Act - inapplicability of Section 141 of the Negotiable Instruments Act to private individuals - Proceedings under Section 138 of the Negotiable Instruments Act cannot be maintained against a person who is not a signatory to the cheque and whose non-signatory status is undisputed. - HELD THAT: - The Court applied the principle that prosecution under Section 138 requires that the cheque be drawn by a person on an account maintained by him and be signed by that person; absent those conditions, criminal liability under Section 138 cannot be fastened. The decision in Alka Khandu Avhad was followed, where the Supreme Court held that an individual who is neither a signatory nor an account-holder cannot be prosecuted under Section 138, and that Section 141 (being concerned with offences by companies/associations) cannot be resorted to to implicate two private individuals as an "association" for the purpose of criminal liability. Here the applicant's non-signatory status to the cheque is not in dispute; therefore this is not a mere defence for trial but an apparent legal bar on the face of the complaint, justifying interference under the inherent jurisdiction of the High Court. [Paras 8, 9, 11]

The complaint under Section 138 of the Negotiable Instruments Act qua the applicant is liable to be quashed.

Final Conclusion: The High Court quashed Criminal Case No. 4313 of 2018 under the Negotiable Instruments Act insofar as it related to the applicant, holding that proceedings under Section 138 could not be continued against a person who undisputedly was not the signatory to the cheque.

Quashing of criminal proceedings for abuse of process / mala fide institution - conversion of a civil dispute into a criminal prosecution - intention to cheat from the inception as essential ingredient of cheating - reliance on defence/extraneous material for quashment under Section 482 Cr.P.C. - application of the Rajiv Thaper four-step test for quashment - category of cases in Bhajan Lal permitting quashment to prevent abuse of process

Quashing of criminal proceedings for abuse of process / mala fide institution - category of cases in Bhajan Lal permitting quashment to prevent abuse of process - The F.I.R. was quashed as being mala fide and an abuse of the process of court. - HELD THAT: - The Court found that respondent no.2 changed his stand after the death of the alleged signatory and, on the admitted documents, had earlier pursued remedies against the deceased alone and thereafter instituted civil proceedings implicating the present applicants. Applying the illustrative category in Bhajan Lal, the Court concluded that the criminal proceeding was maliciously instituted with an ulterior motive and was a misuse of criminal process. The Court observed that proceeding with the criminal case would amount to conversion of a civil dispute into criminal harassment of the accused. [Paras 12, 13, 14, 18]

The F.I.R. is quashed on the ground that the criminal proceedings are mala fide and an abuse of the process of court.

Reliance on defence/extraneous material for quashment under Section 482 Cr.P.C. - application of the Rajiv Thaper four-step test for quashment - The Court accepted and acted upon defence/extraneous material and applied the Rajiv Thaper four-step test to determine whether quashment was appropriate. - HELD THAT: - The Court examined the admitted complaints filed under Section 138 of the Negotiable Instruments Act and other pleadings on record. Relying on Rajiv Thaper, the Court considered whether the defence material was of sterling quality, whether it would overturn the factual basis of the accusations, whether it had been or could be refuted by the complainant, and whether proceeding would amount to abuse of process. Finding all steps satisfied on the material before it, the Court held that reliance on such defence material for quashment was justified in the present case. [Paras 11, 12]

Defence/extraneous material on the record could be considered and, applying the Rajiv Thaper criteria, justified quashment in this case.

Intention to cheat from the inception as essential ingredient of cheating - conversion of a civil dispute into a criminal prosecution - The ingredients of the offence of cheating, namely intention to cheat from the inception, were not made out on the material before the Court. - HELD THAT: - Even if the applicants are assumed to have been connected with the firm, the material showed payment of a substantial part of the price and an admitted civil remedy for recovery being pursued. The Court reiterated that cheating requires an intention to deceive from the outset; on the facts and admitted documents, such intention was not established and the matter was essentially a civil dispute improperly sought to be pursued criminally. [Paras 5, 15, 16]

There is no prima facie case of cheating as the requisite intention from inception is not established; the dispute is civil in character and does not constitute the alleged criminal offence.

Final Conclusion: The criminal application is allowed and the F.I.R. (Crime No. 257 of 2019) is quashed as being mala fide and an abuse of process; the civil suit remains to be decided by the Civil Court on its own merits without being influenced by these observations.

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - proof of execution of cheque / admission of signature - statement recorded under Section 313 Cr.P.C. is not substantive evidence - absence of particulars of original transaction in complaint/notice not fatal in Section 138 prosecution

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - proof of execution of cheque / admission of signature - Whether, upon proof or admission of execution of the cheque, the statutory presumptions under Sections 118 and 139 arise and shift the onus to the accused, warranting conviction in absence of satisfactory rebuttal. - HELD THAT: - The Court held that once the execution of the negotiable instrument (the cheque) is proved or admitted, the presumptions created by Sections 118 and 139 of the Act arise and operate to shift the burden to the accused to disprove that the cheque was issued for consideration or in discharge of a liability. The High Court relied on authoritative pronouncements emphasizing that these presumptions are rebuttable but remain operative unless the accused adduces satisfactory evidence to the contrary. In the present case the first respondent admitted issuance/signature of the cheque and did not produce evidence to rebut the statutory presumptions; consequently the trial court ought to have drawn the presumptions and not acquitted him. [Paras 6, 10, 11, 17]

The statutory presumptions under Sections 118 and 139 apply upon proof or admission of execution; in the absence of adequate rebuttal the accused is liable and the conviction under Section 138 follows.

Statement recorded under Section 313 Cr.P.C. is not substantive evidence - Whether answers given by the accused under Section 313 Cr.P.C. can be treated as substantive evidence sufficient to outweigh the complainant's testimony given on oath. - HELD THAT: - The Court reiterated that statements made by the accused under Section 313 are not evidence on oath, are not subject to cross-examination by the prosecution, and thus cannot be treated as a substantive piece of evidence to displace sworn testimony of prosecution witnesses. The trial court erred in treating the accused's answers under Section 313 as gospel truth and relying upon them to acquit, especially where the complainant's evidence remained unchallenged by cross-examination and the accused adduced no independent evidence to substantiate his version. [Paras 13, 14, 17]

Answers under Section 313 Cr.P.C. are not substantive evidence and cannot, by themselves, justify rejection of the complainant's sworn testimony or an acquittal when statutory presumptions remain unrebutted.

Absence of particulars of original transaction in complaint/notice not fatal in Section 138 prosecution - Whether omission of particulars of the original transaction (time, place, circumstances, prior relationship) in the complaint or statutory notice is fatal to a prosecution under Section 138 of the Negotiable Instruments Act. - HELD THAT: - The Court held that a complaint under Section 138 need not plead or prove the entire original transaction; the crucial element is proof or admission of execution and dishonour of the cheque. The absence of detailed particulars regarding the antecedent transaction or relationship is not a valid ground to dismiss the complaint, and earlier authorities were relied upon to reject the notion that want of such particulars alone renders the complainant's case improbable or unsustainable. Consequently the trial court was not justified in discarding the complainant's case on this ground. [Paras 6, 8, 9]

Omission of detailed particulars of the original transaction in the complaint/notice is not fatal to prosecution under Section 138; proof or admission of cheque execution and dishonour is the determinative fact.

Final Conclusion: The appeal is allowed; the trial court's acquittal is set aside. The first respondent is held guilty of the offence under Section 138 of the Negotiable Instruments Act and is convicted and sentenced as recorded in the judgment, the monetary relief when realised to be paid to the complainant; coercive steps were directed if payment is not made within the period specified.

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - legally enforceable liability - proof of execution of a cheque - genuineness of statement of accounts - use and proof of signed blank cheque

Legally enforceable liability - proof of execution of a cheque - presumption under Sections 118 and 139 of the Negotiable Instruments Act - Whether the cheque (Ext. P1) was proved to have been executed and issued in discharge of a legally enforceable liability so as to attract the statutory presumptions. - HELD THAT: - The trial court disbelieved the appellant's case that Ext. P1 was issued in discharge of a legally enforceable liability. The Court held that execution of the cheque was not admitted by the respondent and the appellant failed to establish that the cheque was executed and issued in discharge of a debt. Significant doubts arose because the vehicle had been re-possessed and sold in public auction prior to the date when the cheque would have been issued, making it improbable that the respondent would have attended to execute a cheque to discharge a liability he claimed did not exist. In these circumstances, the statutory presumptions under Sections 118 and 139 could not be drawn in favour of the complainant, since the foundational requirement - proof of execution/issuance in discharge of a legally enforceable liability - remained unestablished. [Paras 11, 12, 14, 16]

The cheque was not proved to have been executed and issued in discharge of a legally enforceable liability; presumptions under Sections 118 and 139 do not apply.

Genuineness of statement of accounts - legally enforceable liability - Whether the appellant's statement of accounts (Ext. P9) and computation of amounts due were genuine and reliable for proving the debt. - HELD THAT: - The Court found material inconsistencies between Ext. P9 and admitted documents relied upon by the respondent (Ext. D1). Ext. D1, an admitted document, recorded instalment payments aggregating more than the amount reckoned by the appellant; notably a last remittance on 17.07.2007 was omitted from Ext. P9. Ext. P9's inclusion of a component described as an FC/financial credit amount (part of total payable) and reckoning of interest for the entire contract period despite premature re-possession and sale further weakened the appellant's computation. Given these discrepancies and the appellant's failure to account for admitted remittances, the Court held that the genuineness and correctness of Ext. P9 were doubtful and therefore it could not be relied upon to prove consideration supporting Ext. P1. [Paras 8, 15, 17]

The statement of accounts was not shown to be genuine or correctly reckoned; therefore it could not establish the consideration or the debt claimed.

Use and proof of signed blank cheque - proof of execution of a cheque - Whether the possibility that a signed blank cheque had been taken and thereafter completed by the complainant vitiated the appellant's entitlement to relief. - HELD THAT: - The respondent asserted that a blank signed cheque given at the time of the hire purchase agreement was misused after re-possession. The Court observed that even if a signed blank cheque had been obtained earlier, its mere existence does not automatically entitle the complainant to succeed; there must be proof that the cheque was used pursuant to a consensus between parties about the actual amount due. Coupled with the other infirmities in the appellant's case (improbability of execution after re-possession and defective account reckoning), the Court concluded that the blank-cheque contention, together with the surrounding circumstances, supported the finding that the cheque was not shown to be a bona fide discharge of debt. [Paras 13, 14, 16]

The allegation of misuse of a signed blank cheque, considered with surrounding facts and defective account reconciliation, supported the finding that the cheque did not establish a legitimate debt.

Final Conclusion: On the totality of evidence - including improbability of execution after re-possession, discrepancies in the statement of accounts, and the absence of proof that the cheque discharged a legally enforceable liability - the High Court found no ground to interfere with the Magistrate's acquittal; the appeal is dismissed.

Offence under Section 138 of the Negotiable Instruments Act - presumptions under Sections 118 and 139 of the Negotiable Instruments Act - probative value of an immediate reply to a lawyer's notice in cheque dishonour cases - relevance of concurrent civil judgment under Section 42 of the Evidence Act

Offence under Section 138 of the Negotiable Instruments Act - presumptions under Sections 118 and 139 of the Negotiable Instruments Act - probative value of an immediate reply to a lawyer's notice in cheque dishonour cases - relevance of concurrent civil judgment under Section 42 of the Evidence Act - Whether the complainant proved commission of the offence under Section 138 of the Negotiable Instruments Act - HELD THAT: - The court examined the totality of oral and documentary evidence and found the complainant's case beset by significant weaknesses. The acquaintance between the parties and the alleged loan was not supported by independent or family witnesses and was improbable given the absence of security or contemporaneous proof. The accused promptly replied to the lawyer's notice with a consistent version (Ext. D1) that the cheque had been in the hands of a third person (DW1/Surendran) in connection with a vehicle transaction, and that the cheque was handed over without payee and date. Documentary material placed by the defence (Ext. D2 agreement and copies of cheques Exts. D3/D4) corroborated that version to a material degree and showed that Ext. D3 closely resembled Ext. P1 except for payee and date. The complainant gave inconsistent statements in civil and criminal proceedings (as reflected in Exts. D5 and D6) undermining his credibility. In these circumstances the mandatory presumptions under Sections 118 and 139 of the Act could not be drawn in favour of the complainant because the accused denied execution and furnished a plausible and consistently maintained explanation supported by documents. The civil suit between the parties was dismissed and that concurrent judgment (Ext. D6) is pertinent under Section 42 of the Evidence Act in assessing the probabilities. Applying these factors, the court concluded that the prosecution did not prove a legally enforceable debt due to the complainant or that the accused issued the cheque to discharge such debt. [Paras 12, 13, 14, 15, 16]

The appellant failed to establish the offence under Section 138; the acquittal is maintained.

Final Conclusion: On review of the evidence and documents, the High Court upheld the trial court's acquittal of the accused under Section 138 of the Negotiable Instruments Act, holding that the prosecution failed to prove execution of the cheque for a legally enforceable debt and that statutory presumptions could not be drawn; the criminal appeal is dismissed.

Setting aside ex-parte decree under Order 9 Rule 13 read with Section 151 CPC - sufficiency of reason for non-appearance - effect of compromise/settlement on pending civil suit - restoration of suit to its original number - scope of trial after setting aside ex-parte decree

Setting aside ex-parte decree under Order 9 Rule 13 read with Section 151 CPC - sufficiency of reason for non-appearance - restoration of suit to its original number - Ex parte judgment and decree dated 09.12.2016 was liable to be set aside and the suit restored to its original number. - HELD THAT: - The trial Court's finding that the respondent had sufficient cause for non appearance is supported by the timeline and evidence on record: summons in the civil suit were served after the summons in the criminal complaint filed by the petitioner's daughter; a Panchayat settlement was recorded in which the respondent paid an initial installment before the civil hearing date and paid the final installment subsequently; the complainant (petitioner's daughter) recorded a statement and withdrew her complaint. The learned Additional Civil Judge (Sr. Division), Fazilka reached a considered conclusion on these facts and allowed the application under Order 9 Rule 13 read with Section 151 CPC, set aside the ex parte decree and restored the suit. The High Court found no illegality, infirmity or perversity in that conclusion and held that the trial Court shall proceed to decide the controversy on evidence led by the parties.

Application under Order 9 Rule 13 read with Section 151 CPC was rightly allowed; the ex parte judgment dated 09.12.2016 was set aside and the suit restored.

Effect of compromise/settlement on pending civil suit - scope of trial after setting aside ex-parte decree - Whether the compromise between the respondent and the petitioner's daughter extinguished or affected the petitioner's civil suit was not finally adjudicated and must be determined at trial. - HELD THAT: - Although the trial Court accepted that a settlement occurred between the respondent and the petitioner's daughter and that payments were made, the High Court observed that the question whether the present suit was covered by that compromise is a matter of fact and law to be decided upon evidence at trial. The observation that the compromise might have related to the suit does not amount to a final adjudication; instead, the trial Court is to examine the evidence and determine whether the settlement affected the petitioner's claim.

The effect of the alleged compromise on the petitioner's suit was left for determination in trial; the matter is remitted to the trial Court for decision on evidence.

Final Conclusion: Revision petition dismissed; impugned order dated 29.02.2020 upholding the setting aside of the ex parte decree and restoration of the suit is affirmed, and the question whether the settlement extinguished the petitioner's claim is to be decided by the trial Court on evidence.

Power of Appellate Court under Section 148 to order deposit pending appeal - Minimum twenty per cent deposit of fine or compensation - Deposit to be of fine or compensation awarded by the trial court (not of disputed cheque amount) - Discretion to enhance deposit above the minimum - Application of amended Section 148 to appeals arising from pre-amendment complaints

Power of Appellate Court under Section 148 to order deposit pending appeal - Minimum twenty per cent deposit of fine or compensation - Deposit to be of fine or compensation awarded by the trial court (not of disputed cheque amount) - Whether the Appellate Court erred in directing deposit of 20% of the disputed cheque amount instead of directing deposit of 20% of the fine or compensation awarded by the trial Court under Section 148 of the Negotiable Instruments Act. - HELD THAT: - Section 148, introduced by the 2018 amendment, empowers the Appellate Court in appeals by the drawer against conviction under Section 138 to order deposit of a sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court. The High Court declined to re-open the trial on merits and applied the purposive construction of Section 148 as expounded by the Apex Court in Surinder Singh Deswal , which treats the minimum 20% deposit as directed towards the fine or compensation awarded by the trial Court and as a measure in furtherance of the amendment's object to curb delay tactics. On the facts, the trial Court had imposed fine and separately awarded compensation; the Appellate Court's operative Clause-3 directing deposit of 20% of the disputed cheque amount was thus incorrect. The High Court modified the operative direction to read as a deposit of 20% of the compensation awarded by the trial Court (i.e., of the amount awarded under Section 357 CrPC) rather than 20% of the disputed cheque amount. [Paras 12, 15, 16, 18]

Impugned order modified: accused directed to deposit 20% of the compensation awarded by the trial Court (and not 20% of the disputed cheque amount).

Discretion to enhance deposit above the minimum - Consideration of accused's financial capacity and relevant material - Whether the deposit directed by the Appellate Court ought to be enhanced to more than the minimum 20% in the facts of the case. - HELD THAT: - The statute permits the Appellate Court discretion to fix an amount higher than the statutory minimum. The High Court considered the complainant's plea for enhancement and the accused's plea for deletion on grounds of alleged financial hardship and pending parallel civil proceedings. The Court examined the material placed on record, including trial evidence reflecting the company's turnover, and noted absence of specific pleading or proof of grave financial inability. Having balanced the parties' contentions and the overall litigation history, the High Court exercised restraint and declined to enhance the deposit beyond 20% of the compensation awarded by the trial Court. [Paras 20, 21]

No enhancement of the deposit beyond the statutory minimum of 20% of the compensation; applications by the accused dismissed and applications by the complainant allowed to the extent indicated.

Final Conclusion: The Appellate Court's order is modified to direct deposit of 20% of the compensation awarded by the trial Court (instead of 20% of the disputed cheque amount); the accused's applications challenging the condition are dismissed, the complainant's applications are allowed to that extent, and the period for compliance is extended by three months from the date of this order.

Proclamation for person absconding under Section 82 of the Cr.P.C. - Mandatory thirty days' notice between publication of proclamation and the specified date of appearance - Modes of publication under Section 82(2) are conjunctive - Non-compliance with Section 82 renders proclamation and subsequent proceedings a nullity - Requirement to reissue proclamation where the statutory thirty days' period has not been completed

Proclamation for person absconding under Section 82 of the Cr.P.C. - Mandatory thirty days' notice between publication of proclamation and the specified date of appearance - Requirement to reissue proclamation where the statutory thirty days' period has not been completed - Non-compliance with Section 82 renders proclamation and subsequent proceedings a nullity - Validity of the order dated 10.01.2018 declaring the petitioner a proclaimed person for non-compliance with the procedure prescribed by Section 82 Cr.P.C. - HELD THAT: - The Court examined the statutory scheme of Section 82 Cr.P.C. and the settled principles requiring (i) prior issuance of a warrant, (ii) a prima facie satisfaction that the person has absconded or is concealing himself, (iii) specification in the proclamation of a place and a date not less than thirty clear days from the date of publication, and (iv) publication in the manner prescribed by Section 82(2) which the Court held to be conjunctive. In the present case the proclamation was ordered on 06.10.2017 specifying 14.11.2017 as the date of appearance but was published only on 06.11.2017; thus the statutory minimum period of thirty clear days between publication and the date fixed for appearance was not afforded. The trial Court subsequently adjourned hearings but failed to reissue and republish the proclamation to give a fresh thirty days' notice; merely adjourning proceedings could not cure the mandatory requirement. Relying on established precedent and the mandatory character of the modes and period of publication, the impugned declaration made on 10.01.2018 was held to suffer from material illegality and to be a nullity along with proceedings consequent thereto.

Impugned order dated 10.01.2018 declaring the petitioner a proclaimed person is quashed and all consequential proceedings arising therefrom are set aside.

Final Conclusion: The petition is allowed; the order of 10.01.2018 is quashed with all consequential proceedings. The petitioner is directed to surrender before the Judicial Magistrate First Class, Gurugram within four weeks and shall be liable to be remanded to judicial custody, subject to any order granting anticipatory or regular bail.