TaxTMI Updates e-Newsletter
Jul 04,2022

Refund of unutilized input tax credit - inverted duty structure - Section 54(3)(ii) of the CGST Act - refund for unutilised ITC under inverted duty structure - subordinate legislation cannot override parent statute - circular ultra vires statute - no restriction where input and output supplies are the same

Refund of unutilized input tax credit - inverted duty structure - Section 54(3)(ii) of the CGST Act - refund for unutilised ITC under inverted duty structure - circular ultra vires statute - no restriction where input and output supplies are the same - Validity of Circular dated 31.03.2020 para 3.2 insofar as it denies refund under Section 54(3)(ii) when input and output supplies are the same, and validity of the impugned refund rejection dated 05.01.2021 based thereon. - HELD THAT: - The Court held that Clause (ii) of sub section (3) of Section 54 of the CGST Act plainly allows refund of accumulated unutilised input tax credit where credit has accumulated due to the rate on inputs being higher than the rate on outputs; the provision does not condition refund upon any value addition or a difference in the nature of input and output supplies. The Circular dated 31.03.2020 (para 3.2) purports to disallow refunds where input and output supplies are the same and thereby conflicts with and attempts to qualify the statutory mandate. Being subordinate legislation, the circular cannot override the unambiguous statutory provision and is therefore repugnant to Section 54(3)(ii). The Court further noted that a prior clarification/notification permitting refund in cases of concessional supply (referred to in the judgment) was in force for the period of the petitioner's claim. Reliance was placed on earlier High Court decisions which have declined to give effect to the restrictive view in the 31.03.2020 circular. As the petitioner's refund claim related to the period September, 2018 to September, 2019 and arose prior to or during the operation of the clarificatory notification, rejection of the claim by reference to para 3 of the circular was invalid. For these reasons the impugned circular could not be applied to oust the petitioner's entitlement and the rejection order based on it could not be sustained. [Paras 10, 11, 14, 15]

Para 3 of the Circular dated 31.03.2020 is repugnant to Section 54(3)(ii) of the CGST Act and cannot be applied to deny the petitioner's refund; the refund rejection order dated 05.01.2021 is quashed and the respondents are directed to refund the accumulated input tax credit to the petitioner as per entitlement.

Final Conclusion: Writ petition allowed: the impugned circular insofar as it disallows refund under the inverted duty structure where input and output supplies are the same is held repugnant to the statute; the refund rejection order is quashed and the respondents are directed to refund the accumulated ITC for the period claimed.

Detention of goods in transit - demonstration consignment and IGST applicability - quashing of detention memo and show cause notice - requirement for delivery at registered place of business - remand for consideration of explanation to show cause notice

Detention of goods in transit - demonstration consignment and IGST applicability - quashing of detention memo and show cause notice - Validity of detention and show cause notice in respect of the excavator bearing serial no. 22SE141127791 which was stated to be moved for demonstration purposes. - HELD THAT: - The respondent, on instructions recorded in R.C.3078A/2022 dated 27.06.2022, accepted that the excavator bearing serial no. 22SE141127791 was being moved only for demonstration purposes and that supporting documents were available with the consignment. On that basis the Court found no justification for the detention memo and show cause notice issued in respect of that excavator. The Court therefore quashed the detention and directed release without engaging in further factual adjudication. [Paras 5, 6]

Detention memo and show cause notice in respect of excavator serial no. 22SE141127791 quashed; the excavator shall be released within 24 hours.

Requirement for delivery at registered place of business - remand for consideration of explanation to show cause notice - Whether detention is justified where invoice names a registered dealer but the stated place of delivery does not tally with the Department's record of the dealer's place of business. - HELD THAT: - The Court acknowledged the Department's apprehension that delivery to alternate locations could facilitate misuse of a registered dealer's name. However, it observed that there is no statutory requirement under the Act or Rules that a consignment must be received only at the authorised place of business, and noted instances where delivery is made to alternate addresses despite the consignee being a registered dealer. As the matter was at the stage of response to the show cause notice, the Court directed that the petitioner furnish its explanation and that the respondent consider the same and pass orders in accordance with law within seven days of receipt of the reply. [Paras 7, 9, 10]

Writ petition disposed by directing the petitioner to submit its explanation to the show cause notice and the respondent to decide the matter within seven days in accordance with law.

Final Conclusion: One detention (excavator serial no. 22SE141127791) quashed and ordered released within 24 hours; in the other matter the petitioner is directed to reply to the show cause notice and the respondent shall decide the case within seven days in accordance with law.

Grant of pre-trial bail in non-bailable offences - cumulative exercise of discretion in bail applications - conditioning bail to secure attendance and prevent tampering - alternative security by fixed deposit in lieu of sureties - obligation to cooperate with investigation as bail condition - forfeiture/cancellation of bail for breach of conditions

Grant of pre-trial bail in non-bailable offences - cumulative exercise of discretion in bail applications - The petitioner was entitled to be released on pre-trial bail in the FIR despite being accused of offences of fraud related to GST invoices. - HELD THAT: - Having regard to the petitioner's confession as recorded in the status report that a specified share had fallen to him, the period of incarceration (custody since 26-01-2022), the petitioner's advanced age, and the cumulative appraisal of circumstances as required by precedent, continued pre-trial incarceration was not justified. The Court invoked the established principle that bail decisions must consider the cumulative effect of circumstances and may release an accused charged with non-bailable offences where the court is satisfied for reasons recorded. Without expressing any opinion on merits, the Court concluded that the facts of this case warranted enlargement on bail subject to conditions. [Paras 6, 9]

Petition allowed and the petitioner ordered to be released on bail subject to the terms and conditions set out in the order.

Conditioning bail to secure attendance and prevent tampering - obligation to cooperate with investigation as bail condition - forfeiture/cancellation of bail for breach of conditions - Bail was granted subject to conditions to secure attendance, prevent tampering or intimidation, and to ensure cooperation with the investigation; breach would permit cancellation of bail. - HELD THAT: - The Court imposed conditions directed at safeguarding the investigation and trial process: personal bond and surety (or alternative fixed deposit), requirements to attend and cooperate with investigation, prohibition on influencing witnesses or tampering with evidence, deemed custody for the purpose of Section 27 Indian Evidence Act, and clear consequences for non-compliance including opening the door for cancellation of bail. The Court observed that risks of interference or absconsion can be addressed by imposing elaborate and stringent conditions rather than by denying bail altogether. The order also enables prosecutorial recourse and the trial court's supervisory jurisdiction to cancel bail if conditions are violated or if the accused commits new serious offences during trial. [Paras 11, 16, 17, 18, 21]

Bail is subject to the specified conditional framework and remains liable to cancellation for breach or subsequent serious offending.

Alternative security by fixed deposit in lieu of sureties - choice vested in accused between modes of furnishing security - The petitioner was permitted to furnish either surety(s) or an alternative fixed deposit as security, with procedural safeguards governing the fixed deposit option. - HELD THAT: - Following the pragmatic approach approved by the Court in earlier decisions, the order allows the accused the choice to furnish security by way of personal bond with surety or to deposit a fixed sum in a bank in favour of the Chief Judicial Magistrate as an alternative. The Court prescribed procedural directions for creation, endorsement, and custody of such fixed deposit (including permitted banks, automatic renewal and disabling of online liquidation, handing over of original receipt or countersigned printout, notice to the bank branch, and court's lien over the deposit until case disposal or discharge). The accused may switch between modes of security subject to appropriate applications to the investigator or court. [Paras 10, 11, 12, 13, 14]

Accused permitted to choose between surety bonds and fixed deposit as security, subject to the prescribed procedural safeguards.

Disclosure of financial particulars as bail condition - forfeiture/cancellation of bail for non-disclosure - The petitioner was required, as a condition of bail, to disclose comprehensive financial particulars to the investigator and complainant within a specified time, failure of which could result in cancellation of bail. - HELD THAT: - Given the allegations of fraud related to invoices and monetary gain, the Court made disclosure of bank accounts, fixed deposits, demat accounts, valuables, cash-in-hand, immovable property, income and liabilities from specified dates a condition of bail. The Court recorded that non-compliance with this disclosure obligation would constitute ground for cancellation of bail and allow the complainant or State to seek such relief. [Paras 20, 21]

The petitioner must furnish the detailed financial disclosures within the prescribed timeframe; failure to do so may lead to cancellation of bail.

Surrender of arms as a bail condition - The petitioner was directed to surrender any weapons, firearms, ammunition and arms licence to the concerned authority within ten days of release, subject to statutory rules for renewal or return upon acquittal. - HELD THAT: - In view of the nature of allegations and case circumstances, the Court required surrender of weapons and arms licence as a condition of bail, with a direction to inform the investigator of compliance. The Court clarified this was subject to the Indian Arms Act, 1959 and rules permitting renewal or return of arms in case of acquittal if otherwise permissible. [Paras 19]

Petitioner must surrender arms and licence within ten days of release, with stated statutory exceptions.

Final Conclusion: Bail was granted to the petitioner in the FIR relating to alleged GST invoice fraud, the order specifying alternative modes of security (surety or fixed deposit), mandatory cooperation and financial disclosure conditions, surrender of arms, and standard safeguards that breach of conditions or subsequent serious offending may result in cancellation of bail.

Summary order. Petitioners relied on the ratio of this Court in M/s Narsingh Ispat Limited (W.P.(T) No. 177 of 2021) and R.K. Transport Pvt. Ltd.; the State did not dispute applicability; matter posted for orders on 27th June, 2022.

Deferred payment of tax - installment payment of tax arrears - representation under Section 80 of the Tamil Nadu Goods and Services Tax Act, 2017 - judicial direction to consider representation

Representation under Section 80 of the Tamil Nadu Goods and Services Tax Act, 2017 - installment payment of tax arrears - judicial direction to consider representation - Consideration of the petitioner's representation dated 27.04.2022 filed in FORM GST DRC-20 seeking permission to pay GST arrears in 24 equal monthly instalments. - HELD THAT: - The Court noted that the petitioner had submitted a representation under Section 80 seeking deferred payment in instalments in response to a demand notice dated 27.03.2022. The respondents' counsel stated that the representation had been received and would be considered. The Court did not adjudicate the merits of the claim for instalment payment or the correctness of the demand; instead, it issued a direction to the first respondent to consider the representation and pass appropriate orders in accordance with Section 80 of the Tamil Nadu Goods and Services Tax Act, 2017 within a stipulated time. The order is procedural, mandating consideration and decision by the tax authority, without expressing any view on the substance of the petitioner's entitlement to deferred or instalment payments. [Paras 4]

The first respondent is directed to consider the petitioner's representation dated 27.04.2022 and pass appropriate orders under Section 80 within three weeks; the writ petition is disposed of.

Final Conclusion: Petition disposed by directing the first respondent to consider the representation under Section 80 and to pass appropriate orders on the request for payment of GST arrears in 24 monthly instalments within three weeks; no decision on merits and no costs.

Seizure and release of seized property - power of seizure under the Gujarat Goods and Services Tax regime - return of personal electronic items seized during tax investigation - compliance with court orders directing release of seized articles

Seizure and release of seized property - return of personal electronic items seized during tax investigation - compliance with court orders directing release of seized articles - Whether the seizures of certain electronic items and recorder (DVR) belonging to the petitioner justified continuation of impoundment or required release, and the consequential disposal of the writ petitions. - HELD THAT: - The Court recorded that pursuant to earlier directions most seized articles had been released and handed over to the petitioner, with a limited number of electronic items remaining in custody (paras 10-11). The Assistant Government Pleader stated on instructions that data retrieval from the remaining electronic gadgets would be completed and the items released to the petitioner, not later than 31st July, 2022 (para 12). In view of this categorical undertaking and the fact that the bulk of articles had already been returned, the Court found that the petitions did not require further adjudication and could be disposed of on that basis (para 13). The order therefore effected disposal by reliance on the respondent's assurance of compliance with the stated timeline rather than by quashing the seizure order on merits. [Paras 10, 11, 12, 13]

Petitions disposed of as respondent undertook to retrieve details and release the remaining seized electronic items to the petitioner by 31st July, 2022; notice discharged.

Final Conclusion: The writ petitions were disposed of on the respondent-State's undertaking to release the remaining seized electronic items after retrieval of data by 31st July, 2022; most seized articles had already been returned and no further relief was granted.

Anti-profiteering under Section 171 of the CGST Act, 2017 - Benefit of Input Tax Credit (ITC) and commensurate reduction in prices - Methodology for computation of profiteering based on ratio of ITC to turnover - Applicability of Authority's Procedure and Methodology under Rule 126 of the CGST Rules, 2017 - Temporal scope of investigation up to issue of Completion/Occupancy Certificate

Anti-profiteering under Section 171 of the CGST Act, 2017 - Benefit of Input Tax Credit (ITC) and commensurate reduction in prices - Whether the Respondent contravened Section 171(1) of the CGST Act, 2017 by not passing on the benefit of additional ITC to eligible flat buyers for the period 01.07.2017 to 31.03.2019. - HELD THAT: - The Authority examined the DGAP investigation reports, the Respondent's submissions and documents and found that in the pre-GST period the Respondent was not eligible to avail certain credits (zero VAT/Service Tax exemption and VAT composition at 1%) whereas in the post-GST period the Respondent could avail ITC on inputs, input services and capital goods. The DGAP computed the ratio of available input tax credit to turnover in pre- and post-GST periods and found an increase from 0.00% to 6.55% of turnover attributable to additional ITC available post-GST. The Authority held that such additional ITC amounts to a benefit which, in terms of Section 171(1), was required to be passed on to each recipient by way of commensurate reduction in prices. The Authority rejected the Respondent's contentions that (a) no methodology exists, (b) increase in tax rates on inputs should negate ITC benefit, and (c) one-to-one identification between procurement and supply is required; holding that the statutory provision and the Authority's notified Procedure and Methodology permit computation of benefit by comparing ITC-to-turnover ratios and applying the resultant benefit to each supply made during the investigation period. The Authority also found that the Respondent had issued credit notes in October 2018 but had not passed the entire computed benefit to all eligible buyers.

The Respondent contravened Section 171(1) of the CGST Act, 2017 by failing to pass the benefit of additional ITC to eligible buyers for 01.07.2017 to 31.03.2019.

Methodology for computation of profiteering based on ratio of ITC to turnover - Procedure and Methodology under Rule 126 of the CGST Rules, 2017 - Temporal scope of investigation up to issue of Completion/Occupancy Certificate - Quantum of profiteering, identification of recipients and remedial directions including computation adjustments for benefit already passed and temporal scope for calculation. - HELD THAT: - On reinvestigation the DGAP recalculated the additional ITC benefit for the period extended up to issue of Occupancy Certificate (investigation period 01.07.2017 to 31.03.2019). The DGAP quantified total additional ITC benefit and verified that the Respondent had already passed part of the benefit by issuing credit notes to identifiable buyers. After deducting the benefit already passed, the Authority accepted DGAP's computations and identified the remaining profiteered amount to be returned to identified recipients (including the Applicants and 772 other identifiable buyers). The Authority directed the Respondent to reduce prices/return amounts to those recipients along with interest at the rate prescribed under the CGST Rules and required Commissioners of CGST/SGST Gurugram to supervise compliance and publicize the order to enable claimants to come forward. The Authority further held that penalty provisions inserted later (with effect from 01.01.2020) cannot be applied retrospectively to the period under investigation.

Profiteering quantified for 01.07.2017 to 31.03.2019; after allowing deduction for benefit already passed, the Respondent is directed to return the remaining profiteered amount to identified buyers with interest and to comply within three months; supervisory and publicity measures ordered.

Final Conclusion: The Authority found that M/s Perfect Buildwell Pvt. Ltd. contravened Section 171(1) of the CGST Act, 2017 for the period 01.07.2017 to 31.03.2019 by not passing the additional ITC benefit to eligible flat buyers; the DGAP's methodology based on comparison of ITC-to-turnover ratios was accepted, the profiteered amount after adjusting benefits already passed was directed to be returned to identified buyers with interest, compliance to be monitored by the Commissioners of CGST/SGST Gurugram and publicised to enable claims.

Regular bail in economic offences involving fraudulent input tax credit and refund claims - forgery of professional certificate and misuse of UDIN - prima facie commission of offences under Sections 420, 467, 468, 471 of IPC - offences punishable under Section 132 of the CGST Act, 2017 - economic offences and bail jurisprudence - investigation at nascent stage and risk of evidence tampering - professional misconduct of chartered accountants and disciplinary consequences

Regular bail in economic offences involving fraudulent input tax credit and refund claims - forgery of professional certificate and misuse of UDIN - prima facie commission of offences under Sections 420, 467,468,471 of IPC - offences punishable under Section 132 of the CGST Act, 2017 - investigation at nascent stage and risk of evidence tampering - Whether applicant-accused Gaurav Dhir is entitled to regular bail. - HELD THAT: - The court found prima facie that the accused Gaurav Dhir issued a CA certificate by forging signatures of co-accused and uploaded the same to facilitate refund claims of firms later found to be fake. The fact of forgery is not disputed and, irrespective of whether the certificate was legally required, its presentation before authorities to procure refunds converts the conduct into offences beyond mere regulatory lapse. The court observed that the acts indicate a routine practice of issuing forged certificates in multiple matters and that offences under the IPC (Sections 420, 467, 468, 471) appear to be made out in addition to offences under Section 132 of the CGST Act. Given the nascent stage of investigation, the prosecution's apprehension that bail may enable destruction or tampering of evidence and hamper investigation was held to be reasonable. Reliance on precedents favourable to grant of bail was rejected as inapplicable to the present facts involving alleged systematic forgery and large-scale economic fraud. Consequently, considering the gravity and societal impact of the alleged economic offences, bail was refused. [Paras 8, 9, 10, 12, 13]

Bail application of applicant-accused Gaurav Dhir is dismissed.

Regular bail in economic offences involving fraudulent input tax credit and refund claims - forgery of professional certificate and misuse of UDIN - professional misconduct of chartered accountants and disciplinary consequences - investigation at nascent stage and risk of evidence tampering - Whether applicant-accused Sunil Mahalawat is entitled to regular bail. - HELD THAT: - The court recorded that Sunil Mahalawat admitted (and counsel did not deny) that his UDIN, password and OTP were used by the co-accused and that forged certificates bearing his signature were issued. Even if monetary consideration is disputed, the conduct amounted to making mockery of procedural safeguards and crossed professional ethical boundaries. The court observed that the misuse was not an isolated incident and formed part of a broader racket claiming inadmissible ITC and refunds. In view of the prima facie involvement, the seriousness of economic offences, and the early stage of investigation with a real risk of evidence being tampered with or the investigation being impeded, the court concluded that bail at this stage would not be appropriate. [Paras 8, 9, 10, 12, 13]

Bail application of applicant-accused Sunil Mahalawat is dismissed.

Final Conclusion: Both applications for regular bail filed by the accused are dismissed on account of prima facie findings of forgery and misuse of professional credentials, the gravity of economic offences alleged, and the nascent stage of investigation with a real risk to the integrity of evidence; observations are confined to bail applications and do not constitute adjudication on merits.

Cash credit under section 68 - proof of identity, genuineness and creditworthiness of share applicants - source of the source - onus to explain when Assessing Officer traces money - remand for verification of ROC/struck-off status

Cash credit under section 68 - proof of identity, genuineness and creditworthiness of share applicants - source of the source - onus to explain when Assessing Officer traces money - Whether the addition of Rs.55,00,000 as unexplained cash credit under section 68 in respect of share capital received from M/s Lily Enclave Pvt. Ltd. was justified and whether the assessee was obliged to prove source of the source. - HELD THAT: - The Tribunal examined the factual findings of the Assessing Officer and the CIT(A) that M/s Lily Enclave Pvt. Ltd. was a paper/shell company and that the funds introduced as share capital had been routed from M/s Texworld Fashions Pvt. Ltd. and M/s Sita Fabric Mills Pvt. Ltd., earlier treated as unexplained cash credits in their assessments. The Bench reiterated that while for AY 2012-13 the amended proviso to section 68 (effective from AY 2013-14) did not apply, established decisions require that when the Assessing Officer traces the trail of money and specifically queries the source-of-source, the onus shifts to the assessee to offer an explanation and supporting evidence. The Tribunal relied on principles in Sreelekha Banerjee and other precedents to the effect that disclosure must come from the assessee once the department points to an undisclosed source, and observed that the Assessing Officer is entitled to investigate the source of the source. Given that the CIT(A) had proceeded on the basis that the subscriber company was struck off in ROC records during appellate proceedings, but the assessee subsequently asserted that its ROC status is active (a matter not examined below), the Tribunal held that the question of the company's status and the genuineness/creditworthiness trail had not been fully examined by the assessing authority. Considering the combined factual complexity and the duty on the assessee to explain inter connected transactions when asked, the Tribunal found it appropriate not to decide the matter finally but to afford the Assessing Officer an opportunity to verify ROC status and to re-examine the source and creditworthiness in the light of any further evidence the assessee may produce. [Paras 10, 11, 12, 13, 14]

The matter is set aside and remitted to the Assessing Officer for fresh consideration to verify the ROC status of M/s Lily Enclave Pvt. Ltd. and to permit the assessee to produce evidence regarding the source and creditworthiness; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal remitted the issue to the Assessing Officer to verify the corporate status of the share subscriber and to re-examine the genuineness, creditworthiness and the traced 'source of the source' after affording the assessee an opportunity to produce evidence; the appeal is allowed for statistical purposes.

Fees for included services - make available - fees for technical services - binding precedent of a coordinate bench

Fees for included services - make available - fees for technical services - Whether amounts paid to the non-resident company for advisory, review and inspection services in relation to hotel design and construction are taxable as 'fees for included services' under Article 12 of the Indo-US DTAA and as fees for technical services under domestic law. - HELD THAT: - The Tribunal applied the law laid down by a coordinate bench in the assessee's own case and other precedents which interpret 'fees for included services' to require that the service "make available" technical knowledge, skill, know how or result in transfer of a technical plan or design such that the recipient retains and can deploy that knowledge independently after the contract. The services rendered here were advisory, review and inspection of works prepared by others to verify compliance with standards and did not involve transfer or imparting of technical know how, designs or enduring capability to the payer. Consistent with authorities cited, mere provision of expert input or advice, or performance requiring technical skill by the provider, does not amount to making available technical knowledge to the recipient. Consequently, the payments do not fall within Article 12(4) of the Indo US Treaty and are not taxable as fees for included services; the treaty finding precludes application of withholding obligations under section 195 and related deeming provisions. The Tribunal further held that it was bound to follow the coordinate bench precedent and found no reason to deviate. [Paras 7, 8]

Payments characterized as advisory/review services are not taxable as 'fees for included services' under the Indo US DTAA nor as fees for technical services; the appeal of the Assessing Officer is dismissed.

Final Conclusion: The Tribunal upheld the CIT(A)'s order granting relief to the assessee for AY 2013 14, concluding that the impugned payments are advisory/review services not within the scope of 'fees for included services' or technical services, dismissed the Department's appeal and disposed of the assessee's cross objection as not pressed.

Revisionary jurisdiction under section 263 - time limit for exercise of revisional power - order dropping reassessment proceedings versus reassessment order - computation of limitation with reference to original assessment order - prejudice to revenue and erroneous order

Revisionary jurisdiction under section 263 - time limit for exercise of revisional power - order dropping reassessment proceedings versus reassessment order - computation of limitation with reference to original assessment order - Validity of the Principal CIT's order under section 263 dated 23/03/2021 seeking to revise the AO's order dated 25/09/2018 which dropped reassessment proceedings. - HELD THAT: - The Tribunal examined whether the order sought to be revised (the AO's order dropping reassessment proceedings dated 25/09/2018) could be treated as an assessment/reassessment order for computing the two year limitation under section 263. Relying on the decision of the coordinate bench in R K Steel Syndicate, the Tribunal held that an order which in substance and effect merely drops reassessment proceedings cannot be treated as a fresh assessment order so as to extend the time available to the Commissioner to invoke revisional jurisdiction. Where no additions were made in the reassessment proceedings on the issues for which reopening was resorted to, the reassessment order could not serve to enlarge the Commissioner's time barred power; the limitation must be reckoned from the original assessment order. Applying that principle to the facts, the Principal CIT computed limitation from the date of the dropping order (25/09/2018) instead of from the original assessment dated 28/02/2014; consequently the revisionary order dated 23/03/2021 was held to be beyond the statutory period and therefore time barred. [Paras 12, 14, 15]

The order under section 263 dated 23/03/2021 is barred by limitation and is quashed; the assessee's appeal is allowed.

Final Conclusion: The Tribunal upheld the assessee's appeal, quashed the Principal CIT's revisional order dated 23/03/2021 as time barred, and directed that limitation for invoking section 263 must be computed with reference to the original assessment order rather than an order merely dropping reassessment proceedings.

Vacancy allowance in terms of Section 23(1)(c) - notional rental income under Section 23(1)(a) - attribution of notional rent during a rent free period - acceptance of lease agreement bona fides where sham is not alleged - relevance of occupancy certificate to fitness for occupation

Vacancy allowance in terms of Section 23(1)(c) - intention to let and efforts to let - Entitlement to vacancy allowance for the period 19.10.2012 to 31.12.2012 in respect of the leased area - HELD THAT: - The Tribunal held that where the owner holds property with the intention to let and has made efforts to let it, the property falls within clause (c) and is entitled to vacancy allowance. The Assessing Officer and CIT(A) did not dispute the appellant's intention and efforts to let the leased area; accordingly the period during which the leased area remained vacant despite such efforts (19.10.2012 to 31.12.2012) qualifies for vacancy allowance. The Tribunal relied on the Tribunal precedent reasoning that 'property is let' in clause (c) contemplates intention and efforts to let rather than actual letting. The finding that the leased property was vacant during the specified period thus entitles the appellant to the vacancy allowance under Section 23(1)(c). [Paras 9]

Vacancy allowance under Section 23(1)(c) allowed for 19.10.2012 to 31.12.2012.

Notional rental income under Section 23(1)(a) - attribution of notional rent during a rent free period - acceptance of lease agreement bona fides where sham is not alleged - relevance of occupancy certificate to fitness for occupation - Deletion of notional rent attributed for the period 01.01.2013 to 31.03.2013 (part of agreed rent free period) - HELD THAT: - The Tribunal found no allegation of sham in the lease and accepted the parties' agreement that the initial five months were rent free to enable the lessee to make the bare shell fit for occupation. The Assessing Officer relied solely on the existence of an occupancy certificate to contend the premises were fit for occupation, but the appellant produced approvals and contracts showing the lessee carried out works and that no rent was actually received for January-March 2013. Absent a finding that the property could reasonably have been let for a higher sum, the Assessing Officer could not substitute actual rent receipts with a notional rent without determining a reasonable letting rate. On these bases the Tribunal deleted the notional rent attributed for 01.01.2013-31.03.2013. [Paras 10]

Addition of notional rent for 01.01.2013-31.03.2013 deleted.

Notional rental income under Section 23(1)(a) - attribution of notional rent during a rent free period - acceptance of lease agreement bona fides where sham is not alleged - Deletion of notional rent attributed for the period 01.04.2013 to 31.05.2013 (remaining two months of the agreed rent free period) for Assessment Year 2014 15 - HELD THAT: - Applying the same reasoning as for AY 2013 14, the Tribunal held that the agreed rent free period stood on the same footing for the subsequent year and that no notional rent should be attributed where the lease agreement was bona fide, no rent was actually received, and Revenue did not demonstrate that the property could reasonably have been let for a higher sum. Consequently, the notional rent addition for 01.04.2013-31.05.2013 was deleted. [Paras 12]

Addition of notional rent for 01.04.2013-31.05.2013 deleted and appeal allowed for AY 2014 15.

Final Conclusion: Both appeals are allowed: vacancy allowance under Section 23(1)(c) granted for the period 19.10.2012-31.12.2012; notional rent additions deleted for 01.01.2013-31.03.2013 (AY 2013 14) and for 01.04.2013-31.05.2013 (AY 2014 15).

Principles of natural justice - reopening assessment by issuance of notice under Section 148 - assessment completed under summary procedure without adequate opportunity - partial reply does not vitiate assessment where assessee is dilatory - right to statutory appeal

Principles of natural justice - partial reply does not vitiate assessment where assessee is dilatory - reopening assessment by issuance of notice under Section 148 - right to statutory appeal - Whether the impugned assessment orders for AY 2013-2014 and AY 2014-2015 were passed in violation of principles of natural justice by not giving adequate opportunity to the petitioner to respond to the draft assessment orders. - HELD THAT: - The petitioner had not filed returns and notices under the reopening and assessment provisions were issued and followed by requisitions. The petitioner replied for the first time only on 18.02.2022 and thereafter furnished partial replies to draft assessment orders dated 24.03.2022 and 29.03.2022, seeking further time. The Court found that the petitioner had shown disregard to statutory notices and had not been diligent in complying with timelines. On the material before the Court, the partial reply coupled with a request for further time did not establish that the assessment orders were passed in gross violation of natural justice. The Court declined to disturb the assessments on these facts but noted that the petitioner retains the statutory remedy of filing an appeal before the Appellate Commissioner. [Paras 6]

Writ petitions dismissed; petitioner permitted to pursue statutory appeal before the Appellate Commissioner.

Final Conclusion: The High Court dismissed the petitions challenging the assessment orders for AY 2013-2014 and AY 2014-2015, concluding there was no gross violation of natural justice by reason of the petitioner's partial and belated replies; the petitioner remains entitled to file a statutory appeal.

Mandatory compliance with section 148A before issuance of notice under section 148 - applicability of amendments made by the Finance Act, 2021 with effect from 1 April 2021 - date of issuance determined by actual communication/upload - quashing of notice for non-compliance with statutory procedural requirements

Mandatory compliance with section 148A before issuance of notice under section 148 - applicability of amendments made by the Finance Act, 2021 with effect from 1 April 2021 - date of issuance determined by actual communication/upload - Impugned notice under section 148 is unsustainable where the amended statutory procedure under section 148A (as applicable from 1 April 2021) was not complied with and the notice was effectively issued on 1 April 2021. - HELD THAT: - The court found on the record that although the impugned notice bore a signature dated 31 March 2021, it was uploaded for communication on 1 April 2021 at 3 a.m.; that date is to be treated as the date of issuance. As the Finance Act, 2021 amendments prescribing prior compliance with section 148A apply to notices issued on or after 1 April 2021, the respondent was required to follow the mandatory procedures under section 148A before issuing the section 148 notice. The mandatory pre-issuance procedure was not followed in this case. Relying on the court's earlier decisions in Bagaria Properties and Investment Private Limited & Anr. and Monoj Jain , the impugned notice and all subsequent proceedings were held to be not sustainable in law and were quashed for want of compliance with the amended procedure.

Impugned notice under section 148 and subsequent proceedings quashed for non-compliance with section 148A as applicable from 1 April 2021; issuance date treated as 1 April 2021.

Quashing of notice for non-compliance with statutory procedural requirements - Whether quashing of the impugned notice precludes the revenue authority from issuing a fresh notice. - HELD THAT: - The court clarified that quashing the impugned notice and proceedings for procedural non-compliance does not bar the revenue authority from issuing a fresh notice in future, provided any fresh notice is issued in accordance with law and after observing the statutory requirements.

Quashing does not prevent the respondent-authority from issuing a fresh notice in accordance with law.

Final Conclusion: The section 148 notice issued was treated as having been issued on 1 April 2021 and, because the mandatory procedure under section 148A (as amended with effect from 1 April 2021) was not followed, the notice and consequent proceedings were quashed; however, the revenue may issue a fresh notice in accordance with law.

Condonation of delay - ex parte appellate order - opportunity to be heard / final opportunity - restoration / remand for fresh consideration - limited scrutiny - estimation of income - presumptive taxation for retail trade under section 44AF

Condonation of delay - Collector, Land Acquisition v. Katiji test - Delay in filing the appeal of 1054/1055 days was condoned. - HELD THAT: - The Tribunal considered the assessee's condonation petition and supporting affidavit describing prolonged illness, hospitalization, restricted mobility, and disruption due to the COVID-19 pandemic. Relying on the principle in Collector, Land Acquisition v. Mst. Katiji, the Tribunal concluded that the delay was not intentional, was satisfactorily explained, and should be excused in the interest of justice. The application for condonation was therefore allowed and the appeal admitted. [Paras 4]

Delay in filing the appeal is condoned.

Limited scrutiny - estimation of income - ex parte appellate order - restoration / remand for fresh consideration - opportunity to be heard / final opportunity - presumptive taxation for retail trade under section 44AF - The assessment sustained in ex parte appellate order was restored to the file of the CIT(A) for reconsideration with a direction to grant one final opportunity to the assessee to substantiate his case. - HELD THAT: - The Tribunal examined the facts: the case was selected for verification under the limited scrutiny parameter of cash deposits exceeding turnover; the AO estimated income adopting an 8% profit rate and the CIT(A) sustained the assessment by an ex parte order after the assessee failed to appear. Observing the assessee's request for an opportunity to substantiate his contentions and weighing the history of opportunities before the CIT(A), the Tribunal exercised its supervisory jurisdiction in the interest of justice. It directed restoration of the matter to the CIT(A) and mandated that a final opportunity be afforded to the assessee to place material and explain his case, warning that no further adjournment would be granted and that the CIT(A) may pass an appropriate order thereafter. The grounds raised were allowed for statistical purposes. [Paras 10]

Matter restored to the file of the CIT(A) with direction to grant one final opportunity to the assessee to substantiate his case and decide according to law; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and restored the matter to the CIT(A) for fresh consideration, directing that one final opportunity be granted to the assessee to substantiate his case; the appeal is allowed for statistical purposes.

Deduction of prior-period expenditure in the year of payment - deduction under section 80IB(10) and allocation of expenses to eligible projects - treatment of prior-year VAT as expenditure of earlier years versus current year deduction - disallowance under section 14A in the absence of exempt income - application of partnership deed for charging interest on partner debit/credit balances - imputation of hypothetical interest between partners and its net effect on firm income

Deduction of prior-period expenditure in the year of payment - deduction under section 80IB(10) and allocation of expenses to eligible projects - treatment of prior-year VAT as expenditure of earlier years versus current year deduction - Whether VAT paid during the year relating to earlier years is allowable as deduction and, if so, whether it could be claimed against non-80IB(10) projects instead of being allocated to 80IB(10) projects - HELD THAT: - The Tribunal noted it was admitted that the VAT paid in the year under consideration related to earlier years and had not been claimed in those earlier years. The surcharge of liability arose only after a judicial decision held builders liable to VAT, prompting payment in the year under appeal. On these facts, the Tribunal held that deduction of such prior-period VAT is allowable in the year of payment rather than being disallowed as a prior-year expenditure. However, because the VAT clearly pertained to 80IB(10) projects, it could not legitimately be claimed against the profits of non-80IB(10) projects merely because the assessee had no revenue from 80IB(10) projects in the year. The correct treatment is to allow the VAT deduction in the profit and loss account of the 80IB(10) projects, which will increase the closing work-in-progress of those projects; consequent adjustments follow by disallowing the VAT deduction from the non-80IB(10) projects and increasing taxable income under that stream. [Paras 4, 5, 7]

VAT paid for earlier years is allowable as deduction in the year of payment but must be allocated to the profit and loss account (and work-in-progress) of the 80IB(10) projects; it cannot be claimed against non-80IB(10) project profits.

Disallowance under section 14A in the absence of exempt income - Whether disallowance under section 14A is required in respect of the VAT deduction when the assessee had no exempt income from 80IB(10) projects in the year - HELD THAT: - The Tribunal accepted the assessee's position that there was no exempt income in the year because no revenue was earned from 80IB(10) projects. Following judicial precedents to the effect that section 14A disallowance cannot be made where there is no exempt income, the Tribunal held that no disallowance under section 14A was called for in the present facts. [Paras 6]

No disallowance under section 14A is to be made since the assessee did not earn any exempt income in the year.

Application of partnership deed for charging interest on partner debit/credit balances - imputation of hypothetical interest between partners and its net effect on firm income - Whether the addition of interest (computed on partner debit balances) should be sustained where the partnership deed provides for charging/crediting interest but the firm neither charged nor paid such interest and corresponding hypothetical interest would be offset by interest payable to another partner - HELD THAT: - Clause 9 of the partnership deed provided for simple interest at a stated rate on partner credit balances and a corresponding obligation on partners for debit balances. The Tribunal examined the capital account workings which computed gross hypothetical interest receivable from the partner with debit balance and hypothetical interest payable to a partner with credit balance. As neither interest was actually charged nor paid by the firm and the hypothetical interest receivable and payable would largely offset each other, the Tribunal found no basis to sustain an addition limited to the hypothetical interest receivable. The net hypothetical effect would have reduced firm income; consequently, the addition of the isolated hypothetical interest was unjustified and was deleted. [Paras 9, 10, 11]

The addition of interest based on hypothetical interest receivable from the partner is deleted; the interest disallowance sustained by the CIT(A) is set aside.

Final Conclusion: The appeal is partly allowed: the prior-period VAT of Rs.1.13 crore is allowable in the year of payment but must be allocated to the 80IB(10) projects (increasing their work-in-progress) and cannot be claimed against non-80IB(10) project profits; no disallowance under section 14A is warranted; and the addition of hypothetical interest on partner debit balance is deleted.

Revision under section 263 - Exemption under section 54EC - Non-application of mind - Requirement of enquiry/verification by Assessing Officer - Proviso limiting investment to fifty lakh rupees (w.e.f. 01/04/2015) - Interpretation of statute

Revision under section 263 - Exemption under section 54EC - Requirement of enquiry/verification by Assessing Officer - Proviso limiting investment to fifty lakh rupees (w.e.f. 01/04/2015) - Non-application of mind - Interpretation of statute - Whether the Principal CIT was justified in exercising revisionary power under section 263 to set aside the reassessment for AY 2013-14 by holding that exemption under section 54EC should have been restricted to Rs. 50 lakhs. - HELD THAT: - The facts are admitted: the assessee sold land on 15/11/2012 and realised long-term capital gain, of which Rs. 100 lakhs was invested in notified bonds in two tranches (31/03/2013 and 30/04/2013) and exemption under section 54EC was allowed by the AO. The revisional order under section 263 did not identify any specific inquiry or verification which the AO ought to have made; nor did it point to any error of law in the AO's application of section 54EC. The first proviso limiting investment to fifty lakh rupees was enacted with effect from 01/04/2015 (i.e., applicable from AY 2015-16) and therefore did not apply to the transactions in question. Both statutory conditions for exemption (investment within six months and investment in notified asset) were satisfied on the admitted facts. Where the matter is essentially legal and there is no scope for factual inquiry, absence of enquiry does not establish non-application of mind; a revisionary order must specify circumstances warranting enquiry. Applying principles of statutory interpretation, the Tribunal found no incorrect application of law by the AO and observed that the Pr. CIT had not shown any omission that rendered the assessment order erroneous and prejudicial to revenue. Consequently, the revision under section 263 was unsustainable and was liable to be cancelled. [Paras 4]

The revisional order under section 263 is set aside; the AO's allowance of exemption under section 54EC of Rs. 100 lakhs for AY 2013-14 is sustained.

Final Conclusion: Appeal allowed; impugned order of the Principal CIT under section 263 cancelled and the assessment insofar as allowance of exemption under section 54EC for AY 2013-14 is concerned is restored.

Classification of technical know-how/royalty payments as capital or revenue expenditure - Allowability of expenditure versus entitlement to depreciation for acquired know-how - Precedential value of earlier assessment-year decisions upheld by the Tribunal

Classification of technical know-how/royalty payments as capital or revenue expenditure - Precedential value of earlier assessment-year decisions upheld by the Tribunal - Deletion of the addition of Rs.3,60,48,535/- made by the Assessing Officer on account of technical know-how fees/royalty. - HELD THAT: - The Assessing Officer treated the technical know-how fees debited as capital expenditure on the ground that the assessee had acquired absolute rights to use the know-how and derived enduring benefits, and accordingly made a disallowance after allowing depreciation. The Commissioner (Appeals) deleted the addition following earlier deletions in the assessee's own cases for assessment years 2009-10 to 2014-15 and subsequent confirmation of those orders by the Tribunal. The Tribunal noted that Revenue did not point to any error in the reasoning of the Commissioner (Appeals) nor place on record any material showing that the Tribunal's earlier decisions in the assessee's own case had been set aside, overruled or modified by a higher forum. In the absence of any contrary judicial authority or demonstrable flaw in the appellate order, the Tribunal found no reason to interfere with the deletion of the addition and dismissed the Revenue's appeal. [Paras 5, 7, 11]

Addition of Rs.3,60,48,535/- on account of technical know-how fees/royalty deleted; Revenue's appeal dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals)'s deletion of the addition relating to technical know-how fees for A.Y. 2016-2017, relying on consistent earlier appellate outcomes in the assessee's own cases and the absence of any contrary material or higher court ruling, and dismissed the Revenue's appeal.

Deduction under section 80IB - treatment of freight income as part of profits of industrial undertaking - admissibility of invoices and Form No.10CCB as evidentiary proof - reliance on consistent treatment in earlier years - remand for filing details and consequence of failure to furnish

Deduction under section 80IB - treatment of freight income as part of profits of industrial undertaking - admissibility of invoices and Form No.10CCB as evidentiary proof - reliance on consistent treatment in earlier years - Freight (transportation) charges recovered from customers form part of profit of the industrial undertaking and are eligible for deduction under section 80IB for the year under consideration. - HELD THAT: - On remand the assessee furnished audited financial statements, detailed freight invoices showing GST/CST numbers, a Form No.10CCB from a Chartered Accountant and specific schedules identifying freight income which had earlier been shown under "other income". The Tribunal accepted these documents as satisfying the conditions for claiming deduction under section 80IB and also placed weight on the Department's consistent allowance of the claim in earlier years. Having regard to the material now on record and the fact that the assessee demonstrated that freight recovered on transfer of manufactured goods formed part of the activity of the industrial undertaking, the Tribunal concluded that such receipts are to be treated as profits of the industrial undertaking and eligible for deduction. The earlier direction to permit the assessee one more opportunity to produce details was complied with and the Assessing Officer was directed to allow the claimed deduction. [Paras 9, 10]

Assessee entitled to deduction under section 80IB of the Act in respect of the freight income of Rs.11,09,007/-, appeal allowed.

Final Conclusion: On the material produced on remand (invoices, Form No.10CCB and financial statements) the Tribunal held that freight charges recovered formed part of the profits of the industrial undertaking and directed allowance of the deduction under section 80IB for AY 2006-07; the assessee's appeal is allowed.

Disallowance of business expenditure for want of supporting evidence - capital expenditure versus revenue expenditure - entitlement to depreciation on capitalized expenditure - disallowance under Section 40A(3) for cash payments exceeding threshold

Disallowance of business expenditure for want of supporting evidence - Disallowance of Rs.15,000 shown as legal and professional expenditure - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) and AO in disallowing the claimed amount because the assessee failed to produce any supporting evidence to demonstrate that the amount was actually incurred for the purpose of business. The absence of documentary proof justified the disallowance of the expense. [Paras 9]

Claim of Rs.15,000 as legal and professional expenditure disallowed for want of supporting evidence

Capital expenditure versus revenue expenditure - entitlement to depreciation on capitalized expenditure - Treatment of Rs.6,05,470 paid to contractor for building, designing and interior - HELD THAT: - On the material on record the Tribunal agreed with the departmental view that the payment was for creating an asset and therefore of a capital nature. No contrary material was produced by the assessee to show that the expenditure did not confer an enduring benefit. The Tribunal, however, accepted that once treated as capital expenditure the assessee is entitled to claim depreciation as per law. [Paras 10]

Expenditure of Rs.6,05,470 held to be capital in nature; assessee entitled to depreciation in accordance with law

Disallowance under Section 40A(3) for cash payments exceeding threshold - Disallowance of Rs.1,58,800 under Section 40A(3) for cash payments - HELD THAT: - The AO disallowed the expenditure treating the cash payments as exceeding the statutory threshold. Before the Commissioner (Appeals) the assessee claimed the payments were reimbursements supported by various bills none exceeding Rs.20,000, but failed to produce any documentary evidence to substantiate that claim. In the absence of supporting documents the Tribunal found no reason to interfere with the disallowance under Section 40A(3). [Paras 11, 12, 13]

Disallowance of Rs.1,58,800 under Section 40A(3) upheld for want of documentary evidence

Final Conclusion: Appeal dismissed; additions/disallowances confirmed: disallowance of Rs.15,000 for lack of evidence upheld, payment of Rs.6,05,470 held capital but depreciation to be allowed, and disallowance of Rs.1,58,800 under Section 40A(3) upheld.

Disallowance of interest on borrowed funds - attribution of interest-bearing and interest-free funds - nexus between borrowed funds and advances to related parties - genuineness of trade receivables - remand to Assessing Officer for fresh adjudication

Disallowance of interest on borrowed funds - attribution of interest-bearing and interest-free funds - Legitimacy of AO's ad hoc 50% disallowance of interest expense where assessee had both interest-bearing and interest-free funds. - HELD THAT: - The Tribunal held that the Assessing Officer made the disallowance on an ad hoc basis without properly applying the principle of attribution where the assessee possessed both interest-bearing and interest-free funds. The Tribunal observed that, where sufficient interest-free funds exist, the right of attribution lies with the assessee and the AO cannot insist on a strict one-to-one nexus between specific borrowed funds and specific outlays. The Tribunal referred to higher authority precedents endorsing this approach and directed that this aspect be considered afresh by the AO in the reassessment of the disallowance. [Paras 6]

Disallowance set aside for fresh consideration by the AO in light of the correct attribution principle.

Nexus between borrowed funds and advances to related parties - genuineness of trade receivables - remand to Assessing Officer for fresh adjudication - Whether the loans/advances to the related concern amounted to non-business loans disguised as trade receivables and justified the impugned disallowance. - HELD THAT: - The Tribunal found the Revenue's reliance on an alleged abnormal increase in sales to related parties and on the size of the receivable insufficient to impugn the genuineness of the debtor without any enquiry. The Tribunal held that the finding that the trade receivable was not a normal trade debt could not be sustained on the material on record absent proper investigation and correlation of utilization of funds. Consequently, the Tribunal remitted the matter to the AO to decide afresh, taking into account the attribution issue and conducting any necessary enquiry into the nature and genuineness of the receivable and the inter-group transactions. [Paras 7]

Matter remitted to the AO for fresh adjudication on the genuineness of the receivable and nexus of utilization of funds.

Final Conclusion: The Tribunal set aside the impugned ad hoc disallowance and remitted the matter to the Assessing Officer for fresh consideration on the attribution of interest-bearing and interest-free funds and on the genuineness/nexus of the receivable to the related concern; appeal allowed for statistical purposes.

Penalty under section 271(1)(c) of the Income-tax Act - Concealment of income - Furnishing inaccurate particulars - Disallowance under section 14A - Treatment of short term capital gain as business income - Reliance Petro Products principle on levy of penalty

Penalty under section 271(1)(c) of the Income-tax Act - Concealment of income - Furnishing inaccurate particulars - Reliance Petro Products principle on levy of penalty - Validity of the penalty imposed under section 271(1)(c) for the assessment year in question - HELD THAT: - The Tribunal examined whether the penalty under section 271(1)(c) was justified by a finding of concealment or furnishing of inaccurate particulars. It found that the disputed claims and supporting details were before the revenue authorities and that rejection of the claims did not, by itself, establish concealment or inaccurate particulars. Applying the ratio of the Supreme Court in Reliance Petro Products, the Tribunal held that an unsupported or disputed claim which is not ex facie bogus cannot sustain imposition of penalty under section 271(1)(c). On this basis the Tribunal concluded that no cogent case of concealment or furnishing of inaccurate particulars was made out against the assessee and that the precedent required setting aside the penalty imposed by the authorities below. [Paras 6, 7]

Penalty under section 271(1)(c) set aside and appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2012-13 and set aside the penalty imposed under section 271(1)(c), holding that mere non-acceptance of claims by the Revenue did not constitute concealment or furnishing of inaccurate particulars in view of the Reliance Petro Products precedent.

Deductibility of employees' contribution to provident fund and ESI contingent on timely crediting to statutory funds as per Explanation to section 36(1)(va) and its interaction with section 43B - validity of adjustments made in intimation under section 143(1) by Central Processing Centre - remand for reconsideration in light of pending Supreme Court decision

Deductibility of employees' contribution to provident fund and ESI contingent on timely crediting to statutory funds as per Explanation to section 36(1)(va) and its interaction with section 43B - remand for reconsideration in light of pending Supreme Court decision - Whether the disallowance made in the intimation under section 143(1) for late deposit of employees' contribution to EPF/ESI should be finally upheld or remitted for reconsideration in view of the pending SLP against the Gujarat High Court decision in GSRTC - HELD THAT: - The Tribunal noted that the jurisdictional High Court (GSRTC) has held that where the employer has not credited employees' contribution to the relevant fund by the statutory due date prescribed in the Explanation to the deductibility provision, deduction cannot be claimed even if deposited before filing of return, and that this decision is adverse to the assessee. However, an identical matter before a Co-ordinate Bench was remitted to the CIT(A) to decide after taking into account any eventual Supreme Court decision. Given that an SLP against the High Court judgment is pending before the Supreme Court, the Tribunal followed the approach of remitting the issue to the file of the CIT(A) to decide the matter after the Supreme Court's decision, and made the present appeal disposed for statistical purposes with liberty to revive the appeal within three months if the Supreme Court reverses the High Court judgment. [Paras 6, 7, 8]

Matter remitted to the file of the CIT(A) to decide after taking into account the outcome of the SLP pending before the Hon'ble Supreme Court; appeal disposed of for statistical purposes with liberty to revive if Supreme Court reverses the High Court judgment.

Final Conclusion: The Tribunal remitted the issue of disallowance for late deposit of employees' contribution to the CIT(A) for reconsideration after the decision of the Hon'ble Supreme Court in the SLP against the GSRTC judgment; the appeal is disposed for statistical purposes with liberty to revive if the Supreme Court reverses the High Court.

Amendment of shipping bill from drawback to MEIS after export - entitlement to MEIS arises on export of notified goods - benefit under foreign trade policy not to be defeated by procedural infirmity - interpretation and application of Chapter-III of the Foreign Trade Policy (MEIS) - permissibility of post-export correction of MEIS declaration in shipping bill

Amendment of shipping bill from drawback to MEIS after export - permissibility of post-export correction of MEIS declaration in shipping bill - benefit under foreign trade policy not to be defeated by procedural infirmity - Whether shipping bills filed under drawback can be amended post-export to be treated under the MEIS scheme and whether the entitlement to MEIS can be denied on account of procedural omission in the shipping bill. - HELD THAT: - The Court held that the controversy is no longer res integra and followed earlier High Court decisions which recognise that substantive entitlement to MEIS flows from the conditions in Chapter-III of the Foreign Trade Policy once the notified goods are exported to a notified market. The Court adopted the reasoning that entitlement under MEIS arises on export and that such benefit cannot be defeated by a procedural infirmity such as failure to mark the MEIS column in the shipping bill. In view of these authorities, the Tribunal correctly directed amendment of the shipping bills to reflect MEIS entitlement, and there is no substantial question of law warranting interference with that view. [Paras 5, 6]

Appeal dismissed; no substantial question of law made out and order directing amendment of shipping bills to avail MEIS upheld.

Final Conclusion: The Revenue's appeal is dismissed; the High Court upheld the view that exporters entitled to MEIS on export cannot be deprived of the benefit for procedural omissions in the shipping bill and affirmed the Tribunal's direction to permit amendment.

Restoration of company name under Section 252 of the Companies Act, 2013 - Locus standi of applicant for restoration where authorization is furnished by shareholder - Obligation to file pending statutory returns as condition for restoration - Imposition of costs as condition for restoration - Restoration of directors' status and DIN subject to compliance - Power of Registrar of Companies to take further action for prior or interregnum violations

Restoration of company name under Section 252 of the Companies Act, 2013 - Obligation to file pending statutory returns as condition for restoration - Application for restoration of the company's name in the Register of Companies was allowed subject to conditions. - HELD THAT: - The Tribunal found that the company's failure to file statutory returns after 31.03.2018 was not shown to be intentional and that the company continued operations, supported by audited financial statements for the omitted years. The Registrar's report recorded issuance and publication of strike-off notices but stated no objection to restoration and recommended that statutory compliance be ensured. Balancing the prejudice to the company and its directors if not restored against the regulatory lapse, the Tribunal concluded restoration was warranted provided the company regularises filings and complies with other specified conditions. The determinative legal principle applied is that restoration under Section 252 is permissible where the company is shown to be in existence and restoration would prevent undue prejudice, subject to conditions ensuring statutory compliance.

Allowed; impugned strike-off order set aside and the company's name to be restored, subject to filing pending financial statements and annual returns and other conditions.

Locus standi of applicant for restoration where authorization is furnished by shareholder - Applicant's locus to maintain the restoration application was accepted on the basis of subsequent authorization by a shareholder. - HELD THAT: - Section 252 permits the company, a member, creditor or workman to apply for restoration. Although the application was filed by a director who did not hold shares, the applicant produced an authorization executed by a shareholder holding 90% shares after filing the application. The Tribunal treated that authorization as satisfying the statutory locus requirement and proceeded to decide the application on merits.

Applicant's standing accepted; application competent for adjudication.

Imposition of costs as condition for restoration - Restoration of directors' status and DIN subject to compliance - Power of Registrar of Companies to take further action for prior or interregnum violations - Restoration was made conditional on payment of costs, delivery of certified order, publication by RoC, filing of INC-28, declarations regarding demonetization period, restoration of directors' status on compliance, and without precluding RoC from taking further action for other violations. - HELD THAT: - The Tribunal imposed terms to secure statutory compliance and to protect public interest: payment of costs, filing of all pending returns within stipulated time, lodging certified copy of the order with the RoC and related filings, and restoration of directors' status upon compliance. The order explicitly preserves the Registrar's authority to pursue other violations occurring prior to or during the strike-off period. The Tribunal also made non-compliance with conditions operate to nullify the restoration.

Restoration granted subject to specified conditions including payment of costs, compliance filings, publication by RoC, and preservation of RoC's rights to take further action.

Final Conclusion: The Tribunal allowed restoration of M/s. Hanshika Agro Farms Private Limited to the Register of Companies under Section 252, accepting the applicant's locus by shareholder authorization, and directed restoration subject to filing all pending statutory returns, payment of costs, delivery of certified order and related filings, publication by the RoC and preservation of the RoC's power to take any appropriate action for other violations; failure to comply will nullify the order.

Application under section 7 of the Insolvency and Bankruptcy Code, 2016 - financial debt - default - acknowledgement of debt

Financial debt - default - application under section 7 of the Insolvency and Bankruptcy Code, 2016 - acknowledgement of debt - Whether the Financial Creditor has proved existence of a financial debt and a corresponding default by the Corporate Debtor so as to sustain an application under section 7 of the Code. - HELD THAT: - The Tribunal examined the petition, the purported undertaking on stamp paper and the correspondence relied upon by the Financial Creditor and concluded that the materials do not establish a financial debt owed by the Corporate Debtor. The document relied upon does not record the date of disbursement, the terms of grant, any rate or demand of interest or clearly identify the Corporate Debtor as debtor; some entries pertain to individuals and smaller amounts than the alleged principal. The Tribunal applied the settled requirement for a section 7 application that the Adjudicating Authority must be satisfied as to (i) existence of a debt, (ii) occurrence of default, (iii) that the debt is due to a financial creditor and (iv) that the default is by the corporate debtor. On the available record the Tribunal was not satisfied that these elements were proved and observed that the documents placed on record do not prove a financial debt against the Corporate Debtor or a valid acknowledgement extending limitation sufficient to sustain the petition. Having found the foundational requirements unmet, the petition could not be maintained and was rejected. [Paras 16, 17, 18]

The petition under section 7 is dismissed for failure to prove a financial debt and default by the Corporate Debtor.

Final Conclusion: The Tribunal dismissed the section 7 petition as the Financial Creditor failed to establish the existence of a financial debt and corresponding default by the Corporate Debtor; no remand was directed.

Role of Resolution Professional ceases on approval of Resolution Plan - claims not part of approved Resolution Plan stand extinguished - bar on initiating or continuing proceedings in respect of claims not in Resolution Plan - application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016

Role of Resolution Professional ceases on approval of Resolution Plan - Whether the Resolution Professional could address communications and take actions after the approval of the Resolution Plan. - HELD THAT: - The Tribunal found that once the Resolution Plan was approved by the Adjudicating Authority on 7th April, 2022, the role and functions of the Resolution Professional came to an end. Communications purportedly made by the Resolution Professional after approval (including the e-mail dated 25th April, 2022 relied upon by the applicant) could not be treated as operative or confer any right on the applicant. The Tribunal relied on the principle that the moratorium and the RP's mandate cease on approval of the plan and that the RP is required to forward records to the Board, after which the RP's role terminates. Consequently, the post-approval communications by the RP did not afford a basis for relief to the applicant. [Paras 12]

The post-approval communications of the Resolution Professional cannot be given effect; the RP could not validly address the communications relied upon by the applicant after approval of the Resolution Plan.

Claims not part of approved Resolution Plan stand extinguished - bar on initiating or continuing proceedings in respect of claims not in Resolution Plan - Whether the applicant could initiate or continue proceedings for claims not included in the approved Resolution Plan when the applicant did not approach the Adjudicating Authority during approval of the plan. - HELD THAT: - The Tribunal applied the principle that upon approval of a resolution plan, claims not provided for in the plan stand frozen or extinguished and become binding on the corporate debtor and all stakeholders; no person is entitled to initiate or continue proceedings in respect of a claim not part of the resolution plan. Noting the admitted fact that the applicant did not approach the Adjudicating Authority when the Resolution Plan was pending approval and that the applicant sought relief only after plan approval, the Tribunal held that the applicant had no right to file the present application or seek the reliefs claimed. The Tribunal relied on the legal position articulated by higher courts that claims not incorporated in an approved plan cannot be revived by subsequent applications. [Paras 12]

Claims not forming part of the approved Resolution Plan cannot be pursued after approval; the applicant's belated claim is barred and cannot be entertained.

Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - Whether the present IA filed under Section 60(5) IBC read with Rule 11 NCLT Rules is maintainable in the circumstances. - HELD THAT: - Having determined that the Resolution Professional's post-approval communications were ineffective and that claims not included in the approved Resolution Plan are extinguished, the Tribunal concluded that the applicant could not maintain the present application seeking compensation or inclusion of the claimed loss in CIRP costs. The application was therefore liable to be rejected on the ground that the reliefs sought were inconsistent with the finality of the approved Resolution Plan and the statutory scheme. [Paras 12, 13]

The IA under Section 60(5) read with Rule 11 is not maintainable and is rejected.

Final Conclusion: The application is rejected: post-approval communications of the Resolution Professional are ineffective, and claims not incorporated in the approved Resolution Plan cannot be pursued thereafter; consequently the IA seeking compensation or inclusion of the claimed loss in CIRP cost is not maintainable and is dismissed.

Corporate Insolvency Resolution Process - Operational Creditor - privity of contract - assignment of contractual obligations requiring consent - demand notice under Section 8 of the Insolvency and Bankruptcy Code - limitation in relation to running and continuous accounts - moratorium under the Insolvency and Bankruptcy Code

Assignment of contractual obligations requiring consent - privity of contract - Whether purported assignment by the Corporate Debtor to Barnaparichay discharged the Corporate Debtor of liability to the Operational Creditor - HELD THAT: - The Tribunal found that there was no acceptance by the Operational Creditor of any purported assignment by the Corporate Debtor. Relying on the legal principle that obligations under a contract cannot be unilaterally assigned without the promisee's consent, the Tribunal held that the Corporate Debtor's unilateral attempt to transfer liability to Barnaparichay did not extinguish the original contractual obligation. The Operational Creditor consistently raised bills and received part payments against invoices addressed to the Corporate Debtor, and no evidence was placed on record showing consent by the Operational Creditor to any transfer of the Corporate Debtor's liabilities. Consequently, privity of contract between the Operational Creditor and the Corporate Debtor continued unchanged.

The plea of assignment is rejected and the Corporate Debtor remains liable to the Operational Creditor.

Limitation in relation to running and continuous accounts - Whether the claim by the Operational Creditor was barred by limitation - HELD THAT: - The Tribunal examined the running account history and noted that the 28th RA Bill was raised on 31 December 2015 and subsequently admitted in confirmation letters (including by Barnaparichay) on various dates up to 16 May 2018. Having regard to the admissions reflected in the accounts and confirmations, the Tribunal concluded that the application fell within the period of limitation for invoking insolvency proceedings under the Code.

The claim is within limitation and not time-barred.

Operational Creditor - demand notice under Section 8 of the Insolvency and Bankruptcy Code - Corporate Insolvency Resolution Process - Whether the requirements for admission of a petition under section 9 of the Code were satisfied and CIRP should be initiated - HELD THAT: - The Tribunal found on the material on record that the Operational Creditor rendered services accepted by the Corporate Debtor, raised running bills/invoices addressed to the Corporate Debtor, issued a statutory demand notice dated 9 August 2019 which was served, and that there existed a debt and default exceeding the statutory threshold. The Corporate Debtor's reply did not disclose any bona fide pre-existing dispute on the quality of goods or services that would disentitle the Operational Creditor. Applying the established tests, the Tribunal held that the statutory requirements for admission under section 9 were satisfied.

The section 9 petition is admitted and CIRP is initiated; moratorium and related consequences are directed and an Interim Resolution Professional is appointed.

Final Conclusion: The Tribunal admitted the section 9 petition filed by the Operational Creditor, held that the Corporate Debtor remained liable notwithstanding the purported assignment, found the claim within limitation, directed initiation of CIRP with constitution of moratorium, and appointed an Interim Resolution Professional to carry out the CIRP.

Event of Default - Suspension of initiation of corporate insolvency resolution process under the Insolvency and Bankruptcy Code - Operation of the moratorium introduced by Section 10A of the Code - Date of default as determinative of maintainability of a Section 7 petition - Admission and dismissal of a petition under Section 7 of the Code

Operation of the moratorium introduced by Section 10A of the Code - Date of default as determinative of maintainability of a Section 7 petition - Whether the Company Petition filed under Section 7 is maintainable where the date of default falls within the suspension period created by Section 10A of the Insolvency and Bankruptcy Code, 2016. - HELD THAT: - The Tribunal examined the dates relied upon in the petition and the annexures. The petition itself indicates a last date of payment as 21st August 2020 and the computation annexed (Exhibit D) records the date of default as 31st December 2020. The IBC (Second Amendment) Act, 2020 inserted Section 10A which suspended initiation of CIRP for defaults arising on or after 25th March 2020 for a specified suspension period (further extended by notifications until 25th March 2021). The statutory suspension specifically precludes filing an application for initiation of CIRP for any default arising during that suspended period and does not apply to defaults before 25th March 2020. Because the date of default relied upon in the petition falls within the suspension period, the statutory bar under Section 10A applies and precludes admission of the Section 7 petition despite the contractual occurrence of an "Event of Default." Having applied Section 10A to the dates established on the record, the Tribunal found that admission of the petition was barred and that the petition could not be admitted. [Paras 7, 8, 9]

The petition under Section 7 is barred by Section 10A as the default falls within the suspended period and is therefore dismissed.

Final Conclusion: The Company Petition under Section 7 seeking initiation of CIRP is dismissed because the date of default falls within the statutory suspension under Section 10A of the Code, as extended by notifications, thereby precluding initiation of insolvency proceedings for that default.

Service of adjudication order - proof of delivery / acknowledgement due - Section 37C of the Central Excise Act, 1944 - limitation for preferring appeal commences on actual delivery - pre-deposit for filing appeal - recovery by adjustment of refund against demand - recovery in excess of statutory pre-deposit - laches of revenue

Service of adjudication order - proof of delivery / acknowledgement due - Section 37C of the Central Excise Act, 1944 - limitation for preferring appeal commences on actual delivery - Respondents cannot recover or take consequence of the adjudication order dated 17th October, 2012 in the absence of proof that the order was served on the petitioner in compliance with the statutory requirement then prevailing. - HELD THAT: - The Court found that the adjudication order alleged to have been passed on 17th October, 2012 was never shown to have been delivered to the petitioner and no acknowledgement or other proof of service was produced by the respondents. Section 37C, as it stood for the relevant period, required dispatch with acknowledgement due and the statutory mode had to be complied with; the respondents failed to establish actual service or lawful substitution therefor. The Court noted that if a statute prescribes a particular mode of service, it must be followed, and that the respondents could not rely on general presumptions of service or on materials relating to different orders to discharge their burden. The Court also observed authorities relied on by the petitioner to the effect that limitation for preferring appeal runs from actual delivery and that the authorities must show proof of delivery before recovery steps are taken.

Recovery based on the adjudication order of 17th October, 2012 could not be sustained in the absence of proof of service; an order not served cannot produce consequences.

Pre-deposit for filing appeal - recovery by adjustment of refund against demand - recovery in excess of statutory pre-deposit - CBDT circulars on pre-deposit - Respondents were directed to refund amounts recovered in excess of the statutory pre-deposit (20%) and withdraw attachment, where the petitioner has filed appeal and made the statutory pre-deposit. - HELD THAT: - The Court accepted that petitioner, upon first receipt of the adjudication order during these proceedings, made the statutory pre-deposit and filed an appeal. Noting the settled administrative practice and judicial precedents that recovery beyond the prescribed pre-deposit amount during the pendency of an appeal is not permissible, the Court held the respondents' adjustment of the petitioner's refund and attachment of bank accounts resulting in recovery beyond the statutory pre-deposit to be arbitrary and illegal. The Court accordingly directed immediate refund of amounts recovered in excess of 20% of the demand and withdrawal of the bank attachment, and requested expedited disposal of the appeal.

Amount recovered in excess of the statutory pre-deposit is to be refunded and the impugned attachment withdrawn; the appeal is to be expeditiously adjudicated.

Laches of revenue - service of adjudication order - The respondents cannot take advantage of their own laches in failing to prove service of the adjudication order or in delaying recovery steps for over seven years. - HELD THAT: - The Court observed that after the petitioner repeatedly sought a copy of the adjudication order from 2014 onwards, the respondents did not produce proof of service nor took effective recovery steps until November 2021. Such delay and failure to discharge the statutory obligation to prove service disentitled the respondents from relying upon the alleged earlier passing and dispatch of the order. The Court held that the respondents' attempt to shift blame to the petitioner for delay was untenable in view of the documented repeated requests and the respondents' own inability to show service.

Respondents' conduct in sitting over requests and delaying action for years disentitles them from relying on the alleged earlier service; their laches defeats the attempt to recover on that basis.

Final Conclusion: Writ petition allowed in part: recovery and attachment based on the adjudication order dated 17th October, 2012 could not be sustained in the absence of proof of service; amounts recovered in excess of the statutory pre-deposit are to be refunded and bank attachment withdrawn within seven days; the petitioner's appeal having been filed with the statutory pre-deposit, the appellate authority is requested to decide the appeal expeditiously.

Attachment for recovery under Rule 9(4) of the Tamil Nadu Value Added Tax Rules, 2007 - pre-deposit under Section 51 of the Tamil Nadu Value Added Tax Act, 2006 - interim lifting of attachment on deposit - prima facie case - direction for expeditious disposal of appeal - freezing of bank account for tax recovery

Attachment for recovery under Rule 9(4) of the Tamil Nadu Value Added Tax Rules, 2007 - pre-deposit under Section 51 of the Tamil Nadu Value Added Tax Act, 2006 - interim lifting of attachment on deposit - prima facie case - Whether the impugned recovery attachment in Form-U freezing the petitioner's bank account should be lifted pending disposal of the appeal/review, and on what conditions. - HELD THAT: - The Court noted that the assessment order giving rise to the recovery notice is the subject of review and that the petitioner has already made the mandatory 25% pre-deposit in connection with the appeal under Section 51. Having regard to the petitioner's cease of business on account of the Covid-19 outbreak and the existence of a prima facie case on merits (contention that the taxed amount related to purchase of capital goods and not sale of ceramic tiles), the Court exercised its equitable discretion to grant interim relief. The Court ordered that the attachment in Form-U shall be vacated upon the petitioner depositing an additional sum with the respondents; the Court specified the additional deposit required and made clear that the Department may take steps to secure its interest and that the appellate authority is to proceed to dispose the appeal expeditiously. The order balances interim relief to the petitioner against protection of the revenue by conditioning vacation of attachment on a fresh deposit, and by not fettering the appellate authority from taking measures to safeguard departmental interest while disposing the appeal. [Paras 8]

The attachment under Form-U is ordered to be lifted automatically upon the petitioner depositing the specified additional sum; the appellate authority may secure the Department's interest and is directed to dispose of the appeal within three months from receipt of this order.

Direction for expeditious disposal of appeal - Direction to the Appellate Deputy Commissioner regarding timetable for disposal of the appeal filed by the petitioner. - HELD THAT: - While granting interim relief by ordering vacation of the attachment on the specified deposit, the Court also directed the Appellate Deputy Commissioner of State Taxes (Legacy) to dispose of the appeal filed by the petitioner within three months from receipt of a copy of this order. The Court qualified its interim order by expressly permitting the appellate authority to pass any order necessary to secure the Department's interest before finally disposing the appeal. [Paras 8]

The Appellate Deputy Commissioner is directed to dispose of the petitioner's appeal within three months from receipt of a copy of this order, subject to safeguarding the Department's interest.

Final Conclusion: Writ petition disposed by vacating the impugned attachment in Form-U on the petitioner depositing the specified additional amount; the appellate authority is directed to expeditiously dispose the appeal within three months, without prejudice to measures taken to protect the Department's interest.

Pre-assessment notice - Maintainability of writ petition as premature - Opportunity to reply and be heard before final assessment - Quashing and remand for speaking order - Impugned assessment order to be treated as corrigendum to pre-assessment notice - Consideration of State of West Bengal v. Calcutta Club Limited (2019) 19 SCC 107

Maintainability of writ petition as premature - Pre-assessment notice - Opportunity to reply and be heard before final assessment - Consideration of State of West Bengal v. Calcutta Club Limited (2019) 19 SCC 107 - Writ petition challenging the pre-assessment notice is premature and the petitioner must first reply to the notice; thereafter the authority shall decide on merits. - HELD THAT: - The Court held that W.P.No.13292 of 2022, assailing the Pre-Assessment Notice dated 08.04.2022, is premature because the petitioner has not yet submitted a reply to the notice. The petition is disposed by directing the petitioner to file a reply within 30 days from receipt of this order. On receipt of the reply, the respondent is directed to pass appropriate orders on merits and in accordance with law after considering the decision of the Hon'ble Supreme Court in State of West Bengal v. Calcutta Club Limited (2019) 19 SCC 107. The direction preserves the assessing authority's obligation to afford opportunity of reply and to apply the legal principle laid down by the Supreme Court before final adjudication. [Paras 8]

Writ petition is premature; petitioner to file reply within 30 days and assessing authority to decide on merits thereafter, applying the cited Supreme Court decision.

Quashing and remand for speaking order - Assessment order - Impugned assessment order to be treated as corrigendum to pre-assessment notice - Opportunity to reply and be heard before final assessment - Consideration of State of West Bengal v. Calcutta Club Limited (2019) 19 SCC 107 - Impugned assessment order is quashed and the matter is remitted to the Assessing Officer to pass a speaking order after affording the petitioner opportunity to reply and after considering the cited Supreme Court decision. - HELD THAT: - The Court noted that in W.P.No.13300 of 2022 the impugned Assessment Order dated 04.04.2022 was passed after the petitioner had not replied to the pre-assessment notice dated 07.03.2022, although the petitioner was heard before the order. In the interest of ensuring a reasoned decision, the Court quashed the impugned Assessment Order and remitted the matter to the Assessing Officer to pass a speaking order. The quashed order is to be treated as a corrigendum to the pre-assessment notice. The petitioner is directed to file a reply within 30 days from receipt of this order; the Assessing Officer shall thereafter hear the petitioner and pass a reasoned order on merits and in accordance with law within 30 days, taking into account the Supreme Court's decision cited above. [Paras 10]

Impugned assessment order quashed; matter remitted for speaking order after petitioner files reply and after considering the cited Supreme Court decision; timelines directed.

Final Conclusion: Both writ petitions disposed: one (W.P.No.13292/2022) held premature and directed to be proceeded with after petitioner's reply; the other (W.P.No.13300/2022) quashed and remitted for a speaking order with directions to afford hearing, consider the Supreme Court decision and decide within prescribed timelines.

Single point taxation - double taxation - levy of tax at the point of sale by manufacturer or importer - taxability when subsequent sale has been taxed - application of Section 3A(1-c) of U.P. Trade Tax Act - adjustment where tax has been realized twice - remand for recording evidence on tax realization

Single point taxation - double taxation - taxability when subsequent sale has been taxed - application of Section 3A(1-c) of U.P. Trade Tax Act - Demand of tax from the revisionist in respect of sale of motor spirit and diesel oil to other oil marketing companies where tax was subsequently realized by those purchasers is illegal to the extent it results in double taxation. - HELD THAT: - The Court accepted that where the same goods have been taxed and the tax realized and deposited with the State by the subsequent purchaser (other oil companies), the State cannot validly demand tax again from the selling oil company without resulting in double recovery. Reliance was placed on earlier pronouncements and on the statutory scheme embodied in the Trade Tax provisions (including the operation of Section 3A(1-c) and the notifications dealing with point of levy). The revenue conceded that tax cannot be recovered twice for the same goods. Applying the principle of single point taxation, the Court held that to the extent tax has been realized on the subsequent sale, assessing the revisionist again would be unjust, illegal and arbitrary, and interference was warranted in favour of the revisionist for the assessment years in question. [Paras 18, 19]

Answered in favour of the revisionist; the Tribunal order is set aside to the extent it made the revisionist liable for tax already realized on subsequent sale.

Remand for recording evidence on tax realization - adjustment where tax has been realized twice - Whether the revisionist is entitled to benefit depends on factual proof that tax was realized on the subsequent sale; the matter is remitted for factual ascertainment and adjustment if tax is found to have been deposited by the purchasers. - HELD THAT: - The Court observed that the assessing and appellate authorities had not considered or recorded evidence about bifurcation of sales (purchases from in State registered dealers versus imported goods) and whether tax on the same goods had been collected at the subsequent point of sale. The Court therefore remitted the matter to the prescribed authority to record evidence on whether the tax was realized and deposited by the subsequent purchasers, and to grant benefit to the revisionist insofar as such subsequent taxation and deposit is established. If the authority finds that the subsequent sale was taxed and the tax deposited with the State, the revisionist cannot be held liable for tax on those sales. [Paras 20]

Matter remitted to the prescribed authority for inquiry and, if satisfied that subsequent sale was taxed and deposited, to grant the revisionist the corresponding benefit and adjust recoveries.

Final Conclusion: Both revisions are allowed: the Tribunal's order is set aside insofar as it imposed tax that has already been realized on subsequent sales; the matter is remitted to the prescribed authority to record evidence and grant benefit to the revisionist where subsequent taxation and deposit is established for assessment years 2000-01 and 2001-02.

Article 226 of the Constitution - existence of alternate statutory remedy - exceptional circumstances for exercise of writ jurisdiction - principles of natural justice - remedy by statutory appeal - exclusion of period of pendency for limitation

Article 226 of the Constitution - existence of alternate statutory remedy - exceptional circumstances for exercise of writ jurisdiction - principles of natural justice - remedy by statutory appeal - Maintainability of the writ petition under Article 226 when a statutory appeal remedy is available. - HELD THAT: - The Court applied the principle that the availability of an alternate statutory remedy is not an absolute bar to writ jurisdiction but a writ may be entertained only in exceptional circumstances (breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to vires). The petitioner challenged an assessment order for the tax periods 08/2005 to 07/2009, but the record shows that the petitioner was afforded personal hearing and the impugned order provided the statutory appellate remedy. There was no demonstrable breach of fundamental rights, excess of jurisdiction, or challenge to the vires of the statute, and the asserted violation of the principles of natural justice was negatived by the record (personal hearing on 31.01.2022 and an opportunity to appeal). Several factual and mixed questions, including limitation and classification of goods, remained to be adjudicated by the appellate forum. In these circumstances the Court held that the proper course is to dismiss the writ and leave the petitioner to pursue the statutory appeal where all contested factual and legal questions can be examined.

Writ petition dismissed as not maintainable; petitioner permitted to avail the statutory appeal remedy.

Exclusion of period of pendency for limitation - Whether the period of pendency of the writ petition is to be excluded for computation of limitation for the statutory remedy. - HELD THAT: - The Court recorded that the period during which the writ petition remained pending shall be excluded while calculating the period of limitation for any statutory remedy the petitioner wishes to pursue. This direction was given notwithstanding the dismissal of the writ, to ensure the petitioner is not prejudiced on limitation grounds when approaching the appellate authority.

Period of pendency of the writ petition to be excluded for computing limitation.

Final Conclusion: The writ petition is dismissed for want of maintainability in the presence of an adequate statutory appeal; the petitioner is left free to pursue the appellate remedy, with the period of pendency of this writ excluded for limitation purposes.

Compounding of offence under Section 138 of the Negotiable Instruments Act - Withdrawal of criminal complaint and acquittal on compromise - Reduction/exemption of compounding fee in appropriate cases - Direction for release of deposited funds upon compromise - Recovery of unpaid compounding fee as fine under Cr.P.C.

Compounding of offence under Section 138 of the Negotiable Instruments Act - Withdrawal of criminal complaint and acquittal on compromise - Complaint arising out of dishonour of cheque under Section 138 of the Negotiable Instruments Act is compounded and the conviction and sentence recorded against the petitioner are quashed and set aside; petitioner is acquitted. - HELD THAT: - Parties informed the Court that the dispute has been amicably settled and the complainant agreed to withdraw the complaint against receipt of the compromise amount. Having recorded the parties' statements and their authority to settle, the Court permitted withdrawal of the complaint and treated the case as compounded. Consequentially, the judgments of conviction and sentence passed by the courts below have been quashed and set aside and the petitioner is acquitted of the accusation. [Paras 3, 4, 6]

Complaint is compounded; convictions and sentences quashed and set aside; petitioner acquitted.

Reduction/exemption of compounding fee in appropriate cases - Recovery of unpaid compounding fee as fine under Cr.P.C. - Compounding fee, ordinarily 15% of cheque amount, is reduced to a specified nominal sum in view of petitioner's poor financial condition; consequence of non-payment provided. - HELD THAT: - Counsel for the petitioner submitted inability to pay the prescribed 15% compounding fee and relied on the Supreme Court precedents referenced by the High Court. Considering the parties' circumstances and the controlling ratios, the Court exercised discretion to reduce the compounding fee to a fixed sum payable to the H.P. State Legal Services Authority within four weeks. The order stipulates that failure to deposit the compounding fee within the timeline will invite consequential action to recover the amount as fine under the Cr.P.C. [Paras 7, 8, 9]

Petitioner directed to deposit the reduced compounding fee of Rs.3,000 with H.P. State Legal Services Authority within four weeks; non-deposit will lead to recovery as fine under Cr.P.C.

Direction for release of deposited funds upon compromise - Amounts deposited in the trial Court and in the High Court Registry are to be released to the complainant and the balance refunded to the petitioner in specified manner. - HELD THAT: - Having accepted the compromise and authorised withdrawal of the complaint, the Court directed the trial Court to remit the amount deposited in its custody in favour of the complainant on production of this order, without issuing notice to the petitioner. The Registry of the High Court was directed to remit the portion agreed to be released to the complainant and to refund the remaining balance along with up-to-date interest to the petitioner by bank transfer. [Paras 10, 11]

Trial Court and High Court Registry directed to release funds to complainant and refund balance to petitioner as ordered.

Compounding of offence under Section 138 of the Negotiable Instruments Act - Administrative directions regarding compliance and facilitation of compounding fee payment and verification of the order are issued to relevant authority. - HELD THAT: - The Court directed that a copy of the judgment be sent to the H.P. State Legal Services Authority, permitted parties to use a downloaded copy from the High Court website for depositing the compounding fee and other purposes, and clarified that the concerned authority shall not insist on a certified copy; verification of passing of the order may be effected from the High Court website. [Paras 12, 13]

Judgment copy to be sent to H.P. State Legal Services Authority; parties permitted to use downloaded copy for depositing fee and for other purposes.

Final Conclusion: The High Court allowed the compromise: the criminal complaint under Section 138 NI Act is compounded, convictions and sentences against the petitioner are quashed and set aside and the petitioner is acquitted; compounding fee reduced to Rs.3,000 to be paid within four weeks (failure to pay to be treated as fine recoverable under Cr.P.C.); directions issued for release of deposited funds to the complainant and refund of balance to the petitioner; copies to be sent to H.P. State Legal Services Authority and parties permitted to use downloaded copy for compliance.

Vicarious liability under Section 141 of the Negotiable Instruments Act - maintainability of complaint under Section 138 of the Negotiable Instruments Act - requirement of clear and specific averments against directors for prosecution - exercise of inherent jurisdiction under Section 482 Cr.P.C.

Maintainability of complaint under Section 138 of the Negotiable Instruments Act - vicarious liability under Section 141 of the Negotiable Instruments Act - requirement of clear and specific averments against directors for prosecution - The complaint in C.C.No.794 of 2018 is not maintainable as it fails to make clear and specific averments showing that the director/petitioner was in charge of and responsible for the conduct of the company's business at the time of the alleged offence. - HELD THAT: - On scrutiny the complaint contains only bald allegations against the petitioner as a director without particularising the role played by him or showing how he was in charge of and responsible for the conduct of the company's business when the alleged cheque dishonour occurred. The court applied established precedent requiring specific, unambiguous averments to fasten vicarious liability on directors under Section 141; mere listing of a person as director or general assertions of management control are insufficient. While defenses based on non-participation or repayment disputes are matters for trial, the absence of requisite averments renders the complaint not entertainable and liable to be quashed. The High Court therefore concluded that the complaint must be dismissed at the threshold for want of the statutory averments required to proceed against a director under Sections 138 and 141. [Paras 6, 7]

Complaint quashed for lack of specific averments establishing that the petitioner was in charge of and responsible for the company's business attracting liability under Section 141.

Final Conclusion: Criminal Original Petition allowed; the complaint in C.C.No.794 of 2018 is quashed for want of necessary averments against the director, and connected petitions are closed.

Conviction under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - dishonour of cheque due to account closure - service of notice by Registered Post Acknowledgement Due and Certificate of Posting - rebuttal of presumption of legally enforceable debt - failure to adduce evidence by the accused to discharge statutory presumption

Conviction under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - service of notice by Registered Post Acknowledgement Due and Certificate of Posting - dishonour of cheque due to account closure - failure to adduce evidence by the accused to discharge statutory presumption - Validity of conviction and sentence in Criminal Revision Petition No. 219/2018 (arising from C.C. No. 1051/2011). - HELD THAT: - The court found the cheque drawn by the accused was returned dishonoured with the banker's endorsement of account closure and held that notices were sent to the correct address by Registered Post Acknowledgement Due and by Certificate of Posting, both of which were produced. A mere variance in the signature on the postal acknowledgement card did not establish non-service where the accused did not deny the address and did not suggest to PW.1 that notice was not dispatched to the correct address. The statutory presumption under Section 139 in favour of the holder thus arose and was not successfully rebutted. The accused's defence that the cheque was given merely as security and not for a loan rested on oral suggestions alone without supporting records or witness evidence; the accused did not lead evidence to substantiate this defence. On proper appreciation of evidence, the Trial Court and the First Appellate Court legitimately concluded that the presumption of legally enforceable debt stood unrebutted and that conviction under Section 138 was justified.

Conviction and sentence in Criminal Revision Petition No. 219/2018 are maintained and the revision is dismissed.

Conviction under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - service of notice by Registered Post Acknowledgement Due and Certificate of Posting - dishonour of cheque due to account closure - rebuttal of presumption of legally enforceable debt - failure to adduce evidence by the accused to discharge statutory presumption - Validity of conviction and sentence in Criminal Revision Petition No. 220/2018 (arising from C.C. No. 1049/2011). - HELD THAT: - The court recorded that the cheque was drawn by the accused and returned with the banker's endorsement of account closure. Notices were proved by production of Registered Post receipts, postal acknowledgement cards and Certificate of Posting; the accused did not dispute the address or produce evidence of non-receipt. The statutory presumption under Section 139 arose and, in view of the absence of documentary evidence or witness testimony from the accused to rebut the presumption, the defence that the cheque was furnished only as security was unsubstantiated. Cross-examination suggestions did not elicit admissions supporting the accused's case, and no independent evidence or attempted remedies (such as complaints against wrongful retention of cheques or stop-payment instructions) were placed on record by the accused. The Trial Court and the appellate court correctly appreciated the evidence and sustained the conviction under Section 138.

Conviction and sentence in Criminal Revision Petition No. 220/2018 are maintained and the revision is dismissed.

Final Conclusion: Both Criminal Revision Petitions (No. 219/2018 and No. 220/2018) are dismissed; the courts below correctly upheld convictions under Section 138 of the Negotiable Instruments Act after finding the statutory presumption under Section 139 unrebutted and service of notice properly established.

Offence under Section 138 of the Negotiable Instruments Act, 1881 - presumption under Section 139 of the Negotiable Instruments Act, 1881 - compensation in proceedings under Section 138 - production of authorization / power of attorney for a corporate complainant - effect of corporate takeover/merger on maintainability of criminal complaint - weight of admission in criminal proceedings

Production of authorization / power of attorney for a corporate complainant - Belated production of an authorization letter for a corporate complainant is a curable technical defect and not a ground for acquittal. - HELD THAT: - The Court held that non-production of the authorization letter with the complaint was a technical flaw which was subsequently cured by marking the authorization as Ex.P18. Once the authorization was produced and marked, the petitioners could not insist upon a hyper-technical contention to secure acquittal. The court observed that belated production of the authorization does not vitiate the complaint or justify acquittal where the defect is cured. [Paras 13]

Technical objection as to initial non-production of authorization is rejected and is not a ground for acquittal.

Effect of corporate takeover/merger on maintainability of criminal complaint - Allegation of takeover/merger of the complainant company did not render the complaint non-maintainable where the accused failed to produce conclusive evidence to establish merger/takeover. - HELD THAT: - The Court distinguished between takeover of management and merger, noting that the accused's assertion of merger was a matter of record which they could have proved by obtaining certified copies from the Registrar of Companies. P.W.1's cross-examination did not amount to an unequivocal admission that the complainant ceased to exist; his answers were inconsistent and he confirmed that the complainant company existed and was entitled to continue the complaint. The defence therefore failed to discharge the burden of proof on this factual contention and the Trial Court rightly rejected the defence. [Paras 14, 15, 16]

Contention that complaint was filed by a non-existing entity on account of takeover/merger is rejected for want of cogent proof.

Presumption under Section 139 of the Negotiable Instruments Act, 1881 - weight of admission in criminal proceedings - Admission by the defence witness coupled with the statutory presumption under Section 139 establishes liability and the accused failed to rebut that presumption. - HELD THAT: - The Court noted that the presumption under Section 139 operates in favour of the complainant once the cheque, signature and issuance are admitted. D.W.1's categorical admission of outstanding liability and the balance due was treated as substantial evidence. Reliance upon precedents does not mandate exclusion of such admissions; their weight depends on facts and circumstances. In this case the admission, together with the statutory presumption, sufficiently proved the complainant's case and placed the onus on the accused to prove absence of liability, which they failed to do. [Paras 17, 18]

Conviction under Section 138 is supported by admission and the presumption under Section 139; the defence failed to rebut liability.

Compensation in proceedings under Section 138 - Ordering payment of the cheque amount as compensation in a conviction under Section 138 is permissible and not negated by absence of specific pleadings under Section 357(3) Cr.P.C. - HELD THAT: - The Court observed that compensation in cases under Section 138 is a statutory consequence of the offence and is not contingent upon proof of loss in the manner required for other offences such as bodily injury. The argument that the complainant must plead and prove prejudice for grant of compensation under Section 357(3) Cr.P.C. was rejected as inapplicable to the statutory scheme governing Section 138. Consequently, imposition of compensation by the lower courts was held to be in consonance with the nature of the offence. [Paras 19]

Order directing payment of the cheque amount as compensation is valid and sustainable.

Final Conclusion: Criminal Revision dismissed: the conviction under Section 138 of the Negotiable Instruments Act is upheld; technical defects as to authorization and alleged corporate takeover are rejected for lack of proof; admission and presumption under Section 139 sustain liability; the compensation order is held permissible. Directions given for payment of deposited amount to complainant and for the second petitioner to pay the balance within two weeks failing which execution for default sentence may follow.

Power to direct interim compensation under Section 143A of the Negotiable Instruments Act - Requirement of a reasoned order demonstrating application of mind when exercising judicial discretion - Discretion to fix interim compensation within a range not exceeding twenty per cent - Necessity to consider the conduct of the accused (cooperation, adjournments, delay tactics) before granting interim compensation - Remand for fresh consideration where exercise of discretion lacks adequate reasons

Power to direct interim compensation under Section 143A of the Negotiable Instruments Act - Requirement of a reasoned order demonstrating application of mind when exercising judicial discretion - Validity of the Magistrate's order granting 10% interim compensation under Section 143A - HELD THAT: - The High Court examined Section 143A's purpose and scheme and held that while the Magistrate has discretion to award interim compensation not exceeding 20%, such discretion must be exercised with recorded reasons demonstrating application of mind because of penal consequences that can follow non-compliance. The impugned order merely stated that disposal may take considerable time and directed deposit of 10% of the cheque amount without addressing factors bearing on exercise of discretion - in particular, the conduct of the accused (whether cooperating or causing delay) and other relevant circumstances. For want of such reasons the order was found unsustainable and quashed. [Paras 12, 15, 16]

Order granting 10% interim compensation quashed for failure to record adequate reasons and demonstrate application of mind

Discretion to fix interim compensation within a range not exceeding twenty per cent - Necessity to consider the conduct of the accused (cooperation, adjournments, delay tactics) before granting interim compensation - Remand for fresh consideration where exercise of discretion lacks adequate reasons - Relief and directions following quashing - remand for fresh disposal of the Section 143A application - HELD THAT: - Having quashed the impugned order, the Court exercised its inherent jurisdiction under Section 482 Cr.P.C. to remit the matter to the Magistrate to decide the complainant's application afresh. The Magistrate is directed to apply the two-fold discretion: first, to decide whether the application should be entertained after assessing the accused's conduct; and second, if entertained, to determine the appropriate quantum (within 1%-20%) with cogent reasons recorded in writing and after hearing the accused. The remand is for fresh adjudication in accordance with the observations in the judgment and not for rehearing of factual disputes on merits of the cheque's issuance. [Paras 16, 17]

Matter remitted to the Magistrate for fresh consideration and passing of a reasoned order in accordance with the Court's observations

Final Conclusion: Criminal petition allowed; impugned order dated 12-10-2021 granting interim compensation of 10% quashed and the application under Section 143A remitted to the Magistrate for fresh disposal with directions to record reasons, consider the accused's conduct, and determine the quantum within statutory limits.

Stay of departmental proceedings - interplay between departmental and criminal proceedings - no hard and fast rule for grant of stay - time bound completion of departmental inquiry - delay and laches in disciplinary inquiry - monitoring of inquiry by disciplinary authority - grant or refusal of stay depends on factual matrix - departmental proceedings and criminal proceedings operate in different frameworks

Stay of departmental proceedings - no hard and fast rule for grant of stay - delay and laches in disciplinary inquiry - grant or refusal of stay depends on factual matrix - Whether the departmental proceedings should be stayed pendente lite in view of parallel criminal prosecution - HELD THAT: - The Court held that there is no absolute rule entitling an employee to a stay of departmental proceedings merely because criminal proceedings are pending; the grant of such relief depends on the facts of each case. The petitioner had earlier sought and obtained directions for a time bound completion of the departmental inquiry and subsequently retired; he later sought to keep the inquiry in abeyance pending criminal trial, which the Court found to be contradictory conduct. The inquiry had already lingered for over a decade and the delay was attributable in part to the large number of prosecution witnesses; the Tribunal therefore rightly refused a stay and directed monitoring by the disciplinary authority so the inquiry may be concluded expeditiously. In view of precedents cited by the Court, the seriousness of the allegations and the prolonged pendency weighed against granting the requested stay. [Paras 5, 6, 19, 22, 23]

The petition for stay of departmental proceedings was refused and the writ petition dismissed.

Interplay between departmental and criminal proceedings - departmental proceedings and criminal proceedings operate in different frameworks - time bound completion of departmental inquiry - monitoring of inquiry by disciplinary authority - Whether the subject matter of the departmental inquiry was so co extensive with the criminal prosecution as to require suspension of disciplinary proceedings - HELD THAT: - The Court observed that certain aspects of the departmental charge (non disclosure of investments, breach of conduct rules and failure to obtain prior permission) operate within a different ambit from the criminal charges and are capable of independent adjudication in departmental proceedings. Reliance on authorities was considered, but the Court emphasised that when the mode and rules of inquiry and trial differ, disciplinary proceedings need not be stayed as a matter of course. Given the distinct framework of service rules and the public interest in expeditious conclusion of disciplinary inquiries, the Tribunal's view that the departmental proceedings could proceed subject to monitoring was upheld. [Paras 15, 16, 20, 21, 22]

The departmental proceedings were held to be maintainable and distinct from the criminal trial and were permitted to continue under supervisory monitoring.

Final Conclusion: The High Court upheld the Tribunal's refusal to stay the departmental proceedings; finding the departmental inquiry distinct from the criminal prosecution, noting the petitioner's prior consent to time bound inquiry and the prolonged delay, the writ petition was dismissed and the disciplinary authority directed to monitor and conclude the inquiry expeditiously.