TaxTMI Updates e-Newsletter
Jul 05,2022

Violation of principles of natural justice - confiscation of goods under the GST regime - jurisdictional scope of powers under section 129 vis-a -vis section 130 of the GST Act, 2017 - interim release of goods on deposit and bond

Violation of principles of natural justice - confiscation of goods under the GST regime - The impugned order of confiscation was passed without affording the petitioner an opportunity to file a reply and thereby breached principles of natural justice. - HELD THAT: - The Court noted that a show cause notice under the GST Act was issued on 14.4.2022 and, although the petitioner sought certain documents to enable a reply, the authorities conducted search operations on 24.4.2022 and passed the confiscation order on 26.4.2022 immediately thereafter. The rapid succession of events and the failure to permit filing of a reply resulted in a denial of the petitioner's right to be heard. On that basis the Court found a prima facie infringement of principles of natural justice prejudicial to the petitioner and entertained the petition for interim relief. [Paras 3, 4, 5]

Found breach of principles of natural justice in passing the confiscation order without permitting the petitioner to file a reply; prima facie case established.

Interim release of goods on deposit and bond - interim relief - Whether interim relief should be granted by releasing the goods and conveyance subject to conditions. - HELD THAT: - The Court exercised its discretion to grant interim relief in view of the prima facie breach of natural justice. Directing release of the goods and conveyance, the Court imposed conditions as a safeguard: deposit of a specified amount with the competent authority within 10 days as part of interim conditions and, when the final order includes determination of fine in lieu of confiscation, furnishing of a bond within ten days along with the deposit. The Court further observed that non-compliance with these conditions would render the interim order liable to be vacated. [Paras 6]

Granted interim release of goods and conveyance on terms of deposit and future furnishing of bond; non-compliance to result in vacation of interim relief.

Jurisdictional scope of powers under section 129 vis-a -vis section 130 of the GST Act, 2017 - The contention regarding whether powers under section 129 (non-obstante provision) could be invoked independently of section 130 was not finally adjudicated and requires detailed examination. - HELD THAT: - The petitioner challenged the authority's exercise of powers, contending that section 129 (which begins with a non-obstante clause) is independent of section 130 and that the confiscation under section 130 was therefore without jurisdiction. The Court recorded that this question would require a detailed examination and did not decide the point in the interim proceedings. Consequently the legal controversy as to the proper applicability and interplay of section 129 and section 130 was left open for fuller consideration. [Paras 4]

Left undecided and requires detailed examination; not finally adjudicated in the present order.

Final Conclusion: The High Court found a prima facie breach of principles of natural justice in the confiscation order and granted interim relief by directing release of the goods and conveyance on specified deposit and bond conditions, while leaving the substantive jurisdictional dispute between the powers under section 129 and section 130 for detailed adjudication.

Regular bail under Section 439 of the Cr.P.C. - ineligible and fraudulent availment of input tax credit (ITC) - economic offence by bogus billing syndicate and criminal conspiracy - deposit/pre-deposit of disputed tax and its relevance to grant of bail - necessity of custody, risk of flight and influence on witnesses - Article 21 - protection against prolonged detention and right to liberty

Regular bail under Section 439 of the Cr.P.C. - ineligible and fraudulent availment of input tax credit (ITC) - deposit/pre-deposit of disputed tax and its relevance to grant of bail - necessity of custody, risk of flight and influence on witnesses - Article 21 - protection against prolonged detention and right to liberty - Whether the applicant should be released on regular bail in the case alleging fraudulent availment of ITC and criminal conspiracy. - HELD THAT: - The Court examined the material placed on record and the applicant's conduct during investigation. It noted that the applicant's firms had made deposits and reversals towards the disputed ITC - including payments into the Electronic Cash Ledger and reversals - amounting to more than ten per cent of the alleged evaded duty. The Court recorded the applicant's written assurances about payment and cooperation and observed absence of any past criminal record. The prosecution's assertions that further custody was necessary to complete investigation, prevent flight or to avoid tampering with evidence were found to be unsubstantiated by material on record. The Court applied settled law that detention cannot be prolonged indefinitely and relied on the principle that grant of bail is ordinarily the rule while denial is the exception where detention is necessary for a disclosed reason; in the absence of such justification and having regard to the deposits and conduct indicating bonafides, continued custody was not warranted. Accordingly, the Court exercised judicial discretion to enlarge the applicant on bail while leaving open the rights of the prosecution and preserving trial and investigative processes, and imposed conditions to protect the prosecution's interest. [Paras 21, 22, 23]

Applicant released on regular bail on executing personal bond with one surety and subject to specified conditions (including surrender of passport, residence disclosure, prohibition on leaving India without permission and not interfering with prosecution).

Final Conclusion: Bail application allowed; applicant released on regular bail subject to bond and conditions. Nothing in this order expresses any opinion on the merits of the case.

Grant of bail is the rule and refusal is the exception - Triple test: flight risk, tempering with evidence and influencing witnesses - Economic offences require a sensitive approach but do not bar grant of bail - Completion of investigation and filing of complaint as a factor in bail - Documentary evidence seized and trial delay relevant to bail

Grant of bail is the rule and refusal is the exception - Triple test: flight risk, tempering with evidence and influencing witnesses - Economic offences require a sensitive approach but do not bar grant of bail - Completion of investigation and filing of complaint as a factor in bail - Documentary evidence seized and trial delay relevant to bail - Whether the applicant accused of alleged offences under the Central Goods and Service Tax Act is entitled to regular bail - HELD THAT: - The Court applied settled principles that grant of bail is the general rule while refusal is the exception, and that the triple test (risk of flight, tampering with evidence, influencing witnesses) guides the exercise. Although the offence is economic and serious, that classification does not create an absolute bar to bail. The investigation had been completed, a demand notice issued and complaint filed; the case is founded primarily on documentary evidence which has been seized. There was no past criminal antecedent of the applicant, he was shown not to be a flight risk, and the trial was likely to be protracted. Balancing these facts and the jurisprudence cited, the Court found no sufficient ground to continue detention after completion of investigation and filing of complaint and therefore exercised discretion in favour of bail. [Paras 12, 13, 14]

Application allowed; applicant released on regular bail subject to conditions.

Conditions of bail - Surrender of passport and restrictions on travel - Personal bond and surety - Terms and conditions on which bail is to be granted - HELD THAT: - The Court directed release on executing a personal bond with one surety of like amount to the satisfaction of the trial court and imposed conditions designed to secure the trial process and prevent misuse of liberty. Conditions include prohibition on taking undue advantage or acting prejudicially to the prosecution, surrender of passport within a week, restriction on leaving the country without prior permission of the Sessions Judge, furnishing and not changing residence without prior permission, and liberty for the Sessions Judge to modify conditions if appropriate. The Court also directed release if the applicant is not required in connection with any other offence and left procedural implementation to the trial court. [Paras 15, 16]

Bail granted on specified bond and conditions; Sessions Judge may modify conditions as per law.

Final Conclusion: Bail application allowed; applicant to be released on regular bail on execution of the ordered bond and subject to the enumerated conditions, with liberty for the trial court to modify those conditions; no opinion expressed on merits.

Exemption under entry No. 74 of Notification No. 12/2017-Central Tax (Rate) - eligibility of services classified under SAC Heading 9993 - composite supply - authority for advance ruling - appellate authority - failure to consider pleaded ground - quashing and remand for fresh consideration

Authority for advance ruling - appellate authority - failure to consider pleaded ground - quashing and remand for fresh consideration - Impugned order dated 10.03.2022 passed by the Appellate Authority for Advance Ruling is quashed and the matter is remanded to the Appellate Authority for fresh consideration. - HELD THAT: - The High Court found that the Appellate Authority did not consider the specific plea taken by the petitioner before the Authority - namely, that the petitioner's Naturopathy Centre is a stand-alone facility and its services are not composite with hotel services - and that the respondents could not dispute this omission. In view of this failure, the Court set aside the appellate order and directed that the appeal be reconsidered afresh, giving the petitioner an opportunity to place its case on the omitted aspect. The Court expressly refrained from examining the merits of the petitioner's contention, leaving the Appellate Authority free to take an independent view on reconsideration. [Paras 5, 6]

Order dated 10.03.2022 is quashed and the appeal is remanded to the Appellate Authority for reconsideration after giving the petitioner an opportunity to address the question omitted earlier.

Composite supply - exemption under entry No. 74 of Notification No. 12/2017-Central Tax (Rate) - eligibility of services classified under SAC Heading 9993 - Whether the petitioner's Naturopathy Centre services are not covered by the definition of composite supply and consequently eligible for the exemption under the said notification is to be considered afresh by the Appellate Authority. - HELD THAT: - The Court noted that the substantive question whether the Naturopathy Centre is a separate facility (though located within hotel premises) and whether its services fall within the exemption under entry No. 74 read with SAC Heading 9993 was not adjudicated by the Appellate Authority because the plea regarding non-application of the composite supply concept was not considered. The Court therefore remanded that specific legal question for fresh adjudication by the Appellate Authority, instructing that the petitioner be permitted to present its submissions on that aspect and that the Authority rule on it. [Paras 4, 6]

The question whether the services constitute a composite supply and the petitioner's entitlement to the exemption under entry No. 74 (SAC 9993) is remitted to the Appellate Authority for fresh consideration and decision.

Final Conclusion: The High Court quashed the Appellate Authority's order dated 10.03.2022 and remitted the appeal for fresh consideration, directing the Appellate Authority to grant the petitioner an opportunity to argue that its Naturopathy Centre is not a composite supply and to rule on entitlement to the exemption; the Court did not decide the merits.

Submission of certified copy - procedural requirement - substantial compliance - condonation of delay - extension of limitation due to COVID-19 - applicability of Section 5 of the Limitation Act - hyper technical approach - appeal restored

Submission of certified copy - procedural requirement - substantial compliance - hyper technical approach - Whether the Appellate Authority was justified in rejecting the appeal for non-submission of the certified copy of the impugned order within seven days and whether such rejection ought to bar consideration of the appeal on merits. - HELD THAT: - The Court held that the requirement to furnish a certified copy within seven days under Rule 108(3) is a procedural requirement and non-compliance with that requirement in the facts of this case amounted to a mere technical defect. The petitioner had filed the appeal within the prescribed/extended limitation and had enclosed a copy of the impugned order as available on the GST portal with the memo of appeal. Given the circumstances - including the short interval between service of the notice and the date available to the petitioner to comply, the pandemic-related restrictions, and precedent of this Court adopting a liberal approach where a downloaded copy was filed and an explanation was plausible - the Appellate Authority's hyper-technical rejection was not justified. The Court further observed that the Appellate Authority should have verified the date of service of the notice before rejecting the appeal and that the principles of natural justice required informing the appellant of further proceedings so as to enable compliance. [Paras 5, 6, 7]

Impugned order rejecting the appeal for non-submission of the certified copy is set aside and the appeal is restored to the file for decision on merits.

Extension of limitation due to COVID-19 - condonation of delay - applicability of Section 5 of the Limitation Act - Whether the petitioner was entitled to benefit of limitation extension/condonation in view of COVID-19 related orders and the Limitation Act principles, so that the certified copy submitted and offered in May 2022 fell within allowable time. - HELD THAT: - Relying on the Supreme Court's orders extending and excluding periods of limitation in view of the COVID-19 pandemic and this Court's precedent, the Court held that the short delay in submitting the certified copy fell within the exclusion/relief granted by higher orders (including restoration of the order of 23.03.2020 and the 90-day rule). Further, Rule 108(3) does not expressly exclude applicability of Section 5 of the Limitation Act; hence principles permitting condonation apply. Consequently, obtaining the certified copy on 21.05.2022 and offering it on 23.05.2022 was within the relief envisaged by the apex court's orders and could not justify outright rejection of the appeal. [Paras 6]

Petitioner entitled to the benefit of the period excluded/extended on account of COVID-19 and the short delay in submission of the certified copy is to be treated as condoned for the purposes of considering the appeal.

Final Conclusion: The writ petition is allowed: the order rejecting the appeal dated 23.05.2022 is set aside, the appeal (relating to tax period 1st April, 2019 to 31st March, 2020) is restored to file and the Appellate Authority is directed to permit the petitioner to produce the certified copy and decide the appeal on merits expeditiously in accordance with law.

Pre-deposit under Section 107(6) of the CGST Act - rehearing and restoration of appeal - appellate order set aside for non payment of pre deposit

Pre-deposit under Section 107(6) of the CGST Act - rehearing and restoration of appeal - Appellate order dated 06.08.2019 dismissed the appeal solely for non payment of the prescribed pre deposit and whether that order should be set aside and the appeal restored for hearing on merits subject to deposit. - HELD THAT: - The High Court observed that the appellate order (Annexure 12) dismissed the appeal only on the ground of non payment of the 10% pre deposit required under Section 107(6) of the Act and did not decide the merits. In the circumstances the Court declined to adjudicate the merits but set aside the appellate order and permitted restoration of the appeal on condition that the petitioner deposit the prescribed pre deposit. The Court directed the petitioner to deposit the amount of Rs. 18,35,721.81 or 10% of the total tax dues, whichever is higher, within two weeks with the Joint Commissioner of State Tax (Appeal), Jamshedpur Division. Upon such deposit, the appeal shall be restored to the original file and the Joint Commissioner of State Tax (Appeal) shall proceed to hear the matter on its merits. [Paras 5, 6]

Appellate order dated 06.08.2019 is set aside and the appeal is to be restored for rehearing on merits provided the petitioner makes the specified pre deposit within two weeks, after which the appellate authority shall hear the appeal on merits.

Final Conclusion: Writ petition allowed to the extent that the appellate order dismissing the appeal for non payment of pre deposit is set aside; petitioner directed to make the prescribed deposit within two weeks for restoration of the appeal and hearing on merits.

Maintenance of writ jurisdiction despite availability of alternative and efficacious statutory remedy - entertainment of writ where statutory appeal is time barred or remedies are illusory - violation of Article 21 - right to livelihood as ground for writ relief - definition and scope of adjudicating authority under the Uttarakhand Goods and Services Tax Act - scope and remedy under Section 107 (appeals) of the Uttarakhand Goods and Services Tax Act, 2017

Maintenance of writ jurisdiction despite availability of alternative and efficacious statutory remedy - entertainment of writ where statutory appeal is time barred or remedies are illusory - violation of Article 21 - right to livelihood as ground for writ relief - Writ petition under Article 226 was maintainable notwithstanding the existence of a statutory appeal under Section 107 of the Uttarakhand Act. - HELD THAT: - The Court applied the established principle that availability of an alternative remedy does not oust writ jurisdiction in appropriate cases. It accepted that the High Court may entertain a writ where enforcement of fundamental rights, challenge to vires, violation of principles of natural justice, lack of jurisdiction, or where statutory remedy is rendered ineffective, justifies exercise of discretionary writ jurisdiction. The factual finding that cancellation notices published only on the website were insufficient and that cancellation of GST registration impacted the petitioner's ability to work and earn (thereby engaging Article 21 and right to livelihood) warranted exercise of writ jurisdiction. The Court observed that strict limitation provisions and inability to obtain effective relief by statutory appeal can lead to denial of livelihood and constitute a ground for entertaining writ. Applying these principles, the Single Judge's conclusion that the writ was not maintainable was held to be erroneous. [Paras 7, 8, 9]

Writ petition is maintainable; the Single Judge erred in holding otherwise.

Definition and scope of adjudicating authority under the Uttarakhand Goods and Services Tax Act - scope and remedy under Section 107 (appeals) of the Uttarakhand Goods and Services Tax Act, 2017 - Characterisation of the officer who passed the impugned order and the applicability of appeal remedy under Section 107 was examined; the matter requires remand for merits. - HELD THAT: - The Court analysed the definition of 'adjudicating authority' in the Uttarakhand Act and the statutory scheme including provisions for appointment and powers of officers (Sections 2, 3 and 5). Observing precedent where the Commissioner was held not to be an 'adjudicating authority' for the purpose of an appeal, the Court noted that Assistant Commissioners operate under the Commissioner and are not shown to act independently under the Act. Having found error in the Single Judge's maintainability conclusion but noting that no merits were considered below on cancellation of registration, the Court did not decide the substantive correctness of the cancellation order. Instead, it remanded the matter to the Single Judge for adjudication on merits. [Paras 12, 13, 14, 15, 16]

Matter remanded to the Single Judge for consideration on merits; determination of appealability/competence and correctness of cancellation left to the remand adjudication.

Final Conclusion: The appeal is allowed; the High Court's order dismissing the writ as not maintainable is set aside. The writ petition is held maintainable on the grounds stated and the matter is remanded to the Single Judge for fresh consideration on merits.

Cancellation of registration under Section 29 of the GGST Act read with Rule 22 - adequacy of a show cause notice - requirement to disclose material particulars - violation of principles of natural justice by reliance on undisclosed material - quashing of administrative order and remand for de novo proceedings - restoration of GSTIN pending fresh adjudication

Adequacy of a show cause notice - requirement to disclose material particulars - cancellation of registration under Section 29 of the GGST Act read with Rule 22 - The show cause notice dated 14.12.2021 and the consequential order of cancellation dated 30.12.2021 were examined for legal validity. - HELD THAT: - The Court found that the show cause notice did not set out any material particulars which would enable a prudent person to make an effective response. The notice merely reproduced the grounds appearing in the Rules without indicating in what manner the registration was prima facie obtained by fraud, wilful misstatement or suppression of facts. On that basis the notice was held to be legally inadequate and not tenable. Because the foundational notice was deficient, consequential cancellation founded upon it could not stand. [Paras 7, 8]

The show cause notice dated 14.12.2021 and the cancellation order dated 30.12.2021 are quashed and set aside for being without necessary material particulars.

Violation of principles of natural justice by reliance on undisclosed material - quashing of administrative order and remand for de novo proceedings - restoration of GSTIN pending fresh adjudication - Whether the respondent authority relied upon material not disclosed in the show cause notice and whether the matter should be remitted for fresh consideration. - HELD THAT: - The cancellation order referred to initiation of separate investigative proceedings and relied upon a letter dated 14.12.2021 which contained material not disclosed in the show cause notice. The authority therefore proceeded on new material which was not brought to the notice of the writ applicant and so denied a reasonable opportunity to meet the allegations. That conduct amounted to breach of the principles of natural justice. In view of the infirmity, the Court directed that the matter be remitted to the respondent authority for de novo proceedings and indicated that the authority must follow the directions previously issued by this Court in related matters. [Paras 7, 8, 9]

The matter is remitted to the respondent authority for de novo proceedings; the GSTIN of the writ applicant is restored and the authority is directed to comply with applicable judicial directions on procedure.

Final Conclusion: The Court quashed the show cause notice and the cancellation order as legally deficient and contrary to natural justice, restored the registration, and remitted the matter to the respondent authority for fresh adjudication in accordance with law.

Regular bail - prima facie satisfaction for enlargement on bail - consideration of nature and gravity of offence - custody duration as a factor - application of Sanjay Chandra principles - no special circumstances to withhold bail - deposit as a bail condition - non-misuse of liberty and cooperation with investigation

Regular bail - prima facie satisfaction for enlargement on bail - consideration of nature and gravity of offence - custody duration as a factor - application of Sanjay Chandra principles - no special circumstances to withhold bail - Grant of regular bail to the applicant - HELD THAT: - The Court, applying the guiding principle in Sanjay Chandra and having regard to the nature of allegations in the FIR without traversing evidence in detail, found prima facie that the case was fit for exercise of discretion to grant regular bail. The Court noted that the investigation is recorded as concluded by filing of the complaint, the applicant has been in custody since 22.08.2021, co-accused at lower levels had been enlarged on default bail, the maximum sentence contemplated is five years, and the Investigating Officer could not point to any special circumstances necessitating denial of bail. On these cumulative considerations the Court exercised its discretion in favour of bail.

Application for regular bail allowed and the applicant ordered released on bail subject to conditions.

Deposit as a bail condition - non-misuse of liberty and cooperation with investigation - surrender of passport and movement restrictions - periodic reporting to police - trial court's power to vary conditions - Imposition and nature of conditions accompanying bail - HELD THAT: - The Court imposed specific conditions as a precondition to release: execution of personal bond with one surety of like amount; obligations not to misuse liberty or obstruct investigation; surrender of passport; restriction on leaving the State without trial court permission; monthly attendance at the police station for six months; furnishing and not changing residence without prior permission; and a condition to deposit an amount of Rupees One Crore within six months with the Department, with the first installment due by 14.03.2022 and an undertaking to be filed within one week of release. The Court observed that the concerned trial court may delete, modify or relax any condition in accordance with law and that the trial court shall not be influenced by preliminary observations made while granting bail.

Bail granted subject to the enumerated conditions, with liberty for the trial court to vary them and to act on any breach.

Final Conclusion: Bail application allowed: the applicant is enlarged on regular bail on execution of the prescribed bond and compliance with specified conditions (including deposit and reporting obligations); the trial court retains power to alter conditions and to act if conditions are breached.

Limitation for filing appeal - appellate limitation under Section 107 of the CGST Act - condonation of delay - cancellation of GST registration - absence of GST Appellate Tribunal - remand for fresh consideration - remedy when Tribunal not constituted

Limitation for filing appeal - appellate limitation under Section 107 of the CGST Act - condonation of delay - Validity of the first appellate authority's dismissal of the appeal as time barred. - HELD THAT: - The appellate authority proceeded under Section 107(1) and (4) of the CGST Act, which prescribes a three month limitation for filing an appeal and permits one further month by way of condonation on sufficient cause. The Court recognised that the appellate authority may be correct in holding that extension beyond the one month period cannot be condoned. However, the Court nonetheless examined the broader consequences of allowing a final dismissal on limitation when no GST Tribunal has been constituted under the statute, leaving the petitioner without any alternate statutory remedy. The Court therefore did not decide the merits of condonation but treated the limitation point in the context of availability of remedy and the equities of the case. [Paras 6, 7]

The Court did not uphold the appellate dismissal as an end to the matter; having regard to the absence of a constituted Tribunal and the resulting lack of remedy, the limitation point was not allowed to foreclose further consideration of the petitioner's grievance.

Cancellation of GST registration - absence of GST Appellate Tribunal - remand for fresh consideration - remedy when Tribunal not constituted - Whether the matter should be remanded for reconsideration of cancellation of GST registration by the assessing/cancelling authority. - HELD THAT: - The Court found that respondent No.2 had suo motu cancelled the petitioner's GST registration on the ground of non filing of returns and that, in the absence of a constituted GST Tribunal, the petitioner would effectively be left without a remedy if the appellate order was allowed to stand. In the facts and circumstances, and without expressing any opinion on the merits of cancellation, the Court considered it just and proper to remit the matter to respondent No.2 for fresh consideration. The Court directed that the respondent No.2 shall reconsider the grievance and pass an appropriate order in accordance with law, and observed that the petitioner shall submit all returns as required under the statute when the matter is heard on remand. [Paras 7, 8, 9]

Matter remanded to respondent No.2 to reconsider the cancellation of GST registration and pass an appropriate order in accordance with law; petitioner to submit all statutory returns when the matter is heard on remand.

Final Conclusion: Writ petition disposed by remanding the challenge to cancellation of GST registration to respondent No.2 for fresh consideration and appropriate order in accordance with law; no opinion expressed on merits; petitioner to file all returns; no order as to costs.

Jurisdiction to issue notice under section 148 - validity of notice under section 148 where reasons are recorded by an officer lacking jurisdiction - requirement to record reasons for reopening assessment - applicability of section 129 on change of incumbent within the same jurisdiction - continuation of proceedings by successor officer and necessity of fresh notice where initial notice was issued without jurisdiction - invalidity of proceedings and orders passed without jurisdiction - limitation for reassessment (six-year period) and its effect where no valid notice is issued within time

Jurisdiction to issue notice under section 148 - validity of notice under section 148 where reasons are recorded by an officer lacking jurisdiction - requirement to record reasons for reopening assessment - Validity of the notice dated 28.03.2018 issued by the first respondent under section 148 for reassessment of assessment year 2011-2012. - HELD THAT: - The Court applied settled law that jurisdiction cannot be conferred by consent and an assessing officer who lacks jurisdiction cannot validly issue the notice required to reopen assessment. Section 148 requires the assessing officer to record reasons under subsection (2) and issue the notice under subsection (1); the officer recording reasons must be the competent officer having jurisdiction. In the present case the appellant was on the file of the second respondent and the first respondent had no jurisdiction to issue the notice dated 28.03.2018. Consequently, that notice lacked legal sanctity and is invalid. [Paras 14]

Notice dated 28.03.2018 issued by the first respondent under section 148 is invalid for want of jurisdiction.

Applicability of section 129 on change of incumbent within the same jurisdiction - continuation of proceedings by successor officer and necessity of fresh notice where initial notice was issued without jurisdiction - invalidity of proceedings and orders passed without jurisdiction - Whether the second respondent could continue the reassessment proceedings by issuing notice dated 14.12.2018 under section 143(2) read with section 129 without issuing a fresh notice under section 148. - HELD THAT: - Section 129 permits continuation of proceedings when there is a change of incumbent within the same jurisdiction; it does not apply where the predecessor lacked jurisdiction to initiate the proceedings. The files were transmitted after the appellant pointed out lack of jurisdiction, but the second respondent, being the jurisdictional assessing officer, did not issue a fresh notice under section 148 and instead relied on continuation under section 129. Since the initial initiation was by an officer without jurisdiction, the successor could not lawfully continue the reassessment on that basis. Therefore the notice dated 14.12.2018 and consequential continuance of proceedings are invalid. [Paras 14, 16]

Notice dated 14.12.2018 and continuation of reassessment proceedings by the second respondent under section 129 (without a fresh valid section 148 notice) are invalid.

Limitation for reassessment (six-year period) and its effect where no valid notice is issued within time - invalidity of proceedings and orders passed without jurisdiction - Effect of the limitation period for reopening assessment for assessment year 2011-2012 where no valid notice was issued by the jurisdictional officer within the prescribed time. - HELD THAT: - The Court noted that the six-year limitation for reopening assessments for the assessment year 2011-12 expired on 31.03.2018. Admittedly, no valid notice under section 148 was issued by the jurisdictional assessing officer within the statutory time frame. Because the initial notice by the non-jurisdictional officer was invalid and no fresh valid notice was issued in time by the competent officer, the statutory limitation precludes continuation of reassessment. In view of this, the Court found it unnecessary to examine the factual contention whether any income was omitted. [Paras 16]

Limitation for reopening the assessment expired and no valid section 148 notice was issued by the jurisdictional officer within time; reassessment cannot be sustained.

Final Conclusion: The writ appeal is allowed: the notice dated 28.03.2018 issued by the first respondent under section 148 and the consequential notice dated 14.12.2018 issued by the second respondent are set aside as invalid; the reassessment proceedings initiated thereunder stand quashed. No costs.

Deduction under section 80IB(10) - nature of income as determinant for deduction - burden to prove character of receipts - allocation of common/legal and professional expenses among projects - disallowance of expenditure relating to ineligible project

Deduction under section 80IB(10) - nature of income as determinant for deduction - burden to prove character of receipts - Sustenance of disallowance of deduction claimed on receipts described as 'extra work' amounting to Rs.2,99,910/- - HELD THAT: - The assessee was otherwise eligible for deduction under section 80IB(10) in respect of the 'Khinvasara Fort' project. The assessee separately claimed deduction on an amount described as receipts from 'extra work' but failed to furnish any particulars or evidence as to the nature of that work before the Assessing Officer or the Commissioner (Appeals). Section 80IB(10) permits deduction only in respect of profit derived from an eligible housing project; income from works unconnected with the development of the eligible project, charged separately, does not qualify. Because the nature of the 'extra work' could not be shown or examined, the authorities were justified in rejecting the claim for deduction in respect of that amount. [Paras 4, 5]

Disallowance of Rs.2,99,910/- towards 'extra work' is upheld for lack of evidence to establish that such receipts qualified for deduction under section 80IB(10).

Allocation of common/legal and professional expenses among projects - disallowance of expenditure relating to ineligible project - deduction under section 80IB(10) - Sustenance of disallowance of Rs.11.00 lakh paid as architect/legal and professional fees and consequential adjustment to deduction under section 80IB(10) - HELD THAT: - Payments of Rs.11.00 lakh to architects/consultants were shown as relating to the 'Nirvana' project, which was not eligible for section 80IB(10). The assessee, however, produced a project-wise schedule and the profit and loss account showing total legal and professional charges, part of which were allocated to the eligible 'Fort' project. Out of total legal and professional expenses of Rs.14.11 lakh, Rs.6.97 lakh was allocated to the eligible project; applying the same proportion to the disputed Rs.11.00 lakh yields a share of Rs.5.43 lakh attributable to the eligible project. Since the AO had disallowed the entire Rs.11.00 lakh, the proper consequence is to sustain disallowance of the amount as paid but to restore the appropriate share to the eligible project for the purpose of computing deduction under section 80IB(10), thereby increasing the deduction by the allocated share. [Paras 6, 7]

Disallowance of Rs.11.00 lakh is sustained, but Rs.5.43 lakh (the apportioned share attributable to the eligible 'Fort' project) is to be treated as allowable for computing deduction under section 80IB(10), resulting in an increase of deduction by that amount.

Final Conclusion: The appeal is partly allowed: the claim on 'extra work' of Rs.2,99,910/- is disallowed for want of proof that it qualified under section 80IB(10), while the disallowance of Rs.11.00 lakh in professional fees is sustained with an apportioned sum of Rs.5.43 lakh restored to increase the deduction under section 80IB(10).

Date of issue of an administrative order - dispatch/receipt not conclusive for determining date of issue - presumption of regularity of official acts (sec. 114(e) Indian Evidence Act) - limitation under section 263(2) of the Income Tax Act - revision under section 263 for order erroneous and prejudicial to revenue - doctrine of merger and effect of appellate orders on revision jurisdiction - failure to make inquiry as test of error in assessment - jurisdictional effect of non-issue or non-mention of notice under section 143(2)

Date of issue of an administrative order - dispatch/receipt not conclusive for determining date of issue - limitation under section 263(2) of the Income Tax Act - presumption of regularity of official acts (sec. 114(e) Indian Evidence Act) - Whether the revision orders dated 31/03/2017 were barred by limitation because they were dispatched only on 07/04/2017. - HELD THAT: - The Tribunal held that the question is one of fact: an order is regarded as issued when it is released from the control of the authority. Evidence of dispatch alone is not conclusive to displace the apparent date of signing on the order. In the absence of material showing that the orders were not signed or were retained after signing, the statutory presumption of regularity (sec. 114(e) Evidence Act) applies and the date subscribed on the order (31/03/2017) stands as the date of issue. The assessee failed to discharge the onus of proving that the orders were not issued on the date they were signed; reliance solely on postal dispatch records does not rebut the presumption. The reasoning in the Apex Court decision cited (Mohammed Meeran Shahul Hameed) was applied as laying down the legal principle that dispatch/receipt do not automatically determine the date of issue, but the factual determination remains for the authority on the record. [Paras 4]

Assessee's limitation challenge fails; orders dated 31/03/2017 are not barred by limitation.

Doctrine of merger and effect of appellate orders on revision jurisdiction - revision under section 263 for order erroneous and prejudicial to revenue - Whether the doctrine of merger (the fact of appellate proceedings/decision) ousts the revisional jurisdiction under section 263. - HELD THAT: - The Tribunal observed that the appellate proceedings before the first appellate authority dealt with the computation and characterization of capital gains and did not decide the distinct question which formed the basis for revision - namely, failure of the AO to make further inquiries into frequent land transactions and possible assessment as business income. Since the issues before the appellate authority and the revisional authority were different, the doctrine of merger does not operate to oust the revisional jurisdiction. The Revenue has not accepted the AO's stand and the matters remain open; consequently revision could properly be initiated. [Paras 5]

Doctrine of merger does not preclude the revision; ground raised by assessee is rejected.

Failure to make inquiry as test of error in assessment - revision under section 263 for order erroneous and prejudicial to revenue - Whether the assessments were erroneous and prejudicial to revenue on merits because the AO failed to make necessary inquiries regarding sales of immovable property. - HELD THAT: - The Tribunal applied the settled four-fold test for revision (including omission to make inquiry) and held that absence of proper inquiry where facts warranted further investigation renders an assessment erroneous and prejudicial to revenue. The law (including statutory amendment effective 01/06/2015) treats an order made without an inquiry, which ought to have been made, as per se erroneous. Given information of frequent land transactions and discrepancies in declared sale values, the revisional exercise was justified. The assessee raised no substantial contrary contention on this aspect. [Paras 6]

Revision on merits was justified; challenges on this ground fail.

Jurisdictional effect of non-issue or non-mention of notice under section 143(2) - finality of concluded assessment proceedings - Whether non-issue or non-mention of notice under section 143(2) renders the assessments invalid and therefore not amenable to revision under section 263. - HELD THAT: - The Tribunal noted that while service of notice under section 143(2) is ordinarily material to framing an assessment u/s 143(3), the question whether such notice is a jurisdictional fact depends on circumstances and conflicting precedents. More importantly, non-mention of issuance of notice in the assessment order is not conclusive proof that notice was not issued. Collateral proceedings cannot be used to relitigate facts of the original assessment; only proved or admitted facts in the revision proceedings may be considered. Given absence of conclusive proof regarding non-issue of notice, and the settled reluctance to disturb finality without clear basis, the plea of invalidity was rejected. [Paras 7]

Assessee's contention based on non-issue or non-mention of notice u/s 143(2) is not established and is rejected.

Revision under section 263 for order erroneous and prejudicial to revenue - Whether the revision is vitiated because reasons recorded in the assessment proceedings were not furnished to the assessee. - HELD THAT: - The Tribunal treated this ground as vague and unsubstantiated. The assessee did not place material to show that the reasons recorded were with-held or that such non-furnishing affected the validity of the revision proceedings. The point was not shown to arise properly in the revision; accordingly it was rejected summarily. [Paras 8]

Ground is vague and unsubstantiated and is rejected.

Final Conclusion: All appeals by the assessees are dismissed: the revision orders dated 31/03/2017 are not time-barred on the record; doctrine of merger does not preclude revision; revision was justified on merits for failure of inquiry; the contention based on non-issue of notice u/s 143(2) is not established; and the vague claim about non-furnishing of reasons is rejected.

Interpretation of 'six months' under section 54EC of the Income tax Act, 1961 - commencement of the investment period from the date of transfer under section 54EC of the Income tax Act, 1961 - permissibility of part wise investment for claiming exemption under section 54EC of the Income tax Act, 1961 - beneficial construction of tax exemption provisions

Interpretation of 'six months' under section 54EC of the Income tax Act, 1961 - beneficial construction of tax exemption provisions - Whether the period of "six months" prescribed by section 54EC is to be reckoned as six calendar months or as 180 days. - HELD THAT: - The Tribunal examined coordinate bench decisions of the Mumbai ITAT which interpreted the expression 'six months' in section 54EC as meaning six calendar months and not a period of 180 days. Given that section 54EC is a beneficial provision enacted to encourage investment in notified bonds, the provision should be construed in a manner consistent with its purpose. Applying that interpretation to the facts, a transfer effected in October 2013 yielded a six calendar month window running from November 2013 through April 2014. The investment made on 30.04.2014 therefore fell within the six calendar months allowed by the section.

Six months under section 54EC is to be read as six calendar months; the investment on 30.04.2014 was within that period and thus timely.

Commencement of the investment period from the date of transfer under section 54EC of the Income tax Act, 1961 - Whether the time limit for making investment under section 54EC begins from the date of transfer of the asset or from the date of receipt of sale consideration. - HELD THAT: - The Tribunal agreed with the authorities below that the statutory language of section 54EC starts the permissible period 'after the date of such transfer.' The provision therefore fixes the commencement from the date of transfer recorded in the instrument of transfer (sale deed), and not from the date on which consideration is received. The clarity of the transfer date in the sale deed precludes shifting the commencement to receipt of consideration.

The six month period for investment under section 54EC commences from the date of transfer and not from the date of receipt of consideration.

Permissibility of part wise investment for claiming exemption under section 54EC of the Income tax Act, 1961 - Whether the investment required by section 54EC must be made in a single lump sum or may be made in parts. - HELD THAT: - The Tribunal observed that section 54EC does not impose a bar on making the investment in installments. The statutory scheme contemplates that investment may be made 'as a whole or in part' of the capital gains, and there is no provision conditioning the benefit on a single lump sum investment. Consequently, partial investments within the statutory period qualify for exemption to the extent they meet the section's requirements.

Investment under section 54EC may be made in parts; partial investment within the prescribed period is permissible for claiming exemption.

Final Conclusion: The appeal is allowed: the investment in notified bonds made on 30.04.2014 is held to be within six calendar months from the date of transfer and qualifies for exemption under section 54EC for AY 2014 15; the addition of the claimed amount is deleted.

Carry forward and set off of unabsorbed depreciation - treatment of unabsorbed depreciation as current depreciation in succeeding years - application of section 32(2) as amended by the Finance Act to unabsorbed depreciation brought forward on 1st April 2002 - precedential effect of jurisdictional High Court decision

Carry forward and set off of unabsorbed depreciation - treatment of unabsorbed depreciation as current depreciation in succeeding years - application of section 32(2) as amended by the Finance Act to unabsorbed depreciation brought forward on 1st April 2002 - precedential effect of jurisdictional High Court decision - Allowance of carry forward to future years of unabsorbed depreciation pertaining to A.Y. 2000-01 and A.Y. 2001-02 and its treatment as current depreciation. - HELD THAT: - The Appellate Tribunal examined the Revenue's solitary grievance against the CIT(A)'s allowance of carry forward of unabsorbed depreciation relating to A.Y. 2000-01 and A.Y. 2001-02. The CIT(A) followed the decision of the Hon'ble Gujarat High Court in General Motors India Pvt. Ltd. v. DCIT, which held that unabsorbed depreciation available on 1st April 2002 is to be dealt with in accordance with section 32(2) as amended and, where applicable, becomes part of the current depreciation of succeeding years and is available for carry forward and set off without the eight-year restriction. The Departmental Representative before the Tribunal did not place any contrary binding decision of the jurisdictional High Court or the Supreme Court to distinguish that precedent. In light of the binding effect of the jurisdictional High Court decision and its direct application to the facts, the Tribunal found no reason to interfere with the CIT(A)'s allowance of the carry forward and treatment as current depreciation. [Paras 7, 8, 9]

The ground raised by the Revenue is dismissed and the CIT(A)'s order allowing the carry forward and treatment as current depreciation is upheld.

Final Conclusion: The Revenue's appeal is dismissed; the carry forward of unabsorbed depreciation pertaining to A.Y. 2000-01 and A.Y. 2001-02, treated as part of current depreciation in succeeding years in accordance with the jurisdictional High Court decision, is upheld.

Allowability of commission expenses paid to agents and test of commercial expediency - genuineness of payments and onus of proof where TDS and service-tax compliance exist - treatment of receipts as deemed dividend under Section 2(22)(e) - deductibility of employer's contribution to PF/ESI and timeliness under Section 36(1)(va)

Allowability of commission expenses paid to agents and test of commercial expediency - genuineness of payments and onus of proof where TDS and service-tax compliance exist - Deletion of addition disallowing commission payments made to Paras Petrofils Ltd. and Sonic Biochem Extractions Ltd. - HELD THAT: - The Tribunal affirmed the CIT(A)'s finding that the Assessing Officer's disallowance was based on presumption and conjecture without adverse evidence to controvert agreements, bank payments, TDS deduction and service-tax compliance. The Tribunal noted authorities holding that where sufficient evidence supports the authenticity of commission payments and the agents have capacity to render services, the payments cannot be disallowed merely because the commission rate is higher or customer-wise invoice particulars are not shown. On facts the commissions were supported by agreements, confirmations and third party replies; the AO did not produce evidence of diversion/return of funds or other adverse material. Applying the commercial expediency test and relevant precedents, the Tribunal upheld deletion of the addition. [Paras 21, 22, 23]

Addition disallowing commission expenses deleted and revenue's ground dismissed.

Treatment of receipts as deemed dividend under Section 2(22)(e) - Deletion of addition treating certain receipts from Pawan Syntex Pvt. Ltd. and Rashmi Polyfab Pvt. Ltd. as deemed dividend under Section 2(22)(e). - HELD THAT: - On examination of ledger accounts and transactional details the Tribunal accepted the CIT(A)'s finding that the lump sum receipts were business receipts/receivables and arose from sale and job work transactions rather than loans. The net effect on merging the concerned ledger accounts showed receivable balances consistent with business transactions. The revenue did not produce contrary material to displace the factual finding of the CIT(A). Accordingly the Tribunal found no infirmity in deleting the addition under Section 2(22)(e). [Paras 26, 27, 28]

Addition under Section 2(22)(e) deleted and revenue's ground dismissed.

Deductibility of employer's contribution to PF/ESI and timeliness under Section 36(1)(va) - Whether employees' contributions to PF and ESI, paid after the statutory due dates but within the financial year, are deductible. - HELD THAT: - The Tribunal observed that the issue is presently covered by the jurisdictional High Court decision adverse to the assessee (CIT v. GSRTC) and that a Special Leave Petition in that matter is pending before the Supreme Court. Noting precedents and earlier practice of this Bench, the Tribunal did not finally reverse the factual/ legal conclusion adverse to the assessee; instead the matter was restored to the file of the CIT(A) with a direction to decide in accordance with the eventual outcome of the pending SLP. For present purposes the appeal is allowed for statistical purposes, leaving open the assessee's right to seek relief if the High Court ratio is upset by the Apex Court. [Paras 29, 32, 34, 35]

Appeal allowed for statistical purpose and matter remitted to the CIT(A) to be decided in accordance with the outcome of the pending SLP of the GSRTC matter.

Final Conclusion: The Tribunal dismissed the revenue's appeals challenging deletion of commission payments and the deletion of deemed dividend additions (AY 2011 12), and set aside the assessee's challenge to the disallowance of late PF/ESI contributions for statistical disposal with remand to the CIT(A) to decide in accordance with the outcome of the pending Supreme Court SLP.

No penalty on estimated additions - penalty under Section 271(1)(c) for furnishing inaccurate particulars/ concealment - validity of notice under Section 274 r.w.s. 271(1)(c) - deletion of penalty - reopening under Section 147 based on search information

No penalty on estimated additions - penalty under Section 271(1)(c) for furnishing inaccurate particulars/ concealment - Whether penalty under Section 271(1)(c) could be sustained in respect of estimated additions made in assessment for AY 2014-15. - HELD THAT: - The assessment for AY 2014-15 was reopened and additions were made on an estimation basis. It is a settled legal position that penalties under Section 271(1)(c) cannot be levied where the income has been assessed on estimation. The Tribunal relied on earlier decisions to this effect and noted that no contrary legal position or fact was placed before it by the Revenue. Since the addition on which the penalty was founded was purely estimative, the imposition of penalty could not be sustained and had to be deleted. [Paras 6, 7, 8]

Penalty under Section 271(1)(c) deleted and appeal allowed for AY 2014-15.

No penalty on estimated additions - penalty under Section 271(1)(c) for furnishing inaccurate particulars/ concealment - Whether penalty under Section 271(1)(c) could be sustained in respect of estimated additions made in assessment for AY 2007-08. - HELD THAT: - Facts in the AY 2007-08 appeal were similar to the lead case: the assessment was completed after reopening and additions were made on estimation basis. Applying the same settled principle that penalties under Section 271(1)(c) are not leviable on estimated additions, the Tribunal held that the finding in the lead case applied mutatis mutandis. Consequently, there was no legal basis to uphold the penalty levied on the estimative assessment. [Paras 10, 11, 12]

Penalty under Section 271(1)(c) deleted and appeal allowed for AY 2007-08.

Final Conclusion: Both appeals allowed: penalties levied under Section 271(1)(c) for AY 2014-15 and AY 2007-08, which were founded on estimated additions, are deleted as no penalty is leviable on estimated additions.

Power of revision under section 263 of the Income tax Act - erroneous and prejudicial to the interests of the revenue - claim of deduction under section 54B of the Income tax Act - lack of enquiry versus inadequate enquiry - assessment officer taking a plausible view - prohibition on roving and fishing enquiries

Power of revision under section 263 of the Income tax Act - erroneous and prejudicial to the interests of the revenue - claim of deduction under section 54B of the Income tax Act - assessment officer taking a plausible view - lack of enquiry versus inadequate enquiry - prohibition on roving and fishing enquiries - Validity of the Pr. CIT's exercise of revision under section 263 in respect of the Assessing Officer's allowance of deduction under section 54B. - HELD THAT: - The Tribunal examined whether both statutory preconditions for invoking revision-an order being 'erroneous' and 'prejudicial to the interests of the revenue'-were satisfied. Reliance was placed on authorities including Malabar Industrial Co. Ltd. vs. CIT , CIT vs. Max India Ltd. , and decisions distinguishing 'lack of enquiry' from 'inadequate enquiry' such as Gabriel India Ltd. and Sunbeam Auto Ltd. . The assessment record showed that the Assessing Officer had called for and considered details (including 7/12 extracts, sale deeds, valuation report and Index II) and had recorded that the documentation was kept on file. That finding demonstrates application of mind and some enquiry; where the officer takes a plausible view after enquiry, the order cannot be branded 'erroneous' merely because the Commissioner would have taken a different view. The Pr. CIT did not place any material on record to show non compliance with conditions of s.54B or total lack of enquiry. In these circumstances allowing revision to reopen concluded matters would amount to a roving and fishing enquiry contrary to the settled principle in Parashuram Pottery Works Co. Ltd. vs. ITO . Accordingly, the exercise of revision was not justified. [Paras 9, 10, 11, 12]

The revision order under section 263 setting aside the assessment in respect of deduction claimed under section 54B was unjustified and is set aside.

Final Conclusion: The Tribunal allowed the appeal, setting aside the Pr. CIT's order passed under section 263 and upholding the Assessing Officer's allowance of the deduction under section 54B for assessment year 2016 17.

Penalty under section 271(1)(c) - time limit for imposition of penalty - concealment of income - voluntary disclosure - capital gains on sale of land - agricultural land and 8 km rule - penalty notice - remand for fresh adjudication - undisclosed interest income

Penalty under section 271(1)(c) - time limit for imposition of penalty - Whether the penalty order was passed within the statutory time limit prescribed for imposition of penalty. - HELD THAT: - The Tribunal applied the time bar provisions in Section 275 and held that Section 275(1)(c) is applicable because there was no appeal against the assessment additions. The statutory period in such cases is six months from the assessment order or the end of the financial year in which proceedings in which penalty action was initiated are completed, whichever is later. The penalty order dated 07/06/2018 was passed within six months of the assessment order dated 20/12/2017 and therefore was held to be within time. [Paras 5]

Penalty order held to be passed within time; Ground No.1 dismissed.

Concealment of income - voluntary disclosure - capital gains on sale of land - agricultural land and 8 km rule - penalty notice - remand for fresh adjudication - Whether penalty for concealment of capital gain on sale of land was justified on the facts and whether the penalty order should be sustained or remitted for fresh consideration. - HELD THAT: - The Tribunal noted the Assessing Officer's findings that the assessee did not disclose capital gains from sale of land in the return and that the disclosure made in correspondence followed queries and notice by the AO, negativing a bona fide voluntary offer. Reliance was placed on authority holding that wilful concealment is not an essential ingredient for civil penalty and that record before the officer, if sustaining a finding of concealment, is sufficient. On the material before the Tribunal there was a prima facie finding of concealment. However, the assessee produced additional evidence before the Tribunal claiming the land was agricultural and beyond 8 km; these documents were not before the AO. In the interest of justice the Tribunal set aside the penalty insofar as it related to the sale of the impugned land and directed remand to the AO to decide the issue afresh after giving opportunity to the assessee, allowing the assessee to file relevant documents and directing the AO to verify whether agricultural income from the land had been offered in earlier years and to independently collect necessary evidence. [Paras 6, 7, 8]

Penalty in respect of concealment of capital gain set aside and remitted to the Assessing Officer for fresh adjudication after opportunity and verification; Grounds Nos.2 & 3 allowed for statistical purpose.

Undisclosed interest income - Penalty under section 271(1)(c) - remand for fresh adjudication - Whether the penalty imposed for alleged concealment of interest income should be sustained or remitted for fresh inquiry. - HELD THAT: - The assessment order recorded a penalty initiation in respect of interest credited to the assessee's account which the assessee had not explained during assessment proceedings. The Tribunal observed that the AO had levied penalty for concealing the interest income and, in view of the need for further inquiries and to afford the assessee opportunity, set aside this part of the penalty and remitted it to the AO to decide afresh after conducting necessary inquiries and giving the assessee an opportunity to be heard. [Paras 3, 8]

Penalty in respect of undisclosed interest income set aside and remanded to the Assessing Officer for fresh decision after enquiries and opportunity to the assessee.

Final Conclusion: The appeal is partly allowed for statistical purposes: the Tribunal held the penalty order was time bar compliant but set aside the penalty insofar as it related to the capital gain on sale of land and the undisclosed interest, remitting both matters to the Assessing Officer for fresh adjudication after giving the assessee opportunity and allowing production of relevant documents; the remaining grounds were dismissed.

Condonation of delay for filing appeal - reasonable cause for delay attributable to counsel - revisionary jurisdiction under section 263 - limitation under section 263(2) - doctrine of merger and commencement of limitation - erroneous and prejudicial to the interests of revenue (twin conditions)

Condonation of delay for filing appeal - reasonable cause for delay attributable to counsel - Whether the delay of 1769 days in filing the appeal should be condoned and the appeal admitted for adjudication on merits. - HELD THAT: - The Tribunal examined the explanation and documentary evidence regarding the delay, including the failure of the assessee's tax counsel to file the appeal and the assessee's serious injuries and prolonged incapacity. Applying settled principles that a litigant ordinarily does not benefit from delay and that each day's delay must be explained in a commonsense manner, the Bench found the circumstances to constitute sufficient and reasonable cause. The Tribunal relied on precedents recognizing counsel's failure and genuine illness as grounds to condone delay and held that, in the interest of justice and fair play, the appeal ought to be heard on merits rather than dismissed on technical grounds. [Paras 5]

Delay of 1769 days is condoned and the appeal is admitted for adjudication on merits.

Revisionary jurisdiction under section 263 - limitation under section 263(2) - doctrine of merger and commencement of limitation - erroneous and prejudicial to the interests of revenue (twin conditions) - Whether the order passed by the Principal Commissioner of Income Tax under section 263 setting aside the reassessment framed under sections 143(3) r.w. 147 is sustainable or is barred by limitation and/or unsustainable on merits. - HELD THAT: - The Tribunal found that the matters on which the PCIT sought revision (current liabilities, withdrawals against capital and non charging of service tax) were not the subject matter of the reasons recorded under section 148(2) nor were they dealt with in the reassessment proceedings culminating in the order dated 18.12.2013. Relying on the principle that where the issue sought to be revised under section 263 is not part of the reassessment, the period of limitation for invoking section 263 runs from the original assessment (and not from the reassessment), the Bench held that in the present case there was no original assessment under section 143(3) from which limitation could legitimately be reckoned in favour of the revenue. The Tribunal applied the ratio that the doctrine of merger does not apply where the subject matter of revision was not considered in reassessment, and concluded that the PCIT's exercise of jurisdiction was hopelessly barred by limitation. Independently on merits, the Bench held that the PCIT did not demonstrate that the reassessment order was both erroneous and prejudicial to the revenue; the alleged non examination of the cited balance sheet items did not render the assessment erroneous nor was prejudice to revenue made out. [Paras 11, 12, 13, 14, 15]

The revisionary order under section 263 is barred by limitation and, alternatively, is unsustainable on merits; the section 263 order is quashed.

Final Conclusion: The appeal is allowed: the delay in filing the appeal is condoned and the appeal admitted; the order passed by the Principal Commissioner under section 263 (setting aside the reassessment) is quashed as barred by limitation and not shown to be erroneous and prejudicial to the revenue.

Rectification under section 154 - debatable issue not a mistake apparent on the record - allowability of interest expenditure where borrowed funds are invested as share capital - nexus between expenditure and income - deductibility of expenditure notwithstanding non-realisation of contemplated income - consistency of assessment treatment

Rectification under section 154 - debatable issue not a mistake apparent on the record - deductibility of expenditure notwithstanding non-realisation of contemplated income - Whether the disallowance of interest expenditure by rectification under section 154 (in assessment for AY 2014-15) was permissible where the assessee had invested borrowed funds as share capital in partnership firms and the partnership deed provided for interest on capital though such interest was not paid for want of profits. - HELD THAT: - The Tribunal held that the question whether interest paid on loans borrowed and invested as capital of partnership firms is deductible where no interest or remuneration was actually received by the partner is a debatable question of law and fact. Reliance on authorities including Eastern Investments Ltd. and Rajendra Prasad Mody was noted to support the principle that an expenditure may be deductible even if it did not, in fact, produce income in the relevant year. A rectification under section 154 requires an obvious and patent mistake and cannot be used to revisit a debatable point which admits of two opinions. Applying these principles to the facts - existence of a partnership deed provision for interest, claim of interest expenditure allowed in the original assessment, and contested legal questions - the Tribunal concluded that disallowance by way of rectification was not justified because the issue was debatable and not an apparent mistake on the record. [Paras 13, 14]

Rectification under section 154 could not be sustained; appeal allowed and disallowance set aside.

Allowability of interest expenditure where borrowed funds are invested as share capital - nexus between expenditure and income - consistency of assessment treatment - Whether interest expenditure claimed and disallowed in the regular assessment (not by rectification) for AY 2014-15, where loans were held to have been used for personal/home purposes and invested as share capital, was rightly sustained by the CIT(A). - HELD THAT: - The Tribunal noted that the assessment for this year involved a direct disallowance in the assessment order after enquiries (including responses from financiers) indicating that the loans were for personal/home purposes and that funds were invested as share capital in the firms. The CIT(A) gave reasons why the interest expenditure lacked the requisite nexus with taxable business or other income (the only foreseeable return being exempt share of profit) and rejected the assessee's contention about contingent future receipt of interest. The assessee did not place material before the Tribunal to overturn those findings. Unlike the prior matter decided by rectification, this was a substantive adjudication in the assessment and the Tribunal found no infirmity in the reasoning of the CIT(A). [Paras 19, 20]

CIT(A)'s disallowance in the assessment sustained; appeal dismissed.

Final Conclusion: The Tribunal allowed the appeal challenging the rectification (section 154) disallowance on the ground that the question of allowability of the interest was debatable and not an apparent mistake, but dismissed the separate appeal against a substantive disallowance in the assessment for the same tax year where the AO and CIT(A) had recorded factual findings about the loans' personal/home character and the lack of nexus with taxable income.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - voluntary/suo motu disclosure during appellate proceedings - bonafide mistake backed by legal opinion and subsequent alignment with regulatory mandate - componentisation of tangible fixed assets and consequent reversal of depreciation - acceptability of disclosure where Revenue has not detected the error and has not contested the factual claim

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - voluntary/suo motu disclosure during appellate proceedings - bonafide mistake backed by legal opinion - componentisation of tangible fixed assets and consequent reversal of depreciation - Levy of penalty under section 271(1)(c) where the assessee, during appellate proceedings, suo motu surrendered excess depreciation claimed earlier and gave a bona fide explanation based on a legal opinion and subsequent componentisation mandated by MCA. - HELD THAT: - The Tribunal examined whether the assessee's voluntary surrender of excess depreciation of Rs.6.78 crores, made during appellate proceedings to align tax records with books after componentisation of assets following an MCA notification, warranted penalty under section 271(1)(c). The assessee had earlier capitalised entire consideration as building based on a legal opinion and only later, after obtaining independent valuation and applying component accounting prospectively, reversed the depreciation attributable to land and plant & machinery and offered the excess to tax. The disclosure was made before any detection by the Revenue; the Assessing Officer had not discovered the excess claim and the CIT(A) directed enhancement only after the assessee's submission. The Revenue did not controvert the factual narrative or demonstrate that the original claim was patently incorrect; in fact the surrendered amount was accepted without examination. Given the bona fide basis for the original treatment, the proactive correction to align books due to a regulatory mandate, and absence of concealment or non-disclosure persisting against the department, the Tribunal held that the facts did not attract penal consequences under section 271(1)(c). The Tribunal emphasised that voluntary rectification made honestly and prior to detection, supported by explanation and uncontroverted by Revenue, negates the element of concealment required for imposing penalty. [Paras 12, 13, 14, 16, 17]

Penalty levied under section 271(1)(c) deleted; appeal allowed.

Final Conclusion: Penalty under section 271(1)(c) imposed for alleged concealment in A.Y. 2015-16 set aside: the assessee's suo motu disclosure during appellate proceedings, made to align tax records with componentised books on bona fide grounds and not controverted by Revenue, does not warrant imposition of penalty.

Deduction under section 80P(2)(a)(i) - entitlement of cooperative society where members include associate/'B' class members - Principle of mutuality and its application to cooperative societies - Distinction between cooperative society and cooperative bank for purposes of section 80P(4) - Deduction under section 80P(2)(d) - interest/dividend from investments in District Central Cooperative Bank

Deduction under section 80P(2)(a)(i) - entitlement of cooperative society where members include associate/'B' class members - Principle of mutuality and its application to cooperative societies - Distinction between cooperative society and cooperative bank for purposes of section 80P(4) - Assessee entitled to deduction under section 80P(2)(a)(i) despite having A and B class (associate) members - HELD THAT: - The Tribunal, following coordinate-bench authority, examined the facts and relevant statutory scheme and held that the assessee is a cooperative society registered under the Tamil Nadu Co-operative Societies Act, 1983 and was not carrying on banking business requiring an RBI licence. The decision reasoned that Section 80P(4) was enacted to exclude cooperative banks functioning as banks from the benefit, and does not deny the section to primary agricultural credit societies which transact only with their members. The Tribunal distinguished Citizen Co-operative Society where non-members/nominal members and banking-like activities were present; here members (including associate members) are admitted under the State Act and identifiable in records in accordance with Section 22 and Rule 32, and transactions are confined to members. On these findings, mutuality was not defeated and the assessee qualified for the deduction under section 80P(2)(a)(i). [Paras 5]

Claim of deduction under section 80P(2)(a)(i) allowed

Deduction under section 80P(2)(d) - interest/dividend from investments in District Central Cooperative Bank - Interest income from investment in District Central Co-operative Bank eligible for deduction under section 80P(2)(d) - HELD THAT: - On the question whether interest received from deposits with the District Central Co-operative Bank is taxable as 'other income', the Tribunal followed its earlier decision and the jurisdictional High Court ruling holding that interest/dividend earned by a co-operative society from investments made in a District Central Co-operative Bank (which is itself a co-operative society) is for the benefit of the members and is eligible for deduction under section 80P(2)(d). Applying that precedent to the assessee's facts, the Tribunal concluded that the interest falls within the scope of the exemption provision. [Paras 6]

Interest income from District Central Co-operative Bank allowed as deduction under section 80P(2)(d)

Final Conclusion: Appeal allowed: deduction under section 80P(2)(a)(i) granted for business income despite presence of A and B class (associate) members; interest income from District Central Co-operative Bank allowed under section 80P(2)(d).

Penalty under section 271(1)(c) - Concealment of income - Furnishing inaccurate particulars of income - Vitiation of penalty for non-specific charge in notice - Addition under section 68 - Inadvertent mistake rectified during assessment - Penalty not sustainable where addition is not on account of concealment

Penalty under section 271(1)(c) - Vitiation of penalty for non-specific charge in notice - Concealment of income - Furnishing inaccurate particulars of income - Validity of penalty proceedings where notice under section 274 read with section 271(1)(c) does not specify whether penalty is for concealment of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal applied settled precedents holding that the two limbs of section 271(1)(c) are distinct offences and that initiation of penalty proceedings must specify the particular charge. The notice initiating penalty in this case stated that the assessee had either "concealed the particulars of income or... furnished inaccurate particulars of such income", thereby failing to specify which limb was being invoked. Reliance was placed on Supreme Court and High Court authorities and earlier Tribunal decisions to conclude that a notice which does not specify the precise charge renders the penalty proceedings vitiated. In these circumstances the imposition of penalty could not be sustained. [Paras 6]

Penalty proceedings set aside as the notice did not specify whether penalty was for concealment or for furnishing inaccurate particulars of income.

Addition under section 68 - Inadvertent mistake rectified during assessment - Penalty not sustainable where addition is not on account of concealment - Whether, on merits, penalty could be sustained having regard to the nature and quantum of additions and the assessee's conduct. - HELD THAT: - The Tribunal noted that the Assessing Officer himself recorded that the cash deposit said to be a loan related to a date outside the assessment year, and that the small discrepancy in salary was an inadvertent error rectified by the assessee during assessment proceedings. It applied the principle that mere acceptance of assessment and payment of tax/interest does not justify imposing penalty unless the addition is shown to be on account of concealment. Given that the cash deposit issue related to a date outside the year and the salary shortfall was corrected, the facts did not support a finding of concealment or deliberate furnishing of inaccurate particulars. [Paras 6]

On merits penalty is not sustainable as the additions do not demonstrate concealment and the salary shortfall was an inadvertent mistake rectified before the AO.

Final Conclusion: The appeal is allowed and the penalty imposed under section 271(1)(c) for Assessment Year 2012-13 is set aside.

Disallowance of depreciation - claim of addition to written down value as capital expenditure versus revenue repairs - proof of purchase and delivery challans - burden of proof on the assessee - appellate interference with findings of fact - ex-parte disposal

Disallowance of depreciation - proof of purchase and delivery challans - claim of addition to written down value as capital expenditure versus revenue repairs - burden of proof on the assessee - appellate interference with findings of fact - Validity of disallowance of depreciation claimed on stainless steel pipes/tubes added to block of plant and machinery - HELD THAT: - The Assessing Officer disallowed depreciation on the ground that the assessee failed to prove actual purchase and use of stainless steel pipes/tubes, noting absence of delivery challans, implausibility of installation by internal staff, inconsistency between claiming the cost as addition to fixed assets (implying new laying) and the assessee's assertion of replacement, lack of evidence of scrap realisation, and missing details of ancillary items used for installation. The learned Commissioner of Income Tax (Appeals) recorded detailed findings rejecting the assessee's explanations as unconvincing and confirmed the disallowance. The Tribunal, after hearing the Departmental Representative and observing that the CIT(A)'s conclusions are supported by material on record and not controverted by the absent assessee, declined to interfere with those findings of fact. The Tribunal therefore upheld the factual conclusion that the assessee did not discharge the burden of proof to establish the purchase and capitalisation of the pipes/tubes and sustained the disallowance of depreciation. [Paras 6, 7, 9]

The disallowance of depreciation on the claimed additions to plant and machinery is upheld; the appeals are dismissed.

Final Conclusion: Both appeals filed by the assessee against the disallowance of depreciation for assessment years 2014-15 and 2015-16 are dismissed; the Tribunal declines to interfere with the CIT(A)'s factual findings in the absence of contrary material.

Entitlement to drawback on excise duty paid for indigenously procured inputs used in export - invalidated advance licence with permission to procure indigenously - effect of erroneous reference to advance licences in shipping bills - discharge of show cause notice and refund with interest

Entitlement to drawback on excise duty paid for indigenously procured inputs used in export - invalidated advance licence with permission to procure indigenously - Whether petitioner was entitled to claim and receive drawback where advance licences for direct import had been invalidated and the inputs were procured indigenously on payment of excise duty and used in the exported manufacture. - HELD THAT: - The Court found on the documentary record that the advance licences had been invalidated for direct import but expressly allowed procurement of the relevant HDPE indigenously from Reliance Industries Ltd. It is undisputed that the petitioner procured the granules domestically on payment of excise duty and used them in manufacture of exported twine/ropes, and that the petitioner obtained Export Obligation Discharge Certificates. Given these facts, the petitioner was properly entitled to claim drawback of excise duty paid on locally procured inputs used in the exported goods. The Court accepted the respondents' concession that excise duty paid on locally procured inputs used for export can be claimed as drawback and held that the factual position entitled the petitioner to drawback despite the invalidation of the licences for direct import. [Paras 3, 6, 9, 10]

Petitioner entitled to the drawback that was rightly granted by DGFT as the inputs were indigenously procured and used in export.

Effect of erroneous reference to advance licences in shipping bills - discharge of show cause notice and refund with interest - Whether the erroneous indication of advance licence numbers in ARE-1 and shipping bills justified recovery of the drawback and sustenance of the show cause notice and impugned order. - HELD THAT: - The Court noted that the shipping bills mistakenly referred to advance licences but that this factual error did not undermine the substantive position that the licences had been invalidated for direct import and the inputs were procured indigenously. The respondents' reasoning, reflected in the impugned order, placed weight on an erroneous presumption that there was no legal documentary evidence of invalidation; the Court found that observation to be incorrect. Consequently, the error in the shipping bills, which the petitioner could have corrected in time, was not a ground to deny drawback or to sustain the recovery proceedings. The Court thus quashed the impugned order, discharged the show cause notice and directed refund of amounts deposited with applicable interest within four weeks of application for refund. [Paras 5, 11, 12, 13]

Errorous reference in shipping documents did not justify recovery; impugned order quashed, show cause discharged and refund directed with applicable interest.

Final Conclusion: Impugned order dated 18th May 2011 quashed; show cause notice discharged; amounts deposited to be refunded with applicable interest within four weeks of application; petition disposed with no order as to costs.

Preservation of rights pending appellate remedy - abeyance of administrative order - interim relief where tribunal is non-functional - delegation/reallocation of investigative responsibility - no collateral effect of judicial observations on administrative officers - independent adjudication before the tribunal or court

Preservation of rights pending appellate remedy - abeyance of administrative order - interim relief where tribunal is non-functional - Whether the rights of the licence-holder against the order dated 05.04.2022 should be preserved and whether the order should be kept in abeyance pending availment of appellate remedy before the Tribunal. - HELD THAT: - The Court noted that the 1st respondent had filed an appeal against the order dated 05.04.2022 before the Tribunal and was unable to obtain listing of its interlocutory application because of non-availability of Tribunal members. In view of these circumstances the Court preserved all rights of the 1st respondent to pursue remedies in accordance with law and, as an interim measure, kept the order dated 05.04.2022 in abeyance while granting liberty to the 1st respondent to move for appropriate reliefs within a week. The direction was ancillary and limited to maintaining the status quo so that the appellate remedy can be effectively pursued. [Paras 6]

All rights of the 1st respondent are preserved; the order dated 05.04.2022 is kept in abeyance and liberty granted to pursue remedies within one week.

Delegation/reallocation of investigative responsibility - no collateral effect of judicial observations on administrative officers - independent adjudication before the tribunal or court - Whether the Single Judge's direction in paragraph 110 to entrust investigation to another officer continues to operate and what effect the observations against the officer would have. - HELD THAT: - The Court observed that the order dated 05.04.2022 was passed by the officer who then held the post of Commissioner of Customs (Preventive) and that he is no longer working in that capacity. The Court found the direction in paragraph 110 of the impugned judgment to have 'worked itself out' and therefore clarified that any further proceedings pursuant to the order dated 05.04.2022 shall be taken up and concluded by the Commissioner of Customs (Preventive), Ernakulam. The Court further declared that observations made against the officer in the impugned judgment were recorded as findings by the Single Judge and shall not bear further effect on the individual officer. Finally, the Court emphasised that all questions and consequences arising from steps taken are to be independently adjudicated by the Tribunal or the Court on their merits, uninfluenced by the impugned judgment. [Paras 7, 9, 10, 11]

The paragraph 110 direction has lapsed; further proceedings under the order dated 05.04.2022 shall be conducted by the Commissioner of Customs (Preventive), Ernakulam; observations against the officer shall not bear further effect and all consequential questions are to be decided afresh by the Tribunal or Court.

Final Conclusion: Writ appeal disposed: the order dated 05.04.2022 is kept in abeyance with liberty to the licence-holder to pursue appellate remedies within a week; the earlier direction to reassign the investigation has been clarified as worked out and further proceedings shall be handled by the Commissioner of Customs (Preventive), Ernakulam, while observations against the officer shall have no further effect and all consequential issues are to be independently adjudicated by the Tribunal or Court.

Proper officer - jurisdiction to issue show cause notice under Section 28 - reopening of assessment / power to recover duty - Directorate of Revenue Intelligence Additional Director General - substantial question of law - setting aside proceedings for want of authority

Proper officer - jurisdiction to issue show cause notice under Section 28 - Directorate of Revenue Intelligence Additional Director General - setting aside proceedings for want of authority - Validity of the show cause notice dated 27/29.8.2002 issued by the Additional Director General, DRI, and consequent proceedings under the Customs Act, 1962. - HELD THAT: - The Court applied the principles laid down by the Apex Court in Canon India and subsequent authority, holding that Section 28 empowers the recovery of duties through 'the proper officer' and that Section 2(34) requires specific assignment of functions to an officer to render him a 'proper officer'. The Court held that proceedings initiated by the Additional Director General, DRI, by issuing the show cause notice were without authority of law because that officer was not shown to be the Customs 'proper officer' charged with assessment/re-assessment in the relevant jurisdiction. Consequentially, the OIO and all further proceedings founded on that show cause notice could not be sustained and were set aside. The Court expressly declined to adjudicate the merits of the substantial questions of law framed earlier because the foundational notice was held invalid. [Paras 10, 11, 12, 13, 15]

Show cause notice dated 27/29.8.2002 issued by the Additional Director General, DRI, was without authority of law; consequential proceedings including the CESTAT order are set aside.

Substantial question of law - Foreign Trade Policy conditions on advance licence - sale of duty free goods after completion of export obligation - Whether the substantial questions of law framed on admission (concerning conditions of advance licence and sale of duty-free goods after discharge of export obligation) should be decided in this appeal. - HELD THAT: - Although the appeal was admitted to consider specified substantial questions of law, the Court refrained from expressing any opinion on those questions because it held the initiating show cause notice to be without authority of law. The Court therefore left those substantial questions open for consideration and did not decide them on merits. [Paras 1, 14, 15]

The substantial questions of law framed on 12.1.2012 are kept open and no opinion is expressed thereon.

Final Conclusion: The tax appeal is allowed: the show cause notice dated 27/29.8.2002 issued by the Additional Director General, DRI, and consequential proceedings including the CESTAT order are quashed and set aside; the substantial questions of law framed earlier are left open; no order as to costs.

Switching of samples - evidentiary value of expert report - preservation of samples - classification of goods for export duty and drawback - confiscation with option of redemption - penalties under the Customs Act - invocation of extended period of limitation

Switching of samples - preservation of samples - evidentiary value of expert report - Validity and probative value of the CLRI test reports and the Revenue's allegation of switching of samples sent for expert examination. - HELD THAT: - The Tribunal considered the two CLRI reports dated 07.10.2016 and 09.11.2016 which are inconsistent as to the result and descriptive detail (notably colour). The first report certified that the sample satisfied the Public Notice norms for finished leather; the second certified non-satisfaction. The Revenue relied on an allegation of switching of samples but the Mahazar dated 14.10.2016 does not record drawing of samples and the authorities have not explained what was sent to CLRI, how samples were preserved for over three weeks before sending them for testing, or where switching allegedly occurred. Given leather's susceptibility to change and the absence of chain-of-custody or preservation evidence, the Tribunal found the revenue's explanation inadequate to displace the first expert report. The Tribunal therefore held that the Revenue had not satisfactorily shaken the veracity of the first CLRI report and that the second report could not form a reliable basis for confiscation, duty demand or penalties. [Paras 9, 10, 11, 12, 13]

The first CLRI report is accepted; the allegation of switching of samples is not established and the second report does not reliably detract from the first.

Classification of goods for export duty and drawback - confiscation with option of redemption - penalties under the Customs Act - Sustainability of confiscation, duty demands, withdrawal of drawback and penalties premised on the CLRI finding of non-satisfaction of Public Notice norms. - HELD THAT: - The adjudicating authority confirmed confiscation (with option of redemption), demand of duty at the rate applicable to unfinished leather, interest and penalties, and rejected drawback, all based on the CLRI report of 09.11.2016. Since the Tribunal accepted the earlier CLRI report and found the revenue's case for switching and reclassification unsubstantiated, the foundational basis for confiscation, duty demand, appropriation of bank guarantees, rejection of drawback and penalties collapsed. Consequently, the impugned orders and the confirmed demands could not be sustained. [Paras 13, 14]

Confiscation, duty demand, withdrawal of drawback and penalties set aside; appeals allowed.

Invocation of extended period of limitation - Applicability of the extended period of limitation on the facts of these cases as compared to the coordinate bench decision relied upon by the Department. - HELD THAT: - The revenue relied on a coordinate bench decision upholding invocation of the extended limitation period in a clear case of mis-declaration. The Tribunal observed that the present cases are distinguishable because the Revenue's case is founded on an unsubstantiated allegation of sample switching rather than proved mis-declaration. Absent satisfactory proof of mis-declaration, the coordinate bench's reasoning on extended limitation did not support the Revenue's position here. [Paras 13]

Invocation of the extended period of limitation was not sustained on these facts.

Final Conclusion: The appeals are allowed. The Tribunal accepted the first CLRI report and found that the Revenue failed to prove switching of samples or to establish a reliable basis for reclassification, confiscation, duty demands, withdrawal of drawback and penalties; the impugned orders and confirmed demands are set aside.

Classification of imported goods (Areca nuts vs supari) - provisional release under Section 110A of the Customs Act, 1962 - option to pay fine in lieu of confiscation under Section 125 - discretionary for prohibited goods, mandatory for other goods - Circular No.22/2004-Cus. - provisional assessment/release in classification disputes - prompt exercise of administrative discretion in respect of perishable seized consignments

Classification of imported goods (Areca nuts vs supari) - Prima facie classification and the adjudicating authority's duty to determine whether the consignments fall under Chapter 8 (Areca nuts) or Chapter 21 (betel nut product 'supari'). - HELD THAT: - The Court examined the competing classificatory contentions and noted that Chapter 21 is residuary for certain food preparations and specifically includes 'supari', which the petitioners say denotes coarsely cut edible areca nut. The product sample and photographs prima facie showed split areca nuts that had not been softened for consumption, making it at least arguable that they may not be 'supari' as imported. The Court, however, did not undertake final adjudication on classification; instead it directed the assessing authority to undertake a prima facie determination of classification while disposing the provisional release applications. Questions concerning FSSAI certification, retesting and contradictory laboratory reports are factual matters to be examined by the authority with assistance from the parties. [Paras 13, 14, 19, 20]

Authority to proceed to a prompt prima facie classification in each case, after hearing the petitioners, rather than permitting prolonged withholding of consignments.

Provisional release under Section 110A of the Customs Act, 1962 - Circular No.22/2004-Cus. - provisional assessment/release in classification disputes - prompt exercise of administrative discretion in respect of perishable seized consignments - Availability and procedural disposal of applications for provisional release of the seized consignments. - HELD THAT: - Relying on the statutory scheme for provisional release and the Board's Circular No.22/2004-Cus., the Court held that consignments involved in classification disputes should not be withheld where clearance is not totally prohibited; samples may be drawn and provisional assessment/release allowed with adequate security. Given the perishable nature of the goods and their prolonged detention since February 2022, the Court directed that petitioners be permitted to make or update applications under Section 110A and that such applications, when received, be disposed of by the adjudicating authority after hearing the petitioners and making a prima facie classification within two weeks of receipt. [Paras 15, 17, 20, 21]

Petitioners permitted to apply for provisional release; adjudicating authority to decide such applications after hearing and prima facie classification within two weeks, with due regard to Circular No.22/2004-Cus. and the perishable nature of goods.

Option to pay fine in lieu of confiscation under Section 125 - discretionary for prohibited goods, mandatory for other goods - Legal effect of Section 125 regarding availability of option to pay fine where goods are confiscated, and its application to prohibited goods. - HELD THAT: - The Court explained the statutory distinction in Section 125: where goods are 'prohibited' and confiscated, the officer has a discretion to offer an option to pay fine in lieu of confiscation; but where goods are not prohibited, the officer 'shall' offer the option to pay a fine in lieu of confiscation. The Court emphasised that where discretion exists (as with prohibited goods) the authority must nonetheless exercise it promptly, particularly for perishable consignments. [Paras 15, 16, 17]

Section 125 confers discretion to the officer in the case of prohibited goods to offer fine in lieu of confiscation, but that discretion must be exercised promptly, especially for perishable goods.

Final Conclusion: Writ petitions disposed by directing petitioners to apply or update applications for provisional release under Section 110A; adjudicating authority to hear the parties and make a prima facie classification and dispose the applications within two weeks of receipt, having regard to Circular No.22/2004-Cus. and the need for prompt administrative action in respect of perishable consignments; no impleadment of DRI and no costs.

Oppression and mismanagement - appointment of administrator - suspension of the Board - quorum requirement in articles of association - interim relief under Sections 241 and 242 of the Companies Act, 2013 - mediation by administrator - sharing of administrative costs

Appointment of administrator - interim relief under Sections 241 and 242 of the Companies Act, 2013 - Appointment of an independent Administrator to manage the day-to-day affairs of the 01st Respondent Company and suspension of the existing Board until further orders. - HELD THAT: - The Tribunal found that the Board of the 01st Respondent Company was non-functional as two nominee directors of the 02nd Respondent had resigned, and the Articles of Association required presence of Xander and Mantri nominees for a valid quorum, rendering the company headless and its affairs at a standstill. The contention of the 02nd Respondent that appointment of an Administrator would enable the Petitioners to escape liability was rejected as unsustainable; when the Petitioners hold 50.23% and the parties are deadlocked, it is in the interest of the company and stakeholders to appoint an independent Administrator. Exercising its powers under the provisions invoked in the Company Petition, the Tribunal appointed Justice (Retd.) Shri Anand Byra Reddy as Administrator and suspended the Board to enable effective management until disposal of the petition. The order contemplates administration as an interim, protective remedy to cure the impasse and preserve the company's functioning (see paras 9 and 10). [Paras 9, 10]

An independent Administrator was appointed and the Board suspended with immediate effect to manage the company's affairs until further orders.

Quorum requirement in articles of association - suspension of the Board - Effect of the Articles of Association's quorum and nominee-director provisions on the company's ability to hold Board meetings and the consequent need for interim management. - HELD THAT: - The Articles require, inter alia, presence of at least one Xander Director and one Mantri Director for a valid quorum while specifying minimum Board strength. With the resignation of Xander nominees and a resulting inability to constitute a functional Board, no Board meeting could be validly convened, preventing decision-making. This deadlock supported the Tribunal's conclusion that interim administration was necessary to enable the company to function and protect stakeholder interests (see para 8 for the Articles and para 9 for application). [Paras 8, 9]

The Articles' quorum and nominee-director provisions rendered the Board incapable of functioning, justifying interim suspension and appointment of an Administrator.

Sharing of administrative costs - appointment of professionals by Administrator - Terms governing the Administrator's remuneration, ability to engage professionals, and sharing of expenses where the company is unable to pay. - HELD THAT: - The Tribunal fixed a monthly honorarium for the Administrator and permitted engagement of advisors, auditors, advocates, company secretaries or other professionals with prior permission of the Tribunal, the costs of whom shall be borne by the company. Recognising the possibility that the company may be unable to meet these expenses, the Tribunal directed that such honorarium and related expenses shall, in that event, be borne equally by the Petitioners' group and the 02nd Respondent group. These measures ensure the Administrator can function while allocating responsibility for costs equitably between the two principal shareholder groups if the company cannot pay (see para 10(a)-(d)). [Paras 10]

Administrator's honorarium and engagement of professionals permitted; if the company cannot pay, expenses to be borne equally by the Petitioners' group and the 02nd Respondent group.

Mediation by administrator - reporting to Tribunal - Obligations of the Administrator to mediate between shareholder groups and to report to the Tribunal periodically. - HELD THAT: - The Tribunal directed the Administrator to strive to mediate between the Petitioners' Group and the 02nd Respondent Group, examine ongoing contentious issues and counsel the parties towards amicable resolution. Further, the Administrator was required to file independent monthly reports to the Tribunal, with the first report to be filed within four weeks after service on both sides. These directions impose active duties on the Administrator to both attempt reconciliation and keep the Tribunal informed of developments to facilitate further orders (see para 10(e)-(f)). [Paras 10]

Administrator to mediate between the shareholder groups and file monthly reports to the Tribunal, first within four weeks.

Final Conclusion: The Tribunal, finding a deadlock caused by resignation of nominee directors and the resulting inability of the Board to function, appointed an independent Administrator, suspended the Board, fixed terms for remuneration and engagement of professionals, provided for equal sharing of expenses if the company cannot pay, directed the Administrator to mediate between the parties and to file monthly reports, and listed the petition for further hearing.

Winding up for default in filing annual returns - Winding up for fraudulent conduct and misfeasance - Dissolution under Section 302(2) of the Companies Act, 2013 - Liquidator's report where no realizable assets are found - Recording of dissolution in Registrar's register

Dissolution under Section 302(2) of the Companies Act, 2013 - Liquidator's report where no realizable assets are found - Whether the company in liquidation should be dissolved under Section 302(2) having regard to the Official Liquidator's report that there are no assets and winding up process cannot proceed further. - HELD THAT: - The Tribunal examined the Official Liquidator's report and accompanying material which show that the company ceased commercial operations after 2012, last filed its balance sheet on 31.03.2012, had negligible paid-up capital and recorded losses, and that no realizable assets or books of account could be located at the registered office. The Liquidator's attempts to obtain asset information from governmental offices and to take possession of assets were unsuccessful and communications were returned undelivered; the directors did not cooperate and no statement of affairs was filed. The balance sheet indicated no public deposits, no bank/financial institution loans and no charges registered. The Tribunal found that continuation of the liquidation process would serve no useful purpose, would incur further expense, and that public interest would not be adversely affected by dissolution. Applying Sub section (2) of Section 302 and Rule 175 insofar as relevant, the Tribunal concluded it was just and reasonable to dissolve the company forthwith. [Paras 4, 5]

The Tribunal accepted the Official Liquidator's report that there are no realizable assets and that the liquidation process is complete in practical terms, and ordered dissolution of the company with effect from the date of the order.

Recording of dissolution in Registrar's register - What consequential directions should follow upon dissolution of the company. - HELD THAT: - On dissolution, the Tribunal directed the Registry to forward a copy of the order to the Registrar of Companies, NER, Guwahati, for recording a minute of dissolution in the company register. The Official Liquidator was also directed to forward a copy of the order to the Registrar for the same purpose. These directions implement the statutory and administrative formalities consequent to the Tribunal's dissolution order. [Paras 6, 7]

Registry and Official Liquidator to forward the order to the Registrar of Companies who shall record the minute of dissolution in the register.

Final Conclusion: IA (Comp. Act) No. 27/GB/2022 in C.P. No. 21/GB/2019 is allowed; M/s Saradha Griha Developers Private Limited (in liquidation) is dissolved with effect from 21.06.2022, and the Registrar of Companies is directed to record the minute of dissolution.

Stay of interim order pending disposal - opportunity to file replies and rejoinder - requirement of a reasoned and speaking order - principles of natural justice - remand for fresh adjudication on merits

Stay of interim order pending disposal - The interim order dated 03.06.2022 shall remain stayed until disposal of IA(IBC)579/CHE/2022 in CP/1307/IB/2018. - HELD THAT: - The Tribunal considered rival contentions regarding the effect of the Adjudicating Authority's interim order dated 03.06.2022 and concluded that, until IA(IBC)579/CHE/2022 is finally disposed of by the Adjudicating Authority, the interim order will remain stayed by this Tribunal. The stay preserves the position of the parties pending adjudication and ensures that no operative change takes place pursuant to the impugned interim order while the matter is being heard and decided by the Adjudicating Authority in accordance with the directions given by this Tribunal.

Interim order dated 03.06.2022 is stayed until the Adjudicating Authority disposes of IA(IBC)579/CHE/2022.

Opportunity to file replies and rejoinder - principles of natural justice - Contesting respondents (including Respondent Nos.1, 2 and 13) are granted time to file replies/responses/counters and the Appellant/liquidator may file rejoinder thereafter. - HELD THAT: - After hearing the parties, the Tribunal granted ten days to Respondent Nos.1 and 2 and Respondent No.13 to file their replies/responses/counters in IA(IBC)579/CHE/2022. On receipt of those pleadings, the Appellant/liquidator is permitted to file a rejoinder within one week. The Tribunal emphasised that the Adjudicating Authority must afford adequate opportunity of hearing to all contesting parties before passing any order, reflecting the requirement to observe natural justice and to allow the parties to place their legal and factual contentions on record.

Time granted for filing replies and rejoinder; adequate opportunity of hearing must be afforded to all contesting parties.

Requirement of a reasoned and speaking order - remand for fresh adjudication on merits - principles of natural justice - The Adjudicating Authority is directed to consider the pleadings and rejoinder and to pass a reasoned, speaking order on merits after providing adequate opportunities; the matter is remitted for final hearing and adjudication. - HELD THAT: - The Tribunal directed the National Company Law Tribunal (Adjudicating Authority) to take into account the replies/responses/counters filed by the contesting respondents and any rejoinder filed by the liquidator, and thereafter to decide IA(IBC)579/CHE/2022 on merits. The Adjudicating Authority is required to adhere to the principles of natural justice and to record qualitative and quantitative reasons in a speaking order. The Tribunal set timelines: other respondents to complete pleadings within seventeen days, after which the Adjudicating Authority shall take up the matter for final hearing and pass orders within two weeks, uninfluenced by observations made by the Tribunal. Thus the matter has been remitted for fresh consideration on the merits in accordance with law.

Adjudicating Authority to adjudicate IA(IBC)579/CHE/2022 afresh on merits, after considering pleadings and rejoinder, and to pass a reasoned/speaking order in accordance with natural justice within the timelines indicated.

Final Conclusion: The appeal is disposed by staying the impugned interim order until final disposal of IA(IBC)579/CHE/2022, permitting contesting respondents to file their pleadings and the liquidator to file rejoinder, and remitting the matter to the Adjudicating Authority with directions to decide the application on merits by passing a reasoned, speaking order after affording adequate opportunity of hearing within the prescribed timelines.

Initiation of corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt and default - service of demand notice in Form-3 and presumption arising from non-response - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional and duties of IRP - public announcement and submission of claims during CIRP

Operational debt and default - initiation of corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code, 2016 - The Operational Creditor proved existence of an operational debt and default sufficient to admit the application under Section 9 and initiate CIRP against the Corporate Debtor. - HELD THAT: - The Tribunal found that the transactions giving rise to the claimed operational debt were not disputed on the merits by the Corporate Debtor and that the Operational Creditor placed before the Adjudicating Authority invoices, challans, purchase orders, ledger statements and correspondence evidencing supply and non payment. The Corporate Debtor's reply did not advance any plausible defence capable of negating the debt; it only sought appropriation for returned goods and waiver of interest. The Tribunal accepted that the Operational Creditor had established the debt and default and therefore admission of the Section 9 petition was warranted. [Paras 22, 23]

Application under Section 9 admitted and CIRP initiated.

Service of demand notice in Form-3 and presumption arising from non-response - The Form-3 demand notice was duly served and the Corporate Debtor's failure to reply gave rise to a presumption of acknowledgment of the debt. - HELD THAT: - The Tribunal recorded that the Demand Notice in Form-3 was sent and received by the Corporate Debtor (evidenced by postal receipts and tracking report) and remained unanswered. In the absence of any substantive rebuttal to the service or to the claim, the non response supported the finding that the claimed amount was acknowledged and the Corporate Debtor was unable to pay, contributing to the conclusion of default. [Paras 6, 22]

Demand notice treated as duly served; non-response weighed in favour of admission.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional and duties of IRP - public announcement and submission of claims during CIRP - Upon admission, moratorium was declared and an Interim Resolution Professional was appointed with directions for public announcement, convening the Committee of Creditors and conduct of the CIRP, together with ancillary directives including deposit to IRP. - HELD THAT: - Following admission, the Tribunal declared the moratorium and outlined its effects consistent with the Code, directed the IRP to make the public announcement and call for claims, and appointed the named IRP as interim professional (noting the Operational Creditor had not proposed a name). The IRP was directed to convene the Committee of Creditors and identify prospective resolution applicants within the statutory time frame. The Operational Creditor was ordered to deposit an interim amount with the IRP for preliminary expenses, and registry was directed to communicate the order to concerned parties. [Paras 23]

Moratorium declared; IRP appointed and procedural directions issued for conduct of CIRP.

Final Conclusion: The Tribunal admitted the Section 9 petition, holding that the Operational Creditor established operational debt and default and that the demand notice was duly served; accordingly CIRP was ordered to commence, moratorium declared, and an Interim Resolution Professional appointed with directions for public announcement, claim submissions, constitution of the Committee of Creditors and interim compliance by the Operational Creditor.

Undervalued transaction - transaction defrauding creditors - look-back period under Section 46(1)(ii) of the IBC - avoidance of transaction under Section 49 of the IBC - tenancy created in breach of SARFAESI - tenant at sufferance - mesne profits - possession and eviction by Resolution Professional

Possession and eviction by Resolution Professional - tenant at sufferance - tenancy created in breach of SARFAESI - mesne profits - T-RMC to vacate the subject land/premises and hand over vacant peaceful possession to the Resolution Applicant with concomitant payment obligation and assistance from authorities in case of non-compliance. - HELD THAT: - On the material before the Tribunal the purported tenancy in favour of T-RMC over 1.90 acres of the corporate debtor's principal land was not permitted to remain as against the CIRP. The Tribunal directed T-RMC (and any entities) to remove its establishment, employees and machinery and hand over vacant peaceful possession to the Resolution Applicant within 30 days from the date of approval of the Resolution Plan. The Tribunal further held that, although the valuation report indicated a higher fair rent, for ends of justice T-RMC is ordered to pay a monthly sum to the Corporate Debtor pending vacation, and in default the Corporate Debtor/Resolution Applicant may claim and realise mesne profits and take eviction steps with assistance from district administration, police and other authorities. The order implements the RP's duty to secure the asset for CIRP and protects the corporate estate and creditors by restoring possession and permitting recovery of occupation charges. [Paras 11, 13, 14]

I.A.(IB) Nos. 107/KB/2021 and 1302/KB/2020 allowed in part: T-RMC directed to vacate and deliver possession and to pay occupation charges pending handover; authorities to assist on non-compliance.

Avoidance of transaction under Section 49 of the IBC - undervalued transaction - transaction defrauding creditors - look-back period under Section 46(1)(ii) of the IBC - Reliefs under sections 45/49 (avoidance/undervalued transactions) were advanced but the operative order confined to eviction and interim monetary remedy; Tribunal relied on the RP's case of undervaluation and taint but framed reliefs in possession and payment terms. - HELD THAT: - The Resolution Professional alleged the lease was an undervalued transaction created with mala fide intent to put the asset beyond the secured creditor's reach and falling within the look-back period. While the Tribunal noted the valuation and the RP's contentions regarding undervaluation and contravention of SARFAESI, the final directions granted practical reliefs - vacation of premises, payment of occupation charges and liberty to pursue mesne profits and eviction - rather than a detailed adjudication declaring the 2014/2019 agreements void on merits under Section 49. The Tribunal implemented measures to restore the corporate estate for CIRP and to protect creditors' interests pending realisation of rights under the Code. [Paras 8, 9, 11, 14]

The Tribunal accepted the RP's contentions sufficiently to order eviction and interim monetary reliefs, while permitting the Corporate Debtor/Resolution Applicant to seek further steps for recovery and eviction; the applications are allowed with directions as recorded.

Possession and eviction by Resolution Professional - The Resolution Applicant shall not be liable for any liabilities of T-RMC arising from its occupation and operations on the subject land. - HELD THAT: - The Tribunal expressly directed that the Resolution Applicant shall not assume responsibility or liability for T-RMC, its suppliers, contractors, vendors, employees or workers in relation to the occupation of the land, thereby insulating the prospective owner of the corporate assets from third-party obligations attributable to the tenant. [Paras 12]

Resolution Applicant absolved from liabilities of T-RMC in respect of the occupied premises.

Disclosure of Resolution Plans - Application for supply of copies of Resolution Plans (I.A.(IB)/429/KB/2022) dismissed as infructuous. - HELD THAT: - The applicant sought copies of all Resolution Plans submitted to the RP; the Tribunal observed that the Resolution Plan had been approved by the Committee of Creditors and the Adjudicating Authority had heard the approval application, rendering the IA infructuous. Consequently the application was dismissed. [Paras 15, 17, 18]

I.A.(IB)/429/KB/2022 dismissed as infructuous.

Final Conclusion: The Tribunal allowed the RP's interlocutory applications by directing T-RMC to vacate and hand over vacant possession to the Resolution Applicant within 30 days from approval of the Resolution Plan, ordered interim occupation payments recoverable as mesne profits if defaulted, absolved the Resolution Applicant from liabilities of T-RMC, empowered authorities to assist eviction, and dismissed the separate application for copies of Resolution Plans as infructuous.

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - failure to receive a resolution plan - committee of creditors' resolution and voting to initiate liquidation - appointment of liquidator by the Adjudicating Authority - moratorium under Section 14 and fresh moratorium under Section 33(5) - public announcement and communication to Registrar of Companies - duties of the liquidator and reporting obligations under the Liquidation Regulations

Failure to receive a resolution plan - liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - committee of creditors' resolution and voting to initiate liquidation - Corporate Debtor to be ordered into liquidation on the ground that no resolution plan was received within the prescribed timeline and the CoC resolved for liquidation. - HELD THAT: - The IRP published the invitation in Form G and, although one expression of interest was received, no resolution plan was submitted by the last date for submission. The fourth meeting of the CoC on 13.08.2020 resolved to liquidate the Corporate Debtor and authorised the RP to file the application. Notices and reminders were sent to the Haryana Tax department which held a major voting share but did not cast a vote; the Tribunal noted non-appearance and communications indicating delay by the Tax authority and treated their non-participation as lack of interest. On the facts, the Tribunal was satisfied that the circumstances in Section 33(1) (no resolution plan received within the process) were met and that the CoC had passed the requisite resolution to initiate liquidation; accordingly, the Adjudicating Authority directed liquidation in accordance with Chapter III of the Code. [Paras 12, 14, 15]

Application under Section 33(1) is allowed and the Corporate Debtor is ordered to be liquidated immediately in terms of Chapter III of the IBC, 2016.

Appointment of liquidator by the Adjudicating Authority - appointment of the Resolution Professional as liquidator with consent - Mr. Atul Mittal, the existing Resolution Professional, is appointed as liquidator having given his consent. - HELD THAT: - The CoC resolved to propose the name of the incumbent Resolution Professional as liquidator and the RP furnished written consent. In view of satisfaction of conditions under Section 33, the Tribunal exercised its power to appoint the RP as liquidator and recorded his consent to act as such in the liquidation process. [Paras 9, 14, 15]

Mr. Atul Mittal is appointed as liquidator and shall assume custody and control of the assets and properties of the Corporate Debtor with immediate effect.

Moratorium under Section 14 and fresh moratorium under Section 33(5) - public announcement and communication to Registrar of Companies - duties of the liquidator and reporting obligations under the Liquidation Regulations - Consequential directions on commencement of liquidation: cessation of earlier moratorium, commencement of moratorium under Section 33(5), public announcement, RoC notification, and liquidator's duties and reporting timelines. - HELD THAT: - On initiation of liquidation the Tribunal directed that the earlier moratorium under Section 14 shall cease and a fresh moratorium under Section 33(5) shall commence. The order requires the liquidator to take custody and control of assets, make a public announcement under the Liquidation Regulations, submit a preliminary report within seventy-five days from the commencement date and file fortnightly progress reports thereafter. The Tribunal also directed communication of the order to the Corporate Debtor, the Registrar of Companies for updating master data, and the Insolvency and Bankruptcy Board of India, and confirmed the liquidator's power to take legal action on behalf of the Corporate Debtor subject to the Code and leave of the Adjudicating Authority where required. [Paras 15]

The Tribunal issued ancillary and consequential directions necessary for the conduct of the liquidation process, including public notice, RoC update, commencement of the Section 33(5) moratorium, and liquidator's reporting and powers.

Final Conclusion: IA No. 933/2020 filed by the Resolution Professional is allowed; the Corporate Debtor is ordered into liquidation with immediate effect, Mr. Atul Mittal is appointed as liquidator, and consequential directions relating to moratorium, public announcement, reporting and communications to regulatory authorities are issued.

Corporate insolvency resolution process - operational debt and default - service of demand notice under Section 8/9 of the Insolvency and Bankruptcy Code, 2016 - admission and initiation of CIRP under Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016 - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment and powers of Interim Resolution Professional under Sections 16 to 18 of the Insolvency and Bankruptcy Code, 2016 - limitation for filing a Section 9 petition

Service of demand notice under Section 8/9 of the Insolvency and Bankruptcy Code, 2016 - Demand notice in Form 3 dated 05.10.2019 was duly served on the corporate debtor. - HELD THAT: - The Tribunal examined the proof of service placed on record, including the postal receipt and tracking report, and found that the registered post containing the demand notice was delivered to the corporate debtor. On the basis of the tracking report and accompanying affidavit, the Tribunal concluded that the statutory demand process antecedent to a Section 9 petition had been properly complied with. [Paras 9]

Demand notice held to be properly served.

Operational debt and default - admission and initiation of CIRP under Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016 - The corporate debtor owed the operational debt and the debt was in default; the liability was undisputed. - HELD THAT: - The petitioner produced invoices, delivery challan and ledger entries proving supply of printing paper and the claimed amount. The corporate debtor, in its reply, admitted the liability and inability to pay. The petitioner also filed the affidavit required under Section 9(3)(b) asserting no dispute was raised prior to the petition. Having found the existence of unpaid operational debt above the statutory threshold and no genuine dispute, the Tribunal concluded that the conditions for admission under Section 9(5)(i) were satisfied. [Paras 3, 4, 10, 12, 13]

Debt and default established and undisputed; conditions for admission under Section 9 satisfied.

Limitation for filing a Section 9 petition - The petition was filed within limitation. - HELD THAT: - The Tribunal compared the date of default as stated in Form 5 (14.12.2016) with the filing date of the petition (09.12.2019) and, on that basis, found that the petition was filed within the applicable limitation period. The admitted liability further supported the petition's maintainability. [Paras 11]

Section 9 petition held to be within limitation.

Corporate insolvency resolution process - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment and powers of Interim Resolution Professional under Sections 16 to 18 of the Insolvency and Bankruptcy Code, 2016 - Petition admitted and CIRP ordered; moratorium directed and Interim Resolution Professional appointed with specified powers and duties. - HELD THAT: - Finding that the statutory conditions under Section 9 were satisfied, the Tribunal admitted the petition and directed initiation of the corporate insolvency resolution process. Consequent to admission, the statutory moratorium under Section 14 was directed to operate from the date of the order until completion of CIRP or approval of a resolution plan or liquidation. The Tribunal appointed an Interim Resolution Professional after verifying credentials, suspended the powers of the board in terms of Section 17, and set out the IRP's duties under Section 18, including inventory, public announcement, constitution of the Committee of Creditors and reporting obligations. [Paras 14, 15, 16, 17]

CIRP ordered; moratorium imposed; Interim Resolution Professional appointed and directed to perform statutory functions.

Costs of CIRP and interim funding - Petitioner directed to deposit interim amount to meet immediate CIRP expenses. - HELD THAT: - To meet immediate expenses of the CIRP, the Tribunal directed the petitioner to deposit a specified sum with the Interim Resolution Professional within two weeks. The order provided that the amount would be accountable and reimbursable by the Committee of Creditors as CIRP cost. [Paras 18]

Petitioner ordered to deposit interim funds to IRP, recoverable as CIRP cost.

Final Conclusion: The Section 9 petition was admitted: the demand notice was held properly served, the operational debt was proved and undisputed, the petition was within limitation, CIRP was initiated with moratorium directed, an Interim Resolution Professional was appointed and the petitioner was directed to deposit interim funds to meet CIRP expenses.

Corporate Insolvency Resolution Process - Operational Debt within the meaning of section 5(21) - Date of Default - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Remedial scheme of the Code not a recovery remedy

Operational Debt within the meaning of section 5(21) - Date of Default - Whether the non-payment of the Commercial Tax amount withheld under the parties' Memorandum of Understanding constitutes an "operational debt" and whether such non payment fixed a date of default for initiating CIRP under section 9. - HELD THAT: - The Tribunal found that the admitted date when payments ceased was 19 January 2007 and that the Operational Creditor relied upon withholding of Commercial Tax sums as the triggering event for default. The Tribunal held that non payment of amounts representing Commercial Tax withheld in terms of the Memorandum of Understanding cannot be treated as an "operational debt" within the meaning of section 5(21) of the Code. Consequently, the act of paying the Commercial Tax to the authority (or withholding/payment adjustments under the MoU) did not constitute an operational default capable of sustaining a petition under section 9. [Paras 19, 20, 21]

Non payment/withholding of Commercial Tax under the MoU is not an operational debt and does not constitute a date of default for the purpose of initiating CIRP under section 9.

Section 9 of the Insolvency and Bankruptcy Code, 2016 - Remedial scheme of the Code not a recovery remedy - Limitation / delay in initiating CIRP - Whether the petition under section 9 was maintainable in the circumstances and whether the Adjudicating Authority should convert the claim into a CIRP rather than leave the petitioner to pursue recovery under other remedies. - HELD THAT: - The Tribunal noted the long gap between the asserted date of default (2007) and the demand notice (2019) and observed that the Operational Creditor sought recovery of dues rather than invoking the Code's remedial purpose of rescuing a distressed corporate debtor. The Tribunal emphasised that the Code is intended to assist a distressed corporate debtor to revive and is not a substitute for ordinary recovery proceedings. Taking these considerations together, and noting defects in the vakalatnama (not fatal), the Tribunal declined to treat the disputed claim as maintainable for initiating CIRP and dismissed the company petition. The petitioner was left free to pursue its remedies under other law. [Paras 19, 22, 23, 24]

Petition under section 9 dismissed as not maintainable in the circumstances; petitioner permitted to pursue alternate remedies under other law.

Final Conclusion: The company petition under section 9 was dismissed: amounts withheld as Commercial Tax under the parties' MoU do not constitute an "operational debt" for the purposes of section 5(21) or a date of default triggering CIRP, and the petition was not entertained as a substitute for ordinary recovery remedies; the petitioner remains at liberty to seek relief under other laws.

Intervention under Tribunal Rules - Impleadment of a third party - Maintainability of intervention applications - Right of third parties to bring alleged fraudulent or collusive initiation of CIRP to the Adjudicating Authority's notice - Examination of collusion and imposition of penalty under Section 65 of the IBC - Adjudicatory Authority to refrain from expressing opinion on merits when allowing intervention

Intervention under Tribunal Rules - Impleadment of a third party - Maintainability of intervention applications - Applicant's petition for intervention and impleadment in CP(IB) No. 2/KB/2021 - HELD THAT: - The Tribunal applied the settled position of law that any person may seek to bring to the Adjudicating Authority's notice facts suggesting initiation of CIRP fraudulently or with malicious intent, and that maintainability of such intervention is cognizable even if the intervener is not a shareholder, creditor or debtor. On perusal of the application, the record and objections, the Tribunal found material on record sufficient to permit intervention and impleadment of the Applicant in the main petition. The admission of the intervention is limited to allowing the Applicant to be heard and to place on record its allegations; it does not constitute any finding on the merits of the main petition. [Paras 5]

Intervention application is allowed to the extent of impleadment of the Applicant; the Applicant is permitted to intervene in CP(IB) No. 2/KB/2021.

Right of third parties to bring alleged fraudulent or collusive initiation of CIRP to the Adjudicating Authority's notice - Examination of collusion and imposition of penalty under Section 65 of the IBC - Adjudicatory Authority to refrain from expressing opinion on merits when allowing intervention - Whether the Tribunal adjudicated the Applicant's allegations of collusion and fraudulent initiation of CIRP or imposed any penalty under Section 65 of the IBC - HELD THAT: - The Tribunal noted the legal principle that allegations of collusion and fraudulent initiation of CIRP fall within the scope of Section 65 and may be brought to the Adjudicating Authority's notice by any person. However, having allowed intervention, the Tribunal expressly refrained from expressing any opinion on the merits of CP(IB) No. 2/KB/2021 or on the Applicant's allegations. The question of collusion, fraud or levy of any penalty under Section 65 was not adjudicated in this order and remains for consideration in the main petition or a competent forum as appropriate. [Paras 5]

Allegations of collusion and any claim for penalty under Section 65 are not decided in this order and are left open for adjudication in the main proceedings; no opinion on merits is expressed.

Final Conclusion: The application for intervention by Rishima SA Investments LLC (Mauritius) is allowed for impleadment in CP(IB) No. 2/KB/2021; the Tribunal reserved any decision on the merits of the main petition and on the Applicant's allegations of collusion or liability under Section 65 of the IBC. IVN P.7/KB/2021 is disposed of and the main petition is listed on 29.07.2022.

Corporate Insolvency Resolution Process - Operational debt and default - Service of demand notice in Form 3 - Admission under Section 9 of the Insolvency and Bankruptcy Code - Limitation for filing a Section 9 petition - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional

Service of demand notice in Form 3 - The demand notice in Form 3 dated 30.10.2019 was properly served on the corporate debtor. - HELD THAT: - The Tribunal considered the tracking report and postal receipt placed on record by the operational creditor and recorded that the speed post was delivered to the corporate debtor. On this basis the Tribunal concluded that the statutory demand had been issued and served in accordance with the requirements for initiating a Section 9 petition. [Paras 9]

Demand notice was held to have been properly served.

Operational debt and default - Admission under Section 9 of the Insolvency and Bankruptcy Code - The debt claimed by the operational creditor was proved and the corporate debtor did not dispute the liability; default was established. - HELD THAT: - The corporate debtor, in its reply, admitted its liability and inability to pay the debt. The operational creditor filed an affidavit under Section 9(3)(b) asserting that no dispute was raised by the corporate debtor. The Tribunal examined the invoices, ledger entries and the admission by the corporate debtor and found that the petitioner had established both the existence of the operational debt and the default by the corporate debtor. [Paras 10, 12, 13]

Liability admitted and default established; the operational creditor proved the debt and default.

Limitation for filing a Section 9 petition - The Section 9 petition was filed within the period of limitation. - HELD THAT: - The Tribunal noted the date of default as 02.09.2019 and recorded that the petition was filed on 15.11.2019. On examination of these dates the Tribunal found that the application was filed within limitation and therefore not time-barred. [Paras 4, 11]

Petition held to be within limitation.

Corporate Insolvency Resolution Process - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional - On satisfaction of the conditions under Section 9(5)(i) of the Code, the petition was admitted, moratorium directed and an Interim Resolution Professional appointed. - HELD THAT: - Having found proper service of the demand notice, admission of liability by the corporate debtor, proof of operational debt and default above the prescribed threshold, and that the petition was within limitation, the Tribunal concluded that the statutory conditions for admission under Section 9 were met. The Tribunal therefore admitted the petition for initiation of CIRP, declared the moratorium in terms of Section 14(1), and appointed the proposed Interim Resolution Professional, specifying his duties, the requirement to cause public announcement and to constitute the Committee of Creditors within the time prescribed. Directions were also given for cooperation by the corporate debtor and regular reporting to the Tribunal. [Paras 12, 13, 14, 16, 18]

Petition admitted; moratorium directed; Interim Resolution Professional appointed with consequential directions.

Final Conclusion: The Tribunal admitted the Section 9 petition, initiated the Corporate Insolvency Resolution Process against Crest Steel UNA Private Limited, directed moratorium measures to operate, appointed an Interim Resolution Professional and issued consequential directions for carrying forward the CIRP; the petition was held to be duly served, undisputed on merits, and filed within limitation.

Moratorium under insolvency proceedings - corporate insolvency resolution process (CIRP) - resolution plan approval - summary adjudication limits of Adjudicating Authority - enforcement of pre-CIRP contractual rights - effect of moratorium on initiation of proceedings

Moratorium under insolvency proceedings - summary adjudication limits of Adjudicating Authority - enforcement of pre-CIRP contractual rights - I.A. seeking an exit from the Joint Venture Agreement and transfer/purchase of shares during the subsistence of CIRP is not maintainable and is dismissed. - HELD THAT: - The Application, filed under Section 60(5) IBC read with Rules of the Tribunal, sought specific reliefs to effectuate the Applicant's exit from a Joint Venture Agreement entered into prior to initiation of CIRP. CIRP proceedings had commenced and a moratorium was in place; further, a resolution plan had been approved by the Committee of Creditors and the matter of approval was pending before the Adjudicating Authority. In these circumstances the Tribunal held that it could not, by summary adjudication in the instant interlocutory application, conclusively determine or enforce the parties' rights and obligations under the Joint Venture Agreement. The existence of the moratorium and the ongoing resolution process precluded passing the reliefs sought in the Application during the pendency of CIRP and the resolution plan process. [Paras 8]

The Application is dismissed as not maintainable during the subsistence of CIRP and the moratorium; no conclusive adjudication on the JV rights is made.

Resolution plan approval - effect of moratorium on initiation of proceedings - enforcement of pre-CIRP contractual rights - Whether the Applicant is precluded from agitating its contractual rights after cessation of the moratorium and approval of the resolution plan. - HELD THAT: - The Tribunal clarified that dismissal of the instant Application is without prejudice to the Applicant's substantive rights. Once the moratorium has ceased and the resolution plan is approved (and the process under the IBC permits), the Applicant is free to pursue its claims against the Corporate Debtor. The order does not finally adjudicate the merits of the contractual dispute and simply preserves the Applicant's ability to agitate its rights thereafter. [Paras 9]

Applicant is not precluded from agitating its rights against the Corporate Debtor after the moratorium ceases and on approval of the resolution plan.

Final Conclusion: The interlocutory application for exit from the JV and transfer/purchase of shares is dismissed as not maintainable during the CIRP moratorium and pending resolution plan approval; the applicant remains free to pursue its contractual rights after the moratorium has ceased and on approval of the resolution plan.

Penalty under Section 78 - Section 73(3) - voluntary payment of service tax and bar to issuance of show cause notice - Delayed payment of service tax not amounting to suppression

Section 73(3) - voluntary payment of service tax and bar to issuance of show cause notice - Penalty under Section 78 - Delayed payment of service tax not amounting to suppression - Whether the penalty under Section 78 is sustainable where the assessee paid the service tax with interest before issuance of the show cause notice and had issued legitimate invoices showing the tax. - HELD THAT: - The Tribunal found that the appellant had issued valid invoices showing the service tax liability and had paid the service tax with interest on 1st December, 2005, prior to issuance of the show cause notice dated 12.03.2017. Relying on the statutory scheme in Section 73(3), where a person has, on his own ascertainment or on being pointed out by the department, paid the service tax along with interest and informed the Central Excise Officer in writing, the department shall not serve a notice under sub-section (1) in respect of the amount so paid. The Tribunal held that the present case involved only delayed payment and not suppression of transactions; therefore the bar contemplated by Section 73(3) applies and precludes initiation of proceedings entitling imposition of penalty under Section 78. The Tribunal also observed that decisions relied upon by the appellant support this position, whereas decisions cited by the Revenue were on distinguishable facts.

Penalty imposed under Section 78 set aside; appeal allowed with consequential relief.

Final Conclusion: The penalty under Section 78 was quashed because the assessee had paid the service tax with interest before issuance of the show cause notice and there was no suppression; the matter was decided in favour of the appellant.

Definition of intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012 - seafarers recruitment services not intermediary - principal to principal relationship - export of service under Notification No. 27/2012-CE(NT) - refund of CENVAT credit - place of provision of service

Definition of intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012 - seafarers recruitment services not intermediary - principal to principal relationship - Appellant is not an intermediary within the meaning of Rule 2(f) of the POPS Rules, 2012 for the seafarers recruitment/crew supply services rendered to its overseas client. - HELD THAT: - The Tribunal examined the terms of the parties' agreement and the factual matrix and held that the Appellant selected, trained and provided trained manpower while the overseas recipient (the Manager) recruited those personnel into its own payroll, exercised control over them and paid their salaries. The agreement expressly records a "principal to principal" relationship and disavows agency, general agency, joint venture or employer-employee relationships. On these facts the Appellant did not merely arrange or facilitate the provision of the main service but provided trained manpower which the Manager assimilated and engaged; hence the Appellant does not fall within the definition of an "intermediary" in Rule 2(f). The Tribunal further applied its earlier precedents holding that seafarers' recruitment service providers, who carry out the selection, medicals, insurance, training and receive convertible foreign exchange, are not intermediaries, and found those authorities applicable to the present facts. The Commissioner (Appeals)'s conclusion treating the Appellant as an intermediary was thus erroneous. [Paras 5, 6, 7]

Appellant is not an intermediary; the services rendered are not intermediary services under Rule 2(f) and therefore are not to be treated as having their place of provision in India on that ground.

Export of service under Notification No. 27/2012-CE(NT) - refund of CENVAT credit - place of provision of service - Appellant is entitled to refund of accumulated CENVAT credit claimed under Notification No. 27/2012-CE(NT) for the period in dispute. - HELD THAT: - Having held that the Appellant's seafarers recruitment/crew supply services do not constitute intermediary services, the Tribunal concluded that the export of service classification relied upon by the Appellant stands. The Commissioner (Appeals) erred in rejecting the refund claim on the basis that the Appellant was an intermediary and the place of provision was India. The Tribunal also noted that the Department had accepted export declarations in returns and had not levied tax on the Appellant as an intermediary for the period concerned. Applying the legal characterisation reached on the primary issue and relevant precedents, the Tribunal allowed the refund claim and directed payment with applicable interest. [Paras 8]

Refund of CENVAT credit claimed for the period October, 2016 to June, 2017 is allowed and the Department is directed to pay the refund with applicable interest.

Final Conclusion: The order of the Commissioner (Appeals) is set aside. The Appellant is held not to be an intermediary for the services in question and is entitled to the refund of accumulated CENVAT credit claimed for October, 2016 to June, 2017, to be paid by the Department with applicable interest within the time directed by the Tribunal.

Remission of duty - goods destroyed before removal - place of removal under the Central Excise Act - export under bond and Let Export Order - general bond/letter of undertaking and obligation to account - Rule 21 of the Central Excise Rules - satisfactory accounting of goods lost in customs area

Goods destroyed before removal - place of removal under the Central Excise Act - Rule 21 of the Central Excise Rules - Goods destroyed by fire at the CWC CFS (within the customs notified area) are to be treated as destroyed before removal for the purpose of remission under Rule 21. - HELD THAT: - The Court found that the CWC CFS where the consignments were stored is a place permitted for deposit without payment of duty and falls within the meaning of 'place of removal' as defined under Section 4(3)(c)(ii) of the Act. Let Export Orders had been issued by Customs and the goods were under Customs supervision when they were destroyed by fire. Rule 21 authorises remission where goods are lost or destroyed by unavoidable accident at any time before removal. Applying those provisions, the Court held that destruction in the approved warehouse after Customs inspection but before export constitutes destruction before removal and satisfies the primary condition for remission under Rule 21. [Paras 15, 16, 17]

The destruction at CWC CFS is destruction before removal and thus meets the condition for remission under Rule 21.

Export under bond and Let Export Order - general bond/letter of undertaking and obligation to account - satisfactory accounting of goods lost in customs area - The bond obligation does not preclude remission where the goods have been satisfactorily accounted for as destroyed under Customs supervision. - HELD THAT: - The Notification requires furnishing a general bond or letter of undertaking to secure due arrival at the place of export and export therefrom under Customs supervision; such bond is not to be discharged until goods are exported or otherwise accounted for. The Court observed that certificates from CWC, police and fire brigade established that the goods were destroyed within the customs notified area after Let Export Order, and there was no suggestion of clandestine diversion. On that basis the goods were held to have been satisfactorily accounted for and the bond could not be the basis to deny remission. [Paras 16, 17]

Where goods under bond are destroyed within the customs area and supported by appropriate certificates, they are 'accounted for' and remission is not barred by the bond requirement.

Remission of duty - entitlement of exporter (non-manufacturer) to claim remission - An exporter who procures goods under CT-1/ARE and exports them under bond is not precluded from claiming remission merely because he is not the manufacturer. - HELD THAT: - The Court rejected the respondents' submission that only the manufacturer could claim remission. The petitioner, though not the manufacturer, had procured the goods under CT-1/ARE and exported them under general bond/Let Export Order. The Court noted that the statutory and procedural scheme contemplates removal under bond and accounting at the place of export; practical construction and absence of any clandestine removal supported permitting the exporter to claim remission in these circumstances. [Paras 18]

Petitioner, though not the manufacturer, is entitled to claim remission where the statutory conditions and accounting are satisfied.

Final Conclusion: Writ petition allowed: the orders rejecting remission were quashed and respondents directed to grant remission of excise duty in respect of the goods destroyed by fire in the customs-approved warehouse, the consignments being treated as destroyed before removal and satisfactorily accounted for under the bond/Let Export Order regime.

Liability of the manufacturer - treatment of Export Oriented Unit clearances to Domestic Tariff Area - adjustment/credit for duty paid by one unit against liability of another unit of same corporate entity - permissibility of discharge of excise duty by CENVAT credit - abatement under Notification No.23/2003 linked to positive Net Foreign Exchange

Liability of the manufacturer - adjustment/credit for duty paid by one unit against liability of another unit of same corporate entity - Whether payments of excise duty made by the DTA unit could be treated as discharge of duty liability in respect of goods manufactured by the EOU and sold in DTA, or whether the Department could insist on fresh payment by the EOU and require a refund claim to be made by the DTA unit. - HELD THAT: - The Court accepted that the duty liability under the Excise Act devolves on the manufacturer as a corporate legal entity and not on separate registrations per se. Although the petitioner maintained separate registrations for a domestic unit and an EOU, both units formed part of the same corporate manufacturer. The payment of duty by the DTA unit-whether from CENVAT credit or current account-constituted payment of the excise liability. The impugned order did not point to any specific prohibition against discharging duty by CENVAT credit in such circumstances. Requiring the petitioner to pay the same amount again through the EOU and then seek refund would amount to double payment, which the Court was unwilling to permit in the absence of statutory prohibition. Accordingly the Settlement Commission's stand that the DTA payment could not be adjusted and that the EOU must re-pay was rejected. [Paras 9, 10]

Payment of Rs.7,31,58,191 made through the DTA unit must be treated as discharge of the excise liability of the petitioner and the Settlement Commission's direction to re-pay and then claim refund was quashed.

Abatement under Notification No.23/2003 linked to positive Net Foreign Exchange - Whether the petitioner was entitled to abatement under Notification No.23/2003 in respect of DTA clearances, having regard to the alleged suspension of DTA permission and the requirement of achieving positive Net Foreign Exchange (NFE). - HELD THAT: - The Settlement Commission relied on the assertion that DTA permission was not fully operational as it had allegedly been suspended; however the final order itself recorded that the DTA permission had not been cancelled and that only a show-cause notice was pending. That pending show-cause notice could not serve as a basis to deny the abatement. Further, an affidavit by the Deputy Development Commissioner affirmed that the unit had achieved positive NFE and that DTA sale permissions were issued after verifying positive NFE. On these findings the Court held that the petitioner was entitled to the abatement under Notification No.23/2003. [Paras 11]

Denial of abatement of Rs.36,80,850 on the grounds relied upon by the Settlement Commission was set aside and the petitioner was held entitled to the abatement.

Treatment of Export Oriented Unit clearances to Domestic Tariff Area - Whether the Settlement Commission's characterization of the DTA and EOU as independent entities justified levying interest and penalty on both units and directing cumulative payment. - HELD THAT: - The Court found it untenable to treat the two units as independent entities for the purpose of enforcing double discharge of the same duty when the corporate manufacturer had already paid the liability. Consequently the directions in the impugned orders to the extent they levied the disputed amount, interest at 10% and penalty on both units were quashed. The Court permitted respondents to verify arithmetic and adjustments if figures did not tally and to take appropriate steps thereafter. [Paras 9, 12, 13]

The directions in the Settlement Commission's orders to the extent directing payment of the disputed sum, interest and penalty were quashed; respondents may verify computations and take steps if discrepancies are found.

Procedural relief - bank guarantee - Whether the bank guarantee furnished pursuant to earlier interim order should be returned. - HELD THAT: - The petitioner had furnished a bank guarantee pursuant to an earlier order and the Court was informed that the guarantee remained alive. Having allowed the petition in the substantive matters, the Court directed respondents to cancel and return the bank guarantee within four weeks. [Paras 14]

Respondents directed to cancel and return the bank guarantee to the petitioner within four weeks.

Final Conclusion: Writ petition allowed. The Settlement Commission's final order dated 14.1.2008 (and admission order insofar as subsumed) is quashed to the extent it directed payment of the disputed duty amount, interest and penalty; petitioner entitled to abatement under Notification No.23/2003; respondents may verify computations and take further steps if necessary; bank guarantee ordered to be cancelled and returned.

Co-noticee - joint and several liability - eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - treatment of a composite show cause notice - requirement of reasoned decision and hearing under scheme

Co-noticee - joint and several liability - treatment of a composite show cause notice - Whether M/s Sunshine Paints can be treated as a co-noticee jointly and severally liable for the duty alleged against M/s Sunshine Corporation for periods when the writ applicant did not exist. - HELD THAT: - The show-cause notice, though composite, separately quantified and attributed duty liabilities to M/s Sunshine Corporation and to M/s Sunshine Paints; it did not allege that M/s Sunshine Paints was jointly and severally liable for the liability of M/s Sunshine Corporation. The liability attributed to Sunshine Corporation relates to financial years when the writ applicant did not exist. Consequently the writ applicant cannot be held liable for the duty alleged to have been short paid by Sunshine Corporation and cannot be treated as a co-noticee for the purpose of the SVLDRS scheme where co-noticee status would require liability for the same amount along with others. The respondent's contention that takeover of business and invoices issued by the writ applicant establish co-noticee status was rejected on the materials and sequencing of liabilities in the show-cause notice. [Paras 14, 18, 19]

M/s Sunshine Paints is not a co-noticee for the duty liabilities of M/s Sunshine Corporation and therefore could not be denied eligibility on that ground under the Scheme.

Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - requirement of reasoned decision and hearing under scheme - treatment of a composite show cause notice - Whether the rejection of the writ applicant's declaration under the SVLDRS and denial of acceptance without fresh consideration and hearing was sustainable. - HELD THAT: - The Committee's rejection relied on construing the show-cause notice as making Sunshine Corporation the main noticee and Sunshine Paints a co-noticee, and on circulars and rules that a declaration must cover an entire show-cause notice. The High Court found that on the facts the liabilities were segregated in the notice and the writ applicant's declaration fell within the 'litigation' category and merited fresh consideration. In view of the incorrect treatment of the writ applicant as co-noticee and the absence of a proper application of law to the segregated liabilities, the impugned decision dated 11.2.2020 was set aside. The court directed that the designated committee treat the writ applicant's declaration as valid, grant an opportunity of hearing and decide afresh in accordance with law, applying a liberal and pragmatic approach expected for the Scheme. [Paras 20, 21, 25, 26]

The committee's decision dated 11.2.2020 is set aside and the matter is remitted to the Commissioner (South) Designated Committee, Ahmedabad for fresh consideration of the declaration after hearing the writ applicant and deciding in accordance with law within six weeks.

Final Conclusion: Writ application allowed: the order of the designated committee dated 11.2.2020 is set aside; M/s Sunshine Paints is not a co-noticee for the liabilities of M/s Sunshine Corporation and the declaration filed by the writ applicant in the litigation category is to be treated as valid - the committee is directed to re-examine the declaration after giving hearing and to pass a reasoned order in accordance with law within six weeks.

CENVAT credit on warranty / after sales services provided free of cost by third parties - Interpretation of the 'means' clause of the definition of input service - Applicability of precedents decided pre and post amendment of the definition of input service - Doctrine of per incuriam

CENVAT credit on warranty / after sales services provided free of cost by third parties - Interpretation of the 'means' clause of the definition of input service - Applicability of Tribunal precedents - Entitlement to CENVAT credit of service tax paid for repair and maintenance services provided to customers free of cost by dealers/third parties during the warranty period. - HELD THAT: - The Tribunal applied the 'means' part of the definition of 'input service' and followed earlier Division Bench decisions (Carrier Airconditioning & Refrigeration; Honda Motorcycle & Scooter India; Samsung India Electronics) holding that services rendered by dealers/authorized service centres on behalf of the manufacturer for fulfilling warranty obligations are 'input services' used, directly or indirectly, in or in relation to the manufacture and clearance of final products. The Tribunal found that the decision in the appellant's own earlier order (dated 24.11.2017) which reached a contrary conclusion had distinguished those precedents on the mistaken basis that an amendment to the 'includes' portion of the definition (w.e.f. 01.04.2011) affected the 'means' clause; that distinction overlooked that the 'means' clause remained unchanged. The earlier contrary decision was therefore held to be rendered per incuriam for having decided the matter in ignorance of the relevant statutory provision and precedent. Applying the correct ratio, the Tribunal held that where warranty/after sales services are included in the value of the goods and are provided by dealers on behalf of the manufacturer, the service tax borne on such services qualifies for CENVAT credit when availed by the manufacturer. [Paras 4, 5]

The impugned order is set aside and the appellant is entitled to CENVAT credit of service tax paid on warranty services provided free of cost by third parties; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order and held that CENVAT credit cannot be denied for warranty/after sales services provided free of cost by dealers/authorized service centres where such services are in relation to the manufacture and their value is included in the assessable value of the final products; an earlier contrary decision was treated as per incuriam and not followed.

Quashing of assessment orders for non-compliance with statutory procedure - requirement of issuance of show cause notice under Section 74(1) of the TNGST Act and adherence to Rule 142(1A) / Form DRC-01A procedure - opportunity of personal hearing and principles of natural justice - surprise inspection under Section 67 of the TNGST Act - invalidity of recovery action under Section 79 without completion of adjudicatory process

Quashing of assessment orders for non-compliance with statutory procedure - requirement of issuance of show cause notice under Section 74(1) of the TNGST Act and adherence to Rule 142(1A) / Form DRC-01A procedure - opportunity of personal hearing and principles of natural justice - Assessment orders dated 31.01.2022 for the assessment years 2017-18, 2018-19, 2019-20 and 2020-21 were vitiated for non-observance of the prescribed adjudicatory procedure and were quashed. - HELD THAT: - The Court found that after issuance of communications in Form DRC-01A (Rule 142(1A)), the statutory process contemplated that if the dealer objects and does not pay the ascertained tax, a show cause notice under Section 74(1) ought to be issued and, after considering objections and affording personal hearing, the assessment should be finalised. The impugned orders were passed without following this procedure. Although surprise inspection under Section 67 had pointed out defects and the dealer made submissions, the assessment orders were confirmed without completing the statutory adjudicatory steps required by the Act and Rules. For these procedural lapses and in view of the importance of affording the opportunity of hearing and compliance with the prescribed steps, the orders were held to be contrary to principles of natural justice and statutory requirement and therefore were quashed. [Paras 13]

Assessment orders bearing Assessment Nos.33AASFA2666A1ZP/2019-20, 33AASFA2666A1ZP/2018-19, 33AASFA2666A1ZP/2020-21 and 33AASFA2666A1ZP/2017-18 dated 31.01.2022 are quashed for failure to follow the procedure prescribed under the TNGST Act and Rules.

Invalidity of recovery action under Section 79 without completion of adjudicatory process - opportunity of personal hearing and principles of natural justice - The consequential recovery communication issued to the bank under Form GST DRC-09 (directing recovery under Section 79) was quashed as premature and improper. - HELD THAT: - The Court observed that the recovery direction to the Branch Manager, Axis Bank, Ramanathapuram, was issued consequent to the impugned assessment orders which the Court found to be vitiated by procedural non-compliance. Since the underlying adjudication was set aside for non-observance of the statutory process and principles of natural justice, the parallel recovery action issued on that basis could not stand and was quashed. The respondent was directed, if inclined, to issue fresh notice and complete the adjudicatory process in accordance with law before initiating any recovery. [Paras 13]

The recovery notice dated 10.06.2022 issued to the Branch Manager, Axis Bank, is quashed as consequent upon and premised on the set-aside assessment orders.

Final Conclusion: Writ petitions allowed; the impugned assessment orders for the four stated assessment years and the consequential recovery communication are quashed. The respondent is directed to comply with the procedures prescribed under the TNGST Act and Rules, issue appropriate show cause notice, afford opportunity for objections and personal hearing, and decide the matters on merits expeditiously. No costs.

Offence under Section 138 of the Negotiable Instruments Act - Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Enforceable debt or liability as requirement for Section 138 - Illegality of contract and public policy affecting recoverability of debt

Enforceable debt or liability as requirement for Section 138 - Illegality of contract and public policy affecting recoverability of debt - Whether the cheque issued pursuant to an agreement to secure employment constituted a legally enforceable debt or liability attracting offence under Section 138. - HELD THAT: - The Court found that the complainant himself admitted the cheque was issued in pursuance of an agreement to secure a job by unlawful means. Agreements opposed to law or against public policy are not enforceable and a debt or liability arising therefrom cannot be the basis of an offence under Section 138. Applying the settled principle that money paid under an illegal agreement cannot be recovered as a legal debt, the Court held that the cheque was not drawn in support of any legally enforceable debt or liability and therefore did not satisfy the essential requirement of Section 138. [Paras 3, 10]

The cheque was issued pursuant to an illegal contract and did not represent a legally enforceable debt or liability; Section 138 was not attracted.

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Offence under Section 138 of the Negotiable Instruments Act - Whether the statutory presumption under Sections 118 and 139 can be drawn where the cheque was issued pursuant to an unlawful agreement. - HELD THAT: - The Court accepted the trial Court's reasoning that where the cheque springs from an illegal agreement the presumption of consideration or liability under Sections 118 and 139 cannot be raised in favour of the complainant. The underlying illegality of the transaction negatives the existence of a recoverable debt and therefore defeats the statutory presumption relied upon to establish the offence under Section 138. [Paras 3, 10]

The statutory presumption under Sections 118 and 139 cannot be invoked in respect of a cheque issued pursuant to an illegal agreement; conviction under Section 138 cannot follow on that basis.

Remand for fresh trial - Whether the matter should be remanded for de novo trial to enable the complainant to prove his case. - HELD THAT: - The appellant's request for remand was considered and rejected. The Court found no illegality or procedural infirmity in the magistrate's trial proceedings that would warrant remand for a fresh trial. There was no basis shown that further trial would remedy the legal insufficiency arising from the admitted illegality of the underlying agreement. [Paras 11]

No remand for fresh trial; the appellant failed to make out grounds for remand.

Final Conclusion: The appeal is dismissed. The High Court sustained the acquittal on the ground that the cheque was issued pursuant to an illegal agreement and did not represent a legally enforceable debt; consequently the presumption under Sections 118 and 139 and liability under Section 138 could not be invoked, and no remand for fresh trial was warranted.

Presumption under Section 139 of the Negotiable Instruments Act - Offence under Section 138 of the Negotiable Instruments Act - Burden of proof and rebuttal by preponderance of probability - Evaluation of documentary evidence and witnesses' credibility - Appellate interference for perversity in appreciation of evidence

Presumption under Section 139 of the Negotiable Instruments Act - Burden of proof and rebuttal by preponderance of probability - Evaluation of documentary evidence and witnesses' credibility - Whether the accused discharged the statutory presumption under Section 139 and thereby defeated criminal liability under Section 138 by proving that the cheques were not issued for a legally enforceable debt. - HELD THAT: - The Trial Court found that the accused admitted signatures and account but successfully rebutted the statutory presumption by placing on record the agreement dated 22/08/2007 (Ex.D 1) which showed the transaction was for purchase and screening rights with a 10% commission arrangement, not a loan. The Trial Court further held the guarantee letter dated 09/09/2007 relied upon by the complainant to be shrouded in suspicion: it was not disclosed in the statutory notice, its alignment and spacing raised doubts about genuineness, and the depositions of its witnesses were contradictory regarding execution and provenance. The Court applied the correct legal standard that the presumption under Section 139 is rebuttable and may be discharged on the preponderance of probability. On this basis, the Trial Court's conclusion of acquittal was justified and the complainant had failed to prove that the cheques were issued for a legally enforceable debt. [Paras 6, 7, 8, 15]

The accused rebutted the presumption under Section 139 on the evidence of the agreement and the unreliability of the guarantee letter; the cheques were not shown to have been issued for a legally enforceable debt, warranting acquittal.

Appellate interference for perversity in appreciation of evidence - Evaluation of documentary evidence and witnesses' credibility - Whether the Appellate Court perversely reversed the Trial Court's acquittal without properly appreciating evidence and law, thereby requiring interference by the High Court. - HELD THAT: - The Appellate Court reversed the Trial Court solely on the basis of admitted signatures and by relying on the guarantee letter, without addressing the Trial Court's detailed findings about the earlier agreement (Ex.D 1), the late production and suspicious features of the guarantee letter, and the contradictions in witness testimony. The High Court concluded that the Appellate Court failed to apply the correct legal standard and misapplied the evidence, thereby committing perversity in its order. Accordingly, the High Court set aside the appellate judgments and restored the Trial Court's acquittals. [Paras 14, 15, 17]

The appellate judgments were perverse for failing to appreciate material evidence and law; they are set aside and the Trial Court's acquittals are restored.

Final Conclusion: The revision petitions are allowed; the appellate convictions are set aside, the Trial Court's orders of acquittal in S.T.C.No.218/2009 and S.T.C.No.219/2009 are restored and confirmed, and any fine paid is to be refunded to the petitioner.

Quashing of criminal complaint under Section 482 Cr.P.C. - Section 138 Negotiable Instruments Act, 1881 - Section 141 Negotiable Instruments Act, 1881 - Authentication of records downloaded from the Ministry of Corporate Affairs - Valuable defence to be raised at trial

Quashing of criminal complaint under Section 482 Cr.P.C. - Section 138 Negotiable Instruments Act, 1881 - Valuable defence to be raised at trial - Maintainability of the complaint against the petitioner (Accused No.5) and the propriety of invoking extraordinary jurisdiction to quash the criminal proceedings. - HELD THAT: - The High Court examined the submission that the petitioner had ceased to be a director prior to the alleged offence and that no specific averments of any overt act by the petitioner were made in the complaint. Relying on earlier orders in related petitions and established practice, the Court held that the contentions raised by the petitioner amount to a defence which, if available, is a matter to be tested at trial and not a ground for exercise of extraordinary jurisdiction under Section 482 Cr.P.C. The Court further observed that the printouts produced from the Registrar of Companies were not authenticated documents sufficient to secure quashing of the complaint at this stage. On these bases the Court rejected the petitioner's request to quash the proceedings and dismissed the petition as devoid of merit. [Paras 8, 10]

Petition to quash C.C.No.3645 of 2015 against Accused No.5 dismissed; allegations and documentary disputes are to be raised and tested at trial before the Magistrate.

Section 141 Negotiable Instruments Act, 1881 - Authentication of records downloaded from the Ministry of Corporate Affairs - Whether the authenticity of MCA/Registrar of Companies records and the petitioner's alleged cessation as director, and consequent liability under Section 141, can be decided at the quashing stage. - HELD THAT: - The Court noted that whether the petitioner resigned prior to the date of the alleged dishonour and whether he is liable under the explanation to Section 141 involves factual determination and verification of records. The High Court held that such issues are not appropriately resolved by exercising its extraordinary jurisdiction on the basis of unauthenticated printouts; instead, these matters must be considered and determined by the trial Court after appropriate evidence and verification, including authenticated corporate records (Form-12/Form-32 or other admissible proof). The Court therefore left these questions open for adjudication at trial. [Paras 9]

Questions regarding the petitioner's resignation date, authenticity of MCA downloads and liability under Section 141 are to be considered and adjudicated by the trial Court; not decided in the present petition.

Final Conclusion: The Criminal Original Petition seeking quashing of C.C.No.3645 of 2015 as against Accused No.5 is dismissed; documentary and factual disputes concerning resignation, authentication of MCA records and liability under Section 141 are left to be examined by the trial Court and cannot be resolved by extraordinary writ at this stage.

Removal of encroachment from waterbody - Waiver of prior notice to encroachers in public interest - Action under Tamil Nadu Protection of Tanks and Eviction of Encroachment Act, 2007 and Rules - Affording opportunity and passing final orders within fixed time - Application of judicial guidelines in eviction proceedings

Waiver of prior notice to encroachers in public interest - No prior notice to the individual encroachers (respondents 5 to 7) was required before directing remedial action in view of substantial and widespread encroachment and the nature of the order to be passed by the Court. - HELD THAT: - The Court found that because the encroachment affected a substantial portion of the waterbody and involved several individuals, and given the form of relief to be directed, it was appropriate to dispense with prior notice to respondents 5 to 7. The order records that, considering the extent of encroachment and the nature of the relief contemplated, no prior notice was required to be served on those encroachers before issuance of the court's direction. [Paras 3]

Prior notice to respondents 5 to 7 was not required.

Removal of encroachment from waterbody - Action under Tamil Nadu Protection of Tanks and Eviction of Encroachment Act, 2007 and Rules - Affording opportunity and passing final orders within fixed time - Application of judicial guidelines in eviction proceedings - The fourth respondent was directed to consider the petitioner's representations and to initiate and complete appropriate action under the Tamil Nadu Protection of Tanks and Eviction of Encroachment Act, 2007 and the Rules, following this Court's and the Supreme Court's guidelines, affording opportunities to concerned parties and passing final orders within four months; removal of encroachments to ensure the tank is available to the public was mandated. - HELD THAT: - Without expressing any opinion on the merits of the representations, the Court mandated that the fourth respondent consider the representations dated 01.04.2022 and 30.05.2022 and proceed under the statutory scheme provided by the Tamil Nadu Protection of Tanks and Eviction of Encroachment Act, 2007 and the Rules framed thereunder. The authority was directed to follow the guidelines laid down by this Court in T.S. Senthil Kumar v. Government of Tamil Nadu and by the Supreme Court in Madhav Rao Scindia v. Ramesh Jatav, to afford sufficient opportunity to the petitioner, the encroachers and others concerned, and to pass final orders within four months from receipt of the copy of the order. The fourth respondent was further enjoined to ensure meticulous removal of encroachments so that the entire tank is available for public use, thereby safeguarding public interest. [Paras 5]

Fourth respondent to consider representations and take action under the Act and Rules, following judicial guidelines, afford opportunity, pass final orders within four months, and ensure removal of encroachments.

Final Conclusion: The writ petition was disposed directing the competent authority to consider the petitioner's representations and to take statutory action for eviction of encroachments over the waterbody, following relevant judicial guidelines and affording opportunities, within four months; prior notice to the individual encroachers was dispensed with in the circumstances. No costs.