TaxTMI Updates e-Newsletter
Jul 05,2024

Quashment of order and remand for fresh adjudication - opportunity of personal hearing - conditioning relief on interim deposit - treatment of impugned order as addendum to show cause notice - direction to decide on merits within fixed time

Quashment of order and remand for fresh adjudication - opportunity of personal hearing - Impugned order confirming demand for failure to file reply set aside and matter remitted for fresh consideration with an opportunity to the petitioner to explain the case on merits. - HELD THAT: - The Court found that though the notice in Form GST DRC-01 had been confirmed on account of non-filing of a reply, the petitioner should be permitted one opportunity to explain the case on merits. Accordingly, the impugned order is quashed and the matter is remitted to the respondent for fresh adjudication after affording the petitioner a hearing and an opportunity to file a reply. This relief is granted subject to the conditions imposed by the Court. [Paras 6]

Impugned order quashed and remanded for fresh consideration after giving the petitioner an opportunity to explain the case.

Conditioning relief on interim deposit - Grant of opportunity to be subject to deposit of 25% of the disputed tax from the Electronic Cash Register within 30 days. - HELD THAT: - The Court conditioned the grant of relief on the petitioner depositing 25% of the disputed tax from the Electronic Cash Register. The deposit must be made within 30 days from receipt of the order; compliance with this condition is prerequisite to the respondent entertaining the petitioner's reply and proceeding to decide the matter on merits. [Paras 6]

Petitioner to deposit 25% of the disputed tax from the Electronic Cash Register within 30 days as a condition for further consideration.

Treatment of impugned order as addendum to show cause notice - direction to decide on merits within fixed time - Impugned order to be treated as an addendum to the show cause notice; upon compliance and filing of reply within 30 days, respondent to pass fresh orders on merits within three months. - HELD THAT: - The Court directed that the quashed impugned order shall be treated as an addendum to the original show cause notice. Subject to the petitioner depositing the specified amount and filing the reply within 30 days, the respondent is mandated to proceed to hear the petitioner and pass fresh orders on merits and in accordance with law. The Court expected the fresh orders to be completed within three months from the date of the order. [Paras 6]

Impugned order treated as addendum to the show cause notice; respondent to hear petitioner and pass fresh orders on merits within three months on compliance.

Final Conclusion: Writ petition disposed by quashing the impugned assessment order and remitting the matter for fresh adjudication after affording the petitioner a hearing; relief is conditional upon deposit of 25% of the disputed tax from the Electronic Cash Register and filing of a reply within 30 days, with fresh orders to be passed within three months.

Liberty to invoke appellate remedy under Section 107 of the GST Act - requirement of deposit for filing appeal - non-entertainment of questions of law in writ petitions after expiry of limitation - appeal to Appellate Commissioner to be decided on merits without reference to limitation

Non-entertainment of questions of law in writ petitions after expiry of limitation - liberty to invoke appellate remedy under Section 107 of the GST Act - requirement of deposit for filing appeal - appeal to Appellate Commissioner to be decided on merits without reference to limitation - Whether writ petitions filed after expiry of limitation could be entertained and what remedy should be afforded to the petitioners. - HELD THAT: - The court declined to entertain the petitioners' substantive legal submissions in writ petitions filed long after the period for appeal had expired, and instead afforded the petitioners liberty to pursue the statutory appellate remedy before the Deputy Appellate Commissioner under Section 107 of the GST Act. As a precondition for such appellate remedy, the court directed that the petitioners deposit 25% of the disputed tax from the Electronic Cash Register within 30 days of receipt of the order (noting that 10% is the statutory mandatory requirement under Section 107 and an additional 15% is required because the remedy before the Court is being sought after expiry of limitation). Upon such deposit, the appeals before the Appellate Commissioner are to be examined and decided on merits without reference to limitation. [Paras 5, 6, 7]

Petitioners granted liberty to file appeals before the Deputy Appellate Commissioner under Section 107 on depositing 25% of the disputed tax within 30 days; appeals to be decided on merits without reference to limitation; writ petitions disposed.

Final Conclusion: Writ petitions dismissed insofar as substantive legal contention is not entertained; petitioners permitted to approach the Deputy Appellate Commissioner under Section 107 subject to deposit of 25% of the disputed tax within 30 days, and their appeals shall be considered on merits without regard to limitation.

Inadvertent error in GST returns - requirement to consider documents on record - remand for fresh consideration - reverse of excess reverse charge mechanism (RCM) availment - conditional setting aside of assessment order on deposit - opportunity to be heard including personal hearing - protection of revenue interest

Inadvertent error in GST returns - requirement to consider documents on record - opportunity to be heard including personal hearing - Whether the assessment insofar as it rests on an apparent misstatement of turnover in the GSTR returns must be re-examined in the light of documents filed by the petitioner. - HELD THAT: - The petitioner produced GSTR 3B, GSTR 1 and GSTR 9C which, when read cumulatively, prima facie indicate an inadvertent reporting error in the turnover figure for July 2018-19. Neither the draft proposal nor the show cause notice had referred to a requirement to produce the sales list and outward supply invoices. In these circumstances, the interest of justice requires that the assessing officer be directed to afford the petitioner another opportunity to place on record and vindicate its claim, including by permitting submission of additional documents and conducting a personal hearing before passing a fresh order. The court therefore set aside the impugned order insofar as it proceeded without giving that opportunity and directed reconsideration on receipt of the additional material.

Impugned order set aside and matter remanded for fresh consideration after allowing the petitioner to file additional documents and be heard; assessing officer to pass a fresh order thereafter.

Reverse of excess reverse charge mechanism (RCM) availment - protection of revenue interest - conditional setting aside of assessment order on deposit - Whether the allegation of excess availment of RCM credit, and the petitioner's contention that the excess was reversed in the subsequent return, requires fresh examination and whether interim protection should be conditioned on a deposit. - HELD THAT: - The petitioner asserted that the excess RCM availed of was reversed in the GSTR 3B return for August 2018 and communicated this in replies to assessment notices. The High Court found that this factual contention needs to be examined by the assessing officer. To protect revenue interest while permitting reconsideration, the court conditioned the setting aside of the impugned order on the petitioner remitting 10% of the disputed tax demand relating to the RCM issue within fifteen days. Upon receipt of that deposit and the additional documents, the assessing officer is directed to provide a reasonable opportunity, including personal hearing, and pass a fresh order within three months.

RCM issue remanded for fresh examination by the assessing officer; impugned order set aside conditionally on the petitioner remitting 10% of the disputed tax demand and complying with directions for submission of documents and hearing.

Final Conclusion: The High Court set aside the impugned order dated 27.04.2024 and remanded both the turnover reporting issue and the RCM issue for fresh consideration; the petitioner may file additional documents and be afforded a personal hearing, subject to remittance of 10% of the disputed tax demand relating to the RCM issue within fifteen days, and the assessing officer is directed to decide afresh within three months thereafter.

Opportunity of personal hearing - natural justice - ex-parte adjudication - opportunity of hearing under Section 75(4) of the U.P. GST Act - self-imposed bar of alternative remedy - remand for fresh adjudication

Opportunity of personal hearing - natural justice - opportunity of hearing under Section 75(4) of the U.P. GST Act - ex-parte adjudication - Validity of the impugned adjudication order passed without fixing a date for personal hearing and without issuing further notice - HELD THAT: - The Court found that the notice fixed a date for filing reply (18.09.2022) but no separate date for personal hearing was thereafter fixed; despite the petitioner appearing and submitting replies on the dates called, the adjudicating authority passed the impugned order on 04.11.2022 without granting or fixing any occasion for personal hearing. Reliance was placed on the requirement in Section 75(4) that an opportunity of hearing be granted where an adverse decision is contemplated; the omission resulted in an order passed in gross violation of principles of natural justice and amounted to an impermissible ex parte adjudication. The Court held that where personal hearing is not afforded (absent an effective waiver by the noticee), the alternative remedy bar cannot be allowed to operate so as to defeat the right to be heard. [Paras 6, 7, 8, 9]

The impugned order dated 4.11.2022 is set aside for violation of the right to personal hearing and principles of natural justice; the matter is remitted for fresh adjudication after affording due opportunity of hearing to the petitioner.

Self-imposed bar of alternative remedy - remand for fresh adjudication - Whether the self-imposed bar of alternative remedy can be invoked where an adjudication order is passed in breach of the right to personal hearing - HELD THAT: - The Court held that application of a self-imposed bar of alternative remedy is inappropriate where the adjudication has been rendered in gross breach of natural justice by denying personal hearing. In such circumstances allowing the bar would be counter-productive to justice and ineffective because the appellate forum lacks power to cure the fundamental denial; accordingly, the bar was not applied and the matter was remitted to the adjudicating authority to decide afresh after hearing the petitioner. [Paras 8, 9]

Self-imposed bar of alternative remedy is inapplicable in the present facts; the proceedings are remitted to the respondent to pass a fresh order after affording personal hearing.

Final Conclusion: Writ petition allowed; impugned order dated 4.11.2022 set aside and matter remitted to the Assistant Commissioner to pass a fresh adjudication order in accordance with law after affording the petitioner a personal hearing.

Opportunity of personal hearing - mandatory hearing before adverse assessment - principle of natural justice - effect of online declination of hearing - remand for fresh hearing

Opportunity of personal hearing - mandatory hearing before adverse assessment - effect of online declination of hearing - principle of natural justice - Whether the Assessing Authority was bound to afford an opportunity of personal hearing before passing an adverse assessment order despite the assessee having marked 'No' to personal hearing in an online reply to the show-cause notice. - HELD THAT: - The Court considered Section 75(4) of the U.P. GST Act which mandates that an opportunity of hearing shall be granted where an adverse decision is contemplated (para 7). Relying on the coordinate bench decision in Bharat Mint & Allied Chemicals, the Court held that an assessee is not required to specifically request personal hearing and that the Authority is under a duty to afford such hearing before passing an adverse order (para 8). The Court further explained that, particularly where an assessment creates substantial civil liability, affording at least a minimal personal hearing is necessary to satisfy the requirements of natural justice and to enable the authority to pass a reasoned order (paras 9-10). Consequently, the mere fact that the assessee indicated 'No' to personal hearing in the online response does not absolve the Authority of its obligation to provide an opportunity of hearing prior to taking an adverse decision (para 8). [Paras 7, 8, 9, 10]

The Assessing Authority was obligated to grant an opportunity of personal hearing before passing the adverse assessment order; an online declination by the assessee did not relieve the Authority of that duty.

Remand for fresh hearing - opportunity of personal hearing - Whether the impugned assessment order must be set aside and the matter remitted for fresh consideration after affording personal hearing. - HELD THAT: - Applying the principle that personal hearing is mandatory before an adverse order, the Court found the assessment order passed without such hearing to be contrary to law (paras 8-10). In order to cure the procedural defect and enable a decision after hearing the assessee, the Court set aside the impugned order and directed that a fresh notice be issued to the petitioner for personal hearing, with proceedings to be completed expeditiously (para 11). The petitioner undertook to appear on the next date so that the matter may be concluded without undue delay (para 11). [Paras 11]

The impugned order is set aside and the matter is remitted to the Assistant Commissioner for issuance of a fresh notice and disposal after affording personal hearing.

Final Conclusion: Writ petition disposed of; the impugned order dated 26.12.2023 is set aside and the matter remitted to the Assistant Commissioner, State Tax, Sector-2, Pratapgarh, Prayagraj to issue a fresh notice to the petitioner within two weeks and decide the assessment after affording personal hearing.

Assessment under Section 62 on best judgment basis - failure to respond to notice in Form GSTR-3A - principles of natural justice and personal hearing - remand on condition of deposit - setting aside of distraint consequent to quashing of assessment

Assessment under Section 62 on best judgment basis - failure to respond to notice in Form GSTR-3A - Validity of the assessment made on best judgment basis pursuant to non-response to the notice in Form GSTR 3A - HELD THAT: - The Court examined the impugned assessment order and recorded that the assessing officer proceeded to assess the petitioner on a best judgment basis because the petitioner did not respond to the notice in Form GSTR 3A. The respondents contend that principles of natural justice were complied with by issuance of the Form GSTR 3A notice dated 05.01.2023 and that non-filing of returns justified assessment under Section 62. The petitioner, however, pleaded cancellation of GST registration in February 2019 and inability to participate in proceedings due to financial stringency. Having regard to those facts and the absence of any effective participation by the petitioner, the Court held that the interest of justice requires an opportunity to contest the demand on merits.

Assessment made on best judgment basis is set aside to enable fresh adjudication on merits after affording the petitioner an opportunity to be heard.

Remand on condition of deposit - principles of natural justice and personal hearing - Procedure and conditions for remand to the assessing authority - HELD THAT: - The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand. The Court, treating this as an appropriate terms-based compromise in the interest of justice, directed that the impugned order be set aside provided the petitioner deposits 10% of the disputed demand within two weeks of receipt of the order. The petitioner is permitted to submit a reply to the show cause notice within the same period. Upon receipt of the reply and satisfaction about the deposit, the assessing authority must grant a reasonable opportunity, including a personal hearing, and pass a fresh order within three months from receipt of the petitioner's reply.

Matter remanded to the assessing authority on the condition that the petitioner remit 10% of the disputed demand and be given a personal hearing; fresh order to be passed within three months after compliance.

Setting aside of distraint consequent to quashing of assessment - Effect of setting aside the assessment on the distraint order - HELD THAT: - Since the Court set aside the assessment order, it concurrently set aside the consequential distraint order. The Court's disposal of the assessment necessarily removed the basis for continued distraint, and the respondents were directed to withdraw the distraint in view of the order setting aside the assessment.

Distraint order set aside as consequential to setting aside the impugned assessment.

Final Conclusion: The impugned assessment order dated 03.03.2023 and the consequential distraint order are set aside. The assessment is remanded to the assessing authority on terms: the petitioner shall remit 10% of the disputed demand and may file a reply within two weeks; on receipt of the reply and satisfaction about the deposit, the authority shall afford a personal hearing and pass a fresh order within three months. The petition is disposed of on these terms without any order as to costs.

Natural justice - personal hearing - opportunity to be heard - setting aside assessment order - conditional remand for fresh adjudication - deposit as condition for reopening - lifting of bank attachment

Natural justice - personal hearing - opportunity to be heard - Whether the impugned assessment order could be sustained where the petitioner was unable to participate in proceedings and no reasons or personal hearing were afforded on the confirmed tax proposal. - HELD THAT: - The show cause notice proposed tax liability based on mismatches between GSTR-3B, GSTR-1 and auto-populated GSTR-2A, but the assessment was confirmed without the petitioner effectively being heard. The petitioner asserted unawareness of proceedings because communications were uploaded on the GST portal and not otherwise communicated, and only became aware on receipt of a bank attachment notice. The Court found that in these circumstances principles of natural justice required that the petitioner be given an opportunity to contest the demand on merits. Accordingly the impugned order was not permitted to stand without providing the petitioner a chance to reply and to be heard, including by personal hearing.

Impugned order dated 30.12.2023 set aside for want of appropriate opportunity to be heard; petitioner entitled to opportunity to contest the demand on merits including a personal hearing.

Conditional remand for fresh adjudication - deposit as condition for reopening - setting aside assessment order - What remedial course should be adopted and on what terms where an assessment is set aside for failure to provide opportunity to be heard. - HELD THAT: - The Court directed that the assessment order be set aside but placed the petitioner on terms to balance interests of revenue and fairness. The petitioner agreed to remit 10% of the disputed tax demand; the Court ordered that the petitioner remit that amount within two weeks from receipt of the order and permitted submission of a reply to the show cause notice within the same period. Upon receipt of the reply and satisfaction of the remittance, the assessing authority was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the petitioner's reply. This course preserves the authority's power to adjudicate while ensuring the petitioner a fair hearing.

Assessment set aside and remanded for fresh adjudication on the condition that petitioner deposits 10% of disputed demand within the specified period, files a reply, and is thereafter afforded a hearing; fresh order to be passed within three months of receipt of reply.

Lifting of bank attachment - setting aside assessment order - Consequences for provisional measures taken by revenue (bank attachment) consequent to setting aside the assessment order. - HELD THAT: - Because the assessment order was set aside, the Court directed that the bank attachment imposed pursuant to that assessment be lifted. The order implements the practical consequence of setting aside the assessment so that provisional coercive measures founded on that order do not persist pending fresh adjudication under the terms imposed by the Court.

Bank attachment is raised on account of the assessment order being set aside.

Final Conclusion: The writ petition is disposed of by setting aside the assessment order for failure to afford an effective opportunity to be heard; the petitioner must remit 10% of the disputed demand and may file a reply within two weeks, after which the authority shall hold a personal hearing and pass a fresh order within three months; consequentially the bank attachment is lifted.

Natural justice - opportunity of personal hearing - reconsideration of tax assessment - remand subject to payment condition - garnishee proceedings set aside

Natural justice - opportunity of personal hearing - Whether the assessment order could stand where the petitioner asserted lack of awareness of proceedings conducted through the GST portal and thereby was denied a reasonable opportunity to contest the tax demand - HELD THAT: - The court examined the impugned order and the departmental record of communications. Although the revenue relied on intimations, show cause notice and multiple personal hearing notices uploaded on the portal, the petitioner asserted non-receipt and inability to participate. In the interest of justice and having regard to the petitioner's contention that he could explain the mismatch between GSTR-3B and auto-populated GSTR-2A if heard, the Court concluded that reconsideration was warranted. The assessment was therefore set aside to afford the petitioner a reasonable opportunity, including a personal hearing, for contesting the tax proposal.

Impugned assessment order set aside and matter remitted for reconsideration to afford the petitioner a reasonable opportunity including a personal hearing.

Remand subject to payment condition - reconsideration of tax assessment - Terms on which the matter was to be remanded and the condition to be imposed on the petitioner for reconsideration - HELD THAT: - On the petitioner's undertaking and as a condition for remand, the Court required the petitioner to remit 10% of the disputed tax demand within two weeks from receipt of the order. The petitioner was permitted to submit a reply to the show cause notice within the same period. The court directed the assessing authority to proceed only after being satisfied that the required payment was received and upon receipt of the petitioner's reply.

Remand granted subject to the petitioner remitting 10% of the disputed tax demand within two weeks and filing a reply within that period.

Opportunity of personal hearing - reconsideration of tax assessment - Procedure and timeline to be followed by the assessing authority on receipt of the petitioner's reply and conditionally received payment - HELD THAT: - The Court directed that upon receipt of the petitioner's reply and being satisfied that the conditional payment was received, the first respondent must provide a reasonable opportunity to the petitioner, which shall include a personal hearing. Thereafter the assessing authority is to pass a fresh order after reconsideration within three months from the date of receipt of the petitioner's reply.

Assessing authority to provide personal hearing and pass a fresh order within three months of receipt of the petitioner's reply, subject to the payment condition being fulfilled.

Garnishee proceedings set aside - Consequences for ancillary enforcement proceedings consequent to setting aside the assessment order - HELD THAT: - Because the assessment order was set aside, the Court found it appropriate to set aside the garnishee proceedings that had been initiated consequent to the impugned assessment. This follows as an ancillary and immediate consequence of vacating the assessment order pending reconsideration.

Garnishee proceedings set aside consequent to the assessment order being set aside.

Final Conclusion: The writ petition is disposed of by setting aside the assessment order dated 06.07.2023 and remitting the matter for reconsideration on the petitioner filing a reply and remitting 10% of the disputed tax demand within two weeks; the assessing authority shall grant a personal hearing and pass a fresh order within three months thereafter, and the garnishee proceedings stand set aside.

Quashing and remand of assessment order - Conditional relief subject to deposit - Limitation and laches in tax proceedings - Show cause notice as addendum to assessment order - Right to personal hearing before fresh adjudication

Quashing and remand of assessment order - Show cause notice as addendum to assessment order - Right to personal hearing before fresh adjudication - The impugned assessment order dated 14.12.2023 was quashed and the matter was remitted to the respondent for fresh adjudication, treating the impugned order as an addendum to the show cause notice and directing that the petitioner be heard before fresh orders are passed. - HELD THAT: - The Court, after hearing counsel, set aside the impugned order and remitted the matter for de novo consideration on merits. The quashed order is to be treated as an addendum to the preceding show cause notice, and the respondent was directed to afford the petitioner an opportunity to file a reply and to be heard before passing fresh orders. The Court mandated that the respondent proceed to decide the matter afresh and in accordance with law, thereby preserving the requirement of a hearing and fresh adjudication rather than endorsing the earlier assessment order. [Paras 8, 9, 10]

Impugned order quashed; matter remitted for fresh adjudication treating the order as an addendum to the show cause notice and directing that the petitioner be heard before fresh orders are passed.

Conditional relief subject to deposit - Limitation and laches in tax proceedings - Relief was granted notwithstanding the respondent's plea of delay and laches, subject to the petitioner depositing 10% of the disputed tax from its Electronic Cash Register before filing a reply. - HELD THAT: - Although the respondent relied on limitation and laches and cited precedent on time-barred remedies, the Court exercised its equitable discretion to grant conditional relief. The petitioner was required to deposit 10% of the disputed tax amount to the respondent's credit from its Electronic Cash Register as a condition precedent to filing the reply and availing fresh consideration. This condition formed the basis on which the Court remitted the matter despite the respondent's contention on limitation. [Paras 6, 7, 8]

Petitioner permitted to seek fresh adjudication despite delay, on condition of depositing 10% of the disputed tax prior to filing reply.

Time-bound compliance and adjudication - Procedure for filing reply after conditional deposit - The Court directed time-bound steps for the parties: the petitioner to file a reply within 30 days of receipt of the order and deposit, and the respondent to decide the matter preferably within three months thereafter, hearing the petitioner. - HELD THAT: - To ensure expeditious disposal on remand, the Court prescribed specific timelines: the petitioner must file its reply within 30 days from receipt of a copy of the order together with evidence of the deposit; thereafter the respondent is to pass fresh orders on merits and in accordance with law as expeditiously as possible, preferably within three months, and after hearing the petitioner. These directions implement the remand and condition imposed and aim to balance finality with procedural fairness. [Paras 8, 10]

Petitioner to file reply within 30 days after deposit; respondent to pass fresh orders preferably within three months and after hearing the petitioner.

Final Conclusion: Writ petition allowed: impugned assessment order dated 14.12.2023 quashed and remitted for fresh consideration on merits; conditional relief granted subject to deposit of 10% of the disputed tax, petitioner to file reply within 30 days, and respondent to pass fresh orders preferably within three months after hearing the petitioner; no costs.

Quashing of demand for input tax credit - Input Tax Credit discrepancy between GSTR-3B and GSTR-2A - setting aside administrative order - deposit as condition for interim relief - opportunity of hearing - remand for fresh consideration

Quashing of demand for input tax credit - Input Tax Credit discrepancy between GSTR-3B and GSTR-2A - deposit as condition for interim relief - setting aside administrative order - Impugned order confirming demand of IGST and interest set aside subject to deposit - HELD THAT: - The petitioner challenged the order confirming a demand arising from alleged discrepancies between credit declared in GSTR-3B and entries in auto-populated GSTR-2A. The petitioner had admitted and paid the CGST and SGST demand with interest and produced documents asserting that the IGST credit demand was wrongful. Considering the petitioner's inability to appear before the assessing officer earlier and the supporting documents, the Court granted partial relief by quashing the portion of the impugned order which confirmed the IGST demand and interest. This relief was made conditional upon the petitioner depositing Rs. 10,000/- to the respondent's credit from its Electronic Cash Register and filing a reply to the notice within the time directed. [Paras 4, 5]

Impugned order insofar as it confirmed the IGST demand and interest is quashed, subject to deposit of Rs. 10,000/- and filing of a reply within 30 days

Remand for fresh consideration - opportunity of hearing - setting aside administrative order - Matter remanded to assessing officer for fresh decision on merits after hearing the petitioner - HELD THAT: - The Court treated the quashed order as an addendum to the show cause notice and directed the second respondent to consider the matter afresh on merits and in accordance with law. The petitioner is to be heard before any fresh order is passed. The Court fixed a timeline, expecting the assessing officer to decide preferably within two months after receipt of the petitioner's reply and the conditional deposit. [Paras 5, 6]

Matter remanded for fresh adjudication on merits with directions to hear the petitioner and decide preferably within two months

Final Conclusion: Writ petition allowed: the impugned order confirming IGST demand and interest is quashed subject to deposit of Rs. 10,000 and filing of a reply within 30 days; the matter is remitted to the assessing officer for fresh consideration after hearing the petitioner, to be completed preferably within two months; no costs.

Regular bail under Section 439 CrPC - Offences under Section 132(1)(b) and 132(1)(c) of the CGST Act - Cognizability and non-bailability of offences punishable under clause (i) of Section 132(1) (as per Section 132(5)) - Power of arrest under Section 69 CGST Act and its limits - Compliance with Section 41/41A CrPC and the principles in Arnesh Kumar and Satender Kumar Antil - Principle that bail is the rule and jail is the exception

Regular bail under Section 439 CrPC - Principle that bail is the rule and jail is the exception - Grant of regular bail to the applicant arrested in connection with offences under Section 132(1)(b), 132(1)(c) read with Section 132(5) of the CGST Act, 2017 - HELD THAT: - The Court considered the statutory scheme of Section 132 and noted that the maximum punishment for offences under clauses (b) and (c) is imprisonment which may extend to five years, with offences attracting clause (i) being cognizable and non-bailable under subsection (5). Having regard to precedents emphasizing that bail is the rule and jail the exception and the requirement that arrest be justified by concrete reasons, the Court observed that investigation is complete and chargesheet filed. Applying the principles in Arnesh Kumar and Satender Kumar Antil and related decisions, the Court concluded that further detention of the applicant is not required. In view of the foregoing and the custodial and investigative position, the criminal application for regular bail deserved to be allowed subject to conditions. [Paras 8, 12, 17, 18]

Criminal application allowed and applicant released on bail on furnishing a P.R. bond with conditions specified by the Court

Power of arrest under Section 69 CGST Act and its limits - Compliance with Section 41/41A CrPC and the principles in Arnesh Kumar and Satender Kumar Antil - Whether the arrest and continued detention were justified in light of statutory arrest provisions under the CGST Act and procedural safeguards under Sections 41/41A CrPC - HELD THAT: - The Court examined the distinction between the standards of 'reasons to believe' under Section 69(1) CGST Act and the 'reasons to be recorded' under Section 41A CrPC, and reviewed authoritative guidance that arrest powers must be exercised only upon concrete justification (including risk of tampering with evidence, influencing witnesses, or fleeing). The judgment relied on earlier decisions which held that mere paraphrasing of statutory language without recording concrete incidents does not satisfy the requirement to form a reason to believe for arrest. Applying those principles to the material on record, and noting that investigation had progressed to filing of the chargesheet, the Court found that continued incarceration was not warranted and released the applicant on bail subject to conditions. [Paras 10, 11, 17]

Arrest and further detention not sufficient to justify continued custody; applicant to be released on the bail conditions ordered

Final Conclusion: The High Court allowed the criminal application and granted regular bail to the applicant arrested under offences alleged in Section 132(1)(b), 132(1)(c) read with Section 132(5) of the CGST Act, 2017, holding that investigation is complete, continued detention is not required and imposing customary conditions including bond, attendance for investigation, surrender of passport and restriction on leaving jurisdiction.

Quashing of order for non-consideration of reply - Interference under Article 226 - Remand for fresh consideration on merits - Right to be heard before passing orders - Immediate relief by lifting of bank account freezing

Quashing of order for non-consideration of reply - Interference under Article 226 - Right to be heard before passing orders - Remand for fresh consideration on merits - Impugned assessment order dated 30.12.2023 set aside for having been passed without considering the petitioner's reply and written statement, and remitted for fresh decision. - HELD THAT: - The Court observed that the petitioner's reply in Form GST DRC-06 dated 28.10.2023 acknowledged and enclosed the Written Statement, but the first respondent did not advert to these materials while confirming the demand in the impugned order. The omission resulted in the impugned order being passed mechanically and without hearing the petitioner on the material relied upon. Such conduct warranted interference under Article 226 of the Constitution. The impugned order is quashed and is directed to be treated as an addendum to the Show Cause Notice. The petitioner is permitted to file a fresh, more detailed reply within 30 days from receipt of a copy of this order. The first respondent is directed to consider the petitioner's reply and the Written Statement on merits, hear the petitioner, and pass a fresh reasoned order within 60 days from receipt of the copy of this order. [Paras 5, 6, 7, 8]

Impugned order quashed; matter remanded for fresh consideration on merits after permitting filing of reply and hearing, with timelines prescribed for filing and disposal.

Immediate relief by lifting of bank account freezing - Consequential interim relief - Freezing of the petitioner's bank account to be lifted as a consequential interim relief following quashing of the impugned order. - HELD THAT: - Given that the impugned order has been quashed, the Court directed that the respondents lift the freezing of the petitioner's bank account. The direction is immediate and follows from the setting aside of the order which was the basis for the restraint on the account. [Paras 9]

Respondents directed to lift the freezing of the petitioner's bank account.

Final Conclusion: The impugned assessment order dated 30.12.2023 for Assessment Year 2017-2018 is quashed for failure to consider the petitioner's reply and Written Statement; the petitioner may file a fresh reply within 30 days and the first respondent shall pass a reasoned order on merits after hearing the petitioner within 60 days; the freezing on the petitioner's bank account is to be lifted; writ petition disposed of with no costs.

Permission to file statutory appeal out of time - pre-deposit condition for statutory appeal - discretionary relief by writ court to enable statutory remedy - entertainment and disposal of appeal on merits - suo motu impleadment of respondent

Permission to file statutory appeal out of time - discretionary relief by writ court to enable statutory remedy - Petitioner granted permission to file statutory appeal before the Appellate Deputy Commissioner (GST), Trichy, despite non filing earlier. - HELD THAT: - The High Court exercised its discretionary jurisdiction under writ jurisdiction to permit the petitioner to invoke the statutory appellate remedy which was not pursued earlier. Having considered the petitioner's explanation (illness of petitioner's husband, payments already made and attachment by the Department) and the respondents' position, the Court allowed a limited relief enabling filing of the appeal within a stipulated time. The relief was conditional and procedural in nature-it facilitates access to the statutory forum rather than decides the merits of the tax demand. [Paras 9, 10]

Petitioner permitted to file statutory appeal within 30 days from receipt of the order.

Pre-deposit condition for statutory appeal - entertainment and disposal of appeal on merits - Pre-deposit and adjudicatory directions attached to the grant of permission to file appeal. - HELD THAT: - The Court imposed a condition that the petitioner must make a further pre-deposit of 25% of the disputed tax in addition to amounts already recovered, as a prerequisite for entertaining the appeal. Subject to compliance with this pre-deposit requirement, the Appellate Deputy Commissioner (GST), Trichy, was directed to admit the appeal and decide it on merits and in accordance with law expeditiously, preferably within three months of filing. The Court further made clear that failure to file the appeal with the ordered pre-deposit within the prescribed period will automatically revoke the relief granted. [Paras 10]

Appeal to be filed with an additional 25% pre-deposit within 30 days; Appellate Deputy Commissioner to entertain and dispose of the appeal on merits, preferably within three months; failure to comply ipso facto revokes the relief.

Suo motu impleadment of respondent - Appellate Deputy Commissioner (GST), Trichy, impleaded as respondent for effective adjudication of the directed relief. - HELD THAT: - To enable the appellate remedy and ensure the appropriate authority is before the Court for compliance with directions, the Appellate Deputy Commissioner (GST), Trichy, was suo motu made a party to the writ petitions. This step is procedural and ancillary to the grant of permission to file the statutory appeal and the directions given for pre-deposit and disposal on merits. [Paras 9]

Appellate Deputy Commissioner (GST), Trichy, suo motu impleaded as second respondent and directed to entertain and dispose of the appeal as ordered.

Final Conclusion: Writ petitions disposed by permitting the petitioner to file statutory appeals for AYs 2021-22 and 2022-23 within 30 days on payment of an additional 25% pre-deposit (over amounts already recovered); Appellate Deputy Commissioner (GST), Trichy, impleaded and directed to admit and decide the appeals on merits preferably within three months; failure to comply will automatically revoke the relief.

Cancellation of GST registration - non-filing of returns - auto-populated input tax credit in GSTR-2A - application of Rule 30 and addition at 110% of inward supplies - quashing of impugned orders for contradiction with registration status - remand for fresh adjudication on merits - conditional deposit of a percentage of disputed tax as pre-condition for hearing

Cancellation of GST registration - non-filing of returns - auto-populated input tax credit in GSTR-2A - application of Rule 30 and addition at 110% of inward supplies - Validity of the impugned demand orders which relied on purported GSTR-3B filings and auto-populated GSTR-2A data despite the petitioner's GST registration having been cancelled with retrospective effect. - HELD THAT: - The Court found a contradiction between the respondent's reliance on purported returns and auto-populated GSTR-2A entries and the fact that the petitioner's GST registration had been cancelled with effect from an earlier date. In view of that contradiction and the absence of participation by the petitioner in the earlier show-cause proceedings, the impugned orders could not stand. The Court quashed the impugned orders and held that they should be treated as addenda to the show-cause notices which had preceded them, directing that the matter be reconsidered on merits after affording opportunity to the petitioner. [Paras 11, 13]

Impugned orders quashed for being contradictory to the registration status; treated as addenda to preceding show-cause notices and set aside for fresh consideration.

Remand for fresh adjudication on merits - conditional deposit of a percentage of disputed tax as pre-condition for hearing - Remittance of the matter to the respondent for fresh adjudication on merits and the terms on which the petitioner may seek a fresh hearing. - HELD THAT: - The Court remitted the matters to the respondent to pass fresh orders on merits, observing that the petitioner had not replied to the show-cause notices or participated in personal hearings. As a condition precedent to such fresh hearing, the Court directed the petitioner to deposit 10% of the disputed tax (in cash or through an electronic cash mechanism if available) along with the reply to the show-cause notices within 30 days of receiving this order. The respondent was directed to pass fair and reasoned orders preferably within two months thereafter, after hearing the petitioner. [Paras 12, 13, 14]

Matter remitted for fresh consideration; petitioner to deposit 10% of disputed tax within 30 days and respondent to decide on merits after hearing petitioner preferably within two months.

Final Conclusion: The Court quashed the impugned demand orders as inconsistent with the petitioner's cancelled registration, remitted the matters for fresh adjudication on merits, directed the petitioner to deposit 10% of the disputed tax as a condition for hearing within 30 days, and directed the respondent to decide the matters after hearing the petitioner preferably within two months.

Condonation of delay in filing appeal under Section 107 of the West Bengal/Central Goods and Services Tax Act, 2017 - Appellate authority's power to condone delay beyond one month under Section 107(4) - Failure of principles of natural justice due to non-availability of show-cause/order on the portal 'view notices' tab - Direction to adjudicatory authority to decide appeal on merits after granting opportunity of hearing

Condonation of delay in filing appeal under Section 107 of the West Bengal/Central Goods and Services Tax Act, 2017 - Appellate authority's power to condone delay beyond one month under Section 107(4) - Validity of the appellate authority's rejection of the petitioner's application for condonation of delay and consequent dismissal of the appeal. - HELD THAT: - The appellate authority mechanically rejected the petitioner's condonation application and dismissed the appeal for being filed beyond the prescribed period without considering the petitioner's explanation that the show-cause notice and the order under Section 73(9) were not available on the portal's 'view notices' tab and that the petitioner became aware of the order only on receipt of an email dated 29th October, 2023. The Court found that lack of consideration of the petitioner's explanation rendered the appellate order perverse. Reliance was placed on the Division Bench precedent that the appellate authority is competent to condone delay beyond one month under Section 107(4). In view of these findings, the order dated 27th February, 2024 was set aside. [Paras 12, 13]

Appellate authority's order rejecting condonation and appeal set aside; rejection found perverse for failure to consider the petitioner's explanation.

Failure of principles of natural justice due to non-availability of show-cause/order on the portal 'view notices' tab - Direction to adjudicatory authority to decide appeal on merits after granting opportunity of hearing - Whether the High Court should remand the matter for reconsideration or itself condone the delay and direct disposal of the appeal on merits. - HELD THAT: - Having examined the explanation given by the petitioner - that the show-cause notice and the adjudication order were not visible under the usual 'view notices' tab and that the petitioner therefore lacked knowledge to respond - the Court concluded that remand would not serve any useful purpose. Finding the explanation sufficient, the Court exercised its writ jurisdiction to condone the delay and directed the appellate authority to hear and dispose of the appeal on merits after giving the petitioner an opportunity of hearing, preferably within eight weeks from communication of the order. The Court declined to entertain a fresh challenge to the adjudication order under Section 73(9) in writ jurisdiction where an appeal had already been filed. [Paras 14]

Delay condoned by the Court; appellate authority directed to hear and dispose of the appeal on merits within eight weeks after affording opportunity of hearing.

Final Conclusion: The order of the appellate authority dated 27th February, 2024 dismissing the appeal for delay is set aside as perverse; the High Court condoned the delay and directed the appellate authority to hear and dispose of the appeal on merits after providing the petitioner an opportunity of hearing, preferably within eight weeks.

Condonation of delay - exercise of jurisdiction under section 263 of the Income Tax Act - revision proceedings before the Assessing Officer - wait-and-see or forum-shopping conduct - public interest in litigation finality

Condonation of delay - exercise of jurisdiction under section 263 of the Income Tax Act - revision proceedings before the Assessing Officer - wait-and-see or forum-shopping conduct - public interest in litigation finality - Condonation of the delay of 348 days in filing the appeal against the order passed under section 263 was refused and the appeal was dismissed without adjudication on merits. - HELD THAT: - The Tribunal examined the affidavit and correspondence relied upon by the assessee and found that on the date the order under section 263 was passed the assessee promptly sought professional advice and received clear options: either to challenge the section 263 order before the Tribunal to avoid revision proceedings, or to accept the section 263 order and pursue the revision proceedings before the Assessing Officer. The assessee consciously chose to pursue the revision proceedings before the Assessing Officer by furnishing information and thereby elected the second option. The Tribunal noted that only after unfavourable developments in the consequential proceedings did the assessee obtain further advice and belatedly initiate challenge to the section 263 order. The Tribunal characterised this conduct as a deliberate "wait-and-see" or forum-shopping approach designed to retain the benefits of both routes, and observed that condoning such delay would be contrary to public interest and finality of litigation. Reliance was placed on consistent views of co-ordinate Benches rejecting condonation where appellants delayed challenge until after adverse consequential orders. Applying these considerations, the Tribunal concluded the explanation did not constitute sufficient cause for condonation and therefore declined to condone the delay, dismissing the appeal without addressing the merits. [Paras 8, 9, 10]

Delay not condoned; appeal dismissed without deciding the merits.

Final Conclusion: The application for condonation of delay was refused and, on that ground, the appeal against the order under section 263 was dismissed without consideration of the merits.

Stay of demand on terms - acceptance of statutory appeals notwithstanding limitation - rectification petition - disposal within statutory time - portal filing of rectification petitions - abeyance of reassessment proceedings

Stay of demand on terms - Whether the orders under Sections 201/201(1A) shall be stayed on terms pending disposal of statutory appeals. - HELD THAT: - The Court directed that, subject to remittance of a portion of the assessed liability, the impugned orders under Sections 201/201(1A) will be stayed until disposal of the statutory appeals. The petitioner was ordered to remit a specified sum within two weeks from receipt of the order as a condition for grant of the stay. This direction balances the protection of the assessee's right to litigate the assessment with protection of revenue interest during the interregnum. [Paras 5]

Orders under Sections 201/201(1A) are stayed until disposal of statutory appeals, subject to the petitioner remitting the directed amount within the time stipulated.

Acceptance of statutory appeals notwithstanding limitation - Whether the appellate authority should receive and decide the statutory appeals on merits without going into the question of limitation. - HELD THAT: - The Court observed that the impugned orders were issued after the petitioner was heard and noted the petitioner approached the Court within 30 days. In the exercise of supervisory jurisdiction it directed that appeals filed by the petitioner within a short specified period be accepted by the appellate authority and disposed of on merits without objection being taken to limitation, thereby securing an effective adjudication on merits. [Paras 4, 5]

Appellate authority to receive and decide the statutory appeals on merits and not to raise the question of limitation if the appeals are presented within the time prescribed by this order.

Rectification petition - disposal within statutory time - portal filing of rectification petitions - Directions regarding disposal of the rectification petitions and manner of filing thereof. - HELD THAT: - The Court examined the rectification petitions and noted they concern interest payments to Government entities and cover part of the tax demand. The Court directed expeditious disposal of the rectification petitions within a short fixed period and required the petitioner to upload the application and supporting documents on the portal within one week of remittance. The respondents were directed to provide portal access and enable the uploading, aligning with the statutory mechanism for filing such petitions and the six month time frame contemplated under Section 154. [Paras 2, 3, 5]

Rectification petitions are to be disposed of within three months; petitioner to upload the petitions and supporting documents on the portal within the specified time and respondents to provide portal access.

Abeyance of reassessment proceedings - Whether reassessment proceedings pursuant to notice under Section 148 should be kept in abeyance. - HELD THAT: - In order to preserve the status quo pending adjudication of the statutory appeals, the Court ordered that proceedings for reassessment pursuant to the Section 148 notice be kept in abeyance until disposal of the appeals filed by the petitioner. This ensures that parallel reassessment action does not prejudice the appellate process directed by the Court. [Paras 5]

Proceedings for reassessment pursuant to the notice under Section 148 shall be kept in abeyance until disposal of the statutory appeals.

Final Conclusion: Writ petitions disposed of by granting a conditional stay of the orders under Sections 201/201(1A) on remittance of the directed sum, directing the appellate authority to receive and decide appeals on merits without raising limitation, ordering expeditious disposal of rectification petitions with portal filing, directing respondents to enable portal access, and keeping reassessment proceedings under Section 148 in abeyance until disposal of the appeals.

Taxability of payments for computer software as royalty - use or right to use copyright in computer software - application of Double Taxation Avoidance Agreement - obligation to deduct tax at source under section 195 of the Income-tax Act - interpretation of section 9(1)(vi) of the Income-tax Act - precedential effect of Engineering Analysis Centre of Excellence (P.) Ltd. v. Commissioner of Income Tax (Supreme Court)

Taxability of payments for computer software as royalty - interpretation of section 9(1)(vi) of the Income-tax Act - use or right to use copyright in computer software - application of Double Taxation Avoidance Agreement - obligation to deduct tax at source under section 195 of the Income-tax Act - Payments made by the assessee to foreign residents for obtaining computer software do not constitute "royalty" taxable in India under section 9(1)(vi) and do not give rise to an obligation to deduct tax at source under section 195 in the facts of these cases. - HELD THAT: - The Court applied the Supreme Court's decision in Engineering Analysis Centre of Excellence (P.) Ltd. and held that transactions involving purchase/resale/use of computer software governed by EULAs/distribution agreements, in the presence of the relevant DTAAs, do not create an interest or right amounting to the "use of or right to use" copyright such as would attract taxation as royalty under section 9(1)(vi). The Assessing Officer's approach was contrary to the authoritative pronouncement of the Supreme Court; the facts of the present cases are similar and the DTAA with the countries of the payees applies. In view of the binding precedent, the appeals do not raise any substantial question of law for the Revenue and are dismissed. [Paras 2, 4, 5]

Appeals dismissed as the payments are not taxable as royalty and there was no obligation to deduct TDS; no costs.

Final Conclusion: Applying the Supreme Court's ruling in Engineering Analysis Centre of Excellence (P.) Ltd., the High Court dismissed the revenue appeals, holding that the impugned software payments are not royalties taxable in India and that no tax-at-source deduction was required in the circumstances; no costs.

Cash credits under Section 68 - onus on assessee to prove identity, capacity and genuineness - Power to call for information under Section 133(6) - conversion of unaccounted money through share capital - assessment of conduit or non-existent entities

Cash credits under Section 68 - onus on assessee to prove identity, capacity and genuineness - assessment of conduit or non-existent entities - conversion of unaccounted money through share capital - Validity of addition of Rs. 1,87,00,000/- to the assessable income under Section 68 for F.Y. 2013-14 / A.Y. 2014-15 - HELD THAT: - The Court held that the initial onus under Section 68 lies on the assessee to establish proof of identity of the creditors, their capacity to advance money and the genuineness of the transaction. Notices issued under Section 133(6) to the purported investors returned unserved and departmental enquiry found the companies to be non-existent, undermining the assessee's explanation. Applying the principles in Principal Commissioner of Income Tax v. NRA Iron and Steel (supra), where private placement and share capital/premium are used to convert unaccounted money, a higher onus is required and failure to discharge that onus justifies treating the sum as the assessee's income. Given the non-existence of the alleged investing entities and the absence of satisfactory explanation, the addition under Section 68 was held to be justified and rightly sustained by the fora below. [Paras 11, 12, 13]

Addition of Rs. 1,87,00,000/- under Section 68 for F.Y. 2013-14 / A.Y. 2014-15 is upheld.

Assessment of conduit or non-existent entities - double taxation / assessment of conduit entities - onus on assessee to prove identity, capacity and genuineness - Whether a question of law arises because the same amount was assessed to tax in the hands of another entity (Rashi Steels) - HELD THAT: - The Court rejected the contention that double assessment on the same sum would preclude taxing the appellant, noting that where notices to the alleged investor companies revealed them to be non-existent and the assessee failed to discharge the statutory onus, the appellant cannot evade scrutiny by pointing to an assessment of an ultimate beneficiary. The practice of conversion of unaccounted money through the cloak of share capital requires careful scrutiny; insofar as the appellant failed to prove the transaction's genuineness, no substantial question of law arises to warrant interference. [Paras 11, 13, 14]

No question of law arises; the plea against double taxation is not accepted and does not vitiate the addition.

Final Conclusion: The appeal is dismissed; the addition under Section 68 in respect of F.Y. 2013-14 (A.Y. 2014-15) is sustained as the assessee failed to discharge the statutory onus and no question of law arises.

Retrospective amendment to Explanation to Section 9(1)(vii) - obligation to deduct tax at source and disallowance under Section 40(a)(ia) - doctrine of impossibility (lex non cogit ad impossibilia; impotentia excusat legem) - capital versus revenue expenditure - business exigency test

Retrospective amendment to Explanation to Section 9(1)(vii) - obligation to deduct tax at source and disallowance under Section 40(a)(ia) - doctrine of impossibility (lex non cogit ad impossibilia; impotentia excusat legem) - Deletion of addition of Rs. 6,94,32,433/- made under Section 40(a)(ia) for failure to deduct tax at source on payments to non-residents which became taxable by a retrospective amendment - HELD THAT: - The Tribunal held that although the retrospectively inserted Explanation to Section 9(1)(vii) brought such receipts within taxable income, the assessee could not be expected to deduct tax at source in the previous year 2009-2010 when the Explanation was not yet factually on the statute book. This view was in line with a coordinate Tribunal decision accepted by the Department and was supported by the Supreme Court's application of the maxims lex non cogit ad impossibilia and impotentia excusat legem in Engineering Analysis Centre of Excellence (P.) Ltd., which relieves a person of an obligation where it was impossible to comply because the legal provision was not actually in force at the relevant time. The High Court found no perversity in the Tribunal's conclusion that the assessee could not be expected to apply a provision that became effective retrospectively only after the payments were made, and accordingly upheld the deletion of the disallowance. [Paras 17, 18, 19, 20, 21]

Addition under Section 40(a)(ia) deleted; Tribunal's finding upheld

Capital versus revenue expenditure - business exigency test - Allowability as revenue expenditure of amounts spent on renovation of temples and donation towards construction of a school (community development expenses) incurred in the locality of the assessee's mining operations - HELD THAT: - The Tribunal found as a fact that the expenditures were incurred to maintain and create cordial relations with villagers residing around the mining and business area, constituted business exigencies, and did not result in acquisition of any capital asset. The High Court held that the quantum of expenditure, however large, is not determinative of the nature of the expenditure and that the Tribunal's factual finding - that the expenses were for business/commercial expediency and hence revenue in nature - did not raise any substantial question of law. The Court therefore found no perversity in the Tribunal's conclusion and declined to disturb the allowance of these expenditures as revenue expenditure. [Paras 22, 23, 24, 25]

Expenditures for temple renovation and school construction held to be allowable revenue expenditure; disallowance set aside

Final Conclusion: The appeal is dismissed. The Tribunal's order deleting the disallowance under Section 40(a)(ia) in respect of payments to non-residents and holding the community development expenses to be revenue expenditure is upheld; no costs.

Powers under Section 264 of the Income-tax Act - rectification of returns - inadvertent error in return - delay as ground for rejection - remand for reconsideration - consistency of exemption claims - approval under Section 10(23C)(vi)

Powers under Section 264 of the Income-tax Act - inadvertent error in return - delay as ground for rejection - remand for reconsideration - consistency of exemption claims - Whether the order rejecting the revision petition under Section 264 for assessment year 2018-19 should be set aside and the matter remanded for fresh consideration. - HELD THAT: - The Trust, approved under Section 10(23C)(vi), filed the return for AY 2018-19 but inadvertently entered '0' in the exemption column; its audit report in Form 10BD indicated that income was applied to the Trust's objects. The CPC rejected the rectification request and the revision under Section 264 was thereafter rejected by the first respondent principally on the ground of delay. The High Court noted that wide powers are conferred on the CIT under Section 264 and that the impugned order did not consider the petitioner's entitlement to exemption on merits but recorded delay and other filing defects. Given the petitioner's prior approval and consistent claims of exemption, and that the rejection did not address the substantive entitlement, the court exercised supervisory jurisdiction to set aside the order and remand the matter for fresh consideration. The first respondent is directed to reconsider the revision request taking into account the observations in the order and to pass a fresh reasoned order within three months.

Impugned order dated 18.03.2024 set aside and matter remanded to the first respondent for fresh consideration and a reasoned order within three months.

Final Conclusion: The order rejecting the revision under Section 264 for AY 2018-19 is set aside and the matter is remanded for reconsideration on merits; a fresh reasoned order to be passed within three months.

Digital Evidence Investigation Manual - Section 65B of the Indian Evidence Act - natural justice - appellate remedy under the Income Tax Act - exercise of writ jurisdiction under Article 226

Digital Evidence Investigation Manual - Section 65B of the Indian Evidence Act - exercise of writ jurisdiction under Article 226 - Whether interference under Article 226 was warranted on the ground that digital evidence was relied upon without compliance with the Digital Evidence Investigation Manual and Section 65B - HELD THAT: - The petitioner alleged that digital material relied upon in the assessment was not collected or certified in accordance with the Digital Evidence Investigation Manual and Section 65B. The petitioner, however, did not point to any specific instance of non-compliance in the assessment proceedings and did not show that such objections were raised during the assessment. The High Court observed that, to test the contentions, reappraisal of evidence would be necessary and that such reappraisal is properly conducted by the appellate authorities rather than in writ proceedings. In these circumstances the petition was not an appropriate vehicle for exercise of discretionary writ jurisdiction and interference under Article 226 was declined. [Paras 5]

Writ jurisdiction under Article 226 declined; the challenge on alleged non-compliance with the Digital Evidence Investigation Manual and Section 65B is not adjudicated in writ proceedings.

Appellate remedy under the Income Tax Act - natural justice - Relief to permit statutory appeal and direction to appellate authority to decide merits without going into limitation - HELD THAT: - Although the High Court declined to decide the merits in writ jurisdiction, it permitted the petitioner to present a statutory appeal. The Court directed that if the statutory appeal is filed within ten days from receipt of the order, the appellate authority shall receive and dispose of the appeal on its merits without going into the question of limitation. The Court recorded that principles of natural justice were complied with during assessment but nonetheless afforded the petitioner the appellate forum to ventilate the substantive contentions. [Paras 6]

Petitioner permitted to file statutory appeal within ten days; appellate authority directed to admit and decide the appeal on merits without regard to limitation.

Final Conclusion: Writ petition dismissed on merits; petitioner granted liberty to file a statutory appeal within ten days and the appellate authority directed to entertain and decide the appeal on merits ignoring limitation; no order as to costs.

Eligibility of interest income from deposits with cooperative/scheduled banks for exemption - Deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 - Deduction under section 80P(2)(d) of the Income Tax Act, 1961 - Attribution of interest income to business activities of a cooperative society

Eligibility of interest income from deposits with cooperative/scheduled banks for exemption - Deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 - Attribution of interest income to business activities of a cooperative society - Whether interest income earned by the cooperative society on deposits with cooperative/scheduled banks is attributable to its business activities and eligible for exemption under section 80P(2)(a)(i) despite denial under section 80P(2)(d). - HELD THAT: - The Tribunal noted a divergence of judicial opinion among various High Courts on whether income from surplus invested in short-term deposits/securities can be attributed to the society's activities. After considering decisions of Coordinate Benches and relevant High Court precedents, the Tribunal followed the view favouring the assessee that interest earned on fixed deposits with cooperative banks/scheduled banks partakes the character of business income of the cooperative society. Applying that principle, the Tribunal held such interest income to be eligible for exemption under section 80P(2)(a)(i) even though it was not allowable under section 80P(2)(d). The Tribunal directed the Assessing Officer to allow exemption under section 80P(2)(a)(i) and allowed the appeals on that basis. [Paras 6, 7, 8]

Interest income on deposits with cooperative/scheduled banks is attributable to the society's business and is exemptible under section 80P(2)(a)(i); appeals allowed.

Final Conclusion: Both appeals for A.Y. 2018-19 and A.Y. 2020-21 are allowed and the Assessing Officer is directed to allow exemption of the interest income under section 80P(2)(a)(i) of the Act.

Exemption under section 11 - filing of Form 10B as procedural requirement - substantial compliance - technical glitch excusing delay - opportunity of hearing to the assessing officer - alternate claim under section 10(23C)(iiiad)

Exemption under section 11 - filing of Form 10B as procedural requirement - technical glitch excusing delay - substantial compliance - The assessee's claim for exemption under section 11 was to be allowed despite delay in uploading/downloading Form 10B caused by technical issues. - HELD THAT: - The Tribunal found that the failure to furnish Form 10B within the prescribed time was due to technical problems beyond the assessee's control and that the requirement of filing Form 10/10B is procedural in nature. Reliance was placed on precedents holding that procedural lapses should not defeat substantive claims where there is substantial compliance and the audit report is available for verification during assessment or appellate proceedings. In light of these authorities and the documentary proof of upload attempts and the auditor-signed Form 10B placed on record, the Tribunal directed the Assessing Officer to grant the exemption under section 11 after verification. [Paras 6]

Cross Objection allowed; exemption under section 11 granted and Assessing Officer directed to allow the claim after due verification.

Opportunity of hearing to the assessing officer - alternate claim under section 10(23C)(iiiad) - The CIT(A) erred in admitting and allowing the assessee's alternate claim under section 10(23C)(iiiad) without providing an opportunity of hearing to the Assessing Officer. - HELD THAT: - The Tribunal observed that the appellate authority ought to have afforded the Assessing Officer a hearing before admitting the alternate ground under section 10(23C)(iiiad). The error in procedure was noted by the Tribunal; however, since the primary ground denying exemption under section 11 was decided in favour of the assessee, the Revenue's appeal on this procedural error was rendered infructuous. [Paras 6]

CIT(A)'s admission of the alternate claim without hearing the Assessing Officer was incorrect, but the Revenue's appeal on that score is rendered infructuous by the allowance of the section 11 claim.

Final Conclusion: The Cross Objection of the assessee is allowed and the Assessing Officer is directed to grant the exemption under section 11 after verification; the Revenue's appeal is dismissed as infructuous.

Registration under section 12A(1)(ac)(ii) and Section 80G(5) - proposed activities - genuineness of objects of the trust - consideration of documentary evidence for charitable activity - remand for fresh consideration - miscarriage of justice

Registration under section 12A(1)(ac)(ii) and Section 80G(5) - proposed activities - genuineness of objects of the trust - consideration of documentary evidence for charitable activity - remand for fresh consideration - Whether the rejection of the applications dated 28.03.2023 in Form No.10AB for registration under Section 12A(1)(ac)(ii) and Section 80G(5) was justified, and what relief is to be granted. - HELD THAT: - The Tribunal examined the material placed before the Learned CIT(Exemption) and noted that the authority rejected the applications on the ground that no charitable activity, as defined by section 2(15), had been initiated and that no expenditure on charitable activity appeared in the income and expenditure account. The record, however, contained documents showing purchase/advance for land for establishing educational institutions, letters explaining the Trust's objects and intention to promote education and healthcare, and receipts evidencing financial assistance/donations to other trusts. Applying the principle in Ananda Social & Educational Trust that registration under section 12AA (and related provisions) requires consideration of whether the objects and the activities proposed by the trust are genuinely charitable and whether proposed activities may be considered, the Tribunal concluded that the Learned CIT(Exemption) did not adequately appreciate the documentary material and the pleaded proposed activities. The impugned order was therefore found to result in a miscarriage of justice. In consequence, the Tribunal set aside the rejection and directed the Learned CIT(Exemption) to reconsider the applications afresh, exercising statutory powers in accordance with law and taking into account the materials already on record.

Appeals allowed; impugned order dated 26.09.2023 set aside and the matter remitted to the Learned CIT(Exemption) for fresh consideration in accordance with law.

Final Conclusion: The Tribunal allowed the appeals, set aside the orders rejecting registration under Section 12A(1)(ac)(ii) and Section 80G(5), and directed the Learned CIT(Exemption) to reconsider the applications afresh taking into account the materials on record and the settled principle that proposed activities and genuineness of objects are relevant to registration.

Provisional and permanent registration under section 80G(5) - procedural compliance for filing Form 10AB - power to condone delay in filing application for registration - effect of CBDT extension/circular on pending applications

Provisional and permanent registration under section 80G(5) - procedural compliance for filing Form 10AB - power to condone delay in filing application for registration - effect of CBDT extension/circular on pending applications - Whether the application for permanent registration under section 80G(5) filed after the prescribed time could be rejected without consideration of CBDT's subsequent circular permitting extension and whether the matter required fresh consideration by the CIT(Exemptions). - HELD THAT: - The Tribunal noted that the assessee filed Form 10AB for permanent registration on 02.09.2023 though activities commenced on 10.02.2022 and that the CIT(Exemptions) rejected the application as outside the six month timeline (including the earlier CBDT extension up to 30.09.2022). The assessee relied on later administrative action (CBDT circular No.7/2024 dated 25.04.2024) which allowed filing up to 30.06.2024 and argued that the delay was curable and that the CIT(Exemptions) should have the power to condone delay or at least consider the application in light of the circular. The Revenue did not resist the assessee's request to consider the subsequent Board circular. Considering these facts and the CBDT circular, the Tribunal found it appropriate to set aside the order and remit the matter to the file of the CIT(Exemptions) for fresh consideration, giving the authority an opportunity to decide the application in the light of the circular and the submissions on record rather than allowing a summary rejection solely on the ground of delay. [Paras 8]

Order set aside and matter remitted to the file of the CIT(Exemptions) for fresh consideration in light of the CBDT circular; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the CIT(Exemptions) order rejecting the application for registration under section 80G(5) and remitted the matter to the CIT(Exemptions) to be reconsidered in the light of the CBDT circular, directing that the appeal is allowed for statistical purposes.

Condonation of delay and sufficient cause - ex-parte assessment - natural justice and right to be heard - obligation under section 144 to make necessary inquiry - best judgment assessment - addition on account of unexplained cash credited treated as income under section 68 - remand for fresh adjudication after affording opportunity

Condonation of delay and sufficient cause - Whether the delay of 1,170 days in filing the appeal to the Tribunal should be condoned and the appeal admitted. - HELD THAT: - The Tribunal examined the reasons advanced for the delay - namely, Covid-19 pandemic, shifting of business/residence, and disruption caused by farmers' agitation - and the absence of representation before lower authorities. Applying the settled principle that delay may be condoned if sufficient cause is shown and taking a liberal approach in light of unprecedented events, the Tribunal found that reasonable cause existed to prevent timely filing. Consequently, the Tribunal exercised its discretion to condone the delay and admitted the appeal for decision on merits. [Paras 6]

Delay condoned and appeal admitted.

Natural justice and right to be heard - ex-parte assessment - obligation under section 144 to make necessary inquiry - best judgment assessment - remand for fresh adjudication after affording opportunity - Whether the assessment and appellate orders passed ex parte without adequate inquiry and without affording opportunity should be sustained or require restoration to the Assessing Officer for fresh consideration. - HELD THAT: - Records show no effective representation by the assessee before the AO and CIT(A), and the AO made the addition of unexplained cash mechanically in a best judgment assessment, noting non-cooperation. The Tribunal observed that section 144 imposes an obligation on the Assessing Officer to make necessary inquiries about the nature of transactions before making disallowances/additions, and that the CIT(A) treated the returned ITR as invalid without assigning reasons. Given the absence of independent inquiry and the breach of principles of natural justice, the Tribunal held that the impugned orders could not stand. To subserve natural justice and permit appropriate fact-finding, the Tribunal set aside the impugned orders and restored the matter to the AO for fresh assessment after providing the assessee adequate opportunity to be heard. [Paras 12, 13]

Impugned assessment and appellate orders set aside; matter remanded to AO for fresh assessment after affording opportunity of hearing.

General grounds - Whether general grounds of appeal (grounds Nos. 1 and 7) require separate adjudication. - HELD THAT: - The Tribunal found that the grounds were general in nature and did not call for independent consideration. Consequently, they were dismissed as not requiring separate adjudication. [Paras 7]

General grounds dismissed.

Final Conclusion: The Tribunal condoned the delay and admitted the appeal; general grounds were dismissed; the ex parte assessment and appellate orders were set aside and the matter remitted to the Assessing Officer for fresh assessment after affording the assessee adequate opportunity to be heard.

Deduction under Section 80P(2)(d) - Co-operative society - Co-operative bank as a co-operative society - Exclusion of co-operative banks by operation of Section 80P(4) - Processing of return under section 143(1) - permissible adjustments

Processing of return under section 143(1) - permissible adjustments - Deduction under Section 80P(2)(d) - Intimation under section 143(1) cannot disallow deduction under section 80P(2)(d) where such disallowance is not a permissible adjustment under section 143(1). - HELD THAT: - The Tribunal examined the scope of adjustments permissible under section 143(1)(a) and its explanatory sub clauses. The intimations under section 143(1) permit only specified adjustments such as arithmetical errors, incorrect claims apparent from the return under the defined explanation, disallowances linked solely to late filing as provided in clause (v), and addition of incomes appearing in specified forms. A claim for deduction under section 80P(2)(d) does not fall within the Statute's definition of an "incorrect claim apparent from any information in the return" nor is it a deduction subject to the special bar in clause (v) (which applies only when the return is filed beyond the due date). Consequently, the denial of the 80P(2)(d) deduction by way of processing under section 143(1) was not a permissible adjustment and the intimation was unsustainable to the extent it disallowed that deduction. [Paras 7, 8, 9, 10]

The adjustment disallowing deduction under section 80P(2)(d) in the section 143(1) intimation is not permissible and is unsustainable.

Deduction under Section 80P(2)(d) - Co-operative society - Co-operative bank as a co-operative society - Exclusion of co-operative banks by operation of Section 80P(4) - Interest earned by the assessee cooperative housing society from deposits with co-operative banks is deductible under section 80P(2)(d), since co-operative banks are co-operative societies and section 80P(4) does not apply to the assessee. - HELD THAT: - The Tribunal noted that the statutory definition of "co-operative society" and the Maharashtra Co-operative Societies Act establish that co-operative banks are societies which conduct banking business but retain the character of co-operative societies. Section 80P(2)(d) grants deduction in respect of interest derived by a co-operative society from investments with another co-operative society. The assessee is not a co-operative bank and therefore is not subject to the exclusion in section 80P(4). Applying these provisions, the Tribunal held that interest received by the assessee from various co-operative banks qualifies for deduction under section 80P(2)(d). The Tribunal also accepted the assessee's concession that interest from a non co-operative bank (Bank of Baroda) is not eligible for the deduction. [Paras 14, 15, 16, 17, 18]

Interest income from deposits with co-operative banks is allowable under section 80P(2)(d) for the assessee; interest from the non cooperative bank is not allowable.

Final Conclusion: The Tribunal held that the disallowance of the 80P(2)(d) deduction by way of a section 143(1) intimation was impermissible and, on merits, allowed the assessee deduction for interest earned from co operative banks (excluding interest from the non cooperative bank), thereby partly allowing the appeal.

Transfer of right to acquire property - holding period computed from date of allotment letter - long-term capital asset - right in personam - specific performance - deduction under section 54F

Transfer of right to acquire property - holding period computed from date of allotment letter - long-term capital asset - Capital gain on transfer of the right to own the allotted flat is a long-term capital gain where the period of holding is computed from the date of the allotment letter. - HELD THAT: - The Tribunal held that the allotment letter dated 15.02.2010 created an identifiable booking right in favour of the assessee - a contractual right in personam enforceable by specific performance - and that the source of accrual of rights is the agreement that intends to convey such rights. The registered agreement of 13.05.2014 only recorded and elaborated the earlier allotment terms; the right had already accrued on allotment and subsequent payments were made in accordance with that allotment. Applying this legal characterisation and relying on precedents including Sanjeev Lal and the reasoning in Vinod Kumar Jain (as discussed in the judgment), the Tribunal concluded that the holding period must be reckoned from the date of allotment letter, which exceeds 36 months, and therefore the asset is a long-term capital asset and the gain is taxable as long-term capital gain. The Tribunal explicitly distinguished the separate question of transfer of absolute ownership under the Transfer of Property Act as not determinative of the holding period in the facts of this case. [Paras 12, 14, 17]

Ground No. 1 allowed - the gain is long-term capital gain, holding period to be computed from date of allotment letter.

Deduction under section 54F - appellate authority's power to entertain claim despite no revised return - Assessee entitled to claim deduction under section 54F for reinvestment in another residential flat, but the claim is remitted for verification by the Assessing Officer. - HELD THAT: - Having held the transfer to be of a long-term capital asset, the Tribunal found the assessee eligible for deduction under section 54F, noting reliance placed on Goetze (India) Ltd. and Pruthvi Brokers for the principle that appellate authorities may entertain such a claim even if not filed by way of revised return before the assessing officer. The Tribunal accepted the assessee's computation applying section 54F but observed that the veracity and compliance with statutory conditions require verification. Accordingly, the Tribunal directed a limited remand to the jurisdictional Assessing Officer to verify the claim and allow the deduction if the requirements of the Act are satisfied. [Paras 18, 19]

Ground No. 2 allowed for statistical purposes and remitted to the Assessing Officer for verification and consequential allowance of deduction under section 54F if found in order.

Final Conclusion: Appeal allowed: capital gain on transfer of the right to acquire the allotted flat treated as long-term capital gain (holding period from date of allotment letter); claim for deduction under section 54F accepted in principle and remitted to the Assessing Officer for verification and consequential relief if statutory conditions are met.

Obligation to deduct tax at source - assessee in default for failure to deduct TDS - exemption under section 10(5) for Leave Travel Concession limited to travel within India - Rule 2B conditions for LTC exemption - employer's constructive knowledge and absence of bona fide mistake - precedential effect of Supreme Court decision in State Bank of India v. ACIT

Exemption under section 10(5) for Leave Travel Concession limited to travel within India - Rule 2B conditions for LTC exemption - obligation to deduct tax at source - assessee in default for failure to deduct TDS - precedential effect of Supreme Court decision in State Bank of India v. ACIT - Whether the assessee (State Bank of India) is an assessee in default under section 201 for not deducting TDS under section 192 on LTC/LFC/HTC reimbursements where employees' travel involved a foreign leg - HELD THAT: - The Tribunal held that Section 10(5) exempts travel concession only where the travel is to a place in India and that Rule 2B prescribes the conditions (including travel by shortest route within India) for such exemption. Where employees' journeys included foreign legs or were not by the shortest route, the payments could not be treated as exempt under Section 10(5) and therefore were subject to tax for the purpose of TDS. The Tribunal applied the binding precedent of the Hon'ble Supreme Court in State Bank of India v. ACIT (C.A. No.8181 of 2022), which affirmed that a foreign leg removes the travel from the ambit of Section 10(5) and that the employer ought to have deducted tax at source. The Tribunal further accepted the lower authorities' finding that the employer had all material facts when settling LTC claims, so the contention of a bona fide mistake or ignorance was not sustainable. In view of these conclusions and the Supreme Court ruling, the assessee was held to be an assessee in default for non-deduction of TDS on the LTC/LFC/HTC reimbursements involving foreign travel, and the appeals were dismissed. [Paras 10, 11]

Appeal dismissed; assessee held to be in default under section 201 for not deducting TDS on LTC reimbursements involving foreign travel.

Final Conclusion: Following the Supreme Court precedent and applying Section 10(5) read with Rule 2B, the Tribunal affirmed that LTC reimbursements for journeys involving foreign legs are not exempt and the employer was obliged to deduct tax at source; the assessee's appeal is dismissed for AY 2015-16.

Right of cross-examination - principles of natural justice - reclassification of goods - administrative discretion in permitting cross-examination - documentary evidence as basis for assessment - appealability of assessment orders - condonation of delay in statutory appeals

Right of cross-examination - administrative discretion in permitting cross-examination - documentary evidence as basis for assessment - principles of natural justice - Denial of the petitioner's request for cross-examination did not vitiate the assessment order. - HELD THAT: - The Court found that the petitioner requested cross-examination of multiple officers and the chemical examiner but failed to adduce any cogent reason for such cross-examination. The assessing authority had furnished all relevant documentary material relied upon in the show cause notice, including statements, mahazars, reports and RUDs. Applying settled law that the right of cross-examination is not absolute and depends on facts and circumstances, the Court distinguished Andaman Timber Industries on its facts because in that case the impugned order rested on the statements of witnesses whom cross-examination was sought. In the present case the statements of the witnesses sought to be cross-examined did not form the foundation of the order; therefore, denial of cross-examination did not amount to breach of natural justice or render the order infirm. [Paras 5]

The challenge based on denial of cross-examination fails and the assessing officer's conclusion does not contain infirmity.

Appealability of assessment orders - condonation of delay in statutory appeals - Petitioner permitted to file a statutory appeal out of time and the Tribunal directed to admit and decide it on merits without addressing limitation. - HELD THAT: - Noting that the impugned order can be challenged before the statutory appellate forum and that the writ petition had been pending since late April 2024, the Court exercised its supervisory jurisdiction to allow the petitioner to prosecute the statutory remedy. The petitioner was granted ten days from receipt of the copy of this order to file the appeal. The Tribunal was directed to receive and dispose of the appeal on merits and not to raise the question of limitation, thereby effectively condoning any delay attributable to the pendency of the writ petition. [Paras 6]

Petitioner may file the statutory appeal within ten days and the Tribunal shall admit and decide it on merits without going into limitation.

Final Conclusion: Writ petition disposed by rejecting the challenge to denial of cross-examination; petitioner allowed to file a statutory appeal within ten days and the Tribunal directed to admit and decide it on merits without considering limitation; no order as to costs.

Provisional release of imported goods - payment of enhanced/customs duty as condition for release - quantification of duty by Customs within stipulated time - continuance of adjudication proceedings notwithstanding provisional release - consideration of waiver of demurrage charges

Provisional release of imported goods - payment of enhanced/customs duty as condition for release - quantification of duty by Customs within stipulated time - Direction for provisional release of imported second hand digital multifunction printing and copying machines on condition of payment/deposit of the enhanced duty quantified by Customs within stipulated time. - HELD THAT: - The Court directed that the respondents consider the petitioners' plea for provisional release of the goods subject to the condition that the petitioners pay or deposit the enhanced duty. The Customs Department is directed to quantify the duty forthwith within one week from receipt of a copy of the order, following which the petitioners shall make immediate payment. Upon receipt of the payment in entirety, the goods shall be released, the outer limit for release being three weeks thereafter. The direction implements a conditional provisional release regime tying release to pre-payment/deposit of the assessed enhanced duty and prompt quantification by the department.

Provisional release allowed on condition of deposit/payment of quantified enhanced duty with quantification to be completed within one week and release to follow within three weeks of payment.

Continuance of adjudication proceedings notwithstanding provisional release - Provisional release does not impede Customs from continuing with adjudication or other departmental proceedings in accordance with law. - HELD THAT: - The Court made it clear that the order permitting provisional release is without prejudice to the respondents' right to proceed with adjudication or other lawful proceedings. The direction preserves the department's statutory powers to adjudicate the matters on merits despite the interim release of goods, thereby separating interim relief from final adjudication.

Order for provisional release does not bar the Customs Department from carrying out further proceedings, including adjudication, as permitted by law.

Consideration of waiver of demurrage charges - Applications by petitioners for waiver of demurrage charges are to be considered and decided objectively by the Customs respondents. - HELD THAT: - The Court noted an earlier interim direction in related petitions concerning consideration of waiver of demurrage charges. It directed that if petitioners file applications seeking waiver of demurrage, those applications shall be considered and decided by the respondents objectively. This preserves the petitioners' entitlement to seek discretionary relief and obliges the department to examine such applications on their merits.

If an application for waiver of demurrage charges is filed by the petitioners, the respondents shall consider and decide it objectively.

Final Conclusion: Writ petition disposed of on the same terms as an earlier batch order: provisional release permitted on deposit/payment of quantified enhanced duty (quantification within one week; release within three weeks of payment), without prejudice to departmental adjudication, and with a direction to consider any application for waiver of demurrage charges; no order as to costs.

Customs valuation - transaction value - rejection of declared value under Rule 12 of the Customs Valuation Rules - reliance on DRI alert and domestic market enquiries for enhancement of value - admissibility and consideration of documents obtained under RTI - principles of natural justice - remand for fresh adjudication - penalty for paper transactions under Section 114AA

Customs valuation - transaction value - rejection of declared value under Rule 12 of the Customs Valuation Rules - reliance on DRI alert and domestic market enquiries for enhancement of value - Whether the declared transaction value could be enhanced by the Department on the basis of the DRI alert, market enquiries and the material relied upon by the adjudicating authorities. - HELD THAT: - The Tribunal held that initiation of action based on a DRI alert alone does not justify enhancement of the declared transaction value. Though the Department produced market enquiries, supplier correspondence and other material, the record shows that contemporaneous import data and the appellant's working sheets (including a CD) demonstrating prices were available and not given appropriate consideration by the lower authorities. The Tribunal observed that price lists and domestic quotations cannot, without more, displace a bona fide transaction value, and that the authorities must discharge the burden of positively demonstrating untruth or inaccuracy of the declared value under the Rules before rejecting it. Given the factual record, the Tribunal found that the lower authorities proceeded to enhance value without adequate adjudication of the documentary material placed before them.

Findings of enhanced valuation cannot be sustained on the basis of the material as adjudicated below and require fresh examination.

Admissibility and consideration of documents obtained under RTI - principles of natural justice - remand for fresh adjudication - Whether the adjudication complied with principles of natural justice in failing to consider documents obtained by the appellant after the show-cause notice and relied upon in the appeal. - HELD THAT: - The Tribunal noted that the appellant obtained vital documents under RTI and had furnished a CD containing contemporaneous import data and working sheets, which were not put to the appellant in the show cause notice nor considered by the adjudicating authority. Such omission amounted to a violation of the principles of natural justice because the appellant was not afforded an opportunity to meet or explain those materials during adjudication. In these circumstances the Tribunal found that the appropriate remedy was to set aside the impugned order and remit the matter to the adjudicating authority for fresh consideration of the overall case, including the additional documents produced by the appellant, and for decision afresh on valuation, demand, interest and penalties including any claim under Section 114AA.

Impugned order set aside and matter remanded to the adjudicating authority for de novo consideration in light of the additional documents and in accordance with principles of natural justice.

Final Conclusion: The Tribunal allowed the appeals by setting aside the adjudication order and remanding the matter to the adjudicating authority for fresh adjudication of valuation, demand, interest and penalties after giving due consideration to the RTI-obtained documents and other material and in compliance with principles of natural justice; enhancement based solely on a DRI alert and the material as previously adjudicated was held unsustainable.

Suspension of warehouse licence pending enquiry - cancellation of warehouse licence - confiscation of goods under section 111(h) and 111(j) of the Customs Act, 1962 - redemption fine under section 125 of the Customs Act, 1962 - penalty under section 112 and section 117 of the Customs Act, 1962 - application of Warehouse (Custody and Handling of Goods) Regulations, 2016 and regulation 12 - distinction between breach of licence conditions and contravention of Regulations

Suspension of warehouse licence pending enquiry - cancellation of warehouse licence - Continuation of suspension of the appellant's warehouse licences beyond conclusion of the enquiry without cancellation is not permissible. - HELD THAT: - Section 58B empowers suspension of a warehouse licence during the pendency of an enquiry and provides a separate procedure for cancellation after opportunity to be heard. Suspension is not a penalty and may be warranted pending enquiry, but continuation of suspension after the enquiry has concluded without cancellation exceeds the statutory scope. The statutory scheme contemplates distinct consequences for suspension and for cancellation and does not permit bundling continuation of suspension with other penal consequences to compel compliance. The continuation of suspension beyond the impugned order was therefore set aside. [Paras 6, 7]

Continuation of suspension beyond conclusion of enquiry is unlawful and set aside.

Confiscation of goods under section 111(j) of the Customs Act, 1962 - redemption fine under section 125 of the Customs Act, 1962 - Confiscation under section 111(j) and consequent redemption fine in respect of goods temporarily stored in a tank later included in the licence was not warranted. - HELD THAT: - The tribunal found that goods pumped into tank no.103 prior to formal inclusion on the licence involved exigent operational circumstances of liquid bulk cargo and there was no finding of mala fide conduct by the licensee nor prejudice to the revenue. Section 111(j) contemplates removal contrary to permission where goods have been deposited in a warehouse; here the regulatory delay in approval and the operational realities made confiscation disproportionate. In absence of intent to breach and prejudice to exchequer, confiscation and the consequent penalty were unwarranted and therefore incorrect in law. [Paras 8, 9, 10]

Confiscation under section 111(j) and associated redemption fine set aside in respect of the goods stored in tank no.103.

Confiscation of goods under section 111(h) of the Customs Act, 1962 - Confiscation under section 111(h) of consignments alleged to have been unloaded or unloaded in contravention of sections 33 and 34 is not sustainable on the facts before the adjudicator. - HELD THAT: - Section 111(h) applies where goods are unloaded or attempted to be unloaded contrary to statutory provisions. The adjudicator failed to consider chapter VI provisions assigning responsibility for unloading to the master of the vessel and to establish that the alleged bonded tanks were outside the designated customs area. The record did not support invocation of section 111(h) for the five consignments in the private warehouse or for the consignment in the public warehouse; similarly, there was no basis shown for consequent fines and penalties. Those confiscation and penalty findings were therefore unsustainable and were set aside. [Paras 11, 12]

Confiscation and related penalties under section 111(h) and section 112 set aside for the specified consignments.

Penalty under section 117 of the Customs Act, 1962 - application of regulation 12 of the Warehouse (Custody and Handling of Goods) Regulations, 2016 - distinction between breach of licence conditions and contravention of Regulations - Imposition of penalties under section 117 for breaches said to arise from licence conditions, and several other specified lapses, was beyond the authority conferred by regulation 12 and is unsustainable. - HELD THAT: - Regulation 12 empowers penalties for contraventions of the Regulations themselves, or for abetment or failure to comply therewith. The tribunal found that requirements such as solvency certificate, insurance, CCTV installation, audit-trail software facility and certain licence-specific maximum assessable value limits were not prescribed by the Regulations. A licensing authority cannot, by appending conditions to a licence, convert those conditions into delegated statutory provisions attracting fiscal penalties under section 117. Where the Regulations do not prescribe a measure (including a definition of 'value' for any maximum permissible assessable value), imposition of penalty without proper factual and legal basis is invalid. Consequently, penalties imposed under section 117 on these grounds were set aside. [Paras 13]

Penalties under section 117 imposed for breaches of licence conditions and for the other specified lapses are without authority and set aside.

Final Conclusion: The appeals are allowed insofar as the continuation of suspension beyond the concluded enquiry, the orders of confiscation under sections 111(h) and 111(j), the redemption fines and the penalties imposed under sections 112 and 117 (as set out) were found to be without lawful basis; the impugned orders are set aside to the extent indicated.

Refund under Section 18 of the Customs Act - provisional assessment and final adjustment - application under Section 27, limitation and unjust enrichment - finality of assessment and appeal remedy - refund proceedings as execution of assessment

Refund under Section 18 of the Customs Act - provisional assessment and final adjustment - finality of assessment and appeal remedy - Whether a refund greater than the amount specified in the final re-assessment order could be sanctioned without the assessee invoking Section 27 or challenging the re-assessment order - HELD THAT: - The Tribunal held that Section 18 requires refund of amounts which become payable on final assessment without necessity of a separate claim only to the extent of the amount so found refundable in the final assessment arising from provisional assessment. Where the assessee seeks any additional refund beyond the amount determined in the final re-assessment order, that is not automatically refundable under Section 18; the grievance must be addressed by challenging the final assessment or by filing an application under Section 27. The Court relied on Mafatlal Industries to distinguish (i) cases where provisional duty is reduced on final assessment and refund is payable as admitted, and (ii) cases where the assessee seeks an additional amount beyond what was finally adjusted (which engages Section 27, limitation and the doctrine of unjust enrichment). The Tribunal observed that refund-processing authorities cannot re-open or modify the final assessment in refund proceedings because refund proceedings are in the nature of execution of the assessment; any alteration of the assessed amount must be through the appellate/rectification route. Applying these principles to the facts, the final re-assessment dated 02.04.2013 fixed the refundable amount and the sanctioning authority was correct in limiting refund to the amount so assessed; the appellant's claim for a larger sum could only have been pursued by challenging the re-assessment or by a Section 27 application subject to limitation and unjust enrichment rules. [Paras 6, 9, 11, 12, 13]

The refund beyond the amount specified in the final re-assessment could not be granted without challenging the re-assessment or filing under Section 27; the authorities rightly rejected the excess refund claim.

Section 27, limitation and unjust enrichment - refund proceedings as execution of assessment - Whether the appellant could obtain the additional refund by filing a fresh refund application after the final re-assessment without complying with the requirements of Section 27 and limitation - HELD THAT: - The Tribunal found that where an assessee seeks additional refund subsequent to finalisation of assessment (for example arising from amendments, appellate orders or other reasons not forming part of the final assessment), Explanation II to Section 27 and the limitation prescribed therein, together with the doctrine of unjust enrichment, become applicable. The decision in Mafatlal and subsequent High Court and Supreme Court authorities establish that independent refund claims filed after final assessment which re-agitate matters already decided are governed by Section 27/11-B type principles. In the present case the appellant filed a fresh refund application for the balance amount well after the final re-assessment; that claim was rightly rejected as it did not meet the statutory requirements and was barred by limitation and the principles governing unjust enrichment. [Paras 9, 10, 11, 12]

The fresh refund application for the excess amount was properly rejected as governed by Section 27, limitation and the doctrine of unjust enrichment; the appellant could not obtain the excess refund by a belated refund application.

Final Conclusion: The appeal is dismissed. The authorities correctly limited the refund to the amount determined in the final re-assessment; any claim for additional refund required challenging the re-assessment or complying with Section 27 (subject to limitation and unjust enrichment), and could not be granted in refund proceedings which do not revisit the assessment.

Benefit of preferential notification under the Duty Free Tariff Preference Scheme for Least Developed Countries - direct consignment / deemed direct dispatch - customs control in transit - identification of the person chargeable with duty or interest - remand for fresh decision where foreign customs procedures not ascertained

Benefit of preferential notification under the Duty Free Tariff Preference Scheme for Least Developed Countries - direct consignment / deemed direct dispatch - customs control in transit - Availability of notification benefit for cloves claimed to have originated in Zanzibar where goods transited through Jebel Ali and allegedly remained outside customs control - HELD THAT: - The adjudicating authorities denied the concessional benefit primarily on the finding that the goods, after shipment from Zanzibar to Jebel Ali, were cleared out of UAE customs and stored in a shipper's warehouse before being stuffed into a container for onward shipment to India, thereby violating the proviso to the definition of "Direct Consignment"-in particular the requirement that the products have "remained under the Customs control in the country of transit." The Tribunal records that the conclusion rests on the premise that the goods were out of customs control at Jebel Ali, but the authorities did not ascertain the procedures and nature of "customs control" applicable in the United Arab Emirates at Jebel Ali before reaching that conclusion. Imposing India's view of customs control on movements in a foreign territory and deciding denial of origin benefit without establishing foreign customs procedures is not appropriate. In these circumstances the factual and legal determination whether the proviso to the rule was complied with requires fresh consideration after verifying UAE customs procedures and allowing the importer an opportunity to make submissions. [Paras 2, 3]

Remanded to the original authority for fresh decision on availability of the notification benefit after ascertaining UAE customs control procedures and affording the importer an opportunity to be heard.

Identification of the person chargeable with duty or interest - notice and procedural compliance in adjudication under section 28 - Validity of demand and penalty where the original order did not identify the person chargeable with duty or interest and procedural contentions regarding notice and time frame were raised - HELD THAT: - The Tribunal found that the importer and the director were represented in proceedings, which sufficed as notice, but the original adjudication failed to identify the specific "person chargeable with duty or interest" as required by the legislative scheme. Identification of that person is integral to fasten liability for duty, interest and for attracting penalty under the relevant provisions. The lower authorities' explanation for any delay by reference to change of adjudicating authority was noted but not finally adjudicated. Because the impugned order omits the necessary identification and the appellants' contention on procedural compliance was not addressed substantively, the legality of the demand and penalty cannot be sustained without fresh adjudication. [Paras 4, 5, 6]

Remanded to the original authority for fresh adjudication on identification of the person chargeable with duty or interest and on procedural aspects of the demand and penalty after affording opportunity for submissions.

Final Conclusion: Both appeals are allowed by way of remand: the matter is set aside and returned to the original authority for fresh decision on (a) whether the goods remained under customs control in the country of transit (with UAE procedures to be ascertained and appellants heard), and (b) identification of the person chargeable with duty or interest and related procedural issues prior to imposing demand and penalty.

Monetary threshold for filing appeals before CESTAT - Binding effect of Board circulars/instructions issued under Section 131BA of the Customs Act, 1962 - Withdrawal of pending appeals falling below prescribed monetary limit - Reduction of government litigation by refusing appeals with low tax effect

Monetary threshold for filing appeals before CESTAT - Binding effect of Board circulars/instructions issued under Section 131BA of the Customs Act, 1962 - Withdrawal of pending appeals falling below prescribed monetary limit - Maintainability of Revenue's appeal in view of CBIC instructions dated 02.11.2023 prescribing a monetary limit of Rs. 50 lakhs for filing appeals before the CESTAT - HELD THAT: - The Tribunal examined the CBIC instruction dated 02.11.2023, issued under the Board's power in Section 131BA, which prescribes that appeals shall not be filed before the CESTAT where the duty involved is below Rs. 50 lakhs and directs withdrawal of pending appeals below that limit. The Tribunal noted consistent judicial practice in the CESTAT, High Courts and the Supreme Court of dismissing departmental appeals which fall below the prescribed monetary thresholds and found that the present appeal involves duty below the Rs. 50 lakhs threshold. Reliance on prior authorities and observations (including decisions of High Courts and the Tribunal) establishes that such Board instructions are binding on the Department and are intended to reduce litigation of low tax effect. Applying these principles, the Tribunal concluded that the Department's appeal is not maintainable under the instruction and must be dismissed, while leaving any question of law open. [Paras 6, 7, 8, 10]

Appeal dismissed as not maintainable in view of CBIC instructions dated 02.11.2023 prescribing the Rs. 50 lakhs monetary limit for filing appeals before the CESTAT; question of law left open.

Final Conclusion: The departmental appeal is dismissed as not maintainable under the Board's instruction dated 02.11.2023 (issued under Section 131BA) which prescribes that appeals involving duty below Rs. 50 lakhs shall not be filed before the CESTAT and pending appeals below that threshold are to be withdrawn; questions of law, if any, are left open.

Relevant date for adjudication of claims - priority of claims in winding up - application of Rule 154 of the Companies (Court) Rules, 1959 - date of appointment of provisional liquidator as reference date - date of final winding up as reference date - claims of secured creditors versus debenture trustee distinction - finality of unappealed court order

Relevant date for adjudication of claims - date of appointment of provisional liquidator as reference date - date of final winding up as reference date - priority of claims in winding up - application of Rule 154 of the Companies (Court) Rules, 1959 - Determination of the date up to which the petitioning creditor's claim must be adjudicated - whether up to the date of appointment of the Provisional Liquidator (25.02.2002) or up to the date of final winding up (09.08.2012). - HELD THAT: - The Court rejected the applicant's contention that Rule 154 requires valuation of the claim as at the date of final winding up (09.08.2012). The Court held that the determinative question is the fixation of the relevant date for determination of priority of claims, and on the facts of this case the correct reference date is the date when the liquidation process effectively commenced under control of the Provisional Liquidator (25.02.2002). The judgment emphasises that Bank of Baroda had dual and distinct claims - as a secured creditor and as debenture trustee - and the factual position recorded in earlier orders establishes that the claim in the capacity of debenture trustee had been adjudicated up to the date of provisional winding up. The Court further observed that amounts subsequently released to the Bank (including the sum released pursuant to the order dated 31.01.2019) related to its separate secured-creditor claim arising from recovery proceedings in the DRT/DRAT, and do not alter the position that the debenture trustee claim was assessed up to the provisional liquidator date. Given these facts and the finality of earlier unchallenged orders, the Court found no error in the impugned modification directing adjudication up to 25.02.2002 and held the applicant's challenge to be misconceived and without merit. [Paras 15, 16, 17, 18, 19]

The claim of the petitioning creditor shall be adjudicated up to the date of provisional winding up (25.02.2002); the application seeking modification is dismissed.

Final Conclusion: The application is dismissed; the Court affirms that, on the facts and orders in this case, the relevant date for adjudicating the petitioning creditor's claim is the date of appointment of the Provisional Liquidator (25.02.2002), and there is no error in the order dated 03.02.2023 directing adjudication up to that date.

Summary order. Appeal dismissed; Supreme Court declined to interfere with the impugned judgment and order of the National Company Law Appellate Tribunal, New Delhi; pending applications, if any, disposed of.

Jurisdiction to determine interim resolution professional fees and CIRP expenses - liability of financial creditor to pay CIRP costs and RP fees - enforcement of appellate directions by adjudicating authority - limitations of contempt jurisdiction in computing fees - computation of fees on basis of material on record

Jurisdiction to determine interim resolution professional fees and CIRP expenses - enforcement of appellate directions by adjudicating authority - Adjudicating Authority had jurisdiction to examine and determine the fee and CIRP expenses in compliance with the Appellate Tribunal's directions. - HELD THAT: - The Appellate Tribunal's order of 11.12.2019 (paragraph 19) held the Financial Creditor liable to pay CIRP cost and fees and directed the Interim Resolution Professional/Resolution Professional to file a report before the Adjudicating Authority for determination. Given that direction, the Adjudicating Authority possessed ample jurisdiction to proceed to compute and determine entitlement to fee and expenses. The contention that such computation could not be undertaken in the course of contempt proceedings was rejected because the Adjudicatory function flowed from the appellate direction and the Adjudicating Authority could examine and determine amounts due. [Paras 7, 8]

Adjudicating Authority rightly exercised jurisdiction to determine RP fees and CIRP expenses in compliance with the appellate direction.

Computation of fees on basis of material on record - limitations of contempt jurisdiction in computing fees - Computation and allowance of fees and expenses must be based on material before the Adjudicating Authority; an unrelated direction in paragraph 15.3 was set aside. - HELD THAT: - While the Adjudicating Authority could determine fees and expenses, it could do so only on the basis of material placed before it. The Appellate Tribunal's mandate had been substantially complied with by the Adjudicating Authority determining fee and expenses, but the specific direction contained in paragraph 15.3 was found to be unwarranted and was set aside because the Adjudicating Authority should confine its decision to available material and not issue extraneous directions beyond that scope. [Paras 9]

Direction in paragraph 15.3 is set aside; fee and expenses must be founded on the material before the Adjudicating Authority.

Liability of financial creditor to pay CIRP costs and RP fees - The Financial Creditor is liable to pay the determined amounts: RP fee totalling Rs. 7,30,000 and CIRP expenses of Rs. 2,41,512, less any amounts already paid, payable to the RP within four weeks. - HELD THAT: - Having approved the determination by the Adjudicating Authority, the Appellate Tribunal affirmed that the Financial Creditor must discharge the RP fee fixed at Rs. 1,00,000 per month (total Rs. 7,30,000) and the CIRP expenses of Rs. 2,41,512. The Appellate Tribunal recognised prior partial payments if any and directed settlement of the balance by bank draft or RTGS within four weeks from the date of the order. [Paras 9, 10]

Financial Creditor shall pay Rs. 7,30,000 plus Rs. 2,41,512 minus amounts already paid to the RP within four weeks by Bank Draft or R.T.G.S.

Final Conclusion: Appeal disposed; Adjudicating Authority had jurisdiction to determine RP fees and CIRP expenses under the appellate directions, the direction in paragraph 15.3 is set aside, and the Financial Creditor is directed to pay the approved fee and expenses (subject to amounts already paid) to the RP within four weeks.

Valuation under CIRP Regulations 27 and 35 - fair value and liquidation value - commercial wisdom of the Committee of Creditors - eligibility under Section 29 A of the IBC - approval of resolution plan under Section 31 of the IBC - limited judicial review under Section 30(2) and Section 61(3) of the IBC

Valuation under CIRP Regulations 27 and 35 - fair value and liquidation value - Allegation that the valuation exercise during CIRP was irregular and assets were under valued. - HELD THAT: - The Tribunal held that the RP complied with CIRP Regulations 27 and 35 by appointing IBBI registered valuers who submitted valuation reports and by furnishing fair value and liquidation value to the CoC. Pre CIRP valuations and balance sheet figures have no relevance for the CIRP valuation process. Once the CoC is satisfied with the valuation produced by the RP and registered valuers, the Adjudicating Authority cannot re open the valuation question; the Appellant's contrary perception of market value does not permit rejection of a resolution plan approved by the CoC. Reliance was placed on the reasoning in M.K. Rajagopalan v. Dr. Periasamy Palani Gounder to the effect that a compliant valuation process endorsed by the CoC does not invite interference. [Paras 13, 15]

The allegation of irregularity in valuation is rejected and does not justify setting aside approval of the resolution plan.

Eligibility under Section 29 A of the IBC - approval of resolution plan under Section 31 of the IBC - Contention that the Successful Resolution Applicant (SRA) was ineligible under Section 29 A due to SEBI action against its promoters. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's finding that the disqualification under Section 29 A must be examined as on the date of submission of the plan. The SEBI orders relied upon by the Appellant had been set aside or stayed by the Securities Appellate Tribunal, and an independent due diligence conducted by a third party confirmed compliance. The RP had filed the requisite declaration of compliance with Section 29 A and the CoC had found both applicants eligible. Accordingly, there was no merit in the challenge to the SRA's eligibility. [Paras 19, 20]

The SRA was not disqualified under Section 29 A; the challenge to eligibility is dismissed.

Commercial wisdom of the Committee of Creditors - limited judicial review under Section 30(2) and Section 61(3) of the IBC - Whether the Adjudicating Authority or this Tribunal can re examine the commercial decision of the CoC in approving the resolution plan. - HELD THAT: - The Tribunal reiterated settled law that the CoC's commercial wisdom is paramount and not amenable to judicial substitution except on limited grounds specified in Section 30(2) and Section 61(3). The CoC approved the plan with 100% voting share after being provided valuation and other material; the Adjudicating Authority's role is confined to ascertaining conformity with statutory requirements, not re evaluating commercial viability. The Appellant failed to demonstrate non compliance with Section 30(2) or other grounds that would justify interference. [Paras 22, 23]

No interference with the CoC's commercial decision; the approval of the resolution plan stands.

Final Conclusion: The appeal is dismissed: the impugned order approving the SRA's resolution plan is upheld as the valuation process and eligibility checks complied with the CIRP Regulations and the IBC, and there is no ground to impinge on the CoC's commercial wisdom.

Effect of higher court stay on implementation of a resolution plan - Exclusion of suspended period from implementation timeline due to stay by higher court - Hard-stop/18 months clause in a resolution plan and its interpretation - Liquidation under Section 33 of the Insolvency and Bankruptcy Code - Requirement of non-compliance under Section 31 for rejection of a resolution plan - Respect for orders of the Supreme Court and prohibition on pre emptive action by Adjudicating Authority

Effect of higher court stay on implementation of a resolution plan - Exclusion of suspended period from implementation timeline due to stay by higher court - Whether the period during which an ad interim stay granted by the Supreme Court operates is to be excluded from the 18 months implementation period of the approved resolution plan. - HELD THAT: - The Tribunal held that the ad interim stay of the Delhi High Court orders granted by the Supreme Court from 13.12.2021 operated to completely embargo implementation of the approved resolution plan, and therefore that period can be excluded from the 18 month implementation timeline. The approved resolution plan itself anticipated litigation and expressly contemplated that implementation would follow vacation or modification of stay orders and that the implementation period would be put on hold if an appeal or stay was filed. Given the subsistence of the Supreme Court stay, the Adjudicating Authority acted beyond its jurisdiction in ordering liquidation without awaiting final directions from the Supreme Court. The Tribunal directed exclusion of time from 13.12.2021 for as long as the interim order remains in operation. [Paras 18, 24, 28]

Excluded the period from 13.12.2021 while the Supreme Court ad interim stay subsists from the 18 month implementation period of the resolution plan and directed the Adjudicating Authority to allow such exclusion.

Hard-stop/18 months clause in a resolution plan and its interpretation - Requirement of non-compliance under Section 31 for rejection of a resolution plan - Whether the presence of an 18 month 'hard stop' clause in the resolution plan justified treating the plan as lapsed and ordering liquidation when implementation had been stalled by a higher court stay. - HELD THAT: - The Tribunal examined the 'Basic Assumptions' of the approved plan and the Adjudicating Authority's approval order and concluded that the plan expressly recognised the possibility of litigation and provided for suspension of the implementation period while stay/appeal proceedings were pending. Clause 6 and Clause 8 of the Basic Assumptions envisage that the plan would lapse only if stay orders were not vacated/modified and that the implementation period would be discussed or put on hold where appeals are filed. Moreover, Section 33(1)(b) (rejection for non compliance under Section 31) did not apply as there was no breach or non compliance attributable to the resolution applicant; the delay was caused by a third party initiated stay. Thus the mere expiry of 18 months, in the context of an extant higher court stay contemplated by the plan, did not warrant unilateral liquidation. [Paras 17, 18, 19, 27]

Interpreted the 18 month hard stop in light of the plan's Basic Assumptions to mean that the implementation period could be held in abeyance during pending higher court proceedings; therefore expiry of the period while a higher court stay subsisted did not justify treating the plan as lapsed for purposes of liquidation.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code - Respect for orders of the Supreme Court and prohibition on pre emptive action by Adjudicating Authority - Whether the Adjudicating Authority was justified in ordering liquidation under Section 33 while an ad interim stay of relevant orders was subsisting before the Supreme Court. - HELD THAT: - The Tribunal found that none of the statutory pre requisites for liquidation under Section 33 were satisfied: a resolution plan exists and there was no rejection under Section 31 for non compliance attributable to the resolution applicant; the implementation had not commenced due to the Supreme Court stay. The Adjudicating Authority could not validly pre empt the Supreme Court's determination or treat assets as available for liquidation when a higher court's stay prohibited effective transfer or disposal. Accordingly, the impugned liquidation order was held perverse and illegal and was set aside. [Paras 22, 23, 24, 27]

Set aside the liquidation order and held that the Adjudicating Authority could not order liquidation while the Supreme Court's ad interim stay subsisted and the plan's implementation was stalled for that reason.

Final Conclusion: Appeal allowed. Impugned order directing liquidation set aside; Adjudicating Authority directed to allow exclusion of time from 13.12.2021 for the period the Supreme Court ad interim stay remains in operation, and parties granted liberty to approach the Supreme Court for early hearing.

Maintainability of Section 7 application by allottees under amended IBC - threshold requirement under the second proviso to Section 7(1) of the IBC - definition of 'allottee' under RERA as applied to IBC - status of assured return investors as allottees - requirement to modify pending Section 7 applications to meet proviso

Maintainability of Section 7 application by allottees under amended IBC - threshold requirement under the second proviso to Section 7(1) of the IBC - requirement to modify pending Section 7 applications to meet proviso - Whether the Section 7 application filed by the appellants is maintainable in view of the threshold introduced by Amendment Act 1 of 2020 to Section 7(1) of the IBC. - HELD THAT: - The Tribunal held that the Amendment Act 1 of 2020 introduced a specific threshold for financial creditors who are allottees in a real estate project, requiring joint filing by not less than 100 allottees or not less than 10% of the total allottees, whichever is less, and that pending Section 7 applications were required to be modified within the prescribed period to comply with the proviso. The Adjudicating Authority correctly applied this parameter to the facts, noting that the Floreal Tower project has 504 allotted units and 366 allottees in the Assured Returns class, and that the appellants did not meet the prescribed threshold. Consequently the petition was non maintainable for failure to comply with the second proviso and the modification requirement under the amendment. [Paras 10, 13, 17]

Section 7 application is not maintainable for failure to satisfy the threshold prescribed by the second proviso to Section 7(1) as amended and for not modifying the pending petition to comply with the proviso.

Definition of 'allottee' under RERA as applied to IBC - status of assured return investors as allottees - Whether investors under an assured return/MAR plan fall outside the definition of 'allottees' and thereby escape the proviso applicable to allottees. - HELD THAT: - Applying Explanation (ii) to Section 5(8)(f) of the IBC and the RERA definitions, the Tribunal held that commercial space/unit allottees, including those in an Assured Returns class, are covered by the term 'allottee'. The Adjudicating Authority rightly rejected the appellants' attempt to treat assured return investors as a separate genus not governed by the proviso. Reliance on prior Tribunal authority did not displace the plain statutory scheme; the appellants' claim arising from the MAR agreement did not take them out of the substratum of 'allottees' for the purposes of the amended Section 7(1). [Paras 14, 16, 17, 19]

Assured return/MAR investors are to be treated as 'allottees' under RERA as applied to the IBC and therefore are subject to the threshold in the second proviso to Section 7(1).

Final Conclusion: The appeal is dismissed. The Tribunal affirms that investors under the MAR/assured return arrangement are 'allottees' for the purposes of the IBC and that the Section 7 petition was non maintainable for failure to satisfy and/or modify to meet the threshold prescribed by the second proviso to Section 7(1) as inserted by Act 1 of 2020.

Clubbing of interest with principal for threshold under Section 4 of the IBC - maintainability of Section 9 petition - existence of dispute under Section 9 - Mobilox test - operational debt including agreed interest - unilateral interest clause in invoice not binding without agreement

Clubbing of interest with principal for threshold under Section 4 of the IBC - unilateral interest clause in invoice not binding without agreement - operational debt including agreed interest - Whether the interest claimed by the Operational Creditor could be aggregated with the principal debt to meet the Rs.1 crore threshold under Section 4 of the IBC. - HELD THAT: - The Tribunal examined the invoices, correspondence and replies and found that the Corporate Debtor had expressly denied liability for the interest component in its reply to the demand notice and in the reply to the Section 9 petition. The Adjudicating Authority had recorded that there was no agreement between the parties that default would attract interest and that the 24% interest was levied by a unilateral clause in the invoice. Given that the claim for interest was disputed by the Corporate Debtor, the interest could not be clubbed with the principal for the purpose of meeting the statutory threshold under Section 4. The Tribunal distinguished authorities where interest formed part of the debt because it was agreed or undisputed, and held that where interest is contested it cannot be aggregated to confer pecuniary jurisdiction for a Section 9 petition. [Paras 13, 14]

Interest disputed by the Corporate Debtor could not be clubbed with principal to meet the Rs.1 crore threshold; therefore the threshold under Section 4 was not satisfied.

Maintainability of Section 9 petition - existence of dispute under Section 9 - Mobilox test - Whether the Section 9 application was maintainable in view of the Corporate Debtor's dispute regarding the debt and interest. - HELD THAT: - Applying the Mobilox principle, the Tribunal considered whether a plausible dispute existed which was not a patently feeble or spurious defense. The Corporate Debtor had filed contemporaneous replies denying the principal and interest, contending forgery of balance confirmation and asserting a prior mutual settlement and payments. Those denials and averments amounted to a genuine dispute requiring investigation and not mere frivolous objections. Since the claim for interest was contested and the factual contentions raised by the Corporate Debtor were not manifestly untenable, initiation of CIRP was inappropriate as a vehicle to adjudicate the disputed interest claim. The Tribunal observed that insolvency resolution is distinct from recovery of disputed contractual interest, and upheld the Adjudicating Authority's rejection under Section 9. [Paras 11, 12, 15, 16]

Section 9 petition was not maintainable because a bona fide dispute existed as to the debt (including interest); the Adjudicating Authority correctly rejected the application.

Final Conclusion: The Appeal is dismissed. The Adjudicating Authority rightly held that the interest component, being disputed, could not be clubbed with the principal to satisfy the IBC pecuniary threshold and that a genuine dispute existed under Mobilox, rendering the Section 9 petition not maintainable.

Failure to implement an approved resolution plan - Conditional resolution plan versus unconditional implementation obligations - Liquidation for contravention of an approved resolution plan under Section 33(3) - Binding effect of reliefs/refusals recorded in approval order - Deposit into escrow and appropriation by the Committee of Creditors - Extension of implementation timeline and limited moratorium in the resolution plan

Failure to implement an approved resolution plan - Conditional resolution plan versus unconditional implementation obligations - The Successful Resolution Applicant has failed to implement the Resolution Plan approved on 25.03.2021. - HELD THAT: - The Tribunal examined the terms of the approved Resolution Plan, including the payment schedule (clause 5.2), the 180-day implementation period and the limited provision for extension (implementation or six months, whichever is earlier). The Monitoring Committee minutes and multiple meetings recorded that no payments were made and the upfront instalment and subsequent instalments remained in default. The Tribunal found that the Appellant repeatedly sought to make implementation conditional on external outcomes (ROC status, relisting, applicability of amended securities rules) despite the Adjudicating Authority having refused the waivers and concessions sought at approval. The Adjudicating Authority had given the SRA further opportunities (order dated 04.01.2024) to deposit the resolution money, which were not complied with and were instead met with further applications and an appeal. The Tribunal concurred with the Adjudicating Authority's conclusion that linking payment to the external conditions converted the approved plan into a conditional plan and therefore amounted to contravention of the approved plan, justifying the finding of failure to implement. [Paras 7, 22]

Finding of failure to implement the Resolution Plan is upheld.

Binding effect of reliefs/refusals recorded in approval order - Deposit into escrow and appropriation by the Committee of Creditors - The Appellant cannot defer implementation by insisting that the Corporate Debtor's status be changed to 'active' or other conditions before depositing funds into escrow, nor can it prevent appropriation by the CoC once deposited. - HELD THAT: - The approved plan expressly contained timelines and the Adjudicating Authority refused the waivers and concessions the SRA sought at the time of approval, making implementation obligations binding on the SRA. The order dated 02.01.2024 directed ROC to modify status subject to evidence of deposit; the order dated 04.01.2024 directed deposit into escrow and permitted the CoC to appropriate the funds. The Tribunal held that the SRA's attempt to deposit subject to conditions that would delay appropriation was inconsistent with the plan and the Adjudicating Authority's directions. The Tribunal found no infirmity in the Adjudicating Authority's direction that the SRA deposit the sum in escrow and that the CoC be at liberty to appropriate it as per the plan. [Paras 11, 12, 13, 23]

The SRA's contention that ROC status or other conditions absolved it from depositing the resolution money or prevented appropriation by the CoC was rejected.

Liquidation for contravention of an approved resolution plan under Section 33(3) - Liquidation of the Corporate Debtor was rightly directed where the approved Resolution Plan was contravened by the Successful Resolution Applicant. - HELD THAT: - Given the Tribunal's concurrence with the Adjudicating Authority's finding that the SRA had failed to implement the approved plan and had repeatedly defaulted on payments despite opportunities and directions to deposit funds, the Adjudicating Authority had no alternative but to proceed under the statutory provision permitting liquidation where an approved resolution plan is contravened. The Tribunal found that the Adjudicating Authority properly exercised its power to direct liquidation and to instruct the resolution professional to hand over control to the liquidator, and that dismissal of the SRA's interlocutory applications was consequent upon that finding. [Paras 21, 24]

The direction for liquidation was correct and is affirmed.

Final Conclusion: The appeals are dismissed. The Tribunal affirms the Adjudicating Authority's finding that the Successful Resolution Applicant contravened and failed to implement the approved Resolution Plan, that the SRA could not make implementation conditional on ROC status or other external outcomes, and that liquidation under the statutory provision for contravention of an approved plan was rightly ordered; no interference is warranted with the orders complained of.

Effect of exoneration in adjudication proceedings on criminal prosecution - abuse of process - higher standard of proof in criminal cases - independence of adjudication and criminal proceedings - application of Radheshyam Kejriwal principles

Effect of exoneration in adjudication proceedings on criminal prosecution - abuse of process - higher standard of proof in criminal cases - application of Radheshyam Kejriwal principles - Whether the criminal complaint (C-2482/2002) should be quashed in view of the adjudicating authority's order dated 20th August, 2015 exonerating the petitioner on merits. - HELD THAT: - The High Court examined the adjudicating order of 20th August, 2015, noting that the Special Director (ER) considered the Show Cause Memorandum, the reply and 24 relied upon documents (RUDs). The adjudicating authority recorded that RUD 16 (the statement of Shri N. Lakshminarayan) indicated he was told by Dr. E. Ravindranath that IBD Agro received a percentage of counter trade benefit which was not accounted for, but after assessing all materials (including statements of G.K.P. Reddy, E. Ravindranath and others, RBI guidelines and documentary evidence) concluded that the allegations were not proved and the charges under the cited FERA provisions were not established. The Court considered the relevant precedents, including Radheshyam Kejriwal, and the exception thereunder for situations where exoneration is technical or not on merits. Distinguishing the Enforcement Directorate's reliance on Pramod Kumar Dhamija, the Court found that the adjudicating authority had addressed and weighed the materials (including RUD 16) and reached a merits based finding of non sustainability of the allegations. Applying the principle that where adjudication exonerates on merits and the allegation is not sustainable criminal prosecution on the same facts would be an abuse of process, the Court held that continuation of the criminal complaint would be an abuse of the court's process. [Paras 16, 20, 21]

Criminal complaint C-2482/2002 quashed as continuation would be an abuse of process in light of merits based exoneration by the adjudicating authority.

Final Conclusion: The revisional petition is allowed; the complaint case C-2482/2002 pending before the Metropolitan Magistrate is quashed on the ground that the adjudicating authority, after considering the materials, exonerated the petitioner on merits and further prosecution would be an abuse of the court's process.

Liberty to move fresh application for bail - right to speedy trial - consideration of bail application on merits without being influenced by earlier dismissal - prosecution's assurance to conclude investigation and file final complaint/charge-sheet within a stipulated time - disposal of petition with liberty to revive after filing of final complaint/charge-sheet

Liberty to move fresh application for bail - consideration of bail application on merits without being influenced by earlier dismissal - prosecution's assurance to conclude investigation and file final complaint/charge-sheet within a stipulated time - Petitions disposed of with liberty to the petitioner to revive bail plea after filing of the final complaint/charge-sheet, and any such application to be considered on merits uninfluenced by earlier dismissal. - HELD THAT: - The Court relied on its earlier order which had granted the appellant liberty to move a fresh bail application in case of change in circumstances or if the trial was protracted, and which recorded an assurance by the prosecution to conclude trial-related steps within six to eight months. In the present petitions the Solicitor General undertook that the investigation would be completed and the final complaint/charge-sheet filed expeditiously and in any event on or before 03.07.2024, after which the trial court would be free to proceed. Having regard to that assurance and the fact that the period fixed earlier had not yet expired, the Court declined to examine the merits afresh and disposed of the petitions by granting liberty to the petitioner to seek revival of his bail application after filing of the final complaint/charge-sheet. The Court noted that any such bail application shall be considered on its own merits without being influenced by the earlier dismissal; contentions of the parties were kept open.

Petitions disposed of with liberty to revive bail application after filing of final complaint/charge-sheet; any such application to be decided on merits uninfluenced by earlier orders.

Final Conclusion: The Supreme Court disposed of the petitions, recording the prosecution's assurance to file the final complaint/charge-sheet by the date indicated and granting liberty to the petitioner to move a fresh bail application thereafter, which shall be considered on merits without being influenced by prior dismissals; other contentions remain open.

Twin conditions under Section 45 of the Prevention of Money Laundering Act - reasonable grounds for believing accused is not guilty and not likely to commit offence while on bail - admissibility and evidentiary value of statements under Section 50 of PMLA at bail stage - prima facie satisfaction for denial of bail in money laundering cases - proceeds of crime and concealment through benami/false agreements - reliance on seized documentary and electronic material (diary, bank statements, sale agreements) for prima facie case

Twin conditions under Section 45 of the Prevention of Money Laundering Act - reasonable grounds for believing accused is not guilty and not likely to commit offence while on bail - prima facie satisfaction for denial of bail in money laundering cases - Whether the applicants satisfied the twin conditions of Section 45 PMLA entitling them to regular bail - HELD THAT: - The Court applied Section 45 PMLA and the guiding principles from higher courts that the twin conditions require the Court to be satisfied on reasonable grounds that the accused is not guilty and not likely to commit an offence while on bail. The Court examined the material collected during investigation - including seized diaries, bank statements, sale agreements and statements recorded under Section 50 - and formed a prima facie view that the material indicates involvement of the applicants in acquisition/concealment/projection of alleged proceeds of crime. Having regard to the nature and volume of the material placed on record and the statutory presumption under the Act, the Court concluded that the twin conditions are not fulfilled in favour of the applicants and therefore the bar under Section 45 operates to refuse bail in the present case. [Paras 23, 31, 33, 34, 36]

The applications for regular bail are dismissed as the Court is not satisfied, on the material before it, that the twin conditions under Section 45 PMLA are met.

Admissibility and evidentiary value of statements under Section 50 of PMLA at bail stage - reliance on seized documentary and electronic material (diary, bank statements, sale agreements) for prima facie case - Whether statements recorded under Section 50 PMLA and seized documentary/electronic material can be considered for forming a prima facie view at the bail stage - HELD THAT: - The Court held that statements under Section 50 PMLA are admissible and may be relied upon at the bail stage to assess whether a prima facie case exists. The Court noted binding and persuasive precedents recognising the admissibility of Section 50 statements and observed that such statements, together with other corroborating material (seized diary, bank statements, sale agreements, digital evidence), can form the basis of a prima facie satisfaction required under Section 45. The Court rejected the contention that Section 50 statements and the diary could not be considered at the stage of deciding bail. [Paras 31, 32, 33]

Statements under Section 50 PMLA and corroborating documentary/electronic material can be considered to form a prima facie view for the purposes of Section 45 and were relied upon by the Court.

Misleading the court on interim bail grounds - likelihood of tampering with evidence or influencing witnesses as bail consideration - Whether the conduct of applicant Daud Nasir in securing interim bail on medical grounds (and the later revealed facts) adversely affects his entitlement to regular bail - HELD THAT: - The Court examined material concerning the interim bail granted to the applicant for his wife's alleged major surgery at Fortis Hospital and subsequent correspondence and records which showed the surgery was not conducted as represented and that a different, minor surgery was later performed at a different hospital. The Court found that the applicant had misled the Court in obtaining interim bail and that this conduct cast doubt on his credibility and increased the risk of misuse of liberty, including potential tampering with evidence or influencing witnesses. This finding weighed against granting regular bail to that applicant. [Paras 15, 35]

The Court found that Daud Nasir misled the Court regarding interim bail grounds, and such conduct militates against granting regular bail.

Proceeds of crime and concealment through benami/false agreements - reliance on seized documentary and electronic material (diary, bank statements, sale agreements) for prima facie case - Whether the material seized (white diary, sale agreements, bank statements) prima facie indicates that the properties were purchased by the applicants using alleged proceeds of crime concealed via alternate sale agreements - HELD THAT: - The Court reviewed the seizure of a white diary, two differing sale agreements for the same properties (one showing a larger consideration alleged to be genuine and another showing a lower sum alleged to be fabricated), and bank statements of sellers and purchasers. On a prima facie assessment, the Court found that entries in the diary, corroborative bank transactions, and the recovery of the higher value sale agreement support the prosecution's case that the larger transaction (alleged Rs. 36 crore) reflects the actual consideration and that the lesser agreement was used to conceal the cash component allegedly constituting proceeds of crime. The Court held that this material, at the stage of bail, supplies reasonable grounds against the applicants. [Paras 26, 29, 30, 33, 34]

On the material before it, the Court found prima facie evidence suggesting the properties were acquired with amounts that may constitute proceeds of crime and that false/alternate agreements were used to conceal the true transactions, which weighs against bail.

Final Conclusion: On the material placed before it the High Court formed a prima facie view that the twin conditions of Section 45 PMLA were not satisfied in favour of the applicants; statements under Section 50 PMLA and corroborative documentary/electronic evidence were held admissible and relied upon at the bail stage; additionally, the conduct of one applicant in relation to interim bail undermined his credibility. Accordingly, the applications for regular bail were dismissed.

Perversity in acceptance of evidence - entitlement to exemption under Mega Exemption Notification - extended period of limitation under the first proviso to Section 73(1) - assignment of adjudicatory powers by Chief Commissioner - discretion to entertain writ despite availability of alternative statutory remedy - right to personal hearing - remand for fresh consideration

Assignment of adjudicatory powers by Chief Commissioner - jurisdiction of Additional Commissioner - The Additional Commissioner was validly assigned the adjudication and there was no jurisdictional irregularity in the Additional Commissioner passing the final order. - HELD THAT: - The Court noted that although the show cause notice was issued by the Joint Commissioner, the Chief Commissioner had, by order dated 16th November, 2022, assigned the hearing to the Additional Commissioner, who thereafter took up and decided the matter. On that basis the Court held that there was no jurisdictional error in the Additional Commissioner passing the adjudication order and the procedural objection that different officers issued and adjudicated the show cause notice did not vitiate the proceeding. [Paras 7, 9]

Objection to jurisdiction of the Additional Commissioner rejected; no interference on that ground.

Perversity in acceptance of evidence - right to personal hearing - remand for fresh consideration - The authorised officer's failure to give due weight to payment certificates issued by the Government and refusal to accept them for lack of original work orders was held to be perverse, and the matter was remanded for fresh consideration with an opportunity of personal hearing. - HELD THAT: - Records showed that payment certificates issued by the Executive Engineer and Additional Accounts Officer (PWD) corroborated payment to the petitioner. The authorised officer refused to accept those payment certificates because original work orders were not produced. The Court considered that glossing over the payment certificates and refusing to accept them as proof of payment was a perverse finding. In view of that perversity, and since the respondents did not deny that exemption under the Mega Exemption Notification can be granted in appropriate cases, the Court found it proper to remit the matter to the adjudicating authority for fresh disposal after affording personal hearing and permitting additional documents to be filed. The Court exercised its discretion to entertain the writ despite the existence of an appellate remedy because of the nature of the defect. [Paras 10, 12, 13, 15]

Matter remitted to adjudicating authority to reconsider the show cause notice afresh, after personal hearing and permitting production of documents.

Entitlement to exemption under Mega Exemption Notification - verification of contractual documents - The question of the petitioner's entitlement to exemption under the Mega Exemption Notification (20th June, 2012) was not finally decided and is left open for the adjudicating authority to determine on reconsideration. - HELD THAT: - The petitioner asserted entitlement to exemption for Government contracts under the Mega Exemption Notification and explained the mismatch with income tax records on that basis. The Court observed that documents including bills, audited reports, Form 26AS and work orders were placed on record and that the respondents did not deny that the benefit can be granted in appropriate cases. Given the perverse treatment of payment certificates, the Court refrained from adjudicating the exemption issue on merits and directed the adjudicating authority to examine entitlement and verify contractual documents afresh. [Paras 11, 12]

Entitlement under the Mega Exemption Notification remitted for fresh consideration by the adjudicating authority.

Final Conclusion: Writ petition disposed by remitting the show cause proceeding to the adjudicating authority for fresh disposal after affording personal hearing and permitting additional documents; reconsideration to be completed within eight weeks from communication of this order subject to deposit of Rs. 5,00,000; all points left open; no order as to costs.

Exercise of writ jurisdiction - alternative remedy under statutory scheme - appellate remedy before Appellate Commissioner - non-adjudication of merits and limitation

Alternative remedy under statutory scheme - appellate remedy before Appellate Commissioner - exercise of writ jurisdiction - Disposition of the writ petition by directing the petitioner to pursue the statutory appellate remedy instead of adjudicating merits in writ jurisdiction - HELD THAT: - The High Court declined to entertain substantive controversy on merits and factual disputes which the petitioner raised against Order-in-Original No.157/2022-ST, noting that disputed questions of fact and finer points of law are better resolved by the appellate hierarchy established under the Finance Act, 1994. The Court observed that even if the petitioner may have a case on merits, the proper course is to avail the alternate remedy before the Appellate Commissioner and, if necessary thereafter, before the CESTAT and the High Court in its appellate jurisdiction. Consequently, the petition was not investigated on merits; the Court left all issues, including the question of limitation under the proviso to Section 73, open for adjudication by the statutory appellate authorities. [Paras 6, 7, 8]

Writ petition disposed by granting liberty to file a statutory appeal before the Appellate Commissioner within 30 days; all substantive issues including limitation left open.

Final Conclusion: The High Court declined to adjudicate the merits and directed the petitioner to pursue the statutory appeal remedy before the Appellate Commissioner within 30 days, leaving all issues including limitation open for decision by the appellate authorities; no costs.

Liability under Reverse Charge Mechanism for Goods Transport Agency services - Definition of Goods Transport Agency and consignment note requirement - Negative list exclusion for transportation of goods by road by persons other than GTA - Post-negative list regime

Liability under Reverse Charge Mechanism for Goods Transport Agency services - Definition of Goods Transport Agency and consignment note requirement - Negative list exclusion for transportation of goods by road by persons other than GTA - Post-negative list regime - Appellants are not liable to pay service tax under Reverse Charge Mechanism as a Goods Transport Agency for the period April, 2015 to March, 2016. - HELD THAT: - The Tribunal applied its earlier decision in M/s. Vaishnav Marbles Private Limited & Ors. (dated 30.04.2024) and followed the reasoning of the Ahmedabad Bench in Chartered Logistics Ltd. The determinative legal principle is that a person qualifies as a Goods Transport Agency only if the person provides services in relation to transportation of goods by road and issues the consignment note; mere carriage by individual transporters or truck owners without issuance of consignment notes does not convert them into a GTA. Under the post-negative list regime (w.e.f. 01.07.2012), transportation of goods by road by a person other than a GTA is excluded from taxable services under the relevant negative-list entry. The appellants engaged individual transporters and truck owners and did not issue consignment notes; hence they cannot be made liable to pay service tax under the GTA category for the period in dispute.

Impugned order set aside; appeals allowed and appellants held not liable to pay service tax as GTA for April, 2015 to March, 2016.

Final Conclusion: For the post-negative list period in question (April, 2015 to March, 2016), services of individual transporters who do not issue consignment notes do not qualify as GTA services and are excluded from service tax liability under the relevant negative-list entry; the impugned orders holding the appellants liable under RCM are set aside and the appeals are allowed.

Taxability of work contract services under the negative list regime - Exemption for services to entities registered under Section 12AA of the Income tax Act - Classification of sub contractor services in road/toll contracts - Computation of taxable value under composite work contract scheme - Invocation of extended period of limitation for suppression - Penalty under Section 78 for willful suppression - Penalties under Section 77 and late fee under Rule 7C of Service Tax Rules - Interest under Section 75 as consequential on confirmed demand

Taxability of work contract services under the negative list regime - Exemption for services to entities registered under Section 12AA of the Income tax Act - Services provided by the appellant to Amar Nath Ashram Trust are taxable as work contract services and not exempt under the cited notification entries. - HELD THAT: - The Tribunal accepted the original authority's finding that post 01.07.2012, services of the nature undertaken by the appellant fall within the negative list regime and are classifiable as work contract services. The authority examined the work orders for construction of college, hostel and related works and found them not to fall within the limited exemptions afforded to educational or religious premises under the notification relied upon by the appellant. Prior decisions cited by the appellant were held inapplicable as they arose in the pre negative list regime. The original authority's valuation of taxable and non taxable portions for the relevant years was adopted. [Paras 4, 26, 31]

Demand for service tax on amounts received from Amar Nath Ashram Trust upheld.

Classification of sub contractor services in road/toll contracts - Taxability of services to Madhucon Projects - Demand in respect of services provided to Madhucon Projects is upheld because the appellant failed to substantiate that they acted as sub contractor to a main road contractor entitling them to exclusion. - HELD THAT: - The original order rejected the certificate produced by the appellant as unreliable and noted absence of evidence showing that Madhucon Projects was the principal contractor for highway construction and that the appellant was a sub contractor. The work order before the Tribunal did not establish that the activity formed part of a road construction contract which would exclude it from work contract classification. In absence of documentary proof, the claim for exclusion was refused and the demand sustained. [Paras 4, 28]

Tax demand raised against receipts from Madhucon Projects sustained.

Computation of taxable value under composite work contract scheme - Appellant's challenge to the computation (contention of 40% vs. 70% taxable value) in respect of amounts received from Ginni Filaments Ltd. is rejected. - HELD THAT: - The Tribunal noted that the appellant did not challenge the liability for amounts received from Ginni Filaments before the original authority and before the Tribunal confined its scrutiny to the method of computation. The Tribunal upheld the original authority's computation and observed that the appellant had not established entitlement to the alternative 40% valuation relied upon. The finding in the impugned order on computation was therefore affirmed. [Paras 4, 29]

Computation of service tax liability as made in the impugned order sustained.

Invocation of extended period of limitation for suppression - Extended period of limitation was correctly invoked because the appellant wilfully suppressed material facts and failed to register and file returns until after investigation commenced. - HELD THAT: - The authority recorded that the appellant had not registered or filed returns while providing taxable services and only obtained registration after initiation of enquiry. The Tribunal agreed that facts on record demonstrated suppression and that, had the department not initiated inquiry, evasion would have remained unnoticed. Reliance on earlier decisions favouring time bar was held distinguishable as invocation of extended period is fact sensitive. Accordingly the extended period invocation was upheld. [Paras 4, 30]

Invocation of extended limitation period upheld.

Penalty under Section 78 for willful suppression - Penalty under Section 78 is justified and upheld. - HELD THAT: - The original authority found that the appellant knowingly and wilfully suppressed material facts and contravened statutory provisions; consequently penalty under Section 78 was imposed. The Tribunal held that, given the finding of suppression and invocation of extended period, imposition of penalty under Section 78 was justified and referred to doctrinal support in precedents for upholding such penalty where suppression is proved. [Paras 4, 30, 32]

Penalty under Section 78 affirmed.

Interest under Section 75 as consequential on confirmed demand - Interest under Section 75 is consequential upon the confirmed tax demand and is upheld. - HELD THAT: - Having sustained the tax demand and the invocation of extended period, the Tribunal held that interest under Section 75 necessarily follows and found no merit in the appellant's objection to interest being levied. [Paras 4, 31]

Interest under Section 75 upheld.

Penalties under Section 77 and late fee under Rule 7C of the Service Tax Rules - Penalties under Section 77(1)(a), 77(1)(b) and 77(2), and late fee under Rule 7C are justified and upheld for failure to register, non filing of ST 3 returns and non payment of tax. - HELD THAT: - The original order recorded absence of any ST 3 filings for the eleven returns in issue and that the appellant failed to produce documentary evidence of returns having been filed. The Tribunal accepted that non registration, non filing and non payment constituted contraventions attracting penalties under Section 77 and late fees under Rule 7C. The Tribunal also observed that mens rea is not required for levy of such civil penalties and relied on precedent rationale to uphold the penalties. [Paras 4, 33]

Penalties under Section 77 and late fees under Rule 7C sustained.

Final Conclusion: The appeal is dismissed. The Tribunal affirms tax demands, interest, late fees and penalties imposed by the original authority for the financial years 2010 11 to 2014 15, upholding classification as work contract services, rejection of claimed exemptions and the invocation of extended limitation for suppression.

Cenvat credit reversal under Rule 3(5) of the Cenvat Credit Rules, 2004 - transfer/removal of inputs and capital goods - use of inputs and capital goods by contractor for mine development does not amount to removal - binding effect of Tribunal orders / judicial propriety

Cenvat credit reversal under Rule 3(5) of the Cenvat Credit Rules, 2004 - transfer/removal of inputs and capital goods - use of inputs and capital goods by contractor for mine development does not amount to removal - Whether cenvat credit availed on inputs and capital goods supplied to contractors for mine development/ore production is required to be reversed under Rule 3(5) of the Cenvat Credit Rules, 2004. - HELD THAT: - The Tribunal held that where an assessee supplies inputs and capital goods (explosives, detonators, lubricants, pipes, rods, components, etc.) to outsourced contractors for use in mine development or ore production for the assessee, such supply constituted use in relation to the assessee's manufacture and did not amount to removal of inputs or capital goods. Relying on its earlier decision in the appellant's own case for the period April 2008 to May 2010 and the consistent reasoning in Bhilai Steel Plant and Steel Authority of India Ltd. decisions as applied by the Adjudicating Authority in the prior proceedings, the Tribunal found no evidence of a sale or of deduction of costs from contractor remuneration that would indicate transfer as a sale. Consequently, Rule 3(5) - which mandates reversal where inputs are removed as such or capital goods are removed otherwise than to the factory - was held inapplicable. The Tribunal therefore concluded that the cenvat credit so availed need not be reversed. [Paras 4, 7]

No reversal of cenvat credit under Rule 3(5) is required for inputs and capital goods supplied to contractors for use in the assessee's mine development/ore production; such supply does not amount to removal.

Binding effect of Tribunal orders / judicial propriety - Whether the Adjudicating Authority was justified in declining to follow the Tribunal's earlier order and sustaining the demand notwithstanding that the higher forums had dismissed appeals on grounds of low tax effect. - HELD THAT: - The Tribunal noted that the Adjudicating Authority had ignored the Tribunal's earlier decision in the appellant's own case, relying instead on the fact that appeals by the Department were dismissed by higher forums on the ground of low tax effect. The Tribunal emphasised that such dismissals were not on merits but on low tax effect and therefore did not diminish the binding character of the Tribunal's earlier decision. The Tribunal reiterated that its orders are binding on subordinate authorities unless modified or overruled, and, following the earlier pronouncement favourable to the appellant, held the impugned order unsustainable. [Paras 5, 7]

The Adjudicating Authority ought to have followed the Tribunal's earlier decision; dismissal of departmental appeals by higher forums for low tax effect did not justify departing from the Tribunal's ruling.

Interest, penalty and extended period - Whether extended period of limitation, interest and penalty survive once the substantive demand is negatived. - HELD THAT: - Having decided on merits that Rule 3(5) did not apply and that the cenvat credit need not be reversed, the Tribunal held that consequential contentions regarding extended limitation, levy of interest and imposition of penalty fall away and do not survive. The determinative finding that there was no removal or sale of inputs/capital goods rendered ancillary demands and punitive consequences unsustainable. [Paras 7]

Extended period of limitation, interest and penalty do not survive once the substantive demand is negatived.

Final Conclusion: The impugned order is set aside; the appeal is allowed as the cenvat credit availed on inputs and capital goods supplied to contractors for mine development/ore production need not be reversed under Rule 3(5) of the Cenvat Credit Rules, 2004, and consequential claims for extended period, interest and penalty are unsustainable.

Excisability of primary gold - exemption for articles of gold sold under a brand name - requirement of brand name/mark on the article itself for branded goods - binding effect of departmental circular on adjudicating authority

Excisability of primary gold - exemption for articles of gold sold under a brand name - Whether duty is payable on sale of gold bars classified as primary gold. - HELD THAT: - The Tribunal examined the Explanation to Entry No. 89 of Notification No. 01/2011-C.E. which excludes "primary gold" - including ingots, bars and similar unfinished or semi-finished forms - from the definition of "articles" of gold chargeable under the notification. The demand in the present case related to sale of gold bars which fall within the exclusion for primary gold. Applying the express exclusion in the Explanation, the Tribunal concluded that gold bars sold by the appellant are not excisable goods and therefore no excise duty is payable on them. [Paras 9]

Gold bars being primary gold are not excisable; no duty is payable.

Requirement of brand name/mark on the article itself for branded goods - binding effect of departmental circular on adjudicating authority - exemption for articles of gold sold under a brand name - Whether duty is payable on gold coins and silver coins sold by the appellant as 'branded' goods. - HELD THAT: - The Tribunal considered the photographs of the coins and found no logo, trademark or brand name indelibly affixed or embossed on the coins themselves. It further relied on the departmental Circular F. No. 354/38/2011-TRU dated 02.03.2012 which clarifies that excise duty on precious metal articles manufactured or sold under a brand name is attracted only where the trade/brand name or mark is indelibly marked or embossed on the article itself; brand particulars appearing only on packaging, warranty card or certificate do not render the article branded for the purposes of the notification. In view of the absence of any brand mark on the coins and the binding clarification in the Circular, the Tribunal held that the coins cannot be treated as branded goods liable to excise duty under the Entry. [Paras 10, 11]

Gold and silver coins without an indelible brand/mark on the article are not branded goods for the notification; no duty is payable.

Penalty consequential on absence of duty - Whether penalties imposed on the appellants can be sustained. - HELD THAT: - As the Tribunal held that neither the gold bars nor the coins are liable to excise duty for the reasons stated, it followed that the penalties imposed in the impugned order, being consequential on an unsustainable demand of duty, cannot be maintained. [Paras 12, 13]

Penalties imposed on the appellants are set aside.

Final Conclusion: The impugned order confirming demand of excise duty and imposing penalties is set aside: gold bars are excluded as primary gold and the coins, lacking an indelible brand mark on the article, are not branded goods under the notification as clarified by the departmental Circular; accordingly no duty or penalty is payable.

Installation date as determinative of duty liability - Rule 18(2) of the Chewing Tobacco and Unmanufactured Tobacco, Packing Machine (Capacity Determination and Calculation of Duty) Rules, 2010 - penalty for failure to intimate - interest on duty - evidentiary burden to prove fabrication of documents - benefit of doubt where revenue fails to rebut documentary proof

Installation date as determinative of duty liability - Rule 18(2) of the Chewing Tobacco and Unmanufactured Tobacco, Packing Machine (Capacity Determination and Calculation of Duty) Rules, 2010 - Extent of duty liability in absence of prior proof of installation date of packing machine - HELD THAT: - The Tribunal considered whether, in view of Rule 18(2) of the Rules, duty could be demanded from the beginning of the financial year where the assessee produced evidence that the packing machine was purchased on 16.03.2012 and production commenced on 22.03.2012. The adjudicating authority had invoked the presumption of liability from 1st April of the relevant year where date of installation was not proved. The appellants produced the supplier invoice dated 16.03.2012 and the supplier's confirmation of sale during investigation. Revenue did not produce cogent evidence to show the invoice was fabricated. In these circumstances the Tribunal held that the appellants discharged the requisite evidentiary burden to show purchase and installation proximate to the production start date, and that duty could not be validly demanded for periods prior to installation. Applying Rule 18(2), the Tribunal therefore restricted duty liability to the period from 22.03.2012 onwards. [Paras 6, 7, 8]

Duty confirmed only from 22.03.2012 onwards; demand for earlier period set aside.

Evidentiary burden to prove fabrication of documents - benefit of doubt where revenue fails to rebut documentary proof - Whether invoices produced by the appellants were fabricated and could be disregarded - HELD THAT: - Revenue alleged the invoices were an afterthought and fabricated. The Tribunal examined the timing of investigation (29.03.2012) and production of invoices (02.04.2012), noted supplier confirmation of sale and VAT payment recorded on the invoice, and observed that Revenue did not furnish any evidence to demonstrate falsity. In absence of such rebuttal, the Tribunal gave the appellants the benefit of doubt and accepted the documentary evidence as establishing purchase of the machine on 16.03.2012. [Paras 6, 8]

Invoices accepted; allegation of fabrication not sustained.

Penalty for failure to intimate - interest on duty - Liability for penalty and interest consequent to restricted duty liability - HELD THAT: - Having limited duty liability to the period from 22.03.2012, the Tribunal held that duty for that period is payable along with interest. Separately, because the appellants failed to give prior intimation as required under the statutory rules, the Tribunal held that an equivalent amount of penalty is payable. The Tribunal thus sustained liability for interest on the confirmed duty and imposition of penalty for non-intimation, while setting aside demands for periods prior to installation. [Paras 6, 9]

Duty from 22.03.2012 payable with interest; equivalent penalty payable for failure to intimate; remaining demand not sustainable.

Final Conclusion: Appeals disposed: demand of duty prior to 22.03.2012 set aside; duty confirmed from 22.03.2012 with interest and an equivalent penalty for failure to intimate upheld; allegation of fabricated invoices rejected for want of proof.

Penalty for certain offences - personal penalty under Rule 209/Rule 26 - knowledge that goods are liable to confiscation - confiscation as precondition for imposition of personal penalty - CENVAT credit claimed on invoices without delivery

Personal penalty under Rule 209/Rule 26 - confiscation as precondition for imposition of personal penalty - knowledge that goods are liable to confiscation - Imposition of personal penalty on appellants under Rule 209 of the Central Excise Rules, 1944 and Rule 26 of the CENVAT Credit Rules, 2002 was validly sustained. - HELD THAT: - The Tribunal examined Rule 26 (and the similarly worded Rule 209) and held that personal penalty under these provisions arises only where the person concerned knew or had reason to believe that the excisable goods dealt with by him were liable to confiscation. The show-cause notice and the adjudication order did not propose confiscation of the goods nor did they record that the appellants had pre-knowledge that the goods not received in the factory were liable to confiscation. In absence of any finding or proposal on confiscation and without any material to show that the appellants had knowledge of confiscation liability, the statutory precondition for imposing personal penalty was not satisfied. The Tribunal further noted that this position is in line with earlier Tribunal precedent, which held that penalty under Rule 209A/209 cannot be sustained where no goods have been held liable to confiscation. Applying that principle to the facts, the impugned order's imposition of penalty on the appellants could not be sustained.

Penalty imposed on the appellants under Rule 209/26 is set aside; appeals allowed in their favour.

Final Conclusion: The Tribunal set aside the penalty imposed under Rule 209 of the Central Excise Rules, 1944 and Rule 26 of the CENVAT Credit Rules, 2002 on the ground that the necessary precondition of confiscation (or knowledge that goods were liable to confiscation) was neither proposed in the show-cause notice nor found in the adjudication, and allowed the appeals.

Enforceability of mediated settlement - Binding effect of settlement recorded before a mediator - Effect of part-performance/payment pursuant to settlement - Abuse of process of court - Quashing of criminal proceedings under Section 482 CrPC - High Court's inherent powers to secure ends of justice

Enforceability of mediated settlement - Binding effect of settlement recorded before a mediator - Effect of part-performance/payment pursuant to settlement - Validity and binding nature of the settlement reached before the Mediator and effect of payment made thereunder - HELD THAT: - The Court found on the record of the mediation proceedings that Respondent No. 2 had amicably settled the complaints and agreed to withdraw them, and that such statement was made of his own free will and was signed by the parties and their counsel (paras 30-31, 35). The settlement agreement dated 01.04.2016 was signed by the parties and specified the terms and mode of payment, and it is not disputed that the petitioner had paid Rs.30,00,000 pursuant to that settlement (paras 31-34). The contention that the agreement was only a draft or that the statement was not recorded before the Trial Court was rejected as mala fide and immaterial: the fact of settlement before the mediator and part-performance by way of payment precluded the complainant from resiling (paras 32-38, 42-44). The Court emphasised that permitting a complainant to accept consideration pursuant to settlement and thereafter re-agitate the dispute would encourage mala fide conduct and undermine mediated settlements (paras 42-44). [Paras 37, 38, 42, 43, 44]

The settlement reached before the Mediator, accepted by Respondent No. 2 and acted upon by the petitioner through payment, is valid and binding and Respondent No. 2 cannot be permitted to resile from it.

Abuse of process of court - Quashing of criminal proceedings under Section 482 CrPC - High Court's inherent powers to secure ends of justice - Whether continuation of NI Act complaints despite valid settlement and payment amounts to abuse warranting quashing under Section 482 CrPC - HELD THAT: - Having concluded that the disputes were settled and the petitioner had performed the agreed payment, the Court held that continuation of proceedings under the Negotiable Instruments Act would amount to an abuse of the process of the Court (paras 37-38, 43-45). The Court relied on the High Court's inherent power under Section 482 CrPC to prevent abuse and to secure the ends of justice, noting authorities that permit quashing where proceedings are instituted with oblique motive or to harass (paras 48-49). The complainant's conduct in retaining the consideration and continuing litigation since 2016, without offering to return the amount, supported the conclusion of mala fide prosecution and abuse of process (paras 44-47). [Paras 45, 46, 48, 49, 50]

Proceedings under the NI Act were an abuse of process and are quashed under Section 482 CrPC; costs awarded against Respondent No. 2.

Final Conclusion: Petitions allowed. Criminal Complaints Nos. 617263/2016 and 617264/2016 are quashed as an abuse of process in view of the valid mediated settlement and part-performance; Respondent No. 2 directed to pay costs to the petitioner.

Scope of Section 34 of the Arbitration and Conciliation Act, 1996 - patent illegality - public policy of India - interpretation of contract and evidentiary findings - Section 28(3) - arbitrator to decide in accordance with the contract - Section 31(7) - arbitrator's power to grant interest - Section 31A - arbitral tribunal's discretion to award costs

Interpretation of contract and evidentiary findings - scope of Section 34 of the Arbitration and Conciliation Act, 1996 - Whether the welcome drink claim included wet tissue and whether the Arbitrator could award the combined deductions to the claimant - HELD THAT: - The Court upheld the Arbitrator's finding that IRCTC's own communications described the "Welcome Drink" to include both branded tetra-pack Nimbu Pani and refreshing (wet) tissue, and that documentary evidence (letters dated 10.02.2017, 22.02.2017 and 28.02.2017) supported that interpretation. The Arbitrator also relied on admissions in cross-examination by petitioner's witness regarding deductions and supply; and found no instance where IRCTC had acted against the respondent for non-supply. The Tribunal's interpretation was a plausible construction based on record and therefore not perverse or a patent illegality warranting interference under Section 34. [Paras 46, 47, 48, 49, 50]

The award that the welcome drink claim included wet tissue and the consequent monetary award for the combined deductions is upheld.

Section 28(3) - arbitrator to decide in accordance with the contract - patent illegality - Whether the Arbitrator erred in awarding service charges and service tax for the welcome drink despite absence of an express contractual rate - HELD THAT: - The Arbitrator found that the respondent had accepted to supply welcome drink subject to claiming production and service charges later, and the petitioner's silence and continuance of the contract amounted to implied consent. The Tribunal noted that contractually stated service charge ranges (20-30%) made the respondent's claimed rate (under ~17%) reasonable. The Court held this construction and the finding of implied consent were not arbitrary or perverse; the Tribunal did not rewrite the contract but applied a reasonable construction supported by conduct and documents. [Paras 51, 52, 53, 54, 55]

The award of service charges and service tax on the welcome drink is sustained.

Scope of Section 34 of the Arbitration and Conciliation Act, 1996 - patent illegality - Whether the respondent abandoned its claim for service tax and whether the Arbitrator could award service tax despite reframing of certain issues - HELD THAT: - The Court accepted the Arbitrator's determination that only specific issues had been dropped and no general abandonment of the service-tax claim occurred. Because the dues on welcome drink remained to be decided, the Tribunal reasonably held that service tax was payable where there was no contractual provision covering the service for the initial period and where implied acceptance arose thereafter. That finding was a permissible view of the evidence and issues and did not disclose a ground under Section 34. [Paras 56, 57, 58]

The Arbitrator's award of service tax is supported and not liable to be set aside.

Interpretation of contract and evidentiary findings - scope of Section 34 of the Arbitration and Conciliation Act, 1996 - Whether GST on production charges was wrongly awarded by the Arbitrator on the ground that production charges were inclusive of taxes or already paid - HELD THAT: - The Arbitrator's Interim Award had already held GST was payable over and above production charges; that finding attained finality. The Tribunal examined invoices, annexures and admissions in cross-examination and concluded that petitioner had not paid GST on production charges as claimed. The Arbitrator assessed the amounts payable and made quantification based on documentary material. The Court found this approach reasoned and within the Tribunal's competence; reappreciation of evidence was impermissible and no patent illegality was shown. [Paras 62, 63, 64, 65, 66]

The award of GST on production charges is affirmed.

Section 31(7) - arbitrator's power to grant interest - scope of Section 34 of the Arbitration and Conciliation Act, 1996 - Whether the Arbitrator validly awarded interest at 9% per annum from 01.11.2018 - HELD THAT: - Relying on Section 31(7), the Arbitrator exercised the statutory power to grant pre-award and post-award interest where no contractual rate existed; noting the absence of a clause precluding interest and assessing a reasonable rate in light of prevailing bank rates. The Court found this exercise of discretion was permissible, reasoned and not vitiated by perversity or patent illegality. [Paras 67, 68]

The interest awarded at 9% per annum is upheld.

Section 31A - arbitral tribunal's discretion to award costs - ONGC v. Afcons - distinction between fees and costs - Whether the award of costs in favour of the respondent was impermissible because IRCTC's internal letter provided for sharing arbitrator fees equally - HELD THAT: - The Arbitrator acknowledged the IRCTC letter about arbitrator fees but correctly distinguished between arbitrator fees and costs recoverable by a party. The Tribunal applied Section 31A, exercised discretion after considering success on issues and the respondent's payment towards tribunal fees, and granted costs. The Court found this reasoning consonant with law (including ONGC v. Afcons) and not unreasonable; the IRCTC internal provision did not preclude a costs award. [Paras 69, 70, 71, 72, 73]

The costs awarded to the respondent are sustained.

Scope of Section 34 of the Arbitration and Conciliation Act, 1996 - Whether the petition under Section 34 should succeed and whether the Final Award should be set aside - HELD THAT: - Applying the limited scope of interference under Section 34 and the principles concerning patent illegality, public policy and re-appreciation of evidence, the Court examined the challenged contentions and found no ground-legal or factual-that warranted setting aside the award. The Arbitrator's conclusions on issues of interpretation, evidentiary weight and quantification were reasonable views open on the record and not susceptible to annulment under the statutory tests. [Paras 38, 39, 40, 74, 75]

The petition challenging the Final Award is dismissed and the Final Award is upheld.

Execution of award - Section 31(7) - arbitrator's power to grant interest - Whether the execution petition should be allowed and the decree-holder be paid the awarded amount - HELD THAT: - In light of the dismissal of the Section 34 petition and the fact that the petitioner had paid awarded amounts except GST arrears pursuant to interim orders, the Court allowed the execution petition and directed payment of the awarded amount, with interest and costs, within four weeks as per the Final Award. [Paras 77, 78, 79]

The execution petition is allowed; the judgment-debtor is directed to pay the awarded amount with interest and costs within four weeks.

Final Conclusion: The High Court dismissed the petition under Section 34 challenging the Final Award dated 07.04.2021, upheld the Arbitrator's findings on inclusion of wet tissues, service charges, service tax, GST, interest and costs, and allowed the execution petition directing payment of the awarded amount with interest and costs within four weeks.

Criminal liability under Section 138 read with Section 141 of the Negotiable Instruments Act - necessary averments in the complaint to fasten vicarious liability - vicarious liability of company directors and persons in charge of company affairs - burden shifting upon accused to prove restriction on powers - exercise of inherent jurisdiction to quash prosecution

Criminal liability under Section 138 read with Section 141 of the Negotiable Instruments Act - necessary averments in the complaint to fasten vicarious liability - vicarious liability of company directors and persons in charge of company affairs - burden shifting upon accused to prove restriction on powers - Whether the order summoning the accused under Section 138 read with Section 141 of the Negotiable Instruments Act could be quashed for want of specific averments that the named directors were in charge of and responsible for the company's affairs. - HELD THAT: - The High Court examined whether the complaint contained the mandatory averments required to fasten constructive/vicarious liability under Section 141 when a company is the principal accused under Section 138. Relying on the established principle that penal provisions creating constructive liability must be strictly complied with, the Court observed that a complaint must, by clear averment, bring the person within the parameters of Section 141 so that he may know the case to be met. The Court noted the settled position that directors are prima facie the persons in charge of a company's affairs and that a person transacting with a company is entitled to presume that directors are in charge; if restrictions on their power exist, it is for the accused to prove them at trial. On the facts, the complaint specifically alleged that the named accused were Managing Directors/Directors and were fully responsible for the assets, liabilities and daily business affairs of the company. In view of these averments, the Court held that the requisite pleading threshold was met and that the burden would accordingly shift to the accused to establish any limitation on their authority. Applying these principles, the Court found no illegality in the learned Trial Court's order summoning the accused and declined to exercise inherent jurisdiction to quash the proceedings at the summoning stage. [Paras 13, 14]

Order summoning the accused under Section 138 read with Section 141 of the Negotiable Instruments Act is not liable to be quashed as the complaint contains necessary averments that the named directors were in charge of and responsible for the company's affairs.

Final Conclusion: The petition challenging the trial court's order summoning the accused is dismissed; the High Court upheld the sufficiency of the averments in the complaint and declined to quash the summons, leaving the question of any restriction on the directors' powers to be decided at trial.

Compensation for death under Section 166 of the Motor Vehicles Act - assessment of annual income for loss of dependency using previous three years' ITRs - presumptive income under Section 44AE of the Income Tax Act - addition for future prospects in loss of dependency - periodical increment on general damages as per Pranay Sethi - insurer's liability where offending vehicle was validly insured - burden of proof on insurer to establish violation of policy conditions - rate of interest payable on compensation

Assessment of annual income for loss of dependency using previous three years' ITRs - Computation of the deceased's annual income for loss of dependency - HELD THAT: - The Tribunal had averaged four years' ITRs (2011-12 to 2014-15) to compute annual income. The High Court held that the normal course is to take the preceding three consecutive financial years before death. Applying the ITRs of 2012-13, 2013-14 and 2014-15 with tax deductions produces an annual income of Rs. 1,76,496, which the Court accepted in place of the figure adopted by the Tribunal. [Paras 9]

Annual income for computation of loss of dependency fixed at Rs. 1,76,496 based on the average of ITRs for 2012-13, 2013-14 and 2014-15.

Presumptive income under Section 44AE of the Income Tax Act - addition for future prospects in loss of dependency - Whether and how much additional income should be attributed for the heavy goods vehicles owned by the deceased - HELD THAT: - Section 44AE provides a presumptive monthly income (Rs. 7,500) for goods carriage owners. The Court observed that although presumptive income may justify attributing income from the hypothecated vehicles, both vehicles had been purchased only a few months before the accident and there was no evidence about their retention or disposal after death. Considering these facts, the Court declined to accept the Tribunal's full addition of Rs. 60,000 per annum and instead allowed a pro rata addition of Rs. 22,500 (not counting for the entire year) to reflect the brief period of ownership. [Paras 10, 12]

An additional sum of Rs. 22,500 is to be added to annual income to account for vehicle-related earnings, on the limited factual foundation of recent purchase.

Periodical increment on general damages as per Pranay Sethi - Quantum of conventional heads including consortium/general damages and application of periodical increments - HELD THAT: - The parties accepted the legal principle in Pranay Sethi regarding periodical increments on conventional heads. The Tribunal had allowed Rs. 1,20,000 on conventional heads; the Court found that a combined award of Rs. 70,000 on conventional heads (inclusive of periodical increments as appropriate) is reasonable in the facts of this case. [Paras 10, 12]

Conventional heads (general/consortium etc.) reduced to Rs. 70,000 with periodical increments to be applied as held in Pranay Sethi.

Insurer's liability where offending vehicle was validly insured - burden of proof on insurer to establish violation of policy conditions - Liability of the Insurance Company and effect of alleged violation of policy conditions - HELD THAT: - The Tribunal recorded that the offending truck was involved in the accident and was validly insured. The Insurance Company urged violation of policy conditions (lack of driver licence endorsement/permit) to escape liability, but failed to produce specific rebuttal evidence sufficient to establish such violation. Exts. D and E (permit and fitness) and Ext. C (driver's licence) were relied upon; in absence of cogent contrary proof the Court declined to accept the insurer's plea. [Paras 8, 11]

Insurance Company remains liable to indemnify the owner as the vehicle was validly insured and the pleaded policy-condition violation was not established.

Rate of interest payable on compensation - Appropriate rate of interest on the compensation award - HELD THAT: - The Tribunal awarded interest at 7% per annum (described as the usual lending rate) and had also allowed a penal/default interest at 9% per annum. The Court examined the claim for enhancement of interest to 9% and for penal interest, and found no justification for increasing the rate or for awarding penal interest. Consequently the Court upheld interest at 7% per annum from the date of filing of the claim until realization. [Paras 12]

Interest on the modified compensation award fixed at 7% per annum from the date of claim application until realization; no penal/default interest awarded.

Final Conclusion: The High Court modified the Tribunal's award: annual income fixed at Rs. 1,76,496 with an added pro rata vehicle income of Rs. 22,500, loss of dependency and future prospects recalculated, conventional heads fixed at Rs. 70,000, and the total compensation reduced to Rs. 30,88,592 with interest at 7% per annum from the date of filing of the claim; insurer to deposit the amount within eight weeks and be refunded statutory deposit on proof of such payment.