TaxTMI Updates e-Newsletter
Jul 06,2022

Bail under Section 439 Cr.P.C. - Compoundable offence - Admissibility of statements under Section 70 of the GST Act - Grant of bail in economic offences with maximum punishment up to five years - Interim liberty subject to personal bond and sureties - Judicial exercise of discretion to grant bail without expressing opinion on merits

Bail under Section 439 Cr.P.C. - Compoundable offence - Grant of bail in economic offences with maximum punishment up to five years - Admissibility of statements under Section 70 of the GST Act - Interim liberty subject to personal bond and sureties - Application for bail under Section 439 Cr.P.C. was allowed and the petitioner was enlarged on bail on specified conditions. - HELD THAT: - The Court considered the submissions of the petitioner that he had been in custody since 26.05.2022, that the offence was compoundable and that he had deposited a substantial amount, and noted the contention that trial may take long and maximum punishment is five years. The respondent contested bail on the ground of large alleged tax evasion, admissible statements recorded under Section 70 of the GST Act and the petitioner being a habitual offender. Balancing these contentions and the facts and circumstances of the case, and expressly without expressing any opinion on the merits of the prosecution, the Court exercised its discretionary jurisdiction under Section 439 Cr.P.C. and found it just and proper to grant bail. The order records the Court's consideration of the prosecution's objections but proceeds to enlarge the accused on bail subject to conditions tailored to secure his attendance at trial. [Paras 6, 7]

Bail allowed; petitioner to furnish a personal bond and two sureties as directed for appearance before the trial court.

Final Conclusion: Bail application under Section 439 Cr.P.C. allowed; accused enlarged on bail on furnishing the prescribed personal bond and two sureties, the Court observing that the grant is without prejudice to the trial and without expressing any opinion on the merits.

Cancellation of GST registration - limitation for filing appeal and condonation of delay under first appellate provision - remand for fresh consideration in absence of constituted appellate tribunal - suo motu cancellation for non-filing of returns

Cancellation of GST registration - suo motu cancellation for non-filing of returns - limitation for filing appeal and condonation of delay under first appellate provision - Whether the orders cancelling the petitioner's GST registration and dismissing the appeal as time barred should be set aside and the matter remanded for reconsideration in view of absence of a constituted GST Tribunal and the consequences of strict limitation rules. - HELD THAT: - The Court noted that respondent cancelled the petitioner's registration suo motu on the ground of non filing of returns and that the first appellate authority dismissed the appeal as having been filed beyond the extended period of limitation. While the appellate provision permits a three month limitation and a further one month extension on sufficient cause, a rigid application preventing any condonation beyond that extended month could leave the assessee without an effective remedy, particularly where the GST Tribunal under the statute has not been constituted. In these circumstances and having regard to the nature of the grievance (cancellation of registration) the Court found it just and appropriate to set aside the earlier orders and remand the matter for fresh consideration by the authority which passed the cancellation order, with direction that the petitioner may submit all statutory returns when the matter is heard on remand. The Court expressly refrained from expressing any opinion on the merits of the cancellation itself and limited its order to remand for reconsideration in accordance with law. [Paras 3, 5]

Order cancelling the petitioner's GST registration dated 22.07.2019 and the appellate order dated 25.02.2022 are set aside; the matter is remanded to the authority which cancelled the registration to reconsider the petitioner's grievance and pass appropriate orders in accordance with law, petitioner to submit all returns.

Final Conclusion: The writ petition is allowed: the cancellation order and the appellate dismissal are quashed and the matter is remanded to the authority which cancelled registration for fresh consideration in accordance with law, with liberty to the petitioner to submit all returns; no order as to costs.

Audit report under Section 65(6) of the CGST Act - intimation of tax ascertained under Section 73 of the CGST Act - prematurity of writ petition challenging pre-adjudicatory communications - requirement of further adjudication after audit - right to respond to show-cause/intimation before recovery

Audit report under Section 65(6) of the CGST Act - requirement of further adjudication after audit - The legal effect of an audit report issued under Section 65(6) of the CGST Act and whether it by itself authorises recovery or determination of tax liability. - HELD THAT: - The Court held that an audit report issued under Section 65(6) is a communication of findings to the registered person and does not itself contemplate recovery or operate as a final adjudication of tax liability. The statutory scheme requires that findings recorded in an audit report be followed by adjudicatory proceedings in which the registered person is heard before any determination of tax liability or recovery is effected. Consequently, an audit report is pre-adjudicatory and cannot be treated as a concluded assessment or as authorising immediate recovery without further proceedings and opportunity to be heard.

Audit report under Section 65(6) is not a recovery order and requires further adjudication after affording the assessee an opportunity to be heard.

Intimation of tax ascertained under Section 73 of the CGST Act - right to respond to show-cause/intimation before recovery - prematurity of writ petition challenging pre-adjudicatory communications - Whether an intimation of tax ascertained under Section 73, which invites the assessee to show cause, is amenable to writ relief prior to completion of the adjudicatory process. - HELD THAT: - The Court observed that the intimation under Section 73 constitutes a notice of ascertained tax that permits the assessee to file objections or show cause against the proposed tax. The statutory procedure contemplates consideration of the assessee's submissions before any final action is taken. Where such a pre-adjudicatory intimation has been issued and the assessee has an opportunity to reply, a writ challenging the intimation is premature. The Court therefore refused to entertain the challenge at this stage, noting that the authority must consider the assessee's reply and proceed in accordance with law before any determination or recovery is effected.

Intimation under Section 73 inviting show-cause is not a final order; challenge by way of writ at that stage is premature and inadmissible.

Final Conclusion: The writ petition was dismissed as premature since the audit report and the intimation are pre-adjudicatory communications which require further consideration after the petitioner files its response; liberty was granted and the time to reply to the intimation was extended to 8.07.2022.

Matching, reversal and reclaim of input tax credit - Duty to verify transactions at both ends under Section 42(3) and (5) of the CGST Act - Procedure for verification of ITC claims under Circular No.5 of 2021 - Principles of natural justice in ITC verification

Show cause notice - Absence of legal infirmity - Challenge to the show cause notice dated 31.03.2022 is not maintainable on the present record - HELD THAT: - The Court found that no legal infirmity was pointed out in the impugned show cause notice and, on the material before it, was not inclined to entertain the petition challenging that notice at the admission stage. The petition was therefore disposed finally by consent without admitting the challenge to the notice on merits. [Paras 2]

The challenge to the show cause notice is rejected and the writ petition is disposed at the admission stage.

Duty to verify transactions at both ends under Section 42(3) and (5) of the CGST Act - Procedure for verification of ITC claims under Circular No.5 of 2021 - Principles of natural justice in ITC verification - Assessing authority must follow the matching, verification and natural justice procedure when adjudicating ITC claims and may conduct enquiries with both supplier and recipient - HELD THAT: - The Court emphasised that Section 42 of the CGST Act contemplates simultaneous investigation and communication of discrepancies to both supplier and recipient so that cross-verification may be conducted. A reversal of ITC may follow where discrepancies are found, but the authority is required to carry out proper verification of transactions on both sides before taking a final view. The Court relied on the procedure embodied in Circular No.5 of 2021 (paragraph 3.3.5) as instructive for conducting enquiries: issue the show cause notice with connected documents, afford opportunity of hearing (physical or virtual), permit summon of the other-end dealer and, where appropriate, allow cross-examination; if the other dealer is non-existent, assessment may proceed on available material. The Assessing Authority was directed to decide the proceedings in the light of these statutory stipulations and the spirit of the Circular, and the petitioner was directed to file its reply to the show cause notice. [Paras 5, 6, 7, 8, 9]

The Assessing Authority must scrupulously follow Section 42 and the procedure indicated in Circular No.5 of 2021, conduct enquiries with both parties, afford appropriate hearings, and thereafter complete the proceedings; the petitioner is directed to file its reply.

Final Conclusion: Writ petition disposed at admission: challenge to the show cause notice is not entertained; petitioner directed to reply and the Assessing Authority directed to adjudicate the ITC-related show cause notice by following Section 42 of the CGST Act and the verification procedure reflected in Circular No.5 of 2021, affording appropriate hearings and cross-verification before concluding the proceedings.

Validity of notification issued under section 5(3) of the Integrated Goods and Services Tax Act, 2017 - ultra vires - reverse charge liability for ocean freight - services of transportation of goods by a vessel up to the customs station of clearance - importer as recipient of service - quashing of notice/communication issued pursuant to an ultra vires provision

Validity of notification issued under section 5(3) of the Integrated Goods and Services Tax Act, 2017 - ultra vires - reverse charge liability for ocean freight - quashing of notice/communication issued pursuant to an ultra vires provision - Validity of Entry No.10 of the notification dated 28.06.2017 and the consequences for proceedings/notice issued relying on that entry - HELD THAT: - The Division Bench of this Court in Mohit Minerals Pvt. Ltd. had held Entry No.10 of the notification dated 28.06.2017 to be ultra vires the IGST Act. That decision was upheld by the Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd. The impugned Entry purported to make importers liable to pay tax on reverse charge basis for services consisting of carriage of goods by vessel up to the customs station of clearance. Having regard to the binding appellate pronouncement upholding the Division Bench's view that the Entry is ultra vires, the departmental proceedings and the notice dated 29.08.2019 issued pursuant to Entry No.10 cannot be sustained. In those circumstances the petition must be allowed and the proceedings/notice set aside. [Paras 12, 13]

Entry No.10 of the notification dated 28.06.2017 is ineffective for the purposes of the present proceedings; the notice/communication dated 29.08.2019 issued relying on that Entry is quashed and set aside.

Final Conclusion: The petition is allowed; the impugned notice dated 29.08.2019 and the proceedings initiated thereunder are quashed and set aside in view of the Division Bench decision held to be binding and upheld by the Supreme Court.

Transitional credit of accumulated CENVAT credit - Rule 117 of the CGST Rules is directory in nature - CENVAT credit standing as vested property under Article 300A - three years period under the Limitation Act as guiding principle for transition - power of the Commissioner to extend time under sub rule (1A) and Notification No.48/2018

Rule 117 of the CGST Rules is directory in nature - transitional credit of accumulated CENVAT credit - three years period under the Limitation Act as guiding principle for transition - Whether the time limit in Rule 117 for filing Form GST TRAN 1 results in forfeiture of the right to carry forward accumulated CENVAT credit and the permissible period for availing such credit. - HELD THAT: - The Court held that Rule 117 prescribes the procedure for carrying forward CENVAT credit and is directory insofar as it fixes the time limit for filing Form TRAN 1; failure to file within the period prescribed by the Rule does not automatically extinguish the substantive right conferred by Section 140(1). The Court adopted the reasoning in the cited decisions that the credit existing as on the appointed date (30.06.2017) is an accrued/vested right which cannot be taken away by subordinate legislation. In the absence of any substantive forfeiture provision in Section 140, the Court read the procedural time limit as not creating a bar to the exercise of the right. Having regard to the residuary prescription of limitation, the Court accepted the three year period from the appointed date as the maximum reasonable period for availing the transitional credit, and observed that extensions already made (including Notification No.48/2018) demonstrate that the time limit is not sacrosanct. [Paras 10, 11]

Rule 117's time limit is directory and does not result in forfeiture; the three year period from the appointed date (thus permitting filing up to 30.06.2020) is the guiding maximum period for availing transitional credit.

Transitional credit of accumulated CENVAT credit - power of the Commissioner to extend time under sub rule (1A) and Notification No.48/2018 - Whether the writ applicant should be permitted to file Form GST TRAN 1 despite delayed filing and, if so, the relief to be granted. - HELD THAT: - Applying the legal conclusions that Rule 117 is directory and that the three year limitation governs the transitional claim, the Court found the writ applicant's explanation for delay (financial constraints, NPA status of bank account and prompt approach to authorities after Notification No.48/2018) to be sufficient. In view of the settled jurisprudence and the facts that the applicant sought to file TRAN 1 within the permissible period, the Court directed the respondents to enable filing of TRAN 1 electronically or to accept it manually and to verify and process the claim in accordance with law. [Paras 11]

Writ allowed; respondents directed to permit filing of Form GST TRAN 1 electronically or accept it manually and to verify and process the claim within two weeks of receipt of the order.

Final Conclusion: Writ petition allowed: the time limit in Rule 117 for filing TRAN 1 is directory and does not extinguish the substantive right to transition accumulated CENVAT credit; the three year limitation from the appointed date is the guiding maximum; respondent to permit filing of TRAN 1 (electronically or manually) and process the claim within two weeks.

Input tax credit - eligibility of input tax credit on motor vehicles used as demo/test drive cars - restriction under section 17(5)(a) of the GST Act - further supply of such motor vehicles - capital goods - section 16 entitlement to input tax credit

Input tax credit - restriction under section 17(5)(a) of the GST Act - further supply of such motor vehicles - capital goods - Admissibility of input tax credit on purchases of motor vehicles held and used as demo/test drive cars by an authorized dealer and the effect of capitalization and timing of supply. - HELD THAT: - The Authority examined entitlement under section 16 (input tax credit) read with the restriction in section 17(5)(a) which denies ITC on motor vehicles for transportation of persons unless they are used for further supply, transportation of passengers or imparting training. The Authority held that providing test drives or demonstrating vehicle features to prospective buyers does not amount to "imparting training" nor does it convert the use into transportation of passengers. The condition in section 17(5)(a)(A) is therefore the relevant exception: ITC is allowable where the motor vehicle is purchased for "further supply of such motor vehicles." The Authority accepted that demo vehicles, though capitalised in the dealer's books and retained for a mandated demonstration period, are bought with the purpose of eventual sale; capitalization alone does not disentitle the dealer from claiming ITC. There is no statutory time limit for making the further supply; supplies made after a period or at a lower price do not negate the entitlement. The word "such" in the phrase "further supply of such motor vehicles" was construed broadly to cover the very vehicles purchased as demo cars, and the mandated period of use under the manufacturer's policy does not change the purpose of purchase as being for further supply. On these grounds the Authority concluded that purchase and subsequent supply of demo vehicles satisfy the exception in section 17(5)(a)(A), making ITC on such purchases admissible.

The applicant is entitled to avail input tax credit on purchases of demo vehicles (capitalised in books) and may set off such credit against output tax payable under GST, subject to compliance with the conditions of the Act.

Final Conclusion: Advance ruling: ITC on demo/test drive motor vehicles purchased by the dealer is admissible pursuant to section 16 read with the exception in section 17(5)(a)(A) (further supply), and capitalization or the mandated period of demonstration does not preclude such credit.

Classification under HSN 8703 - electrically operated motor vehicle - requirement of battery fitting at time of supply - definition of "electrically operated vehicles" in Explanation to entry 242A - battery operated vehicle (Rule 2(u), CMVR) - Chapter 87 tariff interpretation - preference to specific description

Classification under HSN 8703 - electrically operated motor vehicle - requirement of battery fitting at time of supply - definition of "electrically operated vehicles" in Explanation to entry 242A - battery operated vehicle (Rule 2(u), CMVR) - A three-wheeled electrically operated vehicle (e-rickshaw) supplied without battery is classifiable as an "electrically operated motor vehicle" under HSN 8703. - HELD THAT: - The Authority examined the statutory and regulatory descriptions applicable to electrically operated vehicles. The Explanation to entry 242A defines "electrically operated vehicles" as those run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles. Rule 2(u) of the Central Motor Vehicles Rules describes a "Battery Operated Vehicle" as powered exclusively by an electric motor whose traction energy is supplied exclusively by a traction battery installed in the vehicle. The Authority noted that these definitions characterise the vehicle by its mode of propulsion rather than by who supplies the battery or whether the battery is physically fitted at the moment of supply. Technical description of BEVs confirms that the rechargeable battery is the sole source of propulsion, but the absence of the battery at the time of supply does not change the vehicle's essential character as an electrically operated vehicle. The Authority also relied on the reasoning in the Orissa AAR (and the decision referred therein) that fitting of the battery at or before supply is not a pre-condition for classification as a battery-powered road vehicle. Applying the tariff interpretation principles for Chapter 87 and giving effect to the specific description for "other vehicles with only electric motor for propulsion" (which includes three-wheeled vehicles), the Authority concluded that an e-rickshaw supplied without battery retains its classification under HSN 8703 as an electrically operated motor vehicle.

An e-rickshaw supplied without battery is nevertheless classifiable as an electrically operated motor vehicle under HSN 8703.

Final Conclusion: The Authority ruled that a three-wheeled electrically operated vehicle (e-rickshaw) supplied without the battery is classifiable under HSN 8703 as an "electrically operated motor vehicle."

Classification under HSN 8703 - Electrically operated vehicles - Fitting of battery not a pre condition for classification - Tariff item 87038040 - three wheeled vehicles - Preferential interpretation under Customs Tariff rules

Classification under HSN 8703 - Electrically operated vehicles - Fitting of battery not a pre condition for classification - Tariff item 87038040 - three wheeled vehicles - A three wheeled electrically operated vehicle (e rickshaw) supplied without battery is classifiable as an electrically operated motor vehicle under HSN 8703. - HELD THAT: - The Authority examined the statutory and tariff scheme, the technical nature of battery electric vehicles (BEVs) and the Explanation to entry No. 242A in the Rate Notification which defines "Electrically operated vehicles" as those run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles. While an e rickshaw cannot run without batteries, the Authority adopted the view (consistent with an earlier Orissa AAR and the Departmental revisionary view in Reva Electric Car Co.) that the presence of batteries at the time of supply is not a pre condition to its classification as an electrically operated vehicle. Applying the rule of tariff interpretation that the most specific heading prevails and noting that three wheeled vehicles with only electric motor for propulsion fall under tariff item 87038040, the Authority concluded that an e rickshaw supplied without battery retains its character as an electrically operated vehicle and is classifiable under HSN 8703. [Paras 4]

E rickshaw supplied without battery is classifiable as an "electrically operated motor vehicle" under HSN 8703.

Final Conclusion: The Authority ruled that a three wheeled electrically operated vehicle (e rickshaw), even when supplied without battery, is classifiable as an electrically operated motor vehicle under HSN 8703.

Use of physical violence by tax authorities - interim protection from coercive action pending investigation - requirement to cooperate with GST investigation - right to appeal under Section 107(6) of the CGST Act - power to arrest under the CGST Act

Interim protection from coercive action pending investigation - requirement to cooperate with GST investigation - use of physical violence by tax authorities - Continuation of interim direction restraining respondents from taking coercive steps against the petitioners during the investigation, subject to petitioners' cooperation. - HELD THAT: - The Court noted the factual background including earlier findings in W.P.No.28268 of 2019 that prima facie supported the possibility of physical violence by certain officers during searches, and recorded that the directions issued by the Division Bench on 06.11.2020 (prohibiting violence, transferring inquiry away from a specified officer, restricting hours and mode of interrogation, and adherence to statutory procedure) have attained finality and bind the respondents. Having regard to that history and the admitted position that investigation is ongoing, the Court held that petitioners, as taxable persons, must cooperate with the investigation and respond to summonses. Simultaneously, the Court continued the interim order dated 04.03.2022 restraining the respondents from taking any coercive action against the petitioners until conclusion of the investigation. The order was passed to preserve liberty against informal or indefinite custody and in light of the past conduct and the binding earlier directions. [Paras 25, 26, 28]

Interim protection from coercive steps shall continue until conclusion of the investigation, provided petitioners cooperate and respond to summonses; earlier directions of 06.11.2020 remain binding.

Right to appeal under Section 107(6) of the CGST Act - power to arrest under the CGST Act - Relevance of deposits already made by petitioners to statutory requirement for admission of an appeal and its bearing on interim protection. - HELD THAT: - The Court observed that if an adjudication were to determine the disputed GST liability (allegedly about Rs.9.00 crores as per respondents), the statute permits filing an appeal and, under Section 107(6), requires deposit of a portion of the disputed tax (10%) for admission of the appeal. The petitioners had deposited Rs.4.10 crores to date, which the Court recorded as exceeding the statutory 10% threshold relative to the respondents' present quantification of liability. The Court treated this fact (and precedent relied upon by petitioners) as a relevant consideration in concluding that interim protection should continue, while noting that investigation has to reach its adjudicatory stage for further action. [Paras 27]

Petitioners' deposits (Rs.4.10 crores) were noted as exceeding the 10% deposit threshold contemplated by Section 107(6) and as a factor supporting continuation of interim protection pending conclusion of investigation.

Final Conclusion: Writ petition disposed of by continuing the interim direction that no coercive steps shall be taken against the petitioners during the pendency of the investigation, subject to their cooperation and response to summonses; earlier directions of this Court dated 06.11.2020 remain binding.

Faceless assessment procedure - show cause notice cum draft assessment order - opportunity of personal hearing through video conferencing - principles of natural justice - non obstante clause permitting faceless assessment

Faceless assessment procedure - show cause notice cum draft assessment order - opportunity of personal hearing through video conferencing - principles of natural justice - Impugned assessment order was passed without issuing the draft assessment/show cause and without providing the prescribed opportunity of personal hearing through video conferencing in terms of the faceless assessment procedure, thereby violating principles of natural justice. - HELD THAT: - Section 144B prescribes a faceless assessment regime under a non obstante clause in which, where a variation prejudicial to the assessee is proposed, the assessee must be served with a show cause notice cum draft assessment order and, if requested and permitted, afforded a personal hearing conducted exclusively by video conferencing. The court found on the admitted facts that no draft assessment along with show cause notice was furnished to the petitioner and no opportunity of personal hearing by video conferencing was provided before finalising the assessment. For these reasons the assessment passed by respondent without following the procedure mandated by section 144B was held to be in violation of the principles of natural justice and therefore unsustainable. [Paras 11, 12]

Impugned assessment order quashed for non compliance with the faceless assessment procedure and denial of the prescribed opportunity of personal hearing.

Show cause notice cum draft assessment order - faceless assessment procedure - Assessment quashed and matter remitted to the Revenue to proceed afresh under the provisions of the faceless assessment scheme after issuance of show cause notice cum draft assessment order and after affording opportunity of hearing to the assessee. - HELD THAT: - Having quashed the impugned order for procedural non compliance, the court permitted the Revenue to re proceed in accordance with law under section 144B by issuing the requisite show cause notice cum draft assessment order, considering the assessee's responses and, where applicable, providing personal hearing by video conferencing. The court expressly refrained from examining merits of the assessment and imposed a time limit for completion of the exercise to ensure finality. [Paras 13]

Order quashed and set aside; Revenue permitted to re proceed in accordance with section 144B and to complete the exercise within 12 weeks from receipt of the order.

Final Conclusion: Writ petition allowed; assessment order dated 08.06.2021 and consequential demand notice quashed for failure to follow the faceless assessment procedure and for denial of the prescribed opportunity of personal hearing; Revenue may proceed afresh in accordance with section 144B after issuing show cause notice cum draft assessment order and affording video conference hearing, to be completed within 12 weeks.

Education - charitable purpose - Section 11 exemption - Section 12AA registration - coaching classes for competitive examinations - application of proviso to Section 2(15) - verification of activities by the Assessing Officer - UGC standards for university affiliation

Education - charitable purpose - Section 11 exemption - Section 12AA registration - Assessee entitled to exemption under Section 11 for those educational activities conducted in conformity with university-approved programmes. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the assessee carries out educational activities by operating study centres under an agreement with Yashwantrao Chavhan Maharashtra Open University (YCMOU) and offering programmes leading to university degrees. On the facts, such programmes amount to education within the main limb of charitable purpose and therefore qualify for Section 11 exemption. The Tribunal relied on precedent holding that educational activities resulting in university degrees fall within the meaning of education under Section 2(15), and observed that the assessee holds Section 12AA/80G registrations which are relevant to the assessment of objects. The Tribunal therefore sustained the CIT(A)'s direction to treat the university-affiliated courses as educational and eligible for the impugned exemption. [Paras 5]

CIT(A)'s finding that the assessee is eligible for Section 11 exemption in respect of university-approved degree programmes is upheld.

Coaching classes for competitive examinations - application of proviso to Section 2(15) - verification of activities by the Assessing Officer - UGC standards for university affiliation - Whether coaching classes for competitive examinations conducted by the assessee qualify as charitable education or fall within the proviso to Section 2(15) is not finally decided and is remitted to the Assessing Officer for factual verification. - HELD THAT: - The Tribunal noted that, in addition to university-affiliated programmes, the assessee conducts coaching for civil services and other competitive examinations. It held that Section 11 proceedings empower the Assessing Officer to verify whether the assessee's activities conform to its objects and whether the coaching activities are in line with university/UGC standards. Because a university's approval does not ipso facto validate coaching courses as meeting UGC-prescribed standards for affiliation, the Tribunal directed that the Assessing Officer must examine the evidence afresh, including whether the courses are run strictly in tune with the UGC guidelines; if coaching classes are found to violate those standards or otherwise be commercial in nature within the scope of the proviso to Section 2(15), they would not be entitled to exemption. The assessee was directed to file all relevant details within three opportunities, failing which the Assessing Officer may proceed. [Paras 6, 7]

Matter remitted to the Assessing Officer for factual verification of the coaching activities against the assessee's objects and applicable university/UGC standards; cross-objection follows suit.

Final Conclusion: The CIT(A)'s allowance that the assessee is eligible for Section 11 exemption in respect of university-approved degree programmes is upheld; however, the question whether the assessee's coaching for competitive examinations qualifies as charitable education (and whether the proviso to Section 2(15) applies) is remitted to the Assessing Officer for factual verification against the assessee's objects and relevant university/UGC standards, with the assessee directed to produce supporting details.

Tax deduction at source under Section 194I (rent) - Tax deduction at source under Section 194C (contractual payment for work) - Assessee-in-default under Section 201(1) - Characterisation of common area maintenance charges

Characterisation of common area maintenance charges - Tax deduction at source under Section 194I (rent) - Tax deduction at source under Section 194C (contractual payment for work) - Assessee-in-default under Section 201(1) - Common maintenance charges (CAM) paid by the assessee are contractual payments for services and are liable to TDS under Section 194C and not under Section 194I; consequently the assessee cannot be treated as an assessee-in-default under Section 201(1) for short deduction under Section 194I. - HELD THAT: - The Tribunal examined the agreements placed on record and found that CAM charges were paid to various third parties pursuant to contracts for providing maintenance services and did not form part of rent payments. Relying on the statutory definition of "rent" under Section 194I, which is confined to payments for use of land, building, machinery, plant, equipment, furniture or fittings, the Tribunal held that CAM charges are not payments for use of premises or equipment. Accordingly, such charges are contractual payments for carrying out work and fall within the scope of Section 194C. The decision follows coordinate bench precedents where identical factual patterns were held to attract deduction under Section 194C (including the decisions in Connaught Plaza Restaurants P. Ltd. and Kapoor Watch Company Pvt. Ltd.), and the Tribunal respectfully applied the same reasoning to set aside the orders of the Assessing Officer and the CIT(A) that treated the assessee as an assessee-in-default under Section 201(1). [Paras 5, 6, 7]

TDS on CAM charges is to be deducted under Section 194C and not under Section 194I; the orders treating the assessee as an assessee-in-default under Section 201(1) are set aside.

Final Conclusion: The appeal is allowed: CAM payments are contractual service payments attracting TDS under Section 194C, and the finding of assessee-in-default under Section 201(1) for short deduction under Section 194I is set aside.

Application of Section 68 to trade credits - genuineness and identity of trade creditors - addition as unexplained credits - rejection of books of account and estimation of income by applying gross profit/net profit rate

Application of Section 68 to trade credits - genuineness and identity of trade creditors - addition as unexplained credits - rejection of books of account and estimation of income by applying gross profit/net profit rate - Validity of addition made by treating sundry trade creditors as unexplained credits and charging the entire claimed amount as income - HELD THAT: - The Tribunal examined whether the assessing officer was justified in treating purchases from three parties as bogus and making an addition under Section 68 by treating the sundry creditors as unexplained credits. The Tribunal found that the assessee's practice was to purchase on credit and subsequently settle accounts by sales to the same parties, and that the assessing officer had not disturbed the corresponding sales in the subsequent year. While the books and transactions were held to be not fully reflecting the true state of affairs, the Tribunal held that where the assessing officer makes out a case of non-genuine purchases the correct course is to reject the books and estimate the assessee's income by applying an appropriate and reasonable basis such as GP/NP rate rather than charging the entire purchase amount as income under Section 68. Relying on the reasoning in the cited authority (PCIT vs. Mohammad Haji Adam & Co.) the Tribunal directed that the matter be remitted to the assessing officer to verify details of profit and to estimate income on the basis of the turnover shown by applying a proper and reasonable GP/NP rate, rather than confirming the entire addition as unexplained credit. [Paras 5]

Addition under Section 68 confirmed in principle as objectionable when applied to entire trade creditors; matter remitted to AO to estimate income after rejecting books and applying appropriate GP/NP rate (ground no.1 partly allowed).

Summary dismissal of unpressed ground - Claim regarding addition of interest income - HELD THAT: - At the hearing the assessee expressly stated that ground no.2 (addition on account of interest income) was not pressed. The Revenue raised no objection to dismissal of that ground as not pressed. The Tribunal therefore declined to adjudicate on the substantive merit of that ground and dismissed it as not pressed. [Paras 6]

Ground no.2 dismissed as not pressed.

Final Conclusion: Appeal partly allowed: addition treating the entire trade creditors as unexplained credits under Section 68 set aside insofar as quantification; the matter is remanded to the assessing officer to estimate the assessee's income by applying a proper and reasonable GP/NP rate after verification. The challenge to the interest-income addition is dismissed as not pressed.

Genuineness of transactions - test of human probabilities - sham or preordained share transactions - withdrawal of claim of exemption under section 10(38) - treatment of receipts as long term capital gains vis-a -vis income from other sources - application of section 115BBE - use of stock-exchange mechanism to route unaccounted money

Genuineness of transactions - sham or preordained share transactions - use of stock-exchange mechanism to route unaccounted money - withdrawal of claim of exemption under section 10(38) - treatment of receipts as long term capital gains vis-a -vis income from other sources - Long term capital gains claimed on sale of penny stock shares were not genuine and were correctly treated as income from other sources after the assessee withdrew the exemption claim. - HELD THAT: - The Tribunal upheld the concurrent finding that the share transactions were not bonafide but manufactured to convert unaccounted money into purported capital gains. The conclusion draws on surrounding circumstances: simultaneous purchases and sales by family members, abnormally high and near identical profits on nominal investments in a penny stock, information from the Investigation Wing characterizing the scrip as part of an accommodation/entry operator scheme, and the assessee's voluntary withdrawal of the exemption claim during search proceedings. Applying the test of human probabilities and authorities that banking channels and contract notes alone do not render a transaction genuine, the Tribunal held that the apparent documentary trail was a mask and that the burden to establish genuineness lay on the claimants. Once the assessee withdrew the claim to exemption under section 10(38) and offered the amount as income, the Tribunal reasoned that the character of the receipt could not be preserved as LTCG where the underlying transactions were found to be sham; therefore, treating the amount as income from other sources was justified. [Paras 6, 7, 13, 14]

Assessee's claim of LTCG was rejected as a sham; receipts were properly treated as income from other sources.

Application of section 115BBE - treatment of receipts as long term capital gains vis-a -vis income from other sources - Provisions of section 115BBE could be applied to tax the impugned receipts once they were held to be unaccounted income treated as income from other sources. - HELD THAT: - The Tribunal agreed with the Assessing Officer and the CIT(A) that, having concluded the transactions were sham and the amounts were unaccounted money routed through the stock mechanism, the amounts properly fell to be taxed as income from other sources. In that factual matrix the Tribunal accepted the view that the fiscal character had changed and that the special tax treatment under section 115BBE was attracted. The Tribunal rejected the assessee's contention that section 115BBE could not be applied on the facts, noting that the assessee had herself withdrawn the exemption and offered the amount as income and that the lower authorities had correctly applied the statutory provision. [Paras 6, 14]

Section 115BBE was rightly applied to tax the amounts held to be unaccounted income.

Final Conclusion: On the facts and applying the test of human probabilities, the Tribunal dismissed the appeals and confirmed the Assessing Officer's and CIT(A)'s orders treating the disputed receipts as non genuine, taxing them as income from other sources and applying section 115BBE.

Penalty under section 271C for failure to deduct tax at source - Obligation to deduct tax at source on External Development Charges (EDC) - Payment to Government/DTCP versus payment to Development Authority (HUDA) - effect on TDS liability - Reasonable cause/bonafide belief as defence to penalty - Applicability of CBDT clarification on TDS treatment of EDC

Penalty under section 271C for failure to deduct tax at source - Obligation to deduct tax at source on External Development Charges (EDC) - Payment to Government/DTCP versus payment to Development Authority (HUDA) - effect on TDS liability - Reasonable cause/bonafide belief as defence to penalty - Applicability of CBDT clarification on TDS treatment of EDC - Levy of penalty under section 271C for non-deduction of TDS on EDC paid to HUDA is not sustainable. - HELD THAT: - The Tribunal examined whether payments of External Development Charges (EDC) made to HUDA by the assessee attracted an obligation to deduct tax at source. The record and a contemporaneous clarification of the State (DTCP) showed that EDC receipts were deposited into the Consolidated Fund of the State and that payments were routed through the Directorate of Town and Country Planning (DTCP). Co ordinate Bench decisions of the Tribunal on identical facts held that where payments are made pursuant to directions of a government department (DTCP) and not under a contract with HUDA, no privity of contract exists with HUDA and the taxpayer could reasonably believe that TDS was not exigible. The Tribunal noted the CBDT clarification and prior authorities recognising that a bona fide belief, supported by governmental directions/clarification, constitutes reasonable cause under the statute and negates contumacious conduct required for penalty. Applying those principles and following consistent orders of co ordinate Benches, the Tribunal held that penalty under section 271C could not be sustained. [Paras 6, 7, 8]

Impugned penalty under section 271C deleted and the appeals allowed.

Final Conclusion: The appeals are allowed; the levy of penalty under section 271C for non deduction of tax on EDC paid to HUDA is set aside and the impugned orders are deleted (order pronounced 30 June 2022).

Submission of Form No. 10 electronically - accumulation of income under section 11 - revised return filed under section 139(4) - directory versus mandatory nature of procedural conditions - substantial compliance - condonation of delay in filing Form No. 10 - CBDT Circular No. 7/2018 - remand for fresh consideration by Assessing Officer

Submission of Form No. 10 electronically - revised return filed under section 139(4) - remand for fresh consideration by Assessing Officer - Whether the Form No. 10 filed electronically along with the revised return ought to be taken into consideration by the Assessing Officer. - HELD THAT: - The Tribunal observed that the requirement to submit Form No. 10 electronically was newly inserted and applicable from AY 2016-17, and that the assessee had filed Form No. 10 along with the revised return before completion of assessment. Having regard to the filing of Form No. 10 on 24.03.2018 and the surrounding circumstances (including CBDT guidance addressing difficulties in electronic filing), the Tribunal concluded that the Assessing Officer should have considered the Form No. 10 so filed. For these reasons the Tribunal set aside the assessment and remanded the matter to the Assessing Officer for fresh decision after taking the Form No. 10 on record and affording the assessee a proper and reasonable opportunity of being heard. [Paras 7, 8]

Assessment order set aside and the matter remanded to the Assessing Officer to decide afresh after taking into consideration the Form No. 10 filed with the revised return and after affording the assessee a proper and reasonable opportunity of hearing.

Directory versus mandatory nature of procedural conditions - substantial compliance - condonation of delay in filing Form No. 10 - CBDT Circular No. 7/2018 - Whether non filing of Form No. 10 within the time prescribed should automatically disentitle the assessee to claim accumulation exemption, or whether substantial compliance/condonation can be permitted. - HELD THAT: - Relying on higher court dicta and CBDT circulars recognising difficulties in electronic filing for AY 2016 17, the Tribunal held that the requirement to furnish Form No. 10 is of a procedural nature and that, in the facts of the case where the provision was newly inserted and the assessee filed Form No. 10 before completion of assessment, the omission appeared bona fide and curable. The Tribunal referred to the CBDT Circular No. 7/2018 which authorized Commissioners to admit belated Form No. 10s upon satisfaction of reasonable cause and investment in specified modes, and to judicial authorities treating filing of audit/report as substantial compliance. Applying these principles, the Tribunal concluded that the assessee's belated electronic filing with the revised return warranted consideration rather than automatic denial of exemption. [Paras 7]

The Tribunal treated the non filing as prima facie bona fide and curable, accepted that substantial compliance/condonation principles apply in the circumstances, and directed reconsideration rather than automatic denial of exemption.

Final Conclusion: Appeal allowed for statistical purposes; the assessment order and the impugned appellate order are set aside and the matter is remanded to the Assessing Officer for fresh decision after taking into account the Form No. 10 filed with the revised return and after affording the assessee a proper and reasonable opportunity of hearing.

Loss by embezzlement deductible in the year of discovery when employer realises irrecoverability - meaning of "discovery" as detection plus realisation that amount cannot be recovered - embezzlement loss as incidental to carrying on business and allowable as business loss

Loss by embezzlement deductible in the year of discovery when employer realises irrecoverability - meaning of "discovery" as detection plus realisation that amount cannot be recovered - embezzlement loss as incidental to carrying on business and allowable as business loss - Allowability of amount written off as embezzlement in assessment year 2008-09. - HELD THAT: - The Tribunal found that the embezzlement occurred in financial year 2001-02 and was detected then, but the assessee pursued remedies - criminal complaints, CBI investigation, complaint to Banking Ombudsman and sustained negotiations with bank officials - and it was only after the bank finally refused liability in March 2008 that recovery was shown to be impossible. Applying CBDT Circular No. 035D dated 24.11.1965, which follows the Supreme Court decisions recognising that such a loss is deductible only in the year it is "discovered", and construing "discovery" to mean the point when the employer realises that the amount cannot be recovered (as explained by the Jammu & Kashmir High Court and applied by the Supreme Court in Associated Banking Corporation of India ), the Tribunal held that the deduction was properly claimed in assessment year 2008-09. The Tribunal therefore allowed the embezzlement write off as a business loss in the year when irrecoverability was established after exhaustive efforts at recovery. [Paras 7, 8]

The embezzlement loss written off is allowable in assessment year 2008-09, since discovery for tax deduction purposes occurred when the assessee realised in March 2008 that recovery was not possible.

Final Conclusion: The appeal is allowed: the Tribunal held that the embezzlement loss is deductible in assessment year 2008-09 because the assessee only then realised that the embezzled amount could not be recovered after exhausting remedies.

Exercise of revisional power under section 263 - Claim of deduction under section 54F and section 54B - Non speaking assessment order - Requirement of independent belief by revisional authority - Reliance on audit objections without independent satisfaction

Exercise of revisional power under section 263 - Requirement of independent belief by revisional authority - Reliance on audit objections without independent satisfaction - Validity of the Commissioner's order under section 263 setting aside the assessment and directing reassessment. - HELD THAT: - The Tribunal examined whether the Commissioner applied independent mind before invoking his revisional jurisdiction. The assessment order itself was brief and non speaking, but the material on record showed that the Assessing Officer had made inquiries (including letters to Sub Registrars and receipt of their replies) and had obtained documents and submissions from the assessee during scrutiny. The Commissioner initiated revision proceedings principally on the basis of objections raised by the Internal Audit Party and did not demonstrate an independent satisfaction or belief that the assessment was erroneous and prejudicial to revenue; consequently the revision was held to be effected merely by following audit objections or directives without independent adjudicatory application of mind. Reliance was placed on the principle that a revisional authority must form his own view and not act simply on the directions or objections of the audit/administration. Applying these principles to the facts, the Tribunal concluded that the revision order was not in accordance with law. [Paras 8, 9, 10]

Revision order dated 27.01.2014 under section 263 quashed as passed without independent belief, being based on audit objections alone.

Claim of deduction under section 54F and section 54B - Non speaking assessment order - Consequences for the assessment and consequential orders giving effect to the revisional order and appellate proceedings. - HELD THAT: - Because the revisional order was quashed for want of independent satisfaction by the Commissioner, consequential actions taken pursuant to that revision (including the giving effect order and the assessment adjustments made thereunder) had no legal basis. The Tribunal noted that the appellate authority had, on merits, deleted the additions and allowed the assessee's claims; however, in view of the primary finding that the revision itself was improper, the orders consequent to the revision were rendered infructuous. The Tribunal therefore set aside the revision and declined to sustain the revenue's appeals which sought to uphold the revisional consequences. [Paras 10, 11]

Consequential orders made pursuant to the quashed revision are rendered infructuous; assessee's appeal allowed and revenue's appeal and cross objection dismissed.

Final Conclusion: The Commissioner's revision under section 263 (order dated 27.01.2014) is quashed for lack of independent belief and for being based on audit objections without application of mind; consequential assessments and giving effect orders collapse. The assessee's appeal is allowed; the revenue's appeal and the assessee's cross objection are dismissed.

Revision under section 263 - assessment under section 143(3) - deduction under section 80P - error prejudicial to the interest of revenue - when two views are possible AO's order not vitiated

Revision under section 263 - deduction under section 80P - assessment under section 143(3) - when two views are possible AO's order not vitiated - Whether the revisional order under section 263 holding the assessment framed under section 143(3) as erroneous insofar as it allowed deduction under section 80P for interest earned on deposits with a co-operative bank was sustainable. - HELD THAT: - The Tribunal found that the Assessing Officer had adopted one of two possible views in allowing the deduction under section 80P for interest on deposits with the co operative bank. Reliance was placed on the Tribunal's decision in Shree Keshav Co operative Credit Society Limited and on precedents of the Gujarat High Court which sustained allowance of such deduction. Where two reasonable views are open, invocation of revision under section 263 is impermissible unless the view taken by the AO is unsustainable in law. The Revenue did not place any material before the Tribunal to show that the cited Tribunal decision had been overruled or that the facts of the present cases were distinguishable, nor did it demonstrate that the AO's view was legally untenable. Applying the principle that section 263 cannot be used to substitute the Commissioner's opinion for a legitimately taken view by the AO, the Tribunal held that there was no error in the assessment prejudicial to the revenue and quashed the revisional orders. [Paras 7, 8]

The revisional orders under section 263 were quashed and the appeals of the assessees were allowed.

Final Conclusion: The Tribunal allowed both appeals for A.Y. 2017-18, holding that the AO's allowance of deduction under section 80P on interest from co operative bank deposits represented one of two possible views and therefore did not render the assessment under section 143(3) erroneous so as to justify revision under section 263.

Reopening of assessment beyond four years requires failure to disclose fully and truly all material facts - reopening of assessment cannot be justified by mere change of opinion - reason to believe must demonstrate satisfaction of failure to disclose and not be a borrowed or superficial satisfaction - absence of new tangible material renders reassessment invalid

Reopening of assessment beyond four years requires failure to disclose fully and truly all material facts - reopening of assessment cannot be justified by mere change of opinion - absence of new tangible material renders reassessment invalid - Validity of reassessment proceedings initiated after four years from the end of the assessment year (reopening under section 147/148) where the assessing officer relied on information already placed before him at the original assessment - HELD THAT: - The Tribunal examined the reasons recorded for reopening and the material on record and found that the assessing officer's belief that income had escaped assessment was founded on material that had been placed and considered during the original assessment completed under section 143(3). The assessing officer's reasons merely noted the declared survey income and the simultaneous showing of work in progress in the accounts, without any finding that the assessee had failed to disclose fully and truly all material facts or without recording any new tangible material justifying reopening after the four year period. The Tribunal applied the principle that once the original assessment is completed under section 143(3), reassessment beyond four years is permissible only if income has escaped assessment by reason of the assessee's failure to disclose material facts fully and truly; a mere change of opinion or reliance on information already examined does not satisfy the statutory threshold. In the absence of any allegation or recorded satisfaction that the assessee failed to disclose material facts and given that the assessing officer had considered the relevant documents during the original assessment, the reassessment was held to be illegal and vitiated by change of opinion/absence of new tangible material. Consequently, the Tribunal upheld the CIT(A)'s quashing of the reassessment and declined to decide the Revenue's remaining substantive grounds as infructuous. [Paras 9, 10, 11, 13, 14]

Reassessment proceedings initiated after four years were quashed as the reopening was based on change of opinion and no failure to disclose fully and truly or new tangible material was shown.

Final Conclusion: The appeal filed by the Revenue is dismissed; the reassessment proceedings for AY 2009-10 were quashed for being bad in law, and the Tribunal confirmed the CIT(A)'s order without adjudicating the other grounds on merits.

Additional depreciation under section 32(1)(iia) of the Income-tax Act - applicability of Finance Act, 2012 amendment with effect from 1-4-2013 to earlier assessment years - electricity generated by windmills as an "article or thing" for purposes of additional depreciation

Additional depreciation under section 32(1)(iia) of the Income-tax Act - applicability of Finance Act, 2012 amendment with effect from 1-4-2013 to earlier assessment years - electricity generated by windmills as an "article or thing" for purposes of additional depreciation - Assessee is entitled to additional depreciation claimed on windmills for AY 2012-13 and the AO was directed to compute and allow the same. - HELD THAT: - The Tribunal examined the Assessing Officer's disallowance of the additional depreciation claimed under section 32(1)(iia) on windmills commissioned during the relevant year. The lower authorities disallowed the claim on the basis that the amendment by the Finance Act, 2012 (operative from 1-4-2013) brought power-generation within the clause and, therefore, additional depreciation was not available for AY 2012-13. The Tribunal rejected that approach and followed co-ordinate-bench precedent which held that electricity generated by windmills can qualify as an "article or thing" and that the explanatory memorandum to the Finance Act, 2012 could not be read so as to retrospectively oust claims arising under the statute prior to the amendment. In light of prior Tribunal rulings in identical factual matrices and the assessee's established engagement in power generation, the Tribunal accepted the claim in principle and remitted the matter to the Assessing Officer for computation and allowance of additional depreciation as per law. [Paras 5]

Claim for additional depreciation on windmills for AY 2012-13 is allowed in principle; Assessing Officer to compute and allow the deduction.

Final Conclusion: The appeal is allowed: the assessee's claim for additional depreciation on windmills for AY 2012-13 is accepted in principle and the Assessing Officer is directed to compute and allow the said additional depreciation in accordance with law.

Disallowance of business loss - bogus loss / circular trading - burden of proof and production of corroborative documents - verifications under section 133(6)

Disallowance of business loss - bogus loss / circular trading - burden of proof and production of corroborative documents - verifications under section 133(6) - Validity of the disallowance of Rs.23,33,238/- claimed as business loss on purchase and sale of skimmed milk powder and channa. - HELD THAT: - The Assessing Officer disallowed the claimed loss after the assessee failed to produce reliable corroborative evidence of trading, failed to produce stock registers and delivery challans, and counterparties did not respond to notices issued under section 133(6). The AO recorded a consistent pattern of transactions only with a limited set of entities over years and concluded that the entries indicated circular trading or accommodation entries rather than genuine trading resulting in real loss. The assessee did not controvert the AO's factual findings before the CIT(A) nor furnish evidence of movement or delivery of the commodities during first appeal. The CIT(A) examined the factual matrix, relied on the absence of independent evidence and the pattern of transactions, and confirmed the disallowance. The Tribunal, after considering the record and submissions of the Revenue, found no reason to interfere with the CIT(A)'s factual conclusion and upheld the disallowance.

The disallowance of Rs.23,33,238/- as bogus business loss is upheld and confirmed.

Final Conclusion: The appeal is dismissed; the order of the Commissioner of Income Tax (Appeals) confirming the disallowance is upheld.

Addition on estimated gross profit basis - rejection of books of account u/s 145(3) - accounting treatment of service charges as trust/agency receipts - treatment of complimentary expenses by reduction from closing stock - deemed dividend under section 2(22)(e)

Addition on estimated gross profit basis - rejection of books of account u/s 145(3) - accounting treatment of service charges as trust/agency receipts - treatment of complimentary expenses by reduction from closing stock - Whether the addition made by the AO by estimating gross profit and the rejection of books of account could be sustained and whether alleged non-accounting of service charges and complimentary expenses justified the addition. - HELD THAT: - The Tribunal upheld the reasoned findings of the CIT(A) deleting the addition. The AO's comparison with certain other hotels and estimation of gross profit at 28% was not accepted in view of contemporaneous material showing significant renovation and shutdown of rooms and facilities (rooms, spa, pool, restaurant) which materially reduced room and F&B revenue and occupancy for the year. The assessee furnished explanations and documentary details: particulars of complimentary expenses showing items and beneficiaries, ledger details and proofs concerning service charges and their disbursement, internal audit fee ledger and explanations, and production of books in digital form with account explanations. Service charges collected were held to be received and held in trust and disbursed to employees (accounted through a liability/service charge payable account) and thus their exclusion from revenue did not result in unexplained personal gains. Complimentary supplies were held to be business expenses appropriately reflected by reduction in inventory/closing stock and did not alter profit computation materially whether charged through P&L or by reducing closing stock. For these reasons the Tribunal declined to interfere with the CIT(A)'s conclusion that the AO's rejection of books u/s 145(3) and the consequential addition were not justified. [Paras 6, 8, 11, 16, 17]

Deletion of the addition on account of estimated gross profit and rejection of books of account affirmed; AO's findings on service charges and complimentary expenses rejected.

Deemed dividend under section 2(22)(e) - Whether advances received by the assessee from fellow companies could be taxed as deemed dividend under section 2(22)(e). - HELD THAT: - The Tribunal affirmed the CIT(A)'s deletion of the protective addition under section 2(22)(e). The advances were received from companies in which the assessee was not a registered shareholder; the assessee's holding company (UBSL) and other entities were shown in the shareholding pattern, and the assessee itself did not hold shares in the payor companies. The transaction was evidenced as an advance for sale of shares, the transfers required third party approval which was not obtained and the amounts were subsequently refunded. On these facts the deeming provision did not apply to the assessee. The Tribunal also noted precedent authority to the effect that a person who is not a shareholder of the payer cannot be covered within the definition in section 2(22)(e). [Paras 25, 26, 27, 28]

Protective addition under section 2(22)(e) in the hands of the assessee deleted; order of the CIT(A) affirmed.

Final Conclusion: The revenue appeal is dismissed: the Tribunal affirms the CIT(A)'s deletion of the addition made by estimating gross profit and its rejection of the AO's disallowance arising from alleged defects in accounting for service charges and complimentary expenses, and likewise affirms deletion of the protective addition treating advances as deemed dividend under section 2(22)(e).

Characterisation of expenditure as capital or revenue - Legal and professional fees - capital versus revenue nature - Capital work-in-progress written off - Accrual accounting and year of deduction - Allowability of expenditure under section 37(1)

Capital work-in-progress written off - Accrual accounting and year of deduction - Allowability of expenditure under section 37(1) - Whether capital work-in-progress written off in the books during the year under appeal is allowable in A.Y. 2012-13 or pertains to A.Y. 2011-12 and is not deductible in the relevant year. - HELD THAT: - The authorities below found that the amount described as capital work-in-progress written off related to A.Y. 2011-12 and, because the assessee follows accrual accounting, should have been debited to the profit and loss account of that earlier year. The Tribunal accepted the Commissioner's conclusion that the expenditure did not pertain to the relevant year (A.Y. 2012-13) and therefore could not be allowed in that year under the provision governing allowability of business expenditure. The Tribunal did not find any material to contrary effect and upheld the impugned disallowance. [Paras 6, 7]

Ground relating to disallowance of capital WIP written off dismissed; expenditure held to pertain to A.Y. 2011-12 and not allowable in A.Y. 2012-13.

Characterisation of expenditure as capital or revenue - Legal and professional fees - capital versus revenue nature - Allowability of expenditure under section 37(1) - Whether the large legal and professional fees claimed as revenue expenditure are in fact capital in nature and therefore not allowable. - HELD THAT: - The Commissioner analysed the legal tests distinguishing capital and revenue expenditure, adopting principles (as noted from Pearless Securities and relevant precedents) that expenditure conferring an enduring benefit or acquired for long-term expansion is capital in nature. Having regard to the assessee's own submissions that it was in a nascent stage and had incurred the fees to obtain expert services aimed at augmenting scale of operations and long term revenue generation, the Commissioner treated the payments as capital. The Tribunal found no reason to interfere with that conclusion, observing that the finding that the outlay was for obtaining an enduring advantage and not an ordinary recurring business expense was neither perverse nor illegal, and therefore affirmed the disallowance. [Paras 8, 9, 10, 11]

Ground relating to disallowance of legal and professional fees dismissed; expenditure held to be capital and not allowable as revenue expenditure.

Final Conclusion: The Tribunal dismissed the appeal in its entirety, upholding the disallowances: (i) capital WIP written off held to pertain to A.Y. 2011-12 and not allowable in A.Y. 2012-13, and (ii) legal and professional fees held to be capital in nature and disallowed.

Provisional release under Section 110A - prima facie classification - provisional assessment in classification disputes - discretion to impose fine in lieu of confiscation for prohibited goods - prompt exercise of discretion in respect of perishable goods - Circular No.22/2004-Cus. - provisional clearance where import is not totally prohibited

Provisional release under Section 110A - prima facie classification - provisional assessment in classification disputes - prompt exercise of discretion in respect of perishable goods - Circular No.22/2004-Cus. - provisional clearance where import is not totally prohibited - Petitioners permitted to apply for provisional release and the adjudicating authority must dispose such applications after hearing and a prima facie classification within a specified short period; representations by the petitioner to be disposed by R4 within two weeks. - HELD THAT: - The Court, following its earlier reasoning in the batch order of 13.06.2022, directed that petitioners may make applications for provisional release under Section 110A and that such applications shall be disposed of by the adjudicating authority after hearing the petitioners and simultaneous with a prima facie determination of the classification of the commodity. The Court emphasised the need for prompt exercise of discretion, particularly for perishable consignments, noting that in classification disputes provisional assessment/clearance is generally appropriate unless import is totally prohibited or prosecution is contemplated. The directions give effect to the spirit of Circular No.22/2004-Cus. permitting provisional clearance subject to adequate security to protect revenue and where necessary subject to subsequent testing and final adjudication. In the present matters the Court extended the earlier batch direction and ordered that the petitioner's representations dated 09.05.2022 be disposed by R4 within two weeks from receipt of a copy of the order after hearing the petitioner. [Paras 15, 16, 17, 19, 20]

Applications for provisional release under Section 110A are permitted; the adjudicating authority shall, after hearing and making a prima facie classification, dispose the applications within two weeks, and R4 shall dispose the petitioner's representations within two weeks from receipt of this order.

Final Conclusion: Writ petitions disposed by extending the directions in the earlier batch order: petitioners may seek provisional release under Section 110A and the adjudicating authority (and R4 in particular) must promptly hear and decide such applications/representations with a prima facie classification within two weeks; no costs.

Transaction value under Section 14 of the Customs Act, 1962 - rejection of declared value under Rule 12 of the Customs Valuation Rules, 2007 - redetermination of value under Rule 9 of the Customs Valuation Rules, 2007 - onus on Revenue to prove undervaluation by contemporaneous/import data - confiscation and redemption fine under Section 111 and Section 125 of the Customs Act, 1962 - penalty under Section 114A of the Customs Act, 1962

Transaction value under Section 14 of the Customs Act, 1962 - rejection of declared value under Rule 12 of the Customs Valuation Rules, 2007 - onus on Revenue to prove undervaluation by contemporaneous/import data - Acceptability of the declared transaction value of the yacht (Euro 1,400,000) and validity of its rejection and redetermination by the adjudicating authority. - HELD THAT: - The Tribunal found that the invoice price of Euro 1,400,000 was the price actually paid through banking channels, that the buyer and seller were not related, and that the Bill of Entry and supporting documents disclosed the engine specification (2xMAN 1360mHP) corresponding to the higher "Evolution" variant. Mere omission of the word "Evolution" was held inconsequential when the technical specification identifying the higher variant was declared. The adjudicating authority's rejection relied principally on an inference and on the existence of an initial higher price list without adducing contemporaneous import data or other material establishing payment over and above the invoice price. The Tribunal applied the settled principle that transaction value under Section 14 is to be accepted unless the Revenue adduces cogent material (for example, contemporaneous imports at higher prices or evidence of extra remittance) to justify rejection under Rule 12; mere suspicion, assumptions or reliance on initial quoted lists do not suffice. On the facts, the Tribunal concluded that Revenue failed to discharge the burden to show undervaluation and that the conditions for invoking Rule 12 and re-determination under Rule 9 were not made out. [Paras 6, 9, 11, 13]

Declared transaction value of the yacht accepted; rejection and re-determination in the impugned order set aside; consequent confiscation and penalties in respect of the yacht quashed.

Redetermination of value under Rule 9 of the Customs Valuation Rules, 2007 - confiscation and redemption fine under Section 111 and Section 125 of the Customs Act, 1962 - penalty under Section 114A of the Customs Act, 1962 - Whether the value of the V-SAT connection with dish antenna could be re-determined, and the validity of confiscation, redemption fine and penalties imposed in respect of that item. - HELD THAT: - The Tribunal observed that the adjudicating authority recorded that the V-SAT (Euro 20,700) was not shown in the commercial invoice or Bill of Entry and that contradictory statements were given; the importer failed to produce documentary evidence showing domestic procurement as later alleged. On these facts the Tribunal held determination of the V-SAT's value under Rule 9 and demand of differential duty with interest justified, and that confiscation of the V-SAT under the relevant provision was sustainable. However, the Tribunal found the combined redemption fine imposed in the impugned order to be unsegregated and excessive relative to the ascertained value of the V-SAT; accordingly the Tribunal confined the redemption fine for the V-SAT to 10% of its assessable value. Further, having held that undervaluation/willful suppression was not established for the yacht, the Tribunal concluded that imposition of penalty under Section 114A for the V-SAT could not be sustained in the circumstances. [Paras 14, 15, 16]

Demand of duty and interest in respect of the V-SAT upheld and confiscation sustained; redemption fine limited to 10% of the V-SAT's assessed value (Rs.1,47,812/- as ordered); penalties and personal penalties relating to the V-SAT not sustained.

Final Conclusion: Appeal partly allowed. The Tribunal accepted the declared transaction value of the yacht and set aside the re-determination, confiscation and penalties relating to the yacht; it upheld the re-determination, duty demand, confiscation and adjusted redemption fine (limited to 10% of the V-SAT's assessed value) in respect of the V-SAT, while setting aside related penalties and personal penalties not supported by specific findings.

Family settlement - specific performance - prima facie finding - estoppel by conduct - without prejudice correspondence - Section 430 of the Companies Act, 2013 - jurisdiction of NCLT/NCLAT - interim injunction - implementation by formal documentation not a condition precedent

Family settlement - implementation by formal documentation not a condition precedent - without prejudice correspondence - estoppel by conduct - The Minutes of Discussion dated 14th June 2019 is, in prima facie view, a valid, binding and enforceable family settlement between the three family groups and not rendered non-binding by the contemplated formal documents or the use of the expression 'without prejudice'; the defendants are estopped by their conduct from denying its enforceability. - HELD THAT: - The Court examined the language of the Minutes of Discussion, especially Clauses 6-8 and the concluding paragraph recording the understanding among the Gujarat, Maharashtra and Andhra Pradesh/Telangana families, and observed that Clause 8 treats the Minutes as a "full and final settlement". The concluding words stating that the understanding is "without prejudice to the other rights and remedies available to the parties" were interpreted in their plain meaning and not as negating contractual efficacy. The Court relied on the principle that a provisional or partly formalised agreement need not be subject to a condition precedent of a later formal document unless expressly made "subject to contract"; authorities from English law and Indian jurisprudence were noted. The post-execution correspondence and steps taken by the parties (including share buy-back, exchange of draft formal agreements, payments and other actions) evidenced implementation and conduct in furtherance of the Minutes, giving rise to estoppel against the defendants to deny its validity. The Court rejected contentions that admissions in NCLT affidavits or later conduct (including proposed sale of property) necessarily amounted to repudiation, holding the admissible context showed continuation of the settlement process and that certain actions were consistent with the Minutes. The Court thus reached a prima facie conclusion that the Minutes constitutes a family settlement enforceable between the signatory family representatives. [Paras 92, 93, 94, 95, 96]

Prima facie, the Minutes of Discussion is a binding family settlement and the defendants are estopped by their conduct from denying its enforceability.

Section 430 of the Companies Act, 2013 - jurisdiction of NCLT/NCLAT - specific performance - Section 430 of the Companies Act, 2013 does not oust the civil court's jurisdiction to entertain a suit for specific performance of the Minutes of Discussion where the NCLT/NCLAT is not shown to be empowered under the Act to grant specific performance. - HELD THAT: - The Court analysed Section 430 and the submissions on NCLT/NCLAT powers. It noted that the bar in Section 430 applies only if the Tribunal is empowered to determine the subject matter. The defendants did not identify any provision in the Companies Act that confers power on the NCLT/NCLAT to grant specific performance of such an agreement; while Sections 420/424 were relied upon as broad procedural provisions, the Court referred to the Supreme Court's exposition in Embassy Property Developments that the NCLT's powers are scattered through the Act and that procedural sections do not by themselves supply a substantive power to grant specific performance. Subsequent authority (including decisions that post-date Section 430) was held to support that NCLT/NCLAT do not have jurisdiction to decide enforcement of contractual obligations of this nature. The Court therefore concluded, on a prima facie basis, that the Companies Act does not furnish the NCLT with jurisdiction to grant the final relief of specific performance and consequently Section 430 does not operate to bar the civil suit or interim relief in aid of that suit. [Paras 104, 105, 106, 107, 108]

On a prima facie view, Section 430 does not bar the civil court from entertaining the suit for specific performance because the NCLT/NCLAT is not shown to have power under the Companies Act to grant specific performance.

Interim injunction - prima facie finding - implementation by formal documentation not a condition precedent - Interim relief should be granted to restrain Defendant Nos. 1 and 2 from acting contrary to or defeating the Applicants' rights under the Minutes of Discussion, pending disposal of the suit. - HELD THAT: - Applying the prima facie conclusion that the Minutes is a binding family settlement and having found no bar under Section 430 to the civil court granting interim relief in aid of an action for specific performance, the Court considered the balance of convenience and absence of demonstrated prejudice from any alleged delay. The Court noted steps already taken in implementation of the Minutes and that defendants had sought fresh valuation and buy-out steps before the NCLT which, if permitted, would defeat the Plaintiffs' asserted rights under the Minutes. Weighing these factors and the prima facie strength of the Plaintiffs' case, the Court granted a temporary injunction restraining Defendant Nos. 1 and 2 (and persons acting on their behalf) from acting in any manner contrary to the Minutes of Discussion or defeating the Applicants' rights thereunder or the reliefs claimed in the suit. The order was made without costs. [Paras 109, 110, 111, 112]

Temporary injunction granted restraining Defendant Nos. 1 and 2 from acting contrary to or defeating the Applicants' rights under the Minutes of Discussion; Interim Application disposed accordingly.

Final Conclusion: The Court, on a prima facie assessment, held the Minutes of Discussion to be a binding family settlement enforceable by specific performance; found no bar under Section 430 of the Companies Act, 2013 to the civil court entertaining interim relief in aid of such suit; and granted a temporary injunction restraining Defendant Nos. 1 and 2 (and persons acting on their behalf) from acting in any manner contrary to or defeating the Applicants' rights under the Minutes of Discussion pending disposal of the suit.

Recusal - transfer of proceedings by a Bench - functions of the President under Rule 16(d) of the NCLT Rules, 2016 - administrative assignment of cases - nullity of orders passed without jurisdiction

Recusal - transfer of proceedings by a Bench - nullity of orders passed without jurisdiction - Validity of the Special Bench order dated 02.09.2021 transferring CP-54/ND/2021 and CP-144/ND/2016 to Chandigarh Bench when both Members recorded that they had recused themselves - HELD THAT: - The Bench recorded that both its Members had recused themselves from taking up the matters but nevertheless directed transfer of the Company Petitions to the Chandigarh Bench. When members have recused themselves from dealing with the matters, the proper course is to place the matters before the Acting President/President for administrative assignment under the rules and not for the recusing Bench itself to order transfer. While a Bench may, in an appropriate case, pass judicial orders transferring matters, the facts here - both Members having recused - made the impugned transfer improper. Consequently the transfer order cannot be sustained and is set aside. The Appeals were accordingly partly allowed to the extent of quashing the transfer order and directing placement of the CPs before the President for appropriate exercise of administrative jurisdiction. [Paras 7, 9, 10, 14]

The order dated 02.09.2021 transferring the Company Petitions to the Chandigarh Bench is set aside and the matters are to be placed before the President of the NCLT for appropriate action.

Functions of the President under Rule 16(d) of the NCLT Rules, 2016 - administrative assignment of cases - Whether the President (or Acting President on administrative side) can exercise jurisdiction under Rule 16(d) notwithstanding that the Acting President had judicially recused himself earlier - HELD THAT: - The power conferred upon the President by Rule 16(d) to transfer cases between Benches is a statutory/administrative power which must be exercised by the President even if the President or Acting President had recused himself on the judicial side. The Acting President who recused in the judicial order dated 02.09.2021 is not the President as on date; in any event the statutory power of assignment is to be exercised by the President on administrative considerations. The President is therefore entitled to consider the questions of posting or transfer and to take into account any subsequent orders of NCLT or NCLAT bearing on the petitions. [Paras 11, 12, 14]

The President is to exercise jurisdiction under Rule 16(d) to determine assignment/transfer of the CPs; the President may consider subsequent orders while passing appropriate orders.

Final Conclusion: The Appeals are partly allowed: the Special Bench order dated 02.09.2021 transferring CP-54/ND/2021 and CP-144/ND/2016 to the Chandigarh Bench is set aside and the matters are remitted to the President of the NCLT to exercise jurisdiction under Rule 16(d) and pass appropriate orders; no opinion is expressed on merits. The interim stay previously granted remains in force until further orders.

Settlement under the Insolvency and Bankruptcy Code - one time settlement (OTS) - Section 7 admission - debt and default - Section 12A settlement procedure - Committee of Creditors' commercial wisdom - maximisation of assets versus recovery of financial dues - constitution and decision making of the Committee of Creditors

Section 7 admission - debt and default - Validity of the Adjudicating Authority's admission of the Section 7 application - HELD THAT: - The Tribunal found that the Corporate Debtor did not dispute its financial liability and that the Adjudicating Authority had recorded debt and default in admitting the Section 7 application. The Appellate Tribunal noted the admitted facts of the earlier compromise, the unpaid balance, subsequent default and the bank's steps leading to the Section 7 filing. In view of those findings and the absence of successful challenge to the finding of debt and default before this Tribunal, there was no jurisdictional or legal error in the impugned order admitting the Section 7 application. The Tribunal therefore declined to interfere with the Adjudicating Authority's admission order. [Paras 12]

The order admitting the Section 7 application stands; no interference with the Adjudicating Authority's admission.

One time settlement (OTS) - settlement under the Insolvency and Bankruptcy Code - Committee of Creditors' commercial wisdom - Whether the Financial Creditor can be directed to accept the Appellant's OTS or whether courts can compel grant of OTS - HELD THAT: - The Tribunal applied the settled principle that, while settlements are to be encouraged under the IBC to revive corporate debtors, judicial authorities cannot direct a financial creditor to grant the benefit of an OTS. The decision whether to accept an OTS is entrusted to the commercial judgment of the financial creditor/CoC and is subject to eligibility and prudential considerations. The Tribunal relied on the Supreme Court's pronouncements that courts cannot act as courts of equity to compel acceptance of OTS and that the bank's refusal to grant OTS is not ordinarily justiciable in IBC proceedings. [Paras 10, 11, 12]

No direction could be issued to the Financial Creditor to accept the OTS; the Appellant has no inherent right to compel acceptance of its OTS.

Section 12A settlement procedure - constitution and decision making of the Committee of Creditors - maximisation of assets versus recovery of financial dues - Remedial course directed: opportunity for fresh Section 12A application and directions to the CoC on consideration of the settlement proposal - HELD THAT: - Although the Tribunal declined to order acceptance of the OTS, it afforded the Appellant a procedural opportunity to seek settlement under the statutory mechanism in Section 12A and Regulation 30A. The Tribunal directed the Appellant to file a fresh Section 12A application proposing an amount exceeding the previously offered sum, to be placed before the CoC. It clarified that the CoC's freedom to accept or reject a proposal (including the 90% voting threshold for approval) remains unfettered, but advised relevant factors that the CoC should consider-including the bank's prior invitation to ARCs for the said amount, prospects of realisation under resolution or liquidation and the dual objectives of asset maximisation and recovery of dues. The Tribunal further restrained the CoC from putting any Resolution Plan to vote until it decides on the Section 12A proposal, and prescribed timelines for filing and consideration. [Paras 13, 14, 15]

Appellant granted leave to file a fresh Section 12A application (for an amount exceeding the earlier offer); CoC to consider it within prescribed timelines and having regard to stated factors; CoC shall not put Resolution Plans to vote until decision on the Section 12A proposal.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's admission of the Section 7 application, held that courts cannot direct a financial creditor to accept an OTS, and granted the Appellant a limited procedural opportunity to seek settlement under Section 12A by filing a fresh proposal above the prior offer, directing the CoC to consider it within specified timelines and to refrain from voting on Resolution Plans until that decision is taken.

Financial debt - commercial effect of a borrowing - acknowledgement of debt - application under Section 7 of the Insolvency and Bankruptcy Code - contingent contract and enforcement - deal fee contention - maintainability of insolvency application

Financial debt - commercial effect of a borrowing - acknowledgement of debt - application under Section 7 of the Insolvency and Bankruptcy Code - Whether the amount of Rs.3.5 crore disbursed by the Financial Creditor to the Corporate Debtor between 02.12.2016 and 15.12.2016 is a financial debt within the meaning of the I&B Code or an equity investment in the US company. - HELD THAT: - The Tribunal examined the nature and routing of the Rs.3.5 crore payments, agreements and contemporaneous communications. The amount was credited to the Corporate Debtor's IDBI account and used to meet the earnest money for the auction; the USD 1.5 million sent directly to the US company was treated separately as share application money. The Corporate Debtor executed an agreement acknowledging obligation to refund the Rs.3.5 crore and provided an undertaking including handing over an IDBI cheque for the amount; emails from the Corporate Debtor's directors described the sum as a 'Short Term Loan' and accepted repayment with interest (12%). The audited balance sheet and auditor's note for 2017-18 recorded the amount as unsecured/short-term borrowing. Applying the definition of financial debt, including transactions having the commercial effect of a borrowing, the Tribunal held that the totality of documentary and contemporaneous admissions demonstrate the Rs.3.5 crore was a financial debt and that the Section 7 petition was maintainable. [Paras 13, 16, 18]

The Rs.3.5 crore is a financial debt and the Section 7 application was maintainable.

Contingent contract and enforcement - application under Section 7 of the Insolvency and Bankruptcy Code - acknowledgement of debt - Whether the Corporate Debtor's liability to repay Rs.3.5 crore arose only upon receipt of USD 0.80 million by the Corporate Debtor under the agreement dated 14.07.2018 and thus was a contingent contract not enforceable by the Financial Creditor. - HELD THAT: - The 14.07.2018 agreement was between the US company, the Appellant and the investor and did not include the Financial Creditor as a party. Clause 5 contemplated that Warm Forgings would pay Rs.3.5 crore upon receipt of USD 0.80 million from the investor, but that agreement between third parties cannot dilute or extinguish an existing debt owed to the Financial Creditor. The Tribunal held that the 14.07.2018 arrangement cannot be relied upon to defeat the admitted debt; Section 33 of the Contract Act dealing with enforcement of contingent contracts is inapplicable to defeat the Financial Creditor's independent right to enforce the acknowledged liability. [Paras 21, 22]

The contingent arrangement in the 14.07.2018 agreement does not prevent enforcement of the Corporate Debtor's liability to the Financial Creditor.

Deal fee contention - application under Section 7 of the Insolvency and Bankruptcy Code - Whether the Rs.3.5 crore was a 'deal fee' payable to the Appellant and thus not refundable. - HELD THAT: - The Appellant first advanced the 'deal fee' contention on appeal; no such plea was taken before the Adjudicating Authority. The Reply filed by the Corporate Debtor below did not assert that the sum was a payable deal fee to the Appellant. There is no material in the record to support that the Financial Creditor agreed to pay any deal fee to the Appellant. The Tribunal therefore rejected the contention as a belated, unsupported claim. [Paras 23]

The contention that the amount was a non-refundable deal fee to the Appellant is untenable and rejected.

Final Conclusion: The Adjudicating Authority correctly admitted the Section 7 application: the Rs.3.5 crore was held to be a financial debt evidenced by acknowledgements and accounting records; third party contingent arrangements did not negate the admitted liability; and the 'deal fee' argument, raised only on appeal, was rejected. The appeal is dismissed and interim relief discharged.

Restoration of proceedings - Sufficient cause - Non-prosecution / dismissal for non-appearance - Principles of natural justice - Use of insolvency process as a money-recovery forum

Restoration of proceedings - Sufficient cause - Non-prosecution / dismissal for non-appearance - Principles of natural justice - Whether the Restoration Application (IBC/3/CHE/2021) filed to restore IBA/358/2020 disclosed sufficient cause to set aside the dismissal for non-prosecution and to permit restoration. - HELD THAT: - The Tribunal held that restoration is discretionary and not a matter of right and that sufficient cause (synonymous with good cause) must be demonstrated by the applicant on the facts pleaded. Mere absence of counsel because he was engaged elsewhere or technical/connectivity issues does not automatically constitute sufficient cause. The Tribunal examined the chronology: the petition was dismissed on 18.02.2021 for non-appearance; a restoration application was filed on 07.04.2021; subsequent hearings saw failure to address arguments, leave to file a better affidavit, adjournments at the applicant's request and persistent defects in the application; and on 02.11.2021 the applicant again failed to advance facts sufficiently. In those circumstances the Tribunal found bonafides lacking and that the applicant had not made out an acceptable explanation for repeated non-appearances and adjournments. The Tribunal also noted that restoration should not be granted where the record shows inaction or want of bona fides imputable to the applicant, and that time and judicial resources are precious such that repeated default and unrectified defects do not merit restoration. The Tribunal further observed the respondent's contention that the insolvency process was being used as a money-recovery forum, which was a relevant consideration when assessing the overall conduct and bona fides of the applicant. Applying these principles to the facts, the Tribunal concluded that the Restoration Application did not disclose sufficient cause to allow restoration. [Paras 33, 34, 35, 36, 37]

The Restoration Application was dismissed for want of sufficient cause; the appeal against the impugned order is devoid of merit.

Final Conclusion: The Company Appeal (AT) (CH) (INS) No. 33 of 2022 is dismissed for failure to demonstrate sufficient cause for restoration; no costs.

Maintainability of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - limitation - exclusion of period of embargo and condonation under the Limitation Act, 1963 - effect of Notification under the Tea Act, 1953 on institution of proceedings against a tea undertaking - requirement of prior consent of Central Government under Chapter IIIA of the Tea Act, 1953 for proceedings against taken-over tea undertakings - operation of Section 5 and Section 15(1) of the Limitation Act in context of IBC petitions

Limitation - exclusion of period of embargo and condonation under the Limitation Act, 1963 - operation of Section 5 and Section 15(1) of the Limitation Act in context of IBC petitions - effect of Notification under the Tea Act, 1953 on institution of proceedings against a tea undertaking - Whether the Operational Creditor was entitled to exclusion of the period alleged to be an embargo (from issuance of the Notification until the Supreme Court decision) or condonation of delay in filing CP(IB) No. 2185/KB/2019. - HELD THAT: - The Adjudicating Authority examined the Notification dated 28 January 2016 placing the tea estate under control of the Tea Board and the relevant provisions of Chapter IIIA of the Tea Act, 1953, including sections which require prior permission of the Central Government for suits or proceedings against a taken-over tea undertaking. It observed that those provisions would have permitted the Operational Creditor to institute proceedings upon obtaining prior consent of the Central Government, and that the notification affected the management of the tea estate but did not mean the Corporate Debtor as a juristic entity was not under its directors' control. On this basis the Authority found that the Operational Creditor had the opportunity to proceed against the Corporate Debtor and was not prevented from initiating action. Applying these conclusions to the Limitation Act contentions, the Authority held that the Operational Creditor failed to demonstrate "sufficient cause" under Section 5 for condonation nor entitlement to exclusion under Section 15(1), and therefore the claimed embargo period could not be excluded from computation of limitation for the IBC petition. The interlocutory application for exclusion/condonation was accordingly rejected. [Paras 34, 36, 38, 39, 40]

I.A. (I.B.) 17/KB/2022 for exclusion of time / condonation was rejected; the Operational Creditor is not entitled to exclude the alleged embargo period or condone the delay.

Maintainability of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - limitation - effect of date of default on time-bar - Whether CP(IB) No. 2185/KB/2019 under Section 9 of the IBC was maintainable or was barred by limitation. - HELD THAT: - Having rejected the application for exclusion/condonation of delay, the Authority considered the date of default as admitted (31 December 2015) and concluded that the main petition was filed beyond the prescribed limitation period. The Authority therefore held that the petition under Section 9 was time barred. The dismissal was of the petition on limitation grounds, while preserving the Operational Creditor's right to pursue remedies under any other law. [Paras 40, 41]

CP(IB) No. 2185/KB/2019 is dismissed as barred by limitation.

Final Conclusion: The application for exclusion/condonation of delay was rejected; the Section 9 petition was held time barred and dismissed, without prejudice to the Operational Creditor pursuing other remedies under law.

Existence of operational debt - default under Insolvency and Bankruptcy Code - admission of Section 9 application - unequivocal admission of liability - genuineness of dispute / pre-existing dispute - effect of withdrawal of suit on operant dispute - limitation defence - moratorium - appointment of Interim Resolution Professional - public announcement and submission of claims

Existence of operational debt - default under Insolvency and Bankruptcy Code - unequivocal admission of liability - Operational Creditor established a valid operational debt and the Corporate Debtor committed default, warranting admission of the Section 9 petition. - HELD THAT: - On the materials filed - purchase order, invoices, proof of delivery, export documentation, e-mail correspondence and the minutes of meeting - the Tribunal found clear and repeated acknowledgements by the Corporate Debtor of amounts due and payable to the Operational Creditor. The Tribunal recorded that the Corporate Debtor had not contested delivery or quality of goods and had on multiple occasions admitted liability. In view of these admissions and the documentary record, the Tribunal concluded that a valid claim exists and that default has occurred, and that the defences raised were untenable and not bona fide. [Paras 18, 20]

The Section 9 petition is admitted on the ground that a valid operational debt exists and the Corporate Debtor is in default.

Genuineness of dispute / pre-existing dispute - effect of withdrawal of suit on operant dispute - limitation defence - The pleaded dispute and limitation defence by the Corporate Debtor are rejected as not genuine; the voluntary withdrawal of the suit filed by the Corporate Debtor removed any subsisting basis for withholding payment. - HELD THAT: - The Corporate Debtor relied on an alleged dispute and on contingent payment from its customer and also pleaded limitation. The Tribunal examined the reply to the demand notice, the correspondence, the minutes of meeting and the order of the Calcutta High Court permitting withdrawal of C.S. No. 2 of 2017. The Tribunal held that the Corporate Debtor had not demonstrated a pre-existing bona fide dispute concerning the debt's existence or its quantum and that the withdrawal of its suit undermined the asserted defence of contingency on receipt from a third party. The Tribunal further observed that repeated acknowledgements and the timing of the petition fell within the limitation period, rendering the limitation plea unsustainable. [Paras 9, 10, 17, 20]

The plea of dispute and the limitation defence are rejected; they do not preclude admission of the Section 9 petition.

Admission of Section 9 application - moratorium - appointment of Interim Resolution Professional - public announcement and submission of claims - Consequential reliefs under the Code are granted: the Section 9 petition is admitted, moratorium is declared, a public announcement is directed and an Interim Resolution Professional is appointed. - HELD THAT: - Having found that the Operational Creditor possessed a valid claim and that the Corporate Debtor was in default, the Tribunal proceeded to pass the consequential orders mandated by the Code. The Tribunal declared moratorium in terms of the relevant provisions, directed immediate public announcement and calling for claims, appointed an Interim Resolution Professional (for whom written consent and Form-2 were directed), and prescribed timelines and interim directions including deposit towards IRP preliminary costs and convening of the Committee of Creditors. [Paras 20, 21]

The petition is admitted; moratorium is declared; public announcement and claim submission are directed; and an Interim Resolution Professional is appointed with ancillary directions.

Final Conclusion: The Tribunal admitted the Corporate Insolvency Resolution Process application filed under Section 9, holding that the Operational Creditor had established an undisputed operational debt and default; the Corporate Debtor's dispute and limitation defences were rejected (the withdrawal of its suit being material); a moratorium was declared, a public announcement directed, and an Interim Resolution Professional appointed with further procedural directions.

Initiation of insolvency resolution process against personal guarantor - interim moratorium under section 96(1)(a) of the Insolvency and Bankruptcy Code, 2016 - appointment of Resolution Professional under section 97 of the Insolvency and Bankruptcy Code, 2016 - powers and duties of the Resolution Professional under section 99 of the Insolvency and Bankruptcy Code, 2016 - demand notice in Form B under rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 - consent in Form A and authorization in Form B for appointment of Resolution Professional

Initiation of insolvency resolution process against personal guarantor - interim moratorium under section 96(1)(a) of the Insolvency and Bankruptcy Code, 2016 - demand notice in Form B under rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 - Application under section 95(1) of IBC, 2016 read with rule 7(2) of the IB Rules, 2019 and regulation 4(2) of the IB Regulations, 2019 admitted for initiation of the insolvency resolution process against the personal guarantor and interim moratorium declared to have commenced on filing. - HELD THAT: - The Tribunal considered the petition filed under the provisions governing insolvency resolution of personal guarantors to corporate debtors and the demand notice in Form B issued under rule 7(1) of the IB Rules, 2019. Upon filing of the Application by the financial creditor, the interim moratorium in terms of section 96(1)(a) of the IBC, 2016 was held to commence. The factual averments regarding grant of credit facilities, execution of the personal guarantee and classification of the loan account as NPA were recorded as the basis for initiation of the IR process against the respondent-personal guarantor. [Paras 2, 6, 8]

Insolvency resolution process against the personal guarantor initiated and interim moratorium declared to have commenced on filing.

Appointment of Resolution Professional under section 97 of the Insolvency and Bankruptcy Code, 2016 - consent in Form A and authorization in Form B for appointment of Resolution Professional - powers and duties of the Resolution Professional under section 99 of the Insolvency and Bankruptcy Code, 2016 - Appointment of the nominated Insolvency Professional as Resolution Professional and directions as to his duties and filings. - HELD THAT: - The Tribunal examined the financial creditor's proposal and the written consent (Form A) and authorization (Form B) submitted by the nominated insolvency professional. Exercising the power under section 97, the Tribunal appointed Mr. Mahesh Chand Gupta as Resolution Professional. The appointee was directed to file the statutory declaration within seven days confirming his eligibility and to exercise the powers conferred under section 99 of the IBC, 2016, including making recommendations for acceptance or rejection of the application within the time prescribed and furnishing the report under sub-section (7) of section 99 to the Applicant and to the Adjudicating Authority. [Paras 9, 10]

Mr. Mahesh Chand Gupta appointed as Resolution Professional with directions to file declaration, exercise section 99 powers, and submit the mandated report.

Service of orders and documents on the Resolution Professional - listing and issuance of certified copy - Directions regarding service of the order and documents on the Resolution Professional, listing of the matter and issuance of certified copy. - HELD THAT: - The Tribunal directed the Applicant's counsel to serve a copy of the Order, the Application and accompanying documents on the appointed Resolution Professional by all available modes and to file proof of such service. The matter was listed for further hearing on the specified date, and the Registry was directed to email copies of the order to all parties and their counsel. Provision for issuance of certified copy on compliance with formalities was also ordered. [Paras 11, 12, 13, 14]

Applicant directed to serve the RP and file proof; matter listed; Registry to circulate order and issue certified copy on formalities.

Final Conclusion: The Tribunal admitted the application for initiation of the insolvency resolution process against the personal guarantor, declared the interim moratorium to have commenced on filing, appointed the nominated Insolvency Professional as Resolution Professional with specified statutory directions, and directed service, listing and administrative steps for further proceedings.

Admission of application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 - initiation of corporate insolvency resolution process against personal guarantors - jurisdiction of Adjudicating Authority under Section 60 vis-a -vis. DRT jurisdiction under Section 179 - requirements under Section 95(4)-(6) including demand notice, evidence of default and form/fee compliance - declaration of moratorium on debts upon admission under Section 100-101 - duties of Resolution Professional under Sections 99, 102-106, 208 and public notice/claims process

Admission of application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 - initiation of corporate insolvency resolution process against personal guarantors - requirements under Section 95(4)-(6) including demand notice, evidence of default and form/fee compliance - Applications filed by State Bank of India under Section 95(1) against the personal guarantors are admitted and CIRP is initiated against them. - HELD THAT: - On consideration of the petition averments, the respondents' counter and the report of the Resolution Professional, the Tribunal found that the essential requisites under Section 95(4)-(6) were met as recorded in the RP's report. The RP certified the debt owed by the corporate debtor to the applicant, recorded service and reply to the demand notice, and confirmed production of evidence of outstanding balance (bankers' book certificate) and payment of the prescribed fee with Form C. The personal guarantors did not demonstrate repayment within the statutory period nor produce evidence negating default. Although the respondents disputed aspects of the demand notice and amounts claimed, the Tribunal noted that default by the corporate debtor was not disputed and, on the material before it, concluded the petitions were fit for admission and proceeded to initiate CIRP against the guarantors. [Paras 18, 20, 21, 23]

Admitted under Section 100; CIRP initiated against the personal guarantors.

Jurisdiction of Adjudicating Authority under Section 60 vis-a -vis. DRT jurisdiction under Section 179 - NCLT is the adjudicating authority for insolvency resolution and liquidation of corporate persons including personal guarantors to corporate debtors, rendering Section 179 (DRT jurisdiction) inapplicable when Section 60 is attracted. - HELD THAT: - The Tribunal explained that the insolvency regime for personal guarantors to corporate debtors is governed by Section 60 which designates the NCLT as the Adjudicating Authority for corporate persons. Where Section 60 applies, the alternative jurisdiction conferred by Section 179 upon DRTs is displaced. This jurisdictional position was applied in deciding that these petitions fall within the NCLT's authority. [Paras 22]

Proceedings are maintainable before the NCLT; DRT jurisdiction inapplicable where Section 60 is attracted.

Declaration of moratorium on debts upon admission under Section 100-101 - Moratorium is declared from the date of admission in accordance with Sections 100 and 101 of the Code. - HELD THAT: - Upon admission of the applications, the Tribunal imposed the statutory moratorium which stays pending legal proceedings, prohibits creditors from initiating actions in respect of any debt and restrains the debtor from dealing with assets, subject to the exceptions and duration specified in the Code. The moratorium will operate for the period specified by the Code or until an order on the repayment plan is passed. [Paras 23]

Statutory moratorium declared with effect from the date of admission.

Duties of Resolution Professional under Sections 99, 102-106, 208 and public notice/claims process - The Resolution Professional is directed to perform statutory duties including making recommendations under Section 99, publishing public notice, inviting claims, preparing list of creditors, and submitting repayment plan within prescribed timelines. - HELD THAT: - Having appointed the RP and accepted his recommendation to admit the applications, the Tribunal directed the RP to publish the public notice on the NCLT website and in newspapers, invite claims within the stipulated period, prepare the list of creditors from the application and claims received, and to oversee preparation and submission of the repayment plan to the Tribunal within the timeframes set out in the Code. The RP must also observe the Code of Conduct in Section 208 and submit periodic reports to the Tribunal. [Paras 25, 26, 28, 30, 31]

RP to carry out statutory functions and follow prescribed timelines and procedures for claims, creditors' meeting and repayment plan.

Final Conclusion: The Tribunal admitted the Section 95(1) applications filed by State Bank of India and initiated CIRP against the five personal guarantors, held that NCLT has jurisdiction to adjudicate such matters (displacing DRT jurisdiction where Section 60 applies), declared the statutory moratorium from the date of admission, and directed the appointed Resolution Professional to comply with the Code's requirements for notice, claims, creditors' process and submission of a repayment plan.

Initiation of Insolvency Resolution Process against a personal guarantor under Section 94 of the IBC - admission of application by Adjudicating Authority under Section 100 of the IBC - interim moratorium and its effect on pending proceedings and asset transfers - role, appointment and duties of the Resolution Professional including public notice and claims process - preparation and submission of a repayment plan and conduct of creditors' meeting

Initiation of Insolvency Resolution Process against a personal guarantor under Section 94 of the IBC - admission of application by Adjudicating Authority under Section 100 of the IBC - Petition under Section 94 filed by the personal guarantor was admitted and the Insolvency Resolution Process initiated. - HELD THAT: - The Tribunal found that the petitioner, a personal guarantor, admitted default in repayment of debts and the Resolution Professional's report recommended admission. The report remained unrebutted by the respondents and was not questioned. On the basis of the admitted default, the RP's recommendation and the prima facie non-collusive nature of the petition, the Adjudicating Authority exercised its power under Section 100 to admit the application and initiate the Insolvency Resolution Process against the personal guarantor. [Paras 5, 8, 9]

Application under Section 94 admitted and Insolvency Resolution Process initiated against the personal guarantor.

Interim moratorium and its effect on pending proceedings and asset transfers - Moratorium was declared from date of admission for the statutory period with attendant stays and prohibitions. - HELD THAT: - Upon admission the Tribunal declared the moratorium effective from the date of admission for the period prescribed under the Code. During the moratorium any pending legal action or proceeding in respect of any debt is stayed; creditors are prohibited from initiating legal proceedings in respect of any debt; and the debtor is restrained from transferring, alienating, encumbering or disposing of assets or legal or beneficial interests, subject to exceptions notified by the Central Government in consultation with financial sector regulators. [Paras 9]

Moratorium declared with statutory stays on proceedings and restrictions on transfer of assets for the prescribed period.

Role, appointment and duties of the Resolution Professional including public notice and claims process - preparation and submission of a repayment plan and conduct of creditors' meeting - The Resolution Professional was appointed and directed to publish notice, invite and compile claims, prepare the list of creditors and facilitate preparation and submission of a repayment plan within prescribed timeframes and to conduct creditors' meeting as required. - HELD THAT: - The Tribunal confirmed the appointment of the named Resolution Professional (who had given consent) and directed him to publish public notice on behalf of the Adjudicating Authority within seven days of uploading the order, invite claims under the statutory procedure and prepare a list of creditors within thirty days from the date of the notice. The debtor, in consultation with the RP, was directed to prepare a repayment plan and the RP to submit the plan with his report within the statutory period following the last date of submission of claims. Directions were also given for the convening and conduct of the creditors' meeting and preparation of the meeting report in accordance with the Code and the RP's code of conduct. [Paras 9]

RP appointed and directed to publish notice, collate claims, prepare creditors' list, oversee preparation and submission of repayment plan and conduct creditors' meeting in accordance with the Code.

Final Conclusion: The Tribunal admitted the petition filed under Section 94 and initiated the Insolvency Resolution Process against the personal guarantor, declared the moratorium, appointed the nominated Resolution Professional and directed compliance with the statutory notice, claims, creditors' list and repayment-plan timelines under the Code.

Look Out Circular (LOC) - preventive/detentive LOC versus intimative LOC - issuance and modification of LOC - guidelines for LOC under Office Memorandum dated 27th October, 2010 - prohibition on indirect detention through intimation LOC - right to freedom of movement against arbitrary travel restrictions

Look Out Circular (LOC) - issuance and modification of LOC - guidelines for LOC under Office Memorandum dated 27th October, 2010 - Legitimacy of opening and continuing a preventive/detentive LOC against the petitioner who was not an accused and was a minor at the time of the alleged predicate offences. - HELD THAT: - The Court examined the FRRO/BoI guidelines framed in terms of the judgment in Sumer Singh Salkan and the Office Memorandum dated 27th October, 2010 which restrict LOCs to cases of cognizable offences where detention or prevention from leaving the country is justified. Clause (h) of the O.M. makes clear that where there is no cognizable offence against the person, only intimation of arrival/departure can be sought and detention is impermissible. The petitioner was admittedly a minor during the period of the alleged transactions and was not arrayed as an accused in either ECIR; accordingly a preventive/detentive LOC leading to detention was unwarranted. The Court noted that the respondent converted the detentive LOC into an intimative LOC only after the petition was filed, and held that the original preventive detention by LOC was unjustified in the circumstances of this case. [Paras 11, 12]

Preventive/detentive LOC against the petitioner, who was not an accused and was a minor at the relevant time, was unwarranted and could not be sustained.

Preventive/detentive LOC versus intimative LOC - prohibition on indirect detention through intimation LOC - right to freedom of movement against arbitrary travel restrictions - Permissibility and effect of converting the LOC to an intimative LOC and the limits on action that may be taken under such an intimative LOC. - HELD THAT: - The Court recorded that the respondent modified the LOC to permit the petitioner to travel abroad and return subject to intimation, and further communications clarified that the petitioner should not be stopped at airports and only discrete information about arrival/departure be shared. Applying the O.M. and the principle that what cannot be done directly cannot be done indirectly, the Court held that an intimative LOC cannot be used as a pretext to detain or prevent the petitioner at ports of exit or entry. As the respondent has already taken remedial action by converting the LOC to an intimative LOC and further limiting its operational effect, the Court declined to pass additional directions while cautioning that the petitioner must not be detained under the guise of an intimation requirement. [Paras 5, 7, 11, 12, 13]

Conversion to an intimative LOC is permissible in the circumstances but cannot operate to detain or prevent the petitioner; no further directions were required since respondent had modified the LOC accordingly.

Final Conclusion: Writ petition disposed of: the preventive/detentive LOC was unjustified and has been converted into an intimative LOC which must not be used to detain or prevent the petitioner from departing or arriving; respondents are expected to abide by the FRRO/BoI O.M. dated 27th October, 2010.

Maintainability of substitution of legal heirs - abatement of proceedings on death - definition of "assessee" in taxing statutes - continuation of appeal as continuation of proceedings - interpretation of taxing statutes-no implication or intendment

Maintainability of substitution of legal heirs - abatement of proceedings on death - definition of "assessee" in taxing statutes - Substitution of the legal heirs of the deceased director in the revenue appeal is not maintainable and the deceased should be expunged from the array of parties. - HELD THAT: - The Court applied the binding decision of the Hon'ble Supreme Court in Shabina Abraham (supra), holding that taxing enactments use the present tense in defining an "assessee" and therefore refer to a living person; there is no statutory machinery under the Central Excise regime to continue assessment or proceedings against a dead person by substituting legal heirs. Reliance on general definitions of "person" or machinery provisions cannot be used to read into a taxing statute a power to proceed against legal representatives where the statutory language does not so provide. The Court noted settled principles of interpretation of tax statutes-nothing is to be implied and words must be read fairly-cited precedents approving that legal heirs who are not the persons chargeable under the Act cannot be brought within its ambit by stretched construction. Although the original adjudication had concluded and an appeal continued, that continuation does not sustain substitution where the statute and binding authority preclude proceedings against deceased persons through their legal heirs. A contrary decision on certificate proceedings was distinguished as inapplicable to the liability of a director of a company and did not override the Supreme Court's ruling.

GA/5/2022 (substitution) dismissed; GA/3/2022 (prayer to expunge deceased party) allowed; late Shankar Lal Agarwal deleted from array of parties and tribunal's relief in his name stands affirmed; revenue may proceed only against the first respondent company.

Final Conclusion: The application for substitution of the deceased director's legal heirs is dismissed; the deceased is expunged from the cause title and the tribunal's relief in his name is affirmed, leaving the revenue to pursue the appeal only against the company.

National Calamity Contingent Duty - limitation under proviso to Section 11AC - captively consumed intermediate goods - knowledge of department and absence of suppression

National Calamity Contingent Duty - limitation under proviso to Section 11AC - knowledge of department and absence of suppression - Demand of NCCD in respect of Partially Oriented Yarn consumed captively for manufacture of Polyester Texturised Yarn for the period 01.07.2003 to 31.07.2004 is time-barred and set aside. - HELD THAT: - The Tribunal decided the appeal on the ground of limitation. The appellant had disclosed the entire manufacturing process to the department, filed ER-1 returns regularly, and the department was thus aware of the job-work manufacture of intermediate goods; there was therefore no suppression of facts. The show cause notice demanding NCCD for the period 01.07.2003 to 31.07.2004 was issued on 31.07.2008, which is beyond one year, and consequently the demand could not be sustained under the proviso to Section 11AC. The Tribunal expressly did not adjudicate the merits of the levy of NCCD or interpret the exemption notifications, but allowed the appeal solely on limitation.

The demand of NCCD for 01.07.2003 to 31.07.2004 is barred by limitation and the impugned order is set aside on that ground.

Final Conclusion: Appeal allowed on limitation grounds; the Tribunal set aside the NCCD demand for the period 01.07.2003 to 31.07.2004 without deciding the substantive question of exemption or liability on merits.

Place of removal - transaction value - additional consideration - exclusion of transportation cost from assessable value where charged and shown separately - transfer of property / time of passing of property under the Sale of Goods Act - applicability of Rule 6 of the Central Excise Valuation Rules, 2000

Place of removal - additional consideration - exclusion of transportation cost from assessable value where charged and shown separately - transaction value - Whether freight/transportation charges collected from buyers and shown separately in invoices could be treated as additional consideration and included in assessable value by treating the buyer's premises as the place of removal. - HELD THAT: - The Tribunal accepted the appellant's contention and followed the legal position laid down by the Hon'ble Supreme Court in Ispat Industries and earlier authorities that, as a matter of law, the buyer's premises cannot be treated as the place of removal for the purpose of Section 4 except where on the facts the property in goods passes to the buyer only on delivery at the buyer's premises. The court examined the legislative and rule changes and principles in Ispat Industries which held that transaction value excludes transportation cost where such cost is charged to the buyer in addition to the price and shown separately in the invoice, and that the place of removal refers to places from which the manufacturer sells the goods. Applying that matrix, the Commissioner's conclusion that freight must be included by treating the sale as taking place at the buyer's premises was held to be incorrect. Consequently, the freight collected and shown separately could not be treated as additional consideration forming part of assessable value under the facts of this case. [Paras 4]

The impugned demand treating freight as additional consideration by deeming buyer's premises to be the place of removal is set aside; therefore the consequential demand of interest and penalty also cannot be sustained.

Final Conclusion: Appeal allowed; demand of central excise duty based on inclusion of freight collected from buyers in assessable value set aside, with consequential setting aside of interest and penalty.

Input Tax Credit (ITC) - curative and declaratory amendment - retrospective effect / relating back of legislative amendment - amendment to Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 - setting aside of assessment order

Input Tax Credit (ITC) - amendment to Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 - curative and declaratory amendment - retrospective effect / relating back of legislative amendment - setting aside of assessment order - The petitioner is entitled to avail Input Tax Credit as the amendment to Section 19(2)(v) is curative/declaratory and relates back, and the assessment reversing the ITC claim is to be set aside. - HELD THAT: - The High Court, with the respondent conceding, accepted the Division Bench's reasoning in Everest Industries that the amendment made to Section 19(2) (including clause (v)) was curative and declaratory in nature and therefore relates back to the earlier date. The court held that such curative effect restores the original position regarding the right to ITC, making the right to claim ITC absolute once inputs are used in manufacture or processing within the State, regardless of subsequent interstate or intrastate sale. Applying that conclusion to the present case, the assessment which reversed the petitioner's ITC claim under Section 19(2)(v) failed to take that declaratory/curative character into account. Consequently, the petitioner was held entitled to the claimed ITC and the impugned assessment order was quashed.

Impugned assessment dated 19.04.2022 reversing the ITC claim is set aside and the petitioner is entitled to the Input Tax Credit in accordance with the curative/declaratory effect of the amendment to Section 19(2)(v).

Final Conclusion: Writ petition allowed; assessment order setting aside the petitioner's claim for Input Tax Credit quashed in view of the curative and declaratory character of the amendment to Section 19(2)(v) restoring the petitioner's entitlement.

Right to fair trial - opportunity to adduce defence evidence - power under Section 243(2) of the Code of Criminal Procedure to obtain process and expert assistance - presumption under Sections 118 and 139 of the Negotiable Instruments Act and its rebuttal by defence evidence - sending disputed instrument to Forensic Science Laboratory / handwriting expert for opinion

Right to fair trial - opportunity to adduce defence evidence - sending disputed instrument to Forensic Science Laboratory / handwriting expert for opinion - presumption under Sections 118 and 139 of the Negotiable Instruments Act and its rebuttal by defence evidence - power under Section 243(2) of the Code of Criminal Procedure to obtain process and expert assistance - Whether the refusal by the trial Court and the revisional Court to send the disputed cheque to the Forensic Science Laboratory for handwriting and ageing opinion denied the accused a fair opportunity to adduce defence evidence and thus warranted interference. - HELD THAT: - The Court found that the accused consistently pleaded that the cheque was a blank cheque handed over in 2011 and was allegedly misused in 2018, and sought expert opinion on handwriting and ageing of ink to rebut the statutory presumptions. Reliance on the principles in T. Nagappa and Kalyani Baskar establishes that an accused, in raising a bona fide defence, is ordinarily entitled to the assistance of the Court to obtain expert examination where the document sought would furnish material for rebuttal, and that denial of such opportunity may amount to denial of fair trial. Although the lower Courts referred to prima facie presumptions and observed admissions by the accused, the High Court held that the nature of the defence and the facts asserted made the application for FSL opinion bona fide and that the accused should be permitted to adduce the relevant expert evidence. Consequently, the impugned orders refusing the same were held unsustainable and were quashed, with a direction that the trial Court send the disputed cheque to F.S.L. for the handwriting expert's opinion and proceed expeditiously. [Paras 11, 12]

Impugned orders refusing to send the cheque for forensic handwriting and ageing opinion quashed and set aside; trial Court directed to send the disputed cheque to F.S.L. for the handwriting expert's opinion and conclude the trial expeditiously.

Final Conclusion: The petitions are allowed; both impugned orders are quashed and set aside and the trial Court is directed to send the disputed cheque to the Forensic Science Laboratory for handwriting and ageing opinion, with directions to conclude the trial expeditiously.