TaxTMI Updates e-Newsletter
Jul 08,2022

Anticipatory bail - pre-arrest protection in GST offences - custodial interrogation not warranted for documentary-evidence offences - compounding of offences under the CGST Act - power to summon under the CGST law - arrest and custodial safeguards under Chapter XIV of the CGST Act - condition of furnishing bail bonds and surety as condition for anticipatory bail

Anticipatory bail - pre-arrest protection in GST offences - custodial interrogation not warranted for documentary-evidence offences - condition of furnishing bail bonds and surety as condition for anticipatory bail - Grant of anticipatory bail to the applicants in respect of alleged GST offence involving claimed wrong Input Tax Credit. - HELD THAT: - The Court applied the reasoning in Tarun Jain and related decisions to conclude that where the alleged offence under the CGST Act arises from documentary records and does not prima facie require custodial interrogation, pre-arrest bail is permissible. The Court noted the statutory scheme under Chapter XIV (including the compounding provision) and the powers to summon, observing that the offences under the CGST Act, though economic, do not invariably warrant custody where the punishment and facts do not make custody indispensable. The petitioners had been issued summons (therefore had reason to apprehend arrest) and the company had deposited an amount with the Department (accepted as equal to 12.5% of the alleged evasion), which the Court treated as relevant in assessing grant of anticipatory bail. Balancing the departmental objections about the magnitude of alleged wrong ITC and the documentary nature of evidence, the Court held that custodial interrogation was not necessary and that anticipatory bail could be granted on customary conditions. The Court therefore directed that, in the event of arrest, the applicants be released on anticipatory bail subject to furnishing bail bonds and surety bonds to the satisfaction of the arresting officer.

Applicants entitled to anticipatory bail on furnishing bail bonds and surety bonds of Rs. 50,000 each to the satisfaction of the officer making the arrest.

Final Conclusion: Anticipatory bail granted to the applicants in the event of arrest, on condition of furnishing bail bonds and surety bonds of Rs. 50,000 each; custodial interrogation was held unnecessary given the documentary nature of the evidence and the circumstances noted by the Court.

Regular bail in offences under section 132(1)(b) & (c) of the CGST Act, 2017 - custodial interrogation not required - deposit as condition for interim/regular bail - investigation and adjudication of tax liability distinct from criminal prosecution - existence or non-existence of supplier firms to be determined by investigation/adjudication

Regular bail in offences under section 132(1)(b) & (c) of the CGST Act, 2017 - custodial interrogation not required - Application for regular bail of applicant-accused Hetram in proceedings under section 132(1)(b) & (c) of the CGST Act, 2017 - HELD THAT: - The trial court found that (a) visits by the State GST Department had, in respect of three supplier firms, recorded those firms as operational when inspected; (b) the applicant has paid the value of goods along with GST through banking channels and no mismatch in stock was recorded on departmental visit; and (c) the applicant has cooperated with the investigation, is not a flight risk and custodial interrogation is no longer required. Noting that the question of tax liability and the existence/non-existence of suppliers was yet to be finally determined by investigation or adjudication, and that the maximum punishment under the provisions is imprisonment up to five years (without a statutory requirement of twin conditions for bail as in some other statutes), the court granted bail without adjudicating merits. [Paras 11, 18]

Bail allowed; applicant admitted to bail on furnishing bonds to the satisfaction of the Ilaqa/Duty Magistrate, Gurugram.

Deposit as condition for interim/regular bail - investigation and adjudication of tax liability distinct from criminal prosecution - Condition to be imposed on grant of bail relating to deposit of a portion of alleged liability - HELD THAT: - Applying precedents referred to by the parties, the court exercised its discretion to impose a monetary condition as part of bail. The applicant was directed to deposit 10% of the total alleged liability as a condition precedent to the continuance of bail, to be paid to the competent authority within the time specified. The order makes clear that failure to make the deposit will automatically cancel the bail order and require surrender to custody. This condition was imposed without expressing any final opinion on the correctness of the department's claim or on adjudication of tax liability. [Paras 12, 19]

Bail is subject to deposit of 10% of the alleged liability within the stipulated period; non-payment will result in automatic cancellation of bail.

Existence or non-existence of supplier firms to be determined by investigation/adjudication - investigation and adjudication of tax liability distinct from criminal prosecution - Whether the supplier firms were non-existent and whether tax liability is established - HELD THAT: - The court observed that the factual questions concerning the existence or otherwise of the supplier firms and the determination of any tax liability remain unresolved. The record shows inspections that located some firms as operational; in other instances (including a firm whose registration is said to have been cancelled) the timing and circumstances of cancellation were not established on the record. The court therefore refrained from deciding these questions on merits and left them to be determined through further investigation and appropriate adjudicatory processes. [Paras 11]

Existence of supplier firms and the applicant's tax liability are left open for investigation and adjudication and were not decided.

Final Conclusion: Bail granted to applicant-accused Hetram in proceedings under section 132(1)(b) & (c) of the CGST Act, 2017 on furnishing bonds; bail is subject to deposit of 10% of the alleged liability within the prescribed period and to usual conditions of cooperation with investigation, non-interference with witnesses and not leaving the country without permission; factual questions regarding suppliers and tax liability remain to be determined by investigation and adjudication.

Grant of bail under Section 437 Cr.P.C. - Offences under Section 132(1) of the CGST Act, 2017 including fraudulent availment of Input Tax Credit and obtaining refund - Non-cognizable/bailable and cognizable/non-bailable classification under Section 132(4)-(5) of the CGST Act, 2017 - Gravity of economic offences and its bearing on bail - Risk of tampering with evidence and flight risk as determinants for refusal of bail - Applicability of provisions analogous to Section 41A Cr.P.C./Section 70 of the CGST Act in arrest procedure - Direction for fair and impartial investigation by the revenue authority

Grant of bail under Section 437 Cr.P.C. - Offences under Section 132(1) of the CGST Act, 2017 including fraudulent availment of Input Tax Credit - Gravity of economic offences and its bearing on bail - Risk of tampering with evidence and flight risk as determinants for refusal of bail - Bail application of applicant Durga Madhab Panda dismissed - HELD THAT: - The court considered the allegations that the applicant availed and utilised fraudulent Input Tax Credit and obtained refunds by using invoices from bogus/non-existent firms, thereby causing substantial loss to the public exchequer. The offences were framed under Section 132(1)(c) and (e) read with Section 16(2)(b) of the CGST Act, 2017, provisions which the court examined in the judgment. Having regard to the nature and magnitude of the alleged fraud, the admitted statements in investigation, the forensic findings from the GST portal and searches indicating non existence of firms and goods-less invoices, and the nascent stage of investigation, the court found a reasonable apprehension that release on bail would risk tampering with evidence and enable abscondence. The court applied established principles that economic offences committed by calculated and deliberate design affect the public interest and therefore weigh heavily in bail consideration. Reliance was placed on precedents treating economic offences as gravest and on the established factors for bail (nature of accusation, severity of punishment, nature of evidence, risk of tampering or flight). In the circumstances and without adjudicating merits, the court held that the applicant does not deserve bail at this stage. The court nevertheless directed that the Commissioner, CGST, Gurugram ensure a fair and impartial investigation by the revenue authority. [Paras 7, 8, 9, 10, 11]

Bail is refused and the bail application is dismissed; Commissioner, CGST, Gurugram is directed to ensure fair and impartial investigation.

Final Conclusion: The application for regular bail is dismissed in view of the alleged large-scale fraudulent availment of Input Tax Credit, the nascent stage of investigation and apprehension of tampering/absconding; the court also directs the Commissioner, CGST, Gurugram to conduct a fair and impartial investigation.

Anticipatory bail under Section 438 Cr.P.C. - prematurity of anticipatory bail application - statutory obligation to cooperate with GST inquiry - requirement of prior approval for arrest under the CGST investigative scheme - protection of liberty subject to legitimate inquiry

Anticipatory bail under Section 438 Cr.P.C. - prematurity of anticipatory bail application - statutory obligation to cooperate with GST inquiry - requirement of prior approval for arrest under the CGST investigative scheme - Whether the anticipatory bail application was maintainable or premature and accordingly whether pre-arrest bail should be granted at the present stage. - HELD THAT: - The applicant, a director of an event-management company, was summoned under the GST inquiry to tender his statement and produce purchase/sales invoices from July 2017 onwards. Instead of complying and cooperating with the inquiry, he filed the present anticipatory bail application. The respondents stated that no proposal for arrest-requiring higher approval under the CGST scheme-had been made and thus there was currently no intention to arrest. The court noted the investigation was at an early stage, the applicant had not furnished the documents sought and his apprehension of arrest was speculative. The possibility that higher authorities may be located in the same premises did not convert speculative apprehension into a real threat warranting anticipatory bail. Given the applicant's statutory duty to cooperate and the absence of any concrete arrest proposal or approval, the court held that seeking pre-arrest protection at this stage was premature and that the legitimate course of inquiry must not be hampered. [Paras 9, 11, 12, 13]

Application dismissed as premature; applicant directed to respond to the summons and cooperate with the inquiry, without prejudice to his rights at later stage.

Final Conclusion: The anticipatory bail application is dismissed as premature; the applicant is required to comply with the summons and cooperate with the GST inquiry, and the dismissal is without prejudice to his rights during trial or to seek relief if a concrete arrest proposal arises.

Section 153A - assessment/reassessment power - non-obstante clause and reopening of concluded assessments - incriminating material found during search - assessment under Section 153A not confined to seized material - abate provision of Section 153A (second proviso)

Section 153A - assessment/reassessment power - incriminating material found during search - Whether assessment or reassessment under Section 153A can be framed only on the basis of incriminating material found during search under Section 132. - HELD THAT: - The Court held that Section 153A commences with a non-obstante clause empowering the Assessing Officer to assess or reassess the total income for the specified years and is not constrained to act only on incriminating material seized during the search. A purposive reading shows Section 153A contemplates assessment of total income (not merely undisclosed income discovered in the search) and thus does not make the existence of incriminating material in hand an essential pre-condition to invoke the provision. The Court relied upon the statutory scheme and binding coordinate-bench decisions of this Court (including Raj Kumar Arora and Kesarwani Zarda Bhandar) to conclude that the Assessing Officer may reassess returned years even where the assessment had been concluded earlier, without restricting the exercise of power under Section 153A to seized documents alone. Findings of fact showing incriminating material (where present) are relevant to sustain additions, but the absence of seized incriminating material does not ipso facto render Section 153A inapplicable. [Paras 19, 20, 21, 23, 24]

Answered in the negative - Section 153A assessment/reassessment is not confined to incriminating material found during the search.

Non-obstante clause and reopening of concluded assessments - assessment under Section 153A not confined to seized material - Whether assessment or reassessment under Section 153A can be framed where no incriminating material has been found in the search. - HELD THAT: - The Court answered this in the affirmative. It observed that Section 153A empowers the Assessing Officer to issue notices and reassess or assess the total income for the six preceding assessment years irrespective of whether incriminating material was physically seized from the assessee's premises, and that material available on record or emanating from searches of other persons may legitimately form the basis for assessment. The Court emphasised that interpreting Section 153A to require seized incriminating material as a pre-condition would impermissibly restrict the statutory language and defeat the legislative purpose of the provision. The Court also noted that where incriminating material is in fact considered, the Assessing Officer and appellate authority must record and apply findings of fact, observing that in the present matters such findings were recorded by the AO and CIT(A). [Paras 23, 24, 25, 26, 27]

Answered in the affirmative - assessment/reassessment under Section 153A can be framed even where incriminating material was not found in the search, provided relevant material is otherwise available.

Reopening of concluded assessments - abate provision of Section 153A (second proviso) - Disposition of appeals and further adjudication by the Tribunal. - HELD THAT: - The Court set aside the impugned ITAT orders which had allowed the assessees on the ground that no incriminating material was found, holding those decisions unsustainable in law in view of the Court's interpretation of Section 153A and binding coordinate-bench precedents. The appeals filed by Revenue were allowed, the ITAT orders were set aside and the appeals before the ITAT were restored to their original numbers. The ITAT was directed to decide the appeals afresh on merits in accordance with law after giving the parties a reasonable opportunity of hearing, uninfluenced by observations in the High Court's order. [Paras 28, 29]

ITAT orders set aside; appeals restored and remitted to the ITAT for fresh decision on merits after affording opportunity of hearing.

Final Conclusion: The High Court held that Section 153A empowers assessment or reassessment of total income for the prescribed years without being confined to incriminating material seized during search; appeals by Revenue are allowed, the Tribunal's orders are set aside and the matters are restored to the ITAT for fresh adjudication on merits in accordance with law.

Disallowance under section 14A - apportionment of expenditure - recording of satisfaction by the Assessing Officer before invoking section 14A(2) - application of computation under rule 8D - dominant purpose test - Circular No.05/2014

Disallowance under section 14A - recording of satisfaction by the Assessing Officer before invoking section 14A(2) - Whether the Tribunal was justified in deleting the addition under section 14A because the Assessing Officer failed to record satisfaction before rejecting the assessee's suo motu apportionment. - HELD THAT: - The Court applied the binding tests from the Supreme Court decisions (including Maxopp) that require the Assessing Officer to record an objective satisfaction, having regard to the nature of the assessee and the claim made, before invoking section 14A(2) and proceeding to compute disallowance under rule 8D. On perusal of the assessment order the Assessing Officer merely concluded that the assessee's suo motu apportionment was not convincing but did not record the requisite satisfaction. That failure means the Assessing Officer could not properly reject the assessee's apportionment and invoke the computation mechanism. The Tribunal therefore correctly upheld deletion of the addition.

Tribunal correctly deleted the addition; appeal dismissed on this ground.

Application of computation under rule 8D - apportionment of expenditure - Whether the disallowance should have been recomputed under rule 8D where the assessee had made its own apportionment. - HELD THAT: - The Court reiterated that rule 8D's computation can be applied only after the Assessing Officer records satisfaction that the assessee's claim/apportionment cannot be accepted. The assessment record did not contain such a satisfaction; consequently the Assessing Officer had no jurisdiction to proceed to computation under rule 8D in place of the assessee's apportionment. The Tribunal's conclusion in favour of the assessee on this facet was therefore legally sustainable.

No recomputation under rule 8D was permissible in the absence of recorded satisfaction; Tribunal's view sustained.

Circular No.05/2014 - disallowance under section 14A - Whether Circular No.05/2014 required invocation of rule 8D read with section 14A even when no exempt income was earned, and whether the Tribunal erred in not applying that Circular. - HELD THAT: - The Court treated the Revenue's reliance on the Circular in the context of the settled legal tests from the Supreme Court: even if administrative guidance is invoked, the Assessing Officer must satisfy the statutory requirement of recording an objective satisfaction before applying the rule 8D computation. Since the Assessing Officer failed to record such satisfaction, the Tribunal was justified in not accepting the Revenue's contention based on the Circular and in upholding deletion of the addition.

Tribunal correctly declined to apply the Circular to justify the addition in the absence of recorded satisfaction; substantial question answered against the Revenue.

Final Conclusion: The appeal by the Revenue is dismissed. The Tribunal correctly upheld deletion of the section 14A addition because the Assessing Officer did not record the requisite satisfaction before rejecting the assessee's apportionment or invoking computation under rule 8D; the substantial questions of law are answered against the Revenue.

Reopening of assessment - notice under Section 148 - reason to believe - reason to suspect - income chargeable to tax

Notice under Section 148 - reason to believe - reason to suspect - income chargeable to tax - Validity of reopening assessment by issuing notice under Section 148 where the Assessing Officer recorded only that a payment was received but did not record adequate reasons to believe that income chargeable to tax had escaped assessment. - HELD THAT: - The Court examined whether the Assessing Officer possessed and recorded material constituting "reasons to believe" that income chargeable to tax had escaped assessment, as distinct from mere "reason to suspect". The ITO's communication merely stated that the assessee had received Rs.30,00,000/- in the relevant financial year as per the MOU and that the return for A.Y.2008-09 had not been filed. The Court held that receipt of payment in a transaction is not, by itself, conclusive of taxable income and that the ITO in this case did not set out any analysis or material showing prima facie that the receipt constituted income chargeable to tax. Reliance on the authorities showed that while non-filing of return gives the Assessing Officer wider latitude, the primary requirement of recorded reasons to believe remains indispensable. The ITO's brief note, lacking any explanation why the receipt amounted to taxable income or how escapement was demonstrated, amounted to suspicion or assertion rather than a legally cognizable reason to believe. Consequently the notice under Section 148 was unsustainable. [Paras 21, 22, 23]

The reopening notice issued under Section 148 was invalid for want of recorded reasons to believe; the reassessment proceedings insofar as they relate to A.Y.2008-09 cannot be sustained.

Final Conclusion: Appeal allowed; substantial questions of law answered in favour of the assessee; the ITAT order relating to A.Y.2008-09 is set aside.

Leave Travel Concession as a statutory entitlement versus administrative concession - Rule 44 of the State Bank of India Officers' Service Rules, 1992 confining LTC to travel within India - statutory force of administrative circulars and non-statutory instructions - Government policy and uniform guidelines superseding non-statutory concessions - application of principles of natural justice in withdrawal of non-statutory policy concessions - exemption under Section 10(5) of the Income Tax Act limited to travel within India

Leave Travel Concession as a statutory entitlement versus administrative concession - Rule 44 of the State Bank of India Officers' Service Rules, 1992 confining LTC to travel within India - statutory force of administrative circulars and non-statutory instructions - The IBA/Bank circulars permitting foreign travel as part of LTC have no statutory force and are administrative concessions, not service rights under Rule 44. - HELD THAT: - The Court examined Rule 44 of the State Bank of India Officers' Service Rules, 1992 and held that the Rule expressly confines LTC to travel to any place in India by the shortest route. Administrative circulars and letters issued subsequently permitting foreign travel were not incorporated into the statutory Rules and therefore cannot be treated as statutory service rights. The circulars at best constituted additional concessions or administrative instructions which were given effect by non-statutory communications; absent amendment of Rule 44, such concessions do not acquire statutory enforceability and may be withdrawn. The determinative reasoning is that the statutory rule governs entitlements and administrative circulars beyond its scope cannot override or create a statutory right. [Paras 46, 47, 55]

The circulars permitting foreign travel as part of LTC are non statutory administrative concessions and do not have statutory force.

Government policy and uniform guidelines superseding non-statutory concessions - statutory force of administrative circulars and non-statutory instructions - Withdrawal of the administrative concession (LTC covering foreign travel) pursuant to Government/IBA policy did not infringe statutory service rights. - HELD THAT: - The Court noted the Government of India memorandum directing PSBs to align LTC schemes with the Government scheme (which excludes travel to foreign destinations) and the IBA decision adopting that policy. Because the entitlement to travel abroad was not a right under Rule 44 but an administrative concession, its withdrawal pursuant to broader Government/IBA policy did not amount to infringement of service rights or service conditions. Executive and policy decisions of this character, adopted in public interest and concerning public sector policy, may be implemented and the Bank was entitled to rescind the non statutory concession. The Court relied on the distinction between statutory service conditions and discretionary administrative privileges. [Paras 56, 61, 62, 64]

Withdrawal of the foreign travel concession pursuant to Government/IBA policy did not infringe officers' statutory service rights.

Leave Travel Concession as a statutory entitlement versus administrative concession - statutory force of administrative circulars and non-statutory instructions - Discussions or bilateral talks between the Bank and officers' associations, absent a bipartite agreement or settlement, do not convert an administrative concession into a service condition enforceable as a statutory right. - HELD THAT: - The petitioners relied on prior discussions and circulars to contend that the concession had crystallised into a service right. The Court found no bipartite agreement or settlement that would convert the administrative instruction into a contractual or statutory condition of service. Informal or bilateral discussions, without reduction into an enforceable agreement or amendment of the statutory Rules, cannot create an absolute enforceable right. The absence of any documented bipartite settlement was determinative. [Paras 50, 55]

Mere discussions did not create a bipartite agreement or a service condition; the concession remained administrative and revocable.

Application of principles of natural justice in withdrawal of non-statutory policy concessions - Government policy and uniform guidelines superseding non-statutory concessions - Withdrawal of the non statutory concession without prior hearing did not violate principles of natural justice where no prejudice was caused and the concession was not a statutory right. - HELD THAT: - The Court applied the flexible test for natural justice, observing that the rule audi alteram partem does not operate in a mechanical fashion where no prejudice results. Since the foreign travel facility was a non statutory, discretionary concession and not a vested service right, and because the Government/IBA policy mandated withdrawal, providing a prior opportunity would have been a futile exercise and was not required. The Court emphasised that absence of prejudice and the public policy context rendered non compliance with a prior hearing immaterial. [Paras 59, 60, 63]

Non issuance of prior opportunity did not vitiate the withdrawal of the administrative concession; principles of natural justice were not offended.

Exemption under Section 10(5) of the Income Tax Act limited to travel within India - Travel concession for foreign travel is not exempt under Section 10(5) of the Income Tax Act; tax consequences are to be determined under the Income Tax law. - HELD THAT: - The Court accepted the Income Tax Department's position that the statutory exemption for travel concession applies only to travel to places in India. Accordingly, amounts attributable to foreign travel do not qualify for the Section 10(5) exemption and are susceptible to tax treatment (including TDS) under the Income Tax Act. The Court recognised that statutory tax consequences are to be determined by tax authorities and that the pendency of litigation on TDS issues does not alter the legal position under the Income Tax code. [Paras 22, 54]

LTC claims for foreign travel do not fall within the exemption for travel within India and are taxable as per the Income Tax Act; taxability to be determined under the statute.

Final Conclusion: The writ petition is dismissed. The Court held that the facility to include foreign travel within LTC was an administrative concession without statutory force and could be withdrawn pursuant to Government/IBA policy; there was no infringement of statutory service rights or breach of natural justice warranting relief. Officers remain entitled to LTC and encashment as provided under Rule 44 for travel within India; tax consequences of any foreign travel claims are to be determined under the Income Tax Act.

Protection of Public Provident Fund from attachment - Proviso to Section 60(1) of the Code of Civil Procedure and its interaction with Section 9 of the PPF Act - Obligation to refund amounts wrongly debited from a PPF account

Protection of Public Provident Fund from attachment - Proviso to Section 60(1) of the Code of Civil Procedure and its interaction with Section 9 of the PPF Act - Legality of the respondent-Bank debiting the petitioner's PPF account and whether amounts standing to the credit of a PPF subscriber are liable to attachment for the subscriber's debts or liabilities. - HELD THAT: - The Court noted the settled legal principle that amounts standing to the credit of a subscriber in a Public Provident Fund are immune from attachment in respect of any debt or liability of the subscriber. That protection, read together with the proviso to Section 60(1) of the Code of Civil Procedure and the relevant provisions of the PPF Act and scheme, makes any amount in a PPF account not liable to attachment by creditors. Applying this principle to the undisputed fact that the Bank withdrew/debited the specified sum from the petitioner's PPF account, the Court held that the Bank's action was illegal and unjustified. The Court rejected the Bank's reliance on the existence of guarantees for the firm's debt as a lawful basis to debit the petitioner's PPF account, finding the statutory protection of PPF funds paramount. [Paras 6]

The withdrawal/debit from the petitioner's PPF account was illegal and unjustified.

Obligation to refund amounts wrongly debited from a PPF account - Relief to be granted for the wrongful debit from the PPF account. - HELD THAT: - Having concluded that the debit was illegal, the Court directed restitution of the amount to the petitioner. The respondent-Bank was ordered to deposit the sum into a specified Savings Bank account of the petitioner within a fixed time period. The Court clarified that its observations should not be construed adversely to the Bank in other proceedings. [Paras 7]

The Bank is directed to deposit the wrongly withdrawn amount into the petitioner's Savings Bank account within four weeks.

Final Conclusion: Writ petition allowed; respondent-Bank's debit of the petitioner's PPF account held illegal and Bank directed to refund the amount to the petitioner's savings account within four weeks.

Definition of "plant" under Section 43(3) of the Income Tax Act - treatment of bottles and crates as plant versus stock-in-trade - application and distinction of precedent: Supreme Court in Steel City Beverages Ltd. vis-a -vis High Court decisions in Jai Drinks and Sri Krishna Bottlers - functional test for plant / "tool of the trade" doctrine - interpretation of inclusive definitions in taxing statutes

Definition of "plant" under Section 43(3) of the Income Tax Act - treatment of bottles and crates as plant versus stock-in-trade - functional test for plant / "tool of the trade" doctrine - application and distinction of precedent: Supreme Court in Steel City Beverages Ltd. - Bottles and crates used by the assessee for manufacturing and distribution of soft drinks fall within the meaning of "plant" as contained in Section 43(3) of the Income Tax Act for the assessment year 1989-90. - HELD THAT: - The court examined authoritative decisions construing the inclusive definition of "plant" under the Income Tax Act and applied the functional test: whether the articles perform a function in the assessee's trading activity and are tools of the trade. The High Court decisions in Jai Drinks (Rajasthan) and Sri Krishna Bottlers (Andhra Pradesh) - which held that bottles and crates satisfy the durability and functional tests and are not stock-in-trade where they are returned empty and used repeatedly - were held directly in point and factually identical to the present case. The Tribunal's reliance on the Supreme Court's decision in Steel City Beverages Ltd. was found to be misplaced because Steel City construed "plant" in the context of different statutory rules (the Bihar Deferment Rules) and expressly recognised that the narrower construction adopted there arose from the different object and scheme of that enactment; Steel City therefore did not overrule or negate the Income Tax Act authorities that give a wider meaning to "plant." The Income Tax Rules' depreciation table listing specific categories does not exclude other items from the statutory definition when they otherwise satisfy the test for "plant." Given the accepted factual position about use and return of bottles and crates, the criteria for being a "plant" were satisfied and the Tribunal erred in denying depreciation for the assessment year in question. [Paras 14, 15, 16, 18]

The question is answered in favour of the appellant: bottles and crates used in the appellant's business for the assessment year 1989-90 are to be treated as "plant" under Section 43(3) of the Income Tax Act; appeal allowed.

Final Conclusion: The Tribunal's order denying depreciation on bottles and crates for assessment year 1989-90 is set aside; the appellate court answers the substantial question of law in favour of the assessee and allows the appeal.

Adventure in the nature of trade - stock-in-trade versus investment - intention of the assessee (purchase for resale or for use) - cumulative facts and circumstances test - perversity standard on appellate review

Adventure in the nature of trade - stock-in-trade versus investment - intention of the assessee (purchase for resale or for use) - cumulative facts and circumstances test - perversity standard on appellate review - Whether the surplus arising from transfer of the agreements for acquisition of the two office premises was taxable as business income as an adventure in the nature of trade or as long-term capital gain arising from an investment. - HELD THAT: - The Court accepted the Tribunal's application of established tests and principles, examining the cumulative effect of relevant facts to discern the assessee's intention. The Tribunal noted that the assessee's business was in real estate, board minutes evidenced dealing in sale and purchase of property, the premises were purchased while under construction and were sold before or shortly after possession was offered, the assessee had locked up substantial funds (including entire share capital) in the acquisition, the properties never yielded income or personal use, and no documentary proof of alleged litigation or compulsion to sell was placed on record. On these preponderant factors the Tribunal concluded that the premises were acquired with an intention to resell and thus constituted an adventure in the nature of trade. The High Court found no perversity in the Tribunal's factual findings or inferences, recognised that another view was possible but not sufficient to overturn concurrent findings, and upheld the conclusion that the surplus was assessable as business income. [Paras 9, 10, 11, 12]

The Tribunal's conclusion that the transaction was an adventure in the nature of trade and the surplus is business income is upheld; the question is answered against the assessee.

Final Conclusion: The appeal is dismissed. The Tribunal's finding that the two office premises were acquired for purposes of resale and that the surplus is assessable as business income is affirmed; the second question regarding adjustment under Section 115J was rendered academic and not decided.

Fee for default in furnishing statements under section 234E - Non-applicability of section 234E prior to insertion of section 200A effective 01.06.2015 - Demand for late fee imposed without jurisdiction - Preclusive effect of prior appellate dismissal where impugned demand is void for want of jurisdiction

Non-applicability of section 234E prior to insertion of section 200A effective 01.06.2015 - Fee for default in furnishing statements under section 234E - Section 234E could not be applied to levy late fee for periods prior to 01.06.2015 because section 200A (which made the levy effective) was itself made effective only from 01.06.2015. - HELD THAT: - The Court accepted the reasoning in M/s. Sarala Memorial Hospital v. Union of India that the amendment introducing section 234E takes effect only from 01.06.2015 insofar as section 200A was made effective from that date. Consequently, intimations demanding late fee under section 234E for periods antecedent to 01.06.2015 (including the periods 2012-13 to 2014-15) lack legislative authority and are legally unsustainable. The Court held that, as a matter of law, respondents had no jurisdiction to impose the late fee for the period prior to 01.06.2015 and that sending the matter back for reconsideration would serve no purpose where the levy is void ab initio. [Paras 6, 7, 10, 11]

Demands for late fee under section 234E for the period from 2012-13 until 01.06.2015 are without authority and are quashed.

Preclusive effect of prior appellate dismissal where impugned demand is void for want of jurisdiction - Demand for late fee imposed without jurisdiction - Dismissal of statutory appeals does not preclude challenge under Article 226 where the appellate authority failed to consider binding High Court precedent and the demand is void for want of jurisdiction. - HELD THAT: - Respondents relied on the fact that statutory appeals had been preferred and dismissed, contending that the petitioner could not thereafter invoke writ jurisdiction. The Court found this contention untenable because the jurisdictional High Court had already declared section 234E inapplicable prior to 01.06.2015 and the Appellate Authority did not take that binding decision into account when dismissing the appeals. The appellate orders (Ext. P8 and Ext. P9) were therefore held to be perverse and susceptible to interference under Article 226. Where a demand is legally invalid for lack of jurisdiction, finality of an appealed order cannot shield an unlawful levy. [Paras 8, 9, 11]

The writ petition succeeds despite prior dismissal of statutory appeals; the appellate orders are set aside to the extent they uphold the invalid levy.

Final Conclusion: Writ petition allowed: intimations (Ext. P1 to Ext. P7) demanding late fee under section 234E for the period 2012-13 up to 01.06.2015 are quashed as unauthorized and void; prior dismissal of statutory appeals does not preclude relief where the levy was imposed without jurisdiction and binding High Court precedent was not considered.

Eligibility for Vivad se Vishwas amidst pending prosecution - Tax arrear as defined in Section 2(1)(o) of the Direct Tax Vivad se Vishwas Act - Interpretation of Section 9(a)(ii) of the Direct Tax Vivad se Vishwas Act - Scope of CBDT FAQs vis-a -vis statutory text

Eligibility for Vivad se Vishwas amidst pending prosecution - Tax arrear as defined in Section 2(1)(o) of the Direct Tax Vivad se Vishwas Act - Interpretation of Section 9(a)(ii) of the Direct Tax Vivad se Vishwas Act - Scope of CBDT FAQs vis-a -vis statutory text - Validity of rejection of petitioner's declarations under the Direct Tax Vivad se Vishwas Act where criminal prosecution under Section 276CC was pending for the assessment years 2011-12 to 2015-16 - HELD THAT: - The Court examined the Vivad se Vishwas Act, particularly the definitions of "tax arrear" (Section 2(1)(o)), the scheme for filing declarations and grant of immunity (Sections 3-6), and the non-applicability clause in Section 9(a)(ii). It agreed with the Division Bench of the Bombay High Court in Macrotech Developers Limited that Section 9(a)(ii) excludes the Act's applicability only where prosecution has been instituted in respect of the tax arrear as defined by the Act and relatable to the assessment year; it does not disqualify a declarant merely because prosecution on some issue for that assessment year is pending. The Court held that prosecutions for delayed filing of returns under Section 276CC do not, in the present facts, amount to prosecution "in respect of tax arrear" within the meaning of Section 2(1)(o) and Section 9(a)(ii). Consequently, the CBDT FAQs (Nos.22 and 73) which took a broader ineligibility view are contrary to the statutory scheme and cannot be applied to deny the petitioner the benefit of filing a declaration where the prosecution is not in respect of the tax arrear as defined in the Act. The Court therefore set aside the orders rejecting the declarations and remanded the matter to the authorities to consider the declarations dated 29.12.2020 (and subsequent declarations) in conformity with the Vivad se Vishwas Act and Rules, without regard to the answers given in FAQ Nos.22 and 73. [Paras 58, 59, 60, 61, 62]

Rejections of the petitioner's declarations dated 29.12.2020 (and subsequent declarations) are quashed; the matter is remanded to respondents to reconsider those declarations in conformity with the Vivad se Vishwas Act, dehors CBDT FAQ Nos.22 and 73.

Final Conclusion: Writ petition allowed to the extent that the orders rejecting the petitioner's Vivad se Vishwas declarations for assessment years 2011-12 to 2015-16 are quashed and those declarations are to be reconsidered by the respondents in accordance with the Vivad se Vishwas Act; no order as to costs.

Validity of enquiry under Section 148A of Income Tax Act - Requirement of minimum seven days' notice under Section 148A(b) - Waiver by assessee for replying without objection - Consideration of assessee's reply and formation of prima facie opinion before issuing notice under Section 148 - Assessing Officer's discretion and need for 'free play in the joints'

Requirement of minimum seven days' notice under Section 148A(b) - Waiver by assessee for replying without objection - Whether issuance of a show-cause notice under Section 148A(b) that afforded less than seven days to respond vitiates subsequent proceedings where the assessee replied without objecting to the deficient period - HELD THAT: - The Court held that although Section 148A(b) prescribes a minimum period of seven days to respond, an assessee who receives a shorter period but nonetheless files a detailed reply on merits and does not contemporaneously object to the deficient notice period is estopped from later challenging the validity of the notice on that ground. The scheme and revenue centric object of the Income Tax Act, together with the fact that the petitioner submitted a voluminous reply on merits, led the Court to conclude that the petitioner waived the right to assail the notice for being shorter than seven days. Accordingly, a procedural defect in the notice period was not fatal where the assessee elected to respond without protest and thereby submitted to the process. [Paras 10, 11]

Petitioner's challenge to the show-cause notice on the ground of less than seven days' notice is barred by waiver and estoppel.

Validity of enquiry under Section 148A of Income Tax Act - Consideration of assessee's reply and formation of prima facie opinion before issuing notice under Section 148 - Assessing Officer's discretion and need for 'free play in the joints' - Whether the Assessing Officer's order under Section 148A upholding issuance of a notice under Section 148 was impermissible for want of application of mind or failure to consider the assessee's reply - HELD THAT: - The Court examined the impugned order and found that the Assessing Officer considered the detailed reply and the material on record before forming a prima facie opinion that income may have escaped assessment. The Court recognised that the decision under Section 148A is to be based on material available and the assessee's response, but is not a final adjudication of liability; the AO is entitled to a 'free play in the joints' to form a prima facie view and issue a notice under Section 148. Given that the AO recorded reasons and relied on the need to verify the creditworthiness and existence of intermediary entities, the Court declined to substitute its view on sufficiency of material and held there was no illegality in issuing the notice. [Paras 9, 12, 14]

The order under Section 148A and the consequent notice under Section 148 were valid; there was no failure to consider the reply or misapplication of mind warranting interference.

Final Conclusion: Writ petition dismissed. The challenged order under Section 148A and the consequential notice under Section 148 are upheld: the petitioner waived objection to the deficient notice period by replying without protest, and the Assessing Officer lawfully formed a prima facie opinion to issue the Section 148 notice.

Writ jurisdiction under Article 226 - Alternative efficacious remedy - Re-opening of assessment under section 148 - Requirement of approval under section 151 - Pre-deposit condition for preferring statutory appeal - Interference with assessment proceedings where merit-based examination is required

Writ jurisdiction under Article 226 - Alternative efficacious remedy - Re-opening of assessment under section 148 - Maintainability of writ petition challenging issuance of notice under section 148 after completion of assessment and availability of alternative remedy of appeal - HELD THAT: - The petitions were filed challenging the notice issued under section 148 for the year 2013-2014. During pendency of the petitions, the Assessing Officer completed assessment for 2013-2014 (and also for 2014-2015 and 2015-2016) and final assessment orders were passed. The Court held that where an alternative and efficacious statutory remedy in the form of appeal to the appellate authority exists and the assessment order is appellable, the High Court will generally not entertain a writ petition under Article 226 to examine merits of the assessment or the material on which the reopening was initiated. The petitioner had not amended the writ to challenge the assessment order and the grounds available in the writ could be agitated before the appellate authority. Exceptional circumstances that justify interference in exercise of writ jurisdiction (such as breach of natural justice, jurisdictional error, or manifestly arbitrary action) were not found to exist on the record so as to warrant exercise of extraordinary jurisdiction in the present petitions. The existence of a mandatory pre-deposit requirement for filing the statutory appeal and the magnitude of the demand were noted, but the Court observed that those facts alone did not displace the availability of the appellate remedy or justify adjudication of merits under Article 226 in the circumstances of this case.

Petitions dismissed as not maintainable; petitioner to pursue remedies before the appellate authority, the High Court expressing no opinion on the merits.

Final Conclusion: The writ petitions challenging the notice under section 148 were dismissed on the ground that an alternative efficacious remedy by way of appeal against the assessment order is available and the High Court will not ordinarily examine the merits of reopening under Article 226 where the assessment is appellable; no opinion was expressed on the merits and the appellate authority remains free to decide the appeal.

Voluntary Disclosure of Income Scheme (VDIS) and its effect on regular assessment - Non-refundability and separateness of tax paid under VDIS - Prohibition on adjustment of tax paid under VDIS with tax under the Income-tax Act (TDS/advance tax) - Duty to disclose entire income in VDIS where no return filed before commencement - Finality of completed assessment and bar on reopening under VDIS

Voluntary Disclosure of Income Scheme (VDIS) and its effect on regular assessment - Duty to disclose entire income in VDIS where no return filed before commencement - Whether the assessee could exclude income voluntarily disclosed under VDIS from his belated returns under section 139 and claim tax relief in assessments for 1996-97 and 1997-98. - HELD THAT: - The Court noted that VDIS (Finance Act, 1997) permits declaration of income which had not been disclosed by way of return before the commencement of the scheme. Section 68 permits exclusion of voluntarily disclosed income from total income of the declarant only if conditions in section 68 are satisfied. Where an assessee had not filed any return under section 139 before the scheme, he was obliged, for the purposes of VDIS, to disclose all income chargeable to tax for that assessment year. The petitioner filed belated returns after the VDIS period and sought to exclude only the amount disclosed under VDIS from the belated return while declaring other regular income separately. The Court held that such a piecemeal approach defeats the scheme: an assessee who had not filed returns prior to the VDIS could not split disclosure between the VDIS declaration and subsequent belated returns so as to obtain a tax advantage. Relying on the statutory scheme and the scheme's purpose, the Court found that the Commissioner rightly held that the nature and sources declared under VDIS differed from those in the belated returns and that the petitioner could not take inconsistent positions to secure benefit impermissible under VDIS. [Paras 12, 13, 14]

The exclusion of VDIS-disclosed income from the belated returns so as to reduce tax liability for AY 1996-97 and 1997-98 was not permissible; the Commissioner's conclusion on this point is sustained.

Non-refundability and separateness of tax paid under VDIS - Prohibition on adjustment of tax paid under VDIS with tax under the Income-tax Act (TDS/advance tax) - Finality of completed assessment and bar on reopening under VDIS - Whether tax paid under VDIS is refundable or liable to be adjusted against TDS/advance tax claimed in assessments for 1996-97 and 1997-98. - HELD THAT: - The Court examined sections 68, 69 and 70 of the Finance Act, 1997 and concluded that tax paid under the VDIS is legally distinct from tax payable under the Income-tax Act. Section 70 expressly disallows refund of any amount paid pursuant to a VDIS declaration. Section 69 preserves the finality of completed assessments and precludes reopening or claiming set-off or relief in respect of voluntarily disclosed income. Consequently, sums paid under VDIS cannot be treated as advance tax or TDS for the purpose of obtaining refunds or adjustments in regular assessments. The Commissioner therefore correctly rejected the claim for refund/adjustment of amounts said to have been paid under VDIS and applied the scheme's provisions (including query No.25 as relied upon) in dismissing the revision. [Paras 13, 14]

Tax paid under VDIS is neither refundable nor adjustable against tax under the Income-tax Act (TDS/advance tax); the petitioner's claim for refund/adjustment is rejected and the Commissioner's order is upheld.

Final Conclusion: Writ petition dismissed; the Commissioner's order dated 29.03.2001 dismissing the revisions for assessment years 1996-97 and 1997-98 is upheld on the grounds that (a) VDIS disclosures must be complete where no return was filed before the scheme and cannot be selectively excluded in subsequent belated returns, and (b) tax paid under VDIS is distinct, non-refundable and not adjustable against tax under the Income-tax Act.

Violation of section 13(1)(c) of the Income-tax Act - adequacy of consideration for benefit to specified persons - use of trust property by specified persons without adequate rent or compensation - voluntary professional services as valid consideration - deeming provisions of section 13(2)(b) and (d)

Violation of section 13(1)(c) of the Income-tax Act - use of trust property by specified persons without adequate rent or compensation - Whether the appellant trust violated the provisions of section 13(1)(c) by allowing specified persons to use operation rooms free of charge and by providing residential accommodation at concessional rent. - HELD THAT: - The Tribunal recorded the admitted facts that specified persons used the trust's operation rooms without paying fees and occupied bungalows owned by the trust on payment of Rs.5,000 per month. The determinative question was whether those uses amounted to application of income or property for the benefit of persons referred to in section 13(1)(c). The Tribunal held that the mere availability of trust property to specified persons does not automatically invoke section 13(1)(c) where adequate consideration or compensatory benefit to the trust exists. The assessee's uncontested case was that the founder had allowed use of his own building and assets by the trust without charging rent and that the specified persons rendered voluntary professional services to the trust, being available round the clock for patients. On these facts the Tribunal concluded that the trust saved expenses (rent, salaries, fees) and thus received compensatory benefit, so the use of trust property by specified persons was not without adequate consideration. The Tribunal expressly relied on earlier High Court authorities to support this approach: Natya Sankalpaa vs. DIT , CIT vs. 21st Society of Immaculate Conception , and Foundation For Social Care . [Paras 10, 11]

The transaction did not constitute use or application of the trust's income or property for the benefit of specified persons within section 13(1)(c) on the facts found; section 13(1)(c) is not attracted.

Adequacy of consideration for benefit to specified persons - voluntary professional services as valid consideration - deeming provisions of section 13(2)(b) and (d) - Whether the consideration received by the trust - namely voluntary professional services rendered by the specified persons and other reciprocal benefits from the founder - rendered the rent and allowance adequate so as to preclude disallowance under section 13(1)(c). - HELD THAT: - The Tribunal examined whether the specified persons provided compensation to the trust in a form that would negate any impermissible private benefit. The assessee's uncontroverted case was that the founder had permitted 50% of his building for the trust's use without rent and that the specified persons provided voluntary professional services and were available at odd hours for emergencies. The Tribunal held that these benefits constituted adequate consideration in the factual matrix: the trust's operational costs were reduced and professional services were made available to patients, thereby supplying reciprocal advantage. Consequently, there was no material on record to show that the consideration was inadequate so as to invoke the deeming provisions of section 13(2) as attracting section 13(1)(c). [Paras 11, 12]

The consideration received by the trust was adequate; therefore the provision of accommodation and use of operation rooms did not amount to impermissible benefit under section 13(1)(c).

Final Conclusion: The Tribunal allowed the appeal for AY 2015-16, holding that on the admitted facts the trust had received adequate reciprocal benefit (notably voluntary professional services and use concessions from the founder) and therefore the provisions of section 13(1)(c) did not apply; the exemption under section 11 was not to be denied on the grounds raised.

Deduction under section 80IB(10) - Claim in the return of income and effect of revised return - Bar on allowance of Chapter VIA deduction not claimed in return (sub section (5) of section 80A) - Scope and limits of rectification power exercised under section 154 - Admissibility of a new claim before appellate authority where assessment has not considered it

Deduction under section 80IB(10) - Claim in the return of income and effect of revised return - Bar on allowance of Chapter VIA deduction not claimed in return (sub section (5) of section 80A) - Admissibility of a new claim before appellate authority where assessment has not considered it - Whether CIT(A) could allow deduction under section 80IB(10) when the assessee had withdrawn that claim by filing a revised return. - HELD THAT: - The Tribunal held that once a revised return is filed it withdraws and substitutes the original return; consequently any claim not present in the revised return is not a claim made in the return of income. Reliance was placed on authorities to the effect that a revised return replaces the original return and, if the revision is to cure omission, the revised return may relate back to the original filing date. Sub section (5) of section 80A (as applied) bars allowance of a Chapter VIA deduction which was not claimed in the return. Because the claim for deduction under section 80IB(10) had been withdrawn in the revised return and the assessing officer had no occasion to examine the claim during assessment, the appellate authority could not entertain and allow that claim for the first time in contravention of the statutory bar. The CIT(A) did not point to material satisfying the statutory conditions for allowance nor show that the AO had examined the claim; therefore the CIT(A)'s allowance was contrary to the statutory scheme and unsustainable. [Paras 10, 11, 12]

Allowance of deduction under section 80IB(10) by the CIT(A) was unlawful where the claim had been withdrawn by the revised return; the order of the AO accepting the revised return was restored.

Scope and limits of rectification power exercised under section 154 - Scope and limits of appellate authority's power to review its own order - Deduction under section 80IB(10) - Whether the CIT(A) was justified in entertaining and allowing a rectification under section 154 to admit and allow the deduction under section 80IB(10) after having earlier dismissed the appeal and accepted the revised return. - HELD THAT: - The Tribunal found that the power under section 154 is a limited power to correct mistakes apparent from the record and does not permit the appellate authority to review its earlier order in the absence of an identifiable mistake apparent on the face of the record. The CIT(A) had not pointed out any such mistake in his earlier order and had simply re examined and allowed the deduction on merits without showing a mistake apparent from the record. Further, because the deduction was not claimed in the return accepted by the AO, the CIT(A) could not, by rectification, permit a claim which had not been before the AO or shown to meet the statutory preconditions. Thus the exercise of rectification to admit and allow the deduction was beyond the scope of section 154 and unsustainable. [Paras 16, 17, 18, 19]

The CIT(A)'s exercise of power under section 154 to admit and allow the deduction was impermissible; the rectification and resultant allowance were set aside and the AO's order restored.

Final Conclusion: Both appeals by the Revenue were allowed: the Tribunal restored the assessing officer's orders for A.Y. 2011 12 and A.Y. 2012 13, holding that the deduction under section 80IB(10) could not be allowed after the assessee withdrew the claim by filing a revised return and that the CIT(A) had improperly used section 154 to review and allow the deduction.

Entitlement to exemption under section 54B - power of the Assessing Officer to entertain claims not made in the return - appellate authorities' power to entertain claims not made in the return - revision of return requirement for claims in assessment proceedings - exercise of power under section 263

Entitlement to exemption under section 54B - power of the Assessing Officer to entertain claims not made in the return - exercise of power under section 263 - Validity of the order passed by the Pr. CIT under section 263 setting aside the assessment on the ground that exemption under section 54B was claimed before the Assessing Officer for the first time during reassessment proceedings and not in the original return. - HELD THAT: - The Tribunal accepted that the exemption under section 54B was not claimed in the original return and that the Assessing Officer entertained and allowed the claim during reassessment proceedings. The Pr. CIT relied on Goetz India Ltd. to contend that the AO has no power to entertain a claim not made by way of a revised return and, therefore, the assessment order was erroneous and prejudicial to the interests of revenue. The Tribunal noted that Goetz India Ltd. establishes an embargo only on the AO's power to admit such claims, but does not preclude appellate authorities from allowing relief on a point not taken in the return where the claim is otherwise sustainable. In the present case the Pr. CIT did not dispute the legal eligibility of the assessee to claim exemption under section 54B; his objection related solely to the mode of presentation of the claim before the AO. Given that the claim's admissibility in law was not controverted, the Tribunal held that the mere technical incapacity of the AO to permit a claim first made during reassessment did not render the assessment order so erroneous and prejudicial as to justify exercise of jurisdiction under section 263. Accordingly, the Pr. CIT's order setting aside the assessment was not sustainable. [Paras 4, 5]

The order under section 263 setting aside the assessment is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that because the assessee's eligibility for exemption under section 54B was not disputed, the Pr. CIT erred in invoking section 263 merely because the AO admitted the claim during reassessment without a revised return; the assessment could not be declared erroneous and prejudicial to revenue on that ground.

Labeling requirements under the Bureau of Indian Standards Act, 2016 - confiscation and redemption under Section 125 of the Customs Act, 1962 - penalty under Section 112 of the Customs Act, 1962 - compliance with appellate order - service of appeal and stay application - defective affidavit/affirmation - contempt for non compliance

Compliance with appellate order - confiscation and redemption under Section 125 of the Customs Act, 1962 - labeling requirements under the Bureau of Indian Standards Act, 2016 - penalty under Section 112 of the Customs Act, 1962 - Respondents directed to comply with the direction in the order dated 22.03.2022 of the Commissioner of Customs (Appeals) permitting labeling and redemption for consumption unless a stay is obtained. - HELD THAT: - The Commissioner of Customs (Appeals) allowed the petitioner's appeal to the limited extent of permitting labeling pursuant to the petitioner's BIS licence and directed redemption (instead of re export) so that the imported solar modules may be labeled and consumed in India. The High Court observed that respondents have neglected to implement that appellate direction despite communications from the petitioner. In exercise of its supervisory jurisdiction the Court ordered that respondents shall serve the petitioner with copies of any appeal and stay application filed before CESTAT and, if no stay is granted within four weeks, shall strictly comply with the directions contained in the Commissioner (Appeals) order within one week thereafter. The direction preserves the appellate order unless and until a stay is granted by CESTAT. [Paras 3, 7]

Respondents must serve copy of appeal and stay application and, absent a stay within four weeks, implement the Commissioner (Appeals) order permitting labeling and redemption for consumption within one week.

Service of appeal and stay application - compliance with appellate order - Respondents directed to serve the petitioner with the appeal and stay application filed before CESTAT forthwith. - HELD THAT: - The affidavit in reply first disclosed that respondents had filed an appeal and stay application before CESTAT on 16.06.2022, but the petitioner denied having been served. The Court found service to be outstanding and directed respondents to serve copies by the following day to enable the petitioner to know the precise steps taken before the Appellate Tribunal. The Court linked the obligation of service to the subsequent compliance regime it ordered in the event no stay is obtained. [Paras 6, 7]

Respondents to serve the petitioner with the appeal and stay application by the next day; absence of a stay within four weeks will trigger the compliance directions.

Defective affidavit/affirmation - contempt for non compliance - Affidavit filed by respondents found to be improperly affirmed; the officer who affirmed is directed to re affirm the affidavit before the Court Master and warned of possible contempt proceedings for non compliance. - HELD THAT: - The Court identified material defects in the affidavit: inconsistency in date of affirmation, missing page, and an apparent rubber stamp signature, indicating the affirming officer had not read or correctly affirmed the affidavit. The Court treated the improper affirmation as a matter that undermines integrity of court records and ordered the person (D.S. Garbyal or the actual affirmant) to present before the Court Master to re affirm the affidavit. The Court further warned that continued failure to comply with the Court's directions, in the light of the defective affidavit filing, may invite contempt proceedings. [Paras 5, 7]

The officer who affirmed the affidavit shall re affirm it before the Court Master forthwith; respondents are put on notice of possible contempt if they do not comply with the Court's directions.

Final Conclusion: The petition is disposed with directions that respondents must serve copies of the appeal and stay application immediately, re affirm the defective affidavit before the Court Master, and, unless a stay from CESTAT is obtained within four weeks, comply with the Commissioner (Appeals) order permitting labeling and redemption for consumption within one week; liberty to apply.

Burden of proof in seizure of non-notified goods - proof of smuggling by positive and cogent evidence - non-notified goods under Section 123 of the Customs Act, 1962 - provisional release on security, bank guarantee and bond

Non-notified goods under Section 123 of the Customs Act, 1962 - burden of proof in seizure of non-notified goods - proof of smuggling by positive and cogent evidence - Seizure and confiscation of betel nut held to be unjustified because the department failed to prove smuggling by positive evidence and the goods are not notified under Section 123. - HELD THAT: - The Tribunal found that betel nut is not a notified commodity under Section 123 of the Customs Act, 1962 and accordingly the onus rested on the department to prove that the seized consignment was smuggled into India. The adjudicating authority's conclusion that the owner/driver could not produce valid documents and that Mizoram has little production of betel nut was held to be insufficient, because the department led no cogent or positive evidence showing foreign origin or the manner and place of smuggling. Negative inferences or reliance on perceived improbability of local production were held inadequate to discharge the burden. The Tribunal noted precedents relied upon by the parties, including Customs Appeal No.77344 of 2019 - Smt. Laltanpui and Dharmendra Kumar Jha , which support the principle that for non-notified goods the department must adduces positive proof of smuggling; applying that ratio, the department failed to discharge its burden in the present case. Consequently the seizure and confiscation could not be sustained and were set aside.

Confiscation set aside and appeal allowed for failure of the department to prove smuggling of non-notified goods.

Final Conclusion: The Tribunal allowed the appeal, holding that betel nut being non-notified under Section 123 the burden to prove smuggling lay on the department which was not discharged; therefore the seizure and confiscation were set aside and consequential relief granted as per law.

Authenticity of BIS certificate - confiscation for import without requisite BIS license - admissibility and evidentiary value of admissions by employee - corroboration by foreign supplier's denial - mandatory standard mark and revised Indian Standard applicability

Authenticity of BIS certificate - mandatory standard mark and revised Indian Standard applicability - confiscation for import without requisite BIS license - admissibility and evidentiary value of admissions by employee - corroboration by foreign supplier's denial - Whether the BIS certificate on the imported CRGO Electrical Steel Sheets/Coils was fake and whether confiscation and penalties imposed therefor were justified - HELD THAT: - The Tribunal found that the certificate affixed to the impugned goods bore the old designation IS 3024:2006 whereas the applicable Indian standard for CRGO at the relevant time had been revised to IS 3024:2015, undermining compliance with the mandatory standard mark requirement. The appellant's accountant, Mr. Manoj Kumar, admitted possession of the laptop from which editable excel files titled as BIS certificates were prepared and admitted receipt of certificate templates in editable form; this admission was corroborated by the proprietor's acknowledgment of the employee's role in preparing import documents. Further corroboration came from an e-mail by the purported foreign manufacturer denying issuance of the certificate and producing its genuine three page signed template, whereas the impugned certificate bore no signature. The Tribunal held these facts together furnished sufficient evidentiary basis to conclude that the BIS certificate was not genuine. Given that import of such goods without a valid BIS licence/standard mark is prohibited, the detention and confiscation determination and related consequences as affirmed by the Commissioner (Appeals) were held to be lawful. The Tribunal rejected the appellant's explanation that editable formats and internal filling practices meant the certificate was genuine, finding that the admissions and the supplier's denial negated that defense. [Paras 8, 9]

Findings of Commissioner (Appeals) that the BIS certificate was fake are upheld; confiscation and ancillary penalties/ consequences are sustained and the appeal is dismissed.

Final Conclusion: The Tribunal upholds the appellate authority's findings that the BIS certificate was not genuine and that confiscation (and related consequences) of the imported consignment was justified; the appeal is dismissed.

Self-assessment - reopening of assessment under Section 28 - proper officer for issuance of show cause notice - classification under Rules of Interpretation of the Tariff - Section XVI, Note 2 - classification of parts - entitlement to exemption under Notification No. 46/2011-CUS (Sl. No. 1335) - remand for verification of exemption applicability

Self-assessment - reopening of assessment under Section 28 - Whether Revenue could issue a demand under Section 28 without first appealing against the importer's self-assessed Bills of Entry. - HELD THAT: - The Tribunal held that demands under Section 28 for short levied or not paid duty are a statutory quasi judicial power to reopen an assessment and are distinct from refund mechanics under Section 27. While self assessment is an assessment and is appealable, Section 28 empowers the proper officer to reopen assessments and issue show cause notices within the statutory limitations. Therefore, issuing a demand under Section 28 without first appealing the importer's self assessment is permissible. [Paras 11, 12, 13, 14]

Revenue was correct in issuing the show cause notice under Section 28 without first appealing the self assessed Bills of Entry.

Show cause notice - contents of notice - amendment of classification - Whether the show cause notice proposed a change of classification of the imported goods. - HELD THAT: - The Tribunal examined the show cause notice and the pre consultation communications and found that the notice set out the appellant's classification, the Revenue's alternate classification and the applicable rates of duty (with specific reference to paragraphs 2-7 of the notice). The appellant was afforded adequate opportunity to explain its case during consultative processes prior to adjudication. A show cause notice must be read as a whole and, on that reading, it sufficiently proposed a change of classification. [Paras 16]

Revenue did propose a change of classification of the imported goods in the show cause notice.

Proper officer for issuance of show cause notice - Section 28(11) - deemed power of assessment - Whether the Commissioner (Audit), Customs Audit Commissionerate, was competent to issue the show cause notice under Section 28 in cases of clearance by self assessment. - HELD THAT: - The Tribunal observed that Section 28(11) deems officers appointed before 6 July 2011 to have had assessment powers; additionally, Canon India requires that a notice under Section 28 be issued by the 'proper officer'-the officer who made the assessment or his successor. In clearances effected by importer self assessment there is no assessing officer; post clearance audit officers are the first officers to examine the assessment. To hold otherwise would be absurd (requiring the importer to issue a notice to itself). Accordingly, where goods are cleared by self assessment, the audit, preventive or other officers who conduct the post clearance scrutiny (here, the Commissioner (Audit)) are 'the proper officer' competent to issue notices under Section 28. [Paras 17, 19, 20]

Commissioner (Audit) was competent to issue the show cause notice in the facts of this case.

Classification under Rules of Interpretation of the Tariff - Section XVI, Note 2 - classification of parts - Rule 3 - preference to specific entries - Whether the imported 'Magnetic Iron Centre Copper/Centre Core Assembly' is classifiable under CTH 8505 as a part of electro magnets or under CTH 8511 as a part of spark plugs. - HELD THAT: - Applying the Rules of Interpretation and Section XVI Note 2, the Tribunal noted both headings lie in Chapter 85 and Section Note 2 governs parts. The disputed goods are 'child parts' of spark plugs (which contain an electro magnet of which the core is a component). Section Note 2(b) directs that parts suitable solely or principally for use with a particular machine are to be classified with that machine. Rule 3(a) (preference to the more specific description) and, if needed, Rule 3(c) (last heading in numerical order) point to classification as parts of spark plugs. Viewed under Rule 1 with Section Note 2, and alternatively under Rules 3(a)/(c), the goods are correctly classified under 8511 90 00 as parts of spark plugs. [Paras 21, 23, 27, 28]

The imported goods are classifiable under 85119000 as parts of spark plugs.

Entitlement to exemption under Notification No. 46/2011-CUS (Sl. No. 1335) - remand for verification of applicability - Whether the appellant is entitled to the concessional exemption under Sl. No. 1335 of Notification No. 46/2011 Cus and, if so, to what extent for the Bills of Entry concerned. - HELD THAT: - Having classified the goods under 85119000, the Tribunal observed that Sl. No. 1335 of Notification No. 46/2011 Cus provides an unconditional concession to goods under 851190 imported from ASEAN countries; the disputed goods were imported from Thailand. However, the notification was amended from time to time during the period covering the 79 Bills of Entry (13.03.2018 to 06.03.2020). Determination of the precise applicability of the exemption to each Bill of Entry therefore requires examination of amendments and application to individual entries. For this limited purpose, the Tribunal remanded the matter to the original authority to re determine exemption applicability and duty liability accordingly. [Paras 29, 30, 31]

The appellant is prima facie entitled to benefit under Sl. No. 1335 of Notification No. 46/2011 Cus; matter remanded to the original authority to determine the extent of the exemption for each Bill of Entry.

Final Conclusion: The appeal is partly rejected and partly allowed: the Tribunal upholds the Revenue's classification of the imported goods under 85119000 (parts of spark plugs) but grants prima facie entitlement to the Notification No. 46/2011 Cus (Sl. No. 1335) exemption; the order is modified accordingly and the matter is remanded to the original authority to determine, for each Bill of Entry (imported between 13.03.2018 and 06.03.2020), the applicability and extent of the concession and re compute duty liability.

Willful defaulter - procedure for identification of willful defaulters under the RBI Master Circular dated 01.07.2015 - show cause notice and opportunity of personal hearing - review and confirmation by the Review Committee - Section 2(60) of the Companies Act, 2013 - principles of natural justice - requirement to supply the Identification Committee's order and right to represent to the Review Committee within 15 days - impact on Article 19(1)(g) and consequences of declaring a person a willful defaulter

Procedure for identification of willful defaulters under the RBI Master Circular dated 01.07.2015 - show cause notice and opportunity of personal hearing - review and confirmation by the Review Committee - principles of natural justice - Whether the respondent bank complied with the procedural mandate in paragraph 3 of the RBI Master Circular dated 01.07.2015 and principles of natural justice before classifying the petitioners as willful defaulters and publishing their names in CIBIL. - HELD THAT: - The court examined the mechanism in paragraph 3 of the Master Circular which requires (a) examination by an Identification Committee headed by an Executive Director and two senior officers, (b) issuance of a show cause notice and consideration of submissions with an opportunity for personal hearing if necessary, and (c) review and confirmation by a Review Committee with service of the Identification Committee's order to the borrower so that representation to the Review Committee may be made within 15 days. The record showed that the show cause notice dated 02.01.2019 was returned undelivered and that the notice produced was issued by a bank officer and not by the Identification Committee as mandated. Copies of any Identification Committee order were not placed on record or served on the petitioners. Although the bank relied on newspaper publication and subsequent intimation letters, the court found the bank's steps did not amount to compliance with the mandatory sequence and service requirements, and the bank had not afforded the petitioners the procedural opportunity envisaged in the Circular and elaborated by the Apex Court in State Bank of India v. M/s Jah Developers. Applying the principles in Kothari Filaments and the Jah Developers judgment, the court held that the absence of proper service of the preliminary show cause and of the Identification Committee's order, and the failure to provide the statutory opportunity to represent to the Review Committee, violated principles of natural justice and the statutory scheme. [Paras 9, 10, 12, 13, 14]

The classification of the petitioners as willful defaulters and their publication in the CIBIL list dated 30.09.2020 is set aside as violative of Section 2(60) of the Companies Act, 2013, contrary to the RBI Master Circular dated 01.07.2015, the law in State Bank of India v. Jah Developers and principles of natural justice; the bank is directed to follow the Circular afresh from the beginning.

Final Conclusion: Writ petition allowed; the bank's classification and publication are quashed for procedural non-compliance and breach of natural justice, and the matter is remitted to the bank to re-open identification proceedings in accordance with the RBI Master Circular dated 01.07.2015 and the law laid down by the Apex Court.

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - Appointed date - vesting of assets and liabilities - continuity of employment on amalgamation - dispensing with shareholder meeting - presumption of no-objection where statutory authority is silent

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - Sanction of the Scheme of Amalgamation between the Transferor and Transferee companies - HELD THAT: - The Tribunal examined the Scheme, statutory compliances, valuation, auditor certificates on accounting treatment, responses (or silence) of statutory authorities and the results of convened meetings. Having found the Scheme prima facie beneficial and not detrimental to shareholders, creditors or employees and satisfied that requisite procedural steps and certifications were furnished, the Tribunal granted sanction to the Scheme. The sanction was given subject to the clarification that it does not operate as exemption from any stamp duty, taxes or other statutory obligations and does not preclude action for any statutory violations in accordance with law. [Paras 7, 8, 9]

Scheme sanctioned by the Tribunal as meeting requisite statutory compliances and being beneficial; sanction subject to statutory obligations and without prejudice to action under law for any violations.

Appointed date - validity of ante-dated appointed date - Validity and fixation of the Appointed Date for the Scheme - HELD THAT: - The Regional Director pointed out that the originally stated Appointed Date of 01.04.2020 was ante-dated beyond a year and not in accordance with Section 232(6). The petitioner filed a Board resolution modifying the Appointed Date to 01.04.2021. Having considered the RD's report and the reply affidavit, the Tribunal fixed the Appointed Date as 1st April 2021 for the purposes of the Scheme. [Paras 6, 10]

Appointed Date fixed as 1st April 2021; earlier ante-dated date revised.

Vesting of assets and liabilities - continuity of employment on amalgamation - Effect of the Scheme on transfer/vesting of properties, liabilities and employee status - HELD THAT: - The Tribunal ordered that, pursuant to the Scheme and the statutory provision cited in the body of the order, all properties, rights and interests of the Transferor shall vest in the Transferee without further act or deed and all liabilities, obligations and duties shall transfer to the Transferee. It further directed that all proceedings pending by or against the Transferor shall continue against the Transferee and that employees of the Transferor in service immediately prior to the effective date shall become employees of the Transferee without break or interruption. [Paras 10]

All assets, liabilities, proceedings and employees of the Transferor shall stand transferred/vested in the Transferee on the Scheme taking effect.

Dispensing with shareholder meeting - presumption of no-objection where statutory authority is silent - Procedural directions concerning meetings, statutory notices and silence of statutory authorities - HELD THAT: - Pursuant to the first motion, directions were given regarding meetings of creditors and dispensing with meetings of equity shareholders where appropriate; the convenor's report of meetings was placed before the Tribunal. Notices were issued to statutory/regulatory authorities; where the Income Tax Department and other statutory authorities did not file objections or reports, the Tribunal presumed no objection in terms of the statutory framework. Paper publication and service on statutory authorities were held to have been effected as directed. [Paras 2, 4, 5, 6]

Meetings and service directions treated as complied with; absence of response from statutory authorities taken as no objection to sanction.

Role of Official Liquidator in scrutiny - Report by Official Liquidator and consequential fixation of auditor's remuneration - HELD THAT: - The Official Liquidator appointed an independent auditor to verify the affairs of the Transferor Company, who reported that affairs were not conducted in a manner prejudicial to members, creditors or the public. The Tribunal accepted that report and, following the OL's prayer, fixed the remuneration of the independent auditor and directed payment by the Transferor Company within the period specified in the order. [Paras 6]

Official Liquidator's verification accepted; auditor's remuneration fixed and directed to be paid by the Transferor Company.

Registration and corporate filings consequent to amalgamation - Obligations to effect name change, file revised constitutional documents and deliver certified copy of order for Registrar action - HELD THAT: - The Tribunal directed that the Transferee Company shall change its name to that of the Transferor and file requisite forms with the Registrar of Companies; file revised Memorandum and Articles of Association and pay any differential fees for enhancement of authorised capital after setting off Transferor's fees. The Transferor and Transferee were directed to deliver a certified copy of the sanction order to the Registrar within thirty days, upon which the Transferor shall be dissolved and records consolidated in the Transferee's files. Liberty was reserved for any person interested to apply for further directions. [Paras 6, 10]

Transferee to effect name change, file revised constitutional documents and necessary Registrar filings; certified copy of order to be delivered to Registrar leading to dissolution of Transferor and consolidation of records.

Final Conclusion: The Company Petition for sanction of the Scheme of Amalgamation is allowed. The Tribunal sanctioned the Scheme subject to statutory obligations, fixed the Appointed Date as 1st April 2021, directed vesting of assets and liabilities and continuity of employees, accepted the Official Liquidator's verification and fixed auditor's remuneration, and directed requisite filings and name-change formalities with the Registrar of Companies.

Binding effect of approved resolution plan - non-recoverability of demands included in sanctioned resolution plan - commercial wisdom of the Committee of Creditors and limited judicial review under the IBC - declaratory nature and retrospective effect of the 2019 amendment to Section 31 - unjust enrichment - scope of writ jurisdiction under Article 226

Binding effect of approved resolution plan - non-recoverability of demands included in sanctioned resolution plan - commercial wisdom of the Committee of Creditors and limited judicial review under the IBC - Demands which formed part of the resolution plan approved by the Adjudicating Authority/NCLT cannot be recovered from the resolution applicant or successor entities. - HELD THAT: - The court, applying the law laid down by the Hon'ble Supreme Court in Ghanshyam Mishra (summarised in the judgment), held that a resolution plan approved by the adjudicating authority is binding on stakeholders and that claims forming part of such sanctioned plan cannot be recovered thereafter. The judgment emphasises the primacy of the commercial wisdom of the Committee of Creditors and the limited scope of judicial review under Sections 30 and 31 of the IBC; once the adjudicating authority has approved the plan after satisfying the statutory requirements, the liabilities provided for in the plan are extinguished as against the successful resolution applicant. On that basis the court held that the demands created under the impugned assessment orders (relating to Assessment Year 2016-17) which were part of the sanctioned resolution plan could not be recovered from the petitioners. [Paras 14, 15, 17]

Writ petitions are partly allowed to the extent that demands forming part of the NCLT-sanctioned resolution plan shall not be recovered from the petitioners.

Unjust enrichment - scope of writ jurisdiction under Article 226 - The question of unjust enrichment was not adjudicated and is left open for determination by appropriate fora. - HELD THAT: - The court expressly declined to decide the contention of the State concerning unjust enrichment because that factual and disputed question was not before the assessing authority and cannot be resolved in writ proceedings under Article 226. Consequently, the issue of whether the resolution applicant (or successor) has been unjustly enriched by virtue of the non-recovery of the demands remains open and was not finally decided by this order. [Paras 16]

The question of unjust enrichment is left open and not adjudicated in these writ petitions.

Final Conclusion: The writ petitions are partly allowed: demands covered by the resolution plan approved by the NCLT (relating to Assessment Year 2016-17) shall not be recovered from the petitioners in view of the binding effect of the sanctioned resolution plan as explained in Ghanshyam Mishra; the contention of unjust enrichment is left open and not decided in these proceedings.

Pre-existing dispute under Section 9 of the IBC - admissibility of petition under Section 9 IBC - reconciliation of accounts as raising a dispute - Mobilox test for existence of dispute - initiation of CIRP and appointment of IRP

Pre-existing dispute under Section 9 of the IBC - reconciliation of accounts as raising a dispute - Mobilox test for existence of dispute - Existence of a pre existing dispute between the Corporate Debtor and the Operational Creditor and consequent maintainability of the Section 9 petition. - HELD THAT: - The Tribunal found on the record that correspondence exchanged prior to issuance of the Section 8 notice-most notably the Corporate Debtor's letters dated 20th February, 2020 and 14th March, 2020 and the Operational Creditor's letter dated 11th March, 2020-demonstrated a demand for reconciliation and verification of supporting documents and an appointment fixed for reconciliation on 14th March, 2020 which was not completed. Those communications, together with endorsements on invoices indicating receipt "for verification" and the return of post dated cheques in the context of an agreed reconciliation, constituted material pointing to a dispute continuing prior to the Section 8 notice. Applying the principle in Mobilox Innovations Pvt Ltd v Kirusa Software Pvt Ltd that the adjudicating authority must reject a Section 9 application where there is a plausible pre existing dispute (one that is not patently feeble, hypothetical or illusory), the Tribunal concluded that the Adjudicating Authority ought not to have admitted the petition. The Tribunal therefore held that the Adjudicating Authority's admission of the Section 9 petition and appointment of an IRP was incorrect on the facts of this case. [Paras 12, 16, 17]

The Adjudicating Authority's order admitting the Section 9 petition is set aside for failure to recognise the pre existing dispute established by the parties' correspondence and documentary record.

Final Conclusion: The appeal is allowed: the order dated 2nd August, 2021 admitting the Section 9 petition and appointing an Interim Resolution Professional is set aside. This judgment does not preclude the Operational Creditor from pursuing other remedies available in law.

Operational debt - provision of goods or services - license fee for use and occupation of immovable premises - interpretation of undefined statutory expression - relevance of GST and supply as service - precedential correctness of Tribunal decisions

Precedential correctness of Tribunal decisions - interpretation of undefined statutory expression - Whether the Tribunal's decision in Mr. M. Ravindranath Reddy (and the subsequent Promila Taneja) lays down the correct law. - HELD THAT: - The larger Bench found that the reasoning in Mr. M. Ravindranath Reddy relied unduly on a restricted concept of 'service' derived from Section 14(2) and Regulation 32 (essential goods and services) and therefore did not engage with the wider meaning of 'service' under Section 5(21). The Bench held that those decisions did not consider the full scope of the expression 'service' and consequently adopted an incorrect interpretative approach to the phrase 'operational debt'. The Court noted that where the agreement itself contemplates payment of GST and treats the supply as taxable, that circumstance is relevant to characterising the transaction as a supply of services. For these reasons the earlier Tribunal judgments were held not to state the correct law. [Paras 36, 39, 40]

The judgments in Mr. M. Ravindranath Reddy and Promila Taneja do not lay down the correct law.

Operational debt - provision of goods or services - license fee for use and occupation of immovable premises - relevance of GST and supply as service - Whether a licensor's claim for license fee for use of demised premises for business purposes constitutes an operational debt under Section 5(21) of the Code. - HELD THAT: - The Bench analysed Section 5(21)'s reference to a claim in respect of the provision of goods or services and observed that the term 'services' must be given its ordinary and statutory context where relevant. The License Agreement expressly contemplated payment of government taxes including GST, indicating that the arrangement was to be treated as a taxable supply (i.e., a service). The Agreement fell within the definition of a 'transaction' in Section 3(33) and the licence created an obligation to pay license fees that qualifies as a 'claim' under Section 3(6) and hence a 'debt' under Section 3(11). Applying these principles to the facts - a licence of a Warm Shell Building with fittings and fixtures for running an educational establishment, with contractual provision for GST - the Court concluded that the licence-related unpaid fees are claims arising from provision of services and thus are operational debts within Section 5(21). [Paras 23, 24, 25, 40, 41]

The licensor's claim for unpaid license fee for business use of demised premises is an operational debt under Section 5(21).

Final Conclusion: The appeal is allowed: the Tribunal judgments in Mr. M. Ravindranath Reddy and Promila Taneja do not state the correct law, and the claim for unpaid license fee for use of demised premises for business purposes is an operational debt under Section 5(21); the Adjudicating Authority's order is set aside and the Section 9 application is to be admitted, subject to the Adjudicating Authority passing admission orders after giving the parties an opportunity to settle.

Dissolution of the corporate debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016 - completion of liquidation process - distribution of realized proceeds in accordance with Section 53 of the Code - compliance with the IBBI (Liquidation Process) Regulations, 2016 including Form H - discharge of the liquidator - directions to forward dissolution order to the Registrar of Companies - exclusion of lockdown period under Regulation 47A of the IBBI (Liquidation Process) Regulations, 2016

Completion of liquidation process - dissolution of the corporate debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016 - distribution of realized proceeds in accordance with Section 53 of the Code - compliance with the IBBI (Liquidation Process) Regulations, 2016 including Form H - Whether the liquidation process of M/s Bookawheel Technologies Private Limited was completed in compliance with the Code and Regulations and whether the corporate debtor should be dissolved under Section 54(2) of the IBC. - HELD THAT: - The Tribunal recorded that the liquidator made the public announcement, verified claims, realized assets and proceeds, applied the CIRP and liquidation costs, and distributed available amounts to stakeholders in accordance with Section 53 of the Code and Regulation 42 of the Liquidation Regulations. The liquidator filed the final report dated 23.12.2020 and submitted a compliance certificate in Form H certifying observance of the IBC and Liquidation Regulations. There were no pending applications under Section 43 (avoidance) and no appeals under Section 42; an application under Sections 50 & 51 had been dismissed. The Tribunal also noted the exclusion of the lockdown period under Regulation 47A for computation of the liquidation period. On these findings the Tribunal concluded that the liquidation process has been completed and the conditions for dissolution under Section 54(1) and (2) are satisfied. [Paras 21, 22]

The Tribunal ordered that M/s Bookawheel Technologies Private Limited be dissolved with immediate effect under Section 54(2) of the Code.

Discharge of the liquidator - closure of liquidation bank account - directions to forward dissolution order to the Registrar of Companies and other statutory authorities - What ancillary directions should follow dissolution, including the liquidator's discharge, closure of the liquidation account, and transmission of the dissolution order to statutory authorities. - HELD THAT: - Having concluded that the liquidation process was complete and the realized amounts distributed, the Tribunal exercised the powers under the Code to give consequential directions. The liquidator was permitted to close the liquidation bank account after payment of pending amounts within three weeks, directed to forward a copy of the dissolution order to the Registrar of Companies within two weeks and to intimate other statutory authorities, and was discharged from his duties and responsibilities as liquidator. These directions complete the administrative steps attendant to dissolution. [Paras 23]

The Tribunal permitted closure of the liquidation bank account within three weeks, directed forwarding of the order to RoC and other statutory authorities, and discharged the liquidator from his duties.

Final Conclusion: The Tribunal disposed of IA No.47/2021 by directing dissolution of M/s Bookawheel Technologies Private Limited under Section 54(2) of the IBC, permitted closure of the liquidation account and directed transmission of the order to the Registrar of Companies and other statutory authorities, and discharged the liquidator.

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 - Declaration of solvency and full inquiry into the affairs of the company - Appointment of an insolvency professional as liquidator - Public announcement and invitation of claims under the Voluntary Liquidation Process Regulations - Submission of preliminary and final reports and compliance with liquidation formalities - Dissolution by the Adjudicating Authority upon completion of voluntary liquidation

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 - Declaration of solvency and full inquiry into the affairs of the company - Whether the statutory conditions for initiating voluntary liquidation under Section 59 were fulfilled enabling the company to be liquidated voluntarily. - HELD THAT: - The Tribunal found that the Board of Directors made a declaration, verified by affidavit, stating that a full inquiry into the affairs of the company had been conducted and that the company had no debts or could pay its debts in full from liquidation proceeds. The company produced audited financial statements for the requisite period and passed a special resolution in an Extra Ordinary General Meeting confirming voluntary liquidation and appointing a registered insolvency professional as liquidator. These acts satisfied the statutory prerequisites for voluntary liquidation under Section 59 read with the Voluntary Liquidation Process Regulations. [Paras 2, 5, 6]

Statutory conditions for voluntary liquidation under Section 59 were satisfied and the process could be proceeded with.

Public announcement and invitation of claims under the Voluntary Liquidation Process Regulations - Submission of preliminary and final reports and compliance with liquidation formalities - Distribution of assets and absence of creditor claims - Whether the liquidator complied with the procedural requirements of the Voluntary Liquidation Process Regulations and whether any claims or objections prevented dissolution. - HELD THAT: - The Tribunal recorded that the liquidator published the statutory public announcement in English and regional newspapers and uploaded it on the IBBI website, invited claims within the prescribed period, and submitted the preliminary and final reports to members, the Registrar of Companies and IBBI. The liquidator opened a liquidation bank account, realized bank balances (liquid assets) and distributed proceeds to members, and informed the Income Tax Department. The petition averred that no claims were received except from shareholders. The Registrar of Companies reported no pending inquiries, inspections, complaints or legal actions against the company. In view of these compliances and absence of creditor claims or public objections, there was no impediment to dissolution. [Paras 2, 8, 9, 11, 12]

Liquidator complied with the required procedural formalities, no adverse claims or objections were shown, and the liquidation process was complete in substance.

Dissolution by the Adjudicating Authority upon completion of voluntary liquidation - Whether, on the liquidator's application under Section 59(7), the Adjudicating Authority should pass an order dissolving the corporate person. - HELD THAT: - Having evaluated the material on record - including the declaration of solvency, special resolution, publication of the public announcement, submissions to IBBI and ROC, the preliminary and final reports, distribution of liquidation proceeds and the absence of claims or adverse reports - the Tribunal concluded that the affairs of the company had been wound up and its assets liquidated to the extent relevant. Exercise of power under Section 59(8) to dissolve the corporate person was therefore appropriate. The Tribunal directed communication of the dissolution order to the Registrar of Companies and IBBI within the stipulated period. [Paras 7, 13, 14, 15, 16]

The Adjudicating Authority ordered dissolution of the company and directed communication of the order to the Registrar of Companies and the IBBI.

Final Conclusion: The Tribunal held that the statutory and regulatory requirements for voluntary liquidation were satisfied, the liquidator complied with the prescribed procedure and no adverse claims or objections were shown; accordingly, exercising power under Section 59(8) of the Code the Tribunal ordered dissolution of M/s Dunwell Enterprises Private Limited and directed transmission of the order to the Registrar of Companies and the IBBI.

Default under Section 7 of the IBC - limitation under the Limitation Act - acknowledgement of debt and Section 18 - admission of petition and initiation of CIRP - moratorium under section 14 - appointment of Interim Resolution Professional

Default under Section 7 of the IBC - limitation under the Limitation Act - acknowledgement of debt and Section 18 - Whether the petition under section 7 is barred by limitation - HELD THAT: - The Adjudicating Authority found that the corporate debtor had committed a financial default and continued to fail to service interest on specified dates in early 2013, and made part payments thereafter but did not fully discharge the debt. The balance sheets for years ending 2011, 2012, 2013 and 2018 and the charges registered on the MCA portal were held to constitute continuing acknowledgements of liability by the corporate debtor. Relying on the principle that Section 18 of the Limitation Act operates to revive or extend limitation where there is a written acknowledgement of liability, and in light of binding precedents applying Section 18 to proceedings under Section 7 of the Code, the Tribunal concluded that such acknowledgements extended the period of limitation from time to time and rendered the petition not time-barred. The petition was therefore maintainable despite the earlier defaults. [Paras 18, 20, 21, 24, 25]

Limitation does not bar the Section 7 petition because the corporate debtor's balance sheets and admissions constituted acknowledgements that extended the limitation period under Section 18 of the Limitation Act.

Admission of petition and initiation of CIRP - moratorium under section 14 - appointment of Interim Resolution Professional - Whether the Section 7 petition should be admitted and CIRP initiated along with consequential orders - HELD THAT: - Having found that the petition was complete and that there was a debt in default exceeding the statutory threshold, the Tribunal admitted the Section 7 application. Consequential directions were issued: moratorium under the Code was imposed from the date of the order until completion of CIRP or further order; public announcement of CIRP was directed; an Interim Resolution Professional was appointed subject to compliance with regulatory requirements; the management was suspended and directed to cooperate with the IRP; periodic reporting by the IRP was mandated; the financial creditor was directed to deposit funds to meet initial CIRP expenses; and steps were ordered for communication of the order and updating of corporate records. [Paras 26]

The petition under Section 7 was admitted; CIRP is initiated with moratorium, public announcement, appointment of an IRP and ancillary directions as recorded.

Final Conclusion: The Tribunal admitted the Section 7 petition against the corporate debtor, holding that prior acknowledgements in the corporate debtor's records extended limitation and therefore the petition was not time barred; CIRP was ordered with moratorium, public announcement, appointment of an IRP and related directions.

Voluntary liquidation under section 59 of the Insolvency and Bankruptcy Code, 2016 - Declaration of solvency - Appointment of liquidator - Compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - Public announcement and claims process - Realisation and distribution of assets - No pending litigation - Dissolution of corporate person

Voluntary liquidation under section 59 of the Insolvency and Bankruptcy Code, 2016 - Dissolution of corporate person - Voluntary liquidation of the Petitioner under section 59 of the Code is in order and the corporate person is to be dissolved. - HELD THAT: - The petition, filed under section 59 of the Code by the corporate person through its liquidator, records that the Board resolved to liquidate the company and members passed the special resolution for voluntary winding up. The liquidator filed the final report and the Tribunal, on examination of the petition and annexed documents, concluded that the affairs of the corporate person have been wound up, assets liquidated, and the voluntary liquidation was not with intent to defraud any person. On this basis the Adjudicating Authority ordered dissolution of the Petitioner/Corporate Person. [Paras 2, 6, 18, 20, 21]

The Petition for voluntary liquidation is allowed and the Petitioner/Corporate Person is dissolved.

Declaration of solvency - Appointment of liquidator - Compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - Public announcement and claims process - Statutory and regulatory procedural compliances required for commencement and conduct of voluntary liquidation were fulfilled. - HELD THAT: - The directors executed the Declaration of Solvency and appended audited financial statements and statement of affairs. The members in an EGM passed the special resolution and appointed an Insolvency Professional as liquidator. The liquidator made the statutory public announcement in prescribed Form A and filed required returns and final report with the Registrar of Companies and IBBI in compliance with the Code and the IBBI (Voluntary Liquidation Process) Regulations, 2017. The Tribunal, having reviewed these documents, found procedural requirements satisfied. [Paras 7, 8, 9, 10, 18]

Procedural and regulatory compliances for commencing and conducting voluntary liquidation are found to have been complied with.

Realisation and distribution of assets - Public announcement and claims process - Assets have been realised (including refunds and cash balances), claims were admitted as shown, distributions made in accordance with the priority and final report filed. - HELD THAT: - The liquidator furnished details of realization (refunds and cash/bank balance) and a tabulated statement of claims, amounts admitted and distributions effected to stakeholders under the applicable priority. The liquidator reported no other claims were received in response to the public advertisement. The final report and receipts/payments were filed with the RoC and IBBI, and the Tribunal noted that liquidation costs and admitted claims were discharged and distributions completed as per the statement. [Paras 16, 17, 18]

Realisation and distribution of assets were completed and recorded; admitted claims were paid as reflected in the final report.

No pending litigation - Compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - There is no pending litigation against the corporate person as on the liquidation commencement date. - HELD THAT: - The liquidator stated, in accordance with the relevant regulation, that no litigation was pending against the corporate person. The Tribunal accepted this statement on the record in the course of considering the final report and petition for dissolution. [Paras 15, 20]

The Tribunal records that no litigation was pending against the corporate person as on the liquidation commencement date.

Final Conclusion: The Tribunal, being satisfied that statutory prerequisites were complied with, assets realised and distributed, no litigation subsisted and the voluntary liquidation was not fraudulent, allowed the petition and ordered dissolution of the Petitioner/Corporate Person, directing service of the order on the Registrar of Companies.

Admission under Section 9(5) of the Insolvency & Bankruptcy Code, 2016 - suspension of filing for defaults during COVID 19 under Section 10A - existence of a pre existing dispute as bar to IBC petition - threshold default limit under Section 4 - moratorium consequent to initiation of CIRP under Section 14 - appointment of Interim Resolution Professional and statutory duties under Sections 15, 17 and 18

Suspension of filing for defaults during COVID 19 under Section 10A - Section 10A of the IBC does not protect the alleged defaults in respect of the invoices relied on by the Operational Creditor. - HELD THAT: - The invoices in question were dated 31.10.2019, 30.11.2019 and 31.12.2019 and, applying the agreed payment schedule (40% on invoice date; remaining amounts at 30, 60 and 90 days), full payment fell due on or before 31.01.2020, 29.02.2020 and 31.03.2020. Therefore the defaults occurred before 25.03.2020 and Section 10A (which suspends initiation of CIRP for defaults arising on or after 25.03.2020) is not attracted to these defaults. [Paras 16]

Section 10A does not bar the Section 9 application in respect of the specified invoices.

Threshold default limit under Section 4 - The claimed debt in the invoices exceeds the monetary threshold prescribed in Section 4 of the IBC. - HELD THAT: - On the material on record the total amount mentioned in the relevant invoices itself exceeds the statutory threshold for triggering insolvency proceedings under Section 4; accordingly the petition is not barred on account of being below the monetary threshold. [Paras 17]

The petition satisfies the threshold requirement under Section 4.

Existence of a pre existing dispute as bar to IBC petition - There is no established pre existing dispute that would defeat the Section 9 petition. - HELD THAT: - The complaint letter by the Corporate Debtor alleged recurring errors in the supplied STBs, but contemporaneous communications (emails of 25.02.2020 and others) contain admissions of liability and a payment schedule acknowledging an outstanding liability of approximately the claimed sum; such communications do not present a plausible, non illusory dispute. Applying the standard that a dispute must be a plausible contention requiring investigation and not a patently feeble or spurious defence, the material shows no genuine dispute warranting rejection of the application. [Paras 18]

The plea of a pre existing dispute is rejected and does not bar admission of the petition.

Admission under Section 9(5) of the Insolvency & Bankruptcy Code, 2016 - appointment of Interim Resolution Professional and statutory duties under Sections 15, 17 and 18 - moratorium consequent to initiation of CIRP under Section 14 - The Section 9 application is admitted; an Interim Resolution Professional is appointed and moratorium under Section 14 is declared. - HELD THAT: - Having found that the defaults predate 25.03.2020, that the claimed amount meets the statutory threshold and that no bona fide pre existing dispute exists, the Tribunal admitted the Section 9 petition under Section 9(5). The Tribunal appointed an Interim Resolution Professional from the IBBI list subject to standard disclosures and conditions, directed the IRP to act and file reports in accordance with the Code and Regulations, and declared the moratorium specified under Section 14 with its statutory consequences and exceptions. The Operational Creditor was also directed to pay an interim sum to meet IRP's expenses and the Registry was directed to communicate the order and notify IBBI and ROC. [Paras 19, 20, 23, 24]

The petition is admitted; IRP appointed; moratorium under Section 14 is operative and ancillary directions to give effect to CIRP are issued.

Final Conclusion: The Section 9 petition by the Operational Creditor is admitted under Section 9(5) of the IBC, 2016; the Tribunal held that Section 10A is not attracted, the claim exceeds the statutory threshold, and no genuine pre existing dispute exists, appointed an Interim Resolution Professional and declared the moratorium under Section 14 with consequential directions.

Default - debt - claim - operational creditor - Corporate Insolvency Resolution Process - existence of dispute - Mobilox test - appointment of Interim Resolution Professional - operational expenses deposit - moratorium

Default - debt - claim - operational creditor - Corporate Insolvency Resolution Process - Mobilox test - existence of dispute - Whether there was a 'default' by the corporate debtor entitling the operational creditor to initiate CIRP under Section 9. - HELD THAT: - The Tribunal examined statutory definitions of 'default', 'debt' and 'claim' and applied the test in Mobilox Innovative Pvt. Ltd. to the disputes pleaded by the corporate debtor. The corporate debtor admitted that transactions until mid 2019 were without dispute and acknowledged part of the liability (USD 60,000), while the remaining objections raised by the corporate debtor were found to be feeble and not sufficiently particularised to constitute a pre existing dispute that would defeat the Section 9 application. On the material before it the Tribunal drew a reasonable inference that a liability was due and payable and that non payment amounted to default. [Paras 9, 10, 11]

Application under Section 9 is admitted; CIRP ordered to be initiated as there was default by the corporate debtor.

Appointment of Interim Resolution Professional - disclosure - operational expenses deposit - Committee of Creditors adjustment - Appointment of an Interim Resolution Professional and provision for funding of his functions. - HELD THAT: - The Tribunal noted that the operational creditor had not proposed an IRP and accordingly appointed Mr. Pramod Kumar Gupta as Interim Resolution Professional, recording his consent and requisite disclosures. The Tribunal directed the operational creditor to deposit a specified sum with the IRP within one week to meet expenses of the IRP, with that amount to be accounted for and subject to adjustment by the Committee of Creditors. [Paras 12, 13]

Mr. Pramod Kumar Gupta appointed as Interim Resolution Professional; operational creditor directed to deposit the prescribed amount for IRP's expenses, subject to adjustment by the Committee of Creditors.

Moratorium - prohibition on legal actions - Operation of moratorium consequent to admission of the Section 9 application. - HELD THAT: - Upon admission of the application under Section 9(5), the Tribunal ordered that the moratorium under Section 14(1) shall follow in relation to the corporate debtor and that the consequential provisions in Sections 14(2) to 14(4) will apply during the pendency of the moratorium, thereby triggering the statutory prohibitions specified in the Code. [Paras 14]

Moratorium under Section 14(1) is imposed and Sections 14(2)-14(4) shall apply.

Final Conclusion: The Tribunal admitted the Section 9 petition, held that a default existed entitling initiation of CIRP, appointed an Interim Resolution Professional with directions for an expense deposit to be made by the operational creditor (subject to adjustment by the Committee of Creditors), and ordered operation of the statutory moratorium.

Preferential transactions under Section 43 of the IBC - Undervalued transactions under Section 45 of the IBC - Fraudulent and wrongful trading under Section 66 of the IBC - Ordinary course of business exclusion and one-year look-back for non-related parties

Preferential transactions under Section 43 of the IBC - Certain transactions identified in the transaction audit report (paras reproduced in para 5) are preferential transactions and recoverable under Section 43 of the IBC, except as to Respondent No. 6. - HELD THAT: - The Tribunal examined the transaction auditor's party-wise findings and the timing of payments. Transactions executed within the statutory look back period of two years before the insolvency commencement date and not shown to be in the ordinary course of business were held to fall within the definition of preferential transactions. The Tribunal found that the impugned payments listed at paragraph 5 satisfy the temporal and substantive tests for avoidance under Section 43, and hence are recoverable, subject to the specific exception addressed separately in relation to Respondent No. 6. [Paras 5, 16]

Impugned transactions enumerated in para 5 are preferential transactions under Section 43 and liable to be recovered, except in respect of Respondent No. 6.

Undervalued transactions under Section 45 of the IBC - Transactions identified in the transaction audit report (paras reproduced in para 6) constitute undervalued transactions under Section 45 of the IBC. - HELD THAT: - On review of the auditor's findings regarding sales at prices materially below book or market value, transfers of vehicles below fair market value and other below-value disposals, the Tribunal concluded these transactions were not in the ordinary course and effected to put assets beyond creditors' reach. Applying the legal test for undervalue transactions, the Tribunal held the transactions described at paragraph 6 qualify as avoidable under Section 45. [Paras 6, 16]

Transactions detailed in para 6 are held to be undervalued transactions under Section 45 and are avoidable.

Fraudulent and wrongful trading under Section 66 of the IBC - Transactions enumerated in the transaction audit report (paras reproduced in para 7) are fraudulent/wrongful transactions under Section 66 of the IBC. - HELD THAT: - The Tribunal considered the auditor's findings of circular/adjusted entries without bank payments, sales/purchases with non existent or common address entities, lack of transportation/documentary support and other indicia of transactions entered to inflate/erase stock or divert assets. Concluding that such conduct demonstrated intent to defraud creditors or fraudulent purpose in carrying on the business, the Tribunal held those transactions fall within Section 66 and attract remedies against persons knowingly party to them. [Paras 7, 16]

Transactions described in para 7 are held to be fraudulent/wrongful transactions under Section 66 and liable to appropriate consequences.

Ordinary course of business exclusion and one-year look-back for non-related parties - Respondent No. 6's transactions fall outside the ambit of Section 43 because the respondent was not shown to be a related party and the transactions predate the one year relevant period for non related parties. - HELD THAT: - Respondent No. 6 produced purchase orders, bank statements and ledger entries and the record contained no material to establish related party status. Applying the Anuj Jain principle as to transactions in the ordinary course and the statutory temporal provision that for non related parties the relevant period is one year prior to CIRP commencement, the Tribunal found the last transaction attributed to Respondent No. 6 occurred before the one year look back period and accordingly is outside Section 43's purview in respect of that respondent. [Paras 9, 12]

Alleged transactions with Respondent No. 6 are excluded from avoidance under Section 43 on the ground that they fall outside the one year relevant period for non related parties and no related party relationship was established.

Duty of the Resolution Professional to apply for avoidance and recovery - The Resolution Professional is entitled and directed to seek recovery of the amounts identified and to initiate penal proceedings against suspended directors and others. - HELD THAT: - Relying on Section 25(1) and (2)(j) which impose duties on the RP to preserve assets and apply for avoidance of suspect transactions, and Sections 45 and 66 which provide for recovery/compensation for undervalued and fraudulent transactions, the Tribunal granted the reliefs sought. The Tribunal directed the respondents (other than Respondent No. 6) to pay the amounts identified within thirty days and directed the RP to initiate penal proceedings as per law against suspended directors and other parties. [Paras 14, 15, 17]

Application allowed: respondents except Respondent No. 6 directed to pay amounts as identified; RP directed to initiate penal proceedings.

Final Conclusion: The Tribunal allowed the RP's application: it found the listed transactions to be preferential (Section 43), undervalued (Section 45) or fraudulent (Section 66) and directed respondents (other than Respondent No. 6, whose transactions were held outside Section 43) to pay the amounts identified within 30 days and authorised the RP to initiate penal proceedings.

Setting aside administrative order - System-generated communications and portal accessibility - Opportunity to file response afresh / Form SVLDRS-2A - Right to personal hearing and notice period - Directions to accept physical filing where electronic filing is infeasible - Disclosure of authorities relied upon before hearing

Setting aside administrative order - System-generated communications and portal accessibility - Form No. SVLDRS-3 dated 13.03.2020 was set aside because the petitioner did not receive system-generated intimation and faced portal access problems. - HELD THAT: - The court accepted the uncontroverted averment that the petitioner was unable to access the SVLDRS portal and did not receive email/SMS intimations. The affidavit-in-reply did not deny the portal-access problem and acknowledged that communications are system-generated with minimal human intervention. Given these facts and without adjudicating the substantive merits of the underlying demand, the court held that limited interference was required in the interest of justice and therefore set aside the impugned Form No. SVLDRS-3 to enable the petitioner to respond to the estimate communicated in Form No. SVLDRS-2. [Paras 7, 8, 9]

Form No. SVLDRS-3 dated 13.03.2020 is set aside and the petitioner is permitted to respond afresh to Form No. SVLDRS-2.

Opportunity to file response afresh / Form SVLDRS-2A - Directions to accept physical filing where electronic filing is infeasible - Right to personal hearing and notice period - Disclosure of authorities relied upon before hearing - The respondent is directed to permit fresh filing of Form No. SVLDRS-2A (electronically or physically if portal is not feasible), to afford a personal hearing with at least seven working days' notice, and to furnish any list of authorities intended to be relied on. - HELD THAT: - Having set aside the system-issued Form No. SVLDRS-3, the court provided remedial procedural directions to ensure effective opportunity to be heard. The petitioner may file Form No. SVLDRS-2A afresh online; if technical filing is not feasible, respondent No.5 must inform the petitioner within two weeks and the petitioner shall then file a physical copy within one week. Before passing any order on the representation, respondent No.5 must grant a personal hearing with notice at least seven working days in advance. If respondent No.5 intends to rely on any precedents or orders, a list of those pronouncements must be provided with the hearing notice so the petitioner can address or distinguish them. [Paras 9]

Respondent No.5 to permit fresh electronic filing or accept physical filing if infeasible, grant a personal hearing with seven working days' notice, and supply any authorities to be relied upon with the hearing notice.

Final Conclusion: The High Court set aside Form No. SVLDRS-3 dated 13.03.2020 and directed that the petitioner be allowed to file Form No. SVLDRS-2A afresh (electronically or physically if the portal is not usable), be afforded a personal hearing with at least seven working days' notice, and be furnished with any authorities the respondent proposes to rely upon before a fresh decision is taken.

Violation of principles of natural justice - right to personal hearing - ex parte adjudication - opportunity to be heard - remand for de novo consideration

Right to personal hearing - violation of principles of natural justice - ex parte adjudication - Whether passing the order-in-original on 28.02.2017 before the last date offered for personal hearing vitiated the impugned order for violation of principles of natural justice. - HELD THAT: - The notice dated 17.02.2017 expressly fixed three dates for personal hearing and informed the petitioner that it could appear on any one of the dates. The respondents' later contention that the third date was a typographical error was rejected. Where an adjudicating authority gives a party an option to appear on any one of multiple specified dates, the authority is obliged to wait at least until the last date specified before proceeding to decide the matter ex parte. Abruptly passing the order-in-original on 28.02.2017 without awaiting the final date of 03.03.2017 defeated the clear opportunity afforded to the petitioner to be heard and accordingly vitiated the impugned order on the ground of breach of natural justice. The existence of an alternative appellate remedy does not preclude exercise of writ jurisdiction where principles of natural justice have been breached. [Paras 11, 12]

Impugned order dated 28.02.2017 was set aside as having been vitiated by violation of the principles of natural justice.

Remand for de novo consideration - opportunity to be heard - What remedial course should follow upon finding violation of natural justice. - HELD THAT: - In view of the invalidation of the order for denial of the full opportunity of personal hearing, the Court directed that the respondents may pass fresh order(s) in accordance with law. Before passing any fresh order the respondents are obliged to grant due notice and a fair opportunity of hearing to the petitioner, thereby permitting the petitioner to avail any of the dates for personal hearing and to place material in support of its case. The direction is confined to fresh consideration and does not decide the merits of the underlying demands, additions or penalties which were earlier confirmed. [Paras 13]

Order dated 28.02.2017 set aside and matter remitted to the respondents to pass fresh orders after granting due notice and opportunity of hearing.

Final Conclusion: Writ petition allowed; the order-in-original dated 28.02.2017 is set aside for breach of natural justice and the matter is remitted to the respondents for fresh consideration after affording the petitioner due notice and opportunity of hearing; no order as to costs.

Ultra vires - appointment of Central Excise Officers under Rule 3 - pan-India jurisdiction of Directorate officers - definition of 'Central Excise Officer' in Section 2(b) of the Central Excise Act, 1944 - application of Central Excise Act provisions to Chapter V of the Finance Act, 1994 - section 73 - issuance and adjudication of show cause notices - mandatory effect of administrative circulars / pre-consultation - doctrine of comity of jurisdiction

Ultra vires - appointment of Central Excise Officers under Rule 3 - Validity of Notification No.22/2014 ST dated 16.09.2014 insofar as it appoints officers to exercise powers under Chapter V of the Finance Act, 1994. - HELD THAT: - The Court examined the statutory scheme by which provisions of the Central Excise Act, 1944 were made applicable to Chapter V of the Finance Act, 1994 and the Board's power to appoint officers as Central Excise Officers under Rule 3. The impugned Notification must be read in the context of earlier notifications (notably Notification No.38/2001 and subsequent notifications) and the expansive definition of 'Central Excise Officer' in Section 2(b) of the Central Excise Act, 1944 which permits the Board to invest any person with the powers of a Central Excise Officer. The Board has consistently issued notifications investing Directorate officers with powers exercisable throughout India; Notification No.22/2014 ST is to be read in that statutory and historical context. The Court found no legal impediment in the Board appointing Directorate officers to exercise powers for the purposes of Chapter V and rejected the contention that Rule 3 of the Service Tax Rules, 1994 mandates a restricted local limit rendering the impugned notification ultra vires. [Paras 161, 167, 192, 193, 195]

Challenge to Notification No.22/2014 ST dated 16.09.2014 fails; the Notification is not ultra vires and stands valid.

Definition of 'Central Excise Officer' in Section 2(b) of the Central Excise Act, 1944 - pan-India jurisdiction of Directorate officers - doctrine of comity of jurisdiction - Whether officers of the Directorate General of Central Excise Intelligence / Directorate General of GST Intelligence (DGGI/DGCEI) qualify as 'Central Excise Officers' and may exercise jurisdiction throughout India. - HELD THAT: - The Court analysed Section 2(b) of the Central Excise Act, 1944, Rule 3 of the Central Excise Rules, 2002 and historic Notifications (e.g., Notification No.38/2001 C.E.(N.T.), Notification No.7/2004 C.E.(N.T.) and later notifications) which appointed Directorate officers and invested them with powers 'throughout the territory of India'. Given the expansive statutory definition and the Board's exercise of its power to invest such officers, the Directorate officers are properly 'Central Excise Officers' for the purposes of Chapter V of the Finance Act, 1994 and may exercise the powers entrusted to them on a pan India basis. The Court rejected petitioners' reliance on comity and prior authorities to the extent they would curtail the Board's notified appointments, holding that the Sayed Ali/Canon line cannot be imported to nullify the Board's notifications in this statutory context. [Paras 177, 179, 189, 191, 196]

Officers of the Directorate (DGCEI/DGGI) are 'Central Excise Officers' and may be invested with pan India powers; the challenge to their competence to issue show cause notices is rejected.

Section 73 - issuance and adjudication of show cause notices - application of Central Excise Act provisions to Chapter V of the Finance Act, 1994 - Whether show cause notices issued by officers appointed under the impugned Notification are without jurisdiction under Section 73 of the Finance Act, 1994. - HELD THAT: - Section 73 prescribes the machinery for recovery of service tax and contemplates issuance and adjudication by 'Central Excise Officers' as defined by Section 2(b) of the Central Excise Act, 1944 (as applied). Having held that Directorate officers are validly invested as Central Excise Officers, the Court concluded that show cause notices issued by such officers under Section 73 are not without jurisdiction merely because the officers belong to the Directorate or exercise pan India jurisdiction pursuant to valid notifications. The Court also noted that factual disputes (including questions of limitation, suppression, classification and extended period) are issues to be adjudicated by the designated adjudicating authority and should not be decided at writ stage where contested facts exist. [Paras 159, 191, 193, 202, 204]

Show cause notices issued by officers appointed under the impugned Notification are not ipso facto without jurisdiction; challenges raising disputed factual questions must be decided by the adjudicating authorities.

Mandatory effect of administrative circulars / pre-consultation - Whether failure to follow the Board's Master Circular / pre consultation requirement (e.g., Circular No.1053/2/2017 CX) renders the show cause proceedings void. - HELD THAT: - The Court held that administrative circulars and master circulars, including pre consultation requirements, are administrative facilitation measures and not statutory mandates enforceable as a matter of law to invalidate proceedings. While such circulars promote trade facilitation and uniformity, mere non compliance with the pre consultation requirement does not render a subsequently issued show cause notice illegal or without jurisdiction. The Court relied on precedent that circulars cannot supersede statutory provisions and are not binding on courts in the sense of creating substantive legal rights to quash proceedings. [Paras 197, 198, 199, 200, 201]

Non observance of the pre consultation circular does not invalidate show cause proceedings; such challenges are not a ground for quashing SCNs.

Section 73 - issuance and adjudication of show cause notices - Administrative directions as to interim procedural relief given to petitioners whose SCNs or Orders in Original were challenged. - HELD THAT: - Having dismissed the legal challenge to Notification No.22/2014 ST and having held SCNs issued by Directorate officers are competent, the Court nevertheless directed procedural relief: petitioners issued SCNs in Category 2 are permitted to file replies within 30 days and the adjudicating officer should endeavour to decide preferably within 90 days thereafter; petitioners who suffered Orders in Original in Category 3 are permitted to file statutory appeals within 30 days and make the statutory pre deposit under the Central Excise Act, 1944. The Court emphasised that merits and factual disputes are to be addressed by the adjudicating and appellate authorities. [Paras 205, 206, 207, 208]

Writ petitions challenging the Notification fail; petitioners with SCNs are granted time to file replies and adjudication timelines; petitioners aggrieved by Orders in Original may file appeals with prescribed pre deposit within 30 days.

Final Conclusion: The writ petitions challenging Notification No.22/2014 ST are dismissed. The Court holds that officers of the Directorate (DGCEI/DGGI) are validly appointed as 'Central Excise Officers' and may exercise powers (including pan India jurisdiction) under Chapter V of the Finance Act, 1994; failure to comply with administrative pre consultation circulars does not render show cause proceedings void. Petitioners served with show cause notices are directed to file replies within 30 days and adjudicating authorities are to endeavor timely disposal; petitioners aggrieved by Orders in Original are permitted to prefer statutory appeals with the mandated pre deposit within 30 days.

Interpretation of undertaking at time of cancellation - attachment of lessor's property for lessee's dues - recovery under Section 11 of the Central Excise Act - recovery under Section 142 of the Customs Act - successor-in-business

Interpretation of undertaking at time of cancellation - Whether the undertaking given by the appellant at the time of cancellation of central excise registration made the appellant liable for dues of M/s Roma Industries. - HELD THAT: - The Tribunal examined the text of the undertaking given on surrender of registration and held that its plain language refers to dues of the appellant (M/s Shaniyal Dying and Printing Mills) and envisages that if dues of the appellant arising after surrender are not paid by M/s Roma Industries then the directors/partners of the appellant would be responsible. The Tribunal found that the Department misinterpreted the undertaking to mean that the appellant would be liable for pre-existing or independent dues of M/s Roma Industries. The Court further held that an undertaking given at the time of cancellation does not ipso facto create liability beyond what is lawful and relied on the settled principle that illegality cannot be converted into legality by an agreement or third party act. [Paras 4]

The undertaking does not bind the appellant for dues of M/s Roma Industries and was misinterpreted by the Department.

Attachment of lessor's property for lessee's dues - recovery under Section 11 of the Central Excise Act - recovery under Section 142 of the Customs Act - successor-in-business - Whether the Department could recover dues of M/s Roma Industries by attaching and selling the appellant's property under the provisos to Section 11 of the Central Excise Act and Section 142 of the Customs Act. - HELD THAT: - The Tribunal held that the provisos invoked apply where a successor in business acquires the predecessor's business or where the transferee's possession arises from a transfer of business; they do not extend to the case of a lessor who merely leased or granted leave and licence of premises to a lessee. The appellant did not succeed to or acquire the business or assets of M/s Roma Industries and there was no finding of sham or that the lessee and lessor were the same entity. Reliance was placed on prior decisions which hold that recovery cannot be affected by selling what the defaulter did not own and that mere lease or licence does not confer proprietary rights on the lessee that allow sale of the lessor's property for the lessee's dues. On these grounds the attachment and distress were found to be without legal foundation. [Paras 4, 5]

The provisions of Section 11 and Section 142 could not be validly invoked to recover dues of M/s Roma Industries from the appellant's leased/leave & licence property; the attachment and recovery were set aside.

Final Conclusion: The impugned order is set aside; the Tribunal allowed the appeal, held that the undertaking did not render the appellant liable for the lessee's dues and that recovery by attachment of the appellant's property for dues of M/s Roma Industries was not maintainable, and directed consequential relief including refund with interest as per law.

Deeming provision under Rule 17(2) of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - requirement of presence of functional FFS (Form Fill Seal) packing machines for levy under PMPM Rules - onus on Revenue to prove clandestine manufacture and clearance by cogent, corroborative evidence - evidentiary value of retracted statements and requirement of cross examination under Section 9D regime - admissibility and reliability of handwriting expert opinion and documentary proof of tenancy - confiscation and penalty under Rules 25 and 26 of the Central Excise Rules, 2002 and penalty under Section 11AC

Deeming provision under Rule 17(2) of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - Whether the adjudicating authority validly applied the deeming fiction in Rule 17(2) to fasten duty from 01.04.2010 in absence of evidence of clandestine manufacture/clearance before that date. - HELD THAT: - Tribunal found that the adjudicating authority itself recorded absence of any evidence of clandestine manufacture, clearance, receipt of raw material or receipt of consideration prior to 01.04.2010. The deeming provision in Rule 17(2) was applied without any material showing a change in facts after 01.04.2010; no new corroborative evidence emerged for the period April 2010-18.02.2011 that would justify extending liability from 01.04.2010. Applying the ratio in Shri Krishna Gopal Lawania (as adopted by the Tribunal) and principles that the fiction cannot be invoked without supporting evidence of manufacture/clearance, the Tribunal held that duty could not be demanded for the period prior to the actual visit and that, on the facts, demand could at best relate to the days immediately proximate to the search (the visit on 18.02.2011), and not from 01.04.2010 in the absence of corroboration. [Paras 20, 21, 22, 24]

Deeming fiction under Rule 17(2) could not be validly applied from 01.04.2010 in absence of cogent evidence; demands for period prior to February 2011 are unsustainable.

Requirement of presence of functional FFS (Form Fill Seal) packing machines for levy under PMPM Rules - Whether seized equipment at the Bhourasala and other premises qualified as functional FFS packing machines such that presumptive duty under PMPM Rules could be levied. - HELD THAT: - The Tribunal observed that the machines were photographed/videographed and subsequently detained by the department, and that the adjudicating authority recorded absence of vital parts (for example feeding hoppers) and evidence of dismantling. Appellants repeatedly sought expert inspection; the department declined post seizure technical verification and the adjudicating authority refused inspection on the ground of lapse of time. In these circumstances, and having regard to the statutory definition of packing machines under the Rules and precedents requiring strict construction of the charging provisions, the Tribunal held that incomplete/dismantled equipment lacking essential parts cannot be treated as installed/functional packing machines to attract presumptive levy under PMPM Rules. The Tribunal further relied on authorities which require technical verification where functionality is disputed and disagreed with inferring continuous operability in absence of technical or corroborative evidence. [Paras 27, 28, 29]

Seized equipment did not, on the material, meet the requirement of being functional FFS packing machines; therefore levy under PMPM Rules on that basis was unsustainable.

Onus on Revenue to prove clandestine manufacture and clearance by cogent, corroborative evidence - preponderance of probability and requirement of corroboration - Whether Revenue discharged the burden of proof to establish clandestine manufacture/clearances by M/s MSS and connected premises and thereby justify the confirmed presumptive demand and penalties. - HELD THAT: - The Tribunal reviewed the material relied upon by the adjudicating authority - admitted and later retracted statements, VAT returns of a third party (M/s Shiv Udyog), call records, seizure inventories and reverse calculations - and concluded that none constituted cogent, direct or corroborative evidence of systematic clandestine manufacture/clearances by M/s MSS. Several key witnesses had retracted statements on cross examination; where relied upon, cross examination was at times only permitted after appellate intervention. The Tribunal reiterated settled precedents that clandestine removal is a serious allegation which requires tangible, corroborative proof (procurement, altered stocks, transport/receipt records, buyers, receipts of sale proceeds etc.) and that mere mathematical presumptions or uncorroborated third party VAT figures are insufficient. On that basis the Tribunal held the demand and penalties against M/s MSS unsustainable. [Paras 23, 24]

Revenue failed to prove clandestine manufacture/clearances by M/s MSS with cogent corroborative evidence; demand and penalties against M/s MSS set aside.

Admissibility and reliability of handwriting expert opinion and documentary proof of tenancy - Whether disputed rent agreements and handwriting expert reports could be treated as reliable/documentary proof to fasten ownership/occupier status and liability on the appellants (including Shri Anmol Mishra and others). - HELD THAT: - The Tribunal examined the circumstances of production of rent agreements (late production during searches), the contested notary evidence, and the handwriting expert reports relied upon by Revenue. It found the department relied on a private, at times unqualified, expert (report of Shri H.S. Tuteja) without sending documents to a recognised government forensic laboratory; cross examination exposed weaknesses in the expert's methods and credentials. The Tribunal also recorded that some notarial statements were retracted on examination in chief, and that critical inquiries into intention/consideration and dating of stamp papers were not addressed. In the light of established authorities cautioning against sole reliance on handwriting opinion and requiring corroboration, the Tribunal held the disputed documentary/evidentiary material insufficient to fix ownership/operational control or to sustain penal consequences. [Paras 26, 29, 30]

Rent agreements and handwriting expert evidence, as relied upon, were not reliable/corroborative; they could not sustain findings of ownership/occupier status or penalties.

Evidentiary value of retracted statements and requirement of cross examination under Section 9D regime - Whether retracted/confessional statements and the manner/timing of cross examination permitted by the department could be the basis for confirming demands and penalties. - HELD THAT: - The Tribunal noted that a number of statements initially recorded during investigation were later retracted at examination in chief or on cross examination; in several instances cross examination was only permitted after appellate directions. Given Section 9D jurisprudence and authorities requiring that statements relied upon be tested by cross examination and be corroborated, the Tribunal held that reliance on uncorroborated, retracted statements (or statements whose cross examination was forestalled) cannot form the backbone of a clandestine manufacture case. The Tribunal also observed that the department itself had delayed or impeded cross examination, and therefore the subsequent retractions could not be dismissed as meaningless without assessing the procedural history. [Paras 18, 24, 30]

Retracted statements and the procedural irregularities in examination/cross examination deprived those statements of sufficient evidentiary value to sustain demands or penalties.

Confiscation and penalty under Rules 25 and 26 of the Central Excise Rules, 2002 and penalty under Section 11AC - Whether confiscation and penalties imposed on appellants in respect of seized goods, vehicles and alleged dealing were maintainable. - HELD THAT: - The Tribunal found that confiscation and penalties were largely premised on assumed ownership/possession links, brand printing on seized materials and on uncorroborated statements. The Revenue did not make reasonable enquiries of suppliers, transporters or owners to establish non duty paid character or the appellants' dealing with goods. Where ownership/possession and dealing were not established by direct or corroborative evidence, and where primary liability to manufacture was found to lie elsewhere (e.g., tenant Shri Abdul Salam for M/s Mahadev), the Tribunal concluded that penalties under Rules 25/26 and Section 11AC could not be sustained. [Paras 25, 31, 32, 33]

Confiscation and penalties imposed on the appellants are not maintainable for want of evidence linking them to ownership, possession or dealing in non duty paid excisable goods; penalties set aside.

Final Conclusion: For the reasons given, the Tribunal set aside the adjudicating order: demands and penalties confirmed by the adjudicating authority were quashed in respect of the appellants and all appeals were allowed, the impugned orders being unsustainable for lack of requisite technical proof, corroborative evidence and reliable documentary/forensic support.

Principles of natural justice - reasonable opportunity and personal hearing - compounding under the Tamil Nadu Value Added Tax Act, 2006 - assessment and tax demand on attribution of contract value - relegation to statutory appeal and pre-deposit condition - remand for factual determination by the assessing authority

Principles of natural justice - reasonable opportunity and personal hearing - compliance with departmental circular on grant of time - Whether the assessment orders suffered from violation of principles of natural justice for want of reasonable opportunity and refusal to communicate grant or denial of extension of time. - HELD THAT: - The Court found that the Assessing Authority had accommodated multiple requests for extension of time and had recorded a specific limitation on the time granted in the delivery book when receiving the petitioner's request of 27.03.2019. Having examined the relevant departmental Circular which requires that requests for further time be considered and communicated and that personal hearing be afforded, the Court held that the Circular's requirement was satisfied: the officer's endorsement restricting the extended time till 05.04.2019 communicated the decision on the request. There was therefore no breach of the principles of natural justice and no procedural infirmity in the passing of the assessment orders insofar as opportunity to be heard is concerned.

No violation of principles of natural justice; sufficient opportunity had been afforded and procedural requirements were met.

Compounding under the Tamil Nadu Value Added Tax Act, 2006 - assessment and tax demand on attribution of contract value - remand for factual determination by the assessing authority - relegation to statutory appeal and pre-deposit condition - Whether any tax liability subsists in the hands of the petitioner given that the subcontractor purportedly discharged tax liability on the contract, and the consequent course of action. - HELD THAT: - The Court treated the question of whether the entire contract value had been offered to tax by the contractor as a question of fact and a mixed question of law and fact unsuitable for determination in writ proceedings. The petitioner relied on the Assistant Commissioner's proceedings in the contractor's case, but the Court found those materials insufficient to conclude that the entire contract value was taxed in the contractor's hands or to compare the respective scopes of work. Accordingly, the Court declined to decide the matter on merits and directed that the factual attribution of tax liability be examined afresh by the assessing authority. The petitioner was relegated to file the statutory appeal; the authority is to determine within three weeks of institution of the appeal, after hearing the petitioner, whether any tax liability survives. If the authority finds no liability, the appeals would become unnecessary; if some liability is attributed to the petitioner, the pre-deposit condition for proceeding with the appeal shall apply.

Issue remanded to the assessing authority for fresh factual determination; petitioner relegated to statutory appeal which will be entertained if filed within three weeks, with the authority to determine liability and enforce pre-deposit conditions as applicable.

Final Conclusion: Writ petitions dismissed on merits of procedural fairness; the only remaining question-whether any tax liability survives in the hands of the petitioner because of attribution between principal and contractor-is remanded to the assessing authority for determination; statutory appeals may be filed within three weeks and will be processed subject to the authority's preliminary finding on liability and applicable pre-deposit conditions.