TaxTMI Updates e-Newsletter
Jul 15,2022

Writ of mandamus - rectification of GSTR-1 - consideration of representation - opportunity of hearing - reasoned order - submission of fresh GSTR-1

Rectification of GSTR-1 - consideration of representation - reasoned order - opportunity of hearing - Respondent authority to consider and decide the petitioner's representation seeking rectification/correction of GSTR-1 for the months specified, after hearing and by a reasoned order within a stipulated time. - HELD THAT: - The High Court directed that the Assistant Commissioner, State GST, Cooch Behar Charge, shall consider the petitioner's representation dated November 12, 2021 (annexed as Annexure "P/4") and dispose of it by passing a reasoned order. The respondent is required to afford the petitioner and/or its authorised representative an opportunity of hearing before deciding the representation. The Court permitted the petitioner to raise all factual and legal contentions at the hearing and to rely upon judicial decisions, including the judgment cited on behalf of the petitioner, when making submissions. The direction is procedural and confined to adjudicatory consideration of the pending representation; it does not itself decide the merits of the rectification request. [Paras 5, 6, 7]

Writ petition disposed by directing the respondent to consider the representation, give hearing, pass a reasoned order and communicate the same within four weeks; petitioner permitted to raise all issues and rely on authorities.

Final Conclusion: Writ petition disposed of with a direction to the Assistant Commissioner, State GST, Cooch Behar Charge, to consider and decide the petitioner's representation for rectification of GSTR 1 by a reasoned order after hearing within four weeks; petitioner may advance all factual and legal contentions and rely on judicial decisions; no order as to costs.

Validity of E Way bill for movement of goods - detention of vehicle and seizure of goods for transit without a valid E Way bill - imposition of tax and penalty under the GST regime for transit irregularities - bona fide movement and absence of intention to evade tax - scope of judicial review in writ jurisdiction where no finding of deliberate tax evasion is recorded

Validity of E Way bill for movement of goods - detention of vehicle and seizure of goods for transit without a valid E Way bill - imposition of tax and penalty under the GST regime for transit irregularities - bona fide movement and absence of intention to evade tax - Whether imposition of tax and penalty for movement of goods when the E Way bill validity had expired was justified where the delay was short and there was no finding of deliberate tax evasion - HELD THAT: - The Court analysed the factual matrix that the Hydraulic Mobile Crane was transported under an E Way bill dated September 25, 2021 whose validity had expired shortly before interception, and accepted that the goods and vehicle particulars were not in dispute. The Court found the nature of the goods (heavy, long trailer) and the short gap between expiry and interception, together with the explanation about difficulty in immediate extension (including the expiry falling on a Sunday), furnished a bona fide explanation. The authorities below had not recorded any finding of deliberate or willful attempt to evade tax. Relying on the principle that detention and imposition of penalty under the GST framework must be justified by lack of bona fides or an intention to evade tax, and having regard to a Division Bench decision on closely similar facts which tested the bona fides of movement before upholding detention and penalty, the Court held that the breach in the present case was not of such gravity as to attract penalty for evasion. Consequently, the demand of tax and penalty, and the appellate affirmation, could not be sustained in the absence of a finding of deliberate evasion. [Paras 12, 14, 17, 20]

Orders demanding tax and penalty and the appellate order affirming them were quashed for lack of a finding of deliberate tax evasion; the amount recovered is to be refunded within three weeks; the conclusion is confined to the peculiar facts of the case.

Final Conclusion: Writ petition allowed: the adjudicating order dated October 8, 2021 and the appellate order dated April 18, 2022 quashed; tax and penalty recovered to be refunded within three weeks; order confined to the peculiar facts and not to be treated as precedent.

Exemption for services relating to admission to, or conduct of examination by, an educational institution - definition of "educational institution" for exemption purposes - interpretation and applicability of Entry 66 of Notification No. 12/2017-Central Tax (Rate)

Exemption for services relating to admission to, or conduct of examination by, an educational institution - definition of "educational institution" for exemption purposes - interpretation and applicability of Entry 66 of Notification No. 12/2017-Central Tax (Rate) - Whether the applicant's services provided to AIIMS - namely recruitment examinations, entrance examinations and semester/course examinations - are exempt under Entry 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - Entry 66(b)(iv) exempts services provided to an educational institution by way of services relating to admission to, or conduct of examination by, such institution. The amendment to Notification No. 12/2017 (vide Notification No. 02/2018) removed the restriction "upto higher secondary" insofar as sub item (iv) is concerned, so there is no such upper level limitation for the exemption. The definition of "educational institution" in the notification includes institutions providing education as part of a curriculum for obtaining a qualification recognised by law. AIIMS was established by statute, declared an institution of national importance, conducts undergraduate and postgraduate teaching programs and awards its own degrees; these attributes satisfy the notification's definition of an educational institution. Applying the exemption to the services actually rendered: services by the applicant that relate to admission (entrance examination) to AIIMS fall within Entry 66(b)(iv) and are therefore exempt. By contrast, services rendered in relation to recruitment examinations (for hiring employees) and semester/course examinations (internal/academic assessments) are not covered by that entry and are not exempt. [Paras 12, 13, 16, 17, 19]

Services provided by the applicant to AIIMS by way of entrance examinations are exempt under Entry 66(b)(iv) of Notification No. 12/2017-Central Tax (Rate); services relating to recruitment examinations and semester/course examinations are not exempt under the said entry.

Final Conclusion: Advance Ruling: entrance examination services provided to AIIMS are exempt under Entry 66 of Notification No. 12/2017-Central Tax (Rate); recruitment and semester/course examination services are not exempt. This ruling is binding within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, subject to statutory provisions governing advance rulings.

Advance ruling jurisdiction under Section 97(2) of the CGST Act - Scope of Authority for Advance Ruling - Place of supply and determination of import - High sea sale and import of goods - Levy of IGST on high sea sales at the time of importation

Advance ruling jurisdiction under Section 97(2) of the CGST Act - Scope of Authority for Advance Ruling - Application seeking advance ruling is not maintainable because the question raised does not fall within the matters enumerated in Section 97(2) of the CGST Act. - HELD THAT: - The Authority examined the statutory list of questions for which advance rulings may be sought under Section 97(2) and concluded that only those categories are entertainable. The applicant's query, to the extent it requires determination of the place of supply and the legal effect of a high sea sale in the context of importation, is outside the categories prescribed for advance rulings. Consequently, the Authority found that the question is not within its jurisdiction under Section 97(2) and cannot be adjudicated by the AAR. [Paras 11, 13, 15]

Application is not covered by Section 97 and is disposed of for want of jurisdiction to rule on the question raised.

High sea sale and import of goods - Place of supply and determination of import - Levy of IGST on high sea sales at the time of importation - High sea sale transactions of imported goods form part of the import transaction and IGST liability arises and is collected at the time of importation; such matters fall within Customs domain and are not for the AAR to decide. - HELD THAT: - The Authority noted that neither the CGST/UPGST nor the IGST Acts define 'high seas' but that high sea sale is a sale while goods are en route and that import is determined by place of supply. The Authority observed that determination of place of supply and the tax consequences of high sea sales are integrally connected to import procedures and customs law. Reliance was placed on the GST Council position and the CBEC circular indicating that IGST on high sea sale transactions is to be levied and collected at the time of importation and that value additions from high sea sales are includible in the dutiable/assessable value on clearance. For these reasons the Authority held that the substantive question about HSS falls in the Customs/IGST domain and cannot be ruled upon by the AAR in the advance-ruling application before it. [Paras 12, 14]

Question concerning taxability of high sea sales is within customs/import domain; IGST on HSS transactions is to be collected at importation and thus the AAR will not adjudicate the matter.

Final Conclusion: The application for advance ruling is outside the scope of matters amendable to the Authority under Section 97(2) and is disposed of. Questions relating to high sea sales and their tax consequences are matters connected with importation/customs and IGST at importation and are not amenable to determination by this Authority.

Mandatory minimum notice period for show-cause under Section 148A(b) - requirement of prior opportunity of being heard before issuance of notice under Section 148 - curability of procedural defect in reassessment initiation - quashing of reassessment notice for non-compliance with statutory timeline

Mandatory minimum notice period for show-cause under Section 148A(b) - quashing of reassessment notice for non-compliance with statutory timeline - Whether the order under Section 148A(d) and consequent notice under Section 148 dated 31.3.2022 could be sustained where the assessee was afforded less than the statutory minimum of seven days to respond to the notice under Section 148A(b). - HELD THAT: - The Court examined the text of Section 148A(b) which mandates that the notice to show cause must specify a time to reply that is not less than seven days and not more than thirty days. The record shows the assessee was given only three days to respond to the Section 148A(b) notice dated 25.3.2022, and an order under Section 148A(d) was passed and notice under Section 148 issued on 31.3.2022. The Court held that the minimum period of seven days is a statutory requirement which the Revenue failed to observe; the Revenue's contention that it effectively waited until the seventh day is not acceptable because the statute prescribes a minimum period to be specified in the notice itself before passing an order under Section 148A(d). Non-compliance with this mandatory timeline vitiates the initiation of reassessment proceedings. [Paras 5, 6]

Impugned order under Section 148A(d) dated 31.3.2022 and the notice under Section 148 dated 31.3.2022 quashed and set aside for failure to comply with the minimum seven days' notice requirement.

Curability of procedural defect in reassessment initiation - requirement of prior opportunity of being heard before issuance of notice under Section 148 - Whether the defect of giving less than seven days to the assessee to reply to the Section 148A(b) notice is curable and if the Revenue may issue a fresh notice in compliance with Section 148A(b). - HELD THAT: - The Court observed that the defect of providing less than the statutory minimum period for filing a show-cause reply is a curable procedural irregularity. It noted that the statute contemplates a specified minimum and maximum period and permits extension on application. In view of the non-compliance, the Court permitted the Revenue, if lawfully entitled, to issue a fresh communication in continuation of the earlier show-cause process that affords the assessee at least seven days and not more than thirty days (or such further time as may be validly extended) to file its reply, and thereafter to proceed as per law. [Paras 5]

Revenue permitted to issue a fresh notice/communication complying with the seven to thirty days requirement under Section 148A(b) and to proceed thereafter in accordance with law.

Final Conclusion: Writ petition allowed; impugned order under Section 148A(d) and notice under Section 148 dated 31.3.2022 quashed for failure to comply with the minimum seven-day show-cause period, with liberty to the Revenue to issue a fresh notice affording at least seven days (and not more than thirty days) for reply and proceed thereafter in accordance with law.

Revisionary jurisdiction under Section 263 - twin conditions for invoking Section 263 - disallowance of expenses on account of alleged bogus purchases - assessment officer's estimate of disallowance - distinguishment of Vijay Proteins Ltd. on facts - precedential application of Malabar Industrial Co. Ltd. and Max India

Revisionary jurisdiction under Section 263 - twin conditions for invoking Section 263 - Whether the Principal Commissioner correctly invoked and exercised revisionary jurisdiction under Section 263 of the Income Tax Act in relation to the assessment for A.Y.- 2013-14. - HELD THAT: - The Court affirmed the Tribunal's conclusion that the twin conditions necessary to invoke Section 263 were not satisfied. The Principal Commissioner proceeded on conjecture without any recorded finding that the assessee's books of account were rejected. The materials show that the assessing officer had examined the documents and made an estimated adjustment of 5%, and the assessee's contention that documents were produced before the assessing officer was not found to be incorrect. In these circumstances the assumption of jurisdiction by the Principal Commissioner was held to be bad in law and the Tribunal's interference with the revisionary order was upheld.

Revisionary exercise under Section 263 was invalid; Tribunal rightly set aside the PCIT's order.

Disallowance of expenses on account of alleged bogus purchases - assessment officer's estimate of disallowance - distinguishment of Vijay Proteins Ltd. on facts - precedential application of Malabar Industrial Co. Ltd. and Max India - Whether the Tribunal erred in relying on precedents and in overturning the Commissioner's direction to make a higher disallowance on account of alleged bogus purchases. - HELD THAT: - The Tribunal correctly applied the principles in Malabar Industrial Co. Ltd. and Max India to the factual matrix, noting there was no dispute as to sale and purchase figures and that the assessing officer had accepted the figures and applied a 5% estimated disallowance after examination. The High Court's decision in Vijay Proteins Ltd. was found to be distinguishable because in that case purchases were conclusively held to be based on fictitious invoices; here no such conclusive finding was recorded. Given the factual distinction, the Tribunal did not err in refusing to direct a higher ad hoc disallowance and in upholding the assessment officer's approach.

Tribunal's factual conclusion and reliance on Malabar and Max India were correct; Vijay Proteins held distinguishable and did not justify revisional interference.

Final Conclusion: The revenue's appeal is dismissed; the Income Tax Appellate Tribunal's order setting aside the Principal Commissioner's revisionary direction is affirmed and no substantial question of law arises.

Supervisory jurisdiction under section 263 - erroneous and prejudicial to the interests of the Revenue (twin conditions) - disallowance under section 14A read with Rule 8D - deduction under section 57(iii) - Explanation (2) to section 263

Disallowance under section 14A read with Rule 8D - supervisory jurisdiction under section 263 - erroneous and prejudicial to the interests of the Revenue (twin conditions) - Whether the Pr. CIT was justified in invoking jurisdiction under section 263 to set aside the assessment for not disallowing expenditure under section 14A read with Rule 8D - HELD THAT: - The Tribunal found that the assessee had no exempt income in the year (negative income/loss from partnership and no dividend earned) and therefore no expenditure was incurred for earning exempt income; on those facts disallowance under section 14A read with Rule 8D could not be made. It applied authorities holding that section 14A applies to expenditure in relation to income which is claimed as exempt and that only expenditure proportionate to earning exempt income is disallowable. The Tribunal further held that the Pr. CIT did not specify what further inquiries or verifications the AO ought to have made and that the AO had taken a plausible view sustainable in law. The court emphasised the twin conditions for exercise of section 263 - that the AO's order is both erroneous and prejudicial to Revenue - and that mere disagreement or an alternative view does not satisfy those conditions. Because the Pr. CIT failed to indicate specific omitted inquiries or how the order was prejudicial, the exercise of revisionary jurisdiction was not justified. [Paras 11]

Invocation of section 263 to direct disallowance under section 14A read with Rule 8D was unjustified; the Tribunal's quashing of the Pr. CIT's order is upheld.

Deduction under section 57(iii) - supervisory jurisdiction under section 263 - erroneous and prejudicial to the interests of the Revenue (twin conditions) - Whether the Pr. CIT was justified in setting aside the assessment for allowing deduction of interest under section 57(iii) - HELD THAT: - The Tribunal noted that section 57(iii) requires that expenditure be wholly and exclusively for the purpose of earning income, not that such income must necessarily have been realised. Applying precedent, including the view that interest on money borrowed for investment in shares can be deductible even if shares did not yield dividend, the Tribunal concluded the AO had adopted a plausible and sustainable legal view in allowing the deduction. The Pr. CIT did not demonstrate that the AO's order was both erroneous and prejudicial to Revenue or identify specific missing enquiries; where two views are possible and the AO's view is sustainable in law, revision under section 263 cannot be invoked. [Paras 11]

Pr. CIT's exercise of section 263 to challenge the allowance under section 57(iii) was unwarranted; the Tribunal's setting aside of the Pr. CIT's order is upheld.

Final Conclusion: The High Court finds no infirmity in the Tribunal's conclusions that the Pr. CIT had not shown the AO's order to be both erroneous and prejudicial to Revenue or identified requisite inquiries/verification; the appeal is dismissed and the Tribunal's order quashing the section 263 revision is upheld.

Revision of assessment as erroneous and prejudicial to the interest of Revenue - Applicability of Explanation 2(a) to section 263 - exception under Rule 6DD for purchases from milk producers - disallowance under section 40A(3) for cash payments exceeding Rs.20,000 - assessment officer's inquiry and verification of transactions

Exception under Rule 6DD for purchases from milk producers - assessment officer's inquiry and verification of transactions - revision of assessment as erroneous and prejudicial to the interest of Revenue - Whether the order under section 263 quashing the assessment was justified where the Assessing Officer had allowed certain cash payments under Rule 6DD after examining documents and confirmations showing suppliers to be milk producers. - HELD THAT: - The Tribunal found on the material placed before it that the assessee had produced declarations, identity proofs, account copies and other documents during assessment proceedings showing that the eight payees were milk producers operating cattle farms and that the impugned cash payments were largely made by cheque with only small exceptional cash components covered by the exception in sub-clause (ii) of clause (e) of Rule 6DD. The Assessing Officer examined those documents during reassessment proceedings, issued show-cause notice, afforded opportunity and recorded findings in the assessment order; accordingly the Tribunal held that the Assessing Officer had taken a possible view in allowing the payments and that the assessment order was neither erroneous nor prejudicial to the interest of Revenue. The High Court, after considering the Tribunal's factual findings and settled law on the scope of revision under section 263, found no infirmity in the Tribunal's conclusion and upheld the view that the revision was not justified on these facts. [Paras 9, 10, 11]

Tribunal's finding that the Assessing Officer had adequately inquired and validly allowed the payments under Rule 6DD is upheld; the order under section 263 was not justified on this ground.

Applicability of Explanation 2(a) to section 263 - revision of assessment as erroneous and prejudicial to the interest of Revenue - assessment officer's inquiry and verification of transactions - Whether the Tribunal erred in applying precedents predating insertion of Explanation 2(a) to section 263 and in failing to separately record applicability of Explanation 2(a) as a basis for revision. - HELD THAT: - Revenue contended that Explanation 2(a) (inserted with effect from 1.6.2015) deems an order erroneous if it was passed without making inquiries or verification, and that the Tribunal relied on earlier case law. The High Court noted that the Tribunal's decision was grounded on explicit findings of fact that the Assessing Officer had examined documents, issued show-cause notice and recorded conclusions after hearing the assessee; therefore the precondition in Explanation 2(a) (order passed without making inquiries or verification) was not made out. Given the Tribunal's factual finding that inquiries and verification were carried out and a plausible view taken by the Assessing Officer, the Court found no legal error in the Tribunal's approach and no substantial question of law arose requiring interference. [Paras 9, 10, 11]

Contention based on Explanation 2(a) is rejected on the facts; Explanation 2(a) does not sustain revision where Assessing Officer has made inquiries and verification and taken a possible view.

Final Conclusion: The High Court finds no merit in the Revenue's appeal; the Tribunal's factual and legal conclusions upholding the assessment officer's inquiry and the allowance under Rule 6DD are affirmed and the tax appeal is dismissed.

Receipt collected on behalf of another not taxable - diversion of income before it reaches the assessee - application of income versus collector of another's income - obligation to apply income - trust/overriding charge on receipts

Receipt collected on behalf of another not taxable - diversion of income before it reaches the assessee - application of income versus collector of another's income - Whether the surplus funds of the 67th Annual Conference of CSI-2015, transferred by the AOP to CSI Headquarter and the Chennai chapter in terms of the constitution/byelaws, constitute taxable income of the AOP or were amounts collected on behalf of those societies and therefore not chargeable to tax in the hands of the AOP. - HELD THAT: - The Tribunal accepted the factual position that the AOP was constituted solely to organise the annual conference, operated under the specific bye-laws and clause 15 which mandated audited accounts and distribution of surplus between CSI HQ and the local branch in the prescribed ratio. The payments were made in accordance with those bye-laws and the recipients had been assessed to tax and had disclosed the amounts in their returns. Applying the legal test articulated by the Supreme Court in CIT v. Sitaldas Tirathdas , the determinative question is whether the income was diverted before it ever became the assessee's income or whether it reached the assessee and was thereafter applied to discharge an obligation. The Tribunal found that the nature of the arrangement was that the AOP acted as a conduit/collector for the societies and the surplus never became the AOP's income; the amounts were therefore held in trust and passed on in terms of the constitutional mandate. Consequently the surplus could not be treated as the AOP's taxable income. The Tribunal agreed with the CIT(A)'s conclusion and confirmed deletion of the addition made by the AO. [Paras 5, 6]

The surplus transferred in terms of the bye-laws is not assessable as income of the AOP but was collected on behalf of the societies and hence the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal affirmed the CIT(A)'s order deleting the addition: amounts collected and distributed by the conference AOP pursuant to the constitution/byelaws were held to be collected on behalf of CSI HQ and the local chapter and not taxable in the hands of the AOP; Revenue's appeal is dismissed.

TDS applicability on advertisement payments under Section 194C - Assessee in default and proviso to Section 201(1) - Verification of recipients' compliance with proviso to Section 201(1) - Interest liability under Section 201A(1)

TDS applicability on advertisement payments under Section 194C - Applicability of tax deduction at source on advertisement payments made by the assessee. - HELD THAT: - The Tribunal examined the payments made towards advertisement to fifteen parties totalling the figure reflected in the record and noted that the twin conditions for applicability of the provision (single payment exceeding the specified threshold and aggregate yearly payment to a recipient exceeding the statutory limit) must both be satisfied. The material showed that payments to some recipients during the year were below the aggregate threshold; therefore the provision for TDS could not be applied to those payments. The Tribunal relied on the factual details in the record to hold that TDS is not automatically applicable in respect of payments where the statutory twin conditions are not met. [Paras 5]

TDS under the cited provision does not apply in respect of payments to recipients where the aggregate yearly payment to that recipient is below the statutory threshold.

Assessee in default and proviso to Section 201(1) - Verification of recipients' compliance with proviso to Section 201(1) - Interest liability under Section 201A(1) - Whether the assessee is an assessee in default and related consequences, and the course to be adopted by the assessing officer. - HELD THAT: - Although the Tribunal found that TDS did not apply to certain payments for want of the twin statutory conditions, it observed that the proviso to the provision treating an assessee as not in default applies where the recipient has paid tax on the amounts received and has otherwise complied with the proviso. No proof of such compliance was on record. In these circumstances the Tribunal remitted the matter to the assessing officer for verification whether the recipients had satisfied the conditions of the proviso to Section 201(1). The Tribunal directed that if the AO finds compliance with the proviso, the assessee shall not be treated as an assessee in default. The Tribunal further directed that interest, if payable, shall be charged in accordance with the relevant provision governing interest liability. [Paras 5]

Matter remitted to the AO to verify compliance by recipients with the proviso to Section 201(1); if compliance is established the assessee shall not be treated as an assessee in default; interest to be charged as per the applicable interest provision.

Final Conclusion: The appeal is allowed for statistical purposes; the Tribunal has held that TDS is not attracted where the aggregate yearly payment to a recipient is below the statutory threshold, remitted the matter to the assessing officer to verify recipients' compliance with the proviso to Section 201(1), and directed that interest, if applicable, be charged in accordance with the relevant interest provision; the assessee must be afforded a reasonable opportunity of hearing.

Allowability of provision for an unascertained liability - genuineness of trading losses in foreign exchange derivatives as business losses - veracity of documentary evidence including contract notes and broker records - relevance of memorandum of association for scope of business activities - impermissibility of additions founded on surmise or suspicion

Allowability of provision for an unascertained liability - impermissibility of additions founded on surmise or suspicion - Deletion of addition of Rs. 75,58,000/- relating to 'Compensation due to Rate difference' made by the Assessing Officer. - HELD THAT: - The Tribunal upheld the findings of the Commissioner (Appeals) that the Assessing Officer's disallowance, which treated the amount as an unascertained liability, was based on surmise and suspicion. The assessee placed on record documentary material including a cheque for payment of Rs. 1,51,00,000/- paid after settlement to the relevant party and correspondence evidencing a dispute concerning the HT line. The fact that the assessee ultimately paid a larger sum after settlement supported the existence of the liability and undercut the AO's conclusion that the provision was unjustified. On this basis the First Appellate Authority's deletion of the addition was affirmed. [Paras 7]

Addition deleted; CIT(A)'s deletion upheld and AO's disallowance set aside.

Genuineness of trading losses in foreign exchange derivatives as business losses - relevance of memorandum of association for scope of business activities - veracity of documentary evidence including contract notes and broker records - Deletion of addition of Rs. 4,82,15,440/- representing loss claimed from trading in foreign exchange derivatives. - HELD THAT: - The Tribunal agreed with the CIT(A) that the Assessing Officer's view that the forex derivative transactions were beyond the assessee's ordinary business was incorrect. The company's Memorandum of Association expressly permitted making investments, and the assessee produced time-stamped contract notes from recognised brokers with unique client codes together with brokerage documents to substantiate genuineness. The Tribunal rejected the AO's reliance on a generalized notion of 'human prudence' (that no prudent person would continue to make losses) as insufficient to deem the transactions sham. In view of the documentary evidence and the MOA provisions, the First Appellate Authority's deletion of the addition was sustained. [Paras 8]

Addition deleted; CIT(A)'s deletion upheld and AO's disallowance set aside.

Final Conclusion: The Revenue's appeal is dismissed; the order of the Commissioner (Appeals) deleting both additions is upheld.

Treatment of cost of acquisition under section 49(3) where section 47A deeming applies - applicability of Explanation 6 to section 43(1) and Explanation 2 to section 43(6) in a slump sale between holding and subsidiary - allowability of depreciation on assets revalued post slump sale - ad hoc disallowance of management consultancy fees - treatment of pre operative expenditure pending capitalization - application of section 14A and Rule 8D where no exempt income - deductibility of project appraisal and loan processing fees

Treatment of cost of acquisition under section 49(3) where section 47A deeming applies - applicability of Explanation 6 to section 43(1) and Explanation 2 to section 43(6) in a slump sale between holding and subsidiary - allowability of depreciation on assets revalued post slump sale - Whether depreciation claimed by the transferee on asset values determined by an approved valuer in a slump sale should be restricted to transferor's WDV by applying the explanations to section 43, or whether section 49(3) (read with section 47A) permits adoption of actual cost to the transferee - HELD THAT: - The Tribunal held that the Assessing Officer erred by applying the explanations to section 43(1)/43(6) without taking into account section 49(3) and the operation of section 47A. Clauses (iv) and (v) of section 47 exclude certain transfers between holding and subsidiary companies from being 'transfer' but section 47A can deem such transfers to be chargeable to capital gains if prescribed conditions are not met. Where capital gains are thereby deemed chargeable, section 49(3) provides that the cost of acquisition of the asset to the transferee shall be the cost for which such asset was acquired by it. The facts showed that consideration was discharged by issuance of equity, the transferee later ceased to be wholly owned and MIL offered capital gains under section 47A; consequently section 49(3) applied and the Assessee was entitled to claim depreciation on the asset values as determined by the approved valuer in the slump sale. The CIT(A) correctly reversed the AO's restriction, and the Tribunal dismissed the revenue's ground on this controversy. [Paras 8, 9, 10]

Depreciation upheld on the revalued cost adopted by the assessee; AO's restriction to transferor's WDV set aside.

Ad hoc disallowance of management consultancy fees - Whether the AO could sustain an ad hoc 50% disallowance of management consultancy fees allocated by the holding company to the assessee - HELD THAT: - The Tribunal agreed with the CIT(A) that the AO's ad hoc disallowance was unsustainable. The AO had allowed 50% and disallowed the remainder on an ad hoc basis apparently relying on a special audit report, without any independent evidential basis showing that the allocations were excessive, not at arm's length, or unrelated to the assessee's business. The assessee did not maintain separate secretarial or managerial departments and the allocations related to services used by the assessee. In absence of any material showing that the expenses related to another group company to an extent affecting the assessee, the ad hoc exercise of discretion could not be sustained. [Paras 11, 12]

Ad hoc disallowance deleted; CIT(A)'s order sustaining deduction of consultancy allocations upheld.

Treatment of pre operative expenditure pending capitalization - Whether pre operative expenditures shown in the balance sheet pending capitalization, but debited to profit and loss, can be disallowed as not being revenue in nature - HELD THAT: - The Tribunal concurred with the CIT(A) that the AO was wrong to disallow the expenditures where it was not disputed that the expenditures were revenue in nature and were incurred wholly and exclusively for the expansion of the assessee's healthcare business. The mere treatment in the balance sheet as pre operative expenditure pending capitalization does not alter the inherent revenue nature of expenses incurred for carrying on and expanding business. Thus the deletion of the disallowance by the CIT(A) required no interference. [Paras 13]

Disallowance of pre operative expenditure deleted; expenditure treated as allowable revenue expenses.

Application of section 14A and Rule 8D where no exempt income - Whether addition under section 14A read with Rule 8D was sustainable where there was no exempt income in the relevant assessment years - HELD THAT: - The Tribunal noted that it is admitted there was no exempt income during the relevant years and the CIT(A) therefore rightly deleted the addition. In view of the settled proposition that section 14A disallowance cannot be sustained where there is no exempt income, the revenue's challenge did not require interference. [Paras 14]

Addition under section 14A/Rule 8D deleted; CIT(A)'s order upheld.

Deductibility of project appraisal and loan processing fees - Whether fees paid for project appraisal and for obtaining prospective loans (to IFC/ADB), where the loan did not materialize, are capital in nature or allowable revenue expenditure - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition regarding professional fees. The payments were made in the course of expansion of business and related to appraisal of projects and feasibility for obtaining finance; such payments did not result in creation of a new capital asset and thus were not capital in nature. Consequently they were allowable as revenue expenditures incurred wholly and exclusively for business. [Paras 15]

Professional and appraisal fees deleted; held to be allowable revenue expenses.

Final Conclusion: All appeals by the revenue were dismissed; the CIT(A)'s deletions and corrective rulings as to depreciation, consultancy allocations, pre operative expenditure, section 14A/Rule 8D addition, and professional/appraisal fees are upheld.

Unexplained cash deposits - burden to prove payments by banking channel - opportunity of hearing for enhancement of income - disallowance of expenses on an ad hoc basis

Unexplained cash deposits - burden to prove payments by banking channel - Portion of cash deposits treated as unexplained and whether assessee can establish that unconfirmed amounts were paid to builders by cheques or other banking mode. - HELD THAT: - The Tribunal recorded that confirmations from builders accounted for most of the deposits but two builders (M/s. Gaursons Hi Tech Infrastructure Pvt. Ltd. and Supertech Ltd.) did not confirm amounts aggregating to Rs. 11,01,317/-. The Bench held that where the assessee pleads an intermediatory role and some payments are confirmed, the remaining unconfirmed deposits can be explained if the assessee establishes that payments to the non confirming builders were effected by cheques or banking channels. The Tribunal directed that the CIT(A) should give the assessee an opportunity to establish payment by banking mode and, if successful, the addition of Rs. 11,01,317/- sustained by the CIT(A) shall be deleted. [Paras 6, 7, 8]

Remanded to the CIT(A) with direction to afford opportunity to the assessee to prove that the disputed payments to the two builders were made by banking channels; if established, the addition of Rs. 11,01,317/- to be deleted.

Opportunity of hearing for enhancement of income - Whether the addition of income on account of applying a percentage of turnover was made without giving the assessee an opportunity of hearing for enhancement of income. - HELD THAT: - The Tribunal accepted the assessee's submission that the further addition of income (computed as 10% of turnover) was made without giving the assessee any show cause notice or opportunity of hearing for enhancement. The Revenue did not controvert this contention. In view of this procedural irregularity and violation of the mandate of law, the Tribunal restored the issue to the file of the CIT(A) so that the assessee may be given an opportunity of hearing. [Paras 9, 10]

Restored to the file of the CIT(A) for de novo consideration after affording the assessee an opportunity of hearing on the proposed enhancement.

Disallowance of expenses on an ad hoc basis - Validity of disallowing 10% of total expenses on an ad hoc basis by the CIT(A). - HELD THAT: - The Tribunal found that the CIT(A) upheld an ad hoc disallowance of 10% of total expenses without explaining why the remaining 90% was accepted or distinguishing between verifiable and unverifiable expenditures. The lack of reasoned basis for a flat 10% disallowance rendered that approach unsustainable. Consequently, the Tribunal allowed the ground raised by the assessee challenging the ad hoc disallowance. [Paras 11, 12]

Ad hoc disallowance of 10% of total expenses set aside in favour of the assessee; ground allowed.

Final Conclusion: The appeal is partly allowed: the ad hoc 10% disallowance of expenses is set aside in favour of the assessee; the question of unexplained deposits of Rs. 11,01,317/- and the enhancement by applying 10% of turnover are remanded to the CIT(A) to afford the assessee opportunity to establish payments by banking mode and to grant a hearing on enhancement respectively.

Disallowance under Section 14A read with Rule 8D - disallowance limited to expenditure related to actually received exempt income - characterisation of value of shares pledged as client's margin vs assessee's undisclosed income - allowability of directors' remuneration where Companies Act limits do not apply - deductibility of brokerage/lead charges governed by SEBI bye-laws and commercial judgment of businessman - reliance on jurisdictional High Court and precedents

Disallowance under Section 14A read with Rule 8D - disallowance limited to expenditure related to actually received exempt income - reliance on jurisdictional High Court and precedents - Whether the disallowance under Section 14A read with Rule 8D should be restricted to an amount commensurate with exempt dividend actually received. - HELD THAT: - The AO applied Rule 8D to compute a large disallowance on the basis of investments held though no dividend was received from those investments in the year; the CIT(A) analysed that only a small portion of shares held as stock-in-trade generated exempt dividend (Rs. 87,971) and, following the jurisdictional High Court and other precedents, restricted disallowance to 0.5% of the average holding of shares from which tax-exempt dividend was received, yielding Rs. 22,721. The Tribunal found no flaw in the CIT(A)'s approach which identifies and limits the expenditure disallowable to that related to actually received exempt income rather than making an ad hoc proportionate disallowance in respect of all investments. [Paras 6]

The restriction of the Section 14A/Rule 8D disallowance to Rs. 22,721 is upheld and the Revenue's ground is rejected.

Characterisation of value of shares pledged as client's margin vs assessee's undisclosed income - reliance on SEBI/NSE circular permitting brokers to provide margin trading facility - Whether the value of shares pledged with banks represented undisclosed investments of the assessee taxable as income from other sources, or were client shares pledged for margin facilities. - HELD THAT: - The AO treated the difference between pledge value and book value as unexplained income, reasoning the pledged shares were assessee's own. The CIT(A) examined authorization letters, audited records and NSE Circular No. 395 permitting brokers to provide margin trading facilities and to pledge shares (including client-authorised pledges) and found the assessee's explanation plausible. The Tribunal concurred that the AO's addition was based on conjecture and not on sound legal or factual foundation, and that the evidence supported that shares were pledged on behalf of clients for margin requirements rather than representing undisclosed investments of the assessee. [Paras 7]

The addition under 'Income from other sources' is deleted and the Revenue's ground is rejected.

Allowability of directors' remuneration where Companies Act limits do not apply - application of Companies Act provisions in tax deduction of managerial remuneration - Whether remuneration paid to directors was disallowable because it allegedly exceeded limits prescribed by the Companies Act. - HELD THAT: - The AO disallowed excess remuneration treating payments as not in conformity with section 197/section 198 limits. The CIT(A) noted that the assessee is a non-government public limited company whose shares are not traded and that the statutory limits invoked by the AO did not apply to the assessee's corporate status; reliance was also placed on consistency of treatment in earlier and subsequent years. The Tribunal agreed with the CIT(A)'s finding that the Companies Act limits relied upon by the AO were inapplicable and that deletion of the disallowance was justified. [Paras 8]

The disallowance of directors' remuneration is deleted and the Revenue's ground is rejected.

Deductibility of brokerage/lead charges governed by SEBI bye-laws and commercial judgment of businessman - requirement of agreement/record to substantiate brokerage sharing - Whether payments of lead charges/commission to introducers/business associates were disallowable for lack of agreements or confirmations and as contrary to SEBI guidelines. - HELD THAT: - The AO disallowed lead charges for lack of agreements/confirmations and alleged non-compliance with SEBI. The CIT(A) reviewed the Model Bye-laws and found that sharing brokerage with introducers/authorized persons is permissible subject to prescribed conditions and documentation; appellant had furnished lists, TDS details and PANs. The CIT(A) further applied the principle that the decision to incur business expenses lies with the businessman. The Tribunal found the AO's disallowance unsustainable in view of the records produced and the applicable SEBI framework, and concurred with deletion. [Paras 9]

The disallowance of lead charges is deleted and the Revenue's ground is rejected.

Final Conclusion: All grounds of the Revenue's appeal are rejected; the CIT(A)'s deletions and restrictions in respect of Section 14A/Rule 8D disallowance, alleged unexplained income from pledged shares, directors' remuneration disallowance and lead charges disallowance are upheld, and the Revenue's appeal is dismissed for AY 2014-15.

Kachha arahtia - pacca arahtia - commission income versus gross turnover - turnover for the purposes of section 44AB - cash payments and applicability of section 40A - rejection of books of accounts and estimation under best judgment assessment

Kachha arahtia - pacca arahtia - commission income versus gross turnover - turnover for the purposes of section 44AB - rejection of books of accounts and estimation under best judgment assessment - cash payments and applicability of section 40A - Whether the assessee should be treated as a kachha arahtia or a pacca arahtia and whether the assessee's turnover for tax purposes is his commission income or the total purchases/sales shown in the books; and whether the rejection of books and estimation of profit by the Assessing Officer was justified. - HELD THAT: - The Tribunal examined CBDT Circular No. 452/1986 distinguishing kachha and pacca arahtias and noted the need to ascertain the true contractual and commercial relationship between the assessee and the Allana Group to determine tax treatment. The Circular establishes that where an agent's position is akin to a kachha arahtia only the gross commission is to be treated as turnover for section 44AB, whereas a pacca arahtia's transactions require inclusion of total sales/turnover. The Tribunal observed that factual questions remain unresolved - including the precise nature of the principal agent relationship, the margin/commission structure allowed by the Allana Group, whether title to animals passed to the assessee, the assessee's dominion over goods, the mode of transfers and payments between the parties, the details of cash receipts and payments and their conformity with provisions relevant to section 44AB and section 40A, and the adequacy of supporting ledgers and vouchers. Given these unresolved factual and documentary aspects and earlier reliance on the Circular and judicial authorities, the Tribunal found it necessary that the Assessing Officer re-examine and determine the real turnover after affording the assessee an opportunity of being heard and after verification of the details called for by the revenue. [Paras 12, 13]

The matter is remanded to the Assessing Officer for fresh examination and determination of whether the assessee is a kachha or pacca arahtia and of the correct turnover (commission only or total purchases), with directions to afford the assessee an opportunity of being heard and to verify payments, margins, transfer of title and compliance with provisions concerning cash payments.

Final Conclusion: The appeal is allowed for statistical purposes and the matter is remanded to the Assessing Officer to determine on fresh consideration the true nature of the assessee's transactions and the correct turnover, after affording the assessee an opportunity to produce the requisite details and evidence.

Allowability of ESOP cost as revenue expenditure under Section 37(1) - Capital-versus-revenue characterisation of ESOP-related outgo - Recharge of ESOP cost by associated enterprise and deduction in year of payment - Binding effect of CBDT explanatory circular on ESOP treatment - Penalty under section 271(1)(c) consequential on disallowance - Effect of Vivad se Vishwas settlement on maintainability of appeals

Allowability of ESOP cost as revenue expenditure under Section 37(1) - Capital-versus-revenue characterisation of ESOP-related outgo - Recharge of ESOP cost by associated enterprise and deduction in year of payment - Binding effect of CBDT explanatory circular on ESOP treatment - Deductibility of the ESOP cost recharged by the associated foreign entity as an expense under section 37(1). - HELD THAT: - The Tribunal held that the expenditure incurred by the associated enterprise (MSDW) and recharged to the assessee by way of debit note, paid by the assessee on the basis of market price on allotment, is in the nature of revenue expenditure and deductible under section 37(1). The Assessing Officer's characterisation of the ESOP cost as capital expenditure was rejected. The Tribunal treated the CBDT explanatory circular (Q 16) as directly applicable and binding on facts where the employer purchases shares and subsequently transfers them to employees, which places the appellant in the category where deduction is allowable. The Tribunal further relied on binding and co ordinate precedents (including the Special Bench in Biocon Ltd. and the co ordinate bench in Goldman Sachs (I) Securities Pvt. Ltd.) which have held that discount on issue of employee stock options/RSUs is allowable as a business expenditure, and applied those decisions to allow the claim and direct deletion of the disallowance. [Paras 18]

The ESOP cost recharged by the associated enterprise is allowable as a revenue deduction under section 37(1); the disallowance is deleted.

Penalty under section 271(1)(c) consequential on disallowance - Whether penalty proceedings under section 271(1)(c) required separate adjudication once the disallowance is deleted. - HELD THAT: - The Tribunal treated the penalty ground as consequential upon the deletion of the disallowance. Given the primary disallowance was set aside, no separate adjudication of the penalty was required at this stage. [Paras 19]

Penalty ground is consequential and no separate adjudication is required in view of the allowance of the ESOP expenditure.

Effect of Vivad se Vishwas settlement on maintainability of appeals - Validity of the Commissioner (Appeals) treating the appeal as infructuous on the basis that the assessee had opted for the Vivad se Vishwas Scheme. - HELD THAT: - The Tribunal found that the CIT(A) erred in treating the appeal as settled under the Vivad se Vishwas Act without regard to the facts and law applicable to the ESOP claim. The CIT(A)'s dismissal of the appeal as infructuous was held to be inappropriate and unreasonable, and the Tribunal allowed the ground challenging that action. [Paras 20]

The CIT(A)'s order treating the appeal as infructuous under Vivad se Vishwas is set aside; the appeal is restored for consideration in accordance with the Tribunal's directions.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2016 17, holding that the ESOP cost recharged by the associated enterprise is deductible under section 37(1), declaring the penalty issue consequential, and setting aside the CIT(A)'s order treating the appeal as infructuous under the Vivad se Vishwas Scheme.

Penalty under Section 271C - Tax Deduction at Source (TDS) obligations on payments to State Government authorities - External Development Charges (EDC) - Non-applicability of Section 194C to payments made to State/State agencies - Precedent and administrative clarification as binding guidance

Penalty under Section 271C - External Development Charges (EDC) - Tax Deduction at Source (TDS) obligations on payments to State Government authorities - Non-applicability of Section 194C to payments made to State/State agencies - Precedent and administrative clarification as binding guidance - Whether the penalty imposed under Section 271C for non-deduction/non-payment of TDS in respect of payments of External Development Charges (EDC) to State authorities is sustainable. - HELD THAT: - The Tribunal examined the consolidated penalty order framed for A.Y.2014-15 and A.Y.2016-17 and noted that the underlying facts for both years were identical. It relied on a coordinate-bench decision and on an administrative clarification issued by the Directorate of Town and Country Planning, Haryana, which explained that payments of EDC made to the TCP Department (and processed through HSVP/HUDA as executing agency) amounted to payments to the State and, therefore, were not subject to TDS obligations under Chapter XVII B. The Tribunal observed that the coordinate bench had held that Section 194C does not apply to such payments to agencies executing works on behalf of the State and that, in absence of any default under Chapter XVII B, imposition of penalty under Section 271C was unsustainable. Applying that ratio to the present appeal (A.Y.2016-17) and finding no distinguishing feature advanced by Revenue, the Tribunal followed the coordinate-bench view and concluded that the penalty could not be sustained. [Paras 5, 6, 7]

Impugned penalty under Section 271C for A.Y.2016-17 deleted; appeal allowed.

Final Conclusion: Following the coordinate-bench finding and the administrative clarification that payments of EDC to the State (via TCP/HSV P/HUDA) do not attract TDS under Chapter XVII B, the Tribunal deleted the penalty under Section 271C for A.Y.2016-17 and allowed the assessee's appeal.

Allowability of non-compete fee as revenue expenditure - capital versus revenue expenditure - non-compete consideration as part of share acquisition - liability crystallisation under mercantile system of accounting - treatment of entries in books of account as evidence of nature of expenditure

Allowability of non-compete fee as revenue expenditure - capital versus revenue expenditure - non-compete consideration as part of share acquisition - liability crystallisation under mercantile system of accounting - treatment of entries in books of account as evidence of nature of expenditure - Disallowance of the non-compete fee claimed in assessment year 2017-18 as revenue expenditure and confirmation of its capital nature. - HELD THAT: - The Tribunal examined the consultancy agreement dated 29.10.2013 and the share purchase agreement dated 09.04.2013 together with the Closing Deliverables clause which required deposit of the non-compete consideration in escrow immediately after closing. The Assessing Officer concluded, and the DRP agreed, that the non-compete payment formed part of the consideration for acquisition of the business/shares and was therefore capital in nature. The Tribunal noted that under mercantile accounting the liability had crystallized in the financial year 2013-14 (relevant to AY 2014-15), and the assessee had treated the amount as an intangible asset in its books (amortising one-third in accounts) while claiming it as revenue expenditure in the return for AY 2017-18. There was no persuasive evidence of distinct consultancy services rendered to characterise the payment as revenue. In view of the contractual terms showing the non-compete consideration as a condition precedent to closing and the timing of crystallisation of liability, the payment could not be allowed as a revenue deduction in AY 2017-18; it was part of the capital outlay on acquisition and properly disallowable when claimed as revenue. [Paras 13, 14]

The claim of non-compete fee as revenue expenditure for AY 2017-18 is disallowed; the payment is held to be capital in nature and the assessee's grounds on this issue are dismissed.

Final Conclusion: The appeal is dismissed: the Tribunal upholds the treatment of the non-compete payment as capital (part of share/business acquisition) and rejects the assessee's claim to allow it as revenue expenditure in assessment year 2017-18.

Accommodation entries - Explanation of unexplained credit under section 68 - Treatment of commission as unexplained expenditure under section 69C - Reliance on statement recorded during search and its retraction - Proof by banking trail and deduction of TDS

Accommodation entries - Explanation of unexplained credit under section 68 - Proof by banking trail and deduction of TDS - Reliance on statement recorded during search and its retraction - Deletion of addition treating unsecured loans as unexplained credit under section 68 - HELD THAT: - The AO treated certain unsecured loans as unexplained credits relying on information from the Investigation Wing and a statement attributed to Shri Bhanwarlal Jain. The assessee produced bank records, ledger accounts, confirmations, affidavits, repayment along with interest through banking channels and evidence of TDS and return filings by the lenders. The Ld. CIT(A) found no infirmity in the documents produced by the assessee, noted that the statement relied upon had been retracted and that no cash trail or other specific incriminating evidence linked the assessee to accommodation entry transactions was established by the AO. The Tribunal held that on these uncontroverted findings the assessee discharged the onus to prove the genuineness of the loan transactions and that it was unsafe to sustain additions based solely on a retracted general statement without corroborative evidence. [Paras 7, 8, 9]

Addition under section 68 deleted; CIT(A) order confirmed.

Treatment of commission as unexplained expenditure under section 69C - Reliance on statement recorded during search and its retraction - Proof by banking trail and deduction of TDS - Deletion of addition treating estimated commission as unexplained expenditure under section 69C - HELD THAT: - The AO estimated commission payments and treated them as unexplained expenditure under section 69C based on the same investigative material and alleged modus operandi. The Ld. CIT(A) examined the assessment, remand report and the documentary trail submitted by the assessee and found that the AO had not pointed out any specific infirmity in the documents nor established a nexus by independent investigation; the statement relied upon was retracted. The Tribunal agreed that in light of the bank trail, repayments and TDS reflected in the hands of lenders, the AO's estimate could not be sustained and the addition for commission was rightly deleted. [Paras 5, 9]

Addition under section 69C deleted; CIT(A) order confirmed.

Final Conclusion: The Tribunal dismissed the revenue appeal and confirmed the CIT(A)'s order deleting the additions under sections 68 and 69C for AY 2013-14, holding that the assessee had satisfactorily proved the loan transactions by banking trail, repayments and TDS evidence and that the AO's reliance on a retracted general statement without corroboration was insufficient to sustain the additions.

Waiver of detention/demurrage charges - Sea Cargo Manifest and Transhipment Regulations, 2018 - Regulation 10(1)(l) - binding nature of administrative order - release of goods on implementation of Customs order

Waiver of detention/demurrage charges - Regulation 10(1)(l) - binding nature of administrative order - release of goods on implementation of Customs order - Respondents in possession of imported goods must implement the Customs Authority's order dated 25.03.2022 directing waiver of detention/demurrage charges and release the goods. - HELD THAT: - The Customs Authority on 25th March, 2022 issued an order directing that the Shipping Lines/Custodians shall not charge detention/demurrage/storage charges for containers kept on hold for investigation/verification and directed waiver in terms of Regulation 10(1)(l) of the Sea Cargo Manifest and Transhipment Regulations, 2018. The order of the Customs Authority has not been challenged by the Shipping Line before any forum. In these circumstances the administrative order is binding on the respondents in possession of the goods and they are required to implement it. The High Court, without adjudicating the merits of the underlying Customs order, directed respondents in custody of the goods to release them by giving effect to the waiver directed by the Customs Authority and complete the exercise within two weeks of receipt of the order. The Court clarified that the respondents remain free to challenge the Customs order in appropriate proceedings, and the present direction does not preclude such a challenge, nor does the Court express any opinion on the merits of any such challenge. [Paras 6, 7, 8, 9]

Respondents Nos.3 to 6 are directed to implement the Customs order dated 25.03.2022 for waiver of detention/demurrage charges under Regulation 10(1)(l) of the SCMTR and to release the goods in their custody within two weeks; respondents remain free to challenge the Customs order in appropriate proceedings.

Final Conclusion: The petition is disposed of by directing the respondents in custody of the imported goods to implement the Customs Authority's waiver order dated 25.03.2022 and release the goods within two weeks; liberty is reserved to challenge the Customs order, and no opinion is expressed on its merits.

Grant of bail under Section 439 Cr.P.C. - Applicability of Section 212(6) of the Companies Act as a legal embargo on bail - Parity with co-accused in bail grant - Protection of personal liberty in the face of trial delay - Conditions of bail and sureties

Grant of bail under Section 439 Cr.P.C. - Parity with co-accused in bail grant - Applicability of Section 212(6) of the Companies Act as a legal embargo on bail - Protection of personal liberty in the face of trial delay - Conditions of bail and sureties - Whether the accused A-195, A-193 and A-194 should be enlarged on bail and on what terms - HELD THAT: - The Court, after considering the facts and submissions, granted bail to the three accused under Section 439 Cr.P.C. The reasons recorded include that all three are retired bank officers; they were not earlier arrested despite summons and have appeared before the trial court for years; similarly situated co-accused and main stakeholders in the same matter had been enlarged on bail; and the allegations against the applicants relate to neglect of duties rather than direct fraud or siphoning of funds. The Court observed that Sub-section (i) of Section 212(6) of the Companies Act was complied with because the Public Prosecutor was given an opportunity to oppose, and on a prima facie view the applicants were not guilty and were unlikely to commit further offences, Sub-section (ii) was considered satisfied. The Court also noted the need to protect personal liberty where delay in trial completion is a factor and applied the principle of parity with co-accused who had been granted bail. On that basis bail was granted subject to specified conditions, including furnishing personal bond with local sureties and compliance with appearance and address-notification requirements.

Bail granted to A-195, A-193 and A-194 under Section 439 Cr.P.C. on furnishing personal bond with two local sureties each and subject to appearance and address-notification conditions; applications disposed of accordingly.

Final Conclusion: The High Court allowed the bail applications of the three retired bank officers, holding that the requirements of Section 212(6) were met, relying on parity with co-accused and concerns for personal liberty given trial delay, and imposed customary surety and reporting conditions.

Interpretation of Regulation 10 of the Takeover Regulations, 1997 - meaning of the term "acquirer" and role of "persons acting in concert" - application of Regulation 11(1) vis-a -vis Regulation 10 - discretionary power of the Board under Regulation 44 of the Takeover Regulations, 1997 - penalty regime under Chapter VI A and Section 15 H of the SEBI Act - scope of appellate powers of the Securities Appellate Tribunal under Section 15T - legitimate expectation and principle of doubtful penalisation - reasonableness of exercise of regulatory discretion in presence of delay/laches

Interpretation of Regulation 10 of the Takeover Regulations, 1997 - meaning of the term "acquirer" and role of "persons acting in concert" - application of Regulation 11(1) vis-a -vis Regulation 10 - Regulation 10 is to be read with the defined meaning of "acquirer" in Regulation 2(1)(b) so that the acquirer's holding is to be taken together with holdings of persons acting in concert; Regulation 10 does not apply where the combined holding of the acquirer and persons acting in concert already exceeds the 15% benchmark at the time of the fresh acquisition. - HELD THAT: - The Court accepted the Appellate Tribunal's construction that the term "acquirer" in Regulation 10 must be given the meaning assigned in the definition clause, which expressly includes acquisitions made "by himself or with any person acting in concert with the acquirer." Consequently, the test under Regulation 10 looks at the acquirer's holding taken together with persons acting in concert; where that combined holding already meets or exceeds the threshold, Regulation 10 is not triggered by a fresh acquisition. The Court contrasted the language of Regulation 10 with Regulation 11(1), which applies to an acquirer (alone or with persons acting in concert) who already holds between the specified thresholds and thereafter acquires additional voting rights beyond the permitted creep, and explained that the two regulations operate in different fields and are to be applied according to their wording and context. The Court also observed that the presumption created by the definition of "persons acting in concert" is qualified by "unless the contrary is established," and that factual inquiry may displace the presumption in particular cases. The Court rejected the Board's contention that the Tribunal's interpretation defeats the object of the Takeover Regulations, and endorsed the conclusion that the Tribunal's view was a plausible and acceptable construction of the 1997 Regulations. [Paras 46, 47, 48, 50, 51]

Regulation 10 must be interpreted by reference to the statutory definition of "acquirer" so that combined holdings with persons acting in concert are to be reckoned; the Appellate Tribunal's interpretation is upheld.

Discretionary power of the Board under Regulation 44 of the Takeover Regulations, 1997 - reasonableness of exercise of regulatory discretion in presence of delay/laches - legitimate expectation and principle of doubtful penalisation - Directions issued by the Board under Regulation 44 requiring a belated combined public announcement and open offer (with interest) for acquisitions in 2006 2007 were unsustainable and rightly set aside by the Appellate Tribunal in the facts of the case; regulatory discretion under Regulation 44 must be exercised reasonably, taking into account delay, prejudice, market impact and consistency. - HELD THAT: - The Court agreed with the Tribunal that Regulation 44 confers discretionary powers which must be exercised in a legal, regular and reasonable manner, balancing protection of investor interest and orderly market development. The Whole Time Member's direction to order a combined public announcement and open offer nearly six to eight years after the trigger events would have been arbitrary and disruptive, given the long delay in issuing the show-cause notice, absence of allegations of market manipulation or windfall gains, and absence of investor complaints. The Court emphasised the need for predictability and consistency in regulatory interpretation, invoked principles of legitimate expectation and the doctrine against doubtful penalisation where competing reasonable constructions exist, and held that directions of the nature ordered are not automatic but must be justified by good grounds. Thus the Tribunal was right to substitute a monetary penalty (in its order) and to set aside the belated remedial directions in the present factual matrix. [Paras 79, 80, 81, 82, 83]

The Board's directions under Regulation 44 for a belated public announcement and open offer were set aside as an unreasonable exercise of discretion in the circumstances; delay, absence of prejudice to investors, and legitimate expectation/past regulatory practice informed this conclusion.

Penalty regime under Chapter VI A and Section 15 H of the SEBI Act - scope of appellate powers of the Securities Appellate Tribunal under Section 15T - The Securities Appellate Tribunal does not have power to initiate Chapter VI A penalty proceedings afresh or impose a penalty under Section 15 H where no adjudicating authority has initiated such proceedings; while the Tribunal has wide appellate powers to confirm, modify or set aside orders, it cannot, for the first time, initiate and impose penalties that are the province of the adjudicating authority. - HELD THAT: - The Court explained that Section 15T confers broad appellate jurisdiction on the Tribunal to re examine both facts and law and to pass such orders as it thinks fit in appeals against orders of the Board or adjudicating officers. However, imposing penalties under Section 15 H and conducting adjudication are functions vested in the adjudicating authority under Chapter VI A and Section 15 I, which include statutory requirements (inquiry, opportunity of hearing, consideration of factors under Section 15 J). The Tribunal may uphold, set aside, modify or remit orders, and may remit to the Board the option to initiate Chapter VI A proceedings, but it cannot, in the first instance in an appeal against a Regulation 44 direction, itself initiate and impose a Section 15 H penalty. The Court therefore held that the Tribunal ought not to substitute the Board's Regulation 44 direction with a penalty under Section 15 H; instead it should leave open for the Board to initiate appropriate adjudication if warranted. [Paras 89, 90, 91, 92, 93]

The Appellate Tribunal cannot, for the first time, initiate and impose penalties under Chapter VI A/Section 15 H; its power is appellate and confined to examining correctness and legality of the order under challenge, and it should leave initiation of adjudication to the competent authority.

Final Conclusion: The appeals by SEBI are dismissed. The Court upheld the Appellate Tribunal's interpretation of Regulation 10 (requiring combined reckoning of the acquirer and persons acting in concert), agreed that the Board's belated directions under Regulation 44 to order a combined public announcement and open offer were unsustainable in the facts, and clarified that the Securties Appellate Tribunal, while possessing wide appellate powers under Section 15T, cannot itself initiate and impose Chapter VI A penalties under Section 15 H in the first instance; the Board may, if so advised, initiate appropriate adjudication through the prescribed authority.

Discretionary power under Section 7(5)(a) of the Insolvency and Bankruptcy Code - construction of 'may' versus 'shall' - time bound insolvency resolution versus consideration of viability and financial health - distinction between financial creditors and operational creditors in initiation of CIRP - exercise of judicial discretion not arbitrary or capricious - remand for reconsideration on merits

Discretionary power under Section 7(5)(a) of the Insolvency and Bankruptcy Code - construction of 'may' versus 'shall' - distinction between financial creditors and operational creditors in initiation of CIRP - time bound insolvency resolution versus consideration of viability and financial health - Whether Section 7(5)(a) of the IBC is mandatory or confers discretion on the Adjudicating Authority to admit an application by a financial creditor. - HELD THAT: - The Court held that the literal language of Section 7(5)(a) - which uses the word 'may' - ordinarily confers discretion on the Adjudicating Authority and is to be given its plain meaning. The use of 'may' in Section 7(5)(a), contrasted with 'shall' in the otherwise analogous Section 9(5) (relating to operational creditors), demonstrates a legislative distinction between financial and operational creditors. While timely resolution is a central object of the IBC, that objective does not render Section 7(5)(a) mandatory; instead the Adjudicating Authority must apply its mind to relevant factors (including feasibility of CIRP against a statutorily regulated electricity generating company, pending statutory appeals, awards/decrees in favour of the corporate debtor and the overall financial health and viability of the corporate debtor) before admitting an application. The Court emphasised that the discretion conferred cannot be exercised arbitrarily or capriciously and ordinarily admission will follow satisfaction of existence of financial debt and default unless good reasons exist not to admit the petition. The Court gave illustrative guidance that, for example, where an award/decree in favour of the corporate debtor (and capable of realisation) exceeds the creditor's claim, the Adjudicating Authority may keep admission in abeyance; conversely, it may admit despite such award if the award is incapable of realisation. [Paras 80, 81, 86, 87, 88]

Section 7(5)(a) confers discretion on the Adjudicating Authority; it is not compulsorily mandatory to admit a petition by a financial creditor merely because a debt and default exist, although ordinarily admission will follow unless cogent reasons justify otherwise.

Remand for reconsideration on merits - exercise of judicial discretion not arbitrary or capricious - Whether the orders of the NCLT and NCLAT declining to stay or otherwise treating Section 7(5)(a) as mandatory should be upheld. - HELD THAT: - The Court found that both the NCLT and the NCLAT erred in treating Section 7(5)(a) as mandatorily requiring admission once existence of debt and default were established and in failing to apply relevant discretionary considerations particular to this case (notably the APTEL order favouring the corporate debtor and the pending appeal by MERC in this Court). The impugned orders were therefore set aside and the matter was remanded to the NCLT for fresh consideration of the Appellant's application for stay of further proceedings on merits, in accordance with the principles articulated in this judgment. The Court directed that the NCLT must reconsider the Appellant's grounds against admission and exercise its discretion lawfully and reasonedly. [Paras 89, 90, 91]

The impugned NCLT and NCLAT orders are set aside and the matter is remanded to the NCLT to re consider the Appellant's application for stay and the question of admission afresh on merits in accordance with law.

Final Conclusion: The appeal is allowed; the concurrent orders of NCLT and NCLAT treating Section 7(5)(a) as mandatory are set aside. Section 7(5)(a) is discretionary and the NCLT is directed to re consider the Appellant's application for stay and the question of admission on merits and in accordance with the guiding principles stated in this judgment.

Extinguishment of pre-CIRP operational dues on approval of resolution plan - binding nature of an approved resolution plan under Section 31(1) of the IBC - overriding effect of the Insolvency and Bankruptcy Code - duty of a distribution licensee to supply electricity under Section 43 of the Electricity Act, 2003 - inapplicability of State electricity regulations and contractual clauses inconsistent with the IBC

Extinguishment of pre-CIRP operational dues on approval of resolution plan - binding nature of an approved resolution plan under Section 31(1) of the IBC - Whether the appellant's claim for dues predating the CIRP survives after approval of the resolution plan. - HELD THAT: - The Court held that the electricity dues claimed by the appellant arose prior to initiation of CIRP and that the resolution plan approved by the adjudicating authority binds the corporate debtor and its creditors. Relying on binding precedents, the Court applied the principle that on approval of the resolution plan under Section 31(1) the claims not provided for in the plan stand frozen and extinguished. Given that the appellant did not lodge its claim in the CIRP process and the plan was approved, the appellant's pre-CIRP claim does not survive. [Paras 6, 7, 9, 12, 25]

The appellant's claim for pre-CIRP dues was extinguished on approval of the resolution plan and therefore does not survive.

Duty of a distribution licensee to supply electricity under Section 43 of the Electricity Act, 2003 - extinguishment of pre-CIRP operational dues on approval of resolution plan - Whether the appellant can lawfully refuse reconnection or a fresh supply on the ground of earlier dues which are extinguished by the approved resolution plan. - HELD THAT: - The Court held that Section 43 of the Electricity Act, 2003 casts a statutory duty on a distribution licensee to supply electricity on a valid application (subject to compliance and payment of necessary charges). Where the right to recover earlier dues has been extinguished by operation of the IBC on approval of the resolution plan, the appellant cannot refuse supply on that basis. The writ petitioner offered to pay fresh/reconnection charges and, in view of the IBC's effect on past dues together with the statutory duty under Section 43, denial of supply was impermissible. [Paras 16, 17, 25]

Appellant cannot refuse reconnection or fresh supply on account of extinguished pre-CIRP dues and must supply electricity on compliance with applicable connection/reconnection requirements.

Overriding effect of the Insolvency and Bankruptcy Code - inapplicability of State electricity regulations and contractual clauses inconsistent with the IBC - Whether the appellant may rely on the earlier contract clause or State electricity supply regulations to defeat the effect of the approved resolution plan. - HELD THAT: - The Court applied Section 238 of the IBC to hold that the Code has overriding effect over any inconsistent provisions of other laws or instruments. Contractual clauses entitling disconnection or requiring payment of past dues, and State Electricity Regulatory provisions that would prevent new connection unless past dues are paid, cannot be enforced so as to frustrate the effect of an approved resolution plan. Where such instruments are inconsistent with the IBC's scheme of extinguishment of non-provided claims, they yield to the Code. [Paras 13, 14, 20, 21, 25]

Contractual rights and State regulations inconsistent with the IBC's scheme cannot be relied upon to revive or enforce extinguished pre-CIRP liabilities.

Binding nature of an approved resolution plan under Section 31(1) of the IBC - Whether the appellant was denied opportunity to contest on facts before the Single Judge. - HELD THAT: - The Court recorded that the learned Single Judge had permitted the appellant to serve relevant documents and that the appellant subsequently filed documents and written submissions. Given that the principal dispute was legal and the appellant availed the opportunity to place documents and arguments, the Court found no denial of reasonable opportunity to be a ground for interference. [Paras 24, 25]

No prejudice arose from procedural opportunity; appellant was given sufficient opportunity to place documents and arguments before the Single Judge.

Final Conclusion: The appeal is dismissed. The High Court upheld that the appellant's pre-CIRP operational dues were extinguished upon approval of the resolution plan, the IBC overrides inconsistent contractual or State regulatory provisions, and the distribution licensee must supply electricity in accordance with Section 43 of the Electricity Act, 2003 subject to payment of fresh/reconnection charges and compliance with applicable formalities.

Pre-existing dispute under the Insolvency and Bankruptcy Code, 2016 - validity and evidentiary value of a debit note under the Central Goods and Services Tax law - Mobilox test for spurious, hypothetical or illusory dispute - admission of Section 9 application and initiation of Corporate Insolvency Resolution Process (CIRP)

Pre-existing dispute under the Insolvency and Bankruptcy Code, 2016 - Mobilox test for spurious, hypothetical or illusory dispute - Whether the Adjudicating Authority correctly rejected the Section 9 application on the ground of a pre-existing dispute. - HELD THAT: - The Tribunal examined the material placed before the Adjudicating Authority and found that the defence raised by the corporate debtor - alleging defect in quality and reliance on debit notes - was not supported by contemporaneous communications or documentary evidence. The only document purporting to show a dispute was a debit note attached to an e-mail dated 22.5.2018 and a set of internal e-mails which were not sent to the operational creditor. Applying the principle in Mobilox, the Tribunal held that a dispute must actually exist and must not be spurious, hypothetical or contrived to defeat the operational creditor's claim. The Tribunal concluded that the purported dispute was fabricated and an afterthought raised to evade payment. [Paras 6, 7, 8]

The finding of a pre-existing dispute by the Adjudicating Authority was erroneous and is set aside; the alleged dispute was spurious and did not justify rejection of the Section 9 application.

Validity and evidentiary value of a debit note under the Central Goods and Services Tax law - Whether the purported debit note relied upon by the corporate debtor constituted a legally valid debit note and furnished evidence of return/defect of goods. - HELD THAT: - The Tribunal scrutinised the debit note and observed it lacked essential particulars required by Section 34 of the Central GST Act, 2017 and Rule 53(1A) of the Central GST Rules, 2017-there was no date, no GSTIN/PAN/UIN and no signature. There was also no evidence that defective goods had been returned or that any debit note had been declared in statutory returns. The e-mails relied upon were either internal or did not convey the requisite particulars to the operational creditor. On these facts the debit note did not inspire confidence and could not be treated as proof of a pre-existing dispute. [Paras 6, 7]

The purported debit note was not a legally valid or evidentiary debit note under GST law and did not establish return of defective goods or a pre-existing dispute.

Admission of Section 9 application and initiation of Corporate Insolvency Resolution Process (CIRP) - Whether the Section 9 application should be admitted following the rejection of the Adjudicating Authority's finding on pre-existing dispute. - HELD THAT: - Having found that the Adjudicating Authority's sole ground for rejection was erroneous, the Tribunal proceeded to admit the Section 9 application. The Tribunal directed initiation of the CIRP and remitted the matter to the Adjudicating Authority to issue consequential orders for admission within a specified short timeline. [Paras 9]

Section 9 application is admitted and the matter is remitted to the Adjudicating Authority to issue necessary orders for initiation of CIRP within 15 days.

Final Conclusion: The impugned order dismissing the Section 9 application on the ground of a pre-existing dispute is set aside; the Section 9 application is admitted and the matter is remitted to the Adjudicating Authority to issue consequential orders for initiation of CIRP within 15 days; no order as to costs.

Interim stay - admission into corporate insolvency resolution process - debt and default - operation of Section 10A of the Insolvency and Bankruptcy Code, 2016 on defaults - filing of reply and status report for adjudication on merits

Interim stay - admission into corporate insolvency resolution process - debt and default - Application for interim stay of the Adjudicating Authority's order admitting the Corporate Debtor into the insolvency resolution process. - HELD THAT: - The Tribunal heard rival submissions on whether the Adjudicating Authority correctly recorded 'debt' and 'default' and whether an interim stay of the admission order should be granted. After consideration, the Tribunal found that the Appellant/Corporate Debtor was not entitled to an interim stay of the impugned order. Although the Tribunal observed that the contentions on both sides require detailed consideration, that prospective merits review did not justify interrupting the operation of the admission order by way of interim relief at this stage.

Interim stay is refused; no stay of the impugned admission order is granted.

Operation of Section 10A of the Insolvency and Bankruptcy Code, 2016 on defaults - debt and default - Whether the Adjudicating Authority's observations regarding defaults falling within the period covered by Section 10A (and their effect on 'default') warranted immediate appellate intervention. - HELD THAT: - The Tribunal noted the Adjudicating Authority's observation that certain defaults occurred on or after dates falling within the period referred to in the Adjudicating Authority's order and that Section 10A was invoked in the impugned reasoning. The Tribunal did not resolve the substance of those contentions on the merits; rather, it recorded that the questions require detailed rumination at the appellate stage and therefore refrained from adjudicating the statutory effect of the period at the interim stage.

Substantive questions concerning the effect of the period referenced under Section 10A on the defaults are left for full appellate consideration.

Filing of reply and status report for adjudication on merits - Procedural directions necessary to enable full appellate consideration of the appeal. - HELD THAT: - The Tribunal directed the Financial Creditor to take notice and file a Reply/Response in both modes within two weeks and to serve it on the Appellant. The Resolution Professional was directed to file a Status Report within two weeks in both modes and serve it. The Appellant was directed to serve the Appeal Paper Book(s) on the Financial Creditor and the Resolution Professional by email and to file a Rejoinder within one week after receipt of the Reply/Response and Status Report. The Tribunal listed the matter for further hearing on the specified date.

Respondents to file Reply/Status Report and parties to exchange records as directed; matter listed for further hearing.

Final Conclusion: The Tribunal refused interim stay of the Adjudicating Authority's admission order but directed procedural filings (Reply/Status Report and Rejoinder), ordered exchange of Appeal Paper Book(s), and listed the appeal for further consideration on the merits.

Maintainability of insolvency application filed by an unregistered partnership firm - effect of non-registration under Section 69 of the Indian Partnership Act - distinction between a "suit" and "other proceedings" for the purpose of Section 69 - pre-existing dispute as a bar to initiation of CIRP under Section 9 IBC

Maintainability of insolvency application filed by an unregistered partnership firm - effect of non-registration under Section 69 of the Indian Partnership Act - distinction between a "suit" and "other proceedings" for the purpose of Section 69 - Application under Section 9 IBC filed by an unregistered partnership firm is not barred by Section 69(2) or Section 69(3) of the Partnership Act merely by reason of non-registration. - HELD THAT: - The Tribunal examined Section 69(1)-(3) of the Partnership Act and applied precedents relied upon in the judgment. It adopted the view that the prohibitions in Section 69(2) refer to a "suit" and do not extend to proceedings under the Insolvency and Bankruptcy Code, 2016; applications under the IBC are proceedings and not "suits" within the meaning of Section 69(2). With respect to Section 69(3), the Tribunal followed the interpretative principle in the cited Supreme Court authority that "other proceedings" will attract the ban only when they are intrinsically connected with a suit pending in a court; absent a pending suit, Section 69(3) does not operate to bar the unregistered firm from instituting the present proceeding. Applying these principles to the facts, and finding no pending court suit relating to the claimed debt, the Tribunal held that the Partnership Act provisions do not oust the maintainability of the Section 9 application filed by the unregistered firm. [Paras 7]

The petition by the unregistered partnership firm is not barred by Section 69(2) or Section 69(3) of the Partnership Act and the application is maintainable for consideration under the IBC.

Pre-existing dispute as a bar to initiation of CIRP under Section 9 IBC - Whether a pre-existing dispute between the parties existed on the date of receipt of the Section 8 demand notice. - HELD THAT: - The Tribunal considered the chronology and communications between the parties. The Corporate Debtor had raised substantive deficiencies and claimed rectification costs during a joint meeting held on 11.11.2017, prior to receipt of the Section 8 demand notice dated 14.11.2017 (delivered 17.11.2017). The nature of the complaints related to quality, dimensions, delays and claimed contractual liability, and on the material before the Bench the dispute was found to have crystallised before issuance of the demand notice. In view of this factual finding, the statutory bar created by the presence of a pre-existing dispute on the date of receipt of the notice applied and disentitled the Operational Creditor to the relief under Section 9. [Paras 8]

A pre-existing dispute existed as on receipt of the Section 8 notice; accordingly the Company Petition is dismissed.

Final Conclusion: The Tribunal held that an unregistered partnership firm is not precluded by Section 69 of the Partnership Act from filing an application under Section 9 IBC in the absence of a pending court suit, but on the facts a bona fide pre-existing dispute existed prior to receipt of the demand notice; therefore the Section 9 petition is dismissed.

Limited summary jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - role of Resolution Professional in verification and admission of claims - burden of proof and requirement of supporting documents for claim admission - inability of the Tribunal in summary proceedings to crystallize disputed claims of loss, profit or interest

Role of Resolution Professional in verification and admission of claims - burden of proof and requirement of supporting documents for claim admission - Whether the Resolution Professional was justified in rejecting or partially admitting the applicant's claims for want of supporting documents. - HELD THAT: - The Resolution Professional sought specific supporting documents and particulars (tower-wise agreements, villager payment receipts, invoices and other relevant records) to verify the claims. The applicant failed to furnish the documents despite requests and merely stated the values of claimed amounts. In the absence of the required documentary evidence the Resolution Professional could not admit the claims merely on the basis of assertions. The Tribunal held that, on the material before it, the Resolution Professional was justified in rejecting claims which lacked the requisite supporting documentation. [Paras 6, 7, 8, 9, 11]

The Rejection (or partial non-admission) of claims by the Resolution Professional for want of supporting documents is upheld.

Limited summary jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - inability of the Tribunal in summary proceedings to crystallize disputed claims of loss, profit or interest - Extent to which the Tribunal may adjudicate disputed quantification of claims, including loss, profit or interest, in IA under Section 60(5). - HELD THAT: - The Tribunal emphasised that under its summary jurisdiction it cannot go into detailed adjudication to crystallize disputed claims such as loss, profit or complex interest computations. While the works were executed earlier and some contentions regarding payments and reimbursements were raised, the Tribunal observed that the proper course where documents are lacking is not to attempt to determine detailed quantification in summary proceedings. Consequently, the adjudicatory role is limited and cannot substitute for a full verification process or detailed crystallisation of disputed monetary claims. [Paras 10, 11]

The Tribunal will not undertake crystallisation of disputed claims of loss, profit or interest in summary proceedings and declined to do so in the present application.

Final Conclusion: The application is rejected; the Resolution Professional's approach in not admitting claims unsupported by documents is sustained and the Tribunal, exercising limited summary jurisdiction, declined to adjudicate or crystallise the disputed monetary claims.

Default and debt due and payable - admissibility of petition under section 9 of the Insolvency and Bankruptcy Code - minimum pecuniary threshold under section 4(1) of the IBC - validity of demand notice and compliance with Rule 5 - plausibility of dispute / existence of a real dispute - acknowledgement/admission of debt by the corporate debtor - acceptance of goods and acquiescence - claim for interest stated in tax invoice - moratorium under section 14 of the IBC and appointment of Interim Resolution Professional

Default and debt due and payable - admissibility of petition under section 9 of the Insolvency and Bankruptcy Code - minimum pecuniary threshold under section 4(1) of the IBC - Whether the company petition under section 9 is maintainable and liable to be admitted on the ground of existence of default, satisfaction of pecuniary threshold and limitation. - HELD THAT: - The Tribunal examined the petition filed on 17 January 2020 and the documents annexed thereto. It found that the petition establishes that the Corporate Debtor is in default of an amount exceeding the statutory minimum threshold then applicable under section 4(1) of the Code and that the petition is within the limitation period. The Tribunal observed that even if the interest claimed is excluded, the principal alone crosses the minimum pecuniary threshold. On this basis the petition was held complete and maintainable and was admitted under section 9, with consequential directions including moratorium and appointment of an Interim Resolution Professional. [Paras 8]

The petition under section 9 is admitted; default and pecuniary threshold satisfied; moratorium imposed and IRP appointed.

Plausibility of dispute / existence of a real dispute - acknowledgement/admission of debt by the corporate debtor - Whether the defence based on an alleged conditional arrangement with a third party (Raymond Group) or other documents constitutes a plausible dispute disentitling the Operational Creditor to relief under section 9. - HELD THAT: - The Corporate Debtor relied on emails and an FIR to contend that payment to the Operational Creditor was conditional upon receipt from a third party. The Tribunal examined the said emails and the FIR and found that the emails did not record any payment condition; the FIR was filed by a person whose relationship to the Operational Creditor was not established. Conversely, an email dated 24 May 2019 from the Corporate Debtor acknowledging clearance of pending payment within 15 days was treated as an admission of liability. On the materials before it the Tribunal found no credible evidence of a pre-existing, legally sustainable dispute that would be a plausible defence; the contention was therefore rejected. [Paras 8]

The alleged conditional payment arrangement and other documents do not constitute a plausible dispute; the defence is rejected.

Validity of demand notice and compliance with Rule 5 - acceptance of goods and acquiescence - claim for interest stated in tax invoice - Whether the demand notice, the invoices (including interest), and the acceptance of goods by the Corporate Debtor sustain the Operational Creditor's claim and render the petition complete. - HELD THAT: - The Corporate Debtor challenged the demand notice form, non-attachment of ledger, the imposition of interest, and late delivery. The Tribunal found the demand notice to be in conformity with Rule 5 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016, and rejected the objection that Form 4 was mandated for invoice-based claims. The tax invoice of 20 February 2018 expressly mentioned interest at 24%, and even excluding interest the principal exceeded the threshold. Further, the Corporate Debtor had accepted the goods without demur and such acceptance amounted to acquiescence to any delay in delivery; it could not be urged later as a defence to the petition. Ledger disclosure was held not to be a fatal defect. Accordingly the Tribunal treated the documents as sufficiently supporting the claim. [Paras 8]

Demand notice and invoices including stated interest are valid for the purpose of the petition; acceptance of goods precludes belated objection to delivery; petition held complete.

Final Conclusion: The Adjudicating Authority admitted the section 9 petition, held that default and the pecuniary threshold were satisfied and that no plausible dispute barred admission, directed initiation of CIRP by imposing moratorium, appointed an Interim Resolution Professional and gave ancillary directions for conduct of the process.

Corporate Insolvency Resolution Process (CIRP) - Admission under Section 7 of the IBC - Financial Debt - Default - Moratorium under Section 14 of the IBC - Acknowledgement of debt in balance sheet - Filing of additional documents and pleadings - Appointment of Interim Resolution Professional - Effect of acknowledgment on limitation under the Limitation Act

Admission under Section 7 of the IBC - Existence of debt and default - The Financial Creditor established sanction, disbursement and default such that the petition under Section 7 is maintainable and liable to be admitted. - HELD THAT: - On the material placed on record the Tribunal found that the credit facilities were sanctioned and disbursed to the Corporate Debtor and that there was non-payment in respect of those facilities. The Tribunal, after perusing the documents and hearing the Financial Creditor (with the Corporate Debtor ex parte), concluded that the two essential prerequisites for admission under Section 7 - existence of debt and default - were satisfied. Relying on the settled position that when debt and default are proved the Adjudicating Authority is bound to admit a Section 7 petition, the application was held complete and admission ordered. [Paras 17, 22]

Section 7 petition admitted and CIRP ordered to be initiated against the Corporate Debtor.

Financial Debt - Default - Definition under the Code - The nature of the liability was held to be a "financial debt" and the state of non-payment amounted to a "default" under the Code. - HELD THAT: - The Tribunal examined the character of the credit facilities and the facts of non-repayment and concluded that the liabilities fell within the definition of "financial debt" and that the Corporate Debtor had committed a "default" as contemplated by the Code. These determinations satisfied the statutory tests required for admission under Section 7. [Paras 18]

Liability is a financial debt and default is established under the Code.

Acknowledgement of debt in balance sheet - Effect of acknowledgment on limitation under the Limitation Act - The entries in the Corporate Debtor's balance sheets and written acknowledgements were treated as admissions of liability, with the consequence that limitation is reset by each such acknowledgment. - HELD THAT: - The Tribunal relied on the Corporate Debtor's balance sheets for specified years and its written communications to the Financial Creditor acknowledging indebtedness. Applying the principle that liabilities stated in a corporate debtor's balance sheet constitute an acknowledgement of debt, the Tribunal held that each such acknowledgement restarts the period of limitation under the Limitation Act, and therefore the petition was within time. The Tribunal also referred to controlling Supreme Court precedent on the effect of such acknowledgements. [Paras 12, 14, 19]

Acknowledgements in balance sheets and correspondence amount to admissions resetting limitation; petition not barred by limitation.

Filing of additional documents and pleadings - Admissibility of post filing documents - Additional documents filed by the Financial Creditor before admission were considered admissible and taken on record. - HELD THAT: - The Tribunal noted the filing of supplementary affidavits and documents by the Financial Creditor and, having regard to the absence of any statutory bar and to Supreme Court precedent permitting amendment/filing of additional documents in Section 7 proceedings, treated those documents as part of the record. The Tribunal observed that while inordinate delay may justify refusal in some cases, on the facts before it the additional material could be entertained. [Paras 9, 11]

Additional documents filed before admission were entertained and considered in the adjudication.

Moratorium under Section 14 of the IBC - Interim Resolution Professional appointment - On admission, a moratorium was imposed and an Interim Resolution Professional was appointed to manage the CIRP. - HELD THAT: - Following admission, the Tribunal directed the imposition of the statutory moratorium restraining institution or continuation of legal proceedings, transfer or disposal of assets, enforcement of security and related acts for the CIRP duration. The Tribunal appointed the nominated professional as Interim Resolution Professional, recorded his consent and registration details, and directed him to perform the functions and assume management as prescribed by the Code and Regulations. Ancillary directions included public announcement, deposit to meet initial expenses, and communication to the Registrar of Companies. [Paras 21, 23]

Statutory moratorium imposed; Mr. Vinit Gangwal appointed as Interim Resolution Professional and CIRP management vested in him.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the Financial Creditor, held that the debt was a financial debt and that default was established, accepted the Corporate Debtor's acknowledgements as restarting limitation, entertained the additional documents filed, directed initiation of CIRP, imposed the moratorium and appointed an Interim Resolution Professional, with consequential administrative directions.

Liability to pay amount equivalent to CENVAT credit on removal under Rule 3(5) of the Cenvat Credit Rules, 2004 - interest on delayed or short payment of duty under Section 11AB of the Central Excise Act, 1944 - recovery of duty not levied or short-paid under Section 11A of the Central Excise Act, 1944 - penalty for deliberate default under Section 11AC of the Central Excise Act, 1944 - extended period of limitation where short payment arises from suppression or wilful mis-statement

Liability to pay amount equivalent to CENVAT credit on removal under Rule 3(5) of the Cenvat Credit Rules, 2004 - interest on delayed or short payment of duty under Section 11AB of the Central Excise Act, 1944 - Whether interest under Section 11AB is payable where inputs cleared 'as such' were short-paid at the time of removal and the differential duty was paid subsequently - HELD THAT: - The Tribunal held that where inputs on which CENVAT credit had been taken were cleared 'as such' with short payment in contravention of Rule 3(5), the situation is akin to short payment of duty on goods of own manufacture at the time of clearance. Reliance on the reasoning in SKF/International Auto and Steel Authority of India Ltd. establishes that payment of differential duty after the date of removal constitutes short-payment for which interest under Section 11AB is leviable to compensate the revenue for loss. The appellants' contention that availability of CENVAT balance or correct initial availing of credit absolves them from the obligation to pay interest was rejected: correct availment of credit does not negate the responsibility to make the reversal/payment required on removal, and delayed payment attracts interest irrespective of absence of fraudulent intent. The Tribunal also noted that authorities cited by the appellant (e.g., Ind-Swift/Chandrapur Magnet) were either distinguishable or inapplicable on the facts. [Paras 4]

Interest under Section 11AB is payable on the differential amount relating to clearances of inputs as such which were short-paid at the time of removal; the demand for interest is upheld.

Recovery of duty not levied or short-paid under Section 11A of the Central Excise Act, 1944 - penalty for deliberate default under Section 11AC of the Central Excise Act, 1944 - extended period of limitation where short payment arises from suppression or wilful mis-statement - Whether invocation of extended period of limitation and imposition of penalty under Section 11AC was justified where the assessee, after being pointed out in 2008, continued the practice of short payment - HELD THAT: - The Tribunal found that the appellants were made aware of the short-payment default in 2008 but continued the practice in subsequent years, which demonstrated willful conduct and justified invocation of the extended period. Applying the principles in Rajasthan Spinning & Weaving Mills and the reasoning in Dharamendra Textile, the Tribunal observed that when conditions for extended limitation (suppression/wilful mis-statement/contravention) are established, Section 11AC becomes attracted and penalty must be imposed as prescribed. The Tribunal also relied on its earlier decision in LSR Speciality Oil P. Ltd. which upheld quantification and extended period in similar circumstances. The appellants' assertions of inadvertent error and later voluntary reversal were held insufficient to negate the finding of continued default and to displace the applicability of penalty and extended limitation. [Paras 4, 5]

Invocation of the extended period of limitation and imposition of penalty under Section 11AC were justified and are upheld.

Final Conclusion: Appeal dismissed. The demand for differential amount on clearances of inputs as such for the period April 2006 to October 2010, the interest under Section 11AB thereon, the invocation of extended limitation, and the penalty under Section 11AC were all upheld by the Tribunal.

CENVAT credit on returned goods - Credit of duty on goods brought to the factory - Rule 16(1) of the Central Excise Rules, 2002 - Rule 16(3) of the Central Excise Rules, 2002 - Appropriation/reversal under Rule 16(2) - Demand and recovery under Rule 14 of the Cenvat Credit Rules, 2004 - Interest liability under Section 11AB of the Central Excise Act (Rule 14 CCR) - Penalty under Rule 15(1) of the Cenvat Credit Rules, 2004 read with Rule 25 of the CER, 2002

Rule 16(1) of the Central Excise Rules, 2002 - CENVAT credit on returned goods - Rule 16(3) of the Central Excise Rules, 2002 - Entitlement to take CENVAT credit on goods returned for repair on the basis of the assessee's invoices/triplicate copies under Rule 16(1) without prior permission under Rule 16(3). - HELD THAT: - The Tribunal accepted the Commissioner's factual finding that the assessee produced and the authority verified the original triplicate invoices which co-related with the goods and the Cenvat credits taken. Rule 16(1) treats returned final products as if received as inputs and permits availment of credit on the basis of invoice particulars; Rule 16(3) is a mechanism to meet difficulties in implementing sub-rules (1) and (2) and is not an independent requirement where proper records/invoices exist. Merely filing (and later withdrawing) an application under Rule 16(3) does not imply that Rule 16(1) could not legitimately be followed. In these matters there was no allegation that the credits did not co-relate to the goods or that originals were never available; originals were produced and verified. Consequently the taking of credit under Rule 16(1) on the assessee's invoices/triplicate copies was held lawful. [Paras 11, 12, 14]

CENVAT credit taken under Rule 16(1) on the basis of the assessee's triplicate/invoice copies was proper and did not require prior permission under Rule 16(3).

Appropriation/reversal under Rule 16(2) - Demand and recovery under Rule 14 of the Cenvat Credit Rules, 2004 - Validity of demand for recovery of CENVAT credit where the appellant had reversed/paid the equivalent amounts on removal after repairs and whether such amounts were properly appropriated against the demand. - HELD THAT: - The Commissioner had recorded that the assessee reversed/paid amounts equal to the CENVAT credit at the time of removal under Rule 16(2) and later produced invoices which established authenticity of the credit. The Tribunal observed that once the Commissioner expressed satisfaction about the invoices and the credits co-relating to the goods, and the amounts were reversed/paid at removal, the demand confirmed under Rule 14 read with Section 11A could not be sustained. The amounts paid/reversed pursuant to Rule 16(2) were undisputedly paid in time and were available for appropriation against any allegation of erroneous credit; accordingly the impugned demand was set aside. [Paras 4, 12, 16]

Demand for recovery of the CENVAT credit was set aside because the credit was in order and the equivalent amounts were reversed/paid on removal and appropriately available for appropriation.

Interest liability under Section 11AB of the Central Excise Act (Rule 14 CCR) - Whether interest as claimed by Revenue was exigible for the period of retention of benefit where the assessee had reversed/paid the amounts on removal pursuant to Rule 16(2). - HELD THAT: - While the Commissioner reasoned that once credit is taken the goods become non-duty-paid and interest is warranted for the period of retention (relying on precedent that interest is payable for delay in payment), the Tribunal found that in the present cases there was no delay in making payments required under Rule 16(2). The Commissioner had himself concluded that the CENVAT credit taken was in order and the reversal/payments on removal were made without delay. Reliance on authorities concerning different factual matrices (e.g., supplementary invoices or delayed payments) was inapt. Consequently, the demand for interest could not be sustained. [Paras 4, 15]

Demand for interest under Section 11AB (Rule 14 CCR) is not sustainable where there was no delay in payment/reversal under Rule 16(2).

Penalty under Rule 15(1) of the Cenvat Credit Rules, 2004 - Rule 25 of the Central Excise Rules, 2002 - Whether penalty should be imposed where the assessee reversed/paid the CENVAT credit at removal and there was no misfeasance. - HELD THAT: - The Commissioner found no misfeasance on part of the assessee because the amounts equal to CENVAT credit were reversed/paid upon removal of the goods and the credits were shown to relate to the goods brought for repair. In the absence of contravention warranting punitive action, imposition of penalty under the cited provisions was not justified. The Tribunal upheld the non-imposition of penalty for lack of mala fides or wrongful retention. [Paras 16]

No penalty was imposable where there was no misfeasance and the requisite reversals/payments were made; the proposal for penalty was unsustainable.

Final Conclusion: The appeal is allowed: the CENVAT credit taken under Rule 16(1) was held lawful on the facts; the confirmed demand for recovery and interest could not be sustained given the verified invoices and timely reversals/payments under Rule 16(2); no penalty was imposable. The impugned order is set aside.

Legality of levy of service tax on ocean freight - refund of service tax under Section 11B - cash refund of Cenvat credit of service tax on ocean freight - jurisdiction to decide refund under Section 142(3)

Legality of levy of service tax on ocean freight - refund of service tax under Section 11B - Appellant's claim for refund of service tax paid on ocean freight is to be examined afresh under the statutory refund provision. - HELD THAT: - The Tribunal recorded that the appellant's refund claim based on the contention that levy of service tax on ocean freight is illegal was not considered by the lower authorities because the relevant High Court decision was delivered subsequently. The Division Bench has earlier referred the question of cash refund of Cenvat credit under Section 142(3) to a Larger Bench, but that reference does not preclude the Adjudicating Authority from examining a standalone claim for refund of service tax under the refund provision. In view of these facts and the absence of earlier adjudication on the legality of the levy, the matter is remitted to the Adjudicating Authority for fresh adjudication under Section 11B as to whether the service tax paid on ocean freight was legal and correct. [Paras 4, 5]

Matter remanded to the Adjudicating Authority to decide afresh under Section 11B whether the service tax paid on ocean freight is legal and correct.

Cash refund of Cenvat credit of service tax on ocean freight - jurisdiction to decide refund under Section 142(3) - Tribunal's inability to decide refund of Cenvat credit under Section 142(3) due to an existing reference to the Larger Bench. - HELD THAT: - The Tribunal noted that a Division Bench has referred the question concerning refund of Cenvat credit under Section 142(3) to the Larger Bench in Bosch Electrical Drive India (interim order). Because of that pending reference on jurisdictional/competence issues, the Tribunal is not inclined to decide claims framed expressly as cash refund of Cenvat credit under Section 142(3). Consequently, the question of refund of Cenvat credit is left open for consideration in accordance with the outcome of the reference or by the appropriate authority. [Paras 3, 4]

Refund of Cenvat credit under Section 142(3) not adjudicated by this Tribunal and is kept open in view of the reference to the Larger Bench.

Final Conclusion: The appeal is allowed insofar as the matter is remitted to the Adjudicating Authority to decide afresh under Section 11B whether the service tax on ocean freight was legally payable; the separate question of cash refund of Cenvat credit under Section 142(3) is not decided and is left open in view of the pending Division Bench reference to the Larger Bench.

Power of suo motu revision/review - Jurisdiction to issue notice proposing revision of assessment - Short levy of tax as ground for reopening/revision - Opportunity to file objections and duty to pass reasoned order after hearing

Power of suo motu revision/review - Jurisdiction to issue notice proposing revision of assessment - Short levy of tax as ground for reopening/revision - Whether the Special Commissioner of Revenue, West Bengal was competent to issue the notice dated March 22, 2022 proposing revision and/or review of the final audit-cum-assessment order dated 07.02.2017 (reviewed on 07.07.2017). - HELD THAT: - The Court did not adjudicate the merits of the authority's power or the correctness of the grounds stated in the notice. The notice was issued on the stated ground of detection of a short levy of tax. The Court found that various factual and legal questions, including the question of jurisdiction of the third respondent to issue the notice, require determination and therefore should be considered by the authority in the first instance. Consequently the controversy as to the competence of the Special Commissioner and the validity of the proposed revision was not decided on merits but left for the authority to examine after hearing the petitioner. [Paras 5, 7]

Remanded to the Special Commissioner for fresh consideration of jurisdictional and substantive issues relating to the proposed revision, to be decided after hearing the petitioner.

Opportunity to file objections and duty to pass reasoned order after hearing - Appropriate procedure and timetable to be followed in respect of the notice dated March 22, 2022. - HELD THAT: - The Court granted the petitioner two weeks' time to file objections to the proposed order, permitting the petitioner to raise all legal, factual and jurisdictional points. If objections are filed within that period, the Special Commissioner is directed to conclude the proceedings after giving an opportunity of hearing and by passing a reasoned order communicated to the petitioner. The Court directed that the authority complete the exercise within three weeks from the date of filing such objection; if no objection is filed within two weeks, the authority shall conclude the proceeding within three weeks from the expiry of that two week period. These directions are mandatory and procedural, ensuring adjudication by the authority with reasons and opportunity of hearing. [Paras 6, 8, 9, 10]

Petitioner permitted two weeks to file objections; Special Commissioner directed to hear and pass a reasoned order within three weeks from filing (or from expiry of the two week period if no objection filed).

Final Conclusion: Writ petition disposed by directing the petitioner to file objections within two weeks and remitting the question of competence and the merits of the proposed revision to the Special Commissioner for adjudication after hearing, to be completed within the stipulated timelines; no order as to costs.

Determination of factual issue - remand to assessing authority - final fact-finding authority - fresh assessment uninfluenced by previous findings - reopening of assessment - input tax credit

Determination of factual issue - final fact-finding authority - remand to assessing authority - Whether the Tribunal erred in remanding the matter to the Assistant Commissioner of Sales Tax instead of determining the percentage yield of rice bran oil on the materials on record. - HELD THAT: - The Tribunal found that the ACST's adoption of a 20% yield lacked logical or scientific support and that the assessee's claimed yields (16.10% and 14.44%) were also unsupported by logic or scientific material; consequently the Tribunal remanded the matter for fresh assessment to determine yield after examining factors such as the age of the extraction machine and quality of rice bran. The High Court examined whether all material necessary for determination was already on record and observed that the Department had not placed supporting materials before the Tribunal and that the factual determination required further enquiry and verification. Given that the question was one of fact requiring examination of evidence not then available on record, the Court held that the Tribunal did not err in remanding the case for fresh enquiry rather than deciding the precise percentage on the existing record. The Court further clarified that the assessing authority must conduct the fresh exercise uninfluenced by earlier ACST conclusions or the Tribunal's observations on merits and complete the reassessment within the time directed by the Court. [Paras 3, 7, 8, 9]

Tribunal's remand upheld; matter to be reassessed afresh by the ACST uninfluenced by earlier findings and within the time directed.

Final Conclusion: The revision petition is dismissed; the Tribunal's remand for a fresh assessment to determine the yield percentage is upheld and the ACST is directed to complete the reassessment uninfluenced by prior findings within four months.

Trade discount as deduction from taxable turnover - deductibility of trade discount despite absence from statutory definition of sale price - revised returns - claim not liable to rejection for non disclosure in original return - first point tax paid goods not subject to fresh tax at subsequent points in the same series of sale

Trade discount as deduction from taxable turnover - deductibility of trade discount despite absence from statutory definition of sale price - revised returns - claim not liable to rejection for non disclosure in original return - Trade discount allowed as a permissible deduction from gross taxable turnover and cannot be disallowed merely because it was not disclosed in the original monthly returns. - HELD THAT: - The Tribunal's disallowance of trade discount was set aside. The Court accepted the assessee's contention that trade discount may be deducted from gross turnover even if the term is not specifically enumerated in the definition of 'sale price', and relied on earlier decisions addressing the same proposition. The Court further held that where revised returns are filed to reflect the deduction, the claim cannot be rejected solely because the deduction was not shown in the original return. [Paras 5, 6, 8]

Trade discount deducted from turnover is permissible and the Tribunal's order disallowing it for non disclosure in original returns is set aside.

First point tax paid goods not subject to fresh tax at subsequent points in the same series of sale - Goods on which tax was paid at the first point are not liable to be taxed again at subsequent sales in the same series, even if the subsequent sale price exceeds the earlier purchase price. - HELD THAT: - The Court accepted the assessee's reliance on assessments and appellate orders in other periods in which it was held that subsequent sales are not taxable where tax has already been paid at the first point. On this basis the Tribunal's view requiring payment of sales tax on subsequent sales after first point taxation was negatived. [Paras 7, 8]

No fresh sales tax is leviable on subsequent sales of goods that have been taxed at the first point in the same series of sale; the Tribunal's contrary finding is set aside.

Final Conclusion: The revision petition is allowed: the Tribunal's findings disallowing trade discount and imposing tax on subsequent sales of first point taxed goods are set aside in favour of the assessee; the impugned order is quashed to that extent and the petition is disposed of.

Contempt for wilful disobedience - Maintainability of contempt despite executability - Interplay between interim relief under Section 9 and contempt/execution remedies - Refusal of exemption and prohibition on re agitating rejected grounds - Direction to deposit/maintain specified bank balance as interim protective measure

Contempt for wilful disobedience - Direction to deposit/maintain specified bank balance as interim protective measure - Respondents held guilty of deliberate and wilful disobedience of this Court's orders dated 19.08.2020 and 06.05.2021 for failing to deposit/maintain USD 60 million in the Corporation Bank account. - HELD THAT: - The Court found that the order of the learned Single Judge dated 22.01.2014 (restored by this Court on 19.08.2020) directing maintenance of USD 60 million in the Corporation Bank account, together with the subsequent specific direction dated 06.05.2021 to deposit the shortfall, remained uncomplied with. The respondents' plea of inability for want of liquid funds and repeated applications for exemption had been considered and rejected by this Court (order dated 02.07.2021). Repetitive reliance on the same grounds already rejected was treated as an attempt to delay compliance and as demonstrative of wilful disobedience. Applying settled authority on contempt of court and the necessity of enforcing orders that protect the subject matter of arbitration, the Court concluded that the respondents' conduct warranted a finding of contempt. [Paras 8, 10, 11, 12]

Respondents are guilty of wilful and deliberate disobedience of the orders dated 19.08.2020 and 06.05.2021 and are liable to be punished under the Contempt of Courts Act, subject to further order on punishment.

Maintainability of contempt despite executability - Interplay between interim relief under Section 9 and contempt/execution remedies - Contempt proceedings before this Court were held maintainable notwithstanding that the underlying Section 9 order is executable by ordinary process. - HELD THAT: - The Court rejected the respondents' contention that executability of the underlying order ousts contempt jurisdiction. Relying on precedent, the Court held that the fact that an order is executable under civil procedure does not divest the Court of its jurisdiction to punish for contempt where noncompliance substantially interferes with the due course of justice. The specific direction dated 06.05.2021 by this Court reinforced that the present proceedings are not a mere execution application and that contempt jurisdiction remains available. [Paras 8]

Objection that contempt is not maintainable because the order is executable is overruled; contempt jurisdiction can be exercised alongside execution remedies.

Refusal of exemption and prohibition on re agitating rejected grounds - The respondents' application for exemption from depositing the shortfall (IA No. 68388/2021) was earlier rejected and they could not re urge the same grounds; repetition amounted to contemnatory conduct. - HELD THAT: - The Court recorded that the respondents had sought exemption on grounds of inability to liquidate assets and want of funds and had tendered apologies and undertakings; that application was dismissed on 02.07.2021. The respondents thereafter again pressed the same contentions. The Court held that re petition of grounds already considered and rejected is impermissible and further demonstrated wilful noncompliance. Consequently, the earlier dismissal precludes rehearing of identical submissions in the contempt petition. [Paras 6, 10]

The exemption application was rejected and respondents cannot re argue the same grounds; such repetition amounts to contemptuous conduct.

Direction to deposit/maintain specified bank balance as interim protective measure - The Court directed the respondents to deposit the shortfall so as to maintain USD 60 million within four weeks, and deferred the question of punishment pending compliance. - HELD THAT: - After concluding that respondents were in contempt, the Court afforded them an additional opportunity to comply: deposit the shortfall to bring the Corporation Bank account balance to USD 60 million within four weeks from the date of the order. The Court explained that the extent of any punishment would be directly affected by whether the respondents comply within the stipulated period and fixed the matter for further hearing on punishment. [Paras 6, 12]

Respondents are directed to deposit the shortfall and maintain USD 60 million in the Corporation Bank account within four weeks; matter posted for consideration of punishment on compliance or non compliance.

Final Conclusion: The Supreme Court found the respondents guilty of wilful disobedience of its orders dated 19.08.2020 and 06.05.2021 for failing to maintain USD 60 million in the specified bank account, overruled the objection that executability ousted contempt jurisdiction, rejected the respondents' exemption plea and repetition of rejected grounds as contemnatory, and granted four weeks for compliance before hearing on punishment on 12.08.2022.