TaxTMI Updates e-Newsletter
Jul 16,2021

Pure agent and exclusion from taxable value under Rule 33 of the CGST Rules, 2017 - scope of 'supply' and requirement of 'consideration' under Section 7 of the CGST Act, 2017 - jurisdiction of Authority for Advance Ruling under Section 97(2) of the CGST Act, 2017

Pure agent and exclusion from taxable value under Rule 33 of the CGST Rules, 2017 - Tax liability on collection and remittance of AAPC examination fees by the applicant on behalf of students enrolled for training with the applicant. - HELD THAT: - The applicant collects examination fees from its enrolled students and remits the exact amount to AAPC on authorization of those students, without charging any service fee. Rule 33 permits exclusion of expenditures or costs incurred as a pure agent from the value of supply if the supplier acts as a pure agent on recipient's authorization, separately indicates the payment in the invoice, and the supplies procured as a pure agent are in addition to services supplied on the agent's own account. Here the applicant provides training services (on which GST is charged) and, in addition, facilitates payment of examination fees on behalf of its enrolled students. The Authority found that these facts satisfy the conditions of Rule 33 and therefore the examination fee collected and remitted on behalf of enrolled students is excluded from the applicant's taxable value. [Paras 7]

Collection and payment of examination fee to AAPC on behalf of students enrolled for training is not liable to GST, subject to fulfilment of Rule 33 conditions.

Scope of 'supply' and requirement of 'consideration' under Section 7 of the CGST Act, 2017 - Tax liability on collection and remittance of AAPC examination fees by the applicant on behalf of outside students not enrolled for training. - HELD THAT: - The applicant provides the fee-payment facilitation free of charge to outside students, collecting only the exact examination fee and remitting it to AAPC without any service charge from either the student or AAPC. Supply under Section 7 requires a transaction for a consideration in the course or furtherance of business. As the facilitation is provided without consideration, it falls outside the scope of 'supply'. Consequently, no GST is leviable on the fee-payment facilitation provided to outside students in absence of consideration. [Paras 7]

Collection and payment of examination fee to AAPC on behalf of outside students without any service charge is not liable to GST.

Jurisdiction of Authority for Advance Ruling under Section 97(2) of the CGST Act, 2017 - Whether the Authority may rule on following or adopting the Karnataka AAR decision in M/s. Arivu Educational Consultants Pvt. Ltd. - HELD THAT: - Section 97(2) prescribes the matters on which advance rulings may be sought (classification, applicability of notifications, time and value, admissibility of ITC, liability to pay tax, requirement to register, and whether a particular thing amounts to supply). The applicant's query seeking to follow the essence of the Karnataka AAR decision does not fall within those specified categories for which an advance ruling may be sought. Therefore this Authority lacks jurisdiction to issue a ruling on whether the applicant may follow that prior AAR decision. [Paras 7]

The Authority has no jurisdiction to rule on whether the applicant may follow the Karnataka AAR decision cited.

Final Conclusion: The Authority ruled that (i) exam fees collected and remitted to AAPC on behalf of the applicant's enrolled students may be excluded from taxable value if Rule 33 conditions are met; (ii) facilitation of payment for outside students provided without any consideration is not a 'supply' and is not liable to GST; and (iii) the Authority cannot rule on whether the applicant may follow the Karnataka AAR decision as that question falls outside its jurisdiction under Section 97(2).

Assumption of jurisdiction - preliminary question of jurisdiction - speaking order - liberty to raise preliminary submissions

Assumption of jurisdiction - preliminary question of jurisdiction - speaking order - Authority must first decide the preliminary question concerning assumption of jurisdiction by a speaking order before proceeding to adjudicate the merits. - HELD THAT: - The petition was dismissed as withdrawn, but the court granted the petitioner liberty to present submissions on the preliminary question of whether the Assessing Officer had assumed jurisdiction. The court directed that this preliminary point be decided first by the authority by way of a speaking order, and only thereafter may the authority proceed, if at all, to consider the matter on merits. The order requires an express, reasoned decision on jurisdictional assumption prior to merit adjudication.

Liberty granted to raise and decide the preliminary question of assumption of jurisdiction; the authority directed to issue a speaking order on that point before considering merits.

Final Conclusion: Writ petition dismissed as withdrawn. Petitioner given liberty to urge the preliminary jurisdictional objection; the assessing authority is directed to decide that question first by a speaking order before proceeding to the merits.

Interest under Section 50 of the Central Goods and Services Tax Act, 2017 - Levy of interest on cash remittance - Levy of interest on adjustment of electronic credit ledger - Section 42 notice for mismatch of particulars - Voluntary reversal of input tax credit by filing Form GST DRC-03 - Compensatory and mandatory nature of interest

Levy of interest on adjustment of electronic credit ledger - Interest under Section 50 of the Central Goods and Services Tax Act, 2017 - Levy of interest to the extent it arises from remittance by way of adjustment of the electronic credit ledger. - HELD THAT: - The Court accepted the parties' concession that the question concerning interest charged on adjustments made through the electronic credit register is covered by the earlier decision in Maansarovar Motors Private Limited v. Assistant Commissioner, Poonamallee Division, Chennai (W.P.Nos.28437 of 2019 etc., order dated 29.09.2020). In light of that binding precedent, the impugned levy insofar as it relates to adjustment through the electronic credit ledger cannot be sustained and is set aside. [Paras 4]

Levy of interest on remittances by adjustment of the electronic credit ledger set aside.

Section 42 notice for mismatch of particulars - Voluntary reversal of input tax credit by filing Form GST DRC-03 - Applicability of Section 42 where the assessee has accepted wrongful claim of ITC and voluntarily reversed it by payment in Form GST DRC-03. - HELD THAT: - The Court held that Section 42, which contemplates issuance of notice in cases of mismatch between particulars furnished by suppliers and recipients, is directed to situations where the mismatch is attributable to error in the revenue's database or mistakes at the end of the revenue. Where, as recorded in the impugned order, the assessee received intimation of wrongful ITC, accepted the error and effected voluntary reversal of ITC (attributable to CGST and SGST) by making payment in Form GST DRC-03, the case is not one of a revenue-side mismatch. Consequently Section 42 does not apply to preclude or alter the levy imposed for the assessee's erroneous claim of ITC. [Paras 6, 7]

Section 42 is not attracted where the assessee has voluntarily accepted and reversed a wrongful claim of ITC by payment in Form GST DRC-03.

Levy of interest on cash remittance - Compensatory and mandatory nature of interest - Interest under Section 50 of the Central Goods and Services Tax Act, 2017 - Validity of levy of interest on belated cash remittance by the assessee. - HELD THAT: - The Court observed that interest on belated payment of tax by cash remittance is of a compensatory nature and that the statutory levy under Section 50 is mandatory in such circumstances. Having found that Section 42 is not the relevant provision for the assessee's voluntary reversal, the Court sustained the impugned order insofar as it imposes interest on the belated cash remittance. [Paras 8]

Levy of interest on belated cash remittance upheld as compensatory and mandatory.

Final Conclusion: The writ petition is disposed by modifying the impugned order: the interest charged in respect of adjustments through the electronic credit ledger is set aside, Section 42 is inapplicable where the assessee voluntarily accepted and reversed wrongful ITC via Form GST DRC-03, and the levy of interest on belated cash remittance is upheld as compensatory and mandatory.

Summary order. Petition listed; respondent no.3 (GNCTD) to revert with instructions on whether it will adopt the modality reflected in the Haryana and Gujarat notifications (Annexures P2 and P3); if GNCTD resists, it shall file a counter-affidavit before the next date; remaining respondents granted opportunity to file counter-affidavits before the next date; matter listed on 14.09.2021.

Exemption for services by an unincorporated body to its own members by way of reimbursement or share of contribution upto Rs. 7,500 per month per member - taxability of contribution in excess of specified exemption ceiling - strict interpretation of exemption notifications - legal status of circulars vis-a -vis notifications under Article 13(3) of the Constitution

Exemption for services by an unincorporated body to its own members by way of reimbursement or share of contribution upto Rs. 7,500 per month per member - taxability of contribution in excess of specified exemption ceiling - strict interpretation of exemption notifications - Whether the exemption in Entry 77(c) applies only where the contribution does not exceed Rs. 7,500 per month per member, so that an excess contribution attracts tax only on the excess, or whether exceeding that amount results in loss of exemption for the entire contribution. - HELD THAT: - The Court examined the plain language of the Entry which grants exemption for reimbursement or share of contribution "upto an amount of Rs. 7,500/-" for sourcing goods or services from a third person for common use. The term "upto" denotes an upper limit and, on a plain reading, exempts amounts until that ceiling. By comparing drafting choices in other exemption entries (which expressly indicate when exemption applies only where the amount does not exceed a specified limit or where slabs are intended), the Court concluded that Entry 77(c) was intended to remove from taxation contributions up to the specified limit and to make only the excess exigible to tax. The Court rejected the AAR's construction that any contribution exceeding Rs. 7,500/- would disentitle the association to the exemption for the entire amount, holding that such a view is contrary to the express language and intendment of the Entry. The Court therefore held that only contributions in excess of Rs. 7,500/- are taxable under the GST Act. [Paras 16, 23, 24, 25, 26]

The interpretation that an excess contribution removes exemption for the entire amount is incorrect; only the portion of contribution exceeding Rs. 7,500/- is taxable.

Legal status of circulars vis-a -vis notifications under Article 13(3) of the Constitution - effect of departmental clarification and subsequent Circular on entitlement to statutory exemption - Whether the Circular and the AAR ruling adopting the view that the entire contribution becomes taxable when it exceeds Rs. 7,500/- are legally valid and capable of withdrawing or modifying the statutory exemption. - HELD THAT: - The Court noted that a Circular cannot operate to withdraw a statutory exemption conferred by a notification, and placed reliance on the distinction between notifications (which are statutory instruments) and circulars (which do not constitute 'law' under Article 13(3)). The departmental clarification originally treated only the excess as taxable and that approach had been followed by RWAs. The Court found that both the AAR ruling and the later Circular adopting the AAR's view were contrary to the express language of the exemption Entry. Consequently, the Circular and the AAR's adverse conclusion were quashed to the extent they mandated tax on the entire contribution when the ceiling was exceeded. [Paras 10, 11, 26]

The AAR ruling and the impugned Circular are quashed insofar as they hold that exceeding Rs. 7,500/- disentitles the association to exemption for the entire contribution; a circular cannot withdraw a statutory exemption and the correct position is that only the excess is taxable.

Final Conclusion: Writ petitions allowed; the AAR ruling and the impugned Circular are quashed to the extent they treat the entire contribution as taxable when it exceeds Rs. 7,500/- per month per member. Only contributions in excess of Rs. 7,500/- per member per month are exigible to GST.

Revocation of cancellation of registration under Rule 23 of the CGST Rules, 2017 - Requirement to furnish returns and pay tax, interest and late fee before revocation - Power of the proper officer to revoke or reject revocation application for reasons to be recorded - Exclusion of limitation period due to COVID-19 (Supreme Court suo motu orders)

Exclusion of limitation period due to COVID-19 (Supreme Court suo motu orders) - The delay in filing the appeal was excused and the appeal is not time barred. - HELD THAT: - The Commissioner (Appeals) applied the Supreme Court's suo motu orders extending and excluding the limitation period for proceedings affected by the COVID 19 pandemic, including the restoration of the order dated 23.03.2020. In view of those directions - which excluded the period from 15.03.2020 to 14.03.2021 and provided a 90 day availability where applicable - the appeal filed with a 90 day delay from the normal period was held to be within the extended/excluded limitation and therefore maintainable. The appeal was admitted and proceeded to be decided on merits. [Paras 5]

Delay condoned; appeal not time barred and admitted for adjudication on merits.

Revocation of cancellation of registration under Rule 23 of the CGST Rules, 2017 - Requirement to furnish returns and pay tax, interest and late fee before revocation - Power of the proper officer to revoke or reject revocation application for reasons to be recorded - Whether the appellant had complied with the conditions for seeking revocation of cancellation and the course to be followed by the proper officer. - HELD THAT: - The Tribunal examined the requirements of Rule 23 and the CBIC clarification that where registration is cancelled for failure to furnish returns, revocation applications are not maintainable until pending returns are filed and amounts due are paid. The appellant produced GSTR 3B for October 2020 (till cancellation) and representation that tax, late fee and interest up to the date of cancellation had been deposited, with interest (if any) to be ascertained and paid. On the materials before it the Commissioner (Appeals) found that the appellant had filed pending returns and deposited tax liabilities and late fee, thus meeting the preconditions under Rule 23. The matter as to formal revocation was left to the proper officer to decide after the applicant files the prescribed revocation application (FORM GST REG 21) and after due verification of payments and returns; the proper officer retains the statutory power to revoke by FORM GST REG 22 or to reject after issuing show cause notice, with reasons to be recorded. [Paras 10]

Appellant found to have complied with prerequisites; directed to file revocation application and directed proper officer to consider and verify payment particulars and returns and pass appropriate order.

Final Conclusion: The appeal was admitted as not time barred in view of the Supreme Court's COVID 19 limitation orders; on merits the appellant was found to have complied with the preconditions for seeking revocation of cancellation and was directed to file the revocation application, with the proper officer ordered to verify payments/returns and decide the revocation application in accordance with Rule 23.

Accommodation entries - onus to prove source of credits - estimation of income by applying commission rate - tribunal as last fact-finding authority - ballpark rate/estimate of commission - precedential reliance by coordinate benches - no substantial question of law under Section 260A

Accommodation entries - onus to prove source of credits - estimation of income by applying commission rate - Whether the Tribunal erred in setting aside the assessment and CIT(A) orders by refusing to apply the Assessing Officer's treatment of bank credits as income and the 2.25% commission rate. - HELD THAT: - The Court recorded that the assessment and CIT(A) had treated the credits in the assessee's bank accounts as accommodation entries because the assessee failed to produce satisfactory explanations and confirmations, and applied a commission rate of 2.25% to estimate income. The Tribunal, however, accepted that the assessee provided accommodation entries for consideration but declined to apply a uniform rate (such as 2.25%) across all transactions merely on the basis of loose sheets indicating rates of 1.69% to 2.5% for some transactions. The Tribunal relied on decisions of coordinate benches which had adopted lower commission rates in analogous cases and exercised its fact-finding function to arrive at an appropriate ballpark rate. The High Court found these conclusions not perverse and held that the Tribunal, as the final fact-finding authority, was entitled to make such an estimate rather than mechanically uphold the AO's single-rate application when the material did not establish that same rate for all transactions. [Paras 7, 8]

The Tribunal's refusal to apply the AO's uniform 2.25% rate and its exercise of discretion to estimate commission was not perverse and did not warrant interference.

Tribunal as last fact-finding authority - ballpark rate/estimate of commission - no substantial question of law under Section 260A - Whether the appeals raised a substantial question of law warranting interference under Section 260A. - HELD THAT: - The High Court observed that the Tribunal's findings-accepting that accommodation entries were provided but rejecting application of a uniform commission rate for all transactions and adopting a ballpark rate based on precedent-were not so perverse as to require interference. Given that these were fact-finding conclusions and that the Tribunal is the last fact-finding authority entitled to make reasonable estimates, the Court held that no substantial question of law arose from the impugned orders. Consequently, the appellate jurisdiction under Section 260A did not invite interference with the Tribunal's conclusions. [Paras 9]

No substantial question of law arises; the appeals under Section 260A are not maintainable for interference with the Tribunal's fact-based conclusions.

Final Conclusion: The High Court dismissed the appeals, upholding the Tribunal's fact-finding exercise in estimating commission and concluding that no substantial question of law arises for interference under Section 260A.

Disallowance of short-term capital loss - forfeiture of share warrant/share application money - precedential effect of final appellate order in assessee's earlier assessment - reliance on prior tribunal and High Court decisions - requirement of allotment for acquisition of shares as capital asset

Disallowance of short-term capital loss - forfeiture of share warrant/share application money - precedential effect of final appellate order in assessee's earlier assessment - Validity of the Tribunal's setting aside of the assessing officer's disallowance of short-term capital loss for Assessment Year 2009-10 by following an earlier order in the assessee's own case and precedent decisions. - HELD THAT: - The Tribunal affirmed the Commissioner (Appeals) who had relied on the Tribunal's earlier decision in the assessee's own case for Assessment Year 2007-08 and on the decision in M/s BPL Sanyo. The High Court noted that the earlier order in the assessee's case (AY 2007-08) had attained finality because the appeal therefrom to this Court had been dismissed in view of a monetary limit bar, and therefore the earlier decision was binding on the present controversy. Given that the prior appellate determination dealt with the forfeiture of amounts paid by the assessee in relation to share warrants/application money and was final, the Tribunal correctly applied that precedent and set aside the disallowance of the short-term capital loss made by the assessing officer. The Court observed that the revenue did not press Question No.1 and that the factual distinction urged by the revenue (payment in advance for share warrants vs. allotment) did not outweigh the binding effect of the final earlier order relied upon by the Tribunal and Commissioner (Appeals). [Paras 7]

The Tribunal rightly set aside the disallowance of the short-term capital loss by following the assessee's earlier final appellate order and precedent; the substantial question is answered in favour of the assessee.

Final Conclusion: Appeal dismissed; the Tribunal's order setting aside the disallowance of short-term capital loss for Assessment Year 2009-10 is upheld because it followed the assessee's earlier final appellate order and applicable precedent.

Allowability under Section 37(1) of the Income-tax Act - application of income versus appropriation of profits - expenditure incurred for purposes of business - authorization by bye laws of a co operative society - distinction between funds expended and reserve funds

Allowability under Section 37(1) of the Income-tax Act - expenditure incurred for purposes of business - authorization by bye laws of a co operative society - distinction between funds expended and reserve funds - application of income versus appropriation of profits - Whether contributions amounting to Rs. 10,86,43,782/- to various funds are allowable as expenditure in computing the income of the assessee under Section 37(1) of the Income-tax Act for Assessment Year 2007-08. - HELD THAT: - The Tribunal and this Court found that the sums contributed to the specified funds did not remain with the Apex Co operative Bank nor did they return to the assessee in any form; they were expended pursuant to the assessee's statutory or bye law obligations and for the purposes of the business of banking. Section 37(1) excludes only capital or personal expenditures and those items described by other sections of Chapter IV; the revenue did not contend that the payments were capital or personal or fell under other Chapter IV exclusions. The Court accepted that appropriation of net profits in the sense of distribution requires the formal procedure prescribed for co operative societies, and that authorized payments made in conformity with bye laws and for business purposes fall within admissible expenditure under Section 37(1). Decisions relied upon by the revenue concerned reserve funds and therefore were distinguishable on facts. The Court also noted that a Division Bench decision in the assessee's own case for a later assessment year had allowed similar payments to PACS and DCCBs, supporting the view that such contributions, where spent for business purposes and not held as reserves, are deductible under Section 37(1). Consequently the substantial question was answered against the revenue. [Paras 6, 7]

Contributions to the specified funds amounting to Rs. 10,86,43,782/- are allowable as business expenditure under Section 37(1) for AY 2007-08; appeal dismissed.

Final Conclusion: The substantial question of law is answered against the revenue and in favour of the assessee: the impugned contributions, being authorized by bye laws and expended for business purposes rather than constituting reserve or personal/capital expenditure, are deductible under Section 37(1); the revenue's appeal is dismissed.

Addition to income on account of alleged excess registration charges - estimation under Section 153C - evidence found during search - incriminating documents - burden of corroborative circumstantial evidence - rejection of books of account - concurrent findings of fact

Addition to income on account of alleged excess registration charges - incriminating documents - evidence found during search - burden of corroborative circumstantial evidence - Deletion of additions made by the Assessing Officer relating to amounts collected from customers for vehicle registration - HELD THAT: - Both the Commissioner (Appeals) and the Tribunal found that no incriminating documents or direct evidence from customers were discovered in the assessee's case despite survey and search activity. The authorities recorded that the assessee's books were not rejected and no reliable material was found to support an estimation of unaccounted receipts attributable to registration charges. In those circumstances, and in the absence of corroborative circumstantial evidence linking the collections to undisclosed income of the assessee, the additions made by the Assessing Officer were deleted. The High Court concurred that these conclusions are factual findings and that the Tribunal and the CIT(A) were entitled to reach them on the materials on record.

Additions deleted for the stated assessment years for lack of incriminating documents or direct/corroborative evidence.

Estimation under Section 153C - rejection of books of account - evidence found during search - Permissibility of making an estimation under Section 153C in the absence of supporting seized material or defective books - HELD THAT: - The authorities held that estimation under Section 153C could not be made in the assessee's case because there was no material seized from the assessee (or customers) that directly supported such an estimate, nor were the assessee's books found defective or rejected. The Tribunal relied on the absence of any reliable material from the search/survey to justify deleting the Assessing Officer's estimate. The High Court treated this as a factual conclusion and declined to disturb it.

Estimation under Section 153C could not be sustained on the record; deletion of the estimated additions affirmed.

Concurrent findings of fact - addition to income on account of alleged excess registration charges - Whether the department's appeals raised substantial questions of law warranting interference with the Tribunal's factual conclusions - HELD THAT: - The High Court observed that the CIT(A) and the Tribunal had formed concurrent factual findings - namely, absence of incriminating material, no customer evidence, and books not rejected - which were determinative of the deletion of additions. As these were findings of fact based on the record, the High Court found no substantial question of law arising from the Tribunal's orders and therefore declined to interfere with the concurrent conclusions.

Revenue's appeals dismissed for lack of substantial question of law.

Final Conclusion: The concurrent factual findings of the CIT(A) and the Tribunal - absence of incriminating documents or customer evidence, and no rejection of books - justified deletion of the additions for assessment years 2003-2004 to 2007-2008; the revenue's appeals are dismissed as raising no substantial question of law.

Violation of principles of natural justice - opportunity of hearing - revision under section 264 of the Income Tax Act, 1961 - setting aside and remand for fresh decision - limitation for revision / time-bar

Violation of principles of natural justice - opportunity of hearing - revision under section 264 of the Income Tax Act, 1961 - limitation for revision / time-bar - Impugned order dated 29.3.2021 was passed without considering the petitioner's objection dated 26.3.2021, resulting in violation of principles of natural justice. - HELD THAT: - The court found that the petitioner had submitted an objection dated 26th March, 2021 which was not considered by the Commissioner before passing the order under Section 264 on 29th March, 2021. The respondent's plea that the matter was time barred was rejected because the assessment order sought to be revised had been received by the petitioner on 4th February, 2020 and limitation for revision ran for two years thereafter, so there was sufficient time available to consider the objection. In these circumstances the Commissioner's failure to consider the objection amounted to a breach of the duty to afford a hearing and to decide after applying judicial mind. The court did not examine the merits of the controversy and left the substantive decision open for fresh consideration by the Commissioner.

Order dated 29th March, 2021 set aside for breach of natural justice; matter remitted to the Commissioner to decide afresh after giving opportunity of hearing and to pass a reasoned and speaking order within eight weeks from communication of this order.

Final Conclusion: The impugned order dated 29.3.2021 is quashed for non-consideration of the petitioner's objection and the matter is remitted to the Commissioner for fresh, reasoned decision after affording hearing within eight weeks; the court has not gone into the merits.

Rejection of books of account under section 145(3) - best judgment assessment - estimation of income on a reasonable and proper basis - past history of the assessee as guidance for estimation - test of comparability of business conditions - use of current year margins of similarly situated assessees/peers

Rejection of books of account under section 145(3) - best judgment assessment - estimation of income on a reasonable and proper basis - Validity of the assessing officer's estimation of income by applying an average gross profit rate of 3.03% (computed including the year under consideration) after rejection of books of account. - HELD THAT: - The Tribunal held that once books of account are rejected, the AO must frame assessment on best judgment by estimating income on a reasonable and proper basis having regard to material on record. The AO's methodology of averaging gross profit rates for three years including the year under consideration was held impermissible because it contradicted the principle of comparability: current year results should not be averaged into a benchmark for past years, and the AO made no finding that earlier years were conducted under business conditions comparable to the year under consideration. The Tribunal noted that the AO failed to examine whether past years were similar in business environment and also ignored the assessee's explanation of factors (sluggish market, additional husk cost) making the current year non-comparable. In these circumstances the blind application of a 3.03% GP rate by the AO was not a reasonable basis for best judgment assessment and could not be sustained. [Paras 13, 14, 15, 16, 17]

AO's estimation by applying average GP of 3.03% (including current year) is not sustainable; the CIT(A)'s reduction of the addition is upheld.

Past history of the assessee as guidance for estimation - test of comparability of business conditions - use of current year margins of similarly situated assessees/peers - Legal principle and scope for using past years' profits or peers' current year margins in best judgment assessments and whether the CIT(A) correctly applied that principle. - HELD THAT: - The Tribunal restated settled law that past history of the assessee or history of similarly situated assessees may guide estimation only when conditions are comparable; where significant changes in business conditions exist the past history may be an inappropriate benchmark. In such situations the AO should consider current year profitability of other assessees in the same line of business operating under similar conditions to ascertain an appropriate benchmark. The CIT(A) correctly appreciated the assessee's evidence of market slump and additional direct cost (purchase of husk) which made the current year distinguishable; he therefore refused to accept the AO's increase to 3.03% and allowed only a limited increase of 0.08% based on verified discrepancies. The Tribunal found no reason to interfere with this approach. [Paras 13, 15, 16]

Past history is a guide only if comparable; where business conditions changed, AO should consider comparable peers/current year data - CIT(A)'s application of this principle is upheld.

Final Conclusion: The appeal by the Revenue is dismissed; the Tribunal upholds the CIT(A)'s deletion of the bulk of the addition and confirms that best judgment assessments must be founded on a reasonable basis of comparability or, where comparability is lacking, on appropriate benchmarking against similarly situated assessees operating under comparable conditions.

Cash credits and burden of proof under Section 68 - genuineness, identity and creditworthiness of share applicants - forfeiture of share application money and inference of non-genuineness - surrender by authorised representative and its evidentiary weight - adequacy of departmental inquiry and use of summons/inspection reports - transactions routed through banking channels not conclusive of genuineness - precedential guidance of NRA Iron and steel Ltd. and Pr. CIT v. NDR Promoters

Cash credits and burden of proof under Section 68 - genuineness, identity and creditworthiness of share applicants - forfeiture of share application money and inference of non-genuineness - adequacy of departmental inquiry and use of summons/inspection reports - surrender by authorised representative and its evidentiary weight - transactions routed through banking channels not conclusive of genuineness - Validity of deletion by the CIT(A) of the addition of Rs. 2,50,00,000 made by the Assessing Officer under Section 68 in respect of share application money. - HELD THAT: - The Assessing Officer made the addition after the assessee failed to produce the directors or principal officers of six subscribing companies despite multiple opportunities and summonses, summonses to the companies being returned unserved, and an inspection report stating no evidence of those companies at the given address. The share application money was forfeited in the subsequent year, which further cast doubt on the genuineness of the transactions. The CIT(A) held that the assessee had discharged the initial onus by producing ROC records, PAN, bank statements and confirmations and faulted the AO for not pursuing further enquiries. The Tribunal found that the AO did pursue enquiries - issuing summons, deputing an inspector, examining returned summons and bank details and seeking production of statutory records - and that these materials supported a finding of doubtful existence/creditworthiness of the subscribing companies. The Tribunal also held that payment through banking channels is not by itself conclusive of genuineness or creditworthiness. The Tribunal relied on higher court precedents cited in the record to find that the facts warranted sustaining the addition. On the question of the authorised representative's surrender, the Tribunal noted that the AO did not base the addition solely on the AR's statement but on the cumulative material and factual findings. Consequently, the CIT(A)'s deletion was set aside and the AO's addition restored. [Paras 7, 8]

CIT(A)'s deletion of the addition of Rs. 2,50,00,000 is set aside; the Assessing Officer's addition under Section 68 is restored.

Final Conclusion: Appeal allowed. The ITAT restores the assessing officer's addition of Rs. 2,50,00,000 for AY 2012-13 made under Section 68, reversing the CIT(A)'s order.

Arm's Length Price adjustment - Working capital adjustment and treatment of interest on receivables - Treatment of advances for investment and conversion into equity - Rectification of Tribunal orders under statutory power

Arm's Length Price adjustment - Functional comparability of comparables - Whether the Tribunal's direction to treat the assessee's ITeS international transaction as at ALP without adjudicating functional dissimilarities of the comparables requires rectification - HELD THAT: - The Tribunal had noted the assessee's international transaction margin of 37.54% and the mean margin of the comparables of 33.13%, and directed that if after applying the negative working capital adjustment the assessee's margin fell within +/-3% of the comparables, the transaction would be at ALP and no adjustment required. Since the assessee's margin exceeded the mean margin and the assessee did not press for consideration of functional dissimilarities (and agreed to the Tribunal's approach at hearing), the Tribunal correctly concluded that detailed examination of functional dissimilarities was unnecessary and that no mistake apparent on the face of the record required rectification. [Paras 3]

Rectification rejected; no change to the Tribunal's approach on ALP and comparability for the ITeS segment.

Treatment of advances for investment and conversion into equity - Remand for factual examination - Whether the Tribunal's order failed to consider that advances to associated enterprises were for equity investment subsequently converted into shares, and whether this omission requires rectification - HELD THAT: - The Tribunal's earlier decision in the assessee's own case (ITA No.267/Hyd/2014) had set aside this issue to the file of the Assessing Officer/TPO for fresh examination. Given that the facts and circumstances are similar and the assessee relied on that earlier direction, the omission to direct a like de novo examination in the impugned order amounts to a mistake apparent on the record. The Tribunal therefore substituted paragraph 5.4 of its earlier order and remanded the question to the Assessing Officer/TPO to examine whether the advances were made for equity purposes and whether shares were allotted; if shares were allotted, the transaction should not be treated as capital financing. The ground is allowed for statistical purposes. [Paras 4]

Issue remanded to the Assessing Officer/TPO for fresh examination on whether the advances were for equity and shares were allotted; paragraph 5.4 of the earlier order substituted accordingly.

Working capital adjustment and treatment of interest on receivables - Distinct treatment of interest on delayed receivables - Whether the Tribunal should have directed deletion of the addition for interest on outstanding receivables on the ground that working capital adjustment already covers interest - HELD THAT: - The Tribunal observed that the working capital adjustment accounts for interest on receivables as on the closing date of the accounting year but does not capture interest on delayed receivables incurred during the relevant year beyond the credit period. Consequently, the working capital adjustment does not subsume a separate addition for interest on delayed receivables, and there is no mistake in the Tribunal's order on this point. [Paras 5]

Rectification rejected; the addition for interest on outstanding receivables need not be deleted on account of the working capital adjustment.

Final Conclusion: Both miscellenous applications are partly allowed: the Tribunal's order is upheld on ALP treatment for the ITeS segment and on interest on delayed receivables, but the issue of interest on advances for investment is remanded to the Assessing Officer/TPO for fresh consideration as directed.

Allowability of business expenditure under section 37 - deferred revenue expenditure - matching of revenue with expenditure - accounting entries not determinative of tax character - enduring benefit / capital v. revenue test - AO cannot compel spreading of expenditure claimed by assessee - application of Taparia Tools Ltd. (Supreme Court) on deferred revenue expenditure

Allowability of business expenditure under section 37 - deferred revenue expenditure - matching of revenue with expenditure - accounting entries not determinative of tax character - enduring benefit / capital v. revenue test - AO cannot compel spreading of expenditure claimed by assessee - Whether brokerage expenditure, though shown as deferred revenue expenditure in the assessee's books, is allowable in full in the relevant assessment year under section 37 - HELD THAT: - The Tribunal found as fact that the brokerage had been incurred in the relevant assessment year and was wholly and exclusively for the purpose of the assessee's business. The claim in the computation sought deduction of the entire expenditure for that year notwithstanding that the assessee's accounts amortised part of it as deferred revenue expenditure. Relying on Taparia Tools Ltd., the Tribunal held that the Income-tax Act recognises no concept of deferred revenue expenditure except where amortisation is specifically provided, and that if a business liability has arisen in the accounting year the deduction must be allowed even if payment or quantification may occur later. The matching argument - that expenditure must be spread because the income from the investment accrues over years - was considered and rejected as a basis to deny the deduction where the assessee has already claimed the expenditure in the year of incurrence; the matching principle is an exception limited to cases where the assessee itself elects to spread expenditure (and has only been applied in narrow circumstances such as debenture discount). The Tribunal further held that treatment in books of account is not decisive of tax character and that the expenditure did not create a capital advantage of the kind that would require classification as capital expenditure (applying the commercial test of enduring benefit as explained in Empire Jute). On these grounds the AO's disallowance was held not sustainable and the CIT(A)'s deletion of the addition was upheld. [Paras 10, 11, 12, 13, 14]

Brokerage expenditure incurred in the assessment year and claimed as deduction is allowable in full under section 37; AO cannot compel spreading of such expenditure merely on matching grounds and the fact of deferral in books is irrelevant.

Final Conclusion: Revenue's appeal is dismissed and the order of the CIT(A) deleting the addition is upheld.

Approval under section 80G - remand for fresh consideration - reasonable opportunity of being heard - assessment of genuineness of trust - appeal treated as allowed for statistical purposes

Approval under section 80G - remand for fresh consideration - reasonable opportunity of being heard - Whether the matter should be remitted to the CIT(E) for examination of the assessee's reply and, if satisfied, grant of approval under section 80G after providing a reasonable opportunity of hearing. - HELD THAT: - The Tribunal observed that the CIT(E) had rejected the Form 10G application inter alia on the ground that the assessee had not filed a reply to an order-sheet entry and had expressed doubts about the genuineness of the trust. The assessee's authorised representative undertook to explain the matters with documentary evidence if an opportunity were granted. Having considered the record and submissions, the Tribunal exercised its supervisory jurisdiction in the interest of justice and directed that the issue be remitted to the file of the CIT(E) for fresh examination of the reply. The CIT(E) is directed to consider the materials furnished, afford the assessee a reasonable opportunity of being heard, and, if satisfied on merits, grant approval under section 80G in accordance with law. The assessee is further directed to comply with any notices or directions issued by the CIT(E) in the proceedings before him. [Paras 6]

Matter remitted to the CIT(E) to examine the assessee's reply, afford hearing, and decide the Form 10G application for approval under section 80G on merits; assessee to comply with any directions.

Final Conclusion: The Tribunal remitted the application for approval under section 80G to the CIT(E) for fresh consideration after affording the assessee a reasonable opportunity of hearing and directed that, if satisfied, the CIT(E) grant approval in accordance with law; the appeal is treated as allowed for statistical purposes.

Validity of show-cause notice issued under section 274 read with section 271AAA - requirement to specify whether penalty is for concealment of income or for furnishing inaccurate particulars - penalty under section 271AAA and vitiation on account of defective notice - application of ratio in SSA's Emerald Meadows regarding notice-defect and consequential quashing of penalty

Validity of show-cause notice issued under section 274 read with section 271AAA - requirement to specify whether penalty is for concealment of income or for furnishing inaccurate particulars - penalty under section 271AAA and vitiation on account of defective notice - Notice issued under section 274 r.w.s. 271AAA which did not state whether penalty was initiated for concealment of income or for furnishing inaccurate particulars is invalid and the consequent order under section 271AAA is liable to be quashed. - HELD THAT: - The show-cause notice dated 28/03/2012 issued by the Assessing Officer under section 274 read with section 271AAA failed to indicate whether the proceedings were initiated for concealment of particulars of income or for furnishing inaccurate particulars. Applying the ratio of the Hon'ble Supreme Court in SSA's Emerald Meadows, a notice that omits this essential specification is not valid. Consequentially, an order imposing penalty under section 271AAA founded on such defective notice cannot stand. The Tribunal therefore set aside the CIT(A)'s confirmation and quashed the penalty order. The Tribunal also noted that, on merits, similar reasoning in a coordinate bench decision in the husband's case supported deletion of penalty; however the primary basis for allowing the appeal is the defective notice as per the cited Supreme Court precedent. [Paras 8, 9]

The penalty order under section 271AAA is quashed for want of a valid show-cause notice; the appeal is allowed.

Final Conclusion: The appeal is allowed; the penalty of the Assessing Officer under section 271AAA is deleted and the order imposing penalty is quashed for AY 2008-09.

Validity of revision under section 263 - Saving of exemptions under repeal clause (consistency under section 297(2)(k)) - Registration under section 12AA/12A as condition precedent to claim exemption under section 11 - Applicability of proviso to section 12A(2) for pending assessment proceedings - Failure to comply with appellate directions

Failure to comply with appellate directions - Validity of revision under section 263 - Whether the Principal Commissioner (CIT(E)) rightly exercised jurisdiction under section 263 in holding the AO's set-aside order erroneous and prejudicial for not properly examining the directions of the Tribunal. - HELD THAT: - The Tribunal examined the Coordinate Bench's directions which had set aside the matter to the AO to determine (i) whether exemption under the repealed Act was saved by section 297 and (ii) whether it was consistent with corresponding provisions of the 1961 Act. The Tribunal found that, in the set-aside proceedings, the AO issued queries and received the assessee's submissions but did not record a considered finding addressing the distinguishing features of the 1922 regime and the 1961 regime (notably registration, conditions of application, accumulation and mode of investment under section 11 read with section 12A/12AA). The AO accepted the assessee's contention without grappling with these differences or producing a reasoned conclusion on consistency and saving. Given the AO's failure to discharge the specific factual-legal verification directed by the Tribunal, the Principal Commissioner was justified in invoking section 263 to rectify an order which, as recorded, was erroneous and prejudicial to the revenue by omission of requisite examination. [Paras 36, 37, 40]

The order of the Principal Commissioner under section 263 in setting aside the AO's order is upheld; the assessee's ground challenging the exercise of jurisdiction is dismissed.

Saving of exemptions under repeal clause (consistency under section 297(2)(k)) - Registration under section 12AA/12A as condition precedent to claim exemption under section 11 - Whether exemption granted under section 4(3)(i) of the Indian Income-tax Act, 1922 is saved by section 297(2)(k) of the Income-tax Act, 1961 (i.e., is consistent with corresponding provisions of the 1961 Act) so as to dispense with registration under section 12AA/12A for claiming exemption under section 11. - HELD THAT: - The Tribunal analysed the substantive differences between section 4(3)(i) of the 1922 Act and sections 11, 12, 12A, 12AA and 13 of the 1961 Act. It noted that the 1961 Act introduced material and substantive conditions absent in the 1922 regime-most importantly the requirement of registration under section 12AA/12A (a condition precedent), detailed rules on accumulation, manner and mode of investment, audit and filing obligations, and the Commissioner's powers to register or cancel registration. Because these are new and substantive requirements, the Tribunal held that the old recognition under the 1922 Act cannot be treated as automatically saved by section 297(2)(k) where those requirements are inconsistent with the earlier regime. The Tribunal therefore rejected the contention that absence of a formal registration order under the 1922 Act prevented application of section 297(2)(k), but concluded that on comparing the regimes the 1922 exemption is not consistent with the 1961 provisions and thus not saved so as to obviate compliance with section 12AA/12A. [Paras 31, 32, 33, 34, 35]

Section 4(3)(i) of the 1922 Act cannot be regarded as consistent with and saved by section 297(2)(k) of the 1961 Act so as to dispense with the registration requirement; registration under section 12AA/12A is a condition precedent to claim exemption under section 11 where the 1961 Act's provisions differ materially.

Applicability of proviso to section 12A(2) for pending assessment proceedings - Registration under section 12AA/12A as condition precedent to claim exemption under section 11 - Whether the assessee's subsequent registration under section 12AA (w.e.f. 03.08.2016) and invocation of the proviso to section 12A(2) entitled it to exemption for the impugned assessment year. - HELD THAT: - The Tribunal relied on a coordinate-bench finding in the assessee's own case that the formal registration granted on 05.09.2016 was based on amendments to the trust deed (change in nature from private to public and addition of dissolution clause), such that the constitution of the trust post-amendment was not the same as prior to amendment. The proviso to section 12A(2) applies to proceedings pending before the AO provided the objects and activities remain the same. Where registration is granted on an amended constitution, the proviso's retrospective benefit for preceding assessment years is not available. The Tribunal found no reason to depart from that coordinate-bench conclusion and held that the AO's acceptance of exemption for the impugned year on account of subsequent registration was erroneous and prejudicial to revenue. [Paras 29, 30, 38, 39]

The proviso to section 12A(2) does not extend benefit to the impugned assessment year where registration was granted on an amended constitution; subsequent registration therefore did not cure the defect for the earlier year.

Final Conclusion: The Tribunal dismissed the assessee's appeal and upheld the Principal Commissioner's exercise of jurisdiction under section 263: the AO's set-aside order accepting exemption was found to be erroneous and prejudicial because it failed to address the Tribunal's specific directions and misconstrued the effect of the 1922 exemption vis-a -vis the 1961 Act; the exemption under the 1922 Act was held not to be saved by section 297(2)(k) where the 1961 Act introduced material, inconsistent conditions (notably registration under section 12AA/12A), and the proviso to section 12A(2) was held inapplicable to a registration granted on an amended constitution for prior assessment years.

Disallowance of interest under section 36(1)(iii) for diversion of interest-bearing funds to related parties - presumption that investments/advances are made out of available interest-free funds where such funds suffice - restriction of disallowance to incremental loans and advances in the relevant previous year - principle of consistency and exclusion of opening balance of advances for making fresh disallowance

Disallowance of interest under section 36(1)(iii) for diversion of interest-bearing funds to related parties - presumption that investments/advances are made out of available interest-free funds where such funds suffice - Whether the Assessing Officer was justified in disallowing proportionate interest claimed under section 36(1)(iii) on the ground that borrowed (interest-bearing) funds were utilized to make loans and advances to sister concerns. - HELD THAT: - The Tribunal examined the appellant's financial statements and found that as on 31.03.2014 the appellant had large interest free funds (Reserves and Surplus together with Advances from Customers) which, in aggregate, exceeded the advances to sister concerns. Only a relatively small incremental amount of advances was made in the previous year relevant to A.Y. 2014 15. Established precedent requires that where both interest bearing borrowings and interest free funds are available and the interest free funds suffice to meet the investments/advances, a presumption arises that investments/advances were made out of the interest free funds. Applying that principle to the facts, and noting that earlier years did not attract any disallowance, the Tribunal concluded that the Assessing Officer's finding of diversion of interest bearing funds was not sustainable and that the disallowance could not be sustained in respect of the impugned interest expenditure. [Paras 10, 12, 13]

Disallowance of interest of Rs. 3,80,00,399/- under section 36(1)(iii) deleted as the available interest free funds sufficed to meet the advances and the presumption therefore favoured the assessee.

Restriction of disallowance to incremental loans and advances in the relevant previous year - principle of consistency and exclusion of opening balance of advances for making fresh disallowance - Whether, in the absence of any disallowance in earlier years, the opening balance of loans and advances to related parties could be taken into account for making disallowance in the assessment year under consideration. - HELD THAT: - The Tribunal relied on judicial authority holding that where no disallowance was made in earlier years, the opening balance of loans and advances should not be considered for computing disallowance under section 36(1)(iii); any disallowance, if at all, must be confined to incremental advances made in the previous year relevant to the assessment year. On facts, the incremental advances in the year under consideration were substantially lower than the incremental interest free funds generated in that year. Consequently, the opening balance was excluded and no disallowance arose for the year. [Paras 11]

Opening balance of loans and advances excluded for purpose of disallowance; any disallowance, if warranted, would be limited to incremental advances, which on the facts did not justify the impugned addition.

Final Conclusion: The appeals are allowed. The Tribunal reverses the orders of the lower authorities and directs deletion of the disallowance of interest (as confirmed by the CIT(A)) for A.Y. 2014 15.

Revisional jurisdiction under section 263 - Erroneous order prejudicial to the revenue (Malabar test) - Requirement of verification and possession of books/accounts for computation of deduction under section 80-IA - Distinction between lack of enquiry and inadequate enquiry - E filing of Form 10CCB and annexure compliance in assessment proceedings

Revisional jurisdiction under section 263 - Erroneous order prejudicial to the revenue (Malabar test) - Validity of the Principal Commissioner's exercise of revisional jurisdiction under section 263 in respect of the assessment order for AY 2013-14. - HELD THAT: - The Tribunal applied the twin conditions laid down in Malabar Industries - the assessing officer's order must be erroneous and prejudicial to the interest of revenue. The Principal CIT's objections were that year wise profit/loss details and Form 10CCB were not on record and that the AO had not made requisite verification to compute deduction under section 80 IA. The Tribunal found that the AO had raised specific queries under section 142(1), the assessee furnished year wise income/expense details and e filed Form 10CCB which the AO examined during assessment. Reliance was placed on the distinction between mere difference of opinion and an order being erroneous; where the AO has in fact made enquiries and examined the material, the Commissioner cannot invoke section 263 merely because he would have made further or more detailed enquiries. Applying these principles the Tribunal concluded that the order of the AO was not shown to be erroneous or prejudicial to revenue and therefore the revisional jurisdiction was not correctly invoked. [Paras 11, 14, 15]

Order passed by the Principal CIT under section 263 was quashed; appeal allowed.

Requirement of verification and possession of books/accounts for computation of deduction under section 80-IA - E filing of Form 10CCB and annexure compliance in assessment proceedings - Distinction between lack of enquiry and inadequate enquiry - Whether the Assessing Officer failed to verify records or compute the quantum of deduction under section 80-IA for AY 2013-14, thereby rendering the assessment erroneous. - HELD THAT: - The Principal CIT held that the AO ought to have verified profit & loss account, Form 10CCB and supporting vouchers to compute deduction under section 80 IA. The Tribunal examined the assessment record and noted that the AO had specifically queried the assessee about the windmill income; the assessee furnished year wise income/expense statements and had e filed Form 10CCB (acknowledged). The AO examined these documents while framing the assessment. The Tribunal emphasised that the power under section 263 cannot be exercised where the AO has made enquiries (even if the Commissioner considers them inadequate) and that mere possibility of further verification does not render the AO's order erroneous. On these findings the Tribunal concluded that the AO had made requisite enquiries and the assessment was not vitiated for failure of verification. [Paras 3, 6, 14]

AO did make enquiries and had the relevant documents on record; there was no failure to verify or compute under section 80-IA that would make the assessment order erroneous.

Final Conclusion: The Tribunal held that the conditions for exercise of revisional jurisdiction under section 263 were not satisfied in respect of AY 2013-14: the assessing officer had made enquiries, examined the e filed Form 10CCB and year wise details, and the assessment order was neither erroneous nor prejudicial to revenue. The section 263 order was quashed and the appeal allowed.

Maintainability of appeal under limitation - service of appellate show cause notice and right to opportunity of hearing - ex parte enhancement of assessment - remand for fresh consideration after denial of opportunity - notice under Section 251(2) and limitation under Section 253(3) of the Income Tax Act

Maintainability of appeal under limitation - limitation under Section 253(3) of the Income Tax Act - Appeal admitted despite delay in filing. - HELD THAT: - The assessee's appeal was filed about three years after the CIT(A)'s order. The assessee produced a brief synopsis and an affidavit explaining the delay and demonstrated that the impugned appellate order and the show cause notice for enhancement were not effectively served. The record from the CIT(A)'s office showed the show cause notice dated 16.03.2015 was returned undelivered and there was no material to prove delivery of the impugned order. In these circumstances the Explanation for filing the appeal after the lapse of time was accepted and the appeal was held to be within time for the purposes of admission under the statutory limitation provisions relied upon by the parties. [Paras 2]

Delay excused; appeal admitted for disposal on merits.

Service of appellate show cause notice and right to opportunity of hearing - ex parte enhancement of assessment - remand for fresh consideration after denial of opportunity - notice under Section 251(2) of the Income Tax Act - Impugned ex parte enhancement by the CIT(A) set aside and the matter remanded for fresh decision after giving opportunity of hearing. - HELD THAT: - The Assessing Officer made adhoc disallowances which were confirmed by the CIT(A) who further enhanced the assessment to an adhoc estimate. The CIT(A) had issued a show cause notice under Section 251(2) for enhancement, but that notice was returned unserved and the enhancement was made without affording the assessee an effective opportunity to be heard. In view of the failure of service and consequent denial of opportunity, the Tribunal found the ex parte enhancement unsustainable in the interest of justice and set aside the CIT(A)'s order. The matter was directed to be remitted to the CIT(A) for fresh adjudication after granting one more opportunity of hearing to the assessee. [Paras 5]

Impugned order set aside; matter remanded to CIT(A) for fresh decision after giving the assessee an opportunity of hearing.

Final Conclusion: The appeal was admitted despite the delay because the impugned appellate show cause notice and order were not shown to have been served; the CIT(A)'s ex parte enhancement was set aside and the matter remitted for fresh disposal after affording the assessee a hearing; appeal allowed for statistical purposes.

Interim bail under High Powered Committee recommendations during COVID-19 - evasion of duty and penal consequences under Section 135 of the Customs Act - smuggling and classification as serious economic offence - custodial remand and risk of influencing witnesses - non-applicability of COVID-19 release recommendations to cases investigated by ED/for PMLA or other special agencies - precedential limitation on blanket release in Suo Motu Prison matters

Interim bail under High Powered Committee recommendations during COVID-19 - evasion of duty and penal consequences under Section 135 of the Customs Act - smuggling and classification as serious economic offence - custodial remand and risk of influencing witnesses - precedential limitation on blanket release in Suo Motu Prison matters - Whether the petitioners were entitled to interim bail under the High Powered Committee recommendations and whether the Chief Judicial Magistrate erred in rejecting their interim bail application. - HELD THAT: - The Court examined the High Powered Committee criteria for temporary release during the COVID-19 pandemic and the scope of Section 135 of the Customs Act which carries punishment up to seven years. Although clause 3 of the Committee's recommendations contemplates release of under-trials facing offences with maximum sentence of seven years or less, the Committee expressly excludes certain categories from consideration, including matters investigated by ED and offences falling within specified serious economic offences. The case diary and material on record prima facie establish the petitioners' involvement in smuggling of gold and silver, ongoing and multi agency investigation including proceedings under Customs and matters linked to Money Laundering (ED), prior show cause proceedings and indications of habitual offending. The investigation was at a preliminary stage and custodial remand was held necessary for further probe; there was a reasonable apprehension of influencing witnesses given the petitioners' financial resources. The Court relied on the Supreme Court's observations limiting the scope of Suo Motu prison-release directions and that those directions do not mandate release of prisoners charged with serious offences or where investigation is incomplete. Applying these principles, the Court found that the petitioners fall within excluded categories and that the Chief Judicial Magistrate did not err in refusing interim bail in view of the prima facie material, seriousness of the economic offence and risk to investigation. [Paras 10, 11, 12, 13, 14]

The rejection of the interim bail application by the Chief Judicial Magistrate is justified and does not warrant interference; the petition for interim bail is dismissed.

Final Conclusion: Writ petition dismissed; the trial court's order refusing interim bail is upheld on the grounds of prima facie involvement in serious smuggling offences, ongoing multi agency investigation (including matters attracting ED/PMLA consideration), and risk of influencing witnesses; trial court not to be influenced by observations if a regular bail application is filed.

Review petition - error apparent on the face of the record - scope of review - application of a subsequent higher court judgment to concluded orders - directions in aid of a later precedent

Review petition - error apparent on the face of the record - scope of review - application of a subsequent higher court judgment to concluded orders - Review petition against disposal of Customs Appeals Nos.13 & 14 of 2020 dismissed for want of error apparent on the face of the record and refusal to issue directions pursuant to a later Supreme Court judgment. - HELD THAT: - The review petitioner sought reconsideration of this Court's disposal of Customs Appeal Nos.13 & 14 of 2020 and asked for directions analogous to paragraph 98 of the Supreme Court's judgment in Union of India v. M/s. Raj Grow Impex LLP, which contemplates that matters relating to interveners be governed by its findings while preserving limited appeal rights in relation to quantum. The Court examined the scope of review and found that no error apparent on the face of the record had been pointed out. In the absence of any such error, the proper scope of a review petition did not permit reopening the earlier decision merely by invoking a subsequent higher court judgment to obtain directions; consequently the Court declined to review its order or to issue the directions sought. [Paras 2, 4]

Review petition dismissed; no order as to costs.

Final Conclusion: The review petition challenging this Court's earlier disposal of the Customs appeals was dismissed for lack of any error apparent on the face of the record; the Court declined to re-open its order or to issue directions based on the later Supreme Court judgment.

Re-assessment of import classification - correction of classification by original adjudicating authority - scope and application of Section 128 of the Customs Act, 1962 - SEZ Rules and amendment of import assessment for DTA clearance - requirement of a speaking order and opportunity to be heard on remand

Re-assessment of import classification - correction of classification by original adjudicating authority - SEZ Rules and amendment of import assessment for DTA clearance - Whether the impugned Order in Appeal could be sustained in refusing the appellant's request for reassessment of two Bills of Entry on the ground that modification must be made only by invoking Section 128, and whether the matter should be remanded for de novo adjudication by the original authority. - HELD THAT: - The Tribunal recorded that there was no dispute as to the correct classification of the imported goods and that the appellant had sought reassessment of the two Bills of Entry after realizing the classification error. The Adjudicating Authority's direction that the original assessment must be modified only by proceedings under Section 128 was found to be unnecessary in the circumstances. The Departmental Representative agreed to de novo adjudication by the original authority. In the absence of any contested factual or legal impediment recorded by the Adjudicating Authority, the Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority to pass an appropriate speaking order after affording reasonable opportunity to the appellant. All contentions were left open for fresh consideration on remand. [Paras 4, 5]

Impugned Order in Appeal set aside; matter remanded to the Adjudicating Authority for reassessment and passing of a speaking order after affording reasonable opportunity to the appellant; contentions left open.

Final Conclusion: Appeal allowed by way of remand; the adjudicating authority is directed to re assess the two Bills of Entry and pass an appropriate speaking order in accordance with law after affording the appellant reasonable opportunity, with all contentions left open.

Abetment - dereliction of duty - mens rea/intentional aid requirement for abetment - onus on Department to prove collusion - penalty under Section 114 and 114AA of the Customs Act, 1962 - protection of Government officers acting in good faith

Abetment - mens rea/intentional aid requirement for abetment - penalty under Section 114 and 114AA of the Customs Act, 1962 - onus on Department to prove collusion - Whether the appellant's conduct in carrying out the market inquiry constituted abetment of fraudulent exports attracting penalty under Section 114 and 114AA - HELD THAT: - The Tribunal analysed the ingredients of abetment as defined in Section 107 IPC-instigation, conspiracy or intentional aiding-and emphasised that intentional aid or active complicity is essential to constitute abetment (para 8). The market inquiry in question was conducted after the alleged fraudulent exports had been effected; abetment requires participation prior to or in the course of the commission of the offence (para 10). The material on record did not demonstrate that the appellant instigated, conspired with, or intentionally aided the exporter; there was no evidence that the appellant benefitted from the transactions or that any positive act of collusion took place (paras 10-11, 13). The adjudicating authority had treated the appellant's admission that the inquiry was conducted improperly as an admission of abetment, but the admission related only to negligence or an improper inquiry and not to intentional aiding or conspiracy (para 13). The Tribunal held that the facts relied upon-improper or casual conduct of the market inquiry, failure to ascertain competence of inquired firms, and late IECs of those firms-at best establish dereliction of duty or inefficiency, not the offence of abetment; the Department bore the onus to bring cogent evidence of intentional complicity (paras 11-13). Precedents and statutory protection for officers acting in good faith were noted as supporting the distinction between negligence and abetment (para 13). [Paras 8, 10, 11, 13]

Findings of abetment and the penalty imposed under Section 114/114AA could not be sustained; the conduct amounted to negligence/dereliction of duty at most, not abetment.

Final Conclusion: The adjudicating order confirming penalties under Section 114 and 114AA is set aside; the appeal is allowed and the penalty quashed.

Restoration of name under Section 252 of the Companies Act, 2013 - striking off and dissolution for failure to file annual returns and financial statements - just and equitable doctrine for restoration - opportunity to take remedial measures prior to permanent dissolution - restoration subject to filing of outstanding statutory documents, payment of fees and costs, and publication

Restoration of name under Section 252 of the Companies Act, 2013 - just and equitable doctrine for restoration - striking off and dissolution for failure to file annual returns and financial statements - Whether the name of M/s. Maharana Constructions Private Limited struck off by the Registrar of Companies should be restored in the Register of Companies. - HELD THAT: - The Tribunal found that the Registrar of Companies had struck off the company's name for non filing of annual returns and balance sheets after providing an opportunity to be heard, and that no reply was received from the company or its directors. Notwithstanding the ROC's compliance with the statutory strike off procedure, the Tribunal examined the materials placed before it and concluded that the company continues to be a living entity with assets and the capacity to resume operations. Applying the principle that restoration should be ordered where it is just and equitable and where striking off would be a disproportionate consequence of non filing, the Tribunal held that it would be in the interest of the company, its shareholders and creditors to restore the company's name. The Tribunal emphasised that refusal to restore merely on account of failure to file would be exceptional and that the present facts justify restoration. The Tribunal therefore directed restoration while imposing conditions to protect public interest and regulatory compliance, namely filing all outstanding statutory documents, payment of prescribed fees/additional fees/fines, payment of costs, and publication of the restoration order and notice as required. [Paras 13, 14, 15, 16, 17]

The appeal is allowed and the Registrar of Companies is directed to restore the company's name in the Register as if it had not been struck off, subject to the appellant filing outstanding statutory documents and paying prescribed fees, costs and complying with directions for publication.

Final Conclusion: The Tribunal allowed the appeal and ordered restoration of the company's name under Section 252 as just and equitable, subject to filing all outstanding statutory documents, payment of prescribed fees and costs, and publication of the restoration pursuant to the directions contained in the order.

Power of Tribunal to call meetings where calling a meeting is impracticable - Shareholder requisition to call extraordinary general meeting and consequential right to call meeting on board's failure - Board's power to call extraordinary general meeting - Impracticability threshold for exercise of Tribunal's power under Section 98

Shareholder requisition to call extraordinary general meeting and consequential right to call meeting on board's failure - Board's power to call extraordinary general meeting - Petitioner's entitlement to call or requisition an Extraordinary General Meeting under the Companies Act, 2013 - HELD THAT: - The Tribunal held that the Companies Act, 2013 expressly contemplates two routes to an EOGM: the Board may call an EOGM whenever it deems fit and, alternatively, members holding the prescribed proportion of share capital may requisition an EOGM with statutorily prescribed timelines for the Board to act and, upon Board's failure, the requisitionists themselves may call the meeting. Given these statutory provisions and the admitted facts that the petitioner holds 20% shareholding and remains recorded as a director on the Ministry of Corporate Affairs portal, the petitioner is entitled to invoke Section 100(2) to requisition an EOGM and also, by virtue of being a director, may seek to have an EOGM called under the Board-route in Section 100(1). The Tribunal therefore found that statutory remedies under Section 100 are available to the petitioner and she is legally entitled to proceed under those provisions. [Paras 13, 14]

Petitioner entitled to call or requisition an EOGM under Section 100 of the Companies Act, 2013; statutory procedure under Section 100 must be followed.

Power of Tribunal to call meetings where calling a meeting is impracticable - Impracticability threshold for exercise of Tribunal's power under Section 98 - Whether Tribunal should exercise its Section 98 power to call an EOGM in the present case - HELD THAT: - Section 98 empowers the Tribunal to direct calling, holding and conducting of meetings only where it is impracticable to call or conduct a meeting in the manner provided by the Act or the articles. The Tribunal examined the factual matrix and the parties' pleadings and noted there is no opposition from Respondent No. 2 to the calling of an EOGM; moreover, the statutory mechanisms in Section 100 are available and operable. In these circumstances the Tribunal concluded that it is not "impracticable" to call an EOGM by the routes provided in Section 100 and hence the exceptional jurisdiction under Section 98 need not be invoked. Consequently the petition under Section 98 was refused and the petitioner was directed to avail the remedy under Section 100. [Paras 12, 15, 16]

Prayer under Section 98 rejected; Tribunal will not exercise its power under Section 98 as it is not impracticable to call an EOGM under Section 100.

Final Conclusion: The petition under Section 98 is dismissed; the petitioner is directed to call or requisition an Extra-Ordinary General Meeting in accordance with Section 100 of the Companies Act, 2013, and the application is disposed of.

Compounding of offences - power of the Tribunal to compound offences under Section 441 of the Companies Act, 2013 - compounding of offences under Section 233B (cost audit report) of the Companies Act, 1956 - compounding where punishment includes imprisonment or fine - compounding despite pendency of criminal prosecution without Special Court permission - joint compounding application by a company and its officers in default

Compounding of offences under Section 233B (cost audit report) of the Companies Act, 1956 - power of the Tribunal to compound offences under Section 441 of the Companies Act, 2013 - Tribunal's jurisdiction to compound the default in filing the Cost Audit Report under Section 233B of the Companies Act, 1956 - HELD THAT: - The Tribunal held that it has jurisdiction to compound the offence under Section 233B of the Companies Act, 1956 committed in relation to the Cost Audit Report for the financial year 2013-14. The Registrar's report and the statutory scheme were considered, and reliance was placed on precedents of the NCLAT which interpret Section 441 as not placing a pecuniary fetter on the Tribunal's power to compound offences. Post-repeal of former provisions and having regard to the amended Section 441(6), the Tribunal concluded that it may exercise its compounding jurisdiction in respect of the offence under Section 233B(11) (Companies Act, 1956). The Tribunal therefore exercised its power to compound the offence by order. [Paras 16, 17, 18, 23, 26]

The Tribunal exercised its power under Section 441 to compound the offence under Section 233B of the Companies Act, 1956 for Financial year 2013-14.

Compounding despite pendency of criminal prosecution without Special Court permission - compounding where punishment includes imprisonment or fine - Whether the Tribunal could compound the offence despite pendency of prosecution and without prior permission of the criminal court - HELD THAT: - The Tribunal accepted that prosecution was pending before the Court of Special Chief Judicial Magistrate. Relying on NCLAT decisions and the amendment to Section 441(6) of the Companies Act, 2013, the Tribunal held that it may compound offences (other than those punishable with imprisonment only or with imprisonment and fine) notwithstanding pendency of prosecution and without seeking prior permission of the criminal court. The applicants' explanation of technical difficulties in filing and the subsequent filing of the Cost Audit Report were considered in this context, and no legal impediment to compounding was found. [Paras 22, 23, 24, 25, 26]

The Tribunal may compound the offence despite the pendency of prosecution and without prior permission of the criminal court, and proceeded to compound the offence in the present case.

Joint compounding application by a company and its officers in default - Maintainability of a joint compounding application by the company and its officers in default - HELD THAT: - The Tribunal noted the NCLAT view that a joint application by a company and its officers in default is maintainable. Applying that principle to the facts, the Tribunal found the joint compounding application by the company and its managing and whole-time directors to be maintainable and proceeded to adjudicate the compounding prayer jointly. [Paras 19, 20, 26]

The joint compounding application by the company and its officers in default was held maintainable and was entertained by the Tribunal.

Final Conclusion: The Tribunal allowed the compounding application in respect of the default under Section 233B (Financial year 2013-14), directed payment of the compounding fee as ordered and required the applicants to remit the fee to the appropriate MCA account within the time fixed and to report compliance; the petition is disposed of accordingly.

Maintainability of writ petition under Article 226 against NCLT orders - alternative remedy of appeal under Section 61 of the Insolvency and Bankruptcy Code - self-contained code and limited interference by High Courts - objective of the Insolvency and Bankruptcy Code to provide time-bound insolvency resolution - adjudicatory hierarchy of NCLT, NCLAT and Supreme Court

Maintainability of writ petition under Article 226 against NCLT orders - alternative remedy of appeal under Section 61 of the Insolvency and Bankruptcy Code - self-contained code and limited interference by High Courts - Writ petitions under Article 226 challenging an NCLT order approving a resolution plan are not maintainable where an effective alternative remedy of appeal under Section 61 exists. - HELD THAT: - The Court applied the principle that the Insolvency and Bankruptcy Code is a single, self-contained legislative scheme providing a specific, time bound mechanism for corporate insolvency resolution and creating a three tier adjudicatory hierarchy (NCLT NCLAT Supreme Court). Reliance was placed on the Supreme Court's exposition that the Code must be given effect to as a comprehensive economic statute and that High Courts should refrain from disturbing the resolution process except where the Code permits. The Division Bench precedent in Sulochana Gupta, after reviewing authorities, held that writ petitions under Article 226 are not maintainable against NCLT orders when an appeal under Section 61 is available. Although petitioners asserted that appeals were not being taken up at the NCLAT, the contesting respondents denied this and relied on the availability of the appellate forum; in any event the Court treated the existence of the appellate remedy and the policy of the Code as determinative. For these reasons, the High Court concluded that interference by writ would defeat the Code's objective and dismissed the petitions.

Writ petitions dismissed as not maintainable; appellants to pursue their remedy before the NCLAT under Section 61.

Final Conclusion: The High Court dismissed the petitions, holding that challenges to NCLT orders approving resolution plans must ordinarily be prosecuted by appeal to the NCLAT under Section 61 of the Code, and that the High Court will not, in exercise of Article 226, interfere with the insolvency resolution process where the Code provides the statutory appellate remedy.

Financial debt - disbursement and consideration for the time value of money - default - collusive transaction - investigation of the real nature of transaction - jurisdiction of the adjudicating authority under Section 7(5) - penalty for fraudulent or malicious initiation under Section 65

Jurisdiction of the adjudicating authority under Section 7(5) - investigation of the real nature of transaction - penalty for fraudulent or malicious initiation under Section 65 - Whether the Adjudicating Authority exceeded its jurisdiction in examining the nature of the transaction under Section 7(5) of the IBC. - HELD THAT: - The Tribunal held that the Adjudicating Authority did not exceed its jurisdiction. Reliance was placed on the Supreme Court's rulings that the IBC requires the adjudicating authority to probe the real nature of transactions to prevent misuse of CIRP and to protect legitimate creditors and corporate debtors from mala fide proceedings. The Code contemplates penalties (Section 65 and Section 75) to deter fraudulent or malicious initiation, and therefore the Adjudicating Authority is obliged to examine whether an application is a genuine invocation of insolvency resolution or a collusive/ulterior attempt to obtain IBC advantages. Accordingly, investigation into the nature and motive of the transaction at the admission stage falls within the adjudicating authority's jurisdiction. [Paras 20]

Adjudicating Authority did not exceed its jurisdiction in investigating the nature of the transaction under Section 7(5).

Financial debt - disbursement and consideration for the time value of money - default - Whether the transaction constituted a financial debt and whether a default had occurred. - HELD THAT: - Applying the tests in the Supreme Court decisions, the Tribunal found that the essential elements of Section 5(8) - a disbursement of money against consideration for the time value of money - were absent. The creditor was not a financial institution; ledger entries indicated running account activity with repeated in-and-out transactions; there was no loan agreement, board resolution, stipulated repayment period, or clear evidence that the borrower required the sum given its sanctioned cash credit facility. The creditor also failed to establish the date or basis of default (no demand notice or contractual repayment term), and thus did not prove that a financial debt existed or that a default had occurred. [Paras 26, 28]

The transaction was not a financial debt within Section 5(8) and the Financial Creditor failed to establish that a default had occurred.

Collusive transaction - investigation of the real nature of transaction - Whether the Section 7 application was collusive or filed for an ulterior purpose. - HELD THAT: - Considering the absence of indicia of a genuine loan, the corporate debtor's uncontested admission before the Adjudicating Authority (including an affidavit stating no objection to admission), and concomitant material showing bank security and recovery proceedings by another creditor, the Tribunal agreed with the Adjudicating Authority that the parties had colluded. The transaction created an appearance of debt when the real motive was to obtain moratorium and frustrate the secured creditor's recovery. On these facts and in light of the jurisprudence on sham and collusive transactions, the application was correctly held to be collusive. [Paras 33, 34]

The Section 7 application was collusive; the Adjudicating Authority's finding of collusion is upheld and the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's finding that the transaction was not a financial debt, that default was not established, and that the Section 7 application was collusive is upheld; the Adjudicating Authority did not exceed its jurisdiction.

Financial Debt - Corporate Insolvency Resolution Process - Admission of Section 7 application - Amounts raised from allottee deemed to have commercial effect of borrowing (Explanation to Section 5(8)(f)) - Maintainability of Section 7 proceedings against maintenance company/holding organisation - Limitation / time-bar of IBC claim

Limitation / time-bar of IBC claim - Whether the claim by Respondent No.1 was time barred or the Financial Creditors had slept over their rights - HELD THAT: - The Tribunal found that the Financial Creditors had actively pursued remedies against the Developer and the Corporate Debtor, including filing claims in the Developer's CIRP and moving the National Consumer Disputes Redressal Commission in 2016, and that balance sheets of the Corporate Debtor acknowledged the debt. Applying the approach in Sesh Nath Singh (Civil Appeal No. 9198 of 2019), the court concluded that the creditors were not dormant and the claim could not be dismissed as time barred. [Paras 11]

The claim was not time barred and the contention of laches/sleeping over rights is rejected.

Financial Debt - Amounts raised from allottee deemed to have commercial effect of borrowing (Explanation to Section 5(8)(f)) - Whether the amounts collected from flat purchasers (sinking fund/maintenance) qualify as 'financial debt' under the IBC - HELD THAT: - The Tribunal examined the sale agreements, deed of conveyance and the factual matrix that amounts collected by the Developer were held with its subsidiary, the Corporate Debtor, for maintenance until transfer to the association/holding organisation. In view of the Explanation to Section 5(8)(f), which deems amounts raised from an allottee under a real estate project to have the commercial effect of a borrowing, the Tribunal held that the sums constituted 'financial debt' and were in default, meeting the threshold for initiation of CIRP. [Paras 12]

The amounts collected from flat purchasers qualify as 'financial debt' and were in default.

Admission of Section 7 application - Corporate Insolvency Resolution Process - Maintainability of Section 7 proceedings against maintenance company/holding organisation - Whether the Adjudicating Authority erred in admitting the Section 7 application and initiating CIRP against the Corporate Debtor - HELD THAT: - Having found that the amounts were financial debt and not time barred, and noting that Respondent No.1 had indicated withdrawal of its claim in the Developer's CIRP, the Tribunal concluded there was no error in the Adjudicating Authority's summary admission of the Section 7 application. The factual record showed sums were retained by the Corporate Debtor and not transferred to the association, supporting maintainability of the petition against the maintenance company. [Paras 12, 13]

No error in admission of the Section 7 application; initiation of CIRP against the Corporate Debtor is upheld.

Final Conclusion: Appeal dismissed; the Tribunal upheld the Adjudicating Authority's admission of the Section 7 petition, holding the sums collected from allottees to be financial debt not time barred, and affirmed initiation of CIRP against the Corporate Debtor.

Liquidation under Section 33(1) of IBC - Maximum period for completion of CIRP - Absence of viable resolution plan - Commercial wisdom of the Committee of Creditors - Appointment of liquidator under Section 34(1) of IBC - Disqualification under Section 34(4) of IBC - Duties and reporting obligations of liquidator under Section 35 of IBC

Liquidation under Section 33(1) of IBC - Maximum period for completion of CIRP - Absence of viable resolution plan - Commercial wisdom of the Committee of Creditors - Order for liquidation of the Corporate Debtor was to be passed as CIRP period had expired and no viable resolution plan remained. - HELD THAT: - The Tribunal held that Section 33(1) IBC permits an order of liquidation where the maximum period for completion of the corporate insolvency resolution process has expired. In the present matter the Tribunal noted that in excess of 1000 days had elapsed since initiation of CIRP and that the Committee of Creditors, by 95.29% voting share in its 18th meeting, resolved to liquidate the Corporate Debtor after no resolution plan obtaining requisite support was available. The Tribunal further observed that even after fresh valuation of assets was conducted, no resolution plan emerged that would alter the commercial assessment. In these circumstances the commercial wisdom of the CoC in resolving for liquidation could not be interfered with and liquidation under Section 33(1) was warranted. [Paras 14, 15, 16]

The Corporate Debtor, Shree Bhawani Paper Mills Ltd., is ordered to be liquidated and the moratorium shall cease with the pronouncement of the order.

Appointment of liquidator under Section 34(1) of IBC - Disqualification under Section 34(4) of IBC - Duties and reporting obligations of liquidator under Section 35 of IBC - Appointment of the Resolution Professional as liquidator and directions as to his functions and reporting. - HELD THAT: - Having directed liquidation, the Tribunal appointed the then Resolution Professional as liquidator under Section 34(1), recording that she was not disqualified under Section 34(4). The Tribunal directed the liquidator to intimate the Registrar of Companies, make the requisite public announcements, and perform functions in accordance with Section 35 of the IBC. A quarterly progress report filing obligation was also imposed as part of oversight. [Paras 17, 18, 19]

Ms. Anju Agarwal is appointed as liquidator; she shall notify ROC, cause public announcement, perform duties under Section 35 and file progress reports every three months.

Final Conclusion: CA No. 36/2020 is allowed: having found that the CIRP period has expired and no viable resolution plan exists, the Tribunal ordered liquidation of the Corporate Debtor and appointed the Resolution Professional as liquidator with directions regarding notification, duties and quarterly reporting.

Operational debt - intellectual property as supply of services - right to payment in respect of provision of goods or services - pre-existence of dispute (moonshine dispute) - date of default - jurisdiction of Adjudicating Authority - admission and commencement of CIRP - moratorium

Operational debt - intellectual property as supply of services - right to payment in respect of provision of goods or services - Whether the Minimum Guaranteed Royalties payable under the licensing agreement constitute an operational debt under the IBC. - HELD THAT: - The Tribunal held that the Operational Creditor established a "right to payment" in respect of provision of services/goods arising from the licence to use the trademark. The grant of licence and permitting use of the trademark was treated as a licensed "product" whose use falls within the scope of supply of services (relying on the ordinary meaning of "goods and services", Schedule II of the CGST Act and precedents recognising incorporeal rights within the ambit of goods/services). The Minimum Guaranteed Royalties were fixed payments payable under the agreement and non-payment therefore amounted to default in respect of an operational obligation. The Tribunal rejected the submission that the claim did not arise from provision of goods or services and held the claim to be an operational debt admitting the Section 9 application. [Paras 30]

Minimum Guaranteed Royalties under the licence are an operational debt and the non payment amounts to default under the IBC.

Pre-existence of dispute (moonshine dispute) - Whether a pre existing dispute exists which would bar admission of the Section 9 application. - HELD THAT: - The Tribunal examined the Corporate Debtor's plea that the Operational Creditor was obliged to promote the brand and that payments were conditional. It found that the Corporate Debtor had repeatedly admitted liability (including part payments and contemporaneous emails) and had not raised any dispute in the manner required by Section 8(2)(a) read with Section 5(6) of the IBC concerning existence, quality of goods/services or breach of representation/warranty. The alleged defence was characterised as a "moonshine" dispute in the sense explained in Mobilox Innovations and therefore did not preclude admission. [Paras 30]

No genuine pre existing dispute existed; the defence was a moonshine dispute and did not bar admission.

Date of default - Whether the application was filed within limitation and the date of default. - HELD THAT: - The Tribunal identified the date of default as 15.09.2015, being the date on which the aggregate outstanding royalty amount fell due (expiry of 15 days from the last invoice dated 31.08.2015). The Section 9 application filed on 30.08.2018 was held to be within the period of limitation calculated from that date of default. [Paras 28]

Date of default fixed as 15.09.2015 and the application was not time barred.

Jurisdiction of Adjudicating Authority - Whether the Tribunal has jurisdiction to entertain the application. - HELD THAT: - The Tribunal noted that the registered office of the Corporate Debtor is situated in Delhi and, on that basis, concluded that the New Delhi Bench of the NCLT has jurisdiction to entertain and try the application. [Paras 29]

The Adjudicating Authority (NCLT New Delhi Bench) has jurisdiction to adjudicate the application.

Admission and commencement of CIRP - moratorium - Institution of CIRP, appointment of interim resolution professional and imposition of moratorium. - HELD THAT: - Having found that an operational debt existed, default was admitted and no genuine pre existing dispute prevented admission, the Tribunal allowed the Section 9 application and ordered commencement of the Corporate Insolvency Resolution Process. No name for IRP was proposed by the Applicant; the Tribunal appointed an interim resolution professional, directed the Applicant to deposit funds for immediate IRP expenses, and imposed moratorium in terms of Section 14 of the Code with standard reliefs and directions for communication to relevant authorities. [Paras 31, 32, 33, 34, 35]

Application admitted; CIRP commenced, IRP appointed and moratorium imposed.

Final Conclusion: The Tribunal admitted the Section 9 application: it held that the Minimum Guaranteed Royalties under the trademark licence constituted an operational debt, found no pre existing dispute preventing admission, fixed the date of default as 15.09.2015 (application within limitation), confirmed jurisdiction, commenced CIRP, appointed an interim resolution professional and imposed the statutory moratorium.

Existence of a pre-existing dispute as a bar to initiation of corporate insolvency resolution process - demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Mobilox principle regarding pre-existing dispute - compliance with Section 9(3)(b) and (c) - service of demand notice and supporting documents - jurisdiction of the Adjudicating Authority

Existence of a pre-existing dispute as a bar to initiation of corporate insolvency resolution process - Mobilox principle regarding pre-existing dispute - Whether disputes and communications antecedent to the demand notice established a pre-existing dispute that bars admission of the Section 9 application. - HELD THAT: - The Tribunal applied the principle in Mobilox Innovations that the existence of a dispute must be shown to have existed prior to receipt of the demand notice or invoice. On appraisal of the material, the Tribunal noted multiple communications dated prior to the demand notice (including emails and a customer rejection letter) which raised complaints of defective/sub-standard goods, wastage and consequent losses. Those antecedent communications demonstrated that the operational creditor was aware of the dispute before service of the demand notice and therefore a pre-existing dispute stood established. Consequently the existence of that dispute disqualified the applicant from seeking initiation of the corporate insolvency resolution process under Section 9. [Paras 11, 12, 16]

Pre-existing dispute established; Section 9 application barred on that ground.

Demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - compliance with Section 9(3)(b) and (c) - service of demand notice and supporting documents - Whether the operational creditor complied with mandatory procedural requirements relating to service of demand notice and supporting documents under Section 9. - HELD THAT: - The Tribunal recorded that the applicant issued a demand notice dated 01.11.2017 and served it by speed post/registered post to the address reflected on the MCA website, with delivery shown on 16.12.2017. The Tribunal found that the operational creditor had complied with the mandatory provisions of Section 9(3)(b) and (c) regarding service of the demand notice and annexures. [Paras 5, 6]

Procedural compliance with service and supporting documents under Section 9 established.

Admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - adjudicating authority's duty to admit or reject under Section 9(5) - Whether the Section 9 petition was maintainable and within limitation. - HELD THAT: - The Tribunal observed that the date of default was the date of the last unpaid invoice (29.12.2015) and that the application was filed on 24.09.2018. On this basis the Tribunal concluded that the petition was not time-barred. However, maintainability on limitation did not cure the substantive bar created by the pre-existing dispute. Applying the statutory mandate to admit or reject under Section 9(5), the Tribunal rejected the petition on the ground of pre-existing dispute despite the application being within limitation. [Paras 14, 17]

Application not time-barred but rejected on merits due to pre-existing dispute.

Jurisdiction of the Adjudicating Authority - Whether the Tribunal has jurisdiction to entertain the application. - HELD THAT: - The Tribunal noted that the registered office of the corporate debtor was situated in the territorial jurisdiction of this Bench and accordingly held that the Tribunal had jurisdiction to try the application. [Paras 15]

Tribunal has jurisdiction to entertain the application.

Final Conclusion: The Section 9 application was rejected because antecedent communications and a customer rejection established a pre-existing dispute which barred initiation of CIRP under the Mobilox principle; although the demand notice was served and the petition was within limitation and the Tribunal had jurisdiction, the presence of the pre-existing dispute rendered the petition unsustainable and it was dismissed.

Liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code - Resolution plan not received within the maximum period permitted for completion of CIRP under Section 12 - Appointment of liquidator under Section 34(1) of the Insolvency and Bankruptcy Code - Cessation of moratorium on commencement of liquidation - Liquidator's duties and reporting obligations under Section 35 of the Insolvency and Bankruptcy Code

Liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code - Resolution plan not received within the maximum period permitted for completion of CIRP under Section 12 - Cessation of moratorium on commencement of liquidation - Corporate Debtor to be liquidated because no resolution plan was received within the statutory CIRP period and the CoC resolved for liquidation. - HELD THAT: - The Tribunal applied Section 33(1)(a) of the IBC, noting that the Adjudicating Authority must order liquidation where no resolution plan is received before expiry of the maximum period permitted for completion of CIRP. The record shows initiation of CIRP, constitution and meetings of the CoC, publication(s) of Form-G inviting EOIs, receipt of EOI(s) which did not culminate in submission of an approved resolution plan despite extensions, and the CoC's 8th meeting passing a unanimous resolution to liquidate. Given failure of the resolution process and completion of statutory CIRP steps, the Tribunal held that liquidation is mandated and the moratorium ceases on the pronouncement of the liquidation order. [Paras 12, 13, 14, 15]

Order directing liquidation of V.A.M. Resorts and Hotels Pvt. Ltd.; moratorium declared during CIRP ceases from pronouncement of the liquidation order.

Appointment of liquidator under Section 34(1) of the Insolvency and Bankruptcy Code - Liquidator's duties and reporting obligations under Section 35 of the Insolvency and Bankruptcy Code - Resolution Professional Ashish Singh appointed as liquidator and directed to perform statutory duties, notify Registrar of Companies and make public announcement; progress reports to be filed quarterly. - HELD THAT: - Having ordered liquidation, the Tribunal exercised its power under Section 34(1) to appoint the incumbent Resolution Professional as Liquidator after observing he was not disqualified under Section 34(4). The Liquidator was directed to intimate the Registrar of Companies where the Corporate Debtor is registered, make the statutory public announcement of liquidation, and act in accordance with Section 35 of the IBC, subject to directions from the Adjudicating Authority. A quarterly progress reporting requirement was also imposed. [Paras 16, 17, 18]

Mr. Ashish Singh appointed as Liquidator; directed to intimate ROC, make public announcement, discharge duties under Section 35 and file quarterly progress reports.

Final Conclusion: The Tribunal allowed the application under Section 33 and directed liquidation of the Corporate Debtor; the Resolution Professional Ashish Singh was appointed as Liquidator with directions to notify the ROC, make the public announcement and perform statutory duties with quarterly progress filings; IA No. 310/2020 disposed of.

Punishment under Section 74(3) of the I&B Code for contravention of an approved resolution plan - Mens rea requirement for offences under Section 74(3) - "knowingly and willfully contravenes" - Trial of offences by Special Court under Section 236(1) of the I&B Code - Cognizance and complaint under Section 236(2) of the I&B Code - complaint only by the Board, Central Government or authorised person - Maintainability of an application by an erstwhile Resolution Professional seeking criminal prosecution under the I&B Code - Forfeiture or encashment of performance guarantee contingent upon proven breach of the resolution plan - Obligation to hand over management, records and execution of the approved resolution plan to the Monitoring Committee

Punishment under Section 74(3) of the I&B Code for contravention of an approved resolution plan - Mens rea requirement for offences under Section 74(3) - "knowingly and willfully contravenes" - Forfeiture or encashment of performance guarantee contingent upon proven breach of the resolution plan - Whether the Resolution Applicant can be held criminally liable under Section 74(3) of the I&B Code for alleged failure to make the down payment and whether forfeiture/encashment of the performance guarantee arises. - HELD THAT: - The Bench held that while Section 74(3) applies to persons bound by an approved resolution plan, criminal liability requires establishment of mens rea as expressed by the phrase "knowingly and willfully contravenes ... or abets such contravention." The record shows the Resolution Applicant had drawn bankers' cheques/ demand drafts for the upfront payment as early as 02.02.2021 and had deposited a performance security at the time of submission of the plan; revalidation of the bankers' cheque was allowed by the Tribunal. On these facts the RA's conduct was found bona fide and did not satisfy the requisite "knowingly and willfully" standard necessary for prosecution under Section 74(3). Because there was no finding of breach warranting punishment, the question of forfeiture or encashment of the performance guarantee for meeting CIRP costs did not arise. [Paras 15, 19]

No criminal liability under Section 74(3) is established against the Resolution Applicant; forfeiture/encashment of the performance guarantee does not arise.

Trial of offences by Special Court under Section 236(1) of the I&B Code - Cognizance and complaint under Section 236(2) of the I&B Code - complaint only by the Board, Central Government or authorised person - Maintainability of an application by an erstwhile Resolution Professional seeking criminal prosecution under the I&B Code - Whether the erstwhile Resolution Professional could file a complaint before the Adjudicating Authority seeking criminal prosecution under Section 74(3) of the I&B Code. - HELD THAT: - Section 236 was interpreted to mean offences under the I&B Code are to be tried by the Special Court established under the Companies Act and that no Court shall take cognizance save on a complaint made by the Board or the Central Government or any person authorised by the Central Government. The applicant (erstwhile RP) was not authorised by the Central Government nor did he represent the Board; accordingly he had no competence to initiate criminal proceedings under Section 74(3) before this Adjudicating Authority. The Bench also observed shortcomings in the applicant's conduct as a member of the Monitoring Committee, but on the legal point the application was held not maintainable insofar as it sought criminal prosecution. [Paras 16, 17, 18, 19]

The application by the erstwhile Resolution Professional seeking criminal prosecution is not maintainable before this Adjudicating Authority under Section 236; only the Board, Central Government or an authorised person may file such a complaint.

Obligation to hand over management, records and execution of the approved resolution plan to the Monitoring Committee - Directions required for implementation of the approved resolution plan where parties had not completed the down payment and handover formalities. - HELD THAT: - Having concluded there was no culpable breach by the RA and that the criminal complaint was not maintainable, the Tribunal directed immediate steps to effectuate the approved plan. The Resolution Applicant was directed to make the down payment immediately; the erstwhile Resolution Professional was directed to hand over all necessary documents, details and the unit to the Monitoring Committee in terms of the approved resolution plan. The Tribunal fixed a short compliance period and warned that any failure by parties to comply would be treated as an attempt to derail the insolvency resolution process. [Paras 20]

RA to make immediate down payment and erstwhile RP to hand over documents, details and the unit to the Monitoring Committee within three days; non-compliance to be dealt with strictly.

Final Conclusion: IA No. 105/2021 is dismissed as not maintainable insofar as it seeks criminal prosecution under Section 74(3); on the merits no culpable breach by the Resolution Applicant was found and forfeiture of the performance guarantee does not arise. The Tribunal directed immediate payment of the down payment by the Resolution Applicant and the handover of documents, records and the corporate unit by the erstwhile Resolution Professional to the Monitoring Committee within three days; related IAs filed by the Resolution Applicant are closed.

Maintainability of intervention in an avoidance application after approval of a resolution plan - avoidance application cannot be adjudicated post conclusion of CIRP / after approval of resolution plan - Resolution Professional becomes functus officio on approval of resolution plan - benefit of orders in avoidance proceedings accrues prior to approval of the resolution plan and is not for the post CIRP company or resolution applicant - Monitoring Committee is not a corporate person for purposes of filing/adjudication under section 60(5)

Maintainability of intervention in an avoidance application after approval of a resolution plan - avoidance application cannot be adjudicated post conclusion of CIRP / after approval of resolution plan - Resolution Professional becomes functus officio on approval of resolution plan - Intervention by the successful Resolution Applicant and Monitoring Committee in the avoidance proceedings (C.A. (IB) No. 785/ND/2019) filed by the erstwhile Resolution Professional after approval of the resolution plan is not maintainable. - HELD THAT: - The Tribunal examined whether the successful Resolution Applicant (and its Monitoring Committee) could intervene in and pursue an avoidance application filed by the erstwhile Resolution Professional prior to approval of the resolution plan. Relying on the reasoning in the cited Delhi High Court decision (Venus Recruiters) and the scheme reflected in the ILC observations, the Tribunal held that avoidance applications are intended to secure benefits for the creditors and the corporate debtor during CIRP and that such applications cannot be adjudicated after the CIRP concludes on approval of a resolution plan. The Tribunal further observed that upon approval of the resolution plan the Resolution Professional's mandate comes to an end (he becomes functus officio) and the role is finite except where the resolution plan expressly provides otherwise. In the present case no provision in the approved plan entitled the Resolution Professional or the successful Resolution Applicant to pursue the avoidance application post approval. Having regard to these principles, the applicants' plea for intervention and to continue prosecution of C.A. (IB) No. 785/ND/2019 was held to be not legally tenable. [Paras 6, 7]

Application for intervention dismissed as not maintainable; no relief to applicants to intervene or continue the avoidance proceedings after approval of the resolution plan.

Final Conclusion: The application filed by the successful Resolution Applicant and the Monitoring Committee for intervention in C.A. (IB) No. 785/ND/2019 was dismissed on the ground that avoidance applications cannot be adjudicated after approval of the resolution plan and the Resolution Professional ceased to have the authority to pursue such proceedings post approval.

Classification of creditors as secured or unsecured - proof of security interest and registration of charge - substantiation and verification of claims in CIRP - effect of approval of resolution plan and prohibition on reopening undecided claims (hydra-head principle)

Classification of creditors as secured or unsecured - proof of security interest and registration of charge - substantiation and verification of claims in CIRP - effect of approval of resolution plan and prohibition on reopening undecided claims (hydra-head principle) - The Applicant was not entitled to be classified as a secured financial creditor and the Resolution Professional correctly treated the Applicant as an unsecured financial creditor; the application under section 60(5) was rejected. - HELD THAT: - The Tribunal found that the Applicant failed to produce documentary evidence to substantiate creation or registration of any security interest in favour of the Applicant. The RP relied on the absence of records in prescribed authorities and the Registrar of Companies to show registration of charge, and the Tribunal accepted that no proof of the security, as contemplated for recognition in the insolvency process, had been furnished. The Tribunal noted that the IRP/RP had maintained and published the list of creditors in which the Applicant was shown as unsecured and that no timely substantiation establishing a registrable charge was produced. In these circumstances the RP was justified in not admitting the claimed security and in classifying the claim as unsecured. Further, the Tribunal applied the principle that once a resolution plan is approved by the Committee of Creditors the successful resolution applicant cannot be faced subsequently with undecided or reopened claims (the 'hydra-head' principle), and that permitting reclassification after plan approval would prejudice the resolution applicant and disturb the settled plan. Having considered the absence of proof of registration of charge, the published creditor list, and the bar on reopening decided claims after plan approval, the Tribunal concluded that the Applicant's claim could not be recognized as secured. [Paras 12, 13]

Application dismissed; Applicant correctly classified as unsecured financial creditor and request to reclassify as secured and reopen the resolution plan rejected.

Final Conclusion: The application under section 60(5) seeking directions to treat the Applicant as a secured financial creditor and to reopen the approved resolution plan was rejected for want of proof of any registrable security and because approval of the resolution plan precludes reopening of such claims; the application is disposed of.

Maintainability under Section 60(5) of the Insolvency and Bankruptcy Code - continuance of corporate debtor as a going concern - power to consider contractual reliefs during CIRP - creation of ad hoc security under PMAY Clause 4.7 - issuance of no-objection certificate for creation of temporary/ additional charge - limits of tribunal's power to rewrite contractual terms or waive agreed interest - obligation of administrator and CoC to act transparently and reasonably - retention and release of surplus security by administrator/CoC

Maintainability under Section 60(5) of the Insolvency and Bankruptcy Code - continuance of corporate debtor as a going concern - The application is maintainable before the Adjudicating Authority under Section 60(5) of the IBC as it concerns matters intrinsically connected with the CIRP and the continuance of the corporate debtor's business as a going concern. - HELD THAT: - The Tribunal considered rival contentions on jurisdiction and, applying Section 60(5) and 231 of the IBC and relevant Supreme Court authority, held that matters intrinsically connected with the CIRP and relating to continuation of the corporate debtor's affairs fall within the Adjudicating Authority's jurisdiction. The Tribunal observed that the Administrator and the Committee of Creditors are statutory creatures whose actions must ensure the corporate debtor runs as a going concern, and accordingly the present application addressing impediments to the project's continuance is maintainable before this forum. [Paras 6]

Application held maintainable before the Adjudicating Authority.

Limits of tribunal's power to rewrite contractual terms or waive agreed interest - power to consider contractual reliefs during CIRP - Prayers seeking waiver of interest and reduction/fixation of rate of interest under the loan documents are not legally tenable and are rejected. - HELD THAT: - The Tribunal found that rates of interest and waiver claims derive from the sanction letters and loan/security documents and that the rate was floating; reliefs which would rewrite contractual terms or unilaterally alter agreed interest rates are beyond the scope of Section 60(5) and the Adjudicating Authority's powers in this proceeding. Consequently, requests to waive interest or to fix/reduce interest rates were held to be legally impermissible and therefore disallowed. [Paras 8]

Prayers (c), (d) and (e) seeking waiver or alteration of interest rejected.

Creation of ad hoc security under PMAY Clause 4.7 - issuance of no-objection certificate for creation of temporary/ additional charge - retention and release of surplus security by administrator/CoC - obligation of administrator and CoC to act transparently and reasonably - Applicants entitled to create ad hoc security in favour of GDA under Clause 4.7 of PMAY and to raise additional loans by creating additional securities; Administrator directed to consider and grant NOC in consultation with the CoC while retaining adequate security and to release surplus encumbrances within four weeks. - HELD THAT: - On the merits the Tribunal found that Clause 4.7 of the PMAY imposes a condition precedent requiring creation of ad hoc security over project land to obtain sanctioned plans; such security is temporary and released upon construction of EWS units. The applicants' repeated requests for NOC were not decided on merits but rejected on the ground of CIRP, which the Tribunal held was not a valid reason to refuse consideration. The Tribunal also reviewed the project land valuation context (state circle rates) and concluded that the land value did not justify denial of NOC for security creation. Balancing the Administrator's duty to protect creditors and the need to permit the project to proceed (a time bound public interest project), the Tribunal directed the Administrator to consider grant of NOC in consultation with the CoC, retain adequate security as per norms, release any surplus encumbrances against the outstanding loan, and to act transparently; the exercise to be completed within four weeks of receipt of the order. [Paras 18, 19, 20, 22, 23]

Prayer (a) and (b) partly allowed: applicants may create ad hoc security and additional charges; Administrator/CoC directed to consider/grant NOC and release surplus encumbrances within four weeks.

Final Conclusion: The Tribunal held the application maintainable under Section 60(5) IBC, rejected claims to waive or alter contractual interest, and directed the Administrator, in consultation with the CoC, to consider and grant the NOC for creation of ad hoc security and additional charges under PMAY Clause 4.7 while retaining adequate security and releasing any surplus encumbrances within four weeks; the IA is partly allowed and disposed of.

Refund of erroneously paid Service Tax - limitation under Section 11B of the Central Excise Act, 1944 - remand for verification of timely filing of refund claim - application of precedents of the CESTAT Chennai

Refund of erroneously paid Service Tax - limitation under Section 11B of the Central Excise Act, 1944 - application of precedents of the CESTAT Chennai - Whether the rejection of the refund on the ground of limitation should be set aside and the matter remanded for verification of the timeliness of the refund claim under Section 11B. - HELD THAT: - The Tribunal held that the question of limitation in respect of refund of Service Tax erroneously paid by SIPCOT is no more res integra in view of earlier decisions of the Chennai Bench of the CESTAT relied upon by the appellant. Applying the ratio of those precedents, the Tribunal found it appropriate to set aside the impugned order which rejected the refund as time-barred and to remit the matter to the Adjudicating Authority. The Adjudicating Authority is directed to ascertain whether the date of the refund application meets the time limit prescribed by Section 11B of the Central Excise Act, 1944; if the claim is within time, the refund is to be granted with consequential benefits as provided by law. The Tribunal's decision rests on following the cited CESTAT Chennai authorities and on remanding for factual and temporal verification rather than deciding the limitation point on merits itself. [Paras 3, 4]

Impugned order set aside; appeal allowed by way of remand directing the Adjudicating Authority to verify compliance with Section 11B and, if timely, grant the refund with consequential benefits.

Final Conclusion: The Tribunal, applying its Bench precedents, allowed the appeal by setting aside the order rejecting the refund as time-barred and remitted the matter to the Adjudicating Authority to determine whether the refund application satisfies the time limit under Section 11B; if found timely, the refund shall be released with consequential benefits.

Cenvat Credit - Admissibility of credit for Air Travel Services, Train Services and Courier Services - Input service credit for travel and courier services - Precedential effect of tribunal decisions

Cenvat Credit - Air Travel Services - Train Services - Courier Services - Precedential effect of tribunal decisions - Entitlement of the appellant to Cenvat Credit in respect of Air Travel Services, Train Services and Courier Services. - HELD THAT: - The Tribunal examined whether Cenvat credit could be availed on air travel, rail travel and courier services. Relying on earlier tribunal decisions treating credit for travel agent/transportation-related services and courier agency services as admissible, the Tribunal concluded that the question is settled in favour of allowing Cenvat credit. The order records several prior decisions (including Heartland Bangalore Transcription Ser. , Dr. Reddy's Lab Ltd. , Semco Electrical Pvt. Ltd. , and orders of CESTAT Ahmedabad) as establishing the admissibility of credit for the services in issue. On that basis the demand relating to these services was held not sustainable and the impugned order was modified to allow the appeal.

Appeal allowed; impugned order modified and demand in respect of Air Travel Services, Train Services and Courier Services held not sustainable.

Final Conclusion: The Tribunal allowed the appeal, holding that Cenvat credit in respect of air travel, train travel and courier services is admissible in view of consistent tribunal precedents, and accordingly set aside the demand relating to those services.

Entertaining a writ petition without exhausting statutory appellate remedy - judicial review under Article 226 - appellate remedy as primary forum for fact-finding - principles of natural justice - remand for verification of corporate amalgamation and record entries

Entertaining a writ petition without exhausting statutory appellate remedy - judicial review under Article 226 - principles of natural justice - Whether the writ petitions should be entertained without the petitioner first availing the statutory appellate remedy - HELD THAT: - The High Court held that preferring an appeal is the general rule and entertaining a writ petition before exhausting the appellate remedy is an exception. Writ jurisdiction under Article 226 is supervisory and is intended to scrutinise the process by which a decision was reached rather than to re-adjudge disputed facts which are within the competence of statutory appellate authorities. Mere allegation of violation of principles of natural justice, or routine challenge to assessment orders, is insufficient to bypass the appellate forum; dispensing with the appellate remedy requires an imminent threat or gross injustice warranting urgent relief. The Court therefore declined to adjudicate the substantive disputes in writ proceedings and emphasised that appellate authorities, being final fact-finding forums with domain expertise, must be allowed to consider the appeals on merits. [Paras 4, 5]

Writ petitions not entertained; petitioner directed to avail the statutory appellate remedy

Remand for verification of corporate amalgamation and record entries - appellate remedy as primary forum for fact-finding - Whether the dispute regarding the status of the assessee following amalgamation and the correctness of respondent's records could be decided in the writ petition - HELD THAT: - The Court noted that M/s Rukma Industries Limited had been amalgamated with another company and that the petitioner had intimated the respondents of the amalgamation. The impugned assessment orders, however, were passed in the name of the erstwhile company. The High Court held that such disputed factual questions concerning the intimation and the entries in the respondents' records cannot be finally adjudicated in writ proceedings; they should be examined by the competent statutory appellate authority on the basis of documents and evidence. Consequently the petitioner was granted liberty to file a statutory appeal and the appellate authority was directed to consider and decide the appeal on merits and in accordance with law after affording opportunity to the petitioner. [Paras 3, 7]

Disputed factual issues regarding amalgamation and record entries not decided in writ; petitioner permitted to file appeal and appellate authority directed to verify and decide the matter

Final Conclusion: Writ petitions disposed of without adjudication on merits; petitioner permitted to prefer statutory appeals within four weeks and the appellate authority directed to consider and decide the appeals on merits after verifying the amalgamation/intimation and affording opportunity to the petitioner.

Liability to pay entry tax on imported motor vehicle - competence to collect entry tax - adjustment of interim deposit - statutory recovery procedures for unpaid tax - dismissal of writ petition with costs

Liability to pay entry tax on imported motor vehicle - competence to collect entry tax - The petitioner is liable to pay entry tax on the imported Rolls Royce Ghost and the respondents are competent to collect the entry tax. - HELD THAT: - The High Court held that the question whether entry tax is leviable on the imported vehicle was no longer res integra, relying on the decision in State of Kerala and others vs. Fr.William Fernandez Etc. as cited in the judgment. On that basis the Court concluded that the respondents are competent to demand and collect entry tax and that the petitioner cannot avoid payment by seeking writ relief. The Court also criticised the petitioner for delaying prosecution of the petition and for not disclosing material particulars in the affidavit, treating nonpayment as inconsistent with the constitutional duty to pay tax. [Paras 13, 14]

Writ petition dismissed on merits and petitioner directed to pay the entry tax as demanded.

Adjustment of interim deposit - statutory recovery procedures for unpaid tax - dismissal of writ petition with costs - Payment procedure and consequences were directed: the petitioner to pay entry tax within two weeks with specified adjustment, failing which respondents may recover tax and consequential liabilities; the petition dismissed with costs payable to the specified public relief fund. - HELD THAT: - The Court directed the petitioner to pay the entry tax within two weeks from receipt of the order, permitting adjustment of 20% of entry tax as ordered by the Court's interim order dated 17.07.2012, if such amount had already been paid. The Court further directed that in the event of non-payment within the stipulated period, the respondents were entitled to initiate recovery and consequential action in accordance with the provisions of the Act and Rules. The writ petition was dismissed and a cost of Rs. 1,00,000/- was imposed to be paid to the Tamil Nadu Chief Minister's Covid-19 Public Relief Fund, with reporting compliance listed for a specified date. [Paras 14, 15]

Directed payment within two weeks with permitted adjustment; respondents authorised to follow statutory recovery measures if payment not made; petition dismissed with costs payable to the stated public relief fund.

Final Conclusion: Writ petition dismissed; petitioner held liable to pay entry tax on the imported Rolls Royce, ordered to remit the tax within two weeks subject to the stated adjustment, failing which respondents may proceed with statutory recovery; petition dismissed with costs payable to the Tamil Nadu Chief Minister's Covid-19 Public Relief Fund.

Consideration of objections and representations - opportunity of personal hearing - judicial direction for disposal within fixed time - application of precedents of the Supreme Court - judicial review of administrative inaction

Consideration of objections and representations - application of precedents of the Supreme Court - judicial direction for disposal within fixed time - opportunity of personal hearing - The respondent authority must consider the objections/representation filed by the petitioner and pass orders in accordance with law and Supreme Court principles within a stipulated time, after affording opportunity of personal hearing if requested. - HELD THAT: - The High Court observed that the petitioner had filed objections/representation (recorded in the petition as dated 01.03.2014) which remained unaddressed for several years. The Court held that those objections/representation are required to be considered with reference to the applicable law and the principles laid down by the Supreme Court. To enable effective consideration, the petitioner was directed to furnish copies of the representation/objections and the Supreme Court judgments relied upon to the 1st respondent along with a copy of the present order. The 1st respondent (Deputy Commercial Tax Officer-III, Thoothukudi) was directed to decide the representation after affording the petitioner an opportunity of personal hearing if such a request is made, and to dispose of the objections within twelve weeks from receipt of a copy of the order. [Paras 3]

The 1st respondent is directed to consider and decide the petitioner's objections/representation in accordance with law and Supreme Court authorities, after giving an opportunity of personal hearing if requested, and to do so within twelve weeks of receipt of this order; the petitioner must supply copies of the representation, supporting documents and relied Supreme Court judgments to the 1st respondent along with this order.

Final Conclusion: Writ petition disposed of by directing the concerned tax authority to consider and decide the petitioner's outstanding objections/representation in accordance with law and Supreme Court precedents, after affording opportunity of personal hearing if requested, within twelve weeks; petitioner to supply the relevant representations, documents and judgments to the authority. No costs.

Failure to consider representation - remand for fresh consideration - opportunity of personal hearing - judicial restraint where there is long delay - direction to decide on merits expeditiously

Failure to consider representation - remand for fresh consideration - opportunity of personal hearing - direction to decide on merits expeditiously - The impugned proceedings were not quashed on merits; instead the matter was remitted to the Deputy Commercial Tax Officer to consider the petitioner's objections and subsequent representation and to pass fresh orders afresh. - HELD THAT: - The Court noted that the petitioner had submitted objections prior to the impugned order and a detailed representation thereafter, which, according to the petitioner, were not considered by the 1st respondent. Given the lapse of over 17 years, the Court declined to examine the merits on the record then before it and exercised judicial restraint. The Court directed the 1st respondent to consider the representation dated 01.03.2004, afford the petitioner an opportunity of personal appearance if sought, and decide the matter on merits after taking into account the objections, representations and the judgments relied upon by the petitioner. The Court mandated that the decision be rendered expeditiously and within twelve weeks from receipt of a copy of the order and required the petitioner to furnish relevant documents and the judgments relied upon along with a copy of the order. [Paras 2, 3]

Directed remand for fresh, on-merits consideration of the objections and representation, with an opportunity for personal appearance, and ordered decision within twelve weeks; petitioner to furnish documents and relied judgments.

Final Conclusion: Writ petition disposed by remitting the matter to the Deputy Commercial Tax Officer for fresh consideration of the petitioner's objections and representation on merits with an opportunity of personal appearance, to be decided within twelve weeks; no costs.

Power under Section 81 to summon and compel production - duty to summon and examine third-party dealer before revising assessment - cross-examination of third-party witness - quashing of order for failure to follow statutory procedure - remand for fresh consideration

Power under Section 81 to summon and compel production - duty to summon and examine third-party dealer before revising assessment - cross-examination of third-party witness - quashing of order for failure to follow statutory procedure - Impugned order dated 16.11.2020 set aside for failure to summon the third party dealer and for proceeding to revise the assessment without enabling cross examination; matter remitted for fresh consideration. - HELD THAT: - The Court found that the assessing authority exercised revision based on records said to be of a third party dealer without ensuring production of the dealer or permitting effective cross examination. Section 81 of the TNVAT Act confers on the assessing officer the powers of a civil court to summon persons and compel production of documents and, coupled with those powers, imposes a duty to cause the attendance of such persons where the assessee seeks cross examination. The earlier order of this Court in the petitioner's related litigation was relied upon to show that mere supply of selected documents or statements of the other dealer, without producing him for enquiry, is insufficient. Because the seller was not produced and the statutory procedure for summoning witnesses was not followed, the impugned order could not be sustained and required quashing and remand for adherence to the statutory procedure and to enable the petitioner to conduct cross examination and file final objections. [Paras 4, 6]

Order dated 16.11.2020 is set aside; the matter is remitted to the respondent to pass orders afresh in accordance with law after following the procedure under the Act, summoning the third party and permitting cross examination.

Final Conclusion: Writ petition allowed; impugned order quashed and matter remitted for fresh decision in accordance with Section 81 and applicable precedents, with liberty to the petitioner to cross examine the third party and file final objections.

Principles of natural justice - deemed service of notice - acceptance of declaration forms after completion of assessment - opportunity of hearing on submission of relevant documents

Principles of natural justice - opportunity of hearing on submission of relevant documents - acceptance of declaration forms after completion of assessment - Impugned assessment order dated 30.03.2020 set aside and the matter remitted for fresh consideration with direction to afford hearing and consider H and F declaration forms. - HELD THAT: - The assessment order dated 30.03.2020 was passed during the period of covid-19 lockdown. The petitioner avers that its Guntur office was closed and operations moved to Chennai, which prevented receipt of the registered communication. Having regard to the lockdown circumstances and the petitioner's immediate tendering of the relevant 'H' and 'F' declaration forms upon learning of the order, the Court found it appropriate to provide the petitioner an opportunity in accordance with the principles of natural justice. The High Court did not adjudicate the merits of the declarations or the tax liability but required the assessing authority to receive and consider the declarations and other relevant documents and to pass an appropriate order in accordance with the governing law and rules, expeditiously.

Writ petition allowed; assessment order set aside and assessment remitted to the assessing authority for hearing and fresh consideration on submission of relevant declaration forms.

Final Conclusion: The assessment order dated 30.03.2020 is quashed; the assessing authority is directed to afford the petitioner an opportunity of hearing, accept and consider the submitted 'H' and 'F' declaration forms and pass a fresh order in accordance with law, expeditiously. No costs.

Grant of bail under Section 439 Cr.P.C. - custodial period and effect of co-accused's statutory bail - apprehension of flight and re-offending and imposition of stringent conditions - reliance on confession of co-accused as basis for arraignment - absence of seizure from the accused as factor favouring release

Grant of bail under Section 439 Cr.P.C. - custodial period and effect of co-accused's statutory bail - reliance on confession of co-accused as basis for arraignment - absence of seizure from the accused as factor favouring release - apprehension of flight and re-offending and imposition of stringent conditions - Petition for bail under Section 439 Cr.P.C. by the 2nd accused in a Sessions NDPS case was allowed subject to conditions. - HELD THAT: - The Court noted that the petitioner was arrested on 16.4.2021 and had been in custody for 78 days; no contraband was seized from him and his arraignment followed from a confession by the prime accused. The prime accused from whom the contraband was seized had already been granted statutory bail. Having regard to these facts, the Court concluded that continuing detention would not serve further purpose. The prosecution's concern about possible flight or repetition of offences was acknowledged, but the Court held that such apprehensions could be addressed by imposing stringent conditions. Accordingly, the Court released the petitioner on bail on execution of bond with sureties and specified conditions including non-contact with witnesses, restriction on leaving the revenue district without leave, requirement to appear when required, abstention from further criminality, compliance with Covid-19 guidelines, and liberty to the jurisdictional court to cancel bail on breach of conditions.

Bail granted to the petitioner on condition of bond with two solvent sureties and compliance with specified restrictive and procedural conditions; liberty given to the trial court to cancel bail if conditions are breached.

Final Conclusion: The bail petition is allowed: the 2nd accused is released on bail subject to execution of bond with two solvent sureties and compliance with enumerated conditions to allay prosecution's apprehensions, with liberty to the jurisdictional court to cancel bail on violation.