TaxTMI Updates e-Newsletter
Jul 20,2020

Sewage and waste collection, treatment and disposal and other environmental protection services - Classification under Heading 9994 (Sl. No. 32) - Governmental authority (Explanation to clause (16) of section 2 of the IGST Act) - Pure services excluding works contract and composite supplies involving supply of goods - Exemption under SI. No. 3 of Notification No. 12/2017 (Central Tax Rate) - Obligation of specified authorities to deduct tax at source (TDS) on supply of taxable goods or services

Sewage and waste collection, treatment and disposal and other environmental protection services - Classification under Heading 9994 (Sl. No. 32) - Services of the applicant are classifiable under Sl. No. 32 of Heading 9994 of Notification No. 11/2017 (Central Tax Rate). - HELD THAT: - The Authority examined the nature of services rendered by the applicant - segregation, treatment, recycling and reclamation of Municipal Solid Waste through bio-mining - and concurred with the applicant that these activities fall within the ambit of environmental protection services enumerated in the Annexure to Notification No. 11/2017. After a thorough review of the scope of work and the contract terms, the Authority classified the services under Sl. No. 32 of Heading 9994.

Services are classifiable under Sl. No. 32 of Heading 9994 of Notification No. 11/2017.

Governmental authority (Explanation to clause (16) of section 2 of the IGST Act) - Functions entrusted to a municipality under Article 243W (Twelfth Schedule) - Tirupati Smart City Corporation Limited (TSCCL) is a "Governmental authority" for the purpose of Notification No. 12/2017. - HELD THAT: - The Authority applied the Explanation to clause (16) of Section 2 of the IGST Act and the criteria in Notification No. 31/2017. TSCCL is an SPV created by the State Government, incorporated as a company with government and municipal promoters, governed by a board comprising government nominees and municipal officers. Although equity was held 50:50 by the State Government and the Municipal Corporation, the composition and control by government nominees satisfied the tests of being established by government with requisite participation and control. Further, the services fall within the functions entrusted to a municipality under the Twelfth Schedule (public health, sanitation and solid waste management). On these bases the Authority held TSCCL to be a governmental authority.

The service recipient (TSCCL) is a governmental authority as defined for Notification No. 12/2017.

Pure services excluding works contract and composite supplies involving supply of goods - Exemption under SI. No. 3 of Notification No. 12/2017 (Central Tax Rate) - The services provided by the applicant are exempt under SI. No. 3 of Notification No. 12/2017. - HELD THAT: - The Authority addressed the threefold condition in the exemption entry: (i) the services are pure services (not works contract or composite supplies involving supply of goods) - the contract and scope were found to involve service-only obligations; (ii) the recipient is a governmental authority as held above; and (iii) the services relate to a function entrusted to a municipality (solid waste management). Having satisfied these conditions, the Authority concluded that the services fall within the exemption at SI. No. 3 of Notification No. 12/2017 (as amended).

Services of the applicant are exempt from tax under SI. No. 3 of Notification No. 12/2017.

Obligation of specified authorities to deduct tax at source (TDS) on supply of taxable goods or services - Effect of exemption on TDS obligation - TDS deduction by the governmental authority does not arise because the services are exempt. - HELD THAT: - The Authority noted the statutory scheme requiring specified authorities to deduct tax at source in respect of taxable supplies under the relevant provisions and notifications. Since the services rendered by the applicant were held to be exempt under SI. No. 3 of Notification No. 12/2017, there is no taxable supply on which TDS would be required to be deducted by the governmental authority; accordingly the question of deduction does not arise.

No obligation on the governmental authority to deduct TDS in respect of the services, as they are exempt.

Final Conclusion: The Advance Ruling holds that the applicant's municipal solid waste management services are classifiable under Sl. No. 32 of Heading 9994 of Notification No. 11/2017, that the service recipient (TSCCL) is a governmental authority for the purposes of Notification No. 12/2017, that the services are exempt under SI. No. 3 of Notification No. 12/2017, and consequently the issue of deduction of tax at source by the governmental authority does not arise.

Value of supply includes interest or late fee or penalty for delayed payment - composite supply - financial and related services - actionable claim - exemption for services by way of extending deposits, loans or advances (consideration represented by interest)

Value of supply includes interest or late fee or penalty for delayed payment - actionable claim - Whether the additional amount charged for delayed payment (termed interest/late fee/penalty) constitutes a supply taxable under the GST Act. - HELD THAT: - The Authority applied the statutory rule that the value of a supply shall include interest, late fee or penalty for delayed payment of any consideration. The additional amount charged by the chit-company on delayed subscriptions cannot be treated as a separate exempt interest merely by nomenclature. The Authority examined the applicant's contention that the chit amount is an actionable claim and that the additional amount falls within exemptions applicable to interest on deposits/loans. It concluded that the additional amount is not interest arising from extension of a deposit, loan or advance by the chit-company and therefore does not attract the exemption under the notification dealing with services by way of extending deposits, loans or advances. Having regard to the statutory inclusion rule, the additional amount must be treated as part of the transaction value and therefore as supply liable to GST.

The additional amount charged for delayed payment is a supply and taxable under the GST Act.

Composite supply - financial and related services - If taxable, the classification and applicable rate for the additional amount charged for delayed payment. - HELD THAT: - The Authority held that the additional amount cannot be bifurcated with an independent classification and must take the character of the principal supply. Applying the concept of composite supply, the principal supply is financial and related services rendered by the chit/foreman activity. The Authority rejected the applicant's reliance on exemption entries applicable only where a party actually extends deposits, loans or advances and treated the penal/late charges as ancillary to the chit-related financial service. Accordingly the ancillary charge takes the classification and rate applicable to the principal supply.

Classified as financial and related services (Heading 9971) and taxable at 12% as notified.

Final Conclusion: The interest/penalty charged on delayed payment of monthly subscriptions is includible in the value of supply, constitutes a taxable supply ancillary to the chit/foreman financial service, and is taxable as financial and related services (Heading 9971) at 12%.

Manual refund application - timelines under Rules 90 and 91 of the Central Goods and Services Tax Rules, 2017 - judicial stay of paragraph 8 of Circular No.125/44/2019-GST dated 18th November, 2019 - GSTN portal non compliance with judicial order - processing and disbursement of statutory refund

Manual refund application - timelines under Rules 90 and 91 of the Central Goods and Services Tax Rules, 2017 - processing and disbursement of statutory refund - Respondent directed to process the petitioner's manual refund application and disburse the refund within three working days. - HELD THAT: - The petitioner had filed a manual refund application dated 14th February, 2020 for the period November, 2017 to March, 2019 and furnished clarifications sought by the respondent. Although paragraph 8 of Circular No.125/44/2019-GST had been stayed by this Court, the GSTN Portal was not entertaining refund applications spanning two financial years. Having regard to the strict timelines prescribed by Rules 90 and 91 of the Central Goods and Services Tax Rules, 2017, and the fact that the clarifications were received by the respondent, the court ordered immediate processing of the manual application. The direction is time bound and confined to processing and disbursement in accordance with the statutory timelines.

The respondent is directed to process the petitioner's manual refund application and effect disbursement within three working days.

Final Conclusion: Petition allowed in part by an order directing the respondent to process the petitioner's manual refund application for November, 2017 to March, 2019 and disburse the refund within three working days; matter listed thereafter.

Maintainability of writ petition - notice of intimation under Section 74(5) of the Goods and Services Tax Act, 2017 - FORM GST DRC-01A - show cause notice under Section 74(1) of the Goods and Services Tax Act, 2017 - opportunity of hearing before determination of liability

Maintainability of writ petition - notice of intimation under Section 74(5) of the Goods and Services Tax Act, 2017 - FORM GST DRC-01A - show cause notice under Section 74(1) of the Goods and Services Tax Act, 2017 - opportunity of hearing before determination of liability - Writ challenge to the notice of intimation issued in FORM GST DRC-01A under Section 74(5) of the Act is not maintainable. - HELD THAT: - The Court held that the communication in FORM GST DRC-01A under Section 74(5) is only an intimation of the authority's ascertained liability and does not itself determine enforceable liability. Such an intimation may be ignored by the recipient, but ignoring it can lead to initiation of further proceedings, including a show cause notice under Section 74(1). Any liability ultimately sought to be fastened would be determined after issuance of a show cause notice and after affording the assessee an opportunity of hearing. In these circumstances a writ petition under Article 226 challenging the intimation under Section 74(5) is not maintainable and premature, because the statutory adjudicatory process (including the right to be heard before final determination) remains available to the petitioner. [Paras 6]

Writ petition rejected as the challenge to the Section 74(5) intimation in FORM GST DRC-01A is not maintainable.

Final Conclusion: The writ application is dismissed; the court declined to entertain a pre-adjudicatory challenge to the intimation under Section 74(5), noting that further adjudicatory proceedings (including a show cause notice under Section 74(1) and an opportunity of hearing) remain available to determine any liability.

Natural justice - audi alteram partem - quashing of administrative order for failure to afford opportunity of hearing - remittance for fresh adjudication after hearing - proceedings under Section 74 of the Goods and Service Tax Act, 2017 - court not deciding merits

Natural justice - audi alteram partem - quashing of administrative order for failure to afford opportunity of hearing - proceedings under Section 74 of the Goods and Service Tax Act, 2017 - Impugned order dated 22.05.2020 passed under Section 74 was passed without affording the writ applicant an opportunity of hearing and therefore required to be set aside. - HELD THAT: - The Court found that the order impugned was passed during the lockdown period without giving the writ applicant an opportunity to be heard, infringing the principles of natural justice and audi alteram partem. The State/Department informed the Court that it would afford the writ applicant an opportunity of hearing and would pass a fresh order thereafter. In view of this assurance and the absence of any adjudication on merits in the present proceedings, the Court quashed the impugned order and remitted the matter to the respondent authority for fresh consideration after giving the writ applicant a hearing. The Court expressly refrained from considering or deciding the merits of the underlying tax liability or the correctness of the original adjudication. [Paras 6, 7, 8, 10]

Impugned order quashed; matter remitted to respondent No.2 to afford an opportunity of hearing and thereafter pass an appropriate order in accordance with law.

Final Conclusion: Writ petition allowed by quashing the order dated 22.05.2020 for failure to afford hearing; the matter is remitted to respondent No.2 to issue notice after eight weeks, afford the writ applicant an opportunity of hearing and pass a fresh order in accordance with law; the Court has not gone into the merits.

Transitional input tax credit - Rule 117 of the CGST Rules - Section 140 of the CGST Act - Mandatory nature of time limits for claiming tax concessions - Intra vires rule making power under Section 164 - Electronic filing requirement on the common portal - ITC as a concession and not a vested property right

Rule 117 of the CGST Rules - Section 140 of the CGST Act - Intra vires rule making power under Section 164 - Validity of Rule 117 of the CGST Rules insofar as it prescribes a time limit for filing FORM GST TRAN 1 under Section 140 of the CGST Act. - HELD THAT: - Section 140 contemplates that claims for transitional input tax credit are to be furnished "within such time and in such manner as may be prescribed." The Court held that the power to prescribe time limits is supported by the rule making power in Section 164 and was further reinforced by the retrospective amendment to Section 140 introducing the words "within such time." In that statutory context Rule 117, which fixes a period for electronic submission of FORM GST TRAN 1, is intra vires Section 140 and Section 164. Earlier judicial decisions holding to the contrary were examined, but the Court concluded that Rule 117 falls within the statutory rule making competence to give effect to transitional provisions. [Paras 12, 17]

Rule 117 is intra vires Section 140 and the rule making power under Section 164 and is valid.

Mandatory nature of time limits for claiming tax concessions - Transitional input tax credit - ITC as a concession and not a vested property right - Whether the time limit prescribed by Rule 117 for filing FORM GST TRAN 1 is mandatory or directory. - HELD THAT: - The Court examined the character of input tax credit (ITC), noting Supreme Court precedent that ITC is a concession and not a vested property right and must be availed in compliance with prescribed conditions. The statutory scheme contains other express time limits for availing ITC (for example Section 16(4)), and the amendment to Section 140 expressly empowers prescription of time. Applying established factors for determining mandatory or directory character (including use of peremptory language, object and design of the statute, consequences of non compliance and the fact that the provision relates to availing a concession), the Court concluded that the time limit in Rule 117 is mandatory. Construing the provision as directory would undermine the predictability of revenue and render transitional provisions unworkable; conversely, a mandatory construction gives effect to the legislative design for finite transitional claims. [Paras 17, 18]

The time limit in Rule 117 for filing FORM GST TRAN 1 is mandatory and not directory.

Electronic filing requirement on the common portal - FORM GST TRAN 1 procedure - Whether manual submission of FORM GST TRAN 1 to a Sales Tax Collection Inspector satisfies the requirement of Rule 117 for electronic filing on the common portal. - HELD THAT: - Rule 117 expressly requires submission of the declaration electronically on the common portal. The Court found that handing over a hard copy in person to a Sales Tax Collection Inspector does not satisfy the statutory requirement of electronic filing on the common portal prescribed by the rule. Consequently, the petitioner could not be said to have complied with the filing requirement and failed to establish entitlement to transitional ITC on that basis. [Paras 19]

Manual submission and acknowledgement by a local officer did not satisfy the electronic filing requirement; the petitioner failed to comply with Rule 117.

Final Conclusion: Writ petition dismissed: Rule 117 is valid and its time limit for electronic filing of FORM GST TRAN 1 is mandatory; manual submission did not meet the statutory electronic filing requirement. The order does not preclude the tax authorities from granting any statutory dispensations in exercise of their powers.

Passing on benefit of input tax credit - profiteering under Section 171 of the CGST Act, 2017 - methodology for computation of profiteering - refund of profiteered amount with interest and commensurate reduction of prices - penalty proceedings under Section 171(3A) read with Rule 133(3)(d)

Passing on benefit of input tax credit - profiteering under Section 171 of the CGST Act, 2017 - The Respondent contravened Section 171(1) by not passing the benefit of additional ITC to flat buyers for the investigation period. - HELD THAT: - The Authority accepted the DGAP's verified data and calculations showing that the ratio of ITC to turnover increased from 1.41% (pre-GST) to 6.79% (post-GST), resulting in an additional ITC benefit of 5.38% of taxable turnover. The mathematical methodology employed by the DGAP to quantify the additional ITC benefit and its effect on base and cum-tax prices was held to be appropriate, logical and consistent with Section 171(1). The Authority relied on returns and records collected from the Respondent's premises and reconciled with statutory filings to reach this conclusion. [Paras 16, 17, 18, 24]

Respondent found to have denied the ITC benefit to buyers in contravention of Section 171(1).

Methodology for computation of profiteering - The DGAP's methodology for computing the profiteered amount was approved and relied upon. - HELD THAT: - The Authority reviewed Tables B and C prepared by the DGAP, based on the Respondent's returns, tally data and home buyer list, and held that the comparative computation of pre- and post-GST ITC ratios and recalibration of base prices to determine excess collection was appropriate. The Authority noted that this mathematical approach has been approved in similar cases and is fit for determining the quantum of benefit required to be passed on. [Paras 24]

DGAP's computation methodology accepted and relied upon.

Refund of profiteered amount with interest and commensurate reduction of prices - The profiteered amount was quantified and directions were issued for refund with interest and for reduction of prices. - HELD THAT: - Relying on the DGAP's Annexure-25 and reconciled records, the Authority computed the total profiteered amount as Rs. 1,70,28,230 (inclusive of GST) for the period 01.07.2017 to 30.04.2019, which includes the sum attributable to the Applicant. The Authority directed the Respondent to refund the profiteered amounts to identified buyers along with interest from the dates of collection, and to reduce future prices commensurately. Time-bound compliance and recovery mechanisms were prescribed under Rule 133(3)(a) and (b). [Paras 25, 28]

Profiteered amount fixed at Rs. 1,70,28,230 (inclusive of GST); Respondent directed to refund to identified buyers with interest and to reduce prices; compliance and recovery directions issued.

Identification of recipients for refund - The beneficiaries entitled to refund were identified and confined to buyers for whom payments were received during the investigation period. - HELD THAT: - The Authority accepted the DGAP's home-buyer list and Annexure-25 which identify 177 buyers (the Applicant plus 176 others) as recipients who had paid consideration during 01.07.2017 to 30.04.2019; 40 units with pre-GST bookings but no post-GST receipts were excluded from the profiteering computation for this period, with the DGAP noting those units should be considered when consideration is received. The Authority therefore limited the refund obligation to the identifiable buyers listed by the DGAP. [Paras 20, 25, 28]

Refund directed to the identified recipients who paid during 01.07.2017 to 30.04.2019; units without post-GST receipts excluded from this computation.

Pass on of ITC benefit post-investigation period - Requirement to pass on any ITC benefit accruing after 30.04.2019 was recognised but not finally adjudicated; administrative compliance was directed. - HELD THAT: - The Authority observed that computations were limited to April 2019 because returns were available only up to that month, and stated that any additional ITC benefit accruing post 30.04.2019 must also be passed on by the Respondent. The State Commissioner SGST was directed to ensure such benefit is passed on and to report compliance to the Authority through the DGAP within four months. No final determination of post April 2019 quantum was made. [Paras 14, 21, 29]

Post 30.04.2019 ITC benefit not finally adjudicated; State Commissioner directed to ensure passing of any such benefit and to report-matter left for further verification and compliance.

Penalty proceedings under Section 171(3A) read with Rule 133(3)(d) - Imposition of penalty was not finally imposed; Respondent directed to show cause why penalty should not be levied. - HELD THAT: - Having found contravention of Section 171(1), the Authority held that the Respondent appears liable for penalty under Section 171(3A) read with Rule 133(3)(d). The Authority therefore directed issuance of a notice requiring the Respondent to explain why penalty should not be imposed, rather than immediately imposing penalty. [Paras 30]

Notice to be issued to the Respondent to show cause against imposition of penalty; imposition of penalty remitted to subsequent proceedings.

Final Conclusion: The Authority accepted the DGAP's investigation and methodology, concluded that the Respondent contravened Section 171(1) by not passing the additional ITC benefit for the period 01.07.2017 to 30.04.2019, fixed the profiteered amount at Rs. 1,70,28,230 (inclusive of GST) and directed refund to identifiable buyers with interest and commensurate reduction of prices; it further directed administrative steps to ensure any post April 2019 benefit is passed on and issued notice for initiation of penalty proceedings.

Validity of notice under Section 148 as condition precedent to reopening assessment - jurisdictional notice issued to a dead person - limitation under Section 149(1)(b) upon transfer of proceedings to legal heir - inapplicability of Section 159 where proceedings were not pending against assessee during his lifetime - no statutory obligation on legal heirs to intimate death of assessee to Revenue - inapplicability of Section 292B to notices issued to a dead person - inapplicability of Section 292BB to legal representatives who did not themselves stand in place of the assessee

Validity of notice under Section 148 as condition precedent to reopening assessment - jurisdictional notice issued to a dead person - Notice under Section 148 issued after the assessee's death is invalid and vitiates the jurisdiction to reopen assessment. - HELD THAT: - The Court held that issuance of a notice under Section 148 is the foundational jurisdictional step for reopening an assessment and must be issued to the correct person; a notice issued in the name of a deceased person could not be served and therefore the jurisdictional requirement was not fulfilled. The notice dated 31st March, 2019 was issued after the assessee's death (21st December, 2018) and therefore could never have been validly served. The Court treated such issuance as not merely procedural but a condition precedent to the validity of reopening, citing consistent decisions holding that a notice to a dead person is null unless the legal representative submitted to jurisdiction without objection. [Paras 25, 26, 27]

Notice under Section 148 dated 31st March, 2019 issued to the deceased assessee is invalid; reopening lacked jurisdiction and consequent proceedings are vitiated.

Limitation under Section 149(1)(b) upon transfer of proceedings to legal heir - Proceedings transferred to the petitioner after expiry of limitation are barred by Section 149(1)(b). - HELD THAT: - The Court found that no notice under Section 148 was ever issued to the petitioner within the period of limitation and that the mere transfer of proceedings to the petitioner's PAN on 27th December, 2019 could not cure the absence of a timely jurisdictional notice. Consequently, the assumption of jurisdiction qua the petitioner for the relevant assessment year was beyond the period prescribed and proceedings against her were barred by limitation under Section 149(1)(b). [Paras 28]

Proceedings against the petitioner are barred by limitation as per Section 149(1)(b).

Inapplicability of Section 159 where proceedings were not pending against assessee during his lifetime - Section 159 does not apply because proceedings were not initiated or pending against the assessee while he was alive and legal representatives did not step into his shoes. - HELD THAT: - The Court explained that Section 159 relates only to situations where proceedings had been instituted or were pending against an assessee during his lifetime and thereafter continue against his legal representatives. Here, no proceedings were pending when the assessee was alive; therefore Section 159 could not be invoked to fasten liability upon the legal heirs. The Court relied on precedents holding that Section 159 is inapplicable where proceedings are initiated only after death. [Paras 30, 31]

Section 159 of the Act is not attracted to the present facts and cannot validate the reassessment proceedings against legal heirs.

No statutory obligation on legal heirs to intimate death of assessee to Revenue - There is no statutory duty on legal heirs to inform the Income Tax Department of the assessee's death. - HELD THAT: - The Court observed that absent any statutory provision imposing such a duty, it is inappropriate to cast an obligation on legal representatives to intimate death to the Revenue. The Court noted practical realities (estrangement, disposition of assets) and relied on authority holding there is no statutory obligation to cancel or surrender PAN or otherwise notify the Department; therefore failure to notify cannot cure the fatal jurisdictional defect arising from issuance of notice to a dead person. [Paras 32, 34]

Legal heirs are under no statutory obligation to intimate the death of the assessee to the Revenue; non-intimation does not validate the notice issued to a deceased person.

Inapplicability of Section 292B to notices issued to a dead person - inapplicability of Section 292BB to legal representatives who did not themselves stand in place of the assessee - Neither Section 292B nor Section 292BB can be invoked to cure a notice issued to a dead person or to estop a legal representative who did not stand in place of the deceased assessee. - HELD THAT: - The Court held that issuance of a notice upon a dead person and non-service of such notice is not a curable 'mistake, defect or omission' under Section 292B. Prior decisions have held 292B inapplicable where the notice was issued to a dead person. Further, Section 292BB operates to preclude an assessee who has participated in proceedings from challenging defective notice; it is inapplicable to legal representatives who could not have participated when the notice was issued to a deceased person. The petitioner merely uploaded a death certificate and did not submit to jurisdiction, file returns, or otherwise cooperate in a manner that would attract 292BB. [Paras 35, 36, 37, 38, 39]

Sections 292B and 292BB do not cure the defect of a notice issued to a dead person nor preclude the petitioner from contesting jurisdiction.

Final Conclusion: Writ petition allowed; the notice dated 31st March, 2019 under Section 148 and all consequential orders and proceedings, including orders dated 21st November, 2019 and 27th December, 2019, are quashed.

Reopening of assessment under Section 147 - change of opinion - disclosure of all material particulars necessary for assessment - reopening beyond four years and Proviso to Section 147

Reopening of assessment under Section 147 - change of opinion - reopening beyond four years and Proviso to Section 147 - The Tribunal was justified in holding that the reopening of assessment amounted to a change of opinion and in setting aside the reassessment. - HELD THAT: - The Tribunal noted that the assessee had filed a computation statement with the original assessment expressly showing and claiming the expenditure on construction of building on leasehold land as revenue expenditure, and the assessing officer completed assessment after examining those particulars. Given that the reassessment was initiated beyond four years and having regard to the Proviso to Section 147, the Tribunal concluded that the reopening amounted to a change of opinion. The High Court, on reviewing the facts and the Tribunal's reasoning, found those conclusions justified and declined to disturb them. [Paras 5]

Reopening was a change of opinion; Tribunal rightly set aside the reassessment.

Disclosure of all material particulars necessary for assessment - reopening of assessment under Section 147 - The Tribunal correctly held that the assessee had not failed to disclose truly and fully the particulars necessary for the earlier assessment. - HELD THAT: - On facts, the First Appellate Authority and the Tribunal found that the assessee had made full disclosure by furnishing computation statement and break-up details at the time of the original assessment, specifically claiming the expenditure as revenue in nature. The High Court accepted these factual findings and the conclusion that there was no omission or concealment of material particulars warranting reassessment. [Paras 5]

No failure to disclose; Tribunal's finding in favour of the assessee upheld.

Final Conclusion: The tax case appeal is dismissed; the Tribunal's factual findings that the reopening was a change of opinion and that the assessee had fully disclosed the expenditure were upheld, and no substantial question of law arises.

Characterisation of receipts as capital gains versus business income - treatment of non-compete fee embedded in share sale - application of Section 28(va) of Income Tax Act, 1961 to share sale with non-compete covenant - share purchase under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations - valuation implications - identical consideration to promoters and public shareholders and its bearing on inference of non-compete

Characterisation of receipts as capital gains versus business income - application of Section 28(va) of Income Tax Act, 1961 to share sale with non-compete covenant - Sale proceeds received on transfer of equity shares held as investment were to be treated as capital gains and not as business income under the facts of the case. - HELD THAT: - The Assessing Officer treated part of the sale consideration as business income under the provision relied upon by the Revenue. The Commissioner of Income Tax (Appeals) accepted the factual position that the assessee had sold shares held as investments since the company's inception and noted that the Assessing Officer himself treated a portion as capital gains. The CIT(A) further relied on the clarificatory Circular of the Central Board of Direct Taxes dated 29.02.2016 to support the conclusion that the amount received on sale of the shares of 2,82,50,291 held as investments should be taxed as capital gains rather than business income. The High Court concurred with the concurrent findings of the CIT(A) and the Tribunal, holding that there was no error in treating the receipt as capital gains in the circumstances presented. [Paras 8, 9, 10]

The receipt on sale of the shares held as investment is capital gains and not business income.

Treatment of non-compete fee embedded in share sale - identical consideration to promoters and public shareholders and its bearing on inference of non-compete - share purchase under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations - valuation implications - Amount paid per share under the share purchase agreement did not, on the facts, indicate a separate non-compete fee embedded in the consideration and the transaction was to be treated as a share sale and not a business takeover. - HELD THAT: - The Assessing Officer characterised the excess over market price as a non-compete fee. The CIT(A) and the Tribunal examined the agreement and the surrounding facts, including that the same price was offered and paid to promoter and public shareholders and that the rate was offered pursuant to SEBI (SAST) Regulations' valuation framework. The Tribunal observed that the agreement stipulated no separate non-compete payment by the purchaser and that identical consideration having been paid to public shareholders precluded treating the excess as a promoter-specific non-compete fee. The High Court found that the CIT(A) and ITAT had exhaustively dealt with the point and upheld their negative answer to Revenue's contention. [Paras 8, 9, 10]

No non-compete fee was to be treated as embedded in the share sale; the transaction was a share purchase under the SEBI-related valuation process, not a business takeover attracting separate non-compete treatment.

Identical consideration to promoters and public shareholders and its bearing on inference of non-compete - treatment of consideration received by different classes of shareholders - The equal consideration paid to both the promoter (managing director) and public shareholders precluded treating the amount received by the promoter as reflecting a distinct relinquishment of control or a separate non-compete fee. - HELD THAT: - Revenue argued that the managing director, controlling the business, should be treated differently since he gave up business continuity and part of his share was retained for contingencies. The CIT(A) and the Tribunal recorded that the same rate was offered to all shareholders and that public shareholders received identical consideration; therefore, the payment to public shareholders could not be characterised as lacking any non-compete element while the payment to the promoter carried such an element. The High Court accepted the concurrent findings that identical consideration to all shareholders negated the Revenue's inference of a promoter-specific non-compete component. [Paras 8, 9, 10]

Payment of identical consideration to promoter and public shareholders prevents treating the promoter's receipt as a distinct non-compete fee or as business income.

Final Conclusion: The concurrent findings of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal that the amounts received on sale of shares held as investments for Assessment Year 2013-14 are capital gains (and that no separate non-compete fee or business takeover treatment was justified) are upheld; the Tax Case Appeal is dismissed.

Tax collected at source (TCS) under Section 206C - scrap as defined in explanation to Section 206C - resale of goods purchased as scrap and classification estoppel - assessment of liability under Section 206C(6A) and interest under Section 206C(7)

Scrap as defined in explanation to Section 206C - tax collected at source (TCS) under Section 206C - resale of goods purchased as scrap and classification estoppel - Resale of material purchased from the railways as scrap is subject to provisions of Section 206C; purchaser cannot reclassify goods on resale to escape TCS liability. - HELD THAT: - The Court held that the statutory definition of "scrap" in the explanation to Section 206C covers waste and scrap from manufacture or mechanical working which is not usable due to breakage, cutting up, wear and other reasons. The material purchased by the assessee from the railways was accepted by the assessee as scrap and was subjected to TCS by the railway at the time of sale to the assessee. Once the assessee accepted and paid for goods treated as scrap (and on which TCS was collected), the resale of the same goods cannot assume a different character to avoid the operation of Section 206C. The Tribunal found no merit in the assessee's general contention that the goods did not fall within the definition of scrap; decisions cited by the assessee were fact-specific and not persuasive on the admitted facts of purchase and TCS collection by the railway. Consequently, the Assessing Officer's conclusion that the assessee was an assessee in default under Section 206C(6A) and liable to interest under Section 206C(7) was sustained to the extent the goods were rightly classed as scrap. [Paras 6]

Assessee's plea that material purchased from the railway was not "scrap" is rejected; resale is subject to Section 206C and the default finding is sustained on this ground.

Assessment of liability under Section 206C(6A) and interest under Section 206C(7) - fact-specific verification of classification of particular sales - Whether certain sales treated as scrap were in fact sales of new iron goods requires factual verification and is remanded to the Assessing Officer. - HELD THAT: - The Tribunal noted that the Assessing Officer had made categorizations based on spot verification, and the assessee has since produced sales bills contending that specified sales were of new iron goods and not scrap. As this contention raises a factual question necessitating examination of evidence, ledger entries and supporting bills, the matter was set aside for fresh verification by the Assessing Officer. The assessee is to be afforded an opportunity of hearing and the AO shall decide the issue after considering the evidence filed by the assessee. [Paras 7]

Issue remanded to the Assessing Officer for verification of the sales claimed as new goods and for fresh decision after giving the assessee an opportunity of hearing.

Final Conclusion: Appeal partly allowed: the Tribunal upheld that resale of goods purchased from the railway as scrap falls within Section 206C and sustained the default finding to that extent, but remanded the factual issue of certain sales alleged to be of new goods to the Assessing Officer for verification and fresh adjudication.

Transfer pricing - determination of arm's length price - Section 144C election between filing objections before the Dispute Resolution Panel and preferring appeal to the Commissioner (Appeals) - Transaction Net Margin Method as Most Appropriate Method - Comparability analysis and selection of comparable uncontrolled companies - Remand for fresh adjudication by the first appellate authority

Section 144C election between filing objections before the Dispute Resolution Panel and preferring appeal to the Commissioner (Appeals) - Remand for fresh adjudication by the first appellate authority - Whether the Commissioner (Appeals) was entitled to refuse to adjudicate the assessee's grounds on the basis that the assessee had not filed objections to the draft assessment order before the DRP under Section 144C. - HELD THAT: - The Tribunal held that Section 144C provides an assessee with an option: either to file objections to the draft assessment order with the DRP within the prescribed time or to obtain the final assessment order and challenge it before the Commissioner (Appeals). The understanding in CBDT Circular No. 5/2010 (para.45.4) that exercising the DRP remedy precludes subsequently opting for the normal appellate channel was distinguished from the converse situation; failure to file objections before the DRP does not preclude the assessee from invoking the ordinary appeal remedy. The CIT(A)'s conclusion that absence of objections to the draft order before the DRP barred the assessee from raising those grounds before the CIT(A) was therefore incorrect, and the matter required adjudication on merits by the first appellate authority. [Paras 16]

The CIT(A)'s refusal to decide the appeal on merits for want of DRP objections was held to be erroneous; the assessee may challenge the final assessment before the CIT(A).

Comparability analysis and selection of comparable uncontrolled companies - Transaction Net Margin Method as Most Appropriate Method - Whether the selection and exclusion/inclusion of specific comparable companies (including the exclusion of Acropetal Technologies Ltd. and the inclusion of Akshay Software Technologies Ltd. and Cigniti Technologies Ltd.) was to be upheld. - HELD THAT: - The Tribunal did not decide the merits of the comparability disputes. It recorded that the CIT(A) had not adjudicated the appeal on merits and that the opinion of the first appellate authority on comparability would be of importance for appellate adjudication. Consequently, the Tribunal set aside the CIT(A)'s order and remitted the comparability issues to the CIT(A) for fresh consideration with an opportunity to be heard. [Paras 17]

Comparability disputes are remitted to the CIT(A) for fresh adjudication on merits.

Transfer pricing - determination of arm's length price - Computation of margins of comparable companies - Whether the TPO's computation of margins for Neilsoft Limited and Cades Digitech Private Limited (and resulting adjustments) was correct. - HELD THAT: - The Tribunal declined to decide the substantive correctness of the TPO's margin computations. Noting that the CIT(A) had not considered the appeal on merits, the Tribunal remitted the question of the correctness of the TPO's computations (and the consequential ALP adjustment) to the CIT(A) for fresh consideration and directions after affording the assessee an opportunity of being heard. [Paras 17]

Computation issues raised by the assessee are remitted to the CIT(A) for fresh adjudication on merits.

Final Conclusion: The CIT(A)'s order is set aside. The Tribunal holds that absence of objections before the DRP does not preclude the assessee from raising grounds before the CIT(A); the matters raised in the appeal (comparability and computation of margins leading to ALP adjustment) are remitted to the CIT(A) for fresh consideration on merits after hearing the assessee. The appeal is treated as allowed for statistical purposes.

Slump sale - Undertaking (for slump sale) - Computation of capital gains under section 50B(2) - net worth as cost of acquisition - Requirement of separate books not necessary for treating a unit as an undertaking - Depreciation or inclusion in block of assets not decisive against slump sale

Slump sale - Undertaking (for slump sale) - Requirement of separate books not necessary for treating a unit as an undertaking - Depreciation or inclusion in block of assets not decisive against slump sale - Whether the three sold windmills constitute one or more 'undertakings' and whether their sale qualifies as a slump sale. - HELD THAT: - The Tribunal applied the statutory definitions of 'slump sale' and 'undertaking' and examined the sale deeds and the assessee's accounting treatment. Slump sale requires transfer of one or more undertakings for a lump-sum consideration without allocation to individual assets or liabilities; 'undertaking' includes any part, unit or division or a business activity taken as a whole but excludes individual assets or liabilities not constituting a business activity. The Tribunal found that the sale deeds identified the windmills as a going concern/undertaking, that the principal assets transferred included land and wind turbines, and that the lump-sum consideration was not apportioned among individual assets. The assessee had shown windmill receipts separately, maintained separate ledger accounts for the windmill activity and claimed deductions under section 80IA, demonstrating that the windmills functioned as separate business units. The fact that the windmills were shown in a block of assets and depreciation was claimed did not preclude treatment as an undertaking; separate books of account are not an indispensable requirement to recognise a unit as an undertaking where the activity and its receipts and ledgers permit ascertainment of income and liabilities. The physical separation of the windmills (different locations) was held to be immaterial to the character of the transaction as a slump sale. On these findings the Tribunal upheld the CIT(A)'s conclusion that the windmills constituted undertakings and that their sale qualified as a slump sale. [Paras 6]

The windmills constitute separate undertakings and their sale qualifies as a slump sale; the Assessing Officer was directed to compute capital gains accordingly.

Computation of capital gains under section 50B(2) - net worth as cost of acquisition - How the capital gains on the slump sale are to be computed under section 50B(2). - HELD THAT: - Section 50B(2) treats the net worth of the undertaking as the aggregate value of assets reduced by liabilities as appearing in books of account and is the appropriate measure for computing capital gains on slump sale. The Tribunal endorsed the CIT(A)'s application of section 50B(2), holding that for slump sale the difference between the lump-sum consideration and the net worth of the undertaking constitutes the long-term capital gains; there is no requirement to apply the indexed cost provisions of sections 48 and 49 applicable to normal capital gains computation. [Paras 6]

Long-term capital gains on the slump sale are to be computed as lump-sum consideration less the net worth of the undertaking in terms of section 50B(2).

Final Conclusion: The Tribunal dismissed the revenue's appeal and upheld the CIT(A)'s finding that the three windmills constituted separate undertakings and that their sale qualified as a slump sale; the Assessing Officer was directed to compute long-term capital gains under section 50B(2) (lump-sum consideration less net worth).

Transfer pricing adjustment - Comparability of comparable companies - Arm's length pricing of guarantee commission - Arm's length interest on inter company loans determined by rate applicable to country/currency of loan - Treatment of sub lease income and allowance of expenses under section 57 - Allowability of TDS credit upon verification and opportunity of hearing

Transfer pricing adjustment - Comparability of comparable companies - Exclusion of certain comparable companies and direction to recompute arms length price for provision of call centre and data processing services - HELD THAT: - The Tribunal considered the assessee's limited challenge to eight comparables relied upon by the TPO and, following coordinate bench decisions for the same assessment year, found that the eight companies - Mold tek Technology, Eclerx Services Limited, Accentia Technology Limited, Wipro Limited, Accropetal Technology Limited, Infosys BPO Limited, HCL Comnet Systems & Services Ltd and Cross Domain Solution Ltd - are to be excluded from the set of comparables. The Tribunal directed the AO/TPO to exclude those eight comparables and to recompute the ALP/margin for the international transaction relating to provision of call centre and data processing services in accordance with the observations and directions recorded in the order. [Paras 10, 11, 12]

AO/TPO directed to exclude the eight specified comparables and to recompute the arms length price accordingly; Ground No.2 partly allowed.

Arm's length pricing of guarantee commission - Appropriate arm's length rate for guarantee commission on corporate and performance guarantees - HELD THAT: - The Tribunal examined the arguments that issuance of corporate/performance guarantees by the assessee does not generate income within the meaning of the transfer pricing provisions and reviewed authorities including the jurisdictional High Court's reasoning distinguishing bank guarantees from corporate guarantees. Applying that reasoning and considering the facts and material on record, the Tribunal held that the 3% rate determined by the TPO was not justified and that the DRP's restriction to 1.5% was still excessive. The Tribunal accepted the assessee's alternative submission and directed that 0.50% be adopted as the arm's length rate for guarantee commission fee for computation of the transfer pricing adjustment. [Paras 13, 15, 16]

Adjustment recomputed adopting 0.50% as the arm's length rate for guarantee commission; Ground No.3 partly allowed.

Arm's length interest on inter company loans determined by rate applicable to country/currency of loan - Methodology for determining arm's length rate of interest on loans to associated enterprises - HELD THAT: - The Tribunal considered the TPO's use of a domestic third party rate and the DRP's direction to adopt domestic cost of borrowing plus markup. Relying on precedents of the High Courts (including directions that interest on loans advanced to foreign AEs should be determined based on market rates applicable to the currency and country where the loan is consumed), the Tribunal directed the AO/TPO to recompute the transfer pricing adjustment in accordance with that principle and the decision of the jurisdictional High Court, and to permit the assessee to supply necessary details for that recomputation. [Paras 17, 19, 20]

AO/TPO directed to recompute interest adjustment following the principle that arm's length interest should be determined by reference to market rates applicable to the country/currency where the loan is consumed; Ground No.4 allowed for statistical purpose.

Treatment of sub lease income and allowance of expenses under section 57 - Characterisation of income from sub lease and consequential allowance of expenditure - HELD THAT: - The Tribunal noted the assessee's case that the sub leased portion was part of premises taken on lease for business and that sub lease income arose because the assessee could not use the entire premises. The DRP had earlier directed the AO/TPO to allow expenditure incurred in earning such income under section 57. The Tribunal found no convincing material to recharacterise the income as business income eligible for section 10A and observed that the DRP's rectification order granting the deduction under section 57 has to be given effect. The AO/TPO was directed to implement the DRP direction dated 21.12.2012. [Paras 21, 23, 24]

DRP's direction to allow expenditure under section 57 in relation to sub lease income to be given effect by the AO/TPO; Ground No.5 partly allowed.

Arm's length pricing of guarantee commission - Arm's length interest on inter company loans determined by rate applicable to country/currency of loan - Application of earlier directions to Assessment Year 2009 10 appeals - HELD THAT: - The Tribunal observed that the issues in AY 2009 10 concerning guarantee commission and loan interest are identical to those decided for AY 2008 09. Accordingly, the AO/TPO was directed to recompute the adjustments for AY 2009 10 in conformity with the directions issued in the AY 2008 09 appeal (i.e., adoption of 0.50% for guarantee commission and recomputation of loan interest following the country/currency principle). [Paras 26, 27, 28]

Grounds relating to guarantee and loan for AY 2009 10 partly allowed / allowed for statistical purpose and remitted for recomputation by AO/TPO in accordance with earlier directions.

Allowability of TDS credit upon verification and opportunity of hearing - Claim for short credit of TDS and direction to verify and grant credit with opportunity to assessee - HELD THAT: - The assessee contended that higher TDS credit was payable than shown in the tax computation. The revenue invited the AO to verify the TDS details. The Tribunal directed the AO to verify the TDS claim and to grant credit in accordance with law after the assessee furnishes necessary details and is afforded an opportunity of hearing before any final order is passed. [Paras 29, 30, 31]

AO directed to verify TDS records, allow credit as legally due upon production of supporting details, and grant the assessee an opportunity of hearing; Ground No.3 (AY 2009 10) partly allowed.

Final Conclusion: The appeals are partly allowed. For AY 2008 09 the Tribunal directed exclusion of eight specified comparables and recomputation of ALP for call centre/data processing services, adopted 0.50% as arm's length rate for guarantee commission, directed recomputation of interest on loans to AEs by reference to market rates applicable to the country/currency of the loan, and required the AO/TPO to give effect to the DRP's direction to allow expenditure under section 57 for sub lease income. For AY 2009 10 the Tribunal directed the AO/TPO to apply the same directions on guarantees and loans and to verify and grant TDS credit after affording the assessee an opportunity to produce supporting details.

Ad hoc disallowance of business expenditure - allowability of expenses supported by self-made vouchers - personal element in business expenditure - burden on Assessing Officer to produce specific material for disallowance - quantification of disallowance on facts and circumstances

Ad hoc disallowance of business expenditure - personal element in business expenditure - quantification of disallowance on facts and circumstances - Disallowance of 30% of expenditure claimed under subscription and membership fees - HELD THAT: - The Tribunal examined the nature and quantum of the subscription and membership fee expenditure and the material on record. The payments comprised telecom subscriptions, sales/marketing software subscriptions and amounts spent at hotels/clubs for business meetings and dealer conferences, largely paid through banking channels. The aggregate expenditure was only 0.34% of total expenditure and no adverse qualification was recorded by the auditors. While recognising that a personal element cannot be entirely ruled out in such recreational/meeting expenses, the Assessing Officer made a 30% ad hoc disallowance without identifying any defect or producing specific material to justify that percentage. Applying a fact-sensitive adjustment to meet the ends of justice, the Tribunal held that a 10% disallowance on the said head is reasonable in the circumstances and reduced the Assessing Officer's disallowance accordingly.

The disallowance is reduced and confirmed at 10% of the expenditure under subscription and membership fees; the remainder of the 30% adhoc disallowance is deleted.

Allowability of expenses supported by self-made vouchers - burden on Assessing Officer to produce specific material for disallowance - ad hoc disallowance of business expenditure - 10% ad hoc disallowance of various business expenses (carriage outward, commission & discount, transportation, travelling, business promotion, repairs & maintenance) supported mainly by internal/self-made vouchers - HELD THAT: - The Tribunal considered the inherent nature of the impugned heads - local carriage and transportation, discounts and commissions, travelling of sales staff, business promotion and repairs - and noted that such expenditures in a small-scale manufacturing/trading concern are ordinarily supported by self-made vouchers or payments to unorganized sector parties. The Assessing Officer did not bring forward any specific material to show these expenses were not incurred or were of a personal nature; the auditor's report did not record adverse qualifications such as non-incurrence. Reliance was placed on settled precedent that adhoc disallowances cannot be sustained absent specific findings or materials by the tax authorities. In these circumstances the Tribunal held that the flat 10% disallowance was unjustified and deleted it.

The 10% adhoc disallowance made on the aggregate of the specified expense heads is deleted.

Final Conclusion: The assessee's appeal is partly allowed: the 30% disallowance on subscription and membership fees is reduced to 10%, and the 10% adhoc disallowance on the other specified expense heads is deleted.

Deemed dividend - protective assessment - double addition - finality by acceptance of appellate order - indirect individual benefit in section 2(22)(e)

Deemed dividend - protective assessment - double addition - finality by acceptance of appellate order - Whether protective additions of deemed dividend made in the hands of partners for the same amount already confirmed in the hands of the firm amount to double addition and are liable to be deleted. - HELD THAT: - The Tribunal examined that the Hon'ble ITAT, Chennai had confirmed deemed dividend of Rs. 4.54 Crores in the hands of the firm and that the firm had accepted the ITAT's decision in respect of that sum, rendering that part of the departmental addition final as against the firm. The Assessing Officer's subsequent reopening and protective assessment of one third of the same aggregate amount in the hands of the partners would lead to taxation twice on the same sum. The CIT(A) recorded that in view of the ITAT's final confirmation and the firm's acceptance, sustaining the protective additions in the hands of the partners would be unfair and unreasonable and therefore deleted the additions against the partners. The Tribunal, on consideration of the ITAT's reasoning and the fact of acceptance by the firm, found no infirmity in the CIT(A)'s conclusion and declined to interfere. [Paras 4, 5]

Protective additions of deemed dividend in the hands of the appellants (partners) duplicating an amount already confirmed and accepted as added in the hands of the firm are deleted; Revenue's appeals dismissed.

Final Conclusion: The Tribunal upheld the deletion by the CIT(A) of the protective deemed dividend additions against the two partners because the identical sum (Rs. 4.54 Crores) had already been confirmed as deemed dividend in the hands of the firm and accepted by it; Revenue's appeals are dismissed.

Penalty under Section 271(1)(c) for concealment or furnishing inaccurate particulars - penalty order must specify whether imposed for concealment of income or for furnishing inaccurate particulars - penalty cannot be levied where additions are made on estimated basis - requirement of clear finding by the assessing authority before imposing penalty - interpretation of time-limit for pronouncement of orders under Appellate Tribunal Rules in light of Covid-19 lockdown

Penalty order must specify whether imposed for concealment of income or for furnishing inaccurate particulars - requirement of clear finding by the assessing authority before imposing penalty - Validity of penalty under Section 271(1)(c) for AY 2001-02 where penalty order did not specify whether it was imposed for concealment of income or for furnishing inaccurate particulars. - HELD THAT: - The Assessing Officer's penalty order merely stated that the assessee "has concealed but gross of income/ furnished inaccurate particulars of income" without recording a definite finding on which specific charge under section 271(1)(c) was being sustained. The Tribunal relied on the jurisdictional High Court's principle that while a notice may use "and/or", the final penalty order must contain a clear positive finding whether the penalty is for concealment of income or for furnishing inaccurate particulars; absent such clear conclusion the penalty is not sustainable. Applying that principle to the AO's ambivalent order, the Tribunal held the penalty cannot stand and refrained from adjudicating the merits of concealment. [Paras 9]

Penalty under section 271(1)(c) for AY 2001-02 deleted; appeal partly allowed.

Penalty order must specify whether imposed for concealment of income or for furnishing inaccurate particulars - Validity of penalty under Section 271(1)(c) for AY 1999-2000 in view of the Tribunal's decision in the assessee's co-pending matter. - HELD THAT: - The Tribunal applied its earlier reasoning in the assessee's own case (decided for AY 2001-02) that the penalty order lacked the requisite specific finding as to whether it was for concealment or for furnishing inaccurate particulars. Following the identical principle and decision, the Tribunal set aside the CIT(A)'s confirmation and directed deletion of the penalty. [Paras 12]

Penalty under section 271(1)(c) for AY 1999-2000 deleted; ground of appeal partly allowed.

Penalty cannot be levied where additions are made on estimated basis - Validity of penalty under Section 271(1)(c) for AY 2005-06 where the addition was made on estimated basis. - HELD THAT: - The addition for the year under appeal was determined on an estimated basis. The Tribunal held that penalties under section 271(1)(c) are not sustainable where the impugned addition is based on estimate, following the guidance of the jurisdictional High Court that estimation of income and assessment on such basis does not warrant levy of penalty under section 271(1)(c). Applying that precedent, the Tribunal set aside the CIT(A)'s confirmation and directed deletion of the penalty. [Paras 21]

Penalty under section 271(1)(c) for AY 2005-06 deleted; appeal allowed.

Final Conclusion: The Tribunal deleted the penalties under section 271(1)(c) in all three appeals: for AY 2001-02 and AY 1999-2000 on the ground that the penalty order did not state a specific finding whether it was for concealment or for furnishing inaccurate particulars, and for AY 2005-06 on the ground that the addition was made on an estimated basis; the Assessing Officer is directed to delete the penalties accordingly. The Tribunal also noted that delay in pronouncement was attributable to the Covid-19 lockdown and proceeded to pronounce the order beyond the ordinary 90-day period.

Penalty under section 271(1)(c) - concealment of particulars of income - mens rea - addition in assessment not determinative of penalty - reliance on Reliance Petroproducts - delay in pronouncement of order due to COVID 19 (rule 34 time limit)

Penalty under section 271(1)(c) - concealment of particulars of income - mens rea - addition in assessment not determinative of penalty - reliance on Reliance Petroproducts - Whether penalty under section 271(1)(c) is leviable for alleged undisclosed sales in AY 2010-11 - HELD THAT: - The Tribunal analysed whether the assessee had deliberately concealed particulars of income in respect of unaccounted sales reported to the Revenue by the Central Excise Department. Relying on the principle in Reliance Petroproducts that 'inaccurate' particulars denote a deliberate act or omission, the Bench held that mere making of additions in assessment does not automatically establish conscious concealment. The Revenue produced no material or circumstantial evidence to show dishonest intent or that particulars furnished in the return were incorrect as a matter of fact. In the absence of proof of mens rea or other supporting material leading to a reasonable inference of deliberate concealment, the imposition of penalty could not be sustained. Accordingly, the Tribunal set aside the penalty levied by the AO and confirmed by the CIT(A). [Paras 8]

Penalty under section 271(1)(c) deleted for AY 2010-11; appeal allowed.

Final Conclusion: The appeal is allowed: the penalty imposed under section 271(1)(c) is set aside for Assessment Year (AY) 2010-11. The Tribunal also explained delay in pronouncement of its order by reference to the COVID 19 lockdown and the applicable time limit under rule 34.

Prior approval under section 153D - Validity of assessment framed under section 153A read with section 143(3) in a search year - Requirement of application of mind by approving authority (no mechanical approval)

Prior approval under section 153D - Validity of assessment framed under section 153A/143(3) - Mechanical approval / application of mind - Assessment framed under section 143(3) read with section 153A for A.Y. 2011-12 is invalid for non-compliance with the prior-approval requirement of section 153D. - HELD THAT: - The year under consideration is the search year and therefore assessments framed under section 143(3) pursuant to section 153A were subject to the prior approval requirement contained in section 153D. The record, including the RTI reply placed on record, shows that the approving authority dated the approval 04.03.2013 but the jurisdictional Assessing Officer did not receive that approval until 05.03.2013 - after the assessment order was passed on 04.03.2013. Non-obtaining of the prior approval before passing the assessment thus amounted to non-compliance with the mandatory requirement of section 153D. The Tribunal applied the principle in the jurisdictional High Court decision cited (CIT v. Sunrise Finlease) that absence of prior approval vitiates the assessment, and observed that where approval is received after the assessment it cannot be treated as prior approval. Because the assessee succeeded on this preliminary legal ground, the Tribunal declined to enter into the other substantive grounds of appeal. The Tribunal also noted authorities and factual indicators concerning the requirement that such approval involve application of mind and not be a mechanical acceptance of a draft order, but the decisive fact here was the temporal non-compliance shown by the RTI response. [Paras 11, 12, 13]

The assessment for A.Y. 2011-12 is vitiated for non-compliance with section 153D and the additional ground raising that defect is allowed; other grounds were not adjudicated.

Final Conclusion: Appeals partly allowed: assessment framed for A.Y. 2011-12 under section 143(3) read with section 153A is set aside as void for lack of prior approval under section 153D; other grounds remained unconsidered.

Validity of electronic publication of Gazette notifications - Commencement of a notification: date of issue/upload versus date of electronic Gazette publication - Interpretation of Section 25(4) of the Customs Act vis-a -vis Section 25(1) and (2A) - Operation of Section 8 of the Information Technology Act in relation to e-Gazette publication - Obligation to refund customs duty and IGST collected prior to official e-Gazette publication

Validity of electronic publication of Gazette notifications - Commencement of a notification: date of issue/upload versus date of electronic Gazette publication - Operation of Section 8 of the Information Technology Act in relation to e-Gazette publication - The date on which a notification issued under Section 25 becomes enforceable is the date and time when it is electronically published/printed in the Official (electronic) Gazette, and mere uploading on a Departmental website does not constitute publication for the purpose of enforceability. - HELD THAT: - The Court accepted and followed the reasoning of the Division Bench of the Delhi High Court in M.D. Overseas Ltd., which explained that Section 8 of the Information Technology Act and the government Office Memorandum adopting exclusive e-publishing establish that publication occurs when the Gazette is first published in electronic form. The Madras High Court found no basis to distinguish or displace that conclusion. The Court further agreed with the Andhra Pradesh Division Bench that an endorsement showing the time of electronic signing/printing of the Gazette is decisive for determining when the notification came into force. Consequently, the administrative act of uploading notifications on a Ministry/Department website without their being electronically printed in the e-Gazette does not make the notification enforceable from the upload date. [Paras 16, 17, 18]

Notification is enforceable only from the date and time it is electronically published in the Official Gazette; uploading on a website does not suffice.

Interpretation of Section 25(4) of the Customs Act vis-a -vis Section 25(1) and (2A) - Obligation to refund customs duty and IGST collected prior to official e-Gazette publication - Amendment effecting commencement from date of issue (Section 25(4)) is inconsistent with Sections 25(1) and (2A) and, as applied, rendered collection of enhanced duty prior to e-Gazette publication arbitrary; the petitioner is entitled to refund of excess duty and IGST collected before electronic publication. - HELD THAT: - Relying on the Andhra Pradesh Division Bench decision in Ruchi Soya Industries Ltd., the Court concluded that reading Section 25(4) to make a notification enforceable from its date of issue creates a conflict with the manifest requirement of publication in Sections 25(1) and (2A), producing absurdity and uncertainty. The Court found that such operation is arbitrary insofar as it permits the executive to withhold publication yet treat the notification as effective from an earlier date, thereby prejudicing importers who could not have knowledge of the change. Applying that reasoning to the facts, the High Court held the collection of enhanced customs duty and IGST prior to the e-Gazette publication was unlawful and directed refund of the excess amount deposited under protest. The Court adopted the Andhra Pradesh Division Bench's view that the statutory and constitutional objections to the amended operation of Section 25(4) warranted relief by way of refund. [Paras 18, 20]

Section 25(4) as applied to make notifications effective from date of issue conflicts with Sections 25(1) and (2A); respondents directed to refund excess customs duty and IGST collected prior to e-Gazette publication.

Final Conclusion: The writ petition is allowed: the Court adopts the precedents holding that a notification under Section 25 is enforceable only upon electronic publication in the Official Gazette and, applying that principle, directs the respondents to refund the excess customs duty and IGST collected before such e-Gazette publication within two months.

Provisional release under Section 110A of the Customs Act - Bank guarantee for provisional release - Reasonableness of conditions for release - Prima facie malafide claim of exemption - Provisional release for re-export

Provisional release under Section 110A of the Customs Act - Bank guarantee for provisional release - Reasonableness of conditions for release - Provisional release for re-export - Whether the condition imposed by the adjudicating authority requiring a bank guarantee equivalent to the full duty for provisional release of the seized goods was excessive and whether a different condition should be imposed in the circumstances of the case. - HELD THAT: - The Tribunal found a prima facie case suggesting fraudulent claim of exemption, but emphasised that the detailed investigation and final adjudication on merits remained pending. The appellant sought provisional release for re-export and there was no indication of diversion of the goods. Balancing the revenue's interest given the prima facie suspicion and the appellant's request for re-export, the Tribunal concluded that the condition of furnishing a bank guarantee equal to the entire duty was harsh and excessive. The Tribunal therefore directed provisional release on milder terms: execution of a bond for full value and furnishing a bank guarantee equal to 50% of the total duty, while noting that the appellant shall clear the goods on payment of duty as finally assessed by Customs. [Paras 4]

Provisional release permitted on execution of bond for full value and a bank guarantee of 50% of the total duty; appeal partly allowed.

Final Conclusion: The appeal was partly allowed by modifying the condition for provisional release: goods to be released on bond for full value and bank guarantee of 50% of assessed duty, while investigation and final adjudication on merits remain pending.

Provisional release of seized goods - bond for provisional release - bank guarantee - differential duty - adjustment of bank guarantee against overall demand - undervaluation of imports - prematurity of adjudication on merits

Provisional release of seized goods - bond for provisional release - bank guarantee - differential duty - Terms for provisional release of the imported goods covered by Bills of Entry Nos. 7740144 dated 22.08.2018 and 8549092 dated 22.10.2018. - HELD THAT: - The Tribunal considered the limited question of the terms on which the seized goods should be provisionally released. It noted that the show cause notice had worked out the differential duty for the two specified bills of entry at Rs. 6,56,589/-, and that adjudication on merits (relating to alleged undervaluation) was yet to be concluded and therefore premature for final determination. Balancing the parties' contentions and the fact that the appellant had furnished other bank guarantees, the Tribunal directed provisional release on specific terms: deposit of the principal duty at the time of clearance, furnishing of a bond in the amount specified in the provisional release order, and a reduced bank guarantee with an auto-renewal clause. The Tribunal thus modified the original provisional-release conditions as harsh, while preserving adequate security pending adjudication. [Paras 6]

Provisional release granted subject to deposit of principal duty at clearance, furnishing of a bond of Rs. 99,66,273/-, and a bank guarantee of Rs. 4,00,000/- with auto renewal clause.

Adjustment of bank guarantee against overall demand - undervaluation of imports - prematurity of adjudication on merits - Whether the bank guarantee already furnished by the appellant against other bills of entry could be treated in relation to the overall adjudication of all bills of entry. - HELD THAT: - The Tribunal observed that the appellant had already furnished a bank guarantee for other bills of entry. Given that adjudication would be carried out combinedly for all the bills of entry, the Tribunal held that the existing bank guarantee could be adjusted against any overall demand for penalty and fine, if imposed, at the time of final adjudication. The Tribunal, however, did not decide the merits of the undervaluation allegation, stating that such merits must be established beyond doubt and that it was premature to conclude on them at the provisional-release stage. [Paras 6]

Existing bank guarantee of Rs. 13,69,682/- (furnished against other bills) may be adjusted against the overall demand for penalty and fine, if any, upon combined adjudication; merits of undervaluation left for adjudication.

Final Conclusion: The appeal is partly allowed by modifying the provisional-release conditions: the goods are to be released on deposit of principal duty at clearance, furnishing of the specified bond, and a reduced bank guarantee with auto-renewal; the previously furnished bank guarantee against other bills may be adjusted against any overall demand on combined adjudication, while the substantive question of undervaluation remains open for final adjudication.

Sunset review - likelihood of continuation or recurrence of dumping and injury - non-requirement of re-establishing causal link in sunset review - computation of landed value with applicable customs duty - confidentiality of non-injurious price calculation - designation of non-cooperative exporter and reliance on facts available - scope of rule 23(1B) of the 1995 Rules - Article 11.3 of the Anti Dumping Agreement (GATT) and its application to reviews

Sunset review - scope of rule 23(1B) of the 1995 Rules - Whether the Designated Authority correctly conducted a sunset review to determine likelihood of continuation or recurrence of dumping and injury. - HELD THAT: - The Tribunal explained that a sunset review is prospective in nature and its focus is whether cessation of duty would likely lead to continuation or recurrence of dumping and injury. Rule 23(1B) and Annexure II prescribe the parameters for that exercise. The Tribunal accepted the Designated Authority's approach of examining capacity, export patterns, price relationships and other relevant indicators for the period of investigation (April, 2016 to March, 2017) and the injury period (2013 14 to 2015 16). The Tribunal observed that the criteria applicable to original investigations (such as strict application of section 9A(1) dumping margin limits) do not have the same practical application in a sunset review where the inquiry is likelihood based. On the facts, having regard to the Designated Authority's analysis and conclusions, the sunset review was properly conducted and the Authority's finding of likelihood of recurrence of dumping and injury was sustainable. [Paras 26, 27, 54, 55]

The Designated Authority correctly conducted the sunset review and its conclusion that cessation of the duty would likely lead to continuation or recurrence of dumping and injury is upheld.

Computation of landed value with applicable customs duty - Whether the Designated Authority erred in computing landed value by applying the preferential (nil) rate of customs duty under the ASEAN Agreement. - HELD THAT: - The Tribunal held that landed value is to be computed using the assessable value with the applicable basic customs duty. Under the ASEAN Agreement imports from Thailand are chargeable to nil basic duty upon production of origin certificate; the exporter produced no material to show any basic duty was paid. The Designated Authority's consistent practice of evaluating landed value with the applicable customs duty (which was nil here) was affirmed. The appellant did not demonstrate payment of a different basic duty that would alter the landed value computation. [Paras 33]

No error in the Designated Authority's computation of landed value by applying the applicable (nil) customs duty.

Confidentiality of non-injurious price calculation - Whether non disclosure of the non injurious price (NIP) calculation sheet to the foreign exporter amounted to denial of natural justice. - HELD THAT: - The Tribunal noted the NIP computation is based on confidential costing information of the Domestic Industry. Rule 7 of the 1995 Rules protects such confidential information. The Gujarat High Court decision relied upon by the appellant concerned disclosure to the party that provided the data; it did not require disclosure of confidential domestic costing to a foreign exporter. Given the confidentiality regime and that the exporter was not the source of the underlying confidential data, the Designated Authority was justified in withholding the NIP computation from the foreign exporter. [Paras 45]

Withholding the NIP calculation from the foreign exporter did not breach principles of natural justice.

Monopoly and profitability in sunset review - Whether the Domestic Industry's alleged 'superlative' profits or market dominance defeated the need to continue anti dumping duty in a sunset review. - HELD THAT: - The Tribunal observed that profitability figures relied on (EBITDA and consolidated annual report numbers) were not limited to the product under consideration and hence irrelevant to the product specific sunset inquiry. The Domestic Industry demonstrated that sales of the subject product were a small portion of total sales and that its return on capital employed was below the benchmark relied upon by the appellant. Further, monopoly implies sole producer; the record showed eight domestic producers and that the applicants did not constitute a monopoly. The Tribunal also emphasised that considerations of current injury or profitability applicable to original investigations are not determinative in a sunset review focused on likelihood of recurrence. [Paras 34, 35, 36, 41, 43]

Arguments based on alleged superlative profits or monopoly do not negate the Designated Authority's sunset review conclusion.

Relevance of import volume in sunset review - Whether the low absolute volume or market share of imports from the subject country precluded a finding of likelihood of recurrence of injury. - HELD THAT: - The Tribunal recognised that although imports from Thailand were low in absolute terms and market share, rule 14 (dealing with insignificant imports) is not made applicable to sunset reviews under rule 23(3). In a sunset review the decisive question is the likelihood of recurrence of dumping and injury, not current import volumes. The Designated Authority expressly recorded that actual volume during the investigation period was not determinative for likelihood analysis and proceeded to examine capacity, export patterns, price undercutting and potential for diversion. The Tribunal found no fault in that approach. [Paras 47, 99]

Low import volume did not bar a finding of likely recurrence of dumping and injury in the sunset review.

Non-requirement of re-establishing causal link in sunset review - Article 11.3 of the Anti Dumping Agreement (GATT) and its application to reviews - Whether the Designated Authority was obliged in a sunset review to re establish the causal link between dumped imports and injury. - HELD THAT: - Relying on the Appellate Body report under Article 11.3 and domestic authority, the Tribunal explained that a sunset review is a distinct, prospective exercise and does not require re establishment of the causal link proven in the original investigation. Article 11.3 requires proof that expiry of the duty would likely lead to continuation or recurrence of dumping and injury; it does not mandate re proving causation afresh. The Tribunal noted that determinations under Article 11.3 must rest on a sufficient factual basis, and on the facts the Designated Authority had examined capacities, export destinations, export prices vis a vis NIP and the absence of contrary data from the exporter. Consequently, the Authority was not required to re establish causation. [Paras 56, 60, 61, 62]

No legal obligation to re establish causal link in a sunset review; the Designated Authority's approach was lawful and supported by sufficient factual analysis.

Designation of non-cooperative exporter and reliance on facts available - Whether the Designated Authority erred in not designating the foreign exporter as non cooperative and in proceeding on the basis of available information. - HELD THAT: - Rule 6(4) and rule 6(8) permit the Designated Authority to call for information and, where an interested party does not provide necessary information or impedes the investigation, to record findings on the basis of facts available. The Designated Authority found that the exporter did not furnish transaction wise export details required by the questionnaire and therefore conducted its analysis using the best available information and weighted averages. The Tribunal held that once the Authority exercised its discretion to proceed on facts available and there was no perversity in that exercise, it could not be faulted for not treating the exporter as non cooperative and imposing residual duty. [Paras 68, 69, 82, 97, 98]

The Designated Authority was entitled to proceed on the basis of available information and was not required to treat the exporter as non cooperative in the circumstances.

Grounds not taken in memorandum of appeal - Whether the appellant could, without leave, raise in the appeal the contention that the Domestic Industry's initiation application was not duly substantiated. - HELD THAT: - Rule 10 of the 1982 Procedure Rules (applied by rule 7 of the 1996 Procedure Rules) provides that an appellant shall not urge grounds not set forth in the memorandum of appeal except by leave of the Tribunal. The appellant had not pleaded lack of substantiation in its memorandum nor sought leave to raise that ground. Moreover, the Designated Authority's initiation notification recorded that a duly substantiated application had been filed. The Tribunal therefore declined to permit the new ground to be urged in the appeal. [Paras 31, 32]

The appellant cannot raise in the appeal, without leave, the contention that the initiation application was not duly substantiated; the point was not entertained.

Final Conclusion: Both appeals are dismissed: the foreign exporter's challenge to the Designated Authority's sunset review findings and the Central Government's continuation of anti dumping duty is rejected; the Domestic Industry's appeal seeking enhancement of duty and treating the exporter as non cooperative is also rejected, the Designated Authority having permissibly relied on the facts available and conducted the review in accordance with rule 23(1B) and relevant international law principles.

Definition of 'deposit' under the Companies Act, 2013 and its application to advances for immovable property - application of Rule 2(c)(xii) of the Companies (Acceptance of Deposits) Rules, 2014 to payments for allotment of flats - jurisdiction of the National Company Law Tribunal under the Companies Act, 2013 to adjudicate claims of deposit - remand for fresh consideration where factual determination is necessary - multiplicity of proceedings and concurrent remedies

Definition of 'deposit' under the Companies Act, 2013 and its application to advances for immovable property - application of Rule 2(c)(xii) of the Companies (Acceptance of Deposits) Rules, 2014 to payments for allotment of flats - jurisdiction of the National Company Law Tribunal under the Companies Act, 2013 to adjudicate claims of deposit - remand for fresh consideration where factual determination is necessary - Whether the advance received by the respondent against allotment of a flat is a 'deposit' within Section 2(31) of the Companies Act, 2013 read with Rule 2(c)(xii) of the Companies (Acceptance of Deposits) Rules, 2014, and whether the NCLT has jurisdiction to decide the claim. - HELD THAT: - The appellant raised a statutory contention that amounts paid for booking a flat amounted to a 'deposit' under Section 2(31) and the corresponding rule, and sought penal consequences under Sections 74(3), 75 and 447. The NCLT had dismissed the petition on grounds of multiplicity of proceedings without deciding the legal question. The Appellate Tribunal found that the issue of whether the advance constitutes a 'deposit' requires factual and legal determination - including examination of the nature of the transactions and compliance with the conditions in the Deposit Rules - which the NCLT did not undertake. Because the NCLT did not adjudicate the matter on merits, the Appellate Tribunal declined to express an opinion on the question itself and held that the proper course is to remit the matter to the NCLT for fresh consideration of whether the payments fall within the statutory definition of 'deposit' and whether the Tribunal has jurisdiction to decide the claim under the Companies Act, 2013. The Tribunal directed rehearing and disposal in accordance with law, noting the existence of other proceedings but requiring NCLT to determine the statutory issue on merits. [Paras 19, 20, 21]

Matter remitted to the NCLT for fresh adjudication on whether the advance is a 'deposit' under Section 2(31) read with Rule 2(c)(xii) and on the Tribunal's jurisdiction; appeal disposed directing rehearing and disposal as per law.

Final Conclusion: The appeal is disposed of by remitting the company petition to the NCLT with directions to rehear and decide, on merits, whether the advance paid for allotment of the flat is a 'deposit' under the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, and to determine the Tribunal's jurisdiction; the Appellate Tribunal expressed no opinion on the merits.

Revision of financial statements and directors' report under Section 131 - Corporate Social Responsibility compliance under Section 135 - Composition requirement of Corporate Social Responsibility Committee - Tribunal's power to permit revision without deciding compounding of alleged offences - Principle of ease of doing business

Revision of financial statements and directors' report under Section 131 - Annual report annexure relating to CSR - Petition for permission to revise the Board's Report (specifically the CSR annexure) for the financial year ended 31.03.2018 was allowed. - HELD THAT: - The Tribunal examined the application under Section 131 which permits revision of a financial statement or report in respect of any of the three preceding financial years after obtaining Tribunal approval. The Company sought revision solely to rectify mismatches between the CSR amounts and related disclosures in the CSR annexure and the audited financial statements discovered at the pre scrutiny stage. The Tribunal found that the petition was filed for correction of the Directors' report (CSR annexure) and not for compounding any alleged offence, and that the petitioner had furnished reasons and material showing the basis for revision, including statements in the annexure explaining delayed or staged CSR initiatives. Having considered the pleadings, statutory scheme and the explanations, and mindful of the objective of facilitating compliance, the Tribunal was satisfied to permit the revision of the Board's report as prayed, subject to compliance with extant provisions and rules governing CSR and the procedural requirements of the NCLT Rules. [Paras 7, 9, 11]

The Company is permitted to revise the Board's report (CSR annexure) for the year ended 31.03.2018 in accordance with Section 131 and applicable CSR provisions and rules.

Corporate Social Responsibility compliance under Section 135 - Tribunal's power to permit revision without deciding compounding of alleged offences - Revision was allowed without prejudicing statutory authorities' rights to initiate proceedings for any alleged violations under Section 135, and the Tribunal did not treat the petition as an application for compounding of offences. - HELD THAT: - The Regional Director had pointed to alleged shortcomings including non constitution of a CSR committee with the prescribed number of members and failure to state reasons for under spending as required by Section 135(5). The Tribunal observed that revision under Section 131 is for correcting reports and does not itself constitute compounding of offences; proceedings for alleged violations remain within the competence of statutory authorities. Accordingly, the Tribunal granted permission to revise the report but made clear that this order is without prejudice to the Registrar of Companies' right to initiate appropriate action, and that the petitioner remains free to seek compounding separately if so advised. [Paras 10, 11]

Revision allowed, while preserving the statutory authorities' right to pursue proceedings for any alleged violations and without treating the petition as compounding of offences.

Final Conclusion: The Tribunal allowed the petition to revise the Directors' report (CSR annexure) for FY 2017-18 under Section 131, while explicitly preserving the rights of statutory authorities to initiate proceedings for any alleged violations of Section 135 and related rules; no costs were ordered.

Relinquishment of security interest by secured creditors - proviso to Regulation 32 of the IBBI (Liquidation Process) Regulations, 2016 - realisation of security interest under Section 52 of the Insolvency and Bankruptcy Code, 2016 - waterfall mechanism and distribution under Section 53 of the I&B Code - mutual operation of SARFAESI Act Section 13(9) and I&B Code in liquidation - majority decision of secured creditors binding on dissenting secured creditor

Relinquishment of security interest by secured creditors - proviso to Regulation 32 of the IBBI (Liquidation Process) Regulations, 2016 - majority decision of secured creditors binding on dissenting secured creditor - Whether the Liquidator could proceed to sell secured assets where secured creditors holding 73.76% in value had relinquished their security interests but one secured creditor refused to relinquish. - HELD THAT: - The Tribunal found that although ten of eleven secured creditors, representing 73.76% in value, had relinquished their security interests to the liquidation estate, the proviso to Regulation 32 conditions sale of assets charged to multiple secured creditors on relinquishment by all secured creditors having a charge over those assets. The Tribunal held that it would be prejudicial to stall the liquidation process at the instance of a single dissenting creditor holding only 26.24% in value. Having regard to the purpose of liquidation and the need to avoid deadlock, the Tribunal applied the principle that the decision of the majority of secured creditors who have relinquished their security interest shall be binding on the dissenting secured creditor in the circumstances of the case and directed the Liquidator to proceed with the liquidation process. [Paras 7, 8, 9, 16]

The impugned order refusing permission to sell was set aside and the Liquidator was directed to proceed with liquidation notwithstanding the single secured creditor's refusal to relinquish, having regard to the majority relinquishment.

Realisation of security interest under Section 52 of the Insolvency and Bankruptcy Code, 2016 - waterfall mechanism and distribution under Section 53 of the I&B Code - mutual operation of SARFAESI Act Section 13(9) and I&B Code in liquidation - Whether the respondent secured creditor could, during liquidation, exercise rights under Section 52 to realise its security interest despite not having requisite majority/rightful priority, and whether such exercise would prevail over the liquidation process and Section 53 waterfall. - HELD THAT: - The Tribunal examined the respondent's reliance on Section 52 and contrasted it with the liquidation framework and the waterfall under Section 53. It noted that a secured creditor may realize security interest under Section 52, but such exercise must be consistent with statutory procedure and with the interests of the liquidation process. The Tribunal observed that the respondent did not possess requisite value or exclusive first charge such as would permit unilateral realisation that would frustrate liquidation. The Tribunal further drew upon the principle in Section 13(9) of the SARFAESI Act (requiring agreement by secured creditors representing not less than 60% in value for certain enforcement steps in multi-lender financings) to conclude that the respondent, holding less than the required share and not having an exclusive charge, could not exercise a right to realize in a manner detrimental to the liquidation and other secured creditors. [Paras 10, 15, 16, 19]

The respondent could not, on the facts, realise its security in a way that would defeat the liquidation process or the rights of other secured creditors; its claimed right to unilateral realisation was not accepted.

Direction to liquidator to act under Section 52 r/w Section 53 of the I&B Code - remedy for deadlock among secured creditors in liquidation - What procedural course the Liquidator must follow after the Tribunal's decision. - HELD THAT: - Relying on the approach in precedent and statutory scheme, the Tribunal observed the Liquidator should complete the liquidation process in light of the observations: where secured creditors have not relinquished and opt to realize security, the Liquidator must verify claims under Section 52(3), ascertain priority from records or information utilities, and where disputes about first charge exist may inform parties and proceed in accordance with law. Given the majority relinquishment and lack of an exclusive first charge in favour of the respondent, the Tribunal directed the Liquidator to proceed to dispose of assets consistent with the decision that majority relinquishment will not be stymied by a lone dissentient. [Paras 18, 19, 20]

The Liquidator was directed to proceed with completion of the liquidation process, verifying and acting under Section 52 and Section 53 as necessary; the impugned order was set aside.

Final Conclusion: Appeal allowed; impugned order dated 20th November 2019 set aside and the Liquidator directed to complete the liquidation process in accordance with the Tribunal's observations, permitting the sale of assets notwithstanding the single dissenting secured creditor who had not relinquished its security interest.

Dissolution of corporate debtor under Section 54 - early dissolution where liquidation is complete - payment of workmen's dues on pro-rata basis - Committee of Creditors' approval as special case during CIRP - Adjudicating Authority's inherent powers to prevent abuse and secure speedy justice - liquidation process deemed completed where assets realised and distributable

Dissolution of corporate debtor under Section 54 - early dissolution where liquidation is complete - Committee of Creditors' approval as special case during CIRP - Application for dissolution of the corporate debtor was allowed and the company was dissolved with immediate effect. - HELD THAT: - The Tribunal found that the corporate debtor's assets had been realised, major assets were previously sold, there were no operations or employees since March 2019, no resolution plans were received and the Committee of Creditors, exercising its voting rights, approved dissolution as a special case during the CIRP. Given that realizable assets were exhausted and further liquidation would serve no useful purpose, the Tribunal held that the liquidation process under the Code was, for practical purposes, complete and the Adjudicating Authority could exercise powers under the Code and its inherent jurisdiction to order dissolution under Section 54. The decision rests on the factual conclusion that assets were realised and distributable and on the COC's resolution authorising filing for dissolution. [Paras 7, 8]

The Adjudicating Authority permitted dissolution of M/S. My Choice Knit & Apparels Pvt. Ltd. with immediate effect.

Payment of workmen's dues on pro-rata basis - liquidation process deemed completed where assets realised and distributable - Resolution Professional was permitted and directed to pay workmen on a pro rata basis from remaining realizations, subject to a provision for bank charges. - HELD THAT: - The Tribunal noted the admitted quantum of workmen's claims and the realizations recovered by the Resolution Professional. After payment of insolvency resolution costs and other disbursements, the balance available was insufficient to meet workmen's total claims in full. In these circumstances, and in accordance with the distribution priorities under the Code as applied by the COC, the Tribunal authorised a pro rata distribution to workmen and allowed a specified provision for bank charges, directing the RP to disburse the approved amount expeditiously. [Paras 6, 8]

The Resolution Professional was directed to pay the approved pro rata amount to workmen from the balance realizations, after making the prescribed provision for bank charges.

Adjudicating Authority's inherent powers to prevent abuse and secure speedy justice - Registry and Resolution Professional were directed to forward copies of the dissolution order to statutory authorities. - HELD THAT: - In the exercise of its powers to effect dissolution and to give effect to the statutory scheme, the Tribunal directed the Registry to forward a copy of the order to the Registrar of Companies and required the Resolution Professional to intimate other statutory authorities including the IBBI, so that administrative and statutory records may be updated following dissolution. [Paras 8]

Registry to forward the order to the Registrar of Companies and the Resolution Professional to forward copies to other statutory authorities.

Adjudicating Authority's inherent powers to prevent abuse and secure speedy justice - The order preserves personal liability of directors and promoters notwithstanding dissolution. - HELD THAT: - The Tribunal clarified that dissolution under Section 54 does not absolve directors or promoters of any personal liability or guarantees. Parties aggrieved by such liabilities retain the liberty to pursue appropriate legal remedies against directors or promoters even after dissolution. [Paras 8]

Personal liability or guarantees of directors/promoters, if any, continue to subsist and aggrieved parties may pursue appropriate remedies.

Final Conclusion: The Tribunal allowed the application to dissolve the corporate debtor as a special case under Section 54, directed pro rata payment to workmen from remaining realizations with provision for bank charges, ordered transmission of the dissolution order to statutory authorities, and clarified that dissolution does not extinguish personal liabilities of directors or promoters.

Limitation under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - condonation of delay - effect of parallel regulatory proceedings on limitation - knowledge of a resolution-plan order as triggering limitation - jurisdictional bar to adjudicate merits when appeal is time-barred

Limitation under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - condonation of delay - effect of parallel regulatory proceedings on limitation - Whether the Appellant's appeal against approval of the resolution plan was barred by limitation and whether delay beyond the statutory period could be condoned. - HELD THAT: - The Tribunal examined the Appellant's contention that pendency of proceedings before the Central Electricity Regulatory Commission prevented knowledge and quantification of the operational debt, thereby justifying filing after the statutory period. The Appellant relied on the statutory provision permitting this Tribunal to allow an appeal beyond thirty days by a further maximum of fifteen days and sought condonation on the ground that the CERC proceedings were disposed on 25-09-2019. The record relied upon by the Respondent (Annexure A-20) demonstrated that the Appellant was aware of the NCLT approval of the resolution plan at least by 04-07-2019, when counsel for the Appellant made recorded submissions before the CERC about the NCLT order and its consequences. The Tribunal held that mere inability to quantify the operational debt, when the Appellant had already filed and had a claim admitted by the resolution professional, did not legally prevent the Appellant from instituting the appeal within the limitation period. Nothing on law was shown to create a bar on filing the appeal because parallel regulatory proceedings were pending. Given that the Appellant itself pleaded awareness of the thirty-day limitation and of the Tribunal's limited power to extend time by fifteen days, and having been shown to have known of the NCLT order on 04-07-2019, the appeal filed substantially later was time barred. The Tribunal also observed that if jurisdiction to entertain the appeal is lacking by reason of limitation, it need not examine merits of the resolution plan. [Paras 6, 7, 12, 13, 14]

The appeal is dismissed as time barred and the application for condonation of delay is rejected.

Final Conclusion: The Appellant's appeal against the approval of the resolution plan was dismissed as barred by limitation; the Tribunal found no legal impediment arising from the pending CERC proceedings that justified condonation of delay and therefore declined to examine the merits.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Corporate Insolvency Resolution Process (CIRP) - effect of moratorium on continuation of criminal proceedings - investigation constrained by pending CIRP

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - effect of moratorium on continuation of criminal proceedings - Whether the declaration of moratorium precludes continuation of criminal proceedings against the company or its directors in the circumstances of the present case. - HELD THAT: - The court recognised the principle, as observed by a co ordinate bench, that the declaration of moratorium under Section 14 does not, as a general proposition, prohibit continuation of criminal proceedings against a company or its directors. However, the court held that although a moratorium may not directly bar criminal proceedings in all circumstances, where the subject matter of the criminal investigation consists of transactions and components of loans that are integrally connected to and form part of the CIRP, the moratorium's operation limits further action. The court noted the distinction between the general legal position and the specific factual matrix where further police action would necessarily probe the company's transactions which are within the purview of the CIRP; consequently the moratorium's ambit in that context prevents continuation of investigative steps that would intrude upon the CIRP process. [Paras 2, 3, 4, 11]

While a moratorium under Section 14 does not universally bar criminal proceedings, in this case further criminal investigative steps are constrained because they would examine matters squarely within the CIRP.

Corporate Insolvency Resolution Process (CIRP) - investigation constrained by pending CIRP - Whether the police have taken sufficient steps and whether they may be directed to proceed further while the CIRP and its moratorium are in operation. - HELD THAT: - On the material placed by the police, the court found that the police had taken lawful and adequate steps up to the commencement of the CIRP and the moratorium, including service of notice under section 41A CrPC, registration of an FIR and examination of accused persons who made admissions regarding loans and guarantor status. The court observed that any continuation of investigation would necessarily involve inquiry into the company's transactions which are the subject matter of the CIRP and the orders passed by the NCLT. Given that further action would impinge upon matters falling within the CIRP, the police cannot be directed to take further steps until the CIRP culminates in a resolution or otherwise. On that basis the petitioners' grievance that the police were not taking sufficient steps was rejected. [Paras 8, 9, 10, 12, 13]

Police had taken sufficient steps before the moratorium; further investigation is to be deferred until the CIRP concludes, and the petitioners' complaint of inaction is accordingly not accepted.

Final Conclusion: Writ petition dismissed on contest: the police actions up to the commencement of the CIRP were sufficient and further investigative steps are restrained by the moratorium attendant to the pending CIRP until it is concluded.

Money laundering - proceeds of crime - placement, layering and integration - presumption under Section 24 of the PMLA - non-bailable and cognizable nature of offences under Section 45 of the PMLA - bail under Section 439 Cr.P.C. read with PMLA provisions - reversal of burden of proof - supplementary complaint pursuant to further investigation under Section 173(8) Cr.P.C.

Money laundering - proceeds of crime - presumption under Section 24 of the PMLA - non-bailable and cognizable nature of offences under Section 45 of the PMLA - bail under Section 439 Cr.P.C. read with PMLA provisions - reversal of burden of proof - Whether the petitioner is entitled to bail in the complaint under PMLA - HELD THAT: - The Court found on the material on record a prima facie case that the petitioner participated in the placement and layering of proceeds of crime and attempted to project tainted funds as untainted. The statutory scheme of the PMLA, including the presumption under Section 24 and the mandatory conditions for bail in Section 45, applies to bail applications even when moved under Section 439 Cr.P.C.; the accused must displace the statutory presumption. The petitioner's repeated non-cooperation with summons (attending only once out of multiple summons), alleged suppression of earlier adverse bail orders, pattern of transactions, signatures on self-cheques for cash withdrawals and other material lead the Court to conclude there are reasonable grounds to believe the offence is made out prima facie and that risks of flight, tampering with evidence or influencing witnesses exist. The petitioner's contentions on prior knowledge, retrospective application and alternative explanations for transfers were treated as fact questions to be tested at trial and insufficient at this stage to rebut the statutory presumption. [Paras 18, 19, 24, 25, 26]

Bail refused; the bail petition under Section 439 Cr.P.C. is dismissed.

Supplementary complaint pursuant to further investigation under Section 173(8) Cr.P.C. - investigation under special statutes like the PMLA - Whether the Enforcement Directorate was entitled to file a supplementary complaint after further investigation - HELD THAT: - The Court held that powers of "investigation" are not confined to police under the Cr.P.C. but extend to investigating agencies under special statutes; accordingly, the filing of a supplementary complaint after further investigation is permissible. The judgment relied on precedent recognizing that investigations by other agencies fall within the definition of investigation and observed that subsequent statutory clarification (explanation to Section 44(1) as inserted by Finance (No.2) Act 2019) treats complaints as including subsequent complaints arising from further investigation, reinforcing that the question is no longer res integra. [Paras 20]

Filing of a supplementary complaint by the Enforcement Directorate pursuant to further investigation is lawful and permissible.

Final Conclusion: The petition for bail is rejected: on the material produced the court finds a prima facie case of money laundering against the petitioner, the statutory presumption under Section 24 PMLA and the conditions of Section 45 PMLA apply and are not displaced; separately, the Enforcement Directorate is entitled to file a supplementary complaint after further investigation.

Confirmation of provisional attachment - possession and transfer of money under Section 8(4) of PMLA - Rule 4(5) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - bank guarantee as substitute for attached proceeds of crime - prima facie case for grant of interim status quo ante

Confirmation of provisional attachment - possession and transfer of money under Section 8(4) of PMLA - Rule 4(5) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - Legality of transferring the attached bank balance to the Enforcement Directorate after confirmation of the Provisional Attachment Order where the PAO prayed for maintenance/retention of balance. - HELD THAT: - On confirmation of the Provisional Attachment Order the statutory scheme in Section 8(4) of the PMLA becomes operative and must be read with the procedure prescribed by the Rules. Rule 4(5) expressly provides that where the confirmed property is money in a bank the Authorized Officer shall direct the bank to transfer and credit the money to the account of the Directorate of Enforcement. The Adjudicating Authority confirmed the PAO on a prima facie finding that the properties were proceeds of crime and involved in money laundering. The corrigendum to the PAO directing the bank to maintain balances did not oust the operation of Section 8(4) read with Rule 4(5). The respondent complied with the prescribed procedure and acted "forthwith" as envisaged by the statutory scheme. Consequently the transfer of the amount to the Enforcement Directorate was not illegal merely because the PAO had used language of maintaining/retaining balance.

Transfer of the attached bank amount to the Directorate of Enforcement under Section 8(4) read with Rule 4(5) was lawful and not illegal.

Bank guarantee as substitute for attached proceeds of crime - Whether the appellant's offer to furnish a bank guarantee should be accepted to permit retransfer or restoration of the transferred amount pending appeal. - HELD THAT: - The appellant offered to furnish a bank guarantee to secure the amount so that the funds could be used for commercial purposes pending adjudication. The Tribunal observed that the amount is alleged to be proceeds of crime and that the statutory scheme does not provide for substitution of the attached funds by a bank guarantee at the interim stage. Acceptance of such a substitution would be inappropriate when the property is claimed to be proceeds of crime. The respondent's refusal to accept the bank guarantee was held to be justified at this interlocutory stage, leaving the question open for determination on merits in the appeal.

The offer to furnish a bank guarantee was not accepted and cannot be allowed at the interim stage.

Prima facie case for grant of interim status quo ante - Whether the appellant had made out a prima facie case entitling him to an ad interim order restoring status quo ante (reversal of the transfer) pending the appeal. - HELD THAT: - To obtain an interim restoration of status quo ante the appellant had to demonstrate a prima facie case, balance of convenience and irreparable harm. The Tribunal examined the statutory scheme, the order of confirmation and the timing of transfer pursuant to Rule 4(5), and found that the appellant had not shown a prima facie legal infirmity in the transfer or that acceptance of a bank guarantee was permissible as a matter of law. The fact that the transfer occurred soon after service of the confirmation order and before expiry of the appeal period did not render the transfer illegal in view of the statutory power to take possession forthwith. On this basis the appellant failed to establish entitlement to interim relief.

The appellant did not make out a prima facie case for restoration of status quo ante; the application for ad interim reversal of transfer is dismissed.

Final Conclusion: The interim application for reversal of transfer and restoration of status quo ante is dismissed. The transfer of the attached bank amount to the Enforcement Directorate pursuant to confirmation of the Provisional Attachment Order and Rule 4(5) is held lawful; the appellant's offer of a bank guarantee is not accepted at the interlocutory stage. The appeal remains listed for final hearing on the posted date.

Exemption from filing certified/typed copies, notarised affidavits and physical court stamps - deposit of court fee by online mode with subsequent filing of physical stamp - transfer of funds pursuant to provisional attachment under the Prevention of Money Laundering Act, 2002 - security by way of bank guarantee in aid of appellate relief - expeditious consideration of appeals by the Appellate Tribunal

Exemption from filing certified/typed copies, notarised affidavits and physical court stamps - deposit of court fee by online mode with subsequent filing of physical stamp - Applications for exemption from filing certified/typed copies, notarised affidavits and immediate physical court stamps were allowed subject to conditions. - HELD THAT: - The Court accepted the request for exemption from filing physical certified/typed copies and notarised affidavits, binding the deponents to the contents of the affidavits. The petitioners were directed to deposit the court fee through online mode with the concerned authority within one week and to file the physical stamp within 72 hours from the date of resumption of regular court functioning, in accordance with the Court's Office Order dated April 04, 2020. The exemptions were therefore granted subject to those conditions. [Paras 1, 2, 3]

Exemption applications allowed; online deposit of court fee within one week and filing of physical stamp within 72 hours of resumption of court functioning.

Transfer of funds pursuant to provisional attachment under the Prevention of Money Laundering Act, 2002 - security by way of bank guarantee in aid of appellate relief - expeditious consideration of appeals by the Appellate Tribunal - Writ petitions seeking direction to restore transferred amounts were disposed of by directing the Appellate Tribunal to consider and dispose of the appeals/applications filed by the petitioners expeditiously; the court did not adjudicate the merits. - HELD THAT: - The petitioners challenged transfer of funds effected under an order of the Adjudicating Authority and had filed appeals before the Appellate Tribunal, which could not be heard earlier due to limited functioning amid the Covid-19 pandemic. The petitioners expressed willingness to secure the amount by bank guarantees. The High Court refrained from adjudicating the substantive claim for restitution and, instead, requested the Appellate Tribunal to consider and dispose of the appeals/applications as expeditiously as possible and preferably within three weeks. The petitioners were granted liberty to place this order before the Tribunal in support of their request for early hearing. There was no order as to costs. [Paras 4, 5]

Petitions disposed by directing the Appellate Tribunal to consider and dispose of the appeals/applications expeditiously, preferably within three weeks; petitioners to be at liberty to produce this order; no order as to costs.

Final Conclusion: Exemption applications were allowed subject to online payment of court fee and subsequent filing of physical stamp; the substantive petitions seeking restoration of transferred funds were not decided on merits and were disposed of by urging the Appellate Tribunal to hear and dispose of the appeals/applications expeditiously, with liberty to the petitioners to rely on this order.

Right to fair opportunity of hearing - personal hearing during COVID-19 lockdown - remand for fresh hearing - verification of pre-deposit/payment particulars - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - declaration verification by Designated Committee

Right to fair opportunity of hearing - personal hearing during COVID-19 lockdown - remand for fresh hearing - Validity of the Form SVLDRS-3 communication issued without affording a fair opportunity of personal hearing fixed during the COVID-19 lockdown. - HELD THAT: - The Court found that fixing a personal hearing on 07.05.2020 during the national lockdown, when offices (including those of the petitioner and the authority) were non-functional, did not constitute a fair opportunity of hearing. The petitioners had sought an opportunity to be heard (including by e-hearing), and the Designated Committee proceeded to issue Form SVLDRS-3 without providing a meaningful hearing. The Court did not adjudicate the merits of the petitioners' entitlement under the Scheme but held that procedural fairness required that the petitioners be given one opportunity to present their case in person before the Designated Committee. Consequently the impugned Form SVLDRS-3 was quashed and the matter was remitted to the Designated Committee for fresh personal hearing, with a direction to fix and intimate a date in writing and to pass a fresh order thereafter. [Paras 19, 21]

Form SVLDRS-3 quashed and set aside; matter remitted to the Designated Committee for fresh personal hearing and fresh decision.

Verification of pre-deposit/payment particulars - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - declaration verification by Designated Committee - Obligation of the Designated Committee to verify claimed pre-deposits/payments and accept any requisite payment despite expiry of the Scheme deadline where litigation caused delay. - HELD THAT: - The Court observed a factual dispute between the parties about whether amounts claimed to have been deposited by the petitioners were reflected in departmental records. The Court directed that the Designated Committee should verify the payments from departmental records while conducting the fresh hearing. Although the time limit for deposit under the Scheme had expired, the Court directed that if, after verification or in consequence of the fresh hearing, any amount is found to be payable, the Department shall accept the payment notwithstanding the elapsed deadline, having regard to the pendency of the litigation before the Court. The Court did not decide on the correctness of the petitioners' claim of prior deposits; it left verification and consequential determination to the Designated Committee. [Paras 21]

Designated Committee to verify payment particulars and, if any amount is found payable, accept payment despite expiry of the Scheme deadline; verification and decision to follow the fresh hearing.

Final Conclusion: The impugned Form SVLDRS-3 is quashed; the matter is remitted to the Designated Committee, Ahmedabad-South for a fresh, recorded personal hearing and verification of payment particulars, with the exercise to be completed within six weeks and provision that any required payment shall be accepted despite the Scheme deadline due to pendency of litigation.

Entitlement to CENVAT credit for services used in or in relation to manufacture - interpretation of "input service" under Rule 2(l) of CENVAT Credit Rules, 2004 after deletion of "setting up" - nexus between leasing/renting of immovable property for factory site and manufacture - scope of inclusions and exclusions in definition of input service

Entitlement to CENVAT credit for services used in or in relation to manufacture - interpretation of "input service" under Rule 2(l) of CENVAT Credit Rules, 2004 after deletion of "setting up" - nexus between leasing/renting of immovable property for factory site and manufacture - Whether CENVAT credit is admissible on amounts paid for infrastructure development agreement and lease/maintenance (classified as renting of immovable property service) used to obtain land and infrastructure for setting up the factory after deletion of the words "setting up" from the enlarged portion of Rule 2(l). - HELD THAT: - The court examined the three-part structure of the definition of "input service" under Rule 2(l): (i) services used by a manufacturer directly or indirectly in or in relation to manufacture and clearance up to the place of removal; (ii) an enlarged inclusive list (previously including "setting up", which was deleted with effect from 01.04.2011); and (iii) an exclusions clause. The deletion of the words "setting up" removed that term from the enlarged inclusive limb but did not place services used in setting up into the exclusions. Consequently, services used for setting up were neither specifically included in the enlarged limb nor specifically excluded. The court held that the principal, overarching limb-services used by a manufacturer directly or indirectly in or in relation to manufacture-is wide enough to cover services used to obtain land on lease and related infrastructure development, since without leasing the plot and requisite infrastructure a factory could not be established and manufacture could not commence. Finding a direct nexus between the disputed services and manufacture of final products, the court concluded that such services fall within the definition of "input service" and CENVAT credit is therefore admissible. [Paras 11, 12]

Appellant entitled to CENVAT credit on the disputed amounts; impugned order set aside and appeal allowed.

Final Conclusion: Where the enlarged inclusion in Rule 2(l) omitted the words "setting up" but the exclusion clause did not exclude services used for setting up, the principal limb of the definition-services used by a manufacturer directly or indirectly in or in relation to manufacture-covers payments for leasing land and related infrastructure development; CENVAT credit in respect of the disputed services is admissible and the appeal is allowed.

Statutory time limit - condonation of delay - strict interpretation of exemption notification - burden of proof on the claimant - special rate of value addition

Statutory time limit - condonation of delay - Whether delay in making the application could be condoned beyond the condonable period prescribed by the notification. - HELD THAT: - The Tribunal applied the Supreme Court precedent in Singh Enterprises which holds that where a statute prescribes a specific condonable period, the appellate or executive authority has no power to extend condonation beyond that statutory limit. The notification allowed an initial period until 30th September and a further condonable period of 30 days ending 30th October; this statutory scheme excludes reliance on Section 5 of the Limitation Act to extend time further. The appellant's application, though dated 30.10.2009, was submitted on 03.11.2009, i.e., beyond the condonable period. Consequently the Commissioner was correct to reject the application on the ground of limitation without adjudicating the merits. [Paras 8]

Delay could not be condoned beyond the statutory condonable period and the late application was rightly rejected as time-barred.

Strict interpretation of exemption notification - burden of proof on the claimant - special rate of value addition - Whether the conditions of the exemption notification can be ignored so as to grant a higher rate of refund despite non-compliance with the prescribed application timeline. - HELD THAT: - Relying on the Constitutional Bench decision in Dilip Kumar & Co., the Tribunal held that exemption notifications must be interpreted strictly and the assessee bears the burden of proving applicability. Where the notification prescribes the condition of making the application by 30th September (with a 30-day condonable extension), that condition is mandatory for entitlement to a higher rate. Ambiguities in an exemption notification are to be resolved in favour of the revenue. Since the appellant failed to comply with the notification's time condition, the claim for a higher special rate could not be entertained. [Paras 9, 10]

The notification's conditions are mandatory and, absent compliance with the prescribed timeline, entitlement to the higher rate cannot be granted; the claim was thus rightly refused.

Final Conclusion: The Tribunal upheld the Commissioner's rejection of the application as time-barred and, applying the rule of strict construction of exemption notifications with the burden on the claimant, dismissed the appeal and upheld the impugned order.

Limitation for assessments under section 29(4) of the Punjab Value Added Tax Act, 2005 - time barred notices and assessments - best judgment assessment under section 29(2) - amendment extending limitation period to six years and its prospective application - amendment/amendatory memo cannot override statutory limitation - power to amend assessment in case of fraud under section 29(7) - supervisory/revisionary power of Commissioner under section 65 - exercise of writ jurisdiction under Article 226 and exceptions to alternative remedy rule (violation of natural justice, want of jurisdiction, fundamental rights)

Limitation for assessments under section 29(4) of the Punjab Value Added Tax Act, 2005 - time barred notices and assessments - annual statement filing deadline under Rule 40 - Notices and assessment orders issued in 2019 under section 29(2) in respect of assessment years 2008-09 to 2010-11 were beyond the statutory limitation and are liable to be quashed. - HELD THAT: - The court examined the limitation scheme applicable to assessments under section 29. For the relevant years the limitation for making assessments under sub sections (2) and (3) was, as the court proceeded on the assumed position, a period of six years from the date when the annual statement was filed or was due to be filed. Rule 40 required filing of the annual statement by 20th November of the relevant year; for AY 2010-11 the last date was 20.11.2011 and the six year limitation expired on 19.11.2017. All impugned notices were issued in 2019, i.e., after the expiry of the limitation period. The respondents did not dispute that the notices were issued under section 29(2) and after the limitation period. In these circumstances the notices and the assessment orders founded on such notices were held to be time barred and were set aside. [Paras 6, 7, 8, 11, 16]

Impugned notices and assessment orders issued in 2019 under section 29(2) for AYs 2008-09 to 2010-11 are time barred and are quashed.

Power to amend assessment in case of fraud under section 29(7) - best judgment assessment under section 29(2) - amendment/amendatory memo cannot override statutory limitation - supervisory/revisionary power of Commissioner under section 65 - The respondents' reliance on an administrative memo and on allegations of fraud did not validate proceedings under section 29(2) beyond limitation; the statutory route for dealing with fraud is section 29(7) (amendment of an assessment) or supervisory action under section 65. - HELD THAT: - The respondents contended that assessments/computer entries were fraudulently finalised and relied on an administrative memo instructing issuance of statutory notices. The court observed that the memo directed officers to issue statutory notices 'as per provisions of the Act' but cannot supplant statutory limitation or the specific statutory remedy. If there was an earlier assessment, proceedings under section 29(2) (best judgment assessment) were inappropriate; section 29(7) provides the mechanism to amend an assessment on discovery of fraud, and section 65 confers supervisory powers on the Commissioner to call for and revise proceedings. No action under section 29(7) had been taken; reliance on the memo therefore did not cure the limitation bar. Consequently the contention of fraud did not validate the belated actions taken under section 29(2). [Paras 10, 12, 13, 14, 15]

Allegations of fraud and the administrative memo did not render the section 29(2) notices valid beyond limitation; respondents should have proceeded under section 29(7) or section 65, which was not done.

Exercise of writ jurisdiction under Article 226 and exceptions to alternative remedy rule - High Court entertained the writ petitions despite availability of statutory remedies because the notices were beyond limitation and thus the petitions fell within exceptions permitting interference under Article 226. - HELD THAT: - While interference under Article 226 is ordinarily avoided where efficacious statutory remedies exist, the court noted established exceptions where writ jurisdiction may be exercised - enforcement of fundamental rights, breach of principles of natural justice, orders wholly without jurisdiction, or where vires is challenged. Here the admitted fact that notices were beyond limitation made interference appropriate; accordingly the court set aside the impugned notices and assessment orders. [Paras 15, 16]

Writ petitions were entertained and allowed because the impugned notices/assessments were time barred, falling within recognised exceptions to the rule of withholding writ relief.

Continuation of proceedings in accordance with law - Respondents are at liberty to proceed against petitioners in accordance with law notwithstanding quashing of the impugned notices, subject to compliance with statutory procedures and limitation rules. - HELD THAT: - The court clarified that its order setting aside time barred notices does not preclude the respondents from taking action in accordance with law if so advised. Any such action must conform to the statutory provisions (including appropriate reliance on section 29(7) or section 65 where applicable) and not be founded on the impugned time barred notices. [Paras 17]

Liberty granted to respondents to proceed in accordance with law.

Administrative convenience and status report in large scale alleged fraud - One petition from the bunch has been kept pending for the respondents to file a status report concerning the magnitude and aspects of the alleged fraud. - HELD THAT: - Given the pleaded magnitude of the alleged fraud and the number of cases involved, the court exercised discretion to keep one matter pending to enable the respondents to file a status report detailing various aspects of the matter so that appropriate further action (if any) may be considered. [Paras 19]

A single petition is retained for filing of a status report by the respondents regarding the alleged large scale fraud; other writ petitions are allowed.

Final Conclusion: Writ petitions challenging notices and assessments issued in 2019 under section 29(2) for assessment years 2008 09 to 2010 11 are allowed: the impugned notices and assessment orders are quashed as time barred. Respondents retain the liberty to proceed in accordance with law (including appropriate use of section 29(7) or section 65), and one petition is kept pending for a status report on the alleged large scale fraud.

Condonation of delay under proviso to Section 142 of the Negotiable Instruments Act - cognizance of offence under Section 142 - requirement of notice and receipt for offence under Section 138 - exercise of judicial discretion in condoning delay - remand for disposal in accordance with law

Condonation of delay under proviso to Section 142 of the Negotiable Instruments Act - requirement of notice and receipt for offence under Section 138 - exercise of judicial discretion in condoning delay - Whether the delay in filing the complaint could be condoned and the trial Court erred in dismissing the complaint for delay. - HELD THAT: - The Court examined the material placed before it which established that the complainant issued the registered notice on 27-10-2009, did not receive postal acknowledgement, lodged an enquiry with the Post Office and received an endorsement on 04-01-2010 stating service on 28-10-2009. The Court construed the proviso to Section 142 (inserted w.e.f. 6-2-2003) as permitting condonation of delay if sufficient cause is shown. The trial Court's reliance on the decision in T.S. Murlidhar was found misplaced because in that case no application for condonation was filed before cognizance was taken; by contrast, here the complainant filed I.A.No.1 (erroneously citing Section 141) seeking condonation and produced the postal endorsement as the reason for delay. The Court held that the complainant's explanation that he only became aware of service on 04-01-2010 is not unreasonable; the further delay of approximately thirteen days in presenting the complaint (filed 18-01-2010) was not inordinate such as to bar condonation or to deprive the complainant of the right to have the matter tried on merits. The Court further observed that dismissal on such technicality would preclude adjudication on merits and that no prejudice to the accused was shown by condoning the delay. On this basis the Court exercised its discretion to condone the delay and found the trial Court's order dismissing the complaint to be erroneous. [Paras 15, 17, 18, 20, 22]

The delay in filing the complaint is condoned and the trial Court's order dismissing the complaint for delay is set aside.

Cognizance of offence under Section 142 - remand for disposal in accordance with law - Whether the matter should be restored and remitted to the trial Court for trial. - HELD THAT: - Having found that the condonation of delay was justified and that the trial Court wrongly dismissed the complaint, the High Court restored the private complaint to the file. The Court remitted the matter to the trial Court to proceed with cognizance and trial in accordance with law, keeping all contentions of the parties open so that the accused may contest the matter on merits. Directions were given for the parties to appear and assist the trial Court expeditiously. [Paras 21, 23]

The complaint is restored and remitted to the trial Court for disposal in accordance with law; parties to appear before the trial Court within thirty days.

Final Conclusion: The appeal is allowed; the trial Court's order dismissing the complaint for delay is set aside, the delay in filing the complaint is condoned, the private complaint is restored to file and remitted to the trial Court for trial in accordance with law.