TaxTMI Updates e-Newsletter
Jul 26,2021

Lease/renting of goods treated as supply of services between distinct registrations - deemed distinct persons under Section 25(4) - transaction value and Rule 28 second proviso (invoice value as open market value where recipient avails full ITC) - transportation of goods without invoice - delivery challan and e-way bill (Rule 55 and Rule 138) - movement pursuant to new lease or sub-lease constitutes supply; facilitation/arrangement services taxable

Lease/renting of goods treated as supply of services between distinct registrations - deemed distinct persons under Section 25(4) - Transfer of pallets, crates and containers by CIPL, Karnataka to its other State registrations (e.g. CIPL, Kerala) on lease is a supply and is taxable as supply of services. - HELD THAT: - The Authority held that for GST purposes different State registrations of the same company are to be treated as distinct persons under Section 25(4). Where specific goods are sent on lease pursuant to an agreement between such registrations without transfer of ownership, the transaction falls within Schedule II as a transfer of right in goods without transfer of title and is therefore a supply of services (lease/renting) taxable under the Act. The conclusion follows from the combined operation of Section 7(1), Schedule II and Section 25(4), notwithstanding that under company or income tax law assets are held by the company as a whole. [Paras 15]

Such intra company transfers on lease between State registrations are lease transactions and taxable as supply of services.

Transaction value and Rule 28 second proviso (invoice value as open market value where recipient avails full ITC) - Value on which GST is to be charged for leases between distinct registrations is the value declared in the invoice. - HELD THAT: - Because the supplies are between deemed distinct persons and the recipient is eligible to take full input tax credit, the second proviso to Rule 28 applies: the value declared in the invoice is to be treated as the open market value and hence as the value of supply under Section 15 read with the Valuation Rules. Transaction value under Section 15(1) is not available where parties are related/distinct registrations, so Rule 28 governs and the invoice value is determinative here. [Paras 16]

GST is to be charged on the value declared in the invoice issued by the applicant.

Transportation of goods without invoice - delivery challan and e-way bill (Rule 55 and Rule 138) - Documents to accompany movement of goods from CIPL, Karnataka to CIPL, Kerala are a delivery note (delivery challan) and an e-way bill. - HELD THAT: - The Authority observed that the leasing arrangement is a supply of services and movement of the goods at the time of removal may occur without issuance of the tax invoice. Rule 55 permits issuance of a delivery challan in lieu of invoice for transportation where invoice is not issued at removal; Rule 138 requires generation of an e way bill where consignment value exceeds the prescribed threshold. Consequently, the consignor must issue a delivery note under Rule 55 and generate an e way bill under Rule 138, and the consignment value for e way bill purposes is the market value of the goods as determined under Section 15/valuation rules. [Paras 17]

Movement from Karnataka to Kerala must be accompanied by a delivery note and e way bill for the goods transported.

Movement pursuant to new lease or sub-lease constitutes supply; facilitation/arrangement services taxable - transportation of goods without invoice - delivery challan and e-way bill (Rule 55 and Rule 138) - Movement of equipment from CIPL, Kerala to CIPL, Tamil Nadu on instruction of CIPL, Karnataka is not necessarily a 'mere movement' outside supply; it may constitute a supply by CIPL, Karnataka or by CIPL, Kerala depending on contractual terms, and facilitation services by CIPL, Kerala are taxable. - HELD THAT: - The Authority explained two scenarios. If CIPL, Karnataka terminates the lease with Kerala and immediately enters a lease with Tamil Nadu (instructing Kerala to forward the goods), the movement is part of a separate supply by CIPL, Karnataka to CIPL, Tamil Nadu - effectively return and re lease - and is taxable as supply by CIPL, Karnataka; CIPL, Karnataka should issue the delivery note/e way bill (ship from Kerala to Tamil Nadu) for those goods. Alternatively, if CIPL, Kerala sub leases to CIPL, Tamil Nadu, then the movement arises from Kerala's lease and is taxable in Kerala's hands, with Kerala issuing the delivery note/e way bill. Further, where Kerala merely facilitates transportation on instructions (acting as agent/bailee), the facilitation/arrangement service provided by Kerala to Karnataka is exigible to GST. [Paras 18]

Whether the movement is a mere movement or a taxable supply depends on which lease (or sub lease) or contractual arrangement causes the movement; facilitation services by the intermediate branch are taxable. Documents (delivery note and e way bill) must be issued by the supplier whose contract occasions the movement.

Final Conclusion: The Authority ruled that intra company transfers of specific equipment on lease between State registrations are taxable as supply of services (lease) for GST purposes; GST is chargeable on the invoice value (Rule 28 proviso) where the recipient avails full ITC; movements accompanying such leases must be supported by delivery challan and e way bill; movements to a third State on instruction may constitute a separate taxable supply by the owner registration or a supply/sub lease by the intermediary registration, and any facilitation service is taxable.

Striking off of GST registration for non-payment of interest on delayed GSTR-3B returns - permit payment of tax/interest liability in instalments as a discretionary relief in special circumstances - restoration of GST registration upon clearance of outstanding dues - expedited disposal of representation by tax authority

Striking off of GST registration for non-payment of interest on delayed GSTR-3B returns - restoration of GST registration upon clearance of outstanding dues - Registration struck off for non-payment of interest is liable to be restored on payment of outstanding interest liability. - HELD THAT: - The court records that the registration of the petitioner was struck off due to non-payment of interest liability for delayed filing of returns GSTR-3B for the period October 2018 to April, 2020. It was accepted on the record that once the outstanding interest liability is paid, the respondent authority will restore the petitioner's registration. The court accordingly directed that if the dues are cleared as per the direction of the concerned authority, restoration of registration shall follow immediately.

Registration will be restored immediately upon clearance of the outstanding interest liability for the stated period.

Permit payment of tax/interest liability in instalments as a discretionary relief in special circumstances - expedited disposal of representation by tax authority - The petitioner may apply to the concerned authority to pay the stated interest liability in instalments; the authority is directed to consider and dispose of the representation within seven days. - HELD THAT: - Recognising the petitioner's assertion of financial difficulty and the consequences of de-registration on recovery of contractual dues, the court exercised its supervisory jurisdiction to require the petitioner to make a representation to respondent No.3 seeking permission to pay the interest liability in instalments as a special case, having regard to the Covid-19 pandemic. The court commanded that the representation, accompanied by a copy of the order, shall be disposed of by the respondent within an outer limit of seven days from receipt. This constitutes a remand to the authority for fresh and expedited consideration of an instalment request rather than an adjudication on the merits of any particular instalment plan.

Petitioner to file representation for instalment payment; respondent No.3 to decide the representation within seven days, and consider instalment relief as a special case in light of the pandemic.

Final Conclusion: Writ petition disposed of at motion stage: petitioner to approach respondent No.3 for permission to pay outstanding interest for October 2018 to April, 2020 in instalments; respondent to dispose of the representation within seven days; upon payment of dues as directed, petitioner's GST registration shall be restored immediately.

Reopening of assessment beyond four years under proviso to Section 147 - reason to believe - disclosure fully and truly - explanation 1 to Section 147 - reopening within six years on account of undisclosed income - reopening based on change of opinion - scope of judicial review in writ proceedings

Reopening of assessment beyond four years under proviso to Section 147 - reason to believe - disclosure fully and truly - explanation 1 to Section 147 - reopening within six years on account of undisclosed income - Validity of reopening assessment for AY 2006-2007 beyond four years but within six years on the basis of alleged non-disclosure of retention monies and whether material relied upon qualifies as fresh tangible material under the proviso to Section 147. - HELD THAT: - The Court held that the scheme of the Act permits reopening within six years only if the proviso to Section 147 and its explanations are satisfied; explanation 1 recognises that production of books does not necessarily amount to disclosure if the Assessing Officer can, with due diligence, cull out fresh information. The authority to form an opinion exists where there is reason to believe that material facts were not fully and truly disclosed and various factual circumstances in explanation 2 identify instances of under-assessment. The Assessing Officer in the rejection order recorded that retention monies were claimed as expenditure and that there had been non-disclosure in returns, annual reports and audit reports, thereby furnishing reasons to believe that income chargeable to tax had escaped assessment. The Court emphasised that the determination whether the material constitutes fresh tangible information is a matter for the Assessing Officer to adjudicate in the reassessment process. [Paras 5, 6, 8]

Reopening beyond four years for AY 2006-2007 was held to fall within the proviso to Section 147 on the recorded reasons; sufficiency for reopening is for the tax authority to examine in assessment proceedings.

Scope of judicial review in writ proceedings - reason to believe - reopening based on change of opinion - Extent to which High Court may interfere with reassessment proceedings initiated under Section 147 in writ jurisdiction. - HELD THAT: - The Court reiterated that routine intervention is not desirable and the High Court's role in writ proceedings is confined to examining whether the mandatory condition of reason to believe is satisfied and whether the recorded reasons disclose a prima facie justification for reopening. The sufficiency of reasons and adjudication of disputed factual intricacies, including accounting treatment and whether nondisclosure actually occurred, are questions of fact to be determined by the Assessing Officer and not by the High Court in writ proceedings. Consequently, the High Court will not re-decide factual controversies or substitute its view on merits where the Assessing Officer has recorded reasons to form an opinion. [Paras 5, 9]

High Court limited to scrutiny of the recorded reasons for existence of a prima facie basis; it will not adjudicate merits of the factual disputes in a writ petition.

Reopening of assessment beyond four years under proviso to Section 147 - reopening within six years on account of undisclosed income - scope of judicial review in writ proceedings - Effect of subsequent ITAT reversal of the assessment for AY 2009-10 on the validity of reopening AY 2006-07. - HELD THAT: - The Court observed that reversal of the AY 2009-10 assessment by the Tribunal does not automatically negate the reasons recorded for reopening AY 2006-07. The applicability and relevance of the Tribunal's findings as to materials and disclosures must be considered by the Assessing Officer during reassessment; the High Court will not preclude the reassessment on the basis of the Tribunal order but left it open for the petitioner to establish those contentions before the Assessing Officer in the reassessment process. [Paras 4, 10]

ITAT's later reversal of AY 2009-10 does not, by itself, invalidate the reopening of AY 2006-07; relevance of that order is for consideration by the Assessing Officer in proceedings.

Disclosure fully and truly - reason to believe - Obligation of the assessee to cooperate and produce documents during reassessment proceedings. - HELD THAT: - The Court noted that the assessee had opportunities under the Act to submit books and explanations and that, where reassessment is initiated, the assessee is bound to cooperate by producing relevant documents. The Court directed that the Assessing Officer afford opportunities and complete the reassessment expeditiously, indicating that procedural fairness and chance to be heard are to be observed in the reassessment process. [Paras 2, 9]

Assessee must cooperate and produce relevant materials; Assessing Officer to afford opportunity and conclude reassessment expeditiously.

Final Conclusion: The writ petition was dismissed; the High Court confined its role to scrutiny of the recorded reasons for reopening and declined to reappraise the merits, leaving factual adjudication and completion of reassessment for the revenue authorities with directions to afford opportunity to the assessee and proceed expeditiously.

Income from business - lease rent income - rents from industrial park/SEZ with amenities assessed as business income - services rendered by landlord and characterization as business - deduction under Section 80IA - interest deductible under Section 36(1)(iii) as business expenditure

Income from business - lease rent income - rents from industrial park/SEZ with amenities assessed as business income - Lease rent income from letting out modules of a Software Technology Park constitutes income from business and is taxable under the head Profits and Gains of Business - HELD THAT: - The Court accepted the view of the Division Bench in earlier decisions and the CBDT circular relied upon therein that where an undertaking lets out premises in an industrial park/SEZ along with other facilities and amenities, the receipts fall within the nature of business receipts and are to be assessed as profits and gains of business rather than as income from house property or income from other sources. The High Court followed the ratio in the cited Division Bench judgment and the reasoning that emphasis is on letting out together with provision of facilities/amenities which transforms the character of the receipts into business income.

Answered against the Revenue and in favour of the assessee; lease rent income is business income.

Services rendered by landlord and characterization as business - income from business - Services rendered by the landlord in relation to letting out modules with amenities do not preclude characterization of the receipts as business income - HELD THAT: - Following the Division Bench precedent, the Court held that the provision of services/amenities by the landlord in the context of an industrial park/SEZ is part of the business activity of letting developed space and does not convert the receipts into a non-business character. The Court observed that where letting is accompanied by services and facilities integral to the park's functioning, such receipts partake the character of business.

Answered against the Revenue and in favour of the assessee; landlord's services do not prevent classification as business income.

Interest deductible under Section 36(1)(iii) as business expenditure - deduction under Section 80IA - Interest claimed under Section 36(1)(iii) and claim of deduction under Section 80IA are to be treated in the hands of the assessee as business-related deductions consistent with classification of the receipts as business income - HELD THAT: - By following the Division Bench authorities and the CBDT circular, the Court concluded that once the receipts from letting out in a software technology park are classified as business income, related expenditure including interest under Section 36(1)(iii) is allowable to the extent it is expended for the purpose of that business, and the undertaking's eligibility for deduction under Section 80IA follows from its business character. The Court applied the established ratio rather than re-examining factual particulars.

Answered against the Revenue and in favour of the assessee; interest and related deductions to be treated as business deductions and claim for Section 80IA allowed consistent with business classification.

Final Conclusion: Following the Division Bench precedent and the CBDT circular relied upon therein, the High Court dismissed the Revenue's appeals and answered the substantial questions of law against the Revenue and in favour of the assessee, holding that receipts from letting out modules in the Software Technology Park with amenities are business income and related interest and Section 80IA consequences follow accordingly.

Deduction under Section 10B for export profits - exports effected through third parties - deemed exports under EXIM Policy treated as export for tax deduction - precedential effect of High Court decisions

Deduction under Section 10B for export profits - exports effected through third parties - Exports made through third parties are entitled to deduction under Section 10B of the Income Tax Act on the facts of the case. - HELD THAT: - The Court noted that it was not disputed that the assessee exported goods through a third party. Relying on earlier Division Bench decisions of this Court, the Court held that exports effected through a third party do not disentitle the assessee from claiming deduction under Section 10B. The tribunal failed to take these precedents into account and therefore its contrary conclusion was held to be unsustainable.

Answered in favour of the assessee; the tribunal's findings to the contrary are quashed.

Deemed exports under EXIM Policy treated as export for tax deduction - deduction under Section 10B for export profits - Sales to third parties and to other 100% Export Oriented Units that are treated as deemed exports under the EXIM Policy are to be regarded as exports for the purpose of claiming deduction under Section 10B. - HELD THAT: - The Court applied the reasoning of earlier Division Bench rulings which treated deemed exports under the EXIM Policy as exports for Section 10B purposes. On that basis, sales characterized as deemed exports were held to qualify for the deduction, and the tribunal's refusal to apply that principle was set aside.

Answered in favour of the assessee; the tribunal's contrary conclusion is quashed.

Precedential effect of High Court decisions - The tribunal erred in ignoring this Court's decision in Tata Elxsi v. ACIT, and that omission rendered its order perverse. - HELD THAT: - The Court observed that the tribunal did not take note of the jurisdictional High Court decision in Tata Elxsi v. ACIT, which is relevant to the questions under consideration. For that reason the Court answered the identified substantial question affirmatively and indicated that the tribunal's failure to consider the precedent undermined its conclusion.

Answered in the affirmative in favour of the assessee; the tribunal's omission was a legal error.

Final Conclusion: The common order of the Tribunal dated 15.03.2017 is quashed insofar as it rejects the assessee's claims under Section 10B for Assessment Years 2009-10 and 2010-11; the appeal is allowed.

Reopening of assessment under Section 147/148 - Time bar for reassessment (six years) - Reason to believe that income has escaped assessment - Failure to disclose material facts - Requirement to furnish reasons and afford opportunity to the assessee - Duty to pass a speaking order on objections (GKN Driveshafts principle)

Reopening of assessment under Section 147/148 - Time bar for reassessment (six years) - Reason to believe that income has escaped assessment - Validity of the notice issued under Section 148 dated 07.03.2011 for Assessment Year 2004 - 05 and whether reassessment was time-barred - HELD THAT: - The Court examined the dates of issuance and service of the notice and the statutory six-year limitation. The respondents stated that the notice was issued on 07.03.2011 and served on the assessee on 16.03.2011, while the last date for reopening was 30.03.2011. The reasons recorded show that the Assessing Officer had formed a reason to believe that income chargeable to tax had escaped assessment by virtue of (i) incorrect treatment of VRS payments vis-a -vis the amortisation allowed under the statute and (ii) omission of certain incomes affecting the computation of deduction under the relevant provision, thereby resulting in short collection of tax. On this basis the Court concluded that the impugned notice was issued within the six-year period and was not time barred, and that the Assessing Officer had articulated sufficient grounds to invoke reassessment proceedings under Section 147/148. [Paras 10, 11, 12, 13]

The notice under Section 148 dated 07.03.2011 was held to be within the statutory six year period and therefore valid; no jurisdictional infirmity was found on the ground of time bar.

Requirement to furnish reasons and afford opportunity to the assessee - Failure to disclose material facts - Duty to pass a speaking order on objections (GKN Driveshafts principle) - Whether the petitioner had made out grounds to quash the reassessment proceedings despite having been furnished reasons and whether the Assessing Officer must consider objections and pass a speaking order - HELD THAT: - The petitioner contended there was no failure to disclose material facts and that consequential reopening was unjustified. The Court observed that reasons for reopening were supplied on 19.04.2011 identifying specific discrepancies (VRS treatment and omitted incomes affecting the computation of deduction). The Court recorded that, having received reasons within time, the assessee was required to submit objections and materials; if objections were filed, they must be considered and disposed of by a speaking order in accordance with the principle laid down in GKN Driveshafts. Since the petitioner had not established an acceptable ground to intervene with the reassessment proceedings, the remedy was to participate in the process and have objections adjudicated by the Assessing Officer. [Paras 11, 13, 14]

Petitioner's challenge was rejected; the assessee was directed to file objections if any and the Assessing Officer to consider them and pass a speaking order; absence of a substantive ground to quash reassessment led to dismissal of the writ.

Final Conclusion: The writ petition was dismissed: the notice under Section 148 was held to be validly issued within the six year period and the petitioner was directed to avail the statutory opportunity to file objections, which the Assessing Officer must consider and decide by a speaking order; no interference with the reassessment proceedings was warranted.

Faceless assessment procedure under Section 144B - mandatory show-cause/draft assessment opportunity - principles of natural justice - assessment rendered non est for failure to follow statutory procedure - setting aside assessment and consequential notices with liberty to fresh assessment

Faceless assessment procedure under Section 144B - mandatory show-cause/draft assessment opportunity - principles of natural justice - Assessment completed without issuance of the mandatory draft assessment order/show-cause notice under Section 144B and thereby in violation of principles of natural justice. - HELD THAT: - The Court considered the scheme of Section 144B, including the obligation of the National Faceless Assessment Centre to either finalise an assessment where no prejudicial variation is proposed or to serve a show-cause notice calling upon the assessee to reply where a prejudicial variation is proposed. The Court found that no draft assessment order or show-cause notice was issued in the present case and that the respondents' reliance on having given informal or prior opportunities did not substitute for the mandatory procedure prescribed by Section 144B. For assessments made on or after 1 April 2021, Section 144B(9) renders assessments not made in accordance with the procedure non est. Applying these principles, the Court held that the assessment was completed contrary to the statutory procedure and the rules of natural justice. [Paras 5, 8, 9]

The Court held that the assessment was completed in breach of Section 144B and principles of natural justice and therefore the assessment cannot stand.

Assessment rendered non est for failure to follow statutory procedure - setting aside assessment and consequential notices with liberty to fresh assessment - Consequences of the statutory breach: whether the impugned assessment, demand notice and penalty notices should be set aside and whether respondents may pass a fresh assessment. - HELD THAT: - Having found the procedure mandated by Section 144B was not followed, the Court set aside the impugned assessment order dated 11 June 2021 together with the accompanying notice of demand and notices initiating penalty proceedings. The Court applied the statutory provision that assessments not made in accordance with Section 144B(9) are non est and accordingly quashed the existing orders. However, the Court granted the revenue liberty to proceed afresh and pass an assessment in accordance with law and permitted the petitioner to challenge any future action if aggrieved, thereby leaving scope for re-adjudication strictly following the prescribed procedure. [Paras 10]

Impugned assessment, demand notice and penalty notices set aside; respondents permitted to pass fresh assessment strictly in accordance with law, and petitioner granted liberty to challenge future action.

Final Conclusion: The assessment order dated 11 June 2021, the accompanying demand notice and the notices initiating penalty proceedings are quashed for failure to follow the mandatory faceless assessment procedure under Section 144B and principles of natural justice; the revenue may pass a fresh assessment in accordance with law and the petitioner retains the right to seek remedies against any future action.

Quashing of criminal proceedings under inherent powers - Prima facie triable issues - Ingredients of criminal offences on complaint - Mens rea as a triable fact - Inherent jurisdiction under Section 482 of the Code of Criminal Procedure - Quashing only in rarest of rare cases

Prima facie triable issues - Ingredients of criminal offences on complaint - Mens rea as a triable fact - Whether the allegations in the charge sheet disclose prima facie offences against the petitioner such as to require trial and defeat a petition under the High Court's inherent jurisdiction. - HELD THAT: - The Court examined the charge sheet allegations that the petitioner donated during financial year 2015-16 and claimed exemption in assessment year 2016-17 by producing a certificate alleged to be fake, and that he formed part of a wider conspiracy to claim bogus deductions. The return dates, claimed exemption, subsequent withdrawal of the claim and the departmental action are matters recounted in the charge sheet. On a prima facie reading, these averments disclose ingredients of offences and raise triable questions, including the existence of mens rea, the genuineness of the certificate and whether the withdrawal of the claim was an afterthought. Defences and counter-assertions by the petitioner are matters for trial; they do not justify quashing at threshold where the complaint on its face raises triable issues. [Paras 7, 8, 9, 10]

The allegations disclose prima facie offences and triable issues; the petitioner must face trial to prove innocence.

Quashing of criminal proceedings under inherent powers - Inherent jurisdiction under Section 482 of the Code of Criminal Procedure - Quashing only in rarest of rare cases - Whether the High Court should exercise its inherent jurisdiction under Section 482 Cr.P.C. to quash the proceedings in C.C.No.8140 of 2020 (referred later as C.C.No.8410 of 2020). - HELD THAT: - Applying Supreme Court authority that quashing is appropriate only where complaints disclose no offence or are frivolous, vexatious or oppressive, and that High Courts must exercise Section 482 powers with extreme caution, the Court held that the present matter does not warrant interference. Given the existence of serious allegations and multiple triable issues (including alleged large tax advantage to the public exchequer and the timing of withdrawal of the claim), the petition to quash cannot be allowed. The correctness of the allegations is to be tested at trial; preliminary consideration does not justify stifling the prosecution. [Paras 11, 12, 13]

The petition under Section 482 Cr.P.C. to quash the criminal proceedings is refused; proceedings shall continue.

Final Conclusion: The Criminal Petition under Section 482 Cr.P.C. is dismissed: the charge sheet allegations disclose prima facie offences and several triable issues, and the High Court will not quash the proceedings at this stage in view of settled Supreme Court principles reserving quashing to rare cases.

Reopening of assessment beyond four years - reason to believe - failure to disclose fully and truly all material facts - new information / tangible material - change of opinion - Explanation 1 to Section 147 - GKN Driveshafts (India) Ltd. - scope of judicial review under Article 226

Reopening of assessment beyond four years - reason to believe - failure to disclose fully and truly all material facts - new information / tangible material - Validity of reopening assessment for Assessment Year 2010-11 under Section 147 beyond four years - HELD THAT: - The Court held that the proviso to Section 147 requires that reopening beyond four years must be predicated on a reason to believe that income has escaped assessment by reason of failure to make a return or to disclose fully and truly all material facts. The Assessing Officer recorded information that payments had been made to a number of entities which were 'not genuinely engaged' in the business alleged and that purchases and depreciation claimed would require disallowance; on that basis the AO formed a reason to believe that income had escaped assessment. The Court examined the order disposing of objections where the AO found that reliable information and departmental investigation revealed the alleged parties to be bogus and that the genuineness of transactions and parties had not been verified in the original scrutiny; the AO therefore concluded that the assessee had failed to disclose all material facts. On this basis the Court found the existence of new material and a permissible foundation for reopening under Section 147 and did not interfere with the reopening. [Paras 11, 12, 13, 15, 17]

The reopening of assessment for AY 2010-11 was sustained as founded on new information giving the AO reason to believe that income had escaped assessment.

Change of opinion - Explanation 1 to Section 147 - GKN Driveshafts (India) Ltd. - Whether the reassessment was a mere change of opinion or founded on new material; applicability of Explanation 1 and procedural precedents - HELD THAT: - The Court rejected the contention that reassessment amounted to an impermissible change of opinion. It accepted the AO's finding that the matters relied upon in the reassessment were not the matters considered at the time of the original assessment (the original scrutiny had focussed on classification of interest). The Court noted Explanation 1 that mere production of books earlier does not preclude discovery of material by the AO with due diligence, and observed that the department had followed the procedure laid down by the Supreme Court in GKN Driveshafts by issuing reasons, affording the assessee opportunity to object and disposing of those objections. Given these procedural steps and the AO's recorded reasons, the Court held that the reassessment was not vitiated as a change of opinion. [Paras 10, 15, 16, 17]

The Court held that reassessment was based on new information and investigation, not merely a change of opinion, and that Explanation 1 and the procedural directives in GKN had been complied with.

Scope of judicial review under Article 226 - Extent of High Court's interference under Article 226 with assessment/reassessment findings - HELD THAT: - The Court reiterated that writ jurisdiction under Article 226 permits scrutiny of the process and procedural regularity of administrative action but does not permit the High Court to reappraise or examine disputed facts and evidence which are to be examined by the tax authorities. Given that the departmental procedure for reopening-recording reasons, issuing notice, considering and disposing objections-had been followed and the AO's reasons were candid and convincing, the Court declined to re-evaluate factual findings in writ proceedings. [Paras 14, 17]

The High Court will not reappraise factual controversies in a writ petition; having found procedural regularity, the Court declined to interfere.

Final Conclusion: The writ petition challenging the reopening and the order disposing of objections was dismissed: the Court found that fresh information and a reason to believe existed to reopen AY 2010-11, the departmental procedure including consideration of objections was followed in accordance with authorities, and there was no jurisdictional infirmity warranting interference under Article 226.

Reopening assessment under Section 147/148 - reason to believe and application of the GKN test - speaking order disposing objections and requirement of reasons - failure to furnish material and right to fair opportunity to file objections - limited remand for fresh consideration versus quashing to avoid prejudice to revenue

Reopening assessment under Section 147/148 - reason to believe and application of the GKN test - speaking order disposing objections and requirement of reasons - Validity of initiation of reassessment proceedings for the Assessment Years 2015-16 and 2016-17. - HELD THAT: - The Court examined whether the Assessing Officer complied with the procedural and substantive prerequisites for reopening under Section 147/148, including the furnishing of reasons and disposal of objections in the light of the GKN jurisprudence. The record shows that notices were issued, reasons were furnished on request, the assessee filed objections and those objections were considered and disposed of by a speaking order which records that the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment. The reasons for reopening explain how hospital records were processed (excluding categories not liable to pay fees) to arrive at the quantification. The Court found the reasons candid and convincing and that the Assessing Officer applied mind in accordance with the established test, and accordingly there was no infirmity in the initiation of proceedings under Section 147/148. [Paras 9, 10, 11, 12, 13]

The initiation of reassessment proceedings for AY 2015-16 and AY 2016-17 is sustained; there is no interference with the reopening under Section 147/148.

Failure to furnish material and right to fair opportunity to file objections - limited remand for fresh consideration versus quashing to avoid prejudice to revenue - balancing prejudice to revenue and assessee's right to be heard - Whether the proceedings should be quashed for non-enclosure of the hospital-statement and/or whether the petitioner should be afforded an opportunity to file additional objections based on that material and related appellate findings. - HELD THAT: - The Court addressed the contention that the statement of the hospital manager was not enclosed with the show cause notice and that the petitioner was thereby deprived of a fair opportunity. The Court noted that the statement was subsequently furnished to and acknowledged by the assessee's representative and that the assessee had avenues to seek the material earlier but had not done so immediately. Balancing the assessee's right to file objections against prejudice to the revenue that would follow from quashing the entire reopening, the Court declined to quash the proceedings. Instead the Court directed a limited remedial course: the petitioner was permitted to submit any additional objections and materials within a stipulated short period, and the Assessing Officer was directed to consider those objections and proceed with assessment/reassessment expeditiously; if no objections are filed within the time fixed, the Assessing Officer may proceed. [Paras 14, 15, 16, 17]

Instead of quashing the reopening, the Court ordered a limited opportunity for the petitioner to submit further objections based on the material; the Assessing Officer to consider them and proceed, and permitted the Assessing Officer to continue assessment if no objections are filed within the stipulated time.

Final Conclusion: Writ petitions challenging initiation of reassessment for AY 2015-16 and 2016-17 dismissed insofar as initiation is concerned; instead of quashing the proceedings the petitioner was granted a limited period to file additional objections based on the materials, the Assessing Officer directed to consider them and proceed with assessment/reassessment; petitions disposed accordingly.

Information sufficient to constitute reason to reopen - reopening of assessment under Section 147 - notice under Section 148 - principles of natural justice and opportunity to be heard - directions in GKN Driveshafts - adjudication of disputed factual questions not in writ under Article 226

Information sufficient to constitute reason to reopen - reopening of assessment under Section 147 - notice under Section 148 - Observations in an appellate order (Paragraph 5.4) treated as information for formation of reason to reopen and as foundation for issuing notice under Section 148/147. - HELD THAT: - The Court held that the observations recorded in the Commissioner (Appeals) order operate only as information which the Assessing Officer may treat as a basis to form a reason to believe for reopening the assessment. The impugned appellate observations were not a final adjudication against the petitioner and therefore do not preclude the Assessing Officer from invoking Section 147 and issuing a notice under Section 148 to examine the matter further. The Court emphasised that no final decision has been taken against the petitioner solely on the basis of those observations and the reopening process must proceed in accordance with law. [Paras 5, 8]

Paragraph 5.4 of the appellate order is to be construed as information for invoking Section 147 and does not itself constitute a conclusive determination against the petitioner.

Principles of natural justice and opportunity to be heard - directions in GKN Driveshafts - Requirement of giving the petitioner opportunity and following the procedural safeguards laid down by the Apex Court before completing proceedings consequent to reopening. - HELD THAT: - The Court directed that the Assessing Officer must follow the procedural safeguards and directions laid down in GKN Driveshafts, including affording the petitioner an opportunity to meet the case against him. The writ forum will not decide disputed factual controversies about directorship or entitlements; those factual and legal contentions (including limitation) must be raised before and considered by the competent authorities in the reopening proceedings. The petitioner is therefore entitled to be heard and to place documents and explanations before the authorities during the reopened assessment process. [Paras 5, 6, 9]

Assessing Officer shall follow GKN Driveshafts directions and afford the petitioner an opportunity to contest the grounds of reopening and all factual and legal contentions.

Adjudication of disputed factual questions not in writ under Article 226 - Appropriateness of writ relief to decide disputed factual questions such as whether the petitioner was a director and whether the notice was barred by limitation. - HELD THAT: - The Court observed that contested factual issues (for example, the petitioner's status as director and relevant dates/documents affecting limitation) cannot be determined in writ proceedings under Article 226. Such matters must be established and decided by the competent income-tax authorities in the course of the reopened assessment. The petitioner retains the right to raise limitation and other legal grounds before those authorities, who are directed to consider them in accordance with law. [Paras 6, 7, 9]

Writ proceedings are not the forum to adjudicate disputed factual issues; those matters are to be decided by the competent tax authorities on reopening.

Final Conclusion: Writ petitions dismissed with liberty to the petitioner to raise all factual and legal objections (including limitation and the claim of non-directorship) before the Assessing Officer in the reopened proceedings; appellate observations construed only as information for reopening and the Assessing Officer must proceed by following the directions in GKN Driveshafts and afford the petitioner an opportunity to be heard.

Reopening of assessment on failure to disclose material facts - Scope of "has reason to believe" under Section 147 - Explanation 1 and Explanation 2(c) to Section 147 - Proviso to Section 147 and requirement for reopening beyond four years - Change of opinion doctrine

Reopening of assessment on failure to disclose material facts - Change of opinion doctrine - Proviso to Section 147 and requirement for reopening beyond four years - Validity of reopening assessment under Section 147/148 for Assessment Year 2007-08 on the ground of alleged failure to disclose fully and truly all material facts - HELD THAT: - The Court examined the Assessing Officer's speaking order dated 02.03.2015 and the reasons furnished for reopening. The Assessing Officer found that waivers arising from a one time settlement (both principal and interest) had been treated as prior period adjustments and credited below the line, and that deferred tax asset entries were made, leading to non-disclosure in the tax computation. Applying the principles enunciated in GKN Driveshafts, the Court held that the AO had formed an opinion that income chargeable to tax had escaped assessment due to failure to disclose fully and truly all material facts. The Court rejected the petitioner's contention that mere production of books at original assessment precluded reopening, and found that the AO identified material facts which, in his view, established non disclosure. On the facts before it, the Court concluded that the reopening could not be characterised as a mere change of opinion and that the petitioner had not made out grounds for quashing the notice or order. The Court therefore upheld the validity of reopening and held that the assessee must participate in reassessment proceedings to defend its position. [Paras 13, 16, 17, 20, 21]

Reopening under Section 147/148 in respect of Assessment Year 2007-08 was valid on the finding of failure to disclose fully and truly all material facts; the writ petition on this ground is dismissed.

Scope of "has reason to believe" under Section 147 - Explanation 1 and Explanation 2(c) to Section 147 - Whether Explanation 1 and Explanation 2(c) to Section 147 permit reopening where under assessment is identified from available materials or where production of books does not amount to effective disclosure - HELD THAT: - The Court analysed Explanation 1 and Explanation 2(c) to Section 147 and observed that the concept of "has reason to believe" is wide and contemplates circumstances where the assessee has not produced true and full facts at original assessment. Explanation 1 makes clear that mere production of account books or evidence does not necessarily amount to disclosure if, with due diligence, the AO could discover material evidence later. Explanation 2(c) permits reopening where income has been under assessed, and such under assessment may be discovered even from the same materials originally available. The Court held that identification of under assessment or insufficiency of furnished materials by the AO suffices to form the requisite belief, and that new material as such is not invariably necessary. Applying these explanations to the facts, the Court found the AO's invocation of Section 147 sustainable. [Paras 18, 19, 20]

Explanation 1 and Explanation 2(c) to Section 147 apply and justify reopening where the AO, on available materials, forms reason to believe that income has escaped assessment; reopening was accordingly sustainable.

Final Conclusion: Writ petition dismissed: the Assessing Officer's order reopening assessment for Assessment Year 2007-08 was held sustainable on the finding of failure to disclose material facts and the applicability of Explanations to Section 147; reassessment proceedings may continue. No costs.

Accumulation under section 11(2) - filing of Form No.10 - electronic filing mandate and its effective date - rectification under section 154 - verification of manually filed Form No.10

Accumulation under section 11(2) - filing of Form No.10 - electronic filing mandate and its effective date - verification of manually filed Form No.10 - Denial of exemption by treating non-electronic filing of Form No.10 as fatal to claim of accumulation under section 11(2) for the assessment year in question. - HELD THAT: - The Tribunal found on the record that the assessee had filed Form No.10 physically before the Assessing Officer on 26/06/2014 and that the statutory requirement for electronic filing of Form No.10 became effective only from 01/04/2016. The CPC had denied the claim of accumulation under section 11(2) while processing the return on the ground that Form No.10 was not filed electronically. The Tribunal held that where electronic filing was not mandated for the relevant year, denial of the benefit of accumulation on the mere ground of non-electronic filing was a technical infirmity which could not justify rejection of the claim. Following the Tribunal's earlier decision in Parle Hindu Devalaya Mandir v. DCIT (CPC) Bangalore, the matter was remitted to the Assessing Officer for verification of the manually filed Form No.10 and, if found in order, for allowing the assessee's claim of exemption under section 11(2) in accordance with law.

Issue restored to the Assessing Officer for verification of the manually filed Form No.10 and for allowing the claim of accumulation under section 11(2) if verification is satisfactory; grounds allowed for statistical purposes.

Final Conclusion: Appeal allowed for statistical purposes and remitted to the Assessing Officer with direction to verify the manually filed Form No.10 and grant exemption under section 11(2) if the declaration is in order.

Deduction under section 10A - inclusion of belatedly realized export proceeds in export turnover - application for extension of time to receive export proceeds - implicit approval where no response from competent authority - time limit for receipt of foreign exchange and extension of time - mistake apparent from record

Deduction under section 10A - inclusion of belatedly realized export proceeds in export turnover - application for extension of time to receive export proceeds - implicit approval where no response from competent authority - Belatedly received export proceeds which were realised in convertible foreign exchange after the statutory six month period, where applications for extension were filed and no rejection was communicated by the competent authority/authorised dealer, are to be included in export turnover for computing deduction under section 10A. - HELD THAT: - There is no dispute that the sale proceeds were ultimately received in convertible foreign exchange, albeit after the six month period specified by the statute. The assessee had filed applications for extension of time before the expiry of the statutory period and the authorised authority/bank did not reject those applications. Following the reasoning of the Karnataka High Court in Wipro Ltd., where the Tribunal's approach to include belated receipts routed through proper channels was upheld, the Tribunal finds that absence of an express refusal coupled with actual receipt through the proper channel amounts to entitlement to the benefit. The Tribunal therefore concludes that notwithstanding lack of an express written extension, the amounts realised belatedly but received in convertible foreign exchange and not subject to rejection of extension must be included in the export turnover for computing deduction under section 10A. The Tribunal also noted that a mistake apparent from the record had occurred by applying facts of one year to another and rectified the same in the present adjudication.

Grounds raised by the assessee are allowed and the belatedly realised export proceeds shall be included in export turnover for computing deduction under section 10A.

Final Conclusion: The appeals for assessment years 2008-09 and 2009-10 are allowed; the Assessing Officer is directed to include the amounts realised belatedly (received in convertible foreign exchange where applications for extension were filed and not rejected) in export turnover for computation of deduction under section 10A.

Rule of consistency - Disallowance of commission expenses - Burden of proof for business expenditure - Limited scrutiny

Rule of consistency - Disallowance of commission expenses - Burden of proof for business expenditure - Whether part of the commission payments made by the assessee for AY 2015-16 could be disallowed where similar payments were allowed in earlier years and there was no change in material facts. - HELD THAT: - The Tribunal examined the record and found that commission payments were made regularly in preceding assessment years and earlier scrutiny assessments had not disallowed such payments; the facts for the impugned year were materially the same except for change in names of some recipients. In these circumstances the Tribunal applied the rule of consistency and observed that, absent any change in law or material facts, revenue could not adopt a different view for the impugned year without pointing out distinguishing features. The Tribunal noted that the assessee had produced lists, ledger extracts, evidence of payments and TDS deductions, and that several recipients had filed returns before completion of the appellant's scrutiny assessment; on that basis a substantial part of the commission payments was accepted. Having found no material change warranting a departure from earlier treatment and finding the assessee's explanations and documentary evidence sufficient in respect of the admitted portion, the Tribunal sustained the CIT(A)'s allowance of that part and dismissed revenue's challenge to the CIT(A)'s order. [Paras 9, 11]

The addition disallowing part of the commission payments is not sustainable; the revenue appeal is dismissed and the assessee's appeal is allowed.

Limited scrutiny - Burden of proof for business expenditure - Whether the assessment amounted to an improper expansion of limited scrutiny such as to vitiate the assessment proceedings. - HELD THAT: - The assessee argued that the assessment exceeded the scope of limited scrutiny and relied on CBDT instructions on limited scrutiny. The Tribunal noted the contention but proceeded to decide the matter on consistency and available evidence; it did not find a need to quash the assessment on the ground of improper expansion of scrutiny in the absence of a demonstrated change in facts or successful showing that the limited scrutiny regime was breached so as to affect the outcome. The Tribunal therefore did not remit the matter for fresh adjudication on the limited-scrutiny point and disposed of the appeals on merits.

No separate relief granted on the ground of expansion of limited scrutiny; the matter is decided on the merits and the assessment sustained only to the limited extent determined by the Tribunal.

Final Conclusion: The Tribunal, applying the rule of consistency and on review of the materials, dismissed the revenue appeal and allowed the assessee's appeal for AY 2015-16, upholding the CIT(A)'s partial allowance of commission expenditure and sustaining the balance disallowance only to the extent found untenable by the authorities.

Arm's length price - comparability adjustment under Rule 10B - export incentives (DEPB) and operating income - special provisions of Chapter X (transfer pricing) overriding general exemptions - definition of arm's length price under Section 92F(ii)

Export incentives (DEPB) and operating income - comparability adjustment under Rule 10B - special provisions of Chapter X (transfer pricing) overriding general exemptions - definition of arm's length price under Section 92F(ii) - Whether DEPB incentives received by the assessee are to be included as an adjustment in the CUP comparability analysis for computing arm's length price. - HELD THAT: - The Tribunal examined the contention that DEPB benefits, being export incentives forming part of operating revenues, should be added under Rule 10B(1)(a)(ii)/(iii) as differences materially affecting price. It held that Chapter X of the Act is a special anti-avoidance code for international transactions and that Section 92C(4) proviso and the definition of arm's length price in Section 92F(ii) limit the scope of comparability adjustments to prices applicable between unrelated parties in uncontrolled conditions. Applying the principle generalia specialibus non derogant and relying on the primacy of special transfer pricing provisions, the Tribunal found the precedents relied upon did not address the statutory scheme of Chapter X and therefore could not override the special provision. Consequently the assessee's plea to include DEPB as a comparability adjustment was rejected and the Revenue's grievance on this point accepted. [Paras 8, 9]

DEPB incentives are not to be included as an adjustment in the CUP comparability analysis for ALP computation; Revenue's grievance on this issue is accepted.

Corporate guarantee fee - comparability and market commission - consistency with earlier tribunal findings - Whether the addition made by the Assessing Officer in respect of corporate guarantee commission should stand, or the deletion by the CIT(A) should be upheld. - HELD THAT: - The Tribunal noted that the CIT(A) followed earlier favourable findings in the assessee's own case for AY.2011-12 and that the assessee had recorded a comparable guarantee commission higher than that determined by the TPO. Having regard to judicial consistency and the material showing the assessee's charged commission was reasonable, the Tribunal found no basis to disturb the deletion effected by the CIT(A). [Paras 9]

Deletion of the corporate guarantee commission addition is upheld; Revenue's challenge to that deletion is declined.

Final Conclusion: Revenue's appeal is partly allowed: the Tribunal rejects inclusion of DEPB incentives in transfer pricing comparability and accepts the Revenue's ground on that issue, while upholding the CIT(A)'s deletion of the corporate guarantee fee addition.

Interest u/s. 244A - rectification under section 154 - attribution of delay in claiming TDS - updation of Form 26AS - book profit computation under section 115JB - set off of brought forward business loss and unabsorbed depreciation - remand for verification of figures

Interest u/s. 244A - rectification under section 154 - attribution of delay in claiming TDS - updation of Form 26AS - CIT(A)'s direction to allow interest under section 244A for the full period as granted in the earlier rectification order. - HELD THAT: - The Tribunal accepted the assessee's contention that the delay in crediting TDS arose from updation of Form 26AS by the department, which is beyond the assessee's control. The question whether delay is attributable to the assessee is a debatable issue and therefore not a matter to be decided by a rectification under section 154 to reduce interest. Having regard to the department's responsibility for reflecting TDS in 26AS, the Assessing Officer erred in restricting interest by attributing delay to the assessee. The CIT(A) correctly directed restoration of interest for the full period as allowed in the earlier rectification order, and the Tribunal found no infirmity in that conclusion. [Paras 7, 8]

Order of the CIT(A) directing grant of interest u/s. 244A for the full period is upheld and the revenue's appeal is dismissed.

Book profit computation under section 115JB - set off of brought forward business loss and unabsorbed depreciation - remand for verification of figures - Whether the Assessing Officer's computation and allocation between brought forward business loss and unabsorbed depreciation for computing book profit u/s 115JB are correct. - HELD THAT: - There were conflicting sets of figures and differing methodologies between the assessee and the Assessing Officer/CIT(A). The Tribunal noted that the figures produced by the assessee at hearing were not in consonance with earlier submissions and that the genuineness of the assessee's tabulation required verification. Consequently, rather than adjudicating the competing computations on the record before it, the Tribunal remitted the issue to the file of the Assessing Officer for verification of the assessee's figures. If the AO finds the assessee's figures correct, the AO is directed to allow the claim under section 115JB(2)(iii) in accordance with law after providing the assessee a reasonable opportunity of being heard. The grounds raised by the assessee on this issue were treated as allowed for statistical purposes. [Paras 15]

Computation/allocation dispute remitted to the Assessing Officer for verification and, if verified, for grant of relief in accordance with law; appeals allowed for statistical purposes.

Final Conclusion: The Tribunal dismissed the revenue appeal relating to AY 2009-10 by upholding the CIT(A)'s direction to grant interest u/s. 244A for the full period; disputes concerning computation of book profits and the set-off between brought forward business loss and unabsorbed depreciation for AYs 2004-05 and 2005-06 are remitted to the Assessing Officer for verification and appropriate action, and those appeals are disposed of for statistical purposes.

Verification under Rule 6(1)(b) of the CAROTAR, 2020 - random verification under Rule 6(1)(c) of the CAROTAR, 2020 - reason to believe standard - provisional assessment under Section 18 of the Customs Act, 1962 - self-assessment under Section 17 of the Customs Act, 1962 - security (bank guarantee) for release of goods - indemnity bond for release pending verification - treatment of non-originating components under Form I Part B note of CAROTAR

Typographical error in judgment - correction of record - The earlier judgment dated 26.04.2021 contained an apparent error referring to the Bill of Entry dated 29.09.2020 instead of the Bills of Entry dated 17.12.2020 and required correction. - HELD THAT: - On review the Court found that references to the Bill of Entry dated 29.09.2020 had been juxtaposed with facts and averments relating to the Bills of Entry dated 17.12.2020, producing confusion. The Court held that the line in the earlier order referring to Bill of Entry No.659,629 dated 29.09.2020 was an apparent error arising from that juxtaposition and should be deleted and substituted to refer to the consignment covered by the Bills of Entry dated 17.12.2020. The correction restores the record to reflect the consignment to which the decision related and is warranted as an apparent mistake on the face of the record. [Paras 19]

The sentence referring to Bill of Entry dated 29.09.2020 in the earlier order is deleted and substituted to refer to the Bills of Entry dated 17.12.2020.

Verification under Rule 6(1)(b) of the CAROTAR, 2020 - random verification under Rule 6(1)(c) of the CAROTAR, 2020 - reason to believe standard - security (bank guarantee) for release of goods - indemnity bond for release pending verification - Whether the verification in respect of the Bills of Entry dated 17.12.2020 was under Rule 6(1)(b) or was a random verification under Rule 6(1)(c), and the consequences for release and security. - HELD THAT: - The Court examined the record and the communications produced by the respondents. Rule 6(1)(b) requires that a verification request be grounded on a reason to believe that the origin criterion in the Certificate of Origin has not been met or the importer's claim of preferential duty is invalid, ordinarily after insufficiency in response to Rule 5 is shown and a specific request is made to the verifying authority. The materials produced by the respondents did not set out any such reason to believe in relation to the Bills of Entry dated 17.12.2020, nor did they produce documentation showing a specific request to the verifying authority for verification relevant to those bills; the documents relied upon principally related to an earlier Bill of Entry dated 29.09.2020. Extricating the relevant facts, the Court concluded that, on the materials before it, the verification in respect of the Bills of Entry dated 17.12.2020 could at best be regarded as a measure of due diligence - a random verification within Rule 6(1)(c) - and not a Rule 6(1)(b) verification grounded on reason to believe. As a consequence, the Court held that the respondents could not properly insist on a bank guarantee as a condition for release; instead the Court directed release on the filing of an indemnity bond, subject to payment of any additional duty found due on completion of verification within the time directed, and with liberty to the Customs to take action if duty is not paid as ordered. [Paras 20, 21]

The verification is of the character of a random verification under Rule 6(1)(c) of CAROTAR, 2020; the warehoused consignment covered by the Bills of Entry dated 17.12.2020 is to be released on the petitioner filing an indemnity bond, with duty (if any) payable within the period ordered after assessment.

Final Conclusion: Review allowed to the extent of correcting the earlier order to refer to the Bills of Entry dated 17.12.2020; the purported verification in respect of those bills is held to be random under Rule 6(1)(c) of CAROTAR, 2020, and the Customs are directed to release the warehoused consignment on filing an indemnity bond subject to payment of any duty found due on verification within the period specified.

Sanction of Scheme of Amalgamation and Arrangement - Transfer and vesting of assets and liabilities under Section 232(4) - Demerger and transfer of undertakings - Dissolution without winding up - Liability of demerged company for pre-existing tax liabilities - Dispensation of meetings under Section 230(1) - Compliance with accounting standards and statutory filings - Payment of stamp duty on transfer of immovable property

Sanction of Scheme of Amalgamation and Arrangement - The Scheme of Amalgamation and Arrangement between Transways (Agents) Limited, R.J. Awaas Private Limited, Admobile Private Limited and Roos Electrical Works Private Limited was sanctioned by the Tribunal with effect from 01/04/2019. - HELD THAT: - The Tribunal, after hearing the authorised representative, considering the board approvals, auditors' certificate on accounting treatment, compliance with statutory formalities including service of notices and publication of advertisement, and representations filed by the Regional Director and Official Liquidator, found the Scheme to be bona fide and in the interests of the companies, their shareholders and creditors. The petition for sanction of the Scheme was allowed and the Scheme (Annexure A) was directed to be binding on the companies, their shareholders, creditors and all concerned with effect from the appointed date stated in the Scheme. [Paras 9]

Scheme sanctioned to be binding with effect from 01/04/2019.

Transfer and vesting of assets and liabilities under Section 232(4) - Demerger and transfer of undertakings - Assets, properties, rights and interests of the Transferor Company and Demerged Undertakings stand transferred and vested in the Transferee/Resulting Company; corresponding liabilities and duties also stand transferred to the Transferee/Resulting Company. - HELD THAT: - Pursuant to the sanction, the Tribunal ordered that the Transferor Company's assets, properties, rights, licences and interests shall be transferred to and vested in the Transferee Company and that the liabilities and duties of the Transferor Company and of the Demerged Undertakings shall stand transferred to and become the liabilities and duties of the Transferee/Resulting Company without any further act or deed, in terms of the statutory scheme of transfer under Section 232(4) of the Companies Act, 2013. Proceedings and suits pending by or against the Transferor Company and Demerged Undertakings were directed to continue by or against the Transferee/Resulting Company, and allotment of shares to entitled members was ordered in accordance with the Scheme. [Paras 9]

Assets, rights and liabilities of transferor and demerged undertakings are transferred to and vested in the Transferee/Resulting Company.

Dissolution without winding up - The Transferor Company R.J. Awaas Private Limited shall stand dissolved without winding up upon giving effect to the Scheme. - HELD THAT: - The Tribunal directed that the Transferor Company shall stand dissolved without winding up, consistent with the effect of amalgamation provided in the sanctioned Scheme. [Paras 9]

Transferor Company to be dissolved without winding up.

Liability of demerged company for pre-existing tax liabilities - Admobile Private Limited (a demerged company) shall remain liable for the income tax liabilities recorded against it notwithstanding sanction of the Scheme. - HELD THAT: - In response to the Income Tax Department's representation and the Regional Director's affidavit, and on the petitioners' undertaking and rejoinder, the Tribunal expressly ordered that even after sanction of the Scheme Admobile Private Limited will remain liable for all liabilities as per the Income Tax Department's letter, since Admobile is a demerged company and is not being dissolved by the Scheme. The Tribunal recorded the petitioners' undertaking regarding payment/rectification steps taken in relation to disputed demands and confirmed that sanction will not impede action under law for any violations. [Paras 8]

Admobile Private Limited will remain liable for its pre-existing tax liabilities despite the sanction of the Scheme.

Dispensation of meetings under Section 230(1) - Meetings of equity shareholders and creditors of the petitioning companies were dispensed with in view of unanimous consents/affidavits and the Tribunal proceeded to consider and sanction the Scheme. - HELD THAT: - The records show that this Tribunal had earlier directed dispensation of meetings of equity shareholders, preference shareholders (as applicable) and unsecured creditors for the petitioning companies where consent in writing by affidavit was placed on record and there were no secured creditors. The sanction proceeded on that basis and after statutory notices and advertisements were complied with. [Paras 3, 9]

Meetings dispensed with and sanction granted on the basis of recorded consents and compliance with notice/advertisement requirements.

Compliance with accounting standards and statutory filings - Payment of stamp duty on transfer of immovable property - Petitioners were directed to comply with applicable accounting standards, statutory filings, payment of stamp duty after sanction, and to file certified copies and schedules as required by law and the Tribunal's order. - HELD THAT: - The Regional Director's concerns about compliance with accounting standards and stamp duty were met by the petitioners' written undertakings. The Tribunal recorded those undertakings and imposed specific post-sanction obligations: filing certified copy of the order with the Registrar of Companies within stipulated time, leave to file the Schedule of Assets in Form CAA 7 within three weeks, supply of legible printouts of scheme and schedules to the department for verification and appending to the certified copy, and that stamp duty on transfer of immovable properties would be paid after the Scheme becomes effective. The Tribunal also noted that sanction would not prevent statutory authorities from taking action in accordance with law. [Paras 6, 9, 10]

Petitioners to comply with accounting standards, statutory filings and payment of stamp duty as undertakings and directions recorded by the Tribunal.

Final Conclusion: The National Company Law Tribunal, Kolkata Bench allowed the petition and sanctioned the Scheme of Amalgamation and Demerger effective 01/04/2019, directed transfer and vesting of assets and liabilities in the Transferee/Resulting Company, ordered dissolution of the Transferor Company without winding up, preserved Admobile Private Limited's liability for its pre existing tax demands, and recorded compliance undertakings and post sanction filing and payment directions; the petition is disposed of.

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - appointed date - transfer of assets and liabilities - vesting under Section 232(4) of the Companies Act, 2013 - compliance with statutory formalities - dispensing with meetings of shareholders and creditors - filing of Form MGT-14

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - appointed date - Sanction of the Scheme of Amalgamation and its coming into effect from the Appointed Date - HELD THAT: - The Tribunal examined the petition under Sections 230-232 of the Companies Act, 2013, the affidavits of compliance, publication of notices and service on statutory/sectoral authorities, and the report of the Official Liquidator. Having considered the submissions and documents on record, the Tribunal held that statutory formalities requisite for sanction were complied with and that the Scheme, including its Appointed Date of 01.04.2019, was bona fide and in the interest of all concerned. Consequently the Scheme was sanctioned and declared binding on the companies, their shareholders and creditors with effect from the Appointed Date. [Paras 1, 2, 3, 6]

Petition allowed; the Scheme of Amalgamation is sanctioned and shall be binding with effect from 01.04.2019.

Transfer of assets and liabilities - vesting under Section 232(4) of the Companies Act, 2013 - Effect of sanction on transfer and vesting of the Transferor Company's assets, rights, powers, debts and liabilities - HELD THAT: - On sanction, the Tribunal directed that all property, rights and powers of the Transferor Company shall, without further act or deed, transfer to and vest in the Transferee Company and that all debts, liabilities, duties and obligations of the Transferor Company shall become those of the Transferee Company pursuant to Section 232(4) of the Companies Act, 2013. The order also provided for continuity of proceedings and engagement of employees as set out in the Scheme. [Paras 6]

All assets, rights, powers, debts and liabilities of the Transferor Company stand transferred to and vested in the Transferee Company as per the Scheme and Section 232(4).

Compliance with statutory formalities - filing of Form MGT-14 - dispensing with meetings of shareholders and creditors - Sufficiency of statutory compliance including filing of Form MGT-14 and the earlier dispensing with meetings - HELD THAT: - The Tribunal considered representations of the Regional Director alleging non-filing of Form MGT-14 for certain years. The petitioners produced rejoinder and contended that requisite MGT-14 filings were made subsequently. The record showed service of notices on statutory authorities, publication of advertisement and the Official Liquidator's report finding no prejudice to members or public interest. The Tribunal found that statutory formalities had been duly complied with, that meetings had been dispensed with in accordance with the earlier order due to unanimous affidavits and absence of creditors, and that the RD's objection did not preclude sanction. [Paras 5, 6]

Objections regarding filings did not prevent sanction; statutory formalities are held to have been complied with and the prior dispensation of meetings is affirmed.

Registration and dissolution consequences - Post-sanction filing with Registrar of Companies and dissolution of the Transferor Company - HELD THAT: - The Tribunal directed that certified copies of the order be delivered to the Registrar of Companies within thirty days and that upon such filing the Transferor Company shall be dissolved with effect from the date(s) of filing of the certified copies. The Registrar was directed to consolidate files and records accordingly. The petitioners were also granted leave to file the Schedule of Assets in prescribed form within a specified time. [Paras 6, 7]

Certified copy of the order to be filed with ROC; on filing, the Transferor Company shall be dissolved and records consolidated as directed.

Final Conclusion: The Tribunal allowed the petition, sanctioned the Scheme of Amalgamation of Snowquiz Dealcom Limited with SRG Logistics Private Limited effective from 01.04.2019, directed transfer and vesting of assets and liabilities in the Transferee Company, affirmed compliance with statutory formalities (including dispensation of meetings), and ordered requisite filings with the Registrar of Companies leading to dissolution of the Transferor Company on filing of certified copies.

Scheme of Amalgamation - Dispensing with meetings under Section 230 - Consent by affidavit as substitute for convened meeting - Service and notice to statutory authorities under Section 230(5) - Companies Act, 2013 - sanction-stage directions

Dispensing with meetings under Section 230 - Consent by affidavit as substitute for convened meeting - Scheme of Amalgamation - Whether convening of separate meetings of equity shareholders and specified classes of creditors of the applicant companies could be dispensed with on the basis of written consents by affidavit to the proposed Scheme of Amalgamation. - HELD THAT: - The Tribunal recorded that all equity shareholders of the applicant companies had given their consent to the Scheme by affidavits; secured creditors of Applicant No.1 had given their consent; 90.18% in value of unsecured creditors of Applicant No.1 and 100% in value of unsecured creditors of Applicant Nos.4, 5 and 6 had similarly consented by affidavits. Having perused the records and submissions, the Tribunal concluded that the statutory requirement of convening and holding separate meetings to ascertain consent of those classes could be dispensed with because the requisite classes had already expressed written consent in the form relied upon by the applicants, and therefore formal meetings were unnecessary for those classes in relation to the Scheme of Amalgamation. [Paras 3, 4, 5, 6, 9]

Application allowed insofar as convening of meetings of the specified equity shareholders and creditors is dispensed with.

Service and notice to statutory authorities under Section 230(5) - Companies Act, 2013 - sanction-stage directions - What procedural directions should be issued for service of notice and calling for representations from statutory authorities under Section 230(5) relating to the Scheme of Amalgamation. - HELD THAT: - The Tribunal directed that notice under Section 230(5) together with accompanying documents, including the Scheme and the statement, be served on the Regional Director (Eastern Region), Registrar of Companies, Official Liquidator, High Court Calcutta, Reserve Bank of India and Income Tax Department having jurisdiction by hand delivery, post or email within two weeks of receipt of the order. The notice must specify the 30-day period for filing representations with the Tribunal and be sent in Form No. CAA3 with necessary variations as indicated. The applicants were ordered to file an affidavit proving service and compliance with the directions. [Paras 10, 11]

Directions issued for service of notice on specified authorities, with requirement to file affidavit proving service and compliance.

Final Conclusion: The application is allowed: meetings of the specified consenting shareholders and creditors are dispensed with; statutory notices as prescribed under Section 230(5) shall be served on the listed authorities within the time directed and proof of service filed; CAA No.36/KB/2021 is disposed of accordingly.

Compounding of offences under Section 24A of the SEBI Act - Requirement of consent of SEBI for compounding - Deference to regulatory view of SEBI - Non-obstante clause and exclusive power of SAT or Court to compound - Distinction from CrPC Section 320 and NI Act Section 147/JIK Industries - Public interest versus private nature of offences - Guidelines for compounding under Section 24A

Compounding of offences under Section 24A of the SEBI Act - Requirement of consent of SEBI for compounding - Non-obstante clause and exclusive power of SAT or Court to compound - Distinction from CrPC Section 320 and NI Act Section 147/JIK Industries - Deference to regulatory view of SEBI - Whether the consent of SEBI is a mandatory prerequisite to the SAT or Court exercising power to compound offences under Section 24A of the SEBI Act. - HELD THAT: - Section 24A, which begins with a non-obstante clause, entrusts the power to compound specified offences to the Securities Appellate Tribunal or to the Court before which proceedings are pending. The plain language of Section 24A does not require SEBI's consent. Where Parliament has intended a role for SEBI it has expressed it elsewhere in the statute (for example Section 24B which involves SEBI's recommendation to the Central Government). Nevertheless SEBI is the statutory regulator, prosecuting agency and possesses specialised expertise; consequently the SAT or Court must obtain SEBI's views on an application for compounding and afford those views a high degree of deference in the absence of manifest arbitrariness or mala fides. The court should not read a veto or prior-consent requirement into Section 24A; doing so would amount to judicial legislation. The decision in JIK Industries and provisions under the CrPC and NI Act were examined and distinguished on the basis that Section 24A is a distinct statutory scheme and must be given its natural meaning, subject to the obligation on SAT/Court to seek and give weight to SEBI's views. [Paras 82, 83, 84, 85, 90]

SEBI's consent is not a statutory precondition to compounding under Section 24A, but the SAT or Court must solicit SEBI's views and accord them significant deference unless they are manifestly arbitrary or mala fide.

Guidelines for compounding under Section 24A - Public interest versus private nature of offences - Deference to regulatory view of SEBI - Whether, on the facts of the present case, the offences should be compounded. - HELD THAT: - Having articulated factors and procedural expectations (including those appearing in SEBI's circulars and FAQs) which the SAT or Court should follow when adjudicating compounding applications, the Court applied those principles to the factual matrix. The allegations involved alleged price rigging, misuse of IPO proceeds and manipulation affecting investor protection and market stability. The matter had been considered by SEBI's High Powered Advisory Committee which recommended non-compounding; that recommendation was neither mala fide nor manifestly arbitrary. Given the gravity of the allegations, the public character of the conduct alleged and SEBI's considered objection, compounding was not warranted in the present case. [Paras 92, 93, 94]

The appeal is dismissed on merits: compounding is not appropriate on the facts and the High Court's order refusing compounding is affirmed.

Final Conclusion: The judgment affirms the High Court: Section 24A does not confer a veto to SEBI but requires the SAT or Court to obtain and give substantial deference to SEBI's views before compounding; applying those principles the Court found the allegations in this case to be of a public character affecting investor protection and market stability, SEBI's objection was not manifestly arbitrary, and compounding was rightly refused.

Settlement Agreement - Withdrawal of petition admitted under Section 9 - Quashing of admission order - CIRP costs and fees of the Resolution Professional - Setting aside appointment of Interim Resolution Professional and moratorium - Restoration of management to Board of Directors

Settlement Agreement - Withdrawal of petition admitted under Section 9 - Quashing of admission order - Effect of a duly executed settlement between the parties on the admitted Section 9 petition and the impugned admission order. - HELD THAT: - The parties executed a written settlement agreement dated 19 July 2021 recording full and final settlement of the claim which was the subject matter of the Section 9 petition that resulted in admission by the Adjudicating Authority on 29 August 2019. The settlement recites payment by the appellant (on behalf of the corporate debtor) and an agreement to file a joint statement/affidavit before this Tribunal for disposal of the appeal and withdrawal of the Section 9 petition. The Tribunal noted that the alleged disputed amounts have been received as per the settlement and that the parties had agreed terms for withdrawal. In these circumstances the appeal was disposed as settled, the impugned admission order was quashed and set aside, and the original Section 9 application was directed to be treated as withdrawn. [Paras 3, 4, 8]

Appeal disposed as settled; impugned order quashed and set aside; Section 9 application treated as withdrawn.

CIRP costs and fees of the Resolution Professional - Setting aside appointment of Interim Resolution Professional and moratorium - Restoration of management to Board of Directors - Whether the Tribunal should examine or reopen the sufficiency of CIRP costs and IRP fees after execution of the settlement and payment, and the consequent orders to be passed regarding IRP, moratorium and control of the corporate debtor. - HELD THAT: - The settlement expressly provided that the appellant would bear CIRP costs and the fees of the IRP, and records that payments were made; the IRP/RP issued a No Dues Certificate annexed to the application. Although the original petitioner (acting as liquidator) raised doubts about the quantum of amounts paid to the IRP, the Tribunal observed that, given the willful execution of the settlement agreement and the evidence of payment and the No Dues Certificate, it was inappropriate to permit the original petitioner to now challenge the sufficiency of CIRP expenses and fees. The Tribunal therefore declined to reopen or reassess the CIRP cost/fee question and, consequentially, set aside all orders passed pursuant to the impugned admission (including appointment of IRP, moratorium, freezing of accounts and actions taken by the IRP), directed the IRP to hand over charge and released the corporate debtor to function under its board of directors. [Paras 4, 5, 6, 7, 8]

Do not reopen the question of sufficiency of CIRP costs and IRP fees; set aside orders appointing IRP and imposing moratorium; IRP to hand over charge and corporate debtor restored to its board.

Final Conclusion: The appeal was disposed as settled on the basis of the executed settlement agreement and payments; the impugned admission order under Section 9 was quashed and the original application treated as withdrawn, all consequential orders passed pursuant to admission were set aside, the IRP to hand over charge and the corporate debtor was released to function under its board of directors.

Valid service of statutory demand notice - existence of enforceable operational debt - pre-existing dispute as bar to initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016

Valid service of statutory demand notice - initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 - Validity of service of the statutory demand notice on the corporate debtor - HELD THAT: - The petitioner's demand notice dated 02.01.2019, sent by speed post to the registered address in the corporate debtor's master data, was returned undelivered but was thereafter delivered by hand. The Tribunal applied settled principles that where a notice sent to the address in the corporate debtor's master data is offered for delivery and remains unclaimed, such service is to be treated as valid. The respondent's contention based on the postal tracking report and the alleged invalidity of hand delivery through its watchman was rejected. The Tribunal therefore held that service of the statutory demand notice was valid and proper. [Paras 12]

Demand notice was validly served on the corporate debtor.

Existence of enforceable operational debt - pre-existing dispute as bar to initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 - Whether the petitioner proved an enforceable debt or whether a pre-existing dispute between the parties barred the petition under Section 9 IBC - HELD THAT: - Although transactions between the parties were not disputed, the corporate debtor had issued a warning notice dated 06.12.2018 alleging breach of contract, malpractice and defective/sub-standard supply and threatened revocation/cancellation of contracts. The petitioner did not demonstrate settlement of those disputes either before or after issuance of the demand notice and relied on replies and balance-sheet entries. In view of the existence of the warning notice raising substantive allegations and the absence of proof that those disputes were resolved, the Tribunal concluded that a pre-existing dispute existed which bars admissibility of a Section 9 petition. Consequently it was unnecessary to adjudicate other contentions. [Paras 13]

There exists a pre-existing dispute between the parties; the petition under Section 9 is barred and must be dismissed.

Final Conclusion: The petition under Section 9 of the IBC seeking initiation of CIRP against the corporate debtor is dismissed: service of the statutory demand notice was held valid, but the claim was barred by a pre-existing dispute which the petitioner failed to show was resolved.

Maximisation of the value of assets - timelines under Regulation 36A - fresh invitation for resolution plans (Form G) - commercial wisdom of the Committee of Creditors - estoppel by conduct/consent to participate - extension of CIRP period

Fresh invitation for resolution plans (Form G) - timelines under Regulation 36A - maximisation of the value of assets - Validity of the republished Form G dated 21.02.2021 and challenge to the fresh process. - HELD THAT: - The Tribunal held that the object of the Code is the maximisation of the value of the corporate debtor's assets and that the Committee of Creditors is entitled, in its commercial wisdom, to reject previously received plans and to republish the invitation to submit resolution plans when a higher offer emerges. Although the republished Form G contained shorter timelines than those earlier provided under Regulation 36A, the expiring CIRP period and the need to avoid further delay in resolution justified giving reduced timelines. The applicant, having given consent to participate in the republished process and having sought that its earlier deposit be treated as EMD for the fresh call, was estopped from challenging the fresh Form G. The Tribunal therefore declined to set aside the republished Form G and rejected the contention that the fresh process was vitiated by fraud or collusion. [Paras 9, 10]

The challenge to the republished Form G dated 21.02.2021 was rejected and the republished process was held to be valid in the circumstances.

Estoppel by conduct/consent to participate - commercial wisdom of the Committee of Creditors - Whether the applicant could object to the fresh process after consenting to participate and not submitting a revised plan. - HELD THAT: - The Tribunal found that the applicant, having expressly consented to participate in the republished process and electing not to submit a fresh/revised resolution plan despite being afforded opportunity, cannot object to consideration of other plans by the COC. Participation and acceptance of the republished process amounted to estoppel against the applicant's challenge to that process. [Paras 8, 10]

The applicant was not permitted to challenge the process after consenting to participate and failing to submit a fresh plan.

Fresh invitation for resolution plans (Form G) - extension of CIRP period - Relief to be granted and further course of action in respect of submission and consideration of resolution plans. - HELD THAT: - Balancing the object of the Code and the need to avoid further delay in resolution proceedings, the Tribunal permitted all prospective resolution applicants, including the applicant, to submit fresh or revised resolution plans within a short stipulated timeframe. The COC was directed to consider the plans and the Resolution Professional was directed to file an appropriate application before the Adjudicating Authority after such consideration. The CIRP period was extended to accommodate the timelines fixed by the Tribunal. [Paras 11]

All prospective applicants were permitted to submit fresh/revised plans within 10 days; the COC/RP to proceed and file the appropriate application within 15 days thereafter; CIRP period extended accordingly.

Final Conclusion: The application challenging the republished Form G was disposed of by permitting all prospective resolution applicants to submit fresh or revised plans within the timeframe directed, declining to set aside the republished Form G, and extending the CIRP period to enable consideration of the plans by the COC and consequent filing before the Adjudicating Authority.

Bail - Grant of bail pending trial - Length of custody vis-a -vis maximum sentence - Completion of investigation and filing of draft charges - Parity with co-accused released on bail - Rigour of Section 45 of the Prevention of Money Laundering Act, 2002

Bail - Length of custody vis-a -vis maximum sentence - Completion of investigation and filing of draft charges - Parity with co-accused released on bail - Rigour of Section 45 of the Prevention of Money Laundering Act, 2002 - Appellant entitled to grant of bail pending trial subject to conditions. - HELD THAT: - The Court, without deciding whether the amended rigor of Section 45 applies, granted bail to the appellant. The determinative reasons were: (a) the substantial period of actual custody already undergone by the appellant relative to the maximum sentence prescribed for the offences charged; (b) the investigation having been completed with draft charges circulated, indicating that further custodial interrogation was not warranted on that basis; and (c) parity with other co-accused who had already been released on bail. The Court recorded the prosecution's contentions regarding accused being declared Proclaimed Offender, delayed surrender, and the nature of the alleged foreign-exchange transactions, but found these did not outweigh the factors favouring bail. The Court therefore exercised its discretion to release the appellant on bail subject to specified security, sureties and supervisory conditions, and directed prompt production before the trial Court and speedy verification of sureties.

Bail granted subject to furnishing specified cash security and two like sureties and compliance with conditions imposed by the Trial Court; appellant to be produced and sureties verified within the time prescribed.

Final Conclusion: Appeal allowed; appellant released on bail subject to furnishing cash security and two like sureties and compliance with enumerated conditions, with directions for immediate production before the Trial Court and prompt verification of sureties.

Interim protection against provisional attachment - undertaking to maintain status quo - provisional attachment under PMLA - remand for re-hearing for want of notice to banks - frivolous litigation and imposition of exemplary costs

Interim protection against provisional attachment - undertaking to maintain status quo - Whether the First Appeals filed by the Deputy Director, Directorate of Enforcement against the Tribunal's interlocutory order granting interim protection should be entertained - HELD THAT: - The Court found that the Tribunal's interim order had adequately protected the Union of India's interest by provisionally attaching specified properties and recording an undertaking by the respondents not to alienate the properties until the Tribunal decided the appeal. The High Court concluded that the present first appeals were frivolous and misconceived, observing that the filing of these appeals had impeded timely disposal of the Tribunal appeal. The Court strongly deprecated the initiation of such litigation against an interlocutory order which preserved the Union's interest and accordingly dismissed the appeals. The Court also issued a warning that future frivolous appeals against interlocutory orders of the Tribunal may attract exemplary costs to be recovered from responsible officials personally.

First Appeal No. 164 of 2021 and First Appeal No. 4914 of 2018 dismissed; warning about exemplary costs; no costs awarded in the present order.

Procedural consequence of dismissal - Disposition of ancillary civil applications following dismissal of the First Appeal - HELD THAT: - Having dismissed the First Appeal, the Court dealt with connected interlocutory civil applications filed in that appeal. As these applications were ancillary to the dismissed appeal, the Court disposed of Civil Application (For Stay) No. 1 of 2021 and Civil Application (For Orders) No. 2 of 2021 in R/First Appeal No. 164 of 2021.

The connected civil applications in R/First Appeal No. 164 of 2021 are disposed of.

Remand for re-hearing for want of notice to banks - undertaking to maintain status quo - Effect of the Tribunal's order remanding the matter to the Adjudicating Authority for re-hearing after issuing notice to banks, and the interim status of the undertaking - HELD THAT: - The Tribunal had allowed an appeal and remanded the matter to the Adjudicating Authority for fresh consideration because no notice had been given to the banks and relevant replies were not considered. The High Court recognised that the matter stands remanded to the Adjudicating Authority which remains seized of the matter. In view of that remand, the Court directed that the undertaking given by the parties to maintain the status quo regarding the attached properties shall continue until the Adjudicating Authority decides the matter pursuant to the remand. The Court thereby preserved the interim protection and ensured continuity of the parties' prior undertaking during the remand process.

First Appeal No. 4908 of 2018 disposed of by directing that the parties' undertaking to maintain status quo shall continue until the Adjudicating Authority decides the matter on remand.

Final Conclusion: The High Court dismissed the appeals attacking the Tribunal's interlocutory order as frivolous, disposed of ancillary applications consequent thereto, and, in the connected appeal remanded by the Tribunal for re-hearing for lack of notice to banks, directed that the parties' undertaking to maintain the status quo over the attached properties shall continue until the Adjudicating Authority passes final orders on remand.

Stay of operation of notice of eviction - availability of Appellate Tribunal - statutory remedy of appeal under Section 25 of the Prevention of Money Laundering Act, 2002 - jurisdiction to issue eviction notice under the Prevention of Money Laundering (Taking Possession or Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013

Stay of operation of notice of eviction - statutory remedy of appeal under Section 25 of the Prevention of Money Laundering Act, 2002 - Operation of the impugned Eviction Notice dated 28th June 2021 directed to be stayed until the next date of hearing. - HELD THAT: - The Petitioner had availed the statutory remedy of appeal under Section 25 of the Prevention of Money Laundering Act, 2002 before the Appellate Tribunal, but obtained information that the Tribunal presently has no coram to hear the appeal. The impugned Eviction Notice prescribes a 10-day period for vacation which was nearing expiry. In view of the pending appeal and the stated unavailability of the Tribunal, and subject to objections, the Court found it appropriate to preserve the status quo by staying the operation of the Eviction Notice until the matter is next considered by the Bench. The stay is interim and without prejudice to the rights and contentions of the parties on the merits, including the challenge to the jurisdiction to issue the eviction notice under the Rules. [Paras 5]

The operation of the Eviction Notice dated 28th June 2021 is stayed subject to objections until the next date of hearing.

Availability of Appellate Tribunal - jurisdiction to issue eviction notice under the Prevention of Money Laundering (Taking Possession or Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - Direction to respondent to report instructions regarding availability of the Appellate Tribunal and listing of the petition for further consideration. - HELD THAT: - The learned ASGI sought time to obtain instructions concerning the availability of the Appellate Tribunal. The Court granted that opportunity and directed the matter to be placed on the 'Daily Supplementary Cause List' on 7th July 2021 to enable the respondent to report position on the Tribunal's functioning. The Court recorded the Petitioner's contention that Respondent No.3 lacks jurisdiction under the specified Rules to issue the eviction notice, but did not decide that jurisdictional point at this stage; instead the matter is listed for further consideration after respondents obtain instructions. [Paras 4]

Respondent directed to obtain and report instructions on the availability of the Appellate Tribunal; matter listed for further consideration on 7th July 2021.

Final Conclusion: Interim relief granted: operation of the eviction notice of 28th June 2021 stayed until the next hearing; respondents given opportunity to report instructions on the Appellate Tribunal's availability and matter listed for consideration on 7th July 2021.

Goods transport agency service - reverse charge mechanism - requirement of consignment note and transport documents - assumption of facts by adjudicating authority - penalty for service tax

Goods transport agency service - requirement of consignment note and transport documents - reverse charge mechanism - Whether service tax under the GTA category could be validly demanded from the appellant for transportation of marble blocks by individual truck operators for the period January 2005 to December, 2007. - HELD THAT: - The Tribunal examined the material on record and the nature of services actually availed by the appellant, who employed individual truck operators to transport marble blocks from mines to its factory. The Adjudicating Authority had treated the transactions as services provided by a goods transport agency and proceeded to confirm demand, relying on an assumed existence of transport agency arrangements and of accompanying transport documents such as consignment notes. The Tribunal held that the essential factual precondition for taxing a goods transport agency service - i.e., that the service was rendered by an entity fitting the statutory definition and supported by requisite transport documentation - was not established on the record. The Tribunal further observed that an adjudicatory body cannot base its conclusion on assumptions of fact without reference to evidence on record. In the absence of proof that a GTA as defined was engaged or that consignment notes/documents existed, the demand raised under the reverse charge mechanism in respect of GTA services was unsustainable. [Paras 4, 5, 6]

Demand under the GTA head for the period January 2005 to December, 2007 was set aside.

Assumption of facts by adjudicating authority - penalty for service tax - Whether the penalties imposed along with the demand could be sustained where the foundational demand itself was not supported by evidence. - HELD THAT: - Having found the demand to be improperly and whimsically raised because the requisite factual preconditions for invoking the GTA levy were not proved, the Tribunal also addressed consequences for ancillary penal consequences. The Tribunal held that penalties predicated on an unsustainable demand could not stand. It therefore annulled the penalties imposed by the lower authority, since they flowed from the same infirm demand and there was no basis on record to support imposition of penalties. [Paras 6, 7]

Penalties imposed in relation to the impugned demand were set aside.

Final Conclusion: The appeal was allowed: the demand of service tax purportedly under the goods transport agency service for January 2005 to December, 2007 was quashed for lack of evidential foundation and assumptions by the Adjudicating Authority, and the penalties consequential thereto were set aside; the appellant is entitled to consequential benefits in accordance with law.

Refund of unutilised Cenvat Credit on closure of business - interpretation of Rule 5 of the Cenvat Credit Rules with reference to export-linked refunds - absence of express prohibition on refund under Rule 5 where manufacturer has ceased operations - entitlement to interest under section 11BB of the Central Excise Act

Refund of unutilised Cenvat Credit on closure of business - interpretation of Rule 5 of the Cenvat Credit Rules with reference to export-linked refunds - absence of express prohibition on refund under Rule 5 where manufacturer has ceased operations - entitlement to interest under section 11BB of the Central Excise Act - Appellant entitled to refund of unutilised Cenvat Credit standing in account at the time of closure of the factory and to interest as prescribed under law. - HELD THAT: - The Tribunal examined the claim for cash refund of unutilised Cenvat Credit filed after the assessee surrendered its registration upon closure of the factory. It followed the reasoning in Union of India v. Slovak India Trading Co. Pvt. Ltd. where the Karnataka High Court and subsequently the Supreme Court held that Rule 5 of the Cenvat Credit Rules, which deals with refund in the context of inputs used in goods cleared for export, does not contain an express prohibition against grant of refund where a manufacturer has ceased operations; accordingly refund could not be rejected merely because Rule 5 was framed with export transactions in mind. Applying that principle to the present facts, the Tribunal held that closure of the unit and the assessee coming out of the modvat/Cenvat scheme does not bar a refund claim of unutilised credit. The Tribunal also held that interest on the refund is payable in accordance with section 11BB of the Central Excise Act, i.e., from three months after the date of application until the date of grant of refund. [Paras 8, 12]

Appeal allowed; refund of unutilised Cenvat Credit granted with interest under section 11BB.

Final Conclusion: The Tribunal allowed the appeal, directing grant of the refund of unutilised Cenvat Credit standing in the appellant's account on closure of the factory and directing payment of interest in accordance with section 11BB of the Central Excise Act.

Jurisdiction to adjudicate - Commissioner versus Joint Commissioner competence - Binding effect of High Court judgment over Board circular - Validity of Board circular limiting jurisdiction - Precedence of judicial pronouncement over administrative instructions

Jurisdiction to adjudicate - Commissioner versus Joint Commissioner competence - Validity of Board circular limiting jurisdiction - Precedence of judicial pronouncement over administrative instructions - Whether the Joint Commissioner had jurisdiction to issue the Show Cause Notice and adjudicate the matter despite a Board circular contending that cases involving more than Rs. 2 Crores should be adjudicated by the Commissioner. - HELD THAT: - The Tribunal analysed the question of jurisdiction in light of the Hon'ble Gujarat High Court's order dated 02.08.2019 in Special Civil Application No.13128 of 2019, which, relying on the Supreme Court decision in PAHWA CHEMICALS PVT. LTD., held that "by merely relying upon the circular, it cannot be said that the Joint Commissioner had no jurisdiction to issue the Show Cause Notice and adjudicate the same." The Tribunal held that where a judicial pronouncement in the same case contradicts an administrative Board circular, the Court's judgment prevails and is binding on departmental authorities. The Commissioner (Appeals) erred in treating the Board circular as determinative of jurisdiction notwithstanding the High Court's contrary observation. Applying the settled principle that a court's decision overrides an administrative instruction when the two are in conflict, the Tribunal concluded that the Joint Commissioner, being a Central Excise Officer within the meaning of the statute, possessed jurisdiction both to issue the Show Cause Notice and to adjudicate the matter even though the dispute involved more than Rs. 2 Crores. [Paras 4, 5]

The impugned order is modified to hold that the Joint Commissioner had jurisdiction to issue the Show Cause Notice and adjudicate the case; the revenue's appeal is allowed to that extent and the stay application is rendered infructuous.

Final Conclusion: The Tribunal allowed the revenue's appeal to the extent of holding that the High Court's observation (relying on the Supreme Court in PAHWA CHEMICALS PVT. LTD.) prevails over the Board circular, and that the Joint Commissioner had jurisdiction to issue the Show Cause Notice and adjudicate the matter even though the amount involved exceeded Rs. 2 Crores; consequent modification of the impugned order and disposal of the stay application followed.

Remand for fresh consideration - remission of interest - exercise of power under Section 25(4) - right to reasoned order on main contention - direction for expeditious disposal

Remand for fresh consideration - right to reasoned order on main contention - remission of interest - Whether the Tribunal erred in remanding the matter to the Commissioner instead of remanding it to the Assistant Commissioner of Commercial Taxes and Appellate Authority for reconsideration of the petitioner's contention that no interest was payable. - HELD THAT: - The Tribunal accepted the petitioner's contention that the First Appellate Authority had not appreciated or assigned reasons for rejecting the petitioner's primary contention that no interest was payable, and held the matter required reconsideration. Instead of remanding the appeal to the First Appellate Authority for fresh disposal on that contention, the Tribunal remanded the matter to the Commissioner to consider remission under Section 25(4) of the Goa Value Added Tax Act, 2005. Having found that the Tribunal had itself recorded the absence of a valid consideration of the petitioner's main contention, the High Court held that the appropriate course was to remand the matter to the Assistant Commissioner of Commercial Taxes and Appellate Authority to reconsider and decide the petitioner's contention with reasons, rather than transferring consideration to the Commissioner for remission. The Court therefore modified the impugned order so as to restore the appeal before the Assistant Commissioner and remand it for fresh disposal in accordance with law, while leaving all substantive contentions open for determination by that authority. [Paras 5, 7, 8, 11]

Impugned order dated 23/06/2020 modified; appeal restored and remanded to the Assistant Commissioner of Commercial Taxes and Appellate Authority for fresh disposal on the petitioner's contention that no interest was payable, with reasons to be recorded; merits left open.

Direction for expeditious disposal - What procedural directions should be given for further proceedings following remand. - HELD THAT: - The High Court directed that the petitioners or their representatives appear before the Assistant Commissioner of Commercial Taxes and Appellate Authority on the specified date and file an authenticated copy of the order. The Court also directed the Assistant Commissioner to endeavor to dispose of the appeal expeditiously and, in any case, within four months from the date of the order. The Court clarified that it has not adjudicated the merits and left all contentions open for determination by the Assistant Commissioner on remand. [Paras 9, 10, 11]

Petitioners to appear and file authenticated copy on the stated date; Assistant Commissioner directed to dispose of the appeal expeditiously and within four months; no adjudication on merits by the Court.

Final Conclusion: The High Court modified the Tribunal's order by remanding the petitioner's appeal to the Assistant Commissioner of Commercial Taxes and Appellate Authority for fresh disposal of the petitioner's contention that no interest was payable (with reasons), directed procedural steps for appearance and filing, and ordered expeditious disposal within four months, while leaving substantive issues open for determination by the Appellate Authority.

Exhaustion of statutory appellate remedy - extraordinary jurisdiction under Article 226 - jurisdictional error as distinct from liability - remand for fresh adjudication - non-application of mind - obligation to afford opportunity and decide on merits - application and interpretation of amended provision of Section 19 of the TNVAT Act

Exhaustion of statutory appellate remedy - extraordinary jurisdiction under Article 226 - non-application of mind - Whether the High Court should entertain writ petitions without the aggrieved person first availing the statutory appellate remedies under the TNVAT Act where impugned assessment orders allege jurisdictional error or erroneous application of law. - HELD THAT: - The Court held that exhaustion of the statutory appeal remedy is the general rule and dispensing with that remedy is an exception to be exercised sparingly. The appellate framework under the TNVAT Act (appeal to the Appellate Deputy Commissioner, Appellate Tribunal and remedies to the High Court) is a complete scheme intended to redress grievances, and the appellate authorities are competent to consider errors of law, jurisdictional challenges and alleged non-application of mind after affording opportunity. Constitutional judicial review under Article 226 is supervisory and primarily examines procedure and legality of the decision-making process rather than re-adjudicating mixed questions of fact and law on the basis of affidavits. Exceptional dispensation of the appellate remedy is warranted only where there is imminent or irreparable prejudice, violation of fundamental rights, proceedings are wholly ultra vires, there is a breach of natural justice, or other extraordinary circumstances; routine or unsubstantiated allegations of jurisdictional error do not justify bypassing the statutory appellate remedy. Institutional respect for the appellate mechanism and separation of powers principles require the High Court to refrain from usurping the appellate forum's functions except in such exceptional situations. [Paras 10, 11, 18]

Petitioners are ordinarily bound to exhaust the statutory appellate remedies under the TNVAT Act; writ petitions bypassing appeal will not be entertained in routine cases and exceptional grounds must be made out to dispense with the appellate remedy.

Application and interpretation of amended provision of Section 19 of the TNVAT Act - remand for fresh adjudication - obligation to afford opportunity and decide on merits - Whether the impugned assessment orders should be quashed outright on the ground that the Assessing Officer applied the post-amendment provision of Section 19 of the TNVAT Act to assessment years prior to the amendment, or whether the matter should be remitted for fresh consideration. - HELD THAT: - Having found that the statutory appellate remedy must generally be availed, the Court declined to quash the impugned assessment orders on the writ petitions alone. Instead, the Court directed that the competent authorities must consider the question of applicability and interpretation of Section 19 (including the amendment effected by Tamil Nadu Act 13 of 2015) and thereafter pass assessment orders on merits after affording the assessee an opportunity of being heard. The Court emphasised that jurisdictional errors are generally rectifiable and that outright exoneration of liability on such a basis would frustrate the statutory scheme. Accordingly, the Court remitted the matter to the appropriate authorities for reconsideration and fresh adjudication in accordance with law. [Paras 18, 19]

The writ petitions are not allowed to quash the assessments; the competent authorities are directed to consider Section 19 (including the amendment) and decide the assessments on merits after giving opportunity, expeditiously and preferably within twelve weeks.

Final Conclusion: Writ petitions disposed of. Petitioners are required to avail the statutory appellate remedy in normal circumstances; the impugned assessment orders are not quashed but remitted to the competent authorities to reconsider and decide the assessments on merits in accordance with law (including consideration of the amendment to Section 19) after affording opportunity, preferably within twelve weeks.

Power of court to try summarily under Section 143 of the Negotiable Instruments Act - territorial jurisdiction in prosecutions under Section 138 of the Negotiable Instruments Act - validation of transfer of pending cases under Section 142A of the Negotiable Instruments Act - expeditious disposal of complaints arising under Section 138 of the Negotiable Instruments Act - effect of amendments to jurisdictional provisions in the Negotiable Instruments (Amendment) Act, 2015

Territorial jurisdiction in prosecutions under Section 138 of the Negotiable Instruments Act - validation of transfer of pending cases under Section 142A of the Negotiable Instruments Act - Whether the impugned writ order calling for directions about location and transmission of the criminal record required interference by this Court. - HELD THAT: - The High Court found no ground to interfere with the impugned order of the Single Judge which had permitted the petitioner to take appropriate steps regarding the original case record pending with the Judicial Magistrate, Alipore. The registry inquiry disclosed that the record in CR Case No. C-4392 of 2016 is physically lying before the Judicial Magistrate, 2nd Court at Alipore and that the petitioner had not appeared before that Court despite being given liberty to proceed. The Court noted the history of transfers and retransfers in light of prevailing Supreme Court directions and the subsequent statutory amendments (including insertion of subsection (2) in Section 142 and Section 142A) which govern local jurisdiction and validation of transferred pending cases, but did not reverse the impugned order. No factual finding was made adverse to the petitioner that would justify setting aside the writ order.

The writ order is not interfered with and is upheld; the record is held to be pending before the Judicial Magistrate, 2nd Court at Alipore and the petitioner was to take steps before that Court.

Power of court to try summarily under Section 143 of the Negotiable Instruments Act - expeditious disposal of complaints arising under Section 138 of the Negotiable Instruments Act - Appropriate remedy to ensure timely disposal of the complaint under Section 138 of the Negotiable Instruments Act pending before the Magistrate. - HELD THAT: - Observing that complaints under Section 138 ought to be disposed of summarily and speedily in accordance with Section 143 and the direction of the Supreme Court, and noting delay caused by transfers, this Court directed the trial Court to take steps for final disposal of complaint case No. C-4392 of 2016. The High Court invoked the statutory scheme and supervisory jurisdiction to ensure that the matter is decided expeditiously. The Court gave a concrete timetable to dispel misgiving and promote summary trial in consonance with the Act and judicial pronouncements on speedy disposal.

The Judicial Magistrate, 2nd Court at Alipore is directed to take steps for disposal of complaint case No. C-4392 of 2016 expeditiously, preferably within six months from communication of this order.

Final Conclusion: The appeal is disposed of by declining interference with the impugned writ order while directing the trial Court to expeditiously dispose of the complaint under Section 138 NI Act (Case No. C-4392 of 2016), preferably within six months from communication of this order.