TaxTMI Updates e-Newsletter
Jul 27,2019

Pure services - local authority - governmental authority - government entity - composite supply - works contract - Entry No. 3 of Notification No. 12/2017 - Central Tax (Rate) - Article 243W of the Constitution

Pure services - composite supply - works contract - Entry No. 3 of Notification No. 12/2017 - Central Tax (Rate) - Impugned supply qualifies as a 'pure service' within Entry No. 3 of Notification No. 12/2017 and is not a composite supply or works contract excluded from the exemption. - HELD THAT: - The Authority examined the nature of the contract for management of Non Network tanker using a GPRS system and the material including the work order showing billing on a per tanker trip basis and provision of tracking reports generated from instruments mounted on tankers. Having regard to the contractual character and the service rendered - namely provision of GPRS tracking and management services to ensure water delivery - the Authority found the transaction to be a pure service for the purposes of Entry No. 3 of Notification No.12/2017. The Authority rejected the contention that the presence of tracking instruments imbues the transaction with the character of a composite supply or works contract, concluding that the essential character of the supply is service and not a supply of goods or transfer of property in goods as envisaged by the definition of 'works contract' or the illustrations of 'composite supply'. The finding is therefore that the services fall within the exempt description subject to satisfaction of recipient related conditions in the notification. [Paras 6, 7]

Impugned supply is a pure service and falls within Entry No. 3 of Notification No.12/2017 (subject to recipient eligibility).

Local authority - governmental authority - government entity - Entry No. 3 of Notification No. 12/2017 - Central Tax (Rate) - Article 243W of the Constitution - Recipient Nagpur Environmental Services Ltd. (NESL) is a 'local authority' within the meaning of section 2(69) of the GST Act and the definitions in the notification, entitling supplies to it to the exemption under Entry No. 3. - HELD THAT: - The Authority considered the statutory and administrative record including the Government Resolution under the Nagpur City Municipal Corporation Act, 1948 (section 58B), the Memorandum of Understanding between Nagpur Municipal Corporation and NESL, the corporate shareholding showing Nagpur Municipal Corporation's predominant control and the stated purpose and functions assigned to NESL. On this basis the Authority concluded that NESL was established to carry out functions entrusted to the municipality under Article 243W and that it is an authority under the control/management of the municipal fund, falling within the scope of 'local authority' (and correspondingly within the notification's concept of governmental authority/entity where applicable). Consequently, supplies of pure services to NESL satisfy the recipient condition of Entry No. 3. [Paras 6, 7]

NESL is a local authority for the purposes of the notification and the exemption applies to pure services supplied to it.

Final Conclusion: The Advance Ruling holds that the contract for management of Non Network tankers via GPRS constitutes a pure service and that Nagpur Environmental Services Ltd. is a local authority; accordingly the supply is covered by Entry No. 3 of Notification No.12/2017 CT(Rate) and is exempt from GST.

Summary order. Petitioner granted three weeks to file rejoinder affidavit; matter listed on 21.08.2019 along with Writ Tax Nos.1049 of 2018 and 578 of 2019.

Stay of order - deposit as condition for interim relief - NATIONAL ANTI-PROFITEERING AUTHORITY determination of profiteered amount - passing on benefit to land owner and buyers - continuation of penalty proceedings

Stay of order - deposit as condition for interim relief - NATIONAL ANTI-PROFITEERING AUTHORITY determination of profiteered amount - Whether the impugned order of the National Anti-Profiteering Authority dated 14th June 2019 should be stayed pending adjudication and on what terms. - HELD THAT: - The Court noted that NAPA had determined a profiteered amount and directed distribution of benefits, including an amount to be passed to the land owner for onward distribution to buyers. Having considered the petitions and the interim relief applications, the Court exercised its discretionary power to grant an interim stay of the impugned NAPA order subject to the Petitioners depositing a specified security. The stay is conditional on the Petitioners depositing a total sum of Rs. 40 lacs in equal halves into the CGST and SGST funds by the date fixed, as a protective measure while the petitions proceed. The Court also recorded the factual contention of the Petitioners that liability should be limited to units actually sold, but granted only interim relief without deciding the merits. [Paras 5, 6, 7]

Interim stay of the NAPA order dated 14th June 2019 granted on condition that the Petitioners deposit Rs. 40 lacs (Rs. 20 lacs to CGST fund and Rs. 20 lacs to SGST fund) on or before 31st August 2019.

Continuation of penalty proceedings - Whether the penalty proceedings connected to the NAPA determination should be stayed pending disposal of the petitions. - HELD THAT: - The Court expressly left the penalty proceedings undisturbed, directing that such proceedings will continue and that any orders passed therein will remain subject to the final outcome of the writ petitions. No substantive adjudication on the penalty merits was undertaken; the direction preserves the progress of penalty proceedings while the petitions are heard. [Paras 8]

Penalty proceedings shall continue and any orders therein will be subject to the outcome of the present petitions.

Final Conclusion: The High Court granted conditional interim relief by staying the NAPA order dated 14th June 2019 upon deposit of the specified security by 31st August 2019, while permitting the related penalty proceedings to continue; further pleadings and listing were ordered for directions and final adjudication.

Interest on delayed refund of tax - Compensation for wrongful or arbitrary withholding of money by the State - Provisional refund and time-bound refund procedure - Statutory mandate to sanction interest suo motu - Simple interest as compensatory measure in tax refunds

Interest on delayed refund of tax - Statutory mandate to sanction interest suo motu - Provisional refund and time-bound refund procedure - Entitlement to interest/compensation for delay in payment of refund of integrated tax on exports under the IGST/CGST scheme - HELD THAT: - The Court examined the statutory scheme governing zero rated supplies and refunds (Section 16 of IGST Act; Section 54 and Section 56 of CGST Act) together with the procedural rules (Rules 90, 91, 94 and 96 of the CGST Rules). The provisions envisage time bound processing of refund claims, grant of provisional refunds and an obligation on the proper officer to sanction interest where interest is due under Section 56; Rule 94 mandates that the proper officer shall make an order sanctioning interest and credit the same to the claimant's bank account. The High Court held that these provisions are beneficial and nondiscriminatory and must be given effect to; delay in granting refunds, unexplained by the Revenue, attracts liability to pay interest. The Court noted the respondents had not explained the delay and that the chart of delays supplied by the writ applicants substantiated inordinate delay. [Paras 22, 24, 25]

Writ applicants entitled to interest on delayed refund; respondents liable to pay interest for the delay.

Simple interest as compensatory measure in tax refunds - Computation period and point of commencement of interest - Mandate for quantification and timeline for payment - Rate, basis and mechanism for computation and payment of interest on delayed refund - HELD THAT: - Applying the statutory framework and relevant precedents, the Court directed payment of simple interest at the rate of 9% per annum on the aggregate refundable amount. The Court specified that interest shall run from the date of filing of the GSTR 3 (the return filing date relied upon by the applicants) until the date of refund. The authority concerned was directed to examine the chart submitted by the applicants, compute the aggregate refund and the interest due, and complete this exercise within two months from receipt of the writ of the order; the computed interest amount was to be paid to the applicants within two months thereafter. The Court recorded that the exercise must be undertaken at the earliest and that the authority shall calculate and pay the requisite interest accordingly. [Paras 21, 25]

Interest fixed at 9% p.a. simple from date of filing GSTR 3; authority to compute aggregate amount and pay interest within prescribed two month timelines.

Final Conclusion: Writ petition disposed of directing the respondents to compute and pay simple interest at 9% per annum on the delayed integrated tax refunds (from the date of filing of GSTR 3 to date of refund) and to complete computation and payment within the timelines specified by the Court.

Consideration - supply - business - subscription/contribution as consideration - nexus between amount and taxable activity - principle of mutuality

Consideration - subscription/contribution as consideration - nexus between amount and taxable activity - Contributions received by NIBM from its member banks constitute 'consideration' for the supply of services and are therefore includible within the scope of supply under the GST law. - HELD THAT: - The Authority found that the contributions are received with a caveat to perform activities enumerated in the Memorandum of Association (promotion of research, training, assistance to banks etc.), and hence there is a direct relation between the activities performed and the funds received. The inclusive definition of 'consideration' in the GST Act covers payments made in respect of, in response to, or for the inducement of supply of services by a person. On the facts, contributions by the member banks are not mere voluntary grants but are paid to enable NIBM to carry out the specified activities; therefore the contributions qualify as 'consideration' for supply of services and cannot be excluded as non taxable aid or subsidy. [Paras 5]

Contributions are 'consideration' for taxable supplies and are includible in the scope of supply.

Business - supply - subscription/contribution as consideration - Activities of NIBM fall within the definition of 'business' and the contributions are received in furtherance of that business, thus constituting consideration for supply. - HELD THAT: - Sectional definitions were applied to conclude that a 'business' includes provision by a society for facilities or benefits to its members for a subscription or other consideration. NIBM, an academic and training society formed by RBI and public sector banks, performs services (training, research, consultancy) which are services recognized under GST and are rendered in furtherance of business. The Authority held that the contributions enable and are received for the performance of those services and therefore amount to consideration received in the course or furtherance of business. [Paras 5]

NIBM's activities constitute 'business' and the contributions are received in furtherance of that business, attracting GST.

Principle of mutuality - consideration - The doctrine of mutuality does not apply to exempt the contributions from GST on the facts of this case. - HELD THAT: - The Authority rejected the applicant's contention that the principle of mutuality renders the contributions non taxable. It observed that under the GST Act the applicant (NIBM) and its member banks are distinct 'persons' and that the activities fall within the wide ambit of 'services' and 'consideration' under the statute. Because contributions are paid to obtain services specified in the MOA and there exists a direct relation between funds received and activities performed, the mutuality principle - which precludes taxation where a person effectively deals with himself - is inapplicable. [Paras 5]

Principle of mutuality is not attracted; contributions are taxable.

Final Conclusion: The Authority answered the question in the affirmative: contributions/subscriptions received by NIBM from its member banks towards recurring and non recurring (including capital) expenses are 'consideration' for supply of services in the course or furtherance of business and are therefore leviable to GST.

Supply of warehoused goods to any person before clearance for home consumption - Schedule III of the CGST Act - Bonded warehouse - Non-bonded warehouse - No supply - Export of goods - Advance ruling jurisdiction under Section 97

Supply of warehoused goods to any person before clearance for home consumption - Schedule III of the CGST Act - Bonded warehouse - No supply - Whether supplies made from a bonded warehouse to a vessel at an Indian port fall under Schedule III of the CGST Act - HELD THAT: - The Authority found that goods kept in a bonded warehouse remain under customs control and are not cleared for home consumption; clause 8(a) of Schedule III treats supply of warehoused goods to any person before clearance for home consumption as neither a supply of goods nor a supply of services. On the facts, where goods remain in bonded warehouse and are delivered on board the vessel pursuant to ex-bond procedures (i.e., before clearance for home consumption), such supplies are covered by Schedule III and therefore treated as no supply for GST purposes. The conclusion rests on the character of bonded warehouse goods as not cleared for home consumption and the specific wording of Schedule III clause 8(a).

Supply from a bonded warehouse to a vessel at an Indian port falls under Schedule III and is not subject to GST.

Supply of warehoused goods to any person before clearance for home consumption - Schedule III of the CGST Act - Non-bonded warehouse - Whether supplies made from a non-bonded warehouse to a vessel at an Indian port fall under Schedule III of the CGST Act - HELD THAT: - The Authority observed that goods stored in non-bonded warehouses (or imported goods cleared for home consumption) have been cleared into the taxable territory on payment of appropriate duties and are not 'warehoused goods' for the purposes of clause 8(a) of Schedule III. As such, supplies of those goods to vessels at Indian ports do not fall within Schedule III and therefore are not treated as 'no supply' under that provision; they remain taxable supplies under the GST law.

Supply from a non-bonded warehouse (i.e., after clearance for home consumption) does not fall under Schedule III and is liable to GST.

Export of goods - Advance ruling jurisdiction under Section 97 - Whether the Authority will rule on whether the supplies to vessels at Indian ports constitute exports of goods - HELD THAT: - On examination of the submissions and the statutory scope of advance rulings under Section 97, the Authority concluded that the central question-whether the transactions qualify as 'export of goods'-is beyond the matters on which an advance ruling may be sought in the present context. Accordingly the Authority declined to answer whether the supplies are exports (and hence zero-rated) because that specific question was not maintainable before the Authority under the provisions invoked by the applicant.

The question whether the supplies constitute exports of goods is not answered by this Authority as it lies beyond the scope of the advance ruling sought.

Final Conclusion: Ruling: supplies made from bonded warehouses to vessels at Indian ports are covered by Schedule III (no supply, not subject to GST); supplies from non-bonded warehouses (i.e., after clearance for home consumption) do not fall under Schedule III and remain taxable; the question whether such supplies qualify as exports was not answered by the Authority as it was held to be beyond the scope of the advance ruling application.

Comparability - Arm's Length Price determination - Rule 10B(2) FAR analysis (functions, assets, risks) - exclusion of comparables - Transactional Net Margin Method (TNMM) - Rule 10B(3) - reasonable adjustments to eliminate material effects - high economic upscale and brand value affecting comparability

Comparability - exclusion of comparables - high economic upscale and brand value affecting comparability - Rule 10B(2) FAR analysis (functions, assets, risks) - Rule 10B(3) - reasonable adjustments to eliminate material effects - Whether M/s TCS E-Serve Limited and M/s TCS E-Serve International Limited should be excluded from the list of comparables for determining the ALP of the Assessee's international transactions - HELD THAT: - The Court applied the statutory comparability framework under Rule 10B, emphasising FAR analysis (functions performed, assets employed, risks assumed) and the need to consider whether differences are likely to materially affect price or profit and whether reasonable adjustments can be made. While identical transactions alone do not ensure reliable comparability under TNMM, entities with a significantly larger scale of operations, substantial brand-related intangibles and close association with a major group (Tata/TCS) may materially distort the profit level indicator of a much smaller tested party. The Director's report and other material showed that the impugned TCS E-Serve entities leveraged TCS's scale and brand equity, lacked segmental bifurcation, and possessed intangibles and economic upscale that materially affected their profitability. Precedents of this Court and the Tribunal for AY 2010-11 were held to support exclusion where such factors operate. The ITAT's reliance on the fact of identical transactions without adequately addressing the distorting effect of brand and scale was insufficient; reasonable adjustments could not render those entities reliable comparables for the Assessee whose operations and scale were of a much lower order. For these reasons the two TCS E-Serve entities were held to be unsuitable comparables and were to be excluded. [Paras 15, 24, 28, 29, 30]

Both M/s TCS E-Serve Limited and M/s TCS E-Serve International Limited are excluded from the list of comparables for determining the ALP for AY 2010-11.

Final Conclusion: The appeal is allowed: the ITAT order upholding inclusion of the two TCS E-Serve comparables is set aside and both entities are excluded as comparables for the purposes of determining the ALP for AY 2010-11; no order as to costs.

Dividend income - taxability in year of receipt - onus of proof on assessing officer - treatment of foreign currency instrument - deletion of addition

Dividend income - taxability in year of receipt - onus of proof on assessing officer - treatment of foreign currency instrument - deletion of addition - Addition of dividend income of Rs. 43,12,165 made for A.Y.2012-13 was liable to be deleted. - HELD THAT: - The Tribunal recorded and relied upon documentary evidence showing the dividend was credited to the bank on 16.10.2012 and found that the dividend was not received in the year ending 31.3.2012; consequently it did not fall for taxation in A.Y.2012-13. The assessee had declared the relevant dividend in the subsequent assessment year (2013-14), which the Revenue had accepted. The Tribunal further noted that the Assessing Officer had not discharged the burden of establishing receipt of dividend in the year under consideration, and had erred in treating the amount shown in the dividend warrant in Sri Lankan currency as the assessee's dividend for the year. On these findings of fact the Tribunal held the addition to be without basis and deleted it. The High Court examined these findings and found no error of law in the Tribunal's conclusion, therefore refusing to interfere with the deletion.

The deletion of the addition made on account of dividend income for A.Y.2012-13 is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal and upheld the Tribunal's deletion of the addition of dividend income for A.Y.2012-13, finding no error of law in the Tribunal's factual conclusions.

Treatment of business losses and unabsorbed depreciation on amalgamation - effect of High Court sanction of scheme of amalgamation - relating back to the appointed date of amalgamation - revisional jurisdiction under Section 263 of the Income tax Act

Treatment of business losses and unabsorbed depreciation on amalgamation - relating back to the appointed date of amalgamation - Whether the additions disallowing set off of Dolphin Laboratories' business loss were rightly sustained. - HELD THAT: - The Court upheld the view taken by the Appellate Tribunal and CIT(A) that once the scheme of amalgamation is sanctioned by the High Court, its effect relates back to the appointed date specified in the scheme. Consequently, for the assessment year in question the assessee was entitled to claim set off of business losses of the amalgamating company as available from the appointed date. The fact that the scheme may not have been sanctioned at the time the return was filed did not preclude granting the benefit where the sanction was obtained before completion of the assessment. The Court relied on the reasoning in IRM Limited that High Court sanction, where it relates back to the appointed date, governs recognition of losses and depreciation for taxation purposes.

Addition disallowing business loss of Dolphin Laboratories deleted; Tribunal's order upholding deletion affirmed.

Treatment of business losses and unabsorbed depreciation on amalgamation - effect of High Court sanction of scheme of amalgamation - relating back to the appointed date of amalgamation - Whether the addition disallowing unabsorbed depreciation of Dolphin Laboratories was rightly sustained. - HELD THAT: - Applying the same principle, the Court held that unabsorbed depreciation of the amalgamating company is to be recognised in the hands of the transferee company from the appointed date once the scheme is sanctioned by the High Court and relates back thereto. The Assessing Officer's objection - that at the time of filing the return the scheme was not yet sanctioned - was immaterial where sanction was subsequently granted prior to completion of assessment. The Appellate Tribunal's deletion of the addition of unabsorbed depreciation was therefore justified.

Addition disallowing unabsorbed depreciation of Dolphin Laboratories deleted; Tribunal's order upholding deletion affirmed.

Final Conclusion: Revenue's appeal dismissed; the High Court affirmed the Tribunal's deletion of additions disallowing (i) business loss and (ii) unabsorbed depreciation of the amalgamating company on the basis that the sanctioned amalgamation scheme relates back to the appointed date, rendering the claimed set offs allowable for AY 2006 07.

Re-opening of assessments under Section 153A of the Income tax Act on the basis of material seized in a search - Application of precedent in CIT v. Kabul Chawla to returns filed and completed assessments prior to search - Admissibility and weight of statements recorded during a survey under Section 133A where declarant is not cross examined - Concurrent findings of fact by Commissioner (Appeals) and the Income tax Appellate Tribunal

Re-opening of assessments under Section 153A of the Income tax Act on the basis of material seized in a search - Application of precedent in CIT v. Kabul Chawla to returns filed and completed assessments prior to search - Additions for AYs 2006-07 to 2008-09 could not be sustained under Section 153A where no incriminating material was found and earlier returns/assessments were complete. - HELD THAT: - The Tribunal applied this Court's decision in CIT v. Kabul Chawla and concurred with the Commissioner (Appeals) that, for the years in which returns had been filed on time and assessments completed before the search, there was no incriminating material recovered warranting reopening under Section 153A. The Revenue did not dispute absence of incriminating material in respect of the additions impugned for these years; accordingly the additions fell beyond the scope of reassessment under the statutory provision as interpreted by the cited precedent. [Paras 4, 5]

Additions for AYs 2006-07 to 2008-09 held beyond scope of reassessment under Section 153A and deleted.

Admissibility and weight of statements recorded during a survey under Section 133A where declarant is not cross examined - Concurrent findings of fact by Commissioner (Appeals) and the Income tax Appellate Tribunal - Statement recorded in survey of a third party implicating the assessee could not sustain additions where it was recorded behind the assessee's back and the declarant was not cross examined; documentary material and settlement between parties were taken into account. - HELD THAT: - The Tribunal noted the survey statement against the assessee but also recorded that the assessee produced documents showing litigation and settlement with the third party, which the Assessing Officer did not treat adversely. The statement was recorded without opportunity for the assessee to cross examine the maker; on these facts the Tribunal concurred with the Commissioner (Appeals) that the statement lacked sufficient evidentiary weight to support the additions and rightly resulted in their deletion. [Paras 7, 8]

Additions based on the third party's survey statement were not sustained and were deleted.

Concurrent findings of fact by Commissioner (Appeals) and the Income tax Appellate Tribunal - Additions relating to purchases from M/s Kiran Furnitures and other deletions for AY 2011-12 were examined afresh by the Tribunal and concurred with the Commissioner (Appeals) that expenses were incurred in the ordinary course and the additions were not sustainable. - HELD THAT: - The Tribunal considered the documents and evidence relating to the disputed purchases and the additions for AY 2011-12, gave detailed reasons and agreed with the findings of the Commissioner (Appeals) that the claimed expenses/purchases were genuine and incurred in the normal course of business. On this concurrent factual appraisal the additions were held to have been rightly deleted by the lower appellate authority. [Paras 9]

Additions relating to purchases and expenses for AY 2011-12 deleted; Tribunal concurred with CIT(A).

Concurrent findings of fact by Commissioner (Appeals) and the Income tax Appellate Tribunal - Whether the impugned common order of the Tribunal raises any substantial question of law - none arises on the facts and concurrent factual findings. - HELD THAT: - Given the Tribunal's application of this Court's precedent and its detailed concurrence with the Commissioner (Appeals) on the factual and evidentiary aspects across the assessment years, the High Court found no substantial question of law emanating from the impugned order that would warrant interference. The appeals were therefore dismissed. [Paras 10, 11]

No substantial question of law arises; appeals dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeals, upholding the Tribunal's concurrence with the Commissioner (Appeals) that (i) additions for AYs 2006-07 to 2008-09 could not be sustained under Section 153A in absence of incriminating material and in view of the Kabul Chawla precedent, and (ii) contested additions for subsequent years based on third party statements or challenged purchases were rightly deleted on concurrent factual findings.

Entitlement to deduction under Section 80P for primary agricultural cooperative societies - reopening assessment under Section 147 and issuance of notice under Section 148 - limitation periods for notices predicated on escaped assessment - abeyance of proceedings pending disposal of Special Leave Petitions - revival or quashing of impugned proceedings contingent on outcome of Special Leave Petitions

Entitlement to deduction under Section 80P for primary agricultural cooperative societies - Application of the Division Bench ratio that primary agricultural cooperative societies are entitled to the benefit of Section 80P and its applicability to the writ petitioners. - HELD THAT: - The Court recorded that there is no dispute the ratio in the earlier Division Bench decisions (which held that primary agricultural credit/cooperative societies are entitled to deduction under Section 80P) applies to the writ petitioners. On that basis the Court treated the petitioners as falling within the class protected by the Division Bench rulings and concluded that the Division Bench ratio governs the entitlement of these petitioners to the benefit under Section 80P. The Court therefore proceeded to mould relief in light of those precedents rather than re-adjudicate the substantive question. [Paras 3, 11]

The Division Bench ratio that primary agricultural cooperative societies are entitled to Section 80P applies to the petitioners and governs the outcome.

Abeyance of proceedings pending disposal of Special Leave Petitions - revival or quashing of impugned proceedings contingent on outcome of Special Leave Petitions - Whether the impugned proceedings should be kept in abeyance and the consequences contingent on the outcome of Special Leave Petitions filed by Revenue. - HELD THAT: - Relying on the fact that Special Leave Petitions have been filed in the Supreme Court against the Division Bench orders, the Court ordered that the impugned proceedings be kept in abeyance until disposal of those SLPs. The operative directions provide that if the SLPs succeed, the impugned proceedings will be revived and the petitioners may then raise all available objections including on reasons and limitation; if the SLPs fail or are not entertained, the impugned proceedings will stand set aside without further reference to this Court. The order therefore conditions interim relief on the ultimate outcome of the SLPs and preserves the parties' rights accordingly. [Paras 3, 4]

All impugned proceedings are kept in abeyance pending disposal of the Special Leave Petitions; proceedings will be revived if SLPs succeed and will stand set aside if SLPs fail.

Limitation periods for notices predicated on escaped assessment - reopening assessment under Section 147 and issuance of notice under Section 148 - Whether limitation for issuance of notices under Section 148/147 was to be adjudicated at this stage. - HELD THAT: - The Court noted Revenue's contention about differing limitation periods applicable to notices under Section 148 (as contained in the proviso to Section 147 and Section 149(1)(b) and (c)), and that some impugned notices may be time-barred. However, the Court expressly refrained from expressing any opinion on the limitation plea in this order. The dispositive course chosen-keeping proceedings in abeyance-was taken instead of adjudicating limitation; the Court left open the petitioners' right to raise limitation and other objections if proceedings are revived. [Paras 3, 17, 19]

No opinion is expressed on limitation; the question of limitation is left open for determination when/if proceedings are revived and for the petitioners to raise in the appropriate forum.

Final Conclusion: The writ petitions are disposed of by directing that the impugned proceedings be kept in abeyance pending disposal of the Special Leave Petitions filed by Revenue against the Division Bench orders; if the SLPs succeed the proceedings shall be revived (subject to all defenses including limitation), and if the SLPs fail the impugned proceedings shall stand set aside.

Deduction under section 54F for investment in a residential house - admission of additional evidence under rule 29 of the Income Tax Appellate Rules - estimation of business income by assessing officer and requirement to make enquiries from similarly situated assessees - remand for fresh consideration by the Assessing Officer

Deduction under section 54F for investment in a residential house - admission of additional evidence under rule 29 of the Income Tax Appellate Rules - remand for fresh consideration by the Assessing Officer - Claim for deduction under section 54F amounting to Rs. 86,90,000/- was not finally adjudicated and was remitted to the Assessing Officer after admitting additional evidence. - HELD THAT: - The Tribunal examined the application for admission of additional documents (electricity bills, property tax receipts, inaugural photographs and an affidavit) and found these documents to be material and going to the root of the controversy as they bear on whether the sale proceeds were invested in construction of a new residential asset. In view of their probative character the Tribunal admitted the documents under rule 29 and set aside the concurrent orders of the authorities below on this issue. The matter of allowability of deduction under section 54F was remitted to the Assessing Officer for fresh consideration in accordance with law, taking into account the admitted evidence. [Paras 6]

Admissions granted; question of allowability of deduction under section 54F remitted to the Assessing Officer for fresh decision after considering the admitted evidence.

Estimation of business income by assessing officer and requirement to make enquiries from similarly situated assessees - Addition of Rs. 1,60,010/- by estimating business income was deleted. - HELD THAT: - The Tribunal found that the Assessing Officer did not record any basis for estimating net profit at the figure adopted and that the Commissioner (Appeals) affirmed the AO's estimate without independent enquiry. The law requires the AO, when making a best judgment assessment by estimation, to make enquiries such as comparing with similarly situated assessees before making an ad hoc enhancement. The Tribunal noted that the assessee had declared sales of Rs. 7,29,700/- (as recorded in the file) and that the AO's foundational premise for estimating undisclosed gross receipts was thus incorrect. In the absence of any stated basis for the estimate and of independent enquiries, the adhoc addition could not be sustained and was deleted. [Paras 10]

Addition made by way of estimation of business income deleted.

Final Conclusion: The appeal is partly allowed: the deduction claim under section 54F is remitted to the Assessing Officer after admission of additional evidence; the ad hoc addition to business income by estimation is deleted.

Allowance of higher rate of depreciation for motor vehicles used for hire - Business of running vehicles on hire versus use in own logistics business - Remand for verification whether vehicles were hired out and whether hiring income was earned - Applicability of Rule 8D in computing disallowance under section 14A - Reliance on judicial precedents to determine entitlement to higher depreciation

Allowance of higher rate of depreciation for motor vehicles used for hire - Business of running vehicles on hire versus use in own logistics business - Remand for verification whether vehicles were hired out and whether hiring income was earned - Entitlement to higher rate of depreciation for motor lorries/trucks for A.Y. 2011-12 remanded for fresh verification - HELD THAT: - The Assessing Officer disallowed the assessee's claim for higher depreciation after recording a finding that the vehicles were used in the assessee's own logistics business and not in the business of running them on hire. The CIT(A) had reversed that finding relying on precedents, but the Tribunal observed that neither the AO nor the CIT(A) had examined whether the assessee was in the business of hiring out its vehicles in addition to its logistics business or whether it had actually earned income from hiring. The Tribunal found that those factual enquiries are material to determine entitlement to the higher rate and therefore set aside the CIT(A)'s order on this point and directed remand to the AO for decision afresh after necessary verification in accordance with law. [Paras 7, 9]

CIT(A)'s order deleted the disallowance; set aside and matter restored to the Assessing Officer for fresh decision after verification.

Allowance of higher rate of depreciation for motor vehicles used for hire - Business of running vehicles on hire versus use in own logistics business - Remand for verification whether vehicles were hired out and whether hiring income was earned - Entitlement to higher rate of depreciation for motor lorries/trucks for A.Y. 2014-15 remanded for fresh verification - HELD THAT: - The facts and arguments on the depreciation issue for A.Y. 2014-15 are the same as for A.Y. 2011-12. Applying the same reasoning, the Tribunal restored the issue to the file of the Assessing Officer for fresh consideration and verification as to whether the assessee was in the business of hiring out vehicles and had earned hiring income, before allowing the higher rate of depreciation. [Paras 10]

Issue restored to the Assessing Officer for fresh decision after necessary verification.

Applicability of Rule 8D in computing disallowance under section 14A - Reliance on judicial precedents to determine scope of Rule 8D - Validity of the CIT(A)'s restriction of disallowance under section 14A by application of Rule 8D for A.Y. 2014-15 upheld - HELD THAT: - The Assessing Officer computed a disallowance under section 14A by applying Rule 8D. The CIT(A) restricted that disallowance by following this Tribunal's decision in REI Agro Limited that for the application of Rule 8D only those investments need be considered which have yielded exempt income during the year. That Tribunal decision was upheld by the Calcutta High Court. In view of the High Court's affirmation of the Tribunal's reasoning, the Tribunal found no infirmity in the CIT(A)'s order and upheld the restriction of the disallowance. [Paras 11]

CIT(A)'s restriction of the Rule 8D based disallowance under section 14A upheld; Revenue's ground dismissed.

Final Conclusion: The Tribunal set aside the CIT(A)'s deletion of the depreciation disallowance and remanded the depreciation issue for A.Y. 2011-12 and for A.Y. 2014-15 to the Assessing Officer for fresh decision after necessary verification as to whether the vehicles were hired out and hiring income was earned; the CIT(A)'s restriction of the section 14A disallowance (by application of Rule 8D) for A.Y. 2014-15 was upheld. The appeal for 2011-12 is treated as allowed for statistical purposes; the appeal for 2014-15 is treated as partly allowed for statistical purposes.

Short term capital gain vs business income - intention to hold - investment or stock-in-trade - CBDT Circular No.6/2016 guidance on shares characterization - speculative transaction under section 43(5)

Short term capital gain vs business income - intention to hold - investment or stock-in-trade - CBDT Circular No.6/2016 guidance on shares characterization - Whether the gains from sale of listed shares declared as Short Term Capital Gain are to be treated as capital gains or as business income of the assessee - HELD THAT: - The Tribunal examined the frequency, holding period and manner of transactions, noting that acquisitions and disposals occurred across six scrips with an average interval of about 61 days and there was no evidence of high frequency churning or repeated buy-sell of the same shares. Reliance was placed on the principle that characterization depends on the assessee's intention as evidenced by conduct and records, and that no single test is determinative. The Tribunal referred to CBDT Circular No.6/2016 which recognises that shares may be treated as stock in trade if so opted by the assessee, but also confirms that listed shares held as investments are capital assets. Here the assessee purchased shares from own funds, routed transactions through banking and Demat accounts, and took delivery; there was no use of borrowed funds and no adverse finding as to genuineness. Applying these fact specific principles, the Tribunal concluded that the transactions were investments giving rise to Short Term Capital Gains and not business income. [Paras 10, 11, 12, 13, 14]

Short Term Capital Gains arising from sale of the listed shares are to be treated as capital gains; ground no.1 allowed.

Speculative transaction under section 43(5) - Whether the losses claimed on transactions in copper cathode/rods/wires are to be treated as speculation losses or as business losses adjustable against normal income - HELD THAT: - The Tribunal noted absence of evidence showing actual delivery or possession - no godown details, no bills evidencing delivery - and that purchases and sales were concluded on the same dates. In view of the statutory definition of speculative transactions (transactions settled otherwise than by actual delivery), and on the available record, the Tribunal found that the commodity transactions were settled without actual delivery and thus fell within the ambit of speculative transactions under section 43(5). The lower authorities' finding that such losses are speculative and not allowable against normal income was affirmed. [Paras 5, 15]

Transactions in copper were speculative in nature; the claim of loss is not allowable as business loss and this ground of appeal is dismissed.

Final Conclusion: Appeal partly allowed: Short Term Capital Gains from sale of listed shares held to be capital gains; claim of loss on copper transactions upheld as speculative loss and rejected.

Penalty under 271(1)(c) of the Income Tax Act - Penalty cannot survive when the corresponding additions are set aside - Cancellation of penalty following remand or setting aside of addition by appellate authority

Penalty under 271(1)(c) of the Income Tax Act - Penalty cannot survive when the corresponding additions are set aside - Reliance on precedent for cancellation of penalty - Validity of penalty of Rs. 43,15,142/- levied under 271(1)(c) in respect of addition of Rs. 1,39,64,857/-. - HELD THAT: - The Tribunal noted that the very additions on which the penalty was based had been set aside and remanded to the Assessing Officer by the Tribunal in an earlier order dated 04.07.2018 for fresh examination in light of a Circular relied upon by the assessee. Since the quantum addition was thus not sustained but sent back for re-examination, there remained no subsisting basis for levying penalty for concealment. The Tribunal applied the settled principle, as enunciated in the cited precedent, that where additions on which a concealment penalty is founded are set aside or cancelled by the appellate authority, the corresponding penalty cannot survive independently. For these reasons the Tribunal concluded that the penalty lacked foundation and could not be sustained.

Penalty levied under 271(1)(c) set aside; appeal of the revenue dismissed.

Final Conclusion: The appeal filed by the Revenue is dismissed; the penalty imposed under 271(1)(c) is cancelled because the underlying additions have been set aside and remanded for fresh consideration.

Taxation of income from sale of shares as capital gain versus business income - application of CBDT guidelines to determine objective of acquiring shares - disallowance of interest under section 36(1)(iii) on borrowed funds advanced as share application money - presumption that advances are from accumulated reserves where surplus funds exceed advances - imputation/disallowance of interest on interest free advances to related concerns - Rule 8D applicability and requirement of Assessing Officer's recorded dissatisfaction under section 14A - treatment of rental income as income from house property (section 24) versus business income - allowability of prior period expenses where liability crystallised and bills received during the year - deductibility of employer's PF liability where payment was belated in light of binding precedents

Taxation of income from sale of shares as capital gain versus business income - application of CBDT guidelines to determine objective of acquiring shares - Income from sale of shares of wholly owned subsidiaries is taxable as capital gain and not as business income. - HELD THAT: - The Tribunal followed its earlier coordinate bench decision in the assessee's own case for AY 2011-12 which applied CBDT guidelines: examine objective of acquiring shares, holding period, frequency of transactions and book treatment. Applying those factors to the facts before it, the Tribunal held that shares were held as investment and not for short term trading, and rejected the revenue's contention that sale of shares amounted to trading in underlying assets. The Tribunal emphasised that shareholders do not have direct rights to the company's assets and that the revenue's characterisation conflicted with the assessee's modus operandi and documentary treatment, and therefore the gains were capital in nature. The finding was applied to AY 2007-08 and, on identical facts, to AY 2012-13 as well. [Paras 9, 10, 11]

Grounds relating to taxation of sale of shares answered in favour of the assessee; income to be taxed as capital gain.

Disallowance of interest under section 36(1)(iii) on borrowed funds advanced as share application money - presumption that advances are from accumulated reserves where surplus funds exceed advances - No disallowance of proportionate interest under section 36(1)(iii) in respect of borrowed funds to the extent of share application money where the assessee had sufficient accumulated reserves. - HELD THAT: - Relying on the Tribunal's earlier reasoning in AY 2011-12 and the view of the Jurisdictional High Court in CIT v. Max India Ltd., the Tribunal held that where the assessee's surplus funds far exceed the share application advances, there is a presumption that such advances were made out of surplus (interest free) funds. The AO failed to rebut the assessee's contention or establish nexus that only borrowed funds were advanced; consequently a notional disallowance based on treating share application money as interest bearing loans could not be sustained on merits. [Paras 13, 14]

Grounds disallowing proportionate interest on share application money are allowed and additions deleted.

Imputation/disallowance of interest on interest free advances to related concerns - presumption that advances are from accumulated reserves where surplus funds exceed advances - No imputed interest/disallowance on interest free advances to subsidiaries where AO did not prove nexus with borrowed funds and advances were for business purpose/commercial expediency. - HELD THAT: - The Tribunal, following its findings in AY 2011-12, noted that the AO did not rebut the assessee's case that advances to related concerns were for business purposes (joint ventures) and did not establish that the advances were made from borrowed funds. In absence of such proof and given the assessee's large accumulated reserves, the presumption favouring the assessee applies. The Tribunal relied on binding precedents (including SA Builders Ltd. and authorities recognising surplus fund presumption) to delete the imputed interest addition. [Paras 16, 17]

Additions on account of imputed interest on interest free advances to subsidiaries deleted in favour of the assessee.

Rule 8D applicability and requirement of Assessing Officer's recorded dissatisfaction under section 14A - Disallowance under section 14A read with Rule 8D cannot be sustained where the Assessing Officer has not recorded any satisfaction/dissatisfaction regarding the correctness of the assessee's claim. - HELD THAT: - The AO applied Rule 8D mechanically without recording any satisfaction as to the correctness of the assessee's voluntary exclusion of exempt income related expenditure. The Tribunal followed the view of the Delhi High Court in Vedanta and other decisions that invocation of Rule 8D requires the AO to record dissatisfaction with the assessee's claim; absent such recording, the formulaic disallowance is impermissible. Applying this principle, the Tribunal deleted the addition under section 14A/Rule 8D. [Paras 18, 19, 21, 22, 26]

Addition under section 14A read with Rule 8D deleted for lack of AO's recorded satisfaction.

Treatment of rental income as income from house property (section 24) versus business income - Rental income from letting out properties is taxable under the head 'income from house property' and not as business income; assessee entitled to standard deduction. - HELD THAT: - On facts the Tribunal observed that the rental receipts arose from pure letting of premises and there was no finding of systematic exploitation or commercial activity that would convert such income into business income. Earlier assessments accepted the classification as income from house property. Following Supreme Court authority and its own prior order, the Tribunal held that rental income must be treated as income from house property and allowed the standard 30% deduction. [Paras 24, 25]

Addition treating rent as business income deleted; rental income to be taxed under income from house property with standard deduction allowed.

Allowability of prior period expenses where liability crystallised and bills received during the year - Prior period expenses claimed in the assessment year are allowable where liabilities were crystallised and supporting bills were received during that year. - HELD THAT: - The Tribunal noted that the AO did not dispute the veracity of the prior period expenses and that bills for consultancy and directors' travelling were received during the relevant year. Given that the liability crystallised in the year under assessment and supporting documents existed, the Tribunal deleted the disallowance of prior period expenses. [Paras 25, 26]

Addition on account of prior period expenses deleted; expenses allowed.

Deductibility of employer's PF liability where payment was belated in light of binding precedents - Addition for late deposit of provident fund not maintainable where appellate authority followed Supreme Court and High Court precedents deleting such addition. - HELD THAT: - The CIT(A) had deleted the PF late deposit addition following Supreme Court and Jurisdictional High Court decisions. The Tribunal found no distinguishing facts or legal error in those conclusions and thus upheld the deletion of the addition made by the AO for late PF deposit. [Paras 28]

Addition for late deposit of PF deleted; ground of revenue appeal dismissed.

Final Conclusion: On the facts and consistent with the Tribunal's earlier decision in the assessee's own case for AY 2011-12 and relevant precedents, the Tribunal allowed the assessee's appeals for AY 2007-08, 2012-13 and 2013-14 by deleting the contested additions (share sale characterised as capital gain; disallowances under section 36(1)(iii) and imputed interest on advances; section 14A/Rule 8D disallowance; treatment of rental income and prior period expenses), and dismissed the Revenue's appeals for AY 2012-13 and 2013-14.

Undervaluation of closing stock - valuation of scrap as closing stock - treatment of purchases received by challan and invoices recorded later - relevance of sales tax/VAT acceptance of closing stock - requirement of adjustment to opening stock when revaluing closing stock - disallowance of business expenses for want of proper vouchers

Undervaluation of closing stock - treatment of purchases received by challan and invoices recorded later - relevance of sales tax/VAT acceptance of closing stock - requirement of adjustment to opening stock when revaluing closing stock - Deletion of additions made on account of undervaluation of closing stock of raw material and finished goods - HELD THAT: - The Tribunal examined the Assessing Officer's addition made on the ground that purchases recorded after the last sale date were not included in closing stock. The assessee produced evidence that goods were received earlier through challans and invoices were recorded subsequently; books were audited and not rejected; and VAT authorities had accepted purchases, sales and closing stock. The Tribunal found these facts, together with the higher net profit rate in the impugned year compared to preceding years and absence of any adjustment to opening stock by the AO, sufficient to negate the AO's inference of unaccounted purchases and undervaluation. The Tribunal relied on precedents that additions to closing stock are not sustainable where audited books are not rejected and sales tax/Commercial Tax acceptance of returns is binding on income-tax assessment in the absence of contrary material. Applying that principle and observing the practical improbability of receiving a disproportionate share of material in the last days of the year, the Tribunal concluded the AO's revaluation was unjustified and the additions relating to raw material and finished goods were deleted. [Paras 11, 12]

The additions of Rs. 69,01,453/- (raw material) and Rs. 91,963/- (finished goods) upheld by lower authorities are deleted.

Valuation of scrap as closing stock - reliance on tribunal precedent concerning sister concern - Deletion of addition made on account of valuation of scrap - HELD THAT: - The Tribunal considered the AO's view that large quantity of scrap was unexplained and the assessee's explanation that a substantial part of the scrap consists of reusable small cut-pieces used in production. The Tribunal applied its earlier decision in the sister concern's case, where it had held that an inference based on figures of subsequent years was insufficient to justify an addition absent material showing excess scrap generation or sale. Finding the assessee maintained scrap registers and that trading results were accepted by the AO, the Tribunal found no basis to sustain the addition and followed the sister concern decision in deleting the addition. [Paras 12, 13]

The addition of Rs. 4,97,322/- on account of valuation of scrap is deleted.

Disallowance of business expenses for want of proper vouchers - onus on assessee to substantiate expenditure - Reduction of ad hoc disallowance of various expenses to a limited sum - HELD THAT: - The AO disallowed various expenses on estimate basis because some vouchers were improper or unvouched. The CIT(A) sustained the disallowance. The Tribunal reiterated the settled principle that the assessee bears the onus to substantiate expenditure with proper vouchers; where vouchers are improper or absent, disallowance is permissible even without rejecting books. However, treating the disallowance as excessive on the facts, the Tribunal exercised discretion to moderate the addition and directed the AO to restrict the disallowance to an ad hoc amount of Rs. 50,000/- to meet the ends of justice. [Paras 20, 21]

The aggregate disallowance is restricted to Rs. 50,000/-, and the ground is partly allowed.

Final Conclusion: The Tribunal allowed the appeal in part: deletions granted for the additions on account of undervaluation of closing stock of raw material and finished goods and for valuation of scrap; the ad hoc disallowance of various expenses was reduced and directed to be restricted to Rs. 50,000/-. Appeal accordingly partly allowed.

Leasehold rights for 90 years treated as capital asset - capital asset vs tenancy rights - valuation by fair market value as on 01.04.1981 for pre-1981 acquisition - computation of indexed cost of acquisition for long term capital gains - application of provisions of section 55(2) and section 50C in context of leasehold rights and FMV - remand for fresh consideration of deduction claimed on brokerage on production of evidence

Leasehold rights for 90 years treated as capital asset - capital asset vs tenancy rights - valuation by fair market value as on 01.04.1981 for pre-1981 acquisition - computation of indexed cost of acquisition for long term capital gains - application of provisions of section 55(2) and section 50C in context of leasehold rights and FMV - Assessee's 90-year leasehold rights are capital in nature and the assessee is entitled to compute long term capital gains using the fair market value as on 01.04.1981 (with appropriate indexation) for the property acquired prior to 01.04.1981. - HELD THAT: - On examination of the registered lease deed and its covenants (including payment of provisional premium, right to erect industrial unit, right to mortgage and assign subject to consent, liability to pay rates and taxes, inheritable interest and other incidents of ownership), the Tribunal concluded that the assessee's interest is more than mere tenancy and constitutes a substantial proprietary interest equivalent to ownership for the 90-year term. Coordinate Bench precedents treating long-term lease premiums as capital in nature were followed. The Tribunal held that where the property was acquired prior to 01.04.1981 and the assessee has opted for valuation, the fair market value as on 01.04.1981 must be used to determine the cost for computation of long term capital gains; the statutory scheme in section 55(2)(a) is exhaustive and does not exclude valuing land by FMV when appropriate, and the provisions relating to valuation/FMV (as applied in section 50C context) govern computation accordingly. The CIT(A)'s finding that the rights were tenancy was reversed and the AO was directed to recompute capital gains applying FMV as on 01.04.1981 and indexed cost as required. [Paras 13, 14, 16, 17, 18]

Leasehold rights for 90 years are capital asset; assessee entitled to use FMV as on 01.04.1981 and indexed cost for computing long term capital gains; CIT(A)'s contrary finding set aside and AO directed to recompute accordingly.

Remand for fresh consideration of deduction claimed on brokerage on production of evidence - Deduction claimed for brokerage payments was not finally adjudicated and is remanded to the AO for fresh decision after considering the documentary evidence produced by the assessee. - HELD THAT: - The assessee produced material including bank statements, PAN and ITR of payees and asserted payments were made through banking channels with TDS deducted and after obtaining permission for transfer. In view of the evidence placed on record, the Tribunal directed the AO to decide the claim afresh after affording the assessee an opportunity of being heard and examining the proofs. The matter was not finally decided on merits by the Tribunal; it was remitted for verification and fresh adjudication. [Paras 19, 20]

Claim for deduction of brokerage remitted to the AO for fresh consideration after taking into account the evidence and giving the assessee an opportunity of hearing.

Final Conclusion: Appeal allowed in part: the Tribunal held that the assessee's 90-year leasehold interest is a capital asset and directed recomputation of long term capital gains using the FMV as on 01.04.1981 (with indexation) for AY 2011-12; the claim for brokerage deduction is remitted to the AO for fresh adjudication after verification of evidence.

Additional depreciation on new plant and machinery under section 32(1)(iia) - proviso permitting 10% in year of use for less than 180 days and entitlement to balance in subsequent year - disallowance under section 14A read with Rule 8D - requirement of Assessing Officer's recorded satisfaction - proximate cause test for invoking section 14A

Additional depreciation on new plant and machinery under section 32(1)(iia) - proviso permitting 10% in year of use for less than 180 days and entitlement to balance in subsequent year - Deletion of addition made by Assessing Officer on account of disallowance of additional depreciation claimed by the assessee for the assessment year. - HELD THAT: - The Tribunal's decision in the assessee's own case for the preceding assessment year, which allowed the assessee to claim the balance 50% of the 20% additional depreciation where plant and machinery were put to use in the preceding year for less than 180 days, was binding and on identical facts. The appellate authority applied that Tribunal direction mutatis mutandis and deleted the addition. The Revenue did not show that the Tribunal's order had been stayed or reversed on further appeal. In these circumstances, the deletion of the addition was upheld. [Paras 7]

Addition relating to alleged wrong claim of additional depreciation is deleted and Revenue's grounds on this point are rejected.

Disallowance under section 14A read with Rule 8D - requirement of Assessing Officer's recorded satisfaction - proximate cause test for invoking section 14A - Deletion of addition made under section 14A read with Rule 8D(2)(iii) in respect of exemption-related expenditure. - HELD THAT: - The Tribunal in the assessee's own case examined Rule 8D and section 14A and applied the settled principle that invocation of Rule 8D requires the AO to record an objective satisfaction, having regard to the assessee's accounts, that the assessee's claim (including that no expenditure was incurred for earning exempt income) is incorrect. The Tribunal applied the proximate-cause test and relevant High Court and Supreme Court authorities and found that the AO had not recorded such satisfaction or established nexus of expenses with exempt income; accordingly the disallowance computed under Rule 8D was not sustainable. The appellate authority followed that Tribunal decision on identical facts and deleted the disallowance; the Revenue did not demonstrate that the Tribunal order had been disturbed. [Paras 14]

Disallowance under section 14A read with Rule 8D is deleted and Revenue's ground on this point is rejected.

Final Conclusion: Both Revenue appeals for assessment years 2013-14 and 2014-15 are dismissed; the appellate deletions of the additions for additional depreciation and under section 14A/Rule 8D are sustained, following the Tribunal's orders in the assessee's own case on identical facts.

Penalty under section 271C - Reasonable cause under section 273B - Deduction of tax at source (TDS) and assessee in default under sections 192/200 - LTA exemption under section 10(5) read with Rule 2B - Admission of substantial question of law by High Court and its bearing on assessee's bona fides

Penalty under section 271C - Admission of substantial question of law by High Court and its bearing on assessee's bona fides - LTA exemption under section 10(5) read with Rule 2B - Whether penalty under section 271C could be sustained where the assessee's dispute on disallowance/non-deduction (relating to LTA exemption) was admitted by the High Court on substantial questions of law. - HELD THAT: - The Tribunal held that where the question underlying the alleged failure to deduct TDS (i.e., validity of LTA exemption under section 10(5) read with Rule 2B and the consequent liability under sections 192/200) has been admitted by the High Court for consideration on substantial questions of law, the dispute is debatable and lends credence to the bona fides of the assessee. Reliance was placed on precedents which recognise that admission of substantial questions of law by a High Court indicates that the claim or disallowance is arguable and that penalty under section 271C should not be imposed in such circumstances. Applying that principle to the present facts - where appeals against the orders holding the bank an assessee-in-default were admitted by the Karnataka High Court on substantial questions relating to LTA exemption - the Tribunal concluded that imposition of penalty under section 271C was not justified. The Tribunal further noted that earlier coordinate decisions and factual parity supported deletion of the penalty and that remand for fresh consideration was unnecessary given the conclusion reached on this ground.

Penalty imposed under section 271C deleted; appeals allowed.

Final Conclusion: Where the High Court admits an appeal on substantial questions of law going to the validity of the disallowance or TDS liability (here, the scope of LTA exemption under section 10(5) read with Rule 2B), that admission supports the assessee's bona fides and, on the facts of these cases, the Tribunal set aside the penalty under section 271C.

Remand for fresh examination by Assessing Officer - disallowance confirmed for lack of documentary details - deduction under section 80IB - role of auditor's certificate in allocation of expenditure - disallowance under section 14A for expenditure in relation to exempt income - Rule 8D inapplicable for assessment year 2005-06; 2% benchmark - treatment of cross border payments - characterization requiring agreement/communications to determine taxability and applicability of TDS

Remand for fresh examination by Assessing Officer - treatment of royalty payments and prior year tax deduction - Remittal of disallowance of royalty of Rs. 26,74,811/- to the Assessing Officer for fresh examination - HELD THAT: - The Tribunal accepted the assessee's contention that the royalty in question related to amounts paid earlier and tax had been deducted and remitted in earlier years, but observed absence of conclusive material on record. The Tribunal therefore set aside the orders below and remitted the matter to the Assessing Officer to verify when the royalty was actually paid and whether tax was deducted and deposited, and to decide the issue afresh after giving the assessee a reasonable opportunity. [Paras 2]

Disallowance remitted to the Assessing Officer for re-examination.

Remand for fresh examination by Assessing Officer - treatment of cross border marketing payment - need for agreement to determine nature - Remittal of disallowance of payment of Rs. 5,09,656/- to Mr. James Drutchas, USA to the Assessing Officer for reconsideration - HELD THAT: - The assessee claimed the payment was reimbursement for marketing services and not 'fee for technical services' under the India USA DTAA, and asserted an agreement existed. As the agreement was not on record and lower authorities made no reference to it, the Tribunal held that the nature of the payment could not be determined on the materials before it and therefore directed re examination by the Assessing Officer in the light of the agreement, after giving opportunity to the assessee. [Paras 3]

Disallowance remitted to the Assessing Officer for fresh consideration on production/examination of the agreement.

Remand for fresh examination by Assessing Officer - treatment of cross border payments - need for agreement/communication to characterise payment - Remittal of disallowance of Rs. 14,58,647/- paid to Dietrich Sikler, Germany to the Assessing Officer for fresh examination - HELD THAT: - The assessee described the payment as expenditure for marketing services outside India and not taxable in India as there was no permanent establishment. The Tribunal noted absence of the agreement or communications on record to determine the nature of the payment, set aside the orders below and directed the Assessing Officer to re examine the issue afresh in the light of any agreement filed by the assessee and after affording opportunity. [Paras 4]

Disallowance remitted to the Assessing Officer for re-examination upon production of relevant agreement/communications.

Disallowance confirmed for lack of documentary details - expenditure in connection with exhibitions held outside India - requirement of recipient and purpose particulars - Confirmation of disallowance of Rs. 4,07,371/- paid to non-residents for exhibitions outside India - HELD THAT: - The assessee failed to produce details as to the recipients and purpose of the payments and could not clarify whether amounts related to rent/license fee, travelling or other heads. The Tribunal held that a vague assertion of payments to non residents for exhibitions without supporting particulars cannot sustain an allowance and therefore confirmed the disallowance. [Paras 5]

Disallowance confirmed for lack of requisite details.

Disallowance confirmed for lack of documentary details - business expenditure - inability to prove nature of China business expenses - Confirmation of disallowance of Rs. 8,32,645/- paid to Rane Engine Valve Limited for China business expenses - HELD THAT: - The assessee did not furnish details regarding the payments or the nature of the China business. The Tribunal observed that without material to ascertain the nature of the expenditure, it could not be allowed as business expense, and therefore confirmed the disallowance. The Tribunal noted that assertions as to fee for technical services or applicability of later amendments were irrelevant in the absence of supporting particulars. [Paras 6]

Disallowance confirmed for lack of supporting details.

Remand for fresh examination by Assessing Officer - verification of TDS deduction and nature of services - Remittal of disallowance of Rs. 1,58,274/- paid to railway consultants to the Assessing Officer for verification - HELD THAT: - The assessee asserted the fee was for follow up services to obtain payments from Indian Railways and that tax had been deducted and deposited. The Tribunal directed the Assessing Officer to verify whether tax was deducted and deposited as claimed and to examine the nature of services rendered before deciding the issue afresh, and accordingly set aside the orders below. [Paras 7]

Disallowance remitted to the Assessing Officer for verification of TDS and nature of services.

Remand for fresh examination by Assessing Officer - deduction of tax at source - requirement of documentary evidence to characterise varied marketing and promotion payments - Remittal of disallowance of advertisement and sales promotion expenses of Rs. 2,09,62,270/- to the Assessing Officer for fresh consideration - HELD THAT: - The Tribunal found that the assessee had not placed on record particulars (nature of payments, recipients, supporting vouchers) in respect of a range of items - incentives to mechanics, coupons, payments to dealers, reimbursements, exhibition and conference expenses, customer promotions, warranty expenses, etc. Absent such details, the Assessing Officer could not determine whether TDS was required. The Tribunal set aside the orders below and remitted the entire issue for re examination based on materials the assessee may file. [Paras 8, 9]

Entire issue remitted to the Assessing Officer for reconsideration on production of necessary details.

Deduction under section 80IB - role of auditor's certificate in allocation of expenditure - remand for fresh examination by Assessing Officer - Remittal of the rejection of deduction under section 80IB to the Assessing Officer for re examination after considering the auditor's certificate - HELD THAT: - The assessee filed a profit and loss account of the eligible unit and an auditor's certificate which, the assessee contended, should have been considered in allocating expenditure for section 80IB. The Tribunal noted that neither the Assessing Officer nor the CIT(A) examined the auditor's certificate and directed the Assessing Officer to reconsider the claim afresh taking that certificate into account and after affording the assessee an opportunity. [Paras 10]

Rejection set aside and matter remitted for re-examination with regard to the auditor's certificate.

Disallowance under section 14A for expenditure in relation to exempt income - Rule 8D inapplicable for assessment year 2005-06; 2% benchmark - Modification of disallowance under section 14A: Tribunal directs AO to disallow 2% of exempt dividend income for assessment year 2005-06 instead of 5% - HELD THAT: - The Tribunal observed that Rule 8D was introduced later and is not applicable to the assessment year 2005 06. In line with the Tribunal's approach for years prior to applicability of Rule 8D, the Tribunal directed that 2% of exempt dividend income be disallowed under section 14A as expenditure relating to exempt income, modifying the orders below which had applied a 5% disallowance. [Paras 11]

Disallowance under section 14A restricted to 2% of exempt dividend income for AY 2005-06.

Final Conclusion: The appeal is partly allowed: several additions and disallowances are remitted to the Assessing Officer for fresh examination (royalty, payments to specified non residents, railway consultant fee, advertisement and promotion expenses, and deduction under section 80IB to be reconsidered with auditor's certificate), certain disallowances are confirmed for lack of supporting details, and the disallowance under section 14A for AY 2005 06 is modified to 2% of exempt dividend income.

Reasonable opportunity of making a representation - suspension and cancellation of Importer-Exporter Code Number - Section 8(1)(c) of the Foreign Trade (Development and Regulation) Act, 1992 - procedural fairness in administrative orders - requirement that orders be signed by the officer who conducted the hearing

Reasonable opportunity of making a representation - Section 8(1)(c) of the Foreign Trade (Development and Regulation) Act, 1992 - Time granted in the show-cause notice was not a reasonable time under Section 8(1)(c) and was too short to enable meaningful representation - HELD THAT: - The Court found as an undisputed fact that the show-cause notice dated 15.05.2019 was hand-delivered at about 4.00 p.m. on that day and personal hearing was fixed for 17.05.2019 at 3.30 p.m., leaving less than 48 hours to respond. The petitioner specifically pointed out that the documents requested related to the period 2002 till May 2009 and were voluminous, and stated that two days was insufficient to collate and produce records. Applying the requirement in Section 8(1)(c) that a person be given notice of the grounds and a reasonable opportunity to make a representation (including reasonable time specified in the notice), the Court held that less than 48 hours did not constitute reasonable time in the circumstances and therefore the procedure mandated by Section 8(1)(c) was not complied with. [Paras 4, 5, 6, 7]

The impugned order is set aside insofar as it was founded on a show-cause process that did not afford reasonable time; fresh proceedings are required.

Procedural fairness in administrative orders - requirement that orders be signed by the officer who conducted the hearing - Order-in-original was invalid on procedural grounds because it was signed by an officer other than the officer who held the personal hearing and the order did not reflect that it merely communicated a decision of the hearing officer - HELD THAT: - The Court noted that although the respondents asserted by affidavit that the same officer who conducted the hearing had passed the order and another officer only communicated it, the impugned order as served did not disclose this. Administrative orders cannot be improved or validated by post hoc averments in a counter-affidavit or internal records; the order itself must reflect the decision-making process and be signed by the officer who passed it. Given that the order was signed by an officer who did not hold the personal hearing, this constituted a procedural impropriety warranting setting aside the order. [Paras 8, 9]

The impugned order is liable to be set aside on the ground that it was not validly signed by the officer who conducted the personal hearing.

Suspension and cancellation of Importer-Exporter Code Number - reasonable opportunity of making a representation - Proceedings remitted for fresh consideration and personal hearing before the Joint Director General of Foreign Trade, Bengaluru - HELD THAT: - In view of the procedural defects identified (insufficient time and improper signature/recording of the decision), the Court set aside the impugned order without expressing any opinion on the merits and directed a fresh personal hearing. By consent, the fresh hearing was directed to be held by the Joint Director General of Foreign Trade, Bengaluru, at the specified date and venue; the petitioner was permitted to produce documents and responses then. The Court directed that if the petitioner avails the personal hearing the Officer shall consider all objections and records and pass orders in accordance with law expeditiously and in any event within a fortnight from the personal hearing, and that the order shall be communicated under due acknowledgement within seven working days. If the petitioner fails to attend, the Officer may pass orders on available records. [Paras 10, 11, 12, 13]

Matter remitted for fresh personal hearing and de novo decision by the Joint Director General of Foreign Trade, Bengaluru, with prescribed timelines for decision and communication.

Final Conclusion: The High Court set aside the order-in-original dated 17.05.2019 without expressing any opinion on merits, holding that the show-cause process did not afford reasonable time and that the order suffered procedural defect in being signed by an officer other than the hearing officer; the matter is remitted for a fresh personal hearing and fresh decision by the Joint Director General of Foreign Trade, Bengaluru, with directions on timelines and communication.

Notice under Section 124 of the Customs Act, 1962 - principles of natural justice - imposition of penalty under Section 117 of the Customs Act, 1962 - obligation/duty of a customs broker to verify value and quality of consignments - allegation of collusion to split shipping bills to avoid examination

Notice under Section 124 of the Customs Act, 1962 - principles of natural justice - imposition of penalty under Section 117 of the Customs Act, 1962 - Impugned order set aside insofar as penalty was imposed on the customs broker for want of a notice under Section 124(a); personal hearing alone did not satisfy requirements of natural justice. - HELD THAT: - The Court examined the impugned composite order and found that although a personal hearing took place (through the petitioner's Assistant Manager), the statutory scheme in Section 124-particularly sub-clause (a)-requires that the noticee be informed of the grounds on which a penalty is proposed so as to enable effective representation. Mere participation in a personal hearing, without prior communication of the grounds as mandated by Section 124(a), does not fulfil the requirements of natural justice. Consequently, the portion of the impugned order imposing penalty on the customs broker was set aside and the matter was remitted for issuance of a proper notice under Section 124(a), an opportunity to file written representation and a personal hearing, after which the authority may pass a fresh order in accordance with law. [Paras 11, 14, 15, 17, 19]

Impugned order quashed insofar as it penalised the writ petitioner; respondent directed to issue notice under Section 124(a), permit written representation and personal hearing, and thereafter pass fresh orders.

Obligation/duty of a customs broker to verify value and quality of consignments - allegation of collusion to split shipping bills to avoid examination - Questions whether the customs broker is under a duty to verify value/quality and whether there was collusion were not finally adjudicated and are left open for the authority to decide afresh after providing statutory notice and hearing. - HELD THAT: - The Court declined to decide on the substantive contention that a customs broker is obliged to verify the correctness of declared value and quality, observing that the nature of the remedy requires the authority to consider these contentions afresh. The impugned order had relied on both alleged failure to verify and an assumed collusion with the exporter to split shipping bills; the Court held that, because these grounds were not communicated to the petitioner as required by Section 124(a), the petitioner was deprived of the opportunity to dispel such assumptions. Accordingly, the authority is to reconsider these factual and legal contentions after affording the mandated notice and hearing; the Court left those questions open for fresh adjudication rather than deciding them on merits. [Paras 16, 17, 18, 19]

Substantive issues concerning broker's duty to verify and alleged collusion remitted for fresh consideration by the authority after compliance with Section 124 procedural requirements.

Final Conclusion: The writ petition is allowed in part: the order dated 11.02.2019 is set aside insofar as it imposes penalty on the customs broker; the respondent is directed to issue a notice under Section 124(a) within two weeks, afford the petitioner a written opportunity and personal hearing, and thereafter pass a fresh speaking order which shall be communicated within seven working days; the impugned order insofar as it pertains to the exporter remains untouched.

Demurrage/detention charges - liability to pay demurrage - application of precedent - recall of orders and restoration to file - interim preservation of rights

Recall of orders and restoration to file - The earlier orders dated 19th September, 2018 and 29th October, 2018 were recalled and the writ petition W.P.(C) No. 9863/2018 was restored to file; both review petitions were disposed of. - HELD THAT: - The Court, having considered submissions drawing attention to subsequent Supreme Court pronouncements bearing on the question of payment of demurrage/detention charges, concluded that the earlier interim directions could not stand without fuller consideration. Accordingly, the orders by which goods were released and a deposit was directed were recalled. The review petitions filed by the Customs Department and the DRI were disposed of by recalling those orders and restoring the writ petition to the file for further adjudication. [Paras 5, 6]

Orders dated 19th September, 2018 and 29th October, 2018 are recalled; W.P.(C) No. 9863/2018 is restored to file and the review petitions are disposed of.

Application of precedent - liability to pay demurrage - The question whether the importer or the Customs/DRI is liable to pay demurrage/detention charges was remanded for fresh consideration in light of the Supreme Court decisions cited. - HELD THAT: - The Court observed that the law as explained in Mumbai Port Trust v. Shri Lakshmi Steels and the Supreme Court's order in Union of India v. Afzal Khan require examination to determine their applicability to the facts of the present case. Rather than adjudicating the liability at the interim stage, the matter was restored for a full hearing so that the Court may consider the precedents and decide on merits whether the importer or the Customs/DRI must bear demurrage/detention charges. [Paras 3, 4, 7]

Issue of which party is liable for demurrage/detention charges remanded for fresh consideration and listed before the roster Bench.

Interim preservation of rights - Interim position regarding release of goods and any payment already made towards demurrage/detention was clarified to be subject to final orders in the writ petition. - HELD THAT: - The Court noted that the goods have already been released pursuant to the earlier orders and that any payment to the warehousing agent by Customs/DRI would be without prejudice to the parties' rights. This preserves the status quo and ensures that actions taken pursuant to the recalled orders do not preclude final adjudication on liability. [Paras 8, 9]

Release of goods and any payment towards demurrage/detention by Customs/DRI are subject to the final orders in the writ petition.

Recall of orders and restoration to file - Procedure for further proceedings was directed: respondents to file replies within two weeks, rejoinder to be filed before next date, and matter listed before the roster Bench on 29th August, 2019. - HELD THAT: - Having restored the writ petition to the file, the Court set a timetable for pleadings to enable fresh consideration on merits. The respondents were directed to file their respective replies within two weeks and the petitioner may file rejoinder prior to the next date, with listing before the roster Bench as indicated. [Paras 6, 7]

Respondents to file replies within two weeks, rejoinder to be filed before the next date, and matter listed on 29th August, 2019.

Final Conclusion: The Court recalled its earlier interim orders and disposed of the review petitions, restored the writ petition to the file for fresh consideration of which party is liable to pay demurrage/detention charges in light of the Supreme Court precedents, preserved the interim position regarding release and payments as subject to final orders, and directed filing of pleadings with listing on the roster Bench.

Summary order. Petition for judicial review of the Order in Original suspending the IEC was listed for admission and placed on the Motion List for further hearing on 17.07.2019 to enable respondents to obtain instructions.

Existence of pre existing dispute - admissibility of an application under Section 9 of the IBC - operational debt as a claim (right to payment even if disputed) - pre existing dispute under Section 8(2) - mere dispute as to quantum not defeating admission

Admissibility of an application under Section 9 of the IBC - operational debt as a claim (right to payment even if disputed) - The Adjudicating Authority erred in rejecting the Section 9 application solely because disputed questions of fact existed between the parties. - HELD THAT: - The Tribunal held that where an application under Section 9 shows an operational debt exceeding the statutory threshold and documentary evidence that the debt is due and unpaid, the Adjudicating Authority is not entitled to reject the application merely because factual disputes as to quantum or other issues are raised by the corporate debtor. The court applied the statutory scheme and the Supreme Court's guidance that a 'claim' is a right to payment even if disputed, and that the Code is triggered once default of the requisite amount is shown. Accordingly, absence of a pre existing dispute (as defined by Section 8(2)) is fatal to a respondent's plea; mere post notice counterclaims or disagreements on amounts do not disentitle the operational creditor to proceed under Section 9. [Paras 11, 12]

The Adjudicating Authority's rejection on the ground of disputed questions of fact was incorrect and cannot stand.

Existence of pre existing dispute - pre existing dispute under Section 8(2) - The question whether a dispute exists must be judged by its pre existence before receipt of the demand notice; the respondent failed to show such pre existing dispute in this case. - HELD THAT: - Relying on the Supreme Court's decisions (including Mobilox and Innoventive), the Tribunal reiterated that for a dispute to defeat an application under Section 9 it must have existed prior to the receipt of the demand notice or invoice. The court found no record or contemporaneous evidence showing that the corporate debtor had a pre existing dispute about the services rendered; the communications relied upon by the respondent were held to be afterthoughts made following receipt of the demand notice. Therefore the respondent's contentions did not amount to a pre existing dispute within the meaning of Section 8(2). [Paras 5, 6, 11]

There was no pre existing dispute shown by the respondent; the Section 9 application could not be rejected on that ground.

Admissibility of an application under Section 9 of the IBC - remand for admission and notice to respondent - The matter was remitted to the Adjudicating Authority with directions to admit the Section 9 application and issue notice so the respondent may have an opportunity to settle before admission. - HELD THAT: - Having concluded that the Adjudicating Authority erred in rejecting the petition for lack of ability to adjudicate disputed facts and that no pre existing dispute barred admission, the Tribunal set aside the impugned order and directed the Adjudicating Authority to admit the Section 9 application. The Tribunal expressly directed that admission be preceded by service of notice on the respondent to enable settlement discussions prior to formal admission and initiation of the insolvency process. [Paras 13]

The impugned order is set aside and the case is remitted to the Adjudicating Authority to admit the Section 9 application after notice to the respondent to enable settlement.

Final Conclusion: The appeal is allowed: the Tribunal set aside the Adjudicating Authority's order rejecting the Section 9 petition for being unable to probe disputed facts, held that no pre existing dispute was shown to bar admission, and remitted the matter with directions to admit the petition after issuing notice so the respondent may attempt settlement prior to admission.

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process - operational debt - existence of dispute - applicability of the Limitation Act to proceedings under the Code - reference to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 - undisputed debt as sine qua non for initiation of CIRP - IBC not a substitute for recovery proceedings

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt - existence of dispute - undisputed debt as sine qua non for initiation of CIRP - reference to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 - IBC not a substitute for recovery proceedings - Maintainability of the company petition under the Code in view of disputed claim and pending arbitration; whether CIRP can be initiated for the claimed debt. - HELD THAT: - The Tribunal examined the pleadings and documents, including the Final Payment Certificate dated 31.10.2014 and the correspondence between the parties, and noted that the Corporate Debtor disputed the claimed outstanding amount and had invoked arbitration. Applying the test laid down by the Supreme Court, the Adjudicating Authority must ascertain whether there is an operational debt, whether documentary evidence shows the debt is due and payable, and whether a dispute or an arbitration proceeding exists prior to the demand notice. The Tribunal found that the debt and default were disputed and that arbitration had been invoked; further, the petition was filed in respect of amounts arising from 2014 and the petitioner had not satisfactorily shown the petition to be within limitation. Relying on the principle that IBC is not a substitute for ordinary recovery proceedings and that an undisputed debt is a precondition to initiating CIRP, the Tribunal held that the petition was barred by dispute and laches and therefore not maintainable. Consequent to this finding, the application seeking reference to arbitration became infructuous. [Paras 15, 16, 17, 18]

C.P. (IB) No.02/BB/2018 dismissed as not maintainable; I.A. No.72 of 2018 held infructuous and dismissed.

Final Conclusion: The Tribunal dismissed the Section 9 petition because the claimed operational debt was disputed and the petition was hit by limitation; therefore CIRP could not be initiated and the interlocutory application for arbitration stood infructuous.

Termination during moratorium - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - prohibition on recovery of property occupied by or in possession of the corporate debtor - property and interest therein including contingent or incidental interest - preservation of corporate debtor as a going concern during CIRP - restitution of status quo ante / revival of subsisting contracts

Termination during moratorium - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - prohibition on recovery of property occupied by or in possession of the corporate debtor - Termination of the manufacturing and supply agreement dated 12.05.2011 (r/w addendum 27.04.2016) by the Applicant on 28.11.2017 during the moratorium declared on 13.09.2017 - HELD THAT: - Clause 15.3(b) of the agreement permits termination if the other party 'enters into bankruptcy, liquidation or ... a winding up petition is admitted'. However, Section 14(1)(d) of the IBC imposes a moratorium prohibiting 'the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor'. The term 'property' under the IBC includes present, future, vested or contingent interests incidental to property. The Agreement granted the corporate debtor an interest intrinsic to its business as a manufacturer under the Applicant's trademarks; termination during the moratorium removed that interest and thereby frustrated the CIRP objective of preserving the corporate debtor as a going concern. For these reasons the contractual termination effected during the moratorium is inconsistent with Section 14 and cannot be given effect. [Paras 19, 21, 22]

The termination dated 28.11.2017 is declared null and void and set aside.

Restitution of status quo ante / revival of subsisting contracts - preservation of corporate debtor as a going concern during CIRP - Consequences of setting aside the termination and the contractual status between the parties - HELD THAT: - Having held the termination void, the position as on the date of the moratorium (13.09.2017) is restored. The agreement dated 12.05.2011 read with the addendum dated 27.04.2016 is to be treated as revived and the corporate debtor is to be regarded as a going concern. This restoration is directed in light of the object of the Code to keep the corporate debtor's business intact during CIRP and to enable meaningful consideration of resolution plans. [Paras 22, 23]

The agreement is revived and both parties are directed to perform their respective obligations as if the agreement was never terminated.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - preservation of corporate debtor as a going concern during CIRP - Liability for the interregnum period between the void termination and restoration - HELD THAT: - Although the termination is set aside and contractual relations are restored, the Tribunal declined to fasten liability on either party for the interregnum period. The order separates the question of restoring contractual status from imposing retrospective monetary liabilities for the period when the moratorium and CIRP were in effect. [Paras 23]

Neither party is fastened with any liability for the interregnum period.

Accounts reconciliation - procedure for quantification of claims - Mechanism for resolving disputed monetary claims between the parties arising from their commercial relationship - HELD THAT: - The Tribunal directed a pragmatic and neutral mechanism to resolve contested accounts: both parties are to appoint an independent Chartered Accountant to reconcile their accounts and the parties shall share the remuneration equally. This provides a focused process for quantification without deciding contested liabilities on the present application. [Paras 23]

Both parties to appoint an independent Chartered Accountant to reconcile accounts and share the remuneration equally.

Final Conclusion: The application seeking delivery of the Applicant's plant and machinery is dismissed. The termination effected on 28.11.2017 during the moratorium is set aside; the contract (12.05.2011 r/w 27.04.2016) is restored and the parties must perform their obligations as if the agreement had not been terminated, with no liabilities fixed for the interregnum and directions for an independent accountant to reconcile accounts equally funded by the parties.

Settlement agreement - Admission under Section 9 of the I&B Code - Withdrawal of application under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 - Inherent powers - Operational creditor's claim and proof of settlement

Settlement agreement - Operational creditor's claim and proof of settlement - Admission under Section 9 of the I&B Code - Withdrawal of application under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 - Validity and effect of the alleged Settlement Agreement dated 10th December, 2018 on the admission of an application under Section 9 of the I&B Code and on the exercise of the Appellate Tribunal's power to permit withdrawal under Rule 11. - HELD THAT: - The Tribunal examined the Settlement Agreement produced by the appellant and found material defects: it was on plain paper, lacked dates at the foot and dates of verification below signatures, and was not placed before the Adjudicating Authority when the Section 9 application was admitted. Further, the Operational Creditor subsequently filed a claim dated 25th December, 2018, indicating that the settlement had not been acted upon. In these circumstances the Tribunal concluded that the purported settlement appeared to be an afterthought and was not established as a binding bar to the admission or continuation of proceedings under Section 9. Considering those facts, the Tribunal declined to exercise its inherent power under Rule 11 to permit withdrawal of the Section 9 application, observing that the settlement had not been proved or brought to the Adjudicating Authority's notice and that other claimants existed whose interests would be affected.

The alleged Settlement Agreement was not proved to be binding or acted upon, and the Tribunal refused to permit withdrawal of the Section 9 application under Rule 11; the appeal was dismissed.

Final Conclusion: The appeal by the shareholder challenging admission of the Section 9 application was dismissed: the claimed settlement was not established as valid or effective to oust the proceedings, and the Tribunal declined to allow withdrawal under its Rule 11 power.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code - Committee of Creditors' commercial decision and required majority - valuation and compliance with Regulation 27 and Regulation 35 of the CIRP Regulations - appointment of liquidator under Section 34(1) of the Code - cessation of moratorium under Section 14 and fresh moratorium under Section 33(5) - liquidator's duty to investigate financial affairs under Section 35(1) - public announcement in liquidation under Regulation 12 of the Liquidation Process Regulations

Liquidation under Section 33 of the Insolvency and Bankruptcy Code - Committee of Creditors' commercial decision and required majority - Direction for liquidation of the corporate debtor issued pursuant to the CoC resolution. - HELD THAT: - The Committee of Creditors in its fifteenth meeting recorded that no resolution plan had been approved by the requisite majority and, with 78.25% voting share, resolved to direct the Resolution Professional to file an application under Section 33 for liquidation. Given the expiry of the CIRP period and absence of any successful resolution plan, the Tribunal held that there was no alternative but to order liquidation in conformity with the CoC's decision. The Tribunal therefore allowed the Section 33 application and ordered liquidation in accordance with Chapter III of Part II of the Code. [Paras 16, 17]

Application under Section 33 allowed; corporate debtor ordered to be liquidated in conformity with the CoC resolution.

Valuation and compliance with Regulation 27 and Regulation 35 of the CIRP Regulations - Objections to the liquidation value and plea for fresh valuation rejected. - HELD THAT: - The Tribunal examined the challenge to the valuation process and found that the IRP had appointed two registered valuers within the prescribed timeline and, due to a variance exceeding 40%, had appointed a third valuer and computed a mean value. The proviso to Regulation 27 permits objections on specific conflicts (e.g., relative or related party), which were not established. As the statutory procedure for valuation under the CIRP Regulations was followed, the Tribunal rejected the request for a fresh valuation and held that the objection of decrease in asset value did not justify upsetting the valuation nor serve the objective of asset maximisation. [Paras 15]

No fresh valuation directed; existing valuation process upheld and objection rejected.

Appointment of liquidator under Section 34(1) of the Code - public announcement in liquidation under Regulation 12 of the Liquidation Process Regulations - cessation of moratorium under Section 14 and fresh moratorium under Section 33(5) - liquidator's duty to investigate financial affairs under Section 35(1) - Appointment of the liquidator and ancillary directions for the liquidation process. - HELD THAT: - The Resolution Professional furnished consent in Form AA to act as liquidator. The Tribunal appointed Mr. Huzefa Fakhri Sitabkhan as Liquidator under Section 34(1), directed issuance of public announcement in terms of Regulation 12 of the Liquidation Process Regulations, directed communication of the order to ROC and IBBI, declared that the earlier moratorium under Section 14 shall cease and a fresh moratorium under Section 33(5) shall commence, and directed the Liquidator to investigate the corporate debtor's financial affairs under Section 35(1) and to proceed with liquidation in accordance with the Code and relevant regulations. The Liquidator was also directed to submit a preliminary report within seventy-five days from the liquidation commencement date and to consider admitted claims in accordance with law. [Paras 18, 19]

Liquidator appointed and detailed directions issued for carrying out the liquidation process in terms of the Code and relevant regulations.

Final Conclusion: The Tribunal allowed the RP's Section 33 application and ordered liquidation of Shilpi Cable Technologies Limited in accordance with the Code; valuation objections were rejected and the RP (who consented) was appointed as Liquidator with directions to proceed under the liquidation regulations, make requisite announcements, investigate affairs, and submit the preliminary report within the stipulated time.

Corporate Insolvency Resolution Process - Operational debt and default - Pre-existing dispute / notice of dispute - Section 9 admission criteria - Moratorium under Section 14 - Appointment of Interim Resolution Professional

Pre-existing dispute / notice of dispute - Operational debt and default - The contention of a pre-existing dispute raised by the corporate debtor is not a bar to admission and is rejected. - HELD THAT: - Applying the standard in Mobilox Innovations (P.) Ltd. (as cited in the judgment), the Tribunal examined whether the corporate debtor had placed before the operational creditor a plausible notice of dispute or there existed a record of dispute in an information utility. The corporate debtor's plea that post-dated/undated cheques required confirmation of final amounts was examined against the applicant's rejoinder and the correspondence on record. The Tribunal found that the confirmation sought related only to dates of presentation of cheques and that no substantiated dispute over the quantum was shown. The corporate debtor's assertion that only a lesser sum was due was unsubstantiated and the demand notice under Section 8 remained unanswered. Consequently the purported dispute was held to be neither genuine nor supported by evidence and thus did not disentitle the applicant to relief under Section 9. [Paras 12, 13, 14, 15]

The plea of a pre-existing dispute is rejected and held to be not genuine.

Section 9 admission criteria - Operational debt and default - The application under Section 9 of the IBC, 2016 was complete and satisfied the statutory criteria for admission. - HELD THAT: - The Tribunal found that the application was in prescribed form, the demand notice under Section 8 was served and remained unresponded, there was no repayment of the unpaid operational debt, and no notice of dispute had been received by the operational creditor. The Tribunal further noted service of the application on the corporate debtor, the applicant's bank statements showing non-receipt of the claimed amount, the absence of disciplinary proceedings against the proposed IRP, and that the default was within the period of limitation. On these facts, and applying the admission test under Section 9(5)(i), the Tribunal was satisfied to admit the Section 9 application. [Paras 18, 19, 20, 21]

The Section 9 application is admitted and default established.

Appointment of Interim Resolution Professional - Moratorium under Section 14 - An Interim Resolution Professional was appointed and moratorium declared in terms of the Code. - HELD THAT: - Following admission, the Tribunal appointed the proposed Interim Resolution Professional who was registered with the Board and in respect of whom no disciplinary proceedings were pending. The Tribunal declared the moratorium under Section 14, setting out the attendant prohibitions and the obligation on personnel, promoters and others to extend cooperation to the IRP, and directing observance of the Code's provisions governing the IRP's duties to protect and preserve the corporate debtor's assets. [Paras 22, 23, 24]

Mr. Sandeep Chandana is appointed as IRP and moratorium under Section 14 is declared with the usual consequences.

Final Conclusion: The application under Section 9 is admitted: the Tribunal rejected the corporate debtor's plea of a pre-existing dispute, held that operational default was established, appointed the named Interim Resolution Professional and declared the moratorium under Section 14 of the IBC, 2016.

Manpower Supply Service - service tax liability - extended period of limitation - principal employer liability under ESI and EPF - colourable device - cenvat credit

Manpower Supply Service - service tax liability - colourable device - Liability to pay service tax under the classification of supply of manpower for the period prior to 31.03.2010 - HELD THAT: - The agreements and bills produced show payment on the basis of volume or quantum of work executed and not on the basis of the number of workmen deployed. The Adjudicating Authority erred in construing the contracts as contracts for supply of manpower by relying chiefly on the fact that the principal discharged ESI and PF obligations. Under the Employees Provident Fund Act and the Employees State Insurance Act the ultimate liability for contributions in a factory lies on the principal employer (the owner/occupier of the factory), and payment of such statutory obligations by the principal does not render the contractual arrangement a colourable device for supply of manpower. The material on record (agreements, bills and the terms of engagement) does not establish that the appellant was supplying manpower as a service distinct from works charged on the basis of output; the show cause notice therefore lacked a sustainable foundation insofar as it seeks to fasten past liability as a manpower-supply service. [Paras 7, 8, 9]

No service tax liability can be fastened on the appellant for the period prior to 31.03.2010 under the classification of supply of manpower; the contracts were for works paid by output and not for supply of manpower.

Extended period of limitation - cenvat credit - Validity of show cause notice insofar as the extended period of limitation was invoked - HELD THAT: - There is no finding of contumacious conduct, suppression or falsification of records by the appellant. The fact that, after being advised by the principal, the appellant later obtained registration and began paying service tax does not retroactively create past tax liability or justify invocation of the extended period. Moreover, any service tax subsequently paid would have been available to the principal as cenvat credit, who had discharged central excise liability on their manufactured goods. On these facts the extended period for issuance of demand cannot be invoked. [Paras 9]

Extended period of limitation is not invokable; the show cause notice cannot be sustained on the ground of extended limitation.

Final Conclusion: The appeal is allowed; the impugned order is set aside and the appellant is entitled to consequential benefits in accordance with law.

Determination of value of service portion in the execution of the works contract - works contract - construction of complex - separate determination of value of land and goods in works contracts - amendment to Rule 2A of the Service Tax (Determination of Value) Rules, 2006

Amendment to Rule 2A of the Service Tax (Determination of Value) Rules, 2006 - determination of value of service portion in the execution of the works contract - construction of complex - works contract - Whether the amendment to Rule 2A alters or removes the basis of the Court's earlier decision striking down the taxable service definition specific to 'construction of complex'. - HELD THAT: - The Court observed that Rule 2A, by its title and content, is directed to the determination of the service portion in execution of a works contract and provides a mechanism to separately determine the value of land and goods for works contracts. The earlier decision in Suresh Kumar Bansal (supra) concerned the specific scope of taxable service under Section 65(105)(zzzh) which pertains to the 'construction of complex'. While Section 65(105)(zzzza) relates to works contracts and there may be arguments about overlap between composite contracts for development and sale and the definition of works contract, this Court in the earlier decision did not decide that overlap. The amendment to Rule 2A is therefore specific to works contracts and does not, on that basis, remove or alter the legal basis of the earlier decision which was founded on the specific provision concerning construction of complex. No other ground for review was shown. [Paras 4, 5]

The amendment to Rule 2A does not advance the review petitioners' case; the review petition is dismissed.

Final Conclusion: Applications for condonation of delay in filing and refiling the review petition were allowed. On merits, the review petition was dismissed as the amendment to Rule 2A, being specific to works contracts, did not affect the Court's earlier decision concerning the taxable service of 'construction of complex'.

Eligibility of cenvat credit on sales commission services - sales promotion activity as an input service - effect of departmental clarification/CBEC Circular on retrospective interpretation - conflicting High Court decisions and consequent subjudice of issue

Eligibility of cenvat credit on sales commission services - sales promotion activity as an input service - effect of departmental clarification/CBEC Circular on retrospective interpretation - Assessee entitled to avail cenvat credit of service tax paid on sales commission to sales agents for the period in question; Departmental appeal dismissed. - HELD THAT: - The Tribunal examined divergent High Court decisions on whether commission paid to agents constituted a sales promotion activity eligible as an input service for cenvat credit. Noting that the Gujarat High Court had taken a view adverse to credit while other decisions (including Ambika Overseas) were contrary, the Tribunal observed the issue was the subject of judicial disagreement and subjudice before the Supreme Court. The Department had issued CBEC Circular No. 934/4/2011 clarifying that explanations inserted to rules may have retrospective effect and that sales promotion activities include sale of dutiable goods on commission basis. The Tribunal also relied on its earlier decision in Essar Steel India Ltd. which treated commission to agents as sales promotion activity. In view of the departmental clarification and the Tribunal's precedent, and notwithstanding that the matter remains sub judice at the apex court, the Tribunal found that the original adjudicating authority erred in denying credit and therefore set aside the order reversing the recovery demand and dismissed the Department's appeal.

Order set aside; appeal dismissed and cenvat credit on sales commission services upheld for the period under challenge.

Final Conclusion: The Tribunal dismissed the Department's appeal and upheld the entitlement of the assessee to the cenvat credit on service tax paid on sales commission to agents for September, 2015 to February 2016, relying on departmental clarification and Tribunal precedent despite conflicting High Court rulings and the issue being sub judiced before the Supreme Court.

Refund of service tax - Unjust enrichment - Incidence of tax borne by service recipient

Refund of service tax - Unjust enrichment - Incidence of tax borne by service recipient - Refund payable to service recipient - Rejection of the refund claim on the ground of unjust enrichment was not sustainable where the service recipient had borne the service tax and had directed that the refund be claimed and credited directly to its account. - HELD THAT: - The Tribunal found from the service recipient's letter that the tax amount had already been reimbursed by the service recipient to the appellant and that the refund was required to be credited directly to the service recipient. On that basis, it held that under Section 11B(2)(e), the person who has borne the incidence of tax is entitled to the refund. Since the claim was filed by the appellant on the service recipient's direction and the refund was to go directly to the service recipient, the refund could not be denied on the ground of unjust enrichment. [Paras 6]

The refund claim was held admissible, with payment to be made directly to the service recipient after the necessary account details are furnished or, if already furnished, by direct sanction to the service recipient.

Final Conclusion: The impugned order rejecting refund on the ground of unjust enrichment was set aside. The appeal was allowed with a direction that the sanctioned refund be paid directly to the service recipient.

Refund under Section 11B of the Central Excise Act, 1944 - entitlement to refund where service tax paid and deposited and borne by recipient - services provided abroad - original invoices - computer generated invoices

Refund under Section 11B of the Central Excise Act, 1944 - entitlement to refund where service tax paid and deposited and borne by recipient - services provided abroad - The appellant is entitled to refund of service tax paid where the service was provided abroad but the service tax was paid, deposited with Revenue and borne by the appellant. - HELD THAT: - The Tribunal found that although the services were rendered abroad, the service provider had paid the service tax which was deposited with the Revenue and the appellant had borne that tax. Applying Section 11B of the Central Excise Act, 1944, the appellant is therefore entitled to claim refund of the service tax so borne. The payment and deposit of tax by the provider and the fact that the appellant bore the tax are determinative of the appellant's entitlement to refund under the statutory provision relied upon. [Paras 3]

Refund claim allowed on the ground that service tax was paid, deposited and borne by the appellant; entitlement to refund under Section 11B established.

Original invoices - computer generated invoices - The refund claim cannot be rejected solely because original invoices were not produced where computer generated invoices were submitted and a certificate from the service provider was furnished. - HELD THAT: - The Tribunal noted that the appellant produced computer generated invoices, which do not require signature, and the adjudicating authority as well as the Commissioner (A) had presumed these were not original. The appellant supplemented the invoices with a certificate from the service provider. In these circumstances the absence of a signed 'original' invoice was not a sole or decisive ground for rejecting the refund claim; the documents produced sufficed for permitting the claim to be adjudicated in the appellant's favour. [Paras 3]

Refund claim cannot be denied solely for non-production of signed original invoices where computer generated invoices and a provider's certificate have been furnished.

Final Conclusion: Impugned orders set aside; appeal allowed and refund claim of service tax permitted with consequential relief.

Availment of cenvat credit on capital goods and exemption compatibility - statutory mandate to reverse credit when availing exemption - notional or unutilised credit is not a reversal - limited confirmation of demand where partial reversal accepted - no interest where amount remains unutilised after partial reversal (following precedents) - penalty not leviable where credit remains unutilised

Availment of cenvat credit on capital goods and exemption compatibility - statutory mandate to reverse credit when availing exemption - Cenvat credit on capital goods availed by the appellant was in contravention of the conditions for claiming the exemption and therefore not permissible. - HELD THAT: - The Tribunal noted the admitted facts that the appellant manufactured only the exempted product and that the Notifications granting concessional duty prohibited availing cenvat credit on capital goods. The fact that credit had been availed prior to subsequently claiming the exemption did not cure the contravention. As a statutory mandate required reversal of credit where the exemption is claimed, the undisputed availment of credit on capital goods amounted to unauthorized credit and was correctly held contrary to the Cenvat Credit Rules, 2004. [Paras 5, 7]

The cenvat credit on capital goods was held to have been availed in contravention of the statutory conditions and the finding of unauthorized availment is sustained.

Notional or unutilised credit is not a reversal - limited confirmation of demand where partial reversal accepted - The confirmed demand was modified to exclude the portion of credit already reversed in cash; demand sustained only for the balance amount not reversed. - HELD THAT: - The Tribunal accepted that a portion of the availed credit had been repaid in cash following departmental objection, but observed that the remaining amount continued to lie unutilised in the cenvat account without any book entry or return effecting reversal. Consequently, the total demand could not be sustained; the demand was restricted to the amount which remained un-reversed. [Paras 6, 7]

The demand stands confirmed only to the extent of the un-reversed credit balance; the portion already reversed in cash is excluded from the confirmed demand.

No interest where amount remains unutilised after partial reversal (following precedents) - The appellant is not liable to pay interest on the balance amount of cenvat credit which remains unutilised in the cenvat account, in view of the precedents relied upon. - HELD THAT: - Relying on the decisions placed before the Tribunal, it was held that interest could not be imposed on the amount which, though the subject of dispute, remained unutilised in the appellant's cenvat account after part reversal. The Tribunal specifically applied those authorities to relieve the appellant from interest liability on the sustained portion of the demand. [Paras 7]

No interest is payable on the sustained demand amount.

Penalty not leviable where credit remains unutilised - Penalty could not be imposed in respect of the cenvat credit availed since the amount remained unutilised in the appellant's account. - HELD THAT: - The Tribunal recorded that because the disputed credit remained unutilised and part reversal had been made, the circumstances did not warrant imposition of penalty. On this factual basis the adjudicating authority's imposition of penalty was held not to arise. [Paras 7]

The penalty imposed is set aside.

Final Conclusion: The appeal is partly allowed: the finding of unauthorized availment of cenvat credit on capital goods is upheld, but the confirmed demand is reduced to the un-reversed balance; no interest or penalty is payable on that sustained amount.

Limitation - date of communication/receipt of order - statutory appeal under Section 85 of the Finance Act, 1994 - remand for fresh consideration on merits - adequacy of postal address and postal acknowledgment - setting aside non-speaking order for reconsideration on merits

Date of communication/receipt of order - adequacy of postal address and postal acknowledgment - Date on which the writ petitioner received the original order appealed against was 14.01.2019 and not 22.09.2018. - HELD THAT: - The Court examined departmental postal records (postal receipts) and the postal acknowledgment card produced in response to the petitioner's query. The postal acknowledgment card described the addressee only as 'M/s. Beeku Exports, Chennai - 99', which the Court found to be an inadequate postal address incapable of supporting a reliable delivery finding. The petitioner's memorandum of grounds of appeal and the petitioner's assertion recorded that the date of communication of the order was 14.01.2019 and that the order was obtained in person from the petitioner's office. Having regard to the inadequacy of the address on the acknowledgment card, the absence of the postal acknowledgment card in the departmental file, and the petitioner's contemporaneous record in the grounds of appeal, the Court concluded that it can be safely inferred that the date of receipt of the order-in-original dated 11.07.2018 was 14.01.2019 rather than 22.09.2018 as recorded by the department.

The Court inferred that the order was received by the petitioner on 14.01.2019.

Limitation - statutory appeal under Section 85 of the Finance Act, 1994 - setting aside non-speaking order for reconsideration on merits - remand for fresh consideration on merits - Impugned order dismissing the statutory appeal as time-barred was set aside and the appeal remitted to the First Appellate Authority for fresh adjudication on merits. - HELD THAT: - The Court noted that the First Appellate Authority had dismissed the statutory appeal solely on the ground of limitation without examining the merits. In light of the Court's conclusion regarding the date of receipt (14.01.2019), the Court found it appropriate to set aside the impugned order dated 03.05.2019. The setting aside was expressly without any opinion on the merits of the appeal and was directed to enable the First Appellate Authority to take up the statutory appeal under Section 85 of the Finance Act, 1994, examine it on merits and pass orders in accordance with law. The Court further directed that the orders passed on merits by the First Appellate Authority be communicated to the writ petitioner under due acknowledgment in accordance with the rules.

Impugned order dated 03.05.2019 is set aside and the appeal is remitted to the First Appellate Authority for fresh consideration on merits, with directions to communicate the result under due acknowledgment.

Final Conclusion: Writ petition allowed; impugned appellate order dismissed for limitation set aside (without opinion on merits) and the statutory appeal remitted to the First Appellate Authority for adjudication on merits and communication of the result under due acknowledgment; no costs.

Refund payable in cash under the CGST refund mechanism (Section 142(3) of the CGST Act, 2017) - prohibition on crediting refunds to Cenvat credit account after commencement of GST regime - refund of duty paid under protest - restoration of adjudicating authority's order

Refund payable in cash under the CGST refund mechanism (Section 142(3) of the CGST Act, 2017) - prohibition on crediting refunds to Cenvat credit account after commencement of GST regime - Whether the refund sanctioned to the appellant should be paid in cash or credited to their Cenvat credit account - HELD THAT: - The Tribunal applied the statutory provision brought into force from 1.7.2017, namely Section 142(3) of the CGST Act, 2017, which requires that any refund arising on account of Cenvat credit, duty, tax, interest or any amount shall be paid in cash. The Commissioner (Appeals) erred in directing that the sanctioned refund be credited to the appellant's Cenvat credit account after introduction of the GST regime. That direction was held to be contrary to the clear statutory mandate and against the spirit of the law. The adjudicating authority's order sanctioning the refund in cash was restored, and the impugned appellate order was set aside. [Paras 4, 5]

Impugned order directing credit to Cenvat credit account set aside; adjudicating authority's cash refund order restored.

Final Conclusion: The appeal is allowed; the Commissioner (Appeals) order directing credit of the refund to the Cenvat credit account is set aside and the adjudicating authority's order directing payment of refund in cash is restored, with consequential relief.

Parity of pay - Writ remedy for service benefits - Interest on arrears - Modification of appellate order awarding interest

Modification of appellate order awarding interest - Modification of the High Court's grant of interest on arrears in favour of a member of the Trade Tax Tribunal. - HELD THAT: - The respondent, formerly an advocate and thereafter a member of the Trade Tax Tribunal, had obtained from the High Court parity of pay with members in Government service together with interest at 6% per annum from the date of his appointment in 1994. This Court held that the interest component was to be limited and modified: interest on the arrears of salary shall run from the date of filing of the writ petition (filed in 2001) and not from the date of appointment (1994). The Court therefore altered the temporal scope of the High Court's interest award while leaving the substantive grant of parity intact, and directed the petitioner to pay the arrears within a fixed period.

High Court order modified to award interest on arrears from date of filing of the writ petition (2001); arrears to be paid within three months.

Modification of appellate order awarding interest - Disposition of Special Leave Petitions challenging High Court orders. - HELD THAT: - Two Special Leave Petitions were considered and this Court found no reason to interfere with the impugned orders of the High Court. Accordingly, the Special Leave Petitions were dismissed and any pending applications were disposed of.

Special Leave Petitions dismissed; pending applications disposed of.

Final Conclusion: The Special Leave Petitions challenging the High Court's orders are dismissed. In the matter concerning parity of pay, the High Court's interest award is modified so that interest on arrears runs from the date of filing of the writ petition (2001) and the arrears are directed to be paid within three months.

Intention to evade tax - mere clerical error - penalty at maximum rate - excessiveness and proportionality of penalty - refund of excess deposit

Intention to evade tax - mere clerical error - The assessing authority's finding that the omission in bifurcating laminated and unlaminated P.P. fabric was not a mere clerical error and that intention to evade tax could be inferred. - HELD THAT: - The Court noted that the assessee had disclosed a total of 67 bags of P.P. fabric and the revenue did not contend that 25 bags were in excess of that total. The physical verification showed the consignment comprised 42 bags laminated and 25 bags unlaminated, whereas the invoice described all 67 as laminated. Given that the totals matched, the factual position was that non-disclosure of 25 bags of unlaminated fabric necessarily coincided with an overstatement elsewhere in the invoice. On this basis the Court upheld the conclusion recorded by the assessing authority, appeal authority and Tribunal that the omission could not be treated as a mere clerical mistake and supported an inference of intention to evade tax. [Paras 10, 12]

Finding of intention to evade tax upheld; omission not treated as mere clerical error.

Penalty at maximum rate - excessiveness and proportionality of penalty - refund of excess deposit - Whether the imposition of penalty at the maximum rate was excessive and whether the penalty should be reduced. - HELD THAT: - Although the Court upheld the inference of intention, it found the demand of penalty at 40% to be excessive in the facts of the case where the total quantity declared equalled the consignment and the matter related to A.Y. 2000-01 with a not heavy penalty amount. Exercising discretion, the Court directed that the Tribunal pass an appropriate order confining the penalty to Rs. 25,000 in all and that any balance deposited in excess be refunded to the assessee. [Paras 11, 12]

Penalty reduced and confined to Rs. 25,000; excess amount to be refunded.

Final Conclusion: Revision partly allowed: finding of intention to evade tax sustained, but penalty held excessive and limited to Rs. 25,000 with direction to refund any excess deposit.

Composition under Section 7-D of the U.P. Trade Tax Act - binding contract arising from acceptance of composition - assessment under Section 7(3) of the Act - validity of departmental circular vis-a -vis State Government directions - burden of evidence for presumed sale and inadmissibility of assessment based on surmise

Composition under Section 7-D of the U.P. Trade Tax Act - binding contract arising from acceptance of composition - assessment under Section 7(3) of the Act - Effect of an accepted composition order under Section 7-D on subsequent assessment proceedings under Section 7(3) in respect of the same liability - HELD THAT: - The court held that acceptance of an application for composition under Section 7-D, made pursuant to directions issued by the State Government, operates as an alternative to regular assessment and creates a binding contract between the assessee and the revenue. Once the composition application was accepted in accordance with the State Government scheme, the actual turnover or production figures for the period became extraneous and regular assessment proceedings in respect of the same liability could not be validly resorted to. The Assessing Officer's later action under Section 7(3) to tax presumed sale of coal was thus without jurisdiction where the liability had already been compounded and no contrary stipulation limiting the composition had been recorded in the composition order. [Paras 12, 14, 16, 20]

The composition order barred the impugned assessment; the question is answered in favour of the assessee.

Validity of departmental circular vis-a -vis State Government directions - composition under Section 7-D of the U.P. Trade Tax Act - Whether a circular issued by the Commissioner can limit or qualify the State Government directions for composition under Section 7-D - HELD THAT: - The court found that the composition scheme under Section 7-D is effective only pursuant to directions issued by the State Government, and the Commissioner lacks autonomous jurisdiction to introduce a contrary limitation on the extent of composition. The circular relied upon by the revenue, which purported to restrict composition by reference to consumption or kiln capacity, conflicted with the State Government's composition scheme and therefore was neither binding on the assessee nor enforceable against the terms of the composition accepted under Section 7-D. [Paras 13, 15, 16]

The Commissioner's circular cannot override or limit the State Government directions forming the composition scheme and is not enforceable to defeat the accepted composition.

Burden of evidence for presumed sale and inadmissibility of assessment based on surmise - assessment under Section 7(3) of the Act - Whether there was material to infer that the assessee sold coal outside books and thus was liable to tax for such presumed sales - HELD THAT: - On the material before the court there was no evidence of trading in coal, no exemplar or cogent material showing abnormal consumption compared to comparable kilns, and no finding that the composition order had been set aside. The authorities' conclusion rested on conjecture and surmise rather than admissible evidence. In absence of such material, the Assessing Officer's inference of unaccounted sales was unsustainable and the assessment based on presumed sale could not be upheld. [Paras 18, 19, 20]

There was no material to infer sale of coal outside books; the assessment based on presumed sale was unsustainable.

Final Conclusion: Both revisions are allowed: the accepted composition under Section 7-D precluded the impugned assessment; the Commissioner's circular could not curtail the State Government's composition directions; and there was no evidence to support a finding of resale of coal by the assessee.

JKM principle - centralised mechanism for mismatch of returns and web-portal data - invalidity of assessment founded solely on Annexure-II without requisite procedure - setting aside of impugned assessment orders and remand for fresh assessment - assessment to be completed after implementation of new assessment module

JKM principle - invalidity of assessment founded solely on Annexure-II without requisite procedure - Impugned revised assessment orders passed for the two assessment years were not in conformity with the JKM principle and therefore liable to be set aside. - HELD THAT: - The Court accepted the unchallenged premise that the impugned assessments relied on comparisons with Annexure-II (sale particulars of sellers) without following the procedural safeguards and centralised pre-verification mechanism endorsed in the JKM Graphics decision. The single-judge direction in JKM Graphics requires a centralised exercise by the department to examine mismatches between departmental web-portal figures and dealer returns before issuing notices or making assessments. In view of that governing principle, assessments made merely by relying on Annexure-II without the prescribed systemic verification are unsafe. The writ petitions were held to be squarely covered by the earlier order dated 20.06.2019 and, accordingly, the impugned orders were set aside. [Paras 3, 7, 8]

Impugned orders dated 31.12.2018 for 2014-15 and 2015-16 are set aside as not in conformity with JKM principle.

Centralised mechanism for mismatch of returns and web-portal data - assessment to be completed after implementation of new assessment module - setting aside of impugned assessment orders and remand for fresh assessment - Assessments were remitted for fresh consideration to be completed after the department implements the new centralised methodology/module recommended pursuant to JKM Graphics. - HELD THAT: - The Court directed that after the State places a new centralised methodology/module (which the Court was informed is in the anvil) before the learned single Judge in the JKM Graphics proceeding and that module becomes operative, the respondent shall re-assess the petitioner afresh. The fresh assessments are to be completed within three months from the date the new module becomes operative and the results communicated to the petitioner in accordance with the applicable TNVAT rules. This decision remits the matter for fresh assessment rather than deciding the merits of the tax liabilities on the existing record. [Paras 7, 8]

Matter remitted for fresh assessments to be made in accordance with the new centralised module; fresh assessments to be completed within three months of the module becoming operative and communicated to the petitioner.

Final Conclusion: The court set aside the two revised assessment orders for 2014-15 and 2015-16 as being inconsistent with the JKM principle and remitted the matter for fresh assessments to be completed pursuant to a new centralised assessment module, within three months of that module becoming operative.

Concessional rate of tax via C-forms - inter-state purchase of High Speed Diesel for power generation - effect of introduction of Goods and Services Tax on entitlement to concessional purchases - binding effect of a Single Judge's decision until stayed or reversed - decision in rem - duty of Revenue to permit downloading of statutory/administrative forms in accordance with court orders

Concessional rate of tax via C-forms - inter-state purchase of High Speed Diesel for power generation - binding effect of a Single Judge's decision until stayed or reversed - decision in rem - duty of Revenue to permit downloading of statutory/administrative forms in accordance with court orders - Petitioner entitled to the benefit of purchasing High Speed Diesel on concessional rate by using 'C' forms and the Revenue must permit downloading of 'C' forms in accordance with the ratio of the Ramco Cements decision which remains operative until stayed or reversed. - HELD THAT: - The Court found that the factual position is undisputed: the petitioner previously made inter-state purchases of High Speed Diesel on concessional rate using 'C' forms and, after introduction of GST, the Department blocked access to downloading 'C' forms. The Court relied on the earlier Single Judge decision in the Ramco Cements matter and the subsequent Single Judge order in Southern Cotspinners, which held that the Ramco Cements rationale is applicable to all similarly placed dealers and operates as a decision in rem until stayed or reversed. The Revenue's contention that the benefit can be extended only to parties to the Ramco Cements case was rejected as inconsistent with the in rem character of the earlier decision. In consequence, the petitioner - being similarly placed - must be permitted to download 'C' forms and avail the concessional rate; the Revenue/Assessing Authorities are directed to take necessary action forthwith, within the short time specified by this Court. [Paras 6, 8, 9, 10, 11]

Writ petition allowed; Revenue directed to permit downloading of 'C' forms and to take necessary action within five working days.

Final Conclusion: The writ petition was allowed: the petitioner is entitled to the benefit of purchasing High Speed Diesel on concessional rate by downloading 'C' forms and the Revenue is directed to restore/permit access and take necessary action within five working days; no costs.

Penalty under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008 - stock transfer - intention to evade tax - Form-38 particulars (bill number and date) - clerical error defence - requisite finding for imposition of penalty

Penalty under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008 - stock transfer - Form-38 particulars (bill number and date) - intention to evade tax - clerical error defence - requisite finding for imposition of penalty - Whether the penalty under Section 54(1)(14) could be imposed where column no.6 of Form-38 was left blank but the assessee produced stock transfer invoice, bilty and Form-38 and explained the omission as a clerical error, without any specific finding of intention to evade tax. - HELD THAT: - The Court held that while column no.6 of Form-38 (bill number and date) is material, mere omission of that entry does not automatically justify imposition of penalty under Section 54(1)(14). Following precedent, an assessing authority must record a finding, based on material before it, that there was an intention to evade payment of tax. In the present case the assessee produced stock transfer invoice, bilty and Form-38 at the stage of detention and explained the omission as a clerical mistake; none of the authorities applied independent mind to or recorded any specific finding rejecting that explanation. The Tribunal's general observation about a tendency to leave column no.6 blank after abolition of check posts did not substitute for adjudication of the assessee's specific explanation, especially where only one transaction out of total stock transfers exceeding the stated amount was doubted. Given these facts, the Tribunal's confirmation of the penalty was found to be perverse. The Court declined to remit for fresh adjudication because the appeal related to A.Y. 2008-09 and the VAT Act has been repealed and replaced by GST, and the peculiar factual matrix (manufactured goods, packaged and identified, with accompanying documents) warranted final disposal in favour of the assessee. [Paras 9, 10, 11, 12, 13]

Penalty under Section 54(1)(14) set aside and revision allowed.

Final Conclusion: Revision allowed; the Tribunal's confirmation of the penalty is quashed for want of any recorded finding of intention to evade tax and having regard to the assessee's documentary evidence and explanation.

Special Economic Zone (SEZ) sale - remand for fresh consideration - admission of evidence in revisional proceedings

Special Economic Zone (SEZ) sale - remand for fresh consideration - admission of evidence in revisional proceedings - Quashing of the revisional order to the extent of the claim for disallowance of SEZ sale and remand for fresh consideration allowing petitioners to tender evidence. - HELD THAT: - The revisional authority had not adjudicated the petitioners' claim in respect of SEZ sale on the ground that supporting documents were not produced. The High Court did not decide the factual question whether the documents had been handed over to the departmental representative but held that the petitioners should be permitted to lead available evidence in accordance with law before the revisional authority. The revisional order dated June 20, 2017 is quashed insofar as it pertains to the SEZ sale claim, and the matter is remitted to the revisional authority which is directed to consider the evidence tendered by the petitioners in accordance with law and, if the claim is substantiated, to allow it.

Revisional order quashed to the extent of the SEZ sale claim and remitted for fresh consideration permitting the petitioners to lead evidence.

Final Conclusion: The writ petition is disposed of by quashing the revisional order only insofar as the SEZ sale claim is concerned and remanding that issue to the revisional authority for fresh consideration of evidence tendered by the petitioners in accordance with law; no order as to costs.

Protection under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 - inclusion of liabilities in a BIFR sanctioned scheme - statutory liability under a taxing enactment - no automatic stay on revenue recovery by mere registration before BIFR - requirement of express waiver for statutory tax liabilities

Protection under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 - inclusion of liabilities in a BIFR sanctioned scheme - Whether registration of the company with BIFR alone attracts the embargo in Section 22(1) of the SIC Act so as to protect pre existing interest liability imposed under the State taxing statute. - HELD THAT: - The Court applied settled precedents which hold that Section 22(1) operates to bar proceedings only insofar as the liabilities are reckoned in or covered by a sanctioned scheme prepared or implemented by BIFR. Mere registration or initiation of proceedings before BIFR does not by itself extend protection to liabilities unless those liabilities are included in the sanctioned scheme. The petitioners failed to demonstrate that the interest liability in question was included in any scheme approved by BIFR; the registration date postdated the creation of the liability. Consequently, the statutory embargo under Section 22(1) could not be invoked to shield the statutory interest claimed by the Sales Tax authority. [Paras 8, 11, 13, 15]

Registration before BIFR, without inclusion of the interest liability in a sanctioned scheme, does not attract Section 22(1) protection; the interest liability is not stayed by mere BIFR registration.

Statutory liability under a taxing enactment - requirement of express waiver for statutory tax liabilities - no automatic stay on revenue recovery by mere registration before BIFR - Whether the assessee's pleaded financial distress and BIFR reference furnish a justifiable ground to avoid imposition of interest under Section 26(4)(a) of the Chhattisgarh Vanijyik Kar Adhiniyam, 1994. - HELD THAT: - The Court emphasised that obligations created by a taxing statute are statutory in nature and cannot be treated as waived or suspended absent an express inclusion or waiver in the BIFR approved scheme. Reliance on the company's financial difficulties and the fact of BIFR registration does not, by itself, excuse non payment or prevent imposition of interest. The Single Judge correctly applied the legal tests and precedents and found that the defence of bona fide difficulty failed to displace the statutory obligation to pay interest. [Paras 5, 6, 9]

Financial distress and BIFR registration do not constitute a sufficient legal ground to avoid statutory interest; the imposition of interest under Section 26(4)(a) is sustainable.

Final Conclusion: The appeals are dismissed; the High Court correctly held that mere registration before BIFR does not protect interest liabilities under the State taxing statute unless such liabilities are expressly included in a BIFR sanctioned scheme, and the petitioners' defence of bona fide inability to pay is insufficient to negate the statutory obligation.

Estoppel from challenging the validity of an arbitration clause after seeking appointment of an arbitrator under Section 11 - disclosure obligation of an arbitrator of circumstances likely to give rise to justifiable doubts as to independence or impartiality - recusal of arbitrator when reasonable apprehension of bias exists - setting aside an arbitral award for failure to disclose conflict of interest - public confidence principle: justice must not only be done but must also seem to be done

Estoppel from challenging the validity of an arbitration clause after seeking appointment of an arbitrator under Section 11 - Whether the appellants could dispute the existence or applicability of the arbitration clause after having invoked Section 11 for appointment of an arbitrator. - HELD THAT: - The Court held that the appellants had themselves sought appointment of an independent arbitrator by filing a petition under Section 11 (M.C.A. No.61/2006), which constituted an admission of the arbitration clause and estopped them from thereafter disputing its existence or applicability. Given that the appellants had invoked the remedy under Section 11, they could not at this stage contend that there was no consensus ad idem as to reference to arbitration. This finding disposes of the challenge to the arbitration clause itself and is recorded in the judgment. [Paras 6]

The contention challenging the arbitration clause was rejected on the ground of estoppel arising from the appellants' prior petition under Section 11.

Disclosure obligation of an arbitrator of circumstances likely to give rise to justifiable doubts as to independence or impartiality - recusal of arbitrator when reasonable apprehension of bias exists - setting aside an arbitral award for failure to disclose conflict of interest - public confidence principle: justice must not only be done but must also seem to be done - Whether the award had to be set aside because the arbitrator had failed to disclose having acted as counsel for a party related to the respondent and proceeded with the arbitration despite objections. - HELD THAT: - The Court examined the record showing that the learned arbitrator had filed a vakalatnama on 29.03.2004 for a mesne profits matter in which one of the partners connected to the respondent had been involved, and that objections (communications and notices) regarding this prior retainer were brought to the arbitrator's attention before he proceeded. Applying the pre-amendment obligation in Section 12(1) to disclose circumstances giving rise to justifiable doubts, and the principle that arbitration must not only be fair but also appear fair, the Court found a reasonable basis for the appellants' apprehension of lack of impartiality. Given the failure to disclose and the arbitrator's continuation of proceedings despite the objections, propriety required recusal; the award was therefore unsustainable. The Court did not decide the merits of the underlying claim/counterclaim and confined its order to setting aside the award for lack of impartiality and non-disclosure. [Paras 7, 8, 9, 10]

The award was set aside on the ground that the arbitrator failed to disclose a conflict of interest and ought to have recused himself, thereby creating justifiable doubts as to his independence or impartiality.

Final Conclusion: The High Court judgment allowing the appeal under Section 37(1)(b) was set aside; the District Judge's order under Section 34 setting aside the award was restored. The parties are permitted to pursue arbitration afresh in accordance with law, and all merits of the claim/counterclaim remain open. The appeal is allowed with no order as to costs.

Public trust doctrine - Real Estate Regulatory Authority (RERA) - protection of allottees and completion mandate - Misappropriation/diversion of home buyers' funds and creation of shell companies - Violation of FEMA/FDI norms and overseas investment routing - Bankers' duty to monitor utilisation of project funds and conditional NOC for mortgage - Doctrine that "fraud vitiates" and equitable relief against unjust enrichment - Forensic audit approval and consequential remedial measures - NBCC appointment for project completion and commission fixing - Recovery of dues from attached/alienable assets instead of depriving home buyers - Disciplinary and criminal investigation directions (ICAI, ED, police)

Forensic audit approval and consequential remedial measures - Misappropriation/diversion of home buyers' funds and creation of shell companies - Whether the Forensic Audit findings of large scale diversion of home buyers' funds, creation/use of dummy companies, bogus transactions and related misconduct are to be accepted and acted upon. - HELD THAT: - The Court accepted the Forensic Auditors' detailed findings that funds paid by home buyers and certain bank monies were diverted across group and related entities, that numerous shell/front companies were used to route money, that there were under valued sales, bogus vendor bills and suspicious inter company advances, and that auditors/CFO conduct raised serious professional and criminal concerns. On that factual basis the Court recorded that prima facie criminality, money laundering and FEMA/FDI contraventions had occurred and directed immediate remedial and enforcement responses, including (i) seizure/inspection of records by police for forensic audit, (ii) accountability steps for Directors and other incumbents, (iii) orders for those identified to deposit recoverable amounts into Court, and (iv) directions to regulatory and enforcement agencies to investigate. The Court emphasised that the buyers' monies could not be permitted to be dissipated further and that findings justified comprehensive intervention to protect buyers and recover diverted funds.

Forensic Audit report accepted; auditors' findings of diversion, bogus transactions and suspect corporate structures treated as establishing prima facie fraud and misuse of funds; directions issued for deposit/recovery, forensic/criminal/FEMA/FDI investigations and further enforcement measures.

Real Estate Regulatory Authority (RERA) - protection of allottees and completion mandate - Obligation to deposit project receipts in separate escrow and use for that project - Doctrine that "fraud vitiates" and equitable relief against unjust enrichment - Whether Amrapali group's RERA registration and the rights flowing from it should be sustained given the forensic findings, and what protection and remedies home buyers are entitled to under RERA. - HELD THAT: - Having regard to the auditors' findings and the statutory scheme of RERA (including the obligations on promoters to keep project receipts in a designated account and the Authority's power to ensure completion or facilitate remaining works), the Court held that the promoters' registration and the permissions deriving therefrom could not be allowed to stand in the face of mala fide conduct. RERA's remedial architecture (revocation, Authority led completion, allottee rights and refund/compensation options) was applied in favour of purchasers: the Court held that buyers' interests must be protected, completion must be effected (by an appropriate agency) and buyers cannot be left to suffer because promoters and others misapplied monies. The Court rejected contentions that buyers could be deprived of possession or title because of promoter defaults and declared that, in the present facts, equitable recovery should proceed from assets created or procured by diversion rather than by stripping buyers of their flats.

RERA registration of Amrapali group cancelled; statutory protections for allottees invoked - completion and buyer protection measures ordered; buyers' rights to completion/compensation upheld and protected from being defeated by promoter misconduct.

Noida/Greater Noida authorities' duty under lease and public trust doctrine - Bankers' duty to ascertain conditional NOC prerequisites before accepting mortgage - Recovery of dues from attached/alienable assets instead of depriving home buyers - Whether Noida/Greater Noida Authorities and secured creditors (banks) can realize their dues from the incomplete projects/ flats of innocent allottees where promoter diverted amounts collected for payment of lease/premium and banks failed to ensure proper utilisation. - HELD THAT: - The Court held that authorities and banks had statutory duties and public trust obligations to prevent misuse of land and ensure proper completion; in the present case officials of the authorities and bankers had permitted conditional NOCs and mortgages without ensuring condition precedent payments and monitoring, thereby facilitating diversion. In those circumstances, and given the forensic findings that buyers' monies and bank funds were misapplied, the Court held it would be inequitable to permit recovery from the purchasers' flats or to demolish/forfeit buyers' occupancies. Instead, the Court directed recovery of authorities' and banks' dues from other attached properties and assets created through diverted funds, from guarantors and persons identified by the forensic report, and by processes ordered by the Court, leaving buyers' possession and completion remedies intact.

Authorities and banks cannot proceed to defeat buyers' interests by claiming priority over the purchasers' flats in these facts; dues are to be recovered from attached/alienable assets and identified persons, not by depriving innocent allottees of homes.

Appointment of receiver/implementing agency and completion mandate - NBCC appointment for project completion and commission fixing - How the incomplete projects are to be completed and by whom, and what commercial terms are to apply for completion. - HELD THAT: - The Court appointed a competent agency to take over and complete the projects so as to protect the dominant interest of home buyers and to secure completion without relying on the delinquent promoter. The National Buildings Construction Corporation (NBCC) was directed to undertake completion work; the Court fixed NBCC's commission at 8% and mandated timely DPRs and phased completion under Court supervision. The Court further ordered formation of supervisory/compliance mechanisms (including escrow accounts, committees and monitoring) to ensure funds are used solely for project completion as approved.

NBCC appointed to complete the projects; NBCC's commission fixed at 8%; Court receiver/monitoring regime ordered to supervise completion and disbursement from escrow.

Escrow/secured collection for outstanding payable by allottees - Protections for occupiers and issuance of completion/occupancy certificates - What interim financial and possession regime should be implemented to permit completion and protect occupants. - HELD THAT: - To balance completion and buyer obligations, the Court directed (i) an escrow account to be opened in UCO Bank (Supreme Court branch) for deposits by home buyers of outstanding amounts; (ii) that amounts in escrow be used first for completion and then for any compensation or dues as ordered; and (iii) that Noida/Greater Noida Authorities issue occupancy/completion certificates (including part/phase certificates) and facilitate utility connections for inhabited towers notwithstanding recovery proceedings, subject to the Court's recovery regime from attached assets. The Court required buyers to deposit outstanding sums within a prescribed time and provided for phased offers of possession tied to escrow and NBCC completion, so that innocent occupants are not left without basic amenities or dispossessed because of promoter misconduct.

Escrow scheme (UCO Bank) established for collection of outstanding payments from allottees; occupants to receive completion/occupancy certificates and utility connections while completion is undertaken by NBCC; escrow funds to be applied phase wise for completion and compensation.

Enforcement, disciplinary and criminal investigation directions (ICAI, ED, police) - Accountability of auditors, CFO and directors - Whether and what disciplinary/criminal/FEMA/FDI investigations and professional action should follow the forensic findings. - HELD THAT: - Given the auditors' and forensic reports pointing to manipulation, non disclosure and connivance of statutory auditors/CFO and officers, the Court directed (i) the Enforcement Directorate to investigate FEMA/FDI contraventions and submit quarterly reports; (ii) police to investigate criminal aspects and to continue seizure/forensic assistance where ordered; (iii) Institute of Chartered Accountants of India to consider disciplinary proceedings against the statutory auditor(s) and conclude action within a specified time; and (iv) Directors and other identified persons to be required to deposit or make available amounts identified by the forensic report within a time limit, failing which further coercive steps would follow. The Court thus mandated parallel criminal, regulatory and professional accountability processes.

ED, police and ICAI directed to investigate and take appropriate action; identified directors, auditors and officers ordered to cooperate and to deposit/turn over recoverable assets within time limits; non compliance to attract further proceedings.

Final Conclusion: The Court, after expressly accepting the Forensic Audit, found pervasive diversion of home buyers' funds, suspect corporate structures and regulatory/FEMA/FDI breaches; it cancelled Amrapali's RERA registration and the lease based permissions in the projects, vested rights in a Court Receiver, appointed NBCC (8% commission) to complete projects, established an escrow in UCO Bank for buyers' outstanding payments (to be used for phased completion and compensation), restrained recovery from buyers' flats and ordered recovery from attached/alienable assets and identified persons; and directed criminal, FEMA/FDI and professional disciplinary investigations with interim compliance and deposit obligations on the companies, directors and professionals implicated.

Section 138 Negotiable Instruments Act - security cheques - existing debt or liability - pleading requirements in complaint under Section 138 - quashing of complaint and summoning order - pre-summoning evidence

Section 138 Negotiable Instruments Act - security cheques - existing debt or liability - pleading requirements in complaint under Section 138 - pre-summoning evidence - Whether the complaints under Section 138 of the Negotiable Instruments Act and the summoning orders are maintainable where the cheques were alleged to have been issued as security and the complaints lack averments establishing an existing debt or liability. - HELD THAT: - The Court examined the complaints and the pre-summoning evidence and found that they contain only sketchy averments about prior business transactions and the issuance of cheques, without particularised factual pleadings showing the factual basis of any existing debt or liability. The Court applied the settled principle that a complaint under Section 138 must plead the essential ingredients of an existing debt or liability and relied on earlier authorities holding that absence of requisite pleadings justifies quashing. Given the complainant's failure to aver the nature of the underlying transaction with sufficient detail and the contention that the cheques were delivered as security under MOUs (and thus not representing an existing enforceable debt), the complaints did not disclose a maintainable case under Section 138. On that basis continuation of proceedings would be futile.

Complaints and summoning orders quashed for want of necessary averments to establish an existing debt or liability under Section 138.

Final Conclusion: The High Court quashed the three complaints and the summoning orders under Section 138 of the Negotiable Instruments Act for failure to plead the essential particulars showing an existing debt or liability and because the cheques were pleaded to have been issued as security; the petitions are disposed of.

Authorization by association - maintainability of application filed by an association - Rule 7 of the Central Administrative Tribunal Rules of Practice, 1993 - sufficiency and veracity of authorising resolution - costs for unauthorised filing - finality of common order where related writ dismissed as withdrawn

Authorization by association - Rule 7 of the Central Administrative Tribunal Rules of Practice, 1993 - sufficiency and veracity of authorising resolution - maintainability of application filed by an association - The Tribunal's finding that the Original Application filed by the Association was not properly authorised and therefore not maintainable. - HELD THAT: - The High Court upheld the Tribunal's conclusion that the petitioner failed to produce the requisite authorisation in compliance with Rule 7 of the Central Administrative Tribunal Rules of Practice, 1993. The Court examined the resolution produced as Annexure-6 and found it to be on plain paper without details of the union office or office-bearers, such that it did not inspire confidence as a true and verifiable authorisation. The Tribunal's findings that some members had not consented and that the President had suo motu signed the authorisation were accepted as justifying dismissal of the Original Applications for lack of proper authorisation and consequent non-maintainability.

The Tribunal's finding that the OA was not maintainable for want of proper authorisation is sustained and the writ petition does not succeed on this ground.

Finality of common order where related writ dismissed as withdrawn - costs for unauthorised filing - Whether the present writ petition was barred by finality because a common Tribunal order impugned in a related writ petition had attained finality on dismissal as withdrawn. - HELD THAT: - The High Court noted that the Tribunal had passed a common order in two Original Applications and that a writ petition impugning the common order in respect of the other OA (D.B. Civil Writ Petition No.3786/2019) was dismissed as withdrawn by this Court. Given the commonality of the Tribunal's findings and the absence of a claim to liberty to re-agitate the issue, the Court treated the earlier disposition as giving finality to the Tribunal's findings. The Court therefore found the present petition liable to be dismissed on the ground that the related challenge had attained finality.

The writ petition is also dismissed on the ground of finality arising from the disposal of the related writ petition.

Final Conclusion: The writ petition is dismissed. The High Court found the Tribunal justified in holding that the Original Application was not properly authorised under Rule 7 and further held that the common Tribunal order had attained finality in view of the dismissal as withdrawn of the related writ petition.