TaxTMI Updates e-Newsletter
Jul 27,2024

Summary order. Delay condoned; notice issued to the respondents; respondent No.1 accepted notice.

Detention and penalty under Section 129(3) - e-tax invoice - e-waybill - Rule 138A of the Goods and Services Tax Rules, 2017 - mens rea for evasion of tax - bona fide mistake / human error

Detention and penalty under Section 129(3) - e-tax invoice - e-waybill - mens rea for evasion of tax - bona fide mistake / human error - Whether proceedings and penalty under Section 129(3) could be sustained where goods were accompanied by documents under Rule 138A and an E Waybill, but an E Tax Invoice was not generated prior to movement and there was no finding of mens rea to evade tax. - HELD THAT: - The Court found that all documents required under Rule 138A accompanied the goods and an E Waybill was generated; there was no dispute as to quality or quantity vis-a -vis accompanying documents. The omission to generate an E Tax Invoice prior to movement was characterised as a human error and bona fide mistake, explained by the recent reduction in the turnover threshold for issuance of E Tax Invoices effective 1 August 2022. Critically, the authorities recorded no finding of mens rea to evade tax. In these circumstances the Court held that initiation and continuation of proceedings under Section 129(3) could not be justified in absence of any specific finding of intention to evade tax, and the punitive orders based on the technical omission were unsustainable. [Paras 6, 7]

Impugned orders imposing penalty and confirming detention under Section 129(3) quashed for lack of any finding of mens rea; writ petition allowed.

Final Conclusion: The orders dated 26.12.2022 and 26.05.2023 imposing penalty and confirming detention are quashed for want of any finding of intent to evade tax; any amount deposited shall be refunded on production of certified copy within one month.

Cancellation of registration with retrospective effect - Requirement of a reasoned order for cancellation of GST registration - Power to cancel registration from such date as officer considers fit - Rejection of appeal solely on ground of delay - Reconsideration of appeal on merits after affording opportunity of hearing

Rejection of appeal solely on ground of delay - Reconsideration of appeal on merits after affording opportunity of hearing - Impugned order dated 28.06.2024 rejecting the petitioner's appeal under Section 107 on the ground of delay - HELD THAT: - The High Court observed that the Appellate Authority had dismissed the appeal solely on the ground that it was not filed within the prescribed period. Having noted material shortcomings in the reasoning of the underlying cancellation order (particularly as to retrospective effect), the Court found it appropriate to set aside the impugned appellate order. The matter is remitted to the Appellate Authority to decide the appeal afresh on merits uninfluenced by the question of delay, after affording the petitioner an opportunity of hearing. The Court requested expedition and indicated a preferable disposal period of eight weeks from the date of remand.

Impugned order dated 28.06.2024 set aside; appeal remitted for fresh merits adjudication after hearing.

Cancellation of registration with retrospective effect - Requirement of a reasoned order for cancellation of GST registration - Power to cancel registration from such date as officer considers fit - Validity of the cancellation order dated 21.08.2023 insofar as it cancelled the petitioner's GST registration ab initio from 01.07.2017 - HELD THAT: - The Court recorded that the show cause notice did not indicate any proposal to cancel registration with retrospective effect and that the cancellation order likewise did not state reasons for backdating cancellation to the date of registration. While recognising that the proper officer is empowered to cancel registration from such date as he considers fit, the Court emphasised that the exercise of that power must be informed by reason and cannot be arbitrary or whimsical. The Court was unable to discern any rationale for cancelling registration covering periods during which returns had been duly filed and tax liability discharged. In view of the absence of stated reasons for retrospective cancellation, the legality of that aspect of the cancellation order could not be sustained without fresh consideration on merits.

Cancellation order dated 21.08.2023 is unreasoned as to its retrospective effect and requires fresh consideration; matter remanded to the Appellate Authority for adjudication on merits.

Final Conclusion: The High Court set aside the appellate order dismissing the appeal as time-barred and remitted the matter to the Appellate Authority to decide the appeal afresh on merits after granting the petitioner a hearing, observing that the cancellation order's retrospective ab initio effect was unreasoned and required fresh consideration; the Appellate Authority was urged to dispose the appeal preferably within eight weeks.

Violation of principles of natural justice - Service of show cause notice - Right to opportunity of hearing - Remand for fresh adjudication - Supply of documents upon request

Violation of principles of natural justice - Service of show cause notice - Right to opportunity of hearing - Supply of documents upon request - Remand for fresh adjudication - Impugned Order-in-Original set aside and matter remanded because petitioner repeatedly asserted non-receipt of the show cause notice and requested copies which were not furnished, resulting in denial of an opportunity to reply. - HELD THAT: - The Court recorded that the petitioner repeatedly informed the authority of non-receipt of the show cause notice and on at least three occasions requested copies of the SCN and related communications, but did not receive them. Although the respondent maintained that the SCN had been sent by speed post, the petitioner's persistent complaints and inability to trace earlier notices meant that the principles of natural justice required that a copy of the SCN be supplied and an opportunity to be afforded to file a response. The Court therefore found it unnecessary to adjudicate the factual dispute as to service in these proceedings and, relying on the petitioner's uncontroverted requests and the absence of a provided copy, concluded that the impugned order must be set aside and the matter remitted for de novo consideration after furnishing the requested documents and hearing the petitioner. [Paras 7, 8, 10]

Impugned order dated 12.03.2024 set aside; matter remitted to adjudicating authority to furnish the SCN and related communications and to afford the petitioner an opportunity of hearing before passing a fresh order.

Final Conclusion: The petition is disposed of by setting aside the impugned Order-in-Original and remitting the matter for fresh adjudication; the respondent is directed to supply copies of the SCN and related communications within two weeks, the petitioner to respond within one week of receipt, and the adjudicating authority to pass a fresh order after hearing preferably within eight weeks.

Service by uploading on government portal under Section 169 of the CGST Act - adequacy of posting under 'View Additional Notices and Orders' versus 'View Notices and Orders' - extension of limitation by notification issued under Section 168A of the CGST Act - remand for fresh adjudication after opportunity to be heard

Service by uploading on government portal under Section 169 of the CGST Act - adequacy of posting under 'View Additional Notices and Orders' versus 'View Notices and Orders' - remand for fresh adjudication after opportunity to be heard - Validity of service of the show cause notice uploaded under the portal heading 'Additional Notices and Orders' and the consequent validity of the adjudicating order - HELD THAT: - The Court accepted the line of authority holding that uploading a notice under the portal heading 'Additional Notices and Orders' is not necessarily equivalent to service in terms of Section 169 of the CGST Act where notices and orders are expected to be accessible under a consolidated 'View Notices' area. The Court noted earlier decisions, including ACE Cardiopathy Solutions (P.) Ltd., and the Madras High Court direction addressing separate menu placements on the portal. Although the portal has since been redesigned to place 'View Notices' and 'View Additional Notices' under one heading, the impugned show cause notice was uploaded before that redesign. In view of the inadequacy of the mode/location of posting at the time the notice was uploaded, the adjudicating order premised on that notice was set aside. The matter was remitted to the adjudicating authority for fresh consideration after affording the petitioner an opportunity to file a response and be heard, thereby preserving the requirement of effective and fair notice prior to adjudication. [Paras 6, 8, 9, 10, 11]

Impugned order set aside and matter remanded for fresh adjudication after service-related deficiency; petitioner permitted to file response within two weeks and to be afforded an opportunity of hearing.

Final Conclusion: Petition allowed; impugned adjudication set aside and remanded for fresh consideration in accordance with the directions above, with liberty to the petitioner to file a response within two weeks and to be heard by the adjudicating authority.

Validity of statutory service by electronic portal - posting of show cause notice under 'Additional Notices and Orders' vis-a -vis 'Notices and Orders' - affordance of opportunity to be heard before adjudication - setting aside order and remand for fresh adjudication

Validity of statutory service by electronic portal - posting of show cause notice under 'Additional Notices and Orders' vis-a -vis 'Notices and Orders' - affordance of opportunity to be heard before adjudication - Impugned showcause notice uploaded under the portal category 'Additional Notices and Orders' was not treated as valid service for the purpose of adjudication and the consequential order passed thereon was set aside; matter remitted for fresh consideration after giving the petitioner an opportunity to respond and be heard. - HELD THAT: - The Court held that uploading a showcause notice in the category 'Additional Notices and Orders', which was not co located with 'Notices and Orders' on the portal at the relevant time, did not constitute sufficient service for purposes of adjudication under the CGST regime. Earlier decisions of this Court addressing the distinction between 'View Notices and Orders' and 'View Additional Notices and Orders' were applied. Although the portal has since been redesigned to place both tabs under one heading, the impugned showcause notice was issued before that redesign and therefore the consequent adjudication could not stand. In view of defective service and the absence of an effective opportunity to respond, the impugned order passed under Section 73 was set aside and the matter was remitted to the adjudicating authority to consider the showcause notice afresh after permitting the petitioner to file a response within two weeks and after affording an opportunity of hearing.

Impugned order under Section 73 set aside; showcause notice to be reconsidered afresh by adjudicating authority after permitting response and hearing; petition allowed.

Final Conclusion: Petition allowed; impugned adjudication set aside on account of defective service of the showcause notice on the GST portal and remitted for fresh adjudication after permitting the petitioner to file a response and be heard; pending applications disposed of.

Cancellation of registration for non-filing of returns - suspension of GST registration - revocation of cancellation of registration - condonation of delay in filing revocation application - restoration of registration subject to compliance - power of proper officer to cancel registration - business continuity and public interest in tax administration

Cancellation of registration for non-filing of returns - power of proper officer to cancel registration - restoration of registration subject to compliance - Validity of the cancellation of the petitioner's GST registration for failure to furnish returns and whether registration should be restored. - HELD THAT: - The Court noted that the petitioner's registration was suspended and subsequently cancelled after failure to file returns for a continuous period of six months and on non-response to the show cause notice. Reliance was placed on earlier decisions of this Court and the High Court of Madras [TVL. Suguna Cutpiece Centre v. Appellate Deputy Commissioner (ST) (GST) and M/s Rakesh Enterprises v. The Principal Commissioner Central Goods and Services Tax & Ors. ] emphasising that the departmental object cannot be to preclude taxpayers from carrying on business. Applying that principle, the Court found it appropriate to allow the petition and direct restoration of the petitioner's GST registration, while conditioning restoration on the petitioner filing the requisite returns and paying outstanding dues with interest within one week of restoration. The Court preserved the respondents' power to cancel the registration afresh if the petitioner fails to comply and clarified that other statutory or recovery actions remain open to the authorities. [Paras 6, 10, 11, 12]

Registration ordered to be restored subject to filing of returns and payment of dues with interest within one week; non-compliance would permit fresh cancellation and does not bar other statutory action.

Condonation of delay in filing revocation application - revocation of cancellation of registration - Effect of the petitioner's delayed application for revocation of the cancellation order and the court's response to the rejection of condonation of delay. - HELD THAT: - Although the Proper Officer had dismissed the petitioner's application for revocation as barred by the stipulated ninety-day period, the Court, having taken into account the petitioner's explanation (dispute with its accountant) and the broader principle that cancellation should not unduly prevent a taxpayer from carrying on business, exercised its supervisory jurisdiction to direct restoration on the conditions specified. The Court thereby effectively set aside the practical effect of the rejection of condonation, without remitting the matter for fresh adjudication on delay, by imposing conditional restoration and preserving the respondents' right to act on non-compliance. [Paras 7, 10, 11]

Despite the belated revocation application and its dismissal, the court directed restoration subject to compliance; the rejection of condonation was not allowed to prevent conditional restoration.

Final Conclusion: Writ petition allowed; the respondent authorities are directed to restore the petitioner's GST registration subject to the petitioner filing all required returns and paying outstanding dues with interest within one week of restoration; failure to comply will entitle respondents to cancel the registration afresh, and the order preserves the respondents' right to initiate other statutory or recovery proceedings.

Condonation of delay - power to condone under Section 107(4) of the CGST Act - revocation of cancellation of GST registration - failure to consider sufficient cause for delay - remand for fresh consideration on merits

Condonation of delay - failure to consider sufficient cause for delay - power to condone under Section 107(4) of the CGST Act - Whether the Appellate Authority erred in rejecting the appeal as barred by delay without considering the petitioner's explanation and exercising its condonation power. - HELD THAT: - The Court found that the petitioner's appeal against the order refusing revocation of the cancellation of GST registration was filed six days beyond the three-month period prescribed under Section 107(1) of the CGST Act, and that the petitioner had furnished an explanation that a rectification ticket under Section 161 had been raised and communicated, giving rise to a legitimate expectation that rectification might resolve the grievance. The impugned order did not consider that explanation. Section 107(4) confers a one-month condonation power on the Appellate Authority; the authority was required to examine whether the delay was occasioned by sufficient cause and, if satisfied, to condone the delay. The Court held that the Appellate Authority failed to discharge that obligation and that, on the material before it, the petitioner had provided sufficient reasons warranting condonation of the delay. [Paras 6, 7, 8]

The Appellate Authority erred in not considering the explanation and in failing to exercise its condonation power; the explanation amounted to sufficient cause and the delay ought to have been condoned.

Revocation of cancellation of GST registration - remand for fresh consideration on merits - Remedial direction upon finding of error in handling of delay: whether the matter should be remanded for fresh consideration on merits. - HELD THAT: - Having set aside the impugned Order-in-Appeal for failure to consider the condonation plea, the Court directed that the appeal be remitted to the Appellate Authority to decide the matter on merits. The Appellate Authority is to consider the explanation for delay and, if condonation is granted, proceed to adjudicate the appeal against the order refusing revocation of the cancellation of GST registration. The Court required expeditious disposal and suggested a preferable time frame of six weeks from the date of remand. [Paras 9]

Order-in-Appeal set aside and matter remanded to the Appellate Authority for fresh consideration on merits, with a request for expeditious disposal.

Final Conclusion: Petition allowed: impugned Order-in-Appeal dated 08.05.2024 set aside; appeal remitted to the Appellate Authority to consider condonation of delay and to decide the appeal on merits expeditiously (preferably within six weeks).

Cancellation of GST registration - Revocation of cancellation of GST registration - Verification of principal/additional place of business - Restoration of GST registration upon satisfaction of the Proper Officer - Duty to rectify registration records following restoration - Availability of statutory appellate remedy where tribunal is not constituted

Cancellation of GST registration - Verification of principal/additional place of business - Restoration of GST registration upon satisfaction of the Proper Officer - Duty to rectify registration records following restoration - Whether the cancellation of the petitioner's GST registration should be sustained or whether the matter should be remitted for verification of the additional place of business and conditional restoration of registration. - HELD THAT: - The Court found that the petitioner's GST registration certificate expressly reflected an additional place of business from which the petitioner contended it conducted its operations, although the principal place of business shown was erroneous and the petitioner was at fault in not rectifying the record. The Court held that denial of registration solely for the incorrect principal address, when the registration itself reflects the correct additional place of business from which operations were conducted, would be inappropriate. The respondents were directed to verify, within three weeks, whether the petitioner had been carrying on business from the additional place of business shown in the registration certificate. The petitioner was permitted to produce documents to establish its claim. If the Proper Officer is satisfied that business was conducted from that additional address, the Proper Officer must immediately restore the petitioner's GST registration; the petitioner must thereafter promptly apply to rectify its principal place of business in accordance with law. The Court's direction leaves the factual finding-existence of business at the additional place-and the consequent act of restoration to the administrative verification by the Proper Officer subject to the timelines and cooperation mandated by the Court. [Paras 16, 17, 18, 19, 20]

Respondents to verify the petitioner's claim about its additional place of business within three weeks; if verification is in petitioner's favour, the Proper Officer shall restore the GST registration immediately and the petitioner shall apply for rectification of the principal place of business.

Final Conclusion: The writ petition is disposed of by directing administrative verification of the petitioner's additional place of business within three weeks; conditional restoration of GST registration is ordered if the Proper Officer is satisfied that business was carried on at that address, subject to the petitioner's subsequent application for rectification of its registration records.

Cancellation of GST registration - Non-speaking order - Failure to consider reply to show cause notice - Judicial review under Article 226 - Limitation does not oust writ remedy - Remand for fresh consideration - Right to opportunity to be heard

Cancellation of GST registration - Non-speaking order - Failure to consider reply to show cause notice - Judicial review under Article 226 - Impugned cancellation order dated 21.01.2021 is unsustainable as it is non-speaking and was passed without taking into account the petitioner's reply to the show cause notice. - HELD THAT: - The Court recorded that the cancellation order simultaneously refers to the petitioner's reply dated 21.01.2021 and yet states that no reply was submitted, indicating non-application of mind. An order affecting valuable rights cannot be sustained in the absence of sufficient reasons and without considering the submissions placed on record. Consequently the cancellation order was set aside and the matter required reconsideration by the authority after taking into account the petitioner's reply to the show cause notice. [Paras 4, 5, 8]

Cancellation order dated 21.01.2021 set aside; authority directed to pass fresh order after considering the petitioner's reply.

Limitation does not oust writ remedy - Remand for fresh consideration - Right to opportunity to be heard - Order of the appellate authority dated 13.07.2022 dismissing the appeal on limitation ground does not preclude the petitioner from seeking relief under Article 226 and is set aside; matter remanded for fresh decision. - HELD THAT: - The Court noted that while limitation may bar the statutory remedy of appeal, it does not extinguish the constitutional remedy under Article 226, particularly where the impugned order is unreasoned and affects valuable rights. The appellate order dismissing the appeal on limitation was therefore set aside. The Assistant Commissioner was directed to reconsider and pass a fresh order after taking into account the petitioner's reply; Respondent No.3 was granted liberty to initiate fresh proceedings in accordance with law after affording adequate opportunity to the petitioner. [Paras 6, 7, 8, 9]

Appeal order dated 13.07.2022 set aside; matter remanded for fresh consideration with directions to afford the petitioner an opportunity to be heard and for reconsideration in accordance with law.

Final Conclusion: Writ petition allowed: the cancellation order dated 21.01.2021 and the appellate order dated 13.07.2022 are set aside; the Assistant Commissioner is directed to pass a fresh, reasoned order after considering the petitioner's reply, and the authority may initiate fresh proceedings in accordance with law after giving the petitioner adequate opportunity to be heard.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Allowability of depreciation on non-compete fee as a debatable issue - Conflicting High Court precedents and lis pending before the Supreme Court - Attraction of penalty where bona fide claim or substantial question of law exists

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Allowability of depreciation on non-compete fee as a debatable issue - Conflicting High Court precedents and lis pending before the Supreme Court - Attraction of penalty where bona fide claim or substantial question of law exists - Validity of imposition of penalty under section 271(1)(c) for Assessment Year 2014-15 in respect of disallowance of depreciation on non-compete fee. - HELD THAT: - The assessing officer levied penalty under section 271(1)(c) following an addition disallowing depreciation on non-compete fee; the CIT(A) sustained the penalty. The Tribunal noted that the question of allowability of depreciation on non-compete fee is subject to conflicting decisions of High Courts - the CIT(A) relied on the Jurisdictional High Court decision in Sharp Business System which is under challenge before the Supreme Court, while a subsequent decision of the Delhi High Court in PCIT v. Pepsico India Holding Pvt. Ltd. allowed the claim. Given these divergent views and that the lis on the point is pending before the Supreme Court, the Tribunal held that the claim was debatable and not a case of deliberate concealment or furnishing of inaccurate particulars attracting section 271(1)(c). Applying the principle that penalty cannot be imposed where the taxpayer advances a bona fide, debatable claim on which authoritative decisions conflict, the Tribunal quashed the penalty order.

Penalty order dated 31/03/2019 under section 271(1)(c) for Assessment Year 2014-15 quashed.

Final Conclusion: The appeal is allowed and the penalty imposed under section 271(1)(c) for Assessment Year 2014-15 is quashed because the disallowance of depreciation on non-compete fee involved a debatable question of law with conflicting High Court decisions and the matter was pending before the Supreme Court.

Jurisdictional scope of power under Section 263 to declare an assessment erroneous for lack of enquiry - application of explanation 2 to Section 263(1) concerning absence of enquiry or verification - reappreciation of factual material by the Tribunal on jurisdictional findings - prejudice to the interest of the revenue as a determinative requirement for exercise of Section 263 - Delay filling SLP

As decided by HC [2022 (11) TMI 1448 - CALCUTTA HIGH COURT] PCIT erred in assuming jurisdiction u/s 263; the Tribunal correctly held that the AO had conducted requisite enquiries and the PCIT's order was set aside - HELD THAT:- There is gross delay of 484 days in filing the Special Leave Petition. The explanation offered for seeking condonation of delay is not satisfactory and therefore, not sufficient in law to be condoned.

Consequently, the application seeking condonation of delay is dismissed.

Applicability of provisions of Section 206AA of Act relating to deducting of tax at higher rate in the absence of Permanent Account Number to the payments made to Non Resident – Companies - delay of 255 days in filing this special leave petition

The High Court [2023 (6) TMI 1406 - KARNATAKA HIGH COURT] answered issue in favour of the assessee as section 206AA not to be applied so as to defeat DTAA benefits in the circumstances considered.

HELD THAT:- We are not satisfied with the explanation offered by the petitioners for seeking condonation of delay in filing the special leave petition.

In the circumstances, the special leave petition is dismissed on delay keeping open the question of law.

In dismissing this special leave petition, we have followed the judgment of this Court in Postmaster General and Ors. vs. Living Media India Ltd. and Anr [2012 (4) TMI 341 - SUPREME COURT] and other cases which have followed the aforesaid judgment.

Pending application(s), if any, shall also stand disposed of.

Time limit for completion of reassessment under section 153(2) of the Income Tax Act, 1961 - Service/communication of assessment order as the operative date of completion of assessment - Validity of reassessment where order is passed within limitation but communicated after the prescribed period - Maintainability of writ petition despite availability of alternative statutory remedy where controversy is purely legal or there is statutory non compliance

Time limit for completion of reassessment under section 153(2) of the Income Tax Act, 1961 - Service/communication of assessment order as the operative date of completion of assessment - Validity of reassessment where order is passed within limitation but communicated after the prescribed period - Whether the reassessment proceeding is completed on the date the assessment order is signed or on the date the assessment order is communicated to the assessee for the purpose of section 153(2) limitation - HELD THAT: - The Court applied the settled principle that an order of an authority does not take effect until it is pronounced, published or communicated so that the party affected has the means of knowing it. Relying on a catena of decisions of the Apex Court and High Courts, the Court held that an assessment order kept in the file, though dated earlier, remains provisional until communicated and may be altered before communication. In the facts, notices under section 148 were served in December 2005 and March 2006, bringing the nine month limitation (by the proviso) to 01 04 2006 to 31 12 2006. Although the assessment order bears the date 28 12 2006, it was communicated to the authorised representative only on 05 01 2007; consequently the reassessment was not completed within the period prescribed by section 153(2). The Court therefore treated the operative completion date as the date of communication and found the reassessment time barred. [Paras 11]

Reassessment deemed completed only on communication of the assessment order (05 01 2007) and therefore not within the period prescribed by section 153(2); the reassessment is time barred.

Maintainability of writ petition despite availability of alternative statutory remedy where controversy is purely legal or there is statutory non compliance - Whether the High Court should decline to entertain the writ petition on the ground that an alternative statutory remedy (appeal) under the Income Tax Act was available - HELD THAT: - The Court reviewed the principles governing exercise of writ jurisdiction where alternative remedies exist, noting that availability of an alternative remedy is a rule of discretion and not an absolute bar. Exceptions permit writ jurisdiction where the authority has not acted in accordance with the statute, there is total violation of principles of natural justice, the question is purely legal, or the proceeding is wholly without jurisdiction. Given the undisputed facts, the purely legal nature of the challenge to compliance with the time limit under section 153(2), and the long pendency since 2007, the Court exercised its discretion to decide the writ rather than require recourse to the statutory appeal forum. [Paras 12, 13]

Writ petition maintainable and to be heard on merits despite availability of statutory appeal; refusal to send parties back to departmental forum at this belated stage.

Final Conclusion: Writ petition allowed; the assessment order dated 28 12 2006 and the penalty order dated 29 06 2007 are quashed and set aside as the reassessment was not completed within the period prescribed by section 153(2) of the Income Tax Act, 1961. Parties to bear their own costs.

Applicability of Minimum Alternate Tax (MAT) under Section 115JB - Definition and exclusion of agricultural income under Section 2(1-A) - Capital gains treatment of sale of agricultural land - Admission of additional grounds by the Tribunal - Remand for fresh consideration

Admission of additional grounds by the Tribunal - Applicability of Minimum Alternate Tax (MAT) under Section 115JB - Tribunal's refusal to admit and adjudicate legal grounds raised by the Revenue regarding applicability of Section 115JB - HELD THAT: - The High Court found that the Tribunal both refused to admit additional legal grounds and proceeded to rule on the merits without affording an opportunity for submissions. The Court held that the question raised was purely legal and therefore the Tribunal should have admitted the ground and heard the parties on the applicability of MAT under Section 115JB instead of declining to entertain it on the bases that it was not raised before the Assessing Officer or in the original grounds. The Court concluded that the Tribunal's approach was unsustainable and answered the admitted question against the Tribunal's view, finding that the Tribunal was not legally justified in refusing to admit and adjudicate the Revenue's grounds (see paras 12-14). [Paras 12, 13, 14]

The Tribunal's refusal to admit and adjudicate the Revenue's legal grounds on applicability of Section 115JB is set aside.

Remand for fresh consideration - Applicability of Minimum Alternate Tax (MAT) under Section 115JB - Remission of the matter to the Tribunal for fresh consideration on merits - HELD THAT: - Having set aside the Tribunal's order, the High Court remitted the matter for fresh consideration so that the Tribunal may admit and decide the Revenue's grounds on applicability of Section 115JB after hearing the parties. The Court expressly kept all rights and contentions of the parties on merits open for consideration afresh by the Tribunal (see para 15). [Paras 14, 15]

Matter remitted to the Tribunal for fresh consideration; parties' rights and contentions on merits are kept open.

Final Conclusion: The High Court set aside the ITAT's order refusing to admit and decide the Revenue's legal grounds regarding applicability of MAT under Section 115JB, answered the framed question against the Tribunal, and remitted the matter for fresh consideration with all rights and contentions kept open.

Limitation for issuance of notice under Section 148 - first proviso to Section 149(1)(b) - temporal bar for notices in assessment years beginning on or before 1 April 2021 - faceless assessment scheme and issuance of notice under Section 151A - scope of Section 148A inquiry and its effect on limitation under Section 149

Limitation for issuance of notice under Section 148 - first proviso to Section 149(1)(b) - temporal bar for notices in assessment years beginning on or before 1 April 2021 - Validity of the notice dated 4th April, 2022 issued under Section 148 for Assessment Year 2015-16 in view of the time-limit prescribed by Section 149 - HELD THAT: - The Court applied the interpretation in Hexaware Technologies Limited and held that the first proviso to Section 149(1) must be read with reference to the date on which the notice under Section 148 is sought to be issued. For AY 2015-16 the period available under the earlier clause expired on 31st March, 2022; the impugned notice was issued on 4th April, 2022 and therefore fell outside the temporal limit. The Court rejected the Revenue's contention that issuance of a Section 148A notice on 22nd March, 2022 cured or tolled the limitation under the first proviso to Section 149(1), holding that the legislative text does not assimilate procedural antecedent steps under Section 148A into the temporal bar created by the first proviso. Consequently the Section 148 notice dated 4th April, 2022 was held to be barred by limitation and therefore illegal. [Paras 6, 7]

Notice dated 4th April, 2022 under Section 148 for AY 2015-16 is barred by limitation and is quashed.

Faceless assessment scheme and issuance of notice under Section 151A - Validity of the Section 148 notice issued by the Jurisdictional Assessing Officer contrary to the faceless mechanism under Section 151A - HELD THAT: - The Court examined the faceless assessment regime introduced by Section 151A and the Notification dated 29th March, 2022 implementing automated allocation and faceless issuance of notices to the extent provided under Section 144B. Applying the reasoning in Hexaware Technologies Limited, the Court found that a notice issued by the local Jurisdictional Assessing Officer, rather than through the National Faceless Assessment Centre in accordance with the notified faceless scheme, falls outside the statutory scheme and is invalid. On that ground as well the impugned notice was held to be not in accordance with Section 151A and therefore illegal. [Paras 8]

Notice dated 4th April, 2022 issued by the JAO is not in accordance with the faceless mechanism under Section 151A and is quashed.

Final Conclusion: Writ petition allowed; notice dated 4th April, 2022 under Section 148 and the assessment order dated 13th March, 2024 passed under Section 147 read with Section 144B are quashed as barred by limitation and for non-compliance with the faceless issuance scheme; no costs.

Compounding of offences under Section 279(2) of the Income tax Act - Eligibility for compounding - effect of prior conviction - CBDT Guidelines dated 14.06.2019 para 8.1(iii) - exclusion of convicts from compounding - CBDT Circular No.25/2019 - temporal relaxation and its exceptions - Conduct of assessee and belatedness of compounding application as ground for refusal

Eligibility for compounding - effect of prior conviction - CBDT Guidelines dated 14.06.2019 para 8.1(iii) - CBDT Circular No.25/2019 para 4.1(ii) - Whether the compounding application could be granted notwithstanding the appellant's prior conviction under Direct Tax laws - HELD THAT: - The Court accepted the respondent's conclusion that the Guidelines dated 14.06.2019 (para 8.1(iii)) and Circular No.25/2019 (para 4.1(ii)) categorically exclude from relaxation those offences committed by a person already convicted under Direct Tax laws. The Regional Committee for Compounding declined the application inter alia on that ground and the High Court found those Guidelines/Circular applicable to the facts, distinguishing earlier High Court decisions relied on by the appellant which had not taken the post 2019 Circular and Guidelines into account. The Court held that the rejection was not based solely on conviction but on the scheme of the Guidelines and Circular, and therefore refusal to compound on the ground of prior conviction was permissible in the circumstances of this case. [Paras 12, 14]

Compounding application rightly rejected in view of the Guidelines and Circular which exclude persons convicted under Direct Tax laws from the benefit of compounding; earlier authorities relied upon by the appellant are distinguishable.

Conduct of assessee and belatedness of application - Compounding eligibility - merits and discretionary considerations - Deliberate concealment and non cooperation as bar to compounding - Whether the appellant's conduct and delay in filing the compounding application independently justified rejection of the application - HELD THAT: - The Court recorded and relied upon the Regional Committee's findings that the appellant repeatedly failed to cooperate in the assessment process, that the assessment was completed under Section 144 after enquiries, and that the unexplained investment would have remained concealed but for the assessment - all indicating wilful concealment. The Committee also noted the long delay (application filed some 20 years after the relevant proceedings and after ample opportunities) and held the application to be belated. The High Court agreed that the rejection was supported by multiple reasons - wilful conduct, lack of cooperation, belatedness and the seriousness and multiplicity of offences - and not merely by the existence of conviction. [Paras 9, 11, 13]

Rejection of compounding application was justified on merits due to the appellant's wilful concealment, non cooperation and the belated nature of the application.

Final Conclusion: The High Court dismissed the writ appeal and upheld the refusal to grant compounding: the compounding application was rejected consistently with the CBDT Guidelines and Circular excluding convicted persons and, independently, on merits because of the assessee's wilful concealment, non cooperation and long delay; the dismissal is not interfered with.

Refund of income tax - adjustment against outstanding demands - non-issuance of demand notices - treatment of TDS in assessment and demand - right to raise grievance and obtain personal hearing - disposal by a speaking order within a time-bound period

Refund of income tax - right to raise grievance and obtain personal hearing - disposal by a speaking order within a time-bound period - Petitioner permitted to submit a consolidated grievance and directed procedure for consideration and disposal. - HELD THAT: - The writ petition seeking payment of a calculated refund for assessment year 2007-2008 and challenging subsequent adjustments was not decided on merits. Instead, the Court allowed the petitioner to file a consolidated grievance petition addressing the refund claim and related adjustments. The assessing officer is directed to consider the grievance, afford a reasonable opportunity including a personal hearing, and dispose of it by a speaking order within two months of receipt. The petitioner must submit the consolidated grievance within 15 days of receipt of the order. The Court therefore mandated a time-bound administrative adjudication rather than granting immediate relief. [Paras 6]

Consolidated grievance to be submitted within 15 days; assessing officer to consider with personal hearing and dispose by a speaking order within two months.

Adjustment against outstanding demands - non-issuance of demand notices - treatment of TDS in assessment and demand - Legality of adjustments (including whether demand notices were issued) and claimed omission of TDS in demand for AY 2009-2010 remitted for fresh consideration. - HELD THAT: - The Court observed that adjustments were made by the CPC against alleged arrears of earlier assessment years and that it is unclear from the counter affidavit whether demand notices preceded those adjustments. The petitioner also contended that TDS reflected in the return and Form 26AS for AY 2009-2010 was not taken into account when determining the demand and interest. These contentions were not adjudicated on merits; instead, the Court directed that such issues be raised in the consolidated grievance and considered by the assessing officer, who must examine the legality of adjustments, verify issuance of any demand notices, and address the TDS-related contention before passing a speaking order. [Paras 5, 6]

Issues concerning the lawfulness of adjustments and the TDS-related demand for AY 2009-2010 are remitted to the assessing officer for consideration and decision on merits.

Final Conclusion: Writ petition disposed by directing the petitioner to submit a consolidated grievance within 15 days and by remitting the contested adjustments and the TDS-related demand issue to the assessing officer for consideration, with a requirement of personal hearing and disposal by a speaking order within two months; no order as to costs.

Stay of recovery proceedings - abeyance of recovery - relegation to alternative remedy - statutory appellate remedy - consideration of out-of-turn/early hearing application

Relegation to alternative remedy - stay of recovery proceedings - abeyance of recovery - Whether recovery proceedings should be stayed or kept in abeyance where the court directs the petitioner to pursue the statutory appellate remedy. - HELD THAT: - The Single Judge relegated the appellant to the alternative remedy before the appellate authority without protecting the appellant from coercive recovery steps. The High Court modified that order to provide interim protection: pending disposal of the stay petition or the appeal, whichever is earlier, the recovery proceedings relating to the amounts confirmed by Ext.P13 shall be kept in abeyance. The Court treated such protection as incumbent where a litigant is directed to pursue statutory remedies and coercive steps are already initiated. [Paras 4]

Pending disposal of the stay petition or appeal, whichever is earlier, recovery proceedings under Ext.P13 shall be kept in abeyance.

Consideration of out-of-turn/early hearing application - statutory appellate remedy - Whether the appellate authority should be directed to consider the application for early/out-of-turn hearing of the appeal. - HELD THAT: - The Court noted that the appellant had filed an application (Ext.P19) for out-of-turn hearing before the 3rd respondent. In view of the modification placing recovery in abeyance, the Court also directed that the application for early hearing be considered by the appellate authority in accordance with law, thereby ensuring that the statutory appellate remedy is expeditiously addressed. [Paras 4]

Ext.P19 application for early hearing shall be considered by the 3rd respondent in accordance with law.

Final Conclusion: The writ appeal is disposed of by modifying the Single Judge's order to direct that recovery proceedings under Ext.P13 be kept in abeyance pending disposal of the stay petition or appeal, whichever is earlier, and directing the appellate authority to consider the application for early hearing in accordance with law; all other directions in the impugned judgment remain unchanged.

Advertising, marketing and promotion (AMP) expenses - international transaction - marketing intangibles - transfer pricing adjustment under Chapter X - Bright Line Test - arm's length principle - principle of consistency - comparability

Advertising, marketing and promotion (AMP) expenses - international transaction - marketing intangibles - transfer pricing adjustment under Chapter X - Characterisation of AMP expenses as an international transaction and the consequent entitlement of the TPO to make transfer pricing adjustments under Chapter X - HELD THAT: - The Tribunal, following the reasoning in the assessee's earlier decisions and the Jurisdictional High Court in Maruti Suzuki India Ltd., held that AMP expenses incurred by the assessee cannot be treated or categorised as an international transaction within the meaning of the transfer pricing provisions. Given that finding, the possibility of the TPO making any transfer pricing adjustment in respect of such AMP expenditure under Chapter X does not arise. The Tribunal applied the cited precedent to the facts of the Assessment Year 2012-13 and, on that basis, concluded that the addition made by the Assessing Officer/TPO was not sustainable. [Paras 7, 8, 9]

AMP expenses are not an international transaction and the TPO was not justified in making transfer pricing adjustments under Chapter X; the addition is deleted.

Bright Line Test - arm's length principle - comparability - principle of consistency - Application of alternative benchmarking approaches (including Bright Line Test) and adherence to the principle of consistency in revisiting prior orders - HELD THAT: - The Tribunal recorded that the CIT(A) relied on earlier Tribunal orders in the assessee's own cases for preceding assessment years and on the High Court precedent to reject the adjustments made alternatively by applying the Bright Line Test or other benchmarking approaches. Because the primary conclusion was that AMP expenses did not constitute an international transaction, the alternative grounds based on benchmarking, comparability or application of TNMM/Bright Line Test were rendered unnecessary. The Tribunal emphasised and applied the principle of consistency in following those prior decisions in disposing of the Revenue's grounds of appeal. [Paras 7, 9, 11]

Alternative transfer pricing adjustments based on Bright Line Test or TNMM need not be upheld once AMP expenses are held not to be international transactions; prior Tribunal and High Court decisions were followed on consistency grounds.

Final Conclusion: Following the Jurisdictional High Court and the Tribunal's earlier decisions in the assessee's own cases, the Tribunal dismissed the Department's appeal for Assessment Year 2012-13, holding that AMP expenses are not international transactions and that the transfer pricing adjustments made by the TPO/AO cannot be sustained.

Disallowance of purchases as non-genuine - estimation of profit element in bogus purchases - onus of proof of genuineness of transactions - reopening of assessment under section 147 - reasonable estimation of profit percentage

Disallowance of purchases as non-genuine - estimation of profit element in bogus purchases - onus of proof of genuineness of transactions - reasonable estimation of profit percentage - Addition on account of profit element embedded in purchases from non-genuine parties sustained at a reduced percentage for A.Y. 2010-11 and A.Y. 2011-12 - HELD THAT: - The assessee, engaged in trading in ferrous and non-ferrous metals, failed to discharge the onus of proving the genuineness of certain purchases traced to non-existent parties; accordingly the Assessing Officer estimated and added a profit element in respect of those purchases. The Tribunal accepted that an addition on account of embedded profit was warranted but found the AO's estimate of 12.5% excessive. Having regard to the nature of the assessee's business, the material on record and relevant judicial precedents relied upon by the parties, the Tribunal held that a 5% estimate of profit on the total non-genuine purchases is reasonable and sustainable. The Tribunal therefore reduced the addition to the extent of 5% of the non-genuine purchases for both assessment years. [Paras 8, 10]

Addition sustained to the extent of 5% of the non-genuine purchases for each of A.Y. 2010-11 and A.Y. 2011-12; appeals partly allowed.

Final Conclusion: Both appeals are partly allowed: the Tribunal upheld an addition for purchases from non-genuine parties but reduced the estimated profit element to 5% of such purchases for A.Y. 2010-11 and A.Y. 2011-12.

Revision under section 263 - limited scrutiny under CASS - scope of limited scrutiny - consequential assessment invalidity - de novo assessment following set-aside - presumptive taxation under section 44AD - presumptive income under section 44AE - Explanation 2 to section 263

Revision under section 263 - quash of revisional order - Explanation 2 to section 263 - Validity of the Pr. CIT's revisional order dated 21.03.2024 under section 263. - HELD THAT: - The Tribunal held that the Pr. CIT could not validly exercise revisional jurisdiction by the impugned order dated 21.03.2024 because the earlier revisional order dated 18.03.2021-which was the foundation for subsequent proceedings-had been quashed by the Tribunal in ITA No.136/RPR/2022 dated 10.07.2023. Once the antecedent revisional order was set aside, the consequential assessment framed pursuant to that order lost its standalone foundation and the Pr. CIT lacked jurisdiction to revise it anew. The Bench additionally observed that to the extent the Pr. CIT sought to resurrect or revisit the original assessment dated 30.11.2017 by way of the 21.03.2024 order, such an exercise would be barred by limitation. The Tribunal therefore quashed the Pr. CIT's order dated 21.03.2024. [Paras 8, 10, 11]

Pr. CIT's revisional order dated 21.03.2024 quashed; revision held invalid.

Limited scrutiny under CASS - scope of limited scrutiny - de novo assessment following set-aside - consequential assessment invalidity - presumptive taxation under section 44AD - presumptive income under section 44AE - Whether the assessment framed on 26.03.2022 (de-novo assessment pursuant to set-aside) was sustainable where it dealt with issues beyond the matters directed to be verified in the set-aside order. - HELD THAT: - The Tribunal reiterated that the assessee's case had been selected for limited scrutiny under CASS confined to the question of admissibility of depreciation. The earlier Pr. CIT's set-aside order (18.03.2021) had directed verification only of the genuineness of business and source of cash/credit entries. The A.O.'s consequential de-novo assessment dated 26.03.2022 went beyond those specified directions by revisiting the admissibility of depreciation and raising additional issues (including cash deposits) which were not part of the narrow scope. The Tribunal held that where the scope of proceedings is circumscribed by limited-scrutiny selection and by the directions in the set-aside order, the A.O. was divested of jurisdiction to traverse stray issues which did not flow from those directions. Further, on the merits (as recorded in the earlier Tribunal order), the assessee's regular books showed profits higher than presumptive income under section 44AD and the accounting for vehicle receipts in regular books defeated any contention to treat them under section 44AE; accordingly the allowance of depreciation could not be held prejudicial to revenue. Consequently the de-novo assessment could not survive independently and the consequential revisional action was unsustainable. [Paras 8, 9]

Assessment dated 26.03.2022 (de-novo after set-aside) is unsustainable to the extent it dealt with issues beyond the set-aside directions and cannot stand.

Final Conclusion: The Tribunal allowed the assessee's appeal: the Pr. CIT's revisional order dated 21.03.2024 is quashed and the consequential de-novo assessment (26.03.2022) is held unsustainable insofar as it traversed beyond the limited issues authorized by the set-aside; the allowance of depreciation in the original assessment cannot be held erroneous or prejudicial to revenue.

Capital gains exemption under section 54B - time limit for reinvestment under Section 54B(2) - interpretation of the reference to 'section 139' in Section 54B(2) - Capital Gains Account Scheme as alternative compliance - return furnished under section 139(4) as qualifying date for utilization

Capital gains exemption under section 54B - time limit for reinvestment under Section 54B(2) - interpretation of the reference to 'section 139' in Section 54B(2) - return furnished under section 139(4) as qualifying date for utilization - Capital Gains Account Scheme as alternative compliance - Whether capital gains on sale of agricultural land qualified for deduction under section 54B where the new agricultural land was purchased and payment made before furnishing the return under section 139(4) but after the due date under section 139(1), and no deposit was made in the Capital Gains Account Scheme. - HELD THAT: - The Tribunal examined Section 54B(2) which requires that the amount of capital gains not utilised for purchase of the new asset before the date of furnishing the return under section 139 shall be deposited in the specified account, with the proviso that such deposit must be made not later than the due date applicable under section 139(1) for the Capital Gains Account Scheme. The provision uses the expression 'before the date of furnishing the return of income under section 139' for the purchase limb but refers specifically to the due date under section 139(1) for the deposit limb, thereby distinguishing the two modes of compliance. Reading 'section 139' in Section 54B(2) as inclusive of its sub-sections permits the extended time available under section 139(4) to qualify for the purchase route. Consequently, where the assessee has actually utilised capital gains for purchase of new agricultural land prior to furnishing the return under section 139(4), that utilisation satisfies the requirement of Section 54B(2) even though it is after the section 139(1) due date and no deposit in the Capital Gains Account Scheme was made. Applying this reasoning to the facts, the assessee paid the purchase consideration and filed the return on 29.03.2017 (within the extended filing period under section 139(4)); therefore the capital gain was utilised before furnishing the return and the deduction under Section 54B was allowable. The Tribunal found the decisions relied upon by the assessee to be supportive of this view and allowed the ground of appeal. [Paras 6, 7]

Deduction under section 54B allowed because the capital gain was utilised for purchase of new agricultural land before furnishing the return under section 139(4), satisfying Section 54B(2).

Final Conclusion: Appeal allowed: Tribunal holds that for the purchase limb of Section 54B(2) the reference to 'section 139' includes the extended filing time under section 139(4), and where capital gains are actually utilised by purchase before furnishing the return under section 139(4) (without deposit in the Capital Gains Account Scheme), the deduction under Section 54B is permissible for AY 2016-17.

Right to acquire as capital asset - transfer of capital asset by surrender/extinguishment - computation of capital gains on extinguishment/surrender - non-applicability of Section 50C and Section 56(2)(x)(b) - allowance and carry forward of long term capital loss - penalty under Section 271(1)(c) - voluntary disclosure prior to completion of proceedings - estoppel of assessing authority from invoking penalty where disclosure preceded notice

Right to acquire as capital asset - transfer of capital asset by surrender/extinguishment - computation of capital gains on extinguishment/surrender - non-applicability of Section 50C and Section 56(2)(x)(b) - allowance and carry forward of long term capital loss - Surrender/extinguishment of allotment/right to acquire two flats amounted to transfer of a capital asset and the resulting long term capital loss is allowable and can be carried forward; provisions of Section 50C and Section 56(2)(x)(b) do not apply. - HELD THAT: - The assessee acquired by allotment a right to acquire two flats which constituted a capital asset. On cancellation of allotment the assessee surrendered/extinguished that right and received consideration as evidenced by the cancellation letters. A transfer of that capital asset therefore occurred and requires computation of capital gain or loss. The Assessing Officer's reliance on absence of sale formalities was rejected because the cancellation letters recorded the consideration and the cost of acquisition (indexed) was established, resulting in a long term capital loss. Section 50C applies only where the capital asset transferred is 'land or building or both'; here the transaction was of the 'right to acquire' and not a direct transfer of land/building, and consequently Section 50C and the consequential application of Section 56(2)(x)(b) are not attracted. The Tribunal directed allowance of the long term capital loss and its carry forward for computation in accordance with law. [Paras 12, 13, 14, 15]

Long term capital loss of the assessee arising from surrender of right to acquire two flats is allowed and carry forward directed; Section 50C and Section 56(2)(x)(b) do not apply.

Penalty under Section 271(1)(c) - voluntary disclosure prior to completion of proceedings - estoppel of assessing authority from invoking penalty where disclosure preceded notice - Penalty under Section 271(1)(c) for AY 2012-13 was not sustainable and is deleted where the assessee offered higher income in response to notice after having offered the increased income prior to detection by the Revenue, following the principle that disclosure made before the assessing authority could determine concealment estops invocation of penalty. - HELD THAT: - The reopened assessment concerned additional income, but the assessee had offered higher income in the return filed in response to notice under Section 148 by not claiming a previously claimed loss; that higher income was offered prior to detection by the Revenue of any disallowance and before the Assessing Authority could be satisfied of concealment. Relying on the reasoning of the Kerala High Court, the Tribunal held that where disclosure of additional income is made prior to the Assessing Authority's satisfaction of concealment (and enables payment of the differential tax and interest), the pre-conditions for imposing penalty under Section 271(1)(c) are not established and it would be unfair to penalise the honest disclosure. Applying this principle to the facts, the Tribunal found the penalty levy unsustainable and deleted it. [Paras 23, 25, 26]

Penalty under Section 271(1)(c) for AY 2012-13 is deleted.

Final Conclusion: Both appeals are allowed: for AY 2018-19 the long term capital loss on surrender of right to acquire two flats is allowed and directed to be carried forward (Sections 50C and 56(2)(x)(b) held not applicable); for AY 2012-13 the penalty under Section 271(1)(c) is deleted.

Validity of penalty under section 271(1)(c) - Availability of deduction under section 54B - Effect of appellate order on penalty proceedings - Maintainability of departmental appeal under section 275(1A)

Maintainability of departmental appeal under section 275(1A) - Appeal filed by the Department against the order setting aside penalty is maintainable and section 275(1A) does not bar the appeal in the given facts. - HELD THAT: - The Tribunal examined sub-section (1A) of section 275 and found that its conditions are not satisfied in the present case. Consequently, the contention that the departmental appeal is not maintainable under that provision was rejected. There was no stay of proceedings from the High Court affecting the present appeal, and the Tribunal therefore proceeded to decide the departmental challenge to the CIT(A)'s order. The maintainability objection based on section 275(1A) was held to be without merit. [Paras 11]

Departmental appeal is maintainable; section 275(1A) does not apply to bar the appeal in the facts before the Tribunal.

Validity of penalty under section 271(1)(c) - Availability of deduction under section 54B - Effect of appellate order on penalty proceedings - The penalty imposed under section 271(1)(c) was rightly set aside by the Commissioner (Appeals) because the Appellate Tribunal subsequently allowed the assessee's claim of deduction under section 54B thereby negating the basis for the penalty. - HELD THAT: - The Assessing Officer imposed penalty under section 271(1)(c) for furnishing inaccurate particulars of income in respect of assessment year 2013-14. After the penalty order, this Tribunal in ITA No. 678/JP/2018 allowed the assessee's claim for deductions under section 54B and set aside the quantum addition. The Commissioner (Appeals) took that subsequent appellate decision into account and set aside the penalty. Given that the Appellate Tribunal's decision removed the basis of the addition on which the penalty was founded, the Tribunal found merit in the Commissioner (Appeals)'s order and upheld the setting aside of the penalty. [Paras 12, 13, 14]

Penalty under section 271(1)(c) was properly set aside by the Commissioner (Appeals) in view of this Tribunal's allowance of the deduction under section 54B; departmental appeal against that order is dismissed.

Final Conclusion: The departmental appeal is dismissed: section 275(1A) does not render the appeal non-maintainable, and the penalty under section 271(1)(c) was correctly set aside by the Commissioner (Appeals) because this Tribunal subsequently allowed the assessee's deduction under section 54B, removing the foundation for the penalty.

EPCG scheme export obligation - Prematurity of proceedings prior to expiry of export obligation period - Eligibility for IGST exemption under EPCG where payment for services is received in rupees - Revenue neutrality and availability of Input Tax Credit - Confiscation of imported goods under Customs Act - Penalty under the Customs Act

EPCG scheme export obligation - Prematurity of proceedings prior to expiry of export obligation period - Proceedings initiated and demands confirmed before expiry of the EPCG export obligation period were premature and unsustainable. - HELD THAT: - The EPCG Authorization dated 21.01.2019 required fulfilment of export obligation within six years (by 20.01.2025). The Tribunal found that the licensing period had not expired when the adjudicating authority issued the impugned demand and confiscation order. Proceedings to challenge fulfilment of export obligation and to confirm demand ought to be initiated only after the expiry of the licence period; initiation and confirmation prior to that stage is premature. The Tribunal therefore held that the impugned order confirming demands before the expiry of the licencing period was not justified or correct in law and could not be sustained, having regard to earlier Tribunal authorities cited in support. [Paras 9, 10, 11]

Demand and proceedings confirmed prior to expiry of the export obligation period set aside as premature.

Eligibility for IGST exemption under EPCG where payment for services is received in rupees - Revenue neutrality and availability of Input Tax Credit - The Tribunal held that, on the factual finding that IGST paid by the appellant was available as Input Tax Credit and the overall position was revenue neutral, the demand did not survive. - HELD THAT: - The Tribunal noted Para 5.2 of Circular No.16/2023-Cus and the Supreme Court guidance permitting refund/ITC where appropriate, and examined the factual position that the appellant had paid IGST which was available as ITC. The appellants produced records showing IGST payments and availability of ITC such that the net fiscal position was revenue neutral. In view of established precedents where demands were set aside on the ground of revenue neutrality, the Tribunal concluded that the demand based on alleged ineligibility did not subsist where payment was revenue neutral and ITC was available; the revenue was at liberty to verify the data but the demand was set aside on this ground. [Paras 12, 13, 14]

Demand set aside on the ground of revenue neutrality and availability of Input Tax Credit.

Confiscation of imported goods under Customs Act - Penalty under the Customs Act - Confiscation of the imported capital goods and the penalties imposed on the appellants were unsustainable and were set aside. - HELD THAT: - Having set aside the demand as premature and on the additional ground of revenue neutrality, the Tribunal held that the consequential measures-confiscation of the imported capital goods and penalties imposed under the Customs Act-could not be sustained. The Tribunal expressly set aside the order of confiscation and held that the penalties imposed on the appellants were unwarranted, allowing the appeals with consequential relief as per law. [Paras 14, 15]

Confiscation and penalties set aside; appeals allowed.

Final Conclusion: Appeals allowed: impugned order confirming IGST demand, confiscation and penalties set aside as proceedings were premature and, on the facts, revenue neutral with ITC available; consequential relief granted as per law.

Obligations of Customs Broker under Regulation 10(d) of Customs Brokers Licensing Regulations, 2018 - SCOMET export control and requirement of export authorisation - Time-bar and issuance of show cause notice after receipt of offence report - Proportionality of disciplinary sanctions including revocation of licence, forfeiture of security deposit and imposition of penalty

Obligations of Customs Broker under Regulation 10(d) of Customs Brokers Licensing Regulations, 2018 - SCOMET export control and requirement of export authorisation - Appellant violated Regulation 10(d) of CBLR 2018 by not advising the exporter about the requirement of authorisation for export of Triethanolamine to Mozambique. - HELD THAT: - Regulation 10(d) requires a customs broker to advise the client to comply with the Act and allied rules and to bring non-compliance to the notice of the Deputy/Assistant Commissioner. Triethanolamine was a listed SCOMET item requiring export authorisation for destinations not in Table 1, and Mozambique was not in Table 1. When the client sought to export Triethanolamine to Mozambique, the appellant was obliged to advise the client about the authorisation requirement. Reliance on the exporter's declaration that the chemical was not SCOMET or was for soil testing did not absolve the appellant, who is expected to know and check the statutory list; a client's declaration cannot prevail over the law. For these reasons the Tribunal found that the appellant had clearly violated Regulation 10(d). [Paras 12, 13, 14, 15]

Violation of Regulation 10(d) established.

Time-bar and issuance of show cause notice after receipt of offence report - Show cause notice under CBLR 2018 was not time barred. - HELD THAT: - The Commissioner received an offence report that initially named a different customs broker and not the appellant. A corrigendum identifying the correct broker was issued on 17.11.2022 and received on 18.11.2022; the SCN was issued on 6.2.2023, within 80 days of receipt of the correct offence report. The Commissioner could not reasonably act before receipt of the corrected report; therefore the SCN was not issued after the 255 day period relied upon by the appellant and is not time barred. [Paras 16, 17]

SCN was issued within permissible time and is not time barred.

Proportionality of disciplinary sanctions including revocation of licence, forfeiture of security deposit and imposition of penalty - Penalty of Rs. 50,000 upheld; revocation of licence and forfeiture of security deposit set aside as disproportionate. - HELD THAT: - An attempt to export a SCOMET item without required authorisation is a serious violation and not merely an oversight where the exporter's declaration made the issue evident; the broker should have consulted the policy which explicitly listed Triethanolamine. However, there is no evidence of profit to the appellant from the attempted export; the appellant had already been penalised under section 114(i) with a monetary penalty and has been without licence for about a year. Balancing the gravity of the lapse against absence of personal gain and the existing punishment, the Tribunal deemed it just to uphold the monetary penalty imposed by the Commissioner but to set aside the more severe measures of licence revocation and forfeiture of security deposit. [Paras 18, 19, 20, 21]

Monetary penalty upheld; revocation of licence and forfeiture of security deposit quashed.

Final Conclusion: Appeal partly allowed: finding of breach of Regulation 10(d) and imposition of monetary penalty sustained; revocation of customs broker licence and forfeiture of security deposit set aside, with consequential relief to the appellant.

Exclusion of color toner from anti-dumping duty - interpretation of "Black Toner in Powder Form" - re-assessment under section 17(4) of the Customs Act

Exclusion of color toner from anti-dumping duty - interpretation of "Black Toner in Powder Form" - Whether black color toner (black toner forming part of a color toner for CMYK printers) is liable to anti-dumping duty under the Notification dated 05.03.2021. - HELD THAT: - The invoice and Bill of Entry described the imported goods as 'Printer Color Toner Black' (TS-07 denoting black toner), indicating the product is the black component of a color toner used in CMYK printing. The Notification dated 05.03.2021 levies anti-dumping duty on 'Black Toner in Powder Form' but expressly excludes 'Color Toner' from its scope. The Assistant Commissioner and the Commissioner (Appeals) treated the imported goods as attracting anti-dumping duty by characterising them as 'black toner in powder form' without adequately applying the Notification's exclusion. The appellate court found that the Commissioner (Appeals) erred in rejecting the appellant's pleaded position that the imported black toner was part of a color toner; the distinction based on fineness or higher cost was immaterial because the Notification makes no such qualification. Applying the plain terms of the Notification, the black toner forming part of a color toner falls within the exclusion and is not liable to anti-dumping duty. [Paras 15, 16, 17, 18]

Black color toner forming part of a color toner is excluded from levy of anti-dumping duty under the Notification dated 05.03.2021 and therefore not liable to anti-dumping duty.

Final Conclusion: The appeal is allowed; the order of the Commissioner (Appeals) dated 17.11.2022 is set aside and consequential relief is granted to the appellant.

Right to refund under contractual buy-back clause - requirement of FEMA certificate for repatriation - deposit in court held outside parties' reach - effects of withdrawal and filing claims before the Official Liquidator in winding-up - role of the Official Liquidator in fixation of the liquidation corpus - priority and satisfaction of secured creditors in liquidation

Right to refund under contractual buy-back clause - deposit in court held outside parties' reach - Entitlement of the petitioners to the release of the amount deposited with the Registrar General pursuant to the buy back clause. - HELD THAT: - The Court accepted that the petitioners' contractual right to seek refund under the buy back clause had crystallised on 24.04.2014, prior to the appointment of a Provisional Liquidator. However, the petitioners failed to take requisite steps thereafter: they did not secure or present any FEMA certificate or assert that one was unnecessary, and they subsequently joined in the batch of winding up petitions and agreed to withdraw and present claims before the Official Liquidator. These omissions and the delay in prosecuting their claim disentitle them to the relief of immediate release. The Court therefore declined to direct release in favour of the petitioners on the present application. [Paras 11, 12, 13, 14]

Application for release of the deposited amount in favour of the petitioners is dismissed.

Effects of withdrawal and filing claims before the Official Liquidator in winding-up - role of the Official Liquidator in fixation of the liquidation corpus - priority and satisfaction of secured creditors in liquidation - Disposition of the amount deposited with the Registrar General and its treatment in the liquidation of the respondent company. - HELD THAT: - Given the petitioners' failure to pursue their claimed entitlement and the subsequent insolvency/winding up proceedings, the Court held that the money lying deposited with the Registrar General should be reclaimed by the Official Liquidator with accrued interest and brought within the corpus of the company in liquidation. The Court reasoned that, after the passage of time and in light of competing insolvency claims, the funds are to be utilized for satisfaction of secured stakeholders in accordance with law. [Paras 14, 15]

Registrar deposited amount to be reclaimed by the Official Liquidator with interest and included in the liquidation corpus for satisfaction of secured creditors.

Requirement of FEMA certificate for repatriation - deposit in court held outside parties' reach - Relief in the alternative by permitting the petitioners to file a claim before the Official Liquidator despite delay. - HELD THAT: - Although the petitioners delayed in prosecuting their claim and did not comply with FEMA formalities earlier, the Court exercised discretion in the interest of justice to condone the delay. The petitioners were granted liberty to file their claim with the Official Liquidator within thirty days from the date of the judgment. This provides a procedural avenue for adjudication of their claim in the liquidation process rather than immediate release from court deposit. [Paras 15]

Petitioners may file their claim with the Official Liquidator within thirty days; delay in filing is condoned.

Final Conclusion: The application for release of the deposited amount is dismissed. The Registrar deposited amount, with accrued interest, may be reclaimed by the Official Liquidator and included in the liquidation corpus to satisfy secured creditors; the petitioners are permitted to file their claim with the Official Liquidator within thirty days and delay is condoned.

Jurisdiction of the National Company Law Tribunal - power of Registrar to strike off name of a company - pari materia between Section 560 of the Companies Act, 1956 and Section 248 of the Companies Act, 2013 - continuity of registers and savings under Section 465 of the Companies Act, 2013

Jurisdiction of the National Company Law Tribunal - High Court's competence to direct the Registrar of Companies to revive/relist the petitioner company and to accept delayed statutory returns. - HELD THAT: - The Court held that the relief sought by the petitioner does not lie with the High Court. Having regard to the statutory scheme of the Companies Act, 2013, the appropriate forum for restoration of a struck-off company and related reliefs is the National Company Law Tribunal under the provisions dealing with removal and restoration of company names. The petitioner's application under Rule 9 of the Companies (Court) Rules, 2009 seeking directions to the Registrar to revive/relist the company and accept delayed filings was therefore not maintainable before this Court. The Court dismissed the application and granted liberty to the petitioner to approach the NCLT in accordance with law. [Paras 9, 14]

Application dismissed; petitioner entitled to approach the NCLT for redress.

Pari materia between Section 560 of the Companies Act, 1956 and Section 248 of the Companies Act, 2013 - continuity of registers and savings under Section 465 of the Companies Act, 2013 - power of Registrar to strike off name of a company - Whether action taken under the Companies Act, 1956 and the subsequent striking off under the Companies Act, 2013 are inconsistent and whether prior registers/actions remain available for remedy. - HELD THAT: - The Court examined Section 465 of the Companies Act, 2013 and concluded that actions and procedures under the repealed Act that are not inconsistent with the new Act are to be treated as done under corresponding provisions of the 2013 Act. The Court found that the earlier action under the 1956 Act (Section 560) is effectively pari materia with Section 248 of the 2013 Act and that the latter provides a more detailed procedure including an effective remedy for de-registration. Consequently, the strike-off under the 2013 Act was not inconsistent with the earlier action and the registers maintained under the old Act are deemed to be registers under the new Act and can be relied upon for seeking appropriate legal remedy before the Tribunal. [Paras 11, 12, 13]

Action under the old Act and the new Act are not inconsistent; registers and prior actions are saved and can be relied upon under the 2013 Act.

Final Conclusion: The application seeking direction to the Registrar to revive/relist the petitioner company and accept delayed statutory returns is dismissed; petitioner is at liberty to seek restoration and related reliefs before the National Company Law Tribunal, and the Court records that actions/registers under the Companies Act, 1956 are to be read with and are not inconsistent with the Companies Act, 2013.

Disclaimer of onerous property - Termination/forfeiture of lease and re-entry - Rights of mortgagee limited to rights of mortgagor/sub lessee - nemo dat quod non habet / nemo plus juris - Official Liquidator's power to vest or deliver disclaimed property

Disclaimer of onerous property - Official Liquidator's power to vest or deliver disclaimed property - Grant of leave to the Official Liquidator to disclaim the sub demised office space and the consequences thereof. - HELD THAT: - The Court examined Section 535 of the Companies Act, 1956 and held that the sub demised office space falls within the ambit of an "onerous property" capable of being disclaimed by the Official Liquidator with leave of the Court. The Court found that the sub lease had been validly terminated by the sub lessor on account of non payment of rent and other charges prior to the winding up order and that the Official Liquidator had taken possession. Applying Section 535(2)-(6), the Court exercised its power to permit disclaimer and to direct delivery of possession, while recognising that the Tribunal/Court may impose terms and safeguard the rights of interested persons. Consequently, leave was granted to the Official Liquidator to disclaim the entire sub demised office space and to hand over peaceful, vacant and khas possession to the applicant within the time directed, subject to incidental conditions imposed by the Court. [Paras 18, 31]

Leave granted to the Official Liquidator to disclaim the sub demised office space and to hand over possession to the applicant IIPL within 45 days, subject to the Court's directions.

Termination/forfeiture of lease and re-entry - Rights of mortgagee limited to rights of mortgagor/sub lessee - nemo dat quod non habet / nemo plus juris - Extent of the secured creditor's (PNB) rights in the property once the sub lease was terminated and effect of termination on the bank's mortgage/possession. - HELD THAT: - The Court analysed the sub lease covenant permitting the sub lessee to mortgage its sub leasehold interest but subject to observance of the sub lease covenants. It found that the company (sub lessee) breached rental and ancillary obligations and the sub lessor validly terminated the sub lease prior to winding up. The bank's mortgage rights derived solely from the sub lessee's subsisting rights; once those rights ceased, the bank could not claim a superior title or better rights than the sub lessee. The maxim "nemo dat qui non habet" was applied to hold that nothing survived in favour of the secured creditor beyond what the sub lessee possessed during the subsistence of the sub lease, and therefore the bank's objections to disclaimer and delivery of possession could not be sustained. [Paras 21, 23, 24, 26, 27]

PNB's claim to the property is limited to the rights the sub lessee had; on termination of the sub lease those rights ceased and PNB cannot resist disclaimer or delivery of possession on a superior title basis.

Official Liquidator's inventory, removal and sale of assets - Claims and adjudication in winding up (compensation/mesne profits) - Directions as to inventory, removal/sale of furniture, fixtures, fittings and adjudication of the applicant's monetary claim for rents and mesne profits. - HELD THAT: - The Court directed the Official Liquidator to re enter, make an inventory, value and remove or sell furniture, fixtures and fittings to facilitate delivery of possession. With respect to the applicant's claim for lease rent, electricity and mesne profits, the Court left that entitlement to be adjudicated by the Official Liquidator in the winding up proceedings and to be paid only out of any surplus assets, if available. The Court also imposed that the applicant remain bound to pay security and incidental charges incurred by the Official Liquidator in safeguarding the property. [Paras 11, 31, 32]

Official Liquidator to inventory, value and remove/sell assets and to adjudicate the applicant's monetary claim in the winding up process; any payment contingent upon available surplus; applicant to bear security and incidental charges.

Final Conclusion: The Court allowed CO.APPL.517/2018 and granted leave to the Official Liquidator to disclaim the sub demised office space, directed delivery of peaceful, vacant and khas possession to the applicant IIPL within 45 days, ordered the Official Liquidator to inventory and remove or sell fittings to facilitate delivery, and left the applicant's monetary claim for rent and mesne profits to be adjudicated by the Official Liquidator in the winding up with payment only from any surplus assets; PNB's objections were rejected as its mortgage rights did not survive termination of the sub lease.

Dissolution of company under Section 481 - When winding up cannot proceed for want of funds - Discharge of Official Liquidator - Transfer of residual assets to Common Pool Fund - Communication to Registrar of Companies and closure of books - Effect of dissolution on pending criminal proceedings - Invocation of Meghal Homes principle

Dissolution of company under Section 481 - When winding up cannot proceed for want of funds - Invocation of Meghal Homes principle - Discharge of Official Liquidator - Dissolution of M/s. Spack Turnkey Projects (P) Ltd. and discharge of the Official Liquidator - HELD THAT: - The Court found that the Official Liquidator was not seized of any assets from which further realization could be effected, liquidation steps had reached a terminal stage and no claims (other than the EPFO claim already satisfied) remained to be adjudicated. Relying on the principle in Meghal Homes that where the affairs of a company have been completely wound up or the Official Liquidator cannot proceed with winding up for want of funds or for any other reason the Court may dissolve the company, and having regard to the statutory scheme embodied in Section 481(1), the Court concluded it was just and reasonable to dissolve the company. Consequentially, the Official Liquidator was discharged as liquidator since no further steps in the winding up could be usefully undertaken. [Paras 9, 11, 12, 13, 14]

The company stands dissolved and the Official Liquidator is discharged as its Liquidator.

Transfer of residual assets to Common Pool Fund - Communication to Registrar of Companies and closure of books - Disposition of the remaining funds and administrative formalities on dissolution - HELD THAT: - The Court recorded the balance available with the company and directed that the Official Liquidator be permitted to transfer any available balance to the Common Pool Fund and thereafter close the books of account of the company. The Official Liquidator was also directed to communicate a copy of the order to the Registrar of Companies within 30 days to give effect to the dissolution and complete statutory formalities. [Paras 10, 15, 16]

Official Liquidator may transfer available balance to the Common Pool Fund, close the company accounts, and send a copy of the judgment to the Registrar of Companies within 30 days.

Effect of dissolution on pending criminal proceedings - Disposition of the criminal complaint against ex-directors instituted under Section 454 - HELD THAT: - The Court observed that since the company has been dissolved and the winding up has been brought to an end, the pending criminal complaint instituted by the Official Liquidator under Section 454 of the Companies Act, 1956 does not serve any useful purpose. On that basis the complaint and pending applications were disposed of as having become infructuous by reason of the dissolution of the company. [Paras 18, 19, 20]

The criminal complaint against the ex-directors and pending applications are disposed of as no useful purpose would be served in keeping them pending after dissolution.

Final Conclusion: The petition is allowed: M/s. Spack Turnkey Projects (P) Ltd. is dissolved, the Official Liquidator is discharged; residual funds may be transferred to the Common Pool Fund and accounts closed; a copy of the order is to be sent to the Registrar of Companies; the company petition, pending applications and the criminal complaint are disposed of.

Impleadment as Additional Corporate Debtor - Pre-impleadment notice under Order I Rule 10 CPC - Separation of legal entity and effect of majority shareholding and managerial control - Principles of natural justice in party-joinder

Pre-impleadment notice under Order I Rule 10 CPC - Principles of natural justice in party-joinder - Validity of impleading the appellant without prior notice - HELD THAT: - The Tribunal held that issuance of a prior notice to a proposed party is not a mandatory prerequisite before an order of impleadment is passed under Order I Rule 10 CPC. The question of whether a person should be joined is a matter of judicial discretion for the adjudicating forum, exercised in the light of necessity and expediency in the particular lis. Authorities cited and discussed indicate that, while fairness and reason must guide the exercise, the court may implead a party and thereafter issue notice and afford opportunity to be heard or permit the party to apply for striking off its name. In the present case the Adjudicating Authority, after considering material on record, directed impleadment and subsequently issued notice to the appellant to file its response; thereby preserving the appellant's right to be heard on the merits of its joinder. The Tribunal found no legal error in the procedure adopted and held that absence of a pre-impleadment notice did not vitiate the Impugned Order.

The Impugned Order impleading the appellant without prior notice is not unsustainable on that ground; prior notice is not an absolute precondition to impleadment and the appeal on this plea is dismissed.

Impleadment as Additional Corporate Debtor - Separation of legal entity and effect of majority shareholding and managerial control - Whether the appellant was correctly impleaded as an Additional Corporate Debtor on the basis of majority shareholding and managerial control - HELD THAT: - The Tribunal accepted the Adjudicating Authority's conclusion that the appellant's substantial shareholding and alleged managerial control over the corporate debtor justified its impleadment as an Additional Corporate Debtor for effective adjudication of the Section 9 petition. The Adjudicating Authority applied the established test of whether the presence of the proposed party is necessary for a just and complete determination of the dispute and relied on material indicating majority shareholding and control. The Tribunal observed that subsidiary companies are separate entities but that, where facts show decisive control or managerial domination, impleadment may be appropriate. The appellant's contentions that mere shareholding without evidence of control or that separate corporate existence forbids impleadment were rejected on the record before the Adjudicating Authority, which retained the appellant's right to contest its joinder after service of notice.

The Adjudicating Authority did not commit error in impleading the appellant as an Additional Corporate Debtor on the stated grounds; the appeal on this contention is dismissed.

Final Conclusion: The appeal is dismissed. The Tribunal upholds the Adjudicating Authority's order impleading the appellant as an Additional Corporate Debtor and finds that absence of a pre-impleadment notice did not vitiate the order, while preserving the appellant's opportunity to contest its joinder before the NCLT.

Doctrine of necessity - Inherent powers under section 60(5) of the Insolvency and Bankruptcy Code, 2016 - Extension of section 60(5) powers to the appellate forum - Relief to deposit balance after liquidation order - Objective of CIRP - revival of the corporate debtor as a going concern

Relief to deposit balance after liquidation order - Doctrine of necessity - Objective of CIRP - revival of the corporate debtor as a going concern - Permitting the successful resolution applicant to deposit the outstanding balance after an order of liquidation and stay of liquidation proceedings. - HELD THAT: - The Tribunal recognized that although the liquidation order dated 26.07.2023 had attained finality and the appellant had not directly challenged that order, exceptional relief could be granted to permit deposit of the balance due under an approved resolution plan. Applying the doctrine of necessity and having regard to the underlying objective of CIRP to revive the corporate debtor as a going concern, the Tribunal exercised its powers to avoid an outcome that would render the proceedings futile where no other plan or buyer was available. The liquidator and the financial creditor raised no objection to allowing the deposit; on that basis and to meet the purpose of the Code, the appellant was given a final opportunity to deposit the outstanding amount within a limited time. The Tribunal made clear that this concession is conditional and time-bound, and refusal or failure to deposit within the stipulated period will permit the liquidator to proceed with liquidation steps and seek alternative buyers under law.

Liberty granted to the appellant to deposit the outstanding amount within one month; if not deposited, the relaxation lapses and the liquidator may proceed to find alternative buyers and continue liquidation processes.

Inherent powers under section 60(5) of the Insolvency and Bankruptcy Code, 2016 - Extension of section 60(5) powers to the appellate forum - Whether the appellate Tribunal (NCLAT) can invoke the powers embodied in section 60(5) of the Code to pass appropriate orders in furtherance of CIRP objectives. - HELD THAT: - The Tribunal held that the jurisdictional and enabling language of section 60(5), though expressed with reference to the NCLT, must be given a logical construction that allows the appellate forum to exercise analogous powers when functioning as a continuation of proceedings under the Code. Consequently, the NCLAT may, in appropriate cases and to meet the ends of justice and the objectives of the CIRP, exercise powers under section 60(5) to pass orders directed at avoiding liquidation and preserving the possibility of revival of the corporate debtor, subject to case-specific considerations and limits.

NCLAT can invoke and apply the powers under section 60(5) in exercise of its appellate jurisdiction to pass appropriate orders to further the objectives of the Code.

Final Conclusion: The appeal is allowed to the limited extent of granting the appellant a final, time-bound opportunity to deposit the outstanding sum to implement the approved resolution plan; the Tribunal affirmed that the appellate forum may, under the logic of section 60(5) and the doctrine of necessity, grant such relief to further CIRP objectives, subject to the condition that failure to deposit within the stipulated period revives the liquidator's authority to pursue liquidation and alternative buyers.

Maintainability of writ petition in presence of alternative statutory remedy - immunity of corporate debtor under Insolvency and Bankruptcy Code after approval of resolution plan - adjudication proceedings under FEMA not abated by insolvency - scope of Section 32A of the IBC (as introduced by Ordinance) vis-a -vis pre-existing regulatory/adjudicatory proceedings

Maintainability of writ petition in presence of alternative statutory remedy - Whether the writ petition under Article 226 is maintainable despite alternative remedies under FEMA. - HELD THAT: - The Court held that the existence of alternative statutory remedies under FEMA (notably the adjudicatory and appellate provisions) renders the writ petition not maintainable. Reliance was placed on the principle that when a fiscal statute provides a dedicated statutory forum for redressal, a litigant should ordinarily invoke that forum rather than seek extraordinary writ relief. The exceptional grounds permitting writ jurisdiction (breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction or vires challenge) were examined and found not to be made out on the facts of this case. [Paras 9, 12]

Writ petition is not maintainable in view of efficacious alternate remedies under FEMA; exceptional grounds for writ relief are absent.

Immunity of corporate debtor under Insolvency and Bankruptcy Code after approval of resolution plan - scope of Section 32A of the IBC (as introduced by Ordinance) vis-a -vis pre-existing regulatory/adjudicatory proceedings - Whether the petitioner (a corporate debtor whose resolution plan was approved) enjoys immunity from adjudication proceedings initiated under FEMA for acts alleged to have been committed prior to the corporate insolvency resolution process. - HELD THAT: - The Court held that the petitioner was not granted immunity from FEMA adjudication proceedings. The NCLT order conferred immunity in respect of regulatory or administrative liabilities to the extent stated in that order, but that did not operate to extinguish adjudication under FEMA. The adjudication proceedings under FEMA had been initiated by issuance of a show cause notice dated 31.03.2017, which preceded the corporate insolvency resolution process; further, proceedings under the relevant FEMA provisions do not abate by reason of insolvency of the person liable. Thus, on the material before the Court, Section 32A (as introduced by the Ordinance) did not operate to bar the FEMA adjudication impugned in the petition. [Paras 6, 10, 11]

Petitioner is not immune from FEMA adjudication in respect of the alleged pre-CIRP contraventions; adjudication proceedings validly continue.

Final Conclusion: Writ petition dismissed: the petition is not maintainable in view of alternate remedies under FEMA and the petitioner, despite approval of a resolution plan, was not entitled to immunity from the FEMA adjudication initiated prior to the corporate insolvency resolution process.

Summary order. Civil appeal dismissed for gross delay (condonation refused) and on merits; pending applications disposed of.

Refund of CENVAT credit - claims under Notification No.27/2012-CE - limitation / time bar - substantial compliance - intermediary services - remand for fresh consideration - principles of natural justice

Refund of CENVAT credit - claims under Notification No.27/2012-CE - limitation / time bar - substantial compliance - Whether the refund claims filed by the appellant are barred by limitation under Notification No.27/2012-CE. - HELD THAT: - The Tribunal found that the appellants filed their initial refund claims in time and that the only lacuna was non submission of Bank Realisation Certificates (BRCs) which the appellants attributed to non availability on the DGFT website. The Department did not contend that the refund claims themselves were filed late; rather it relied on absence of BRCs. The appellants had produced Foreign Inward Remittance Certificates (FIRCs) and bank statements showing receipt of remittances. Applying the principle that refund claims cannot be held time barred merely because certain supporting documents, not within the control of the claimant, were not appended, the Tribunal held that the appellants had complied in a substantial manner with the conditions of Notification No.27/2012 and therefore the claims are not barred by limitation. [Paras 5]

Refund claims are not barred by limitation; the appellants substantially complied with the requirements of Notification No.27/2012.

Intermediary services - remand for fresh consideration - principles of natural justice - Whether the services rendered by the appellants are 'intermediary services' (thereby affecting entitlement to refund). - HELD THAT: - The Original Authority had recorded elaborate findings that the appellants rendered intermediary services. The Commissioner (Appeals), however, did not decide the issue on merits and instead remanded the matter to the Original Authority for fresh findings. The Tribunal observed that because the Commissioner (Appeals) gave no independent findings accepting or rejecting the lower authority's reasoning, it was deprived of an opportunity to examine that appellate conclusion. In the interest of justice the Tribunal directed that the matter be returned to the Commissioner (Appeals) to consider the original authority's findings, decide the question on merits by applying his own interpretation of law, and afford the appellant an opportunity of being heard in accordance with the principles of natural justice. The Commissioner (Appeals) was directed to decide the issue within twelve weeks of receipt of the certified copy of the order. [Paras 6, 7]

Issue remanded to the Commissioner (Appeals) for fresh adjudication on whether the appellants exported services or provided merely intermediary services, with opportunity to the appellant to be heard and a direction to decide within 12 weeks.

Final Conclusion: Both appeals are partly allowed: the refund claims are held not to be time barred, and the question whether the services were intermediary is remanded to the Commissioner (Appeals) for fresh decision in accordance with law and principles of natural justice within twelve weeks.

Composite contract - abatement - Commercial or Industrial Construction Services (CICS) - Works Contract Service (WCS) - service tax liability on construction of educational institutions - eligibility for abatement despite supply of free materials - remand for fresh consideration - opportunity of hearing and liberty to furnish evidence

Commercial or Industrial Construction Services (CICS) - service tax liability on construction of educational institutions - composite contract - remand for fresh consideration - opportunity of hearing and liberty to furnish evidence - Demand of service tax for the period 01.04.2012 to 30.06.2012 under CICS including works for educational institutions remanded for fresh consideration - HELD THAT: - The Tribunal observed that the department confirmed demands for the period 01.04.2012 to 30.06.2012 under CICS, including construction executed for educational institutions. Having noted Tribunal and higher court authorities holding that composite contracts do not sustain a demand under CICS, the Bench accepted the appellant's request for an opportunity to establish that the contracts were composite and that certain projects were for educational institutions not liable to service tax. In view of these considerations and the precedents referred to by the Tribunal, the matter for this period is remanded to the adjudicating authority for fresh adjudication, with an opportunity to the appellant to file evidence and be heard, and with directions to consider the cited decisions while deciding the issue. [Paras 5, 6, 8, 9]

Set aside and remanded to the original authority to reconsider the demand for 01.04.2012 to 30.06.2012 in the light of the appellate decisions and after affording the appellant an opportunity to produce evidence.

Commercial or Industrial Construction Services (CICS) - abatement - composite contract - eligibility for abatement despite supply of free materials - remand for fresh consideration - opportunity of hearing and liberty to furnish evidence - Demand of service tax for the period 01.07.2012 to 31.03.2013 under CICS and the appellant's entitlement to abatement remanded for fresh consideration - HELD THAT: - For the period 01.07.2012 to 31.03.2013 the department denied abatement on the ground that the appellant had not furnished evidence showing use or payment of VAT for materials; the appellant contended the contracts were composite and relied on the principle in Bhayana Builders that abatement may be available even where free materials are provided. The Tribunal found these contentions required further consideration and remanded the matter so the adjudicating authority may examine all evidence afresh, including the appellant's accounts, agreements and any proof of material usage/payment, and determine entitlement to abatement after affording opportunity to the appellant. [Paras 7, 8, 9]

Set aside and remanded to the original authority to reconsider the demand for 01.07.2012 to 31.03.2013 and the applicability of abatement, after allowing the appellant to produce evidence and be heard.

Final Conclusion: The appeal is allowed by way of remand; the impugned order is set aside and the matter is remitted to the original adjudicating authority to reconsider the demands for both periods in accordance with the cited decisions, giving the appellant an opportunity of hearing and liberty to furnish evidence.

Service tax on trade discounts/incentives - Principal to principal dealership transactions - Incentives not being transaction specific consideration - Trading of goods excluded from definition of service - Reversal of CENVAT credit under Rule 6(3) of the CENVAT Credit Rules, 2004 - Computation of interest under Notification No.13/2016-CE(NT) dated 01.03.2016 - Penalty under Section 78 of the Finance Act / Rule 15(3) of CENVAT Credit Rules, 2004

Service tax on trade discounts/incentives - Principal to principal dealership transactions - Incentives not being transaction specific consideration - Trading of goods excluded from definition of service - Levy of service tax on incentives/discounts paid by the manufacturer to the authorized dealer on purchase/sale of vehicles - HELD THAT: - The Tribunal held that the arrangement between the manufacturer and the appellant is a principal to principal dealership and the incentives/discounts granted on achievement of sales targets constitute trade discounts forming part of the sale price of vehicles rather than consideration for any distinct service. Following binding precedents, the Tribunal reasoned that target based incentives are not attributable to a particular supply of service but to the overall sale relationship and thus do not qualify as taxable consideration. Further, onward sale of vehicles involves transfer of property in goods which is excluded from the definition of 'service'. Applying these principles to the facts, the Tribunal concluded that the demand of service tax on incentives/discounts could not be sustained. [Paras 7, 10]

Demand of service tax of Rs.3,03,50,663/- confirmed on incentives/discounts is set aside.

Reversal of CENVAT credit under Rule 6(3) of the CENVAT Credit Rules, 2004 - Computation of interest under Notification No.13/2016-CE(NT) dated 01.03.2016 - Liability under Rule 6(3)(i) for reversal of CENVAT credit attributable to trading activity and computation of interest - HELD THAT: - The Tribunal noted that the appellant, on being pointed out in audit, had reversed credit attributable to input services used for trading activity by depositing an amount via challan (Rs.42,30,802/-) which exceeded the appellant's assessed liability as claimed. As the appellant had already reversed the credit, the Tribunal directed remand to the adjudicating authority to verify the proportionate CENVAT credit actually attributable to trading activity, recompute the correct liability and determine interest month wise in accordance with Notification No.13/2016 CE(NT) dated 01.03.2016, allowing adjustment against any excess payment. The remand is for verification and recomputation with interest; the substantive question of reversal obligation under Rule 6(3) was applied to the facts. [Paras 8, 10]

Confirmation of the amount of Rs.3,84,28,721/- under Rule 6(3) is set aside and the matter is remanded to the adjudicating authority for verification, recomputation of liability and computation/adjustment of interest.

CENVAT credit admissibility - Penalty under Section 78 of the Finance Act / Rule 15(3) of CENVAT Credit Rules, 2004 - Admissibility of CENVAT credit claimed and imposition of penalty for non reversal - HELD THAT: - The Tribunal observed that the appellant had reversed the CENVAT credit attributable to trading activity and, in fact, paid an amount in excess of their claimed liability. Given that the major part of the demand has been set aside and the appellant had already made reversal/payments (including an admitted excess), the Tribunal found imposition of penalty under Section 78 of the Finance Act or Rule 15(3) of the CENVAT Credit Rules to be unwarranted. The appellant also did not press the question of admissibility of a small credit amount which was insignificant for present purposes. [Paras 8, 9, 10]

CENVAT credit issue left for verification as above; penalties imposed are set aside.

Final Conclusion: The appeal is allowed in part: the demand of service tax on incentives/discounts is quashed; the confirmed liability under Rule 6(3) is set aside and remitted to the adjudicating authority for verification, recomputation and computation of interest under the cited notification with opportunity to the appellant; penalties imposed are set aside. Appeal disposed accordingly.

Summary order. Appeal dismissed; delay condoned; pending applications, if any, disposed of.

Levy of central excise duty on sale of capital goods cleared as scrap - Applicability of Rule 3(5A)(b) of Cenvat Credit Rules, 2004 to capital goods cleared as waste and scrap - Cenvat credit of input service-outward transportation only up to the place of removal - Inadmissible cenvat credit and recovery under Rule 14 of Cenvat Credit Rules - Interest on duty under Section 11AA of the Central Excise Act, 1944 - Extended period of limitation and penalty for suppression with intent to evade duty

Levy of central excise duty on sale of capital goods cleared as scrap - Applicability of Rule 3(5A)(b) of Cenvat Credit Rules, 2004 to capital goods cleared as waste and scrap - Liability to pay an amount equal to duty on transaction value when capital goods are cleared as waste and scrap under Rule 3(5A)(b) of the Cenvat Credit Rules, 2004. - HELD THAT: - The Tribunal held that the machinery sold by the appellant qualified as 'capital goods' and Rule 3(5A)(b) prescribes that where capital goods are cleared as waste or scrap the manufacturer shall pay an amount equal to the duty leviable on the transaction value. The provision operates independently of whether cenvat credit had been availed at the time of purchase (contrast with Rule 3(5A)(a) which deals with adjustment where credit was taken). The purchase and sale invoices did not demonstrate a direct correlation or sufficient description to rebut application of the rule. Documentary assertions by the appellant (affidavit) were found inadequate to establish that Rule 3(5A)(b) was inapplicable. Consequently the statutory mandate of Rule 3(5A)(b) required payment equal to duty on transaction value for the scrap sale.

Demand for duty on sale of old machinery as scrap under Rule 3(5A)(b) is upheld and payable by the appellant.

Cenvat credit of input service-outward transportation only up to the place of removal - Inadmissible cenvat credit and recovery under Rule 14 of Cenvat Credit Rules - Interest on duty under Section 11AA of the Central Excise Act, 1944 - Extended period of limitation and penalty for suppression with intent to evade duty - Admissibility of cenvat credit of service tax on outward freight beyond the place of removal, its utilization, recovery, and consequent levy of interest and penalty. - HELD THAT: - The Tribunal applied the definition of 'input service' under Rule 2(l) which confines outward transportation to services 'upto the place of removal' as qualifying input service. The admitted fact was that outward freight availed by the appellant related to transportation beyond the factory gate (place of removal), therefore such credit was not admissible. The record of ER I returns and service tax ledger did not support the appellant's contention that the credit was reversed in the month of availment; without reversal entries the credit stood wrongly taken and utilized. Consequently the wrongly availed credit is recoverable under the Rules (including Rule 14), interest is payable under Section 11AA of the Central Excise Act, 1944, and, because the outward freight credit was knowingly and deliberately suppressed from the Department with intent to evade duty, the extended period of limitation and penalty were correctly invoked and imposed. The Tribunal found no reason to interfere with these findings and sanctions.

Cenvat credit availed on outward freight beyond the place of removal is inadmissible and recoverable; interest and penalty (including invocation of extended period) upheld.

Final Conclusion: The impugned order confirming demand of duty on sale of capital goods as scrap, recovery of inadmissible cenvat credit on outward freight, interest under Section 11AA, invocation of extended limitation and penalty is affirmed; the appeal is dismissed.

Penal liability under Rule 26(2) of the Central Excise Rules, 2002 - Availability of cenvat credit where duty on finished goods has been paid - Requirement of corroborative evidence beyond statements of third parties - Finality of appellate order and its effect on subsequent proceedings - Buyer not obliged to verify existence or records of upstream suppliers

Finality of appellate order and its effect on subsequent proceedings - Penal liability under Rule 26(2) of the Central Excise Rules, 2002 - Whether the penalty imposed on the appellant under Rule 26(2) can be upheld where the department has accepted the appellate findings in respect of the main noticee and has not challenged that order. - HELD THAT: - The Tribunal noted that in the appeal filed by the main noticee (APSPL) the Commissioner (Appeals) on merits held that APSPL had received the goods as per impugned invoices, paid duty on finished goods and had availed cenvat credit legitimately; that order has attained finality as the department did not challenge it. In these circumstances, the Tribunal held that there was no justification to take a contrary view in respect of the appellant and therefore no basis to sustain the penalty imposed on the appellant when the underlying demand in respect of cenvat credit was held not maintainable. The Tribunal followed binding precedents and the facts that the Department accepted the Commissioner (Appeals) findings and did not appeal. Consequently the imposition of penalty could not be affirmed. [Paras 6, 9]

Penalty affirmed by the impugned order set aside and the appeal allowed.

Availability of cenvat credit where duty on finished goods has been paid - Requirement of corroborative evidence beyond statements of third parties - Buyer not obliged to verify existence or records of upstream suppliers - Whether demand and penalty can be sustained against a buyer/appellant where the case rests on statements about non existence of upstream manufacturers but the buyer produced invoices, ledger entries, evidence of payment and duty paid on finished goods. - HELD THAT: - The Tribunal relied on the Commissioner (Appeals) findings (reproduced in the order) that the appellant had availed cenvat credit on the basis of duty paying documents, sales of finished goods were accepted by the Department, payments were made through banking channels, and no physical stock shortage was shown. It emphasised the settled principle that proceedings based solely on statements of third parties require corroboration by positive evidence; in the absence of such corroboration the demand is not sustainable. The Tribunal also adopted the reasoning of the Division Bench in Drolia Electrosteel that a buyer who places orders on registered traders and receives goods cannot be expected to verify the correctness of upstream registrations or records issued by the department. Applying these principles to the facts, the Tribunal found the departmental case deficient and unfounded to sustain demand or penalty against the appellant. [Paras 5, 8]

Demand and penalty could not be sustained in the absence of corroborative evidence; appellant entitled to relief.

Final Conclusion: The appeal is allowed; the impugned order affirming penalty under Rule 26(2) is set aside and the penalty/quasi demand sustained against the appellant is quashed in view of the accepted appellate findings and absence of requisite corroborative evidence.

Valuation of clearances for export - manufacture (including processes incidental or ancillary) - job work - excisable value - revenue-neutrality - extended period of limitation for demand - availability of CENVAT credit - penalty under Rule 25 of the Central Excise Rules, 2002

Valuation of clearances for export - manufacture (including processes incidental or ancillary) - job work - excisable value - availability of CENVAT credit - Legality of the assessable value adopted by the job-worker (1st appellant) for clearances to the principal (2nd appellant) which were subsequently exported after testing and repacking by the principal. - HELD THAT: - The Tribunal found that the 1st appellant was a job worker manufacturing goods exclusively for the 2nd appellant and that further processes - testing, repacking, palletization and shrink-wrapping - were carried out at the premises of the 2nd appellant. Those activities fall within the concept of "manufacture" as they are incidental or ancillary to completion of a marketable product. The Department rejected the plea without conducting verification at the 2nd appellant's premises and mechanically issued a show cause notice solely on the basis of a difference in declared assessable values. On the facts, and having regard to the contemporaneous statement recorded and the appellants' consistent plea, the Tribunal held that the departmental conclusion that the goods were exported "as such" was without adequate inquiry. Further, the transactions were revenue-neutral because duty paid by the 1st appellant would be eligible as credit to the 2nd appellant. In these circumstances the valuation adopted by the 1st appellant cannot be set aside on the basis relied upon by the Department. [Paras 7]

The value adopted by the 1st appellant for payment of duty on clearance to the 2nd appellant is not unlawful on the ground that the goods were exported "as such"; the Department's rejection without verification was unsustainable.

Extended period of limitation for demand - revenue-neutrality - availability of CENVAT credit - Sustainability of demands confirmed by the authorities which were issued invoking the extended period of limitation. - HELD THAT: - The Tribunal concluded that there was no positive act of suppression by the appellants; duty had been paid during the disputed period and the situation was revenue-neutral because any duty discharged by the 1st appellant would be available as credit to the 2nd appellant. In the absence of established suppression and given revenue neutrality, the invocation of the extended period for the entire demand was not justified. Accordingly the demand falls within the extended period and cannot be sustained. [Paras 8]

The demands confirmed by the authorities, which fall within the extended period, are not sustainable and are set aside on limitation grounds.

Penalty under Rule 25 of the Central Excise Rules, 2002 - revenue-neutrality - Validity of the penalty imposed on the 2nd appellant under Rule 25 of the Central Excise Rules, 2002. - HELD THAT: - Having held that the substantive demand could not be sustained (for reasons of lack of established suppression and revenue-neutrality), the Tribunal held that the penalty levied on the 2nd appellant was unwarranted. The availability of credit to the 2nd appellant and the revenue-neutral character of the transactions meant that imposition of penalty was not justified. [Paras 9]

The penalty imposed on the 2nd appellant under Rule 25 is set aside.

Final Conclusion: Impugned order set aside; both appeals allowed, demand and interest set aside on the ground that extended period invocation was unsustainable and the penalty imposed on the 2nd appellant is quashed; consequential relief, if any, to follow.

Section 138 of the Negotiable Instruments Act - cheque issued as security - legally enforceable debt or other liability - presumption in favour of the payee/holder of the cheque - question of fact triable at trial - scope of exercise of inherent powers under Section 482 CrPC

Section 138 of the Negotiable Instruments Act - cheque issued as security - legally enforceable debt or other liability - presumption in favour of the payee/holder of the cheque - question of fact triable at trial - Maintainability of the complaint under Section 138 where accused contend the cheques were issued only as security and payment had been made by RTGS. - HELD THAT: - On the material before the High Court the complainant had produced invoices, ledger entries and averments that cheques were retained on the instructions of the accused towards outstanding dues and that as on 17.04.2021 an outstanding liability subsisted. The accused's plea that the cheques were issued merely as security and payments had been effected by RTGS raises disputed questions of fact which go to the root of the defence. The court applied the established principle that Section 138 is attracted only if a legally enforceable debt or liability subsisted on the date of drawing the cheque, but also recognised the legal presumption in favour of the payee/holder and the settled position that whether a cheque was given as security or in discharge of a debt is normally a triable issue. Given the limited and circumscribed jurisdiction of the High Court under Section 482, the petition could not be allowed to embark upon a detailed factual inquiry or to displace the presumption in favour of the complainant. On the prima facie record, including the ledger and retention of cheques, the High Court found it not appropriate to quash the complaint and held that the matter required trial and evaluation of evidence by the trial court. [Paras 12, 13, 14]

The petition for quashing is dismissed; the complaint under Section 138 is not quashed and the matter must proceed to trial.

Final Conclusion: The High Court declined to exercise inherent jurisdiction under Section 482 to quash the criminal complaint under Section 138, observing that disputed factual questions-whether the cheques were security or discharged an existing liability-require trial; the petition is dismissed and the trial court to decide on admissibility and merits of the defence.

Liquidated damages and requirement of legal injury - Section 74 of The Indian Contract Act - reasonable compensation and pre estimate doctrine - Mastery of the arbitrator over assessment of quality and quantity of evidence - Pleadings as the matrix for admissible evidence; no evidence de hors pleadings - Interference with arbitral factual findings limited to perversity or illegality

Liquidated damages and requirement of legal injury - Section 74 of The Indian Contract Act - reasonable compensation and pre estimate doctrine - Validity of levy of liquidated damages by the appellant and whether the respondent was entitled to refund of the amounts retained. - HELD THAT: - The Arbitrator found that although four out of 46 transformers were delivered late, the respondent failed to demonstrate any legal injury resulting from the delay because only 8 transformers had been commissioned even after substantial lapse of time; the Arbitrator therefore directed refund of liquidated damages retained. The High Court upheld that conclusion. The Court applied the settled principle that Section 74 does not dispense with the basic requirement of establishing that some loss or damage has been suffered; the liquidated sum represents an upper limit and reasonable compensation is payable only where legal injury is shown. Reliance on precedents emphasised that where timely delivery ceases to be the essence (as evidenced by long delays in installation/commissioning) and no causal legal injury is proved, awarding liquidated damages would amount to unjust enrichment. The Court held that the Arbitrator's factual appreciation - including reliance on contemporaneous minutes showing delayed installation/commissioning - fell within the arbitrator's domain and did not call for interference. [Paras 26, 27, 28, 29, 30]

Arbitral finding that no legal injury was proved was upheld; refund of liquidated damages ordered by the arbitrator was sustained and the Section 34 challenge dismissed on this ground.

Mastery of the arbitrator over assessment of quality and quantity of evidence - Interference with arbitral factual findings limited to perversity or illegality - Whether the Single Judge and this Court should disturb the arbitrator's factual findings on the evidence placed before him. - HELD THAT: - The Court reiterated that the arbitrator is the master of the quality and quantity of evidence and that appellate interference with an arbitral tribunal's findings of fact is not warranted where the conclusions fall within the arbitrator's evaluative domain. The High Court's confirmation of the arbitrator's conclusion - that the pleadings and evidence did not prove legal injury - was found to be within permissible limits of judicial review under Section 34 and therefore correctly sustained. [Paras 25, 27, 30]

No interference with the arbitrator's factual findings; the Single Judge's dismissal of the Section 34 petition on these factual conclusions was affirmed.

Pleadings as the matrix for admissible evidence; no evidence de hors pleadings - Permissibility of adducing new evidence (or filing additional affidavit) at the appellate stage to show that NTPC had imposed liquidated damages on the appellant. - HELD THAT: - The appellant sought to introduce material at the appellate stage to show that NTPC, the ultimate employer, had levied liquidated damages on the appellant. The Court declined to permit evidence de hors the pleadings, noting that evidence must follow pleadings and that the contention was neither pleaded before the arbitrator nor before the Single Judge. Allowing such material at a late stage would amount to ambush and is impermissible; hence leave to file an additional affidavit was refused. [Paras 21, 22, 31]

Application to bring on record additional evidence concerning NTPC's imposition of liquidated damages was refused; evidence not pleaded could not be admitted at this stage.

Pleadings as the matrix for admissible evidence; no evidence de hors pleadings - Mastery of the arbitrator over assessment of quality and quantity of evidence - Failure of the appellant to bring a counter claim or specific pleading quantifying loss/injury in relation to retained amounts. - HELD THAT: - The Court observed that the appellant, having retained amounts as liquidated damages, should have lodged a counter claim if it sought to justify retention or should at least have pleaded specific injury to support the levy. No such counter claim was filed and the pleadings lacked particularised averments of loss. The lack of specific pleading and quantification weighed against the appellant in the Arbitrator's and Court's assessment. [Paras 24, 25]

Appellant's failure to plead or counter claim on the issue of retained amounts and absence of specific averments of legal injury supported the conclusion that levy of liquidated damages was unjustified insofar as no loss was demonstrated.

Final Conclusion: The appeal is dismissed. The High Court correctly upheld the arbitrator's finding that the respondent did not prove legal injury warranting retention of liquidated damages; late evidence not pleaded was refused and the arbitral award in favour of the respondent is to be released with accrued interest.

Quashing of criminal proceedings under Section 482 Cr.P.C. - inquiry under Section 202 Cr.P.C. in complaints under Section 138 N.I. Act - magistrate's satisfaction from documents in issuance of process - no mini-trial at quashing or summoning stage - presumptions under Section 118 and Section 139 of the Negotiable Instruments Act - inadmissibility of fresh evidence in exercise of Section 482 Cr.P.C.

Quashing of criminal proceedings under Section 482 Cr.P.C. - no mini-trial at quashing or summoning stage - Whether the summoning order dated 03.02.2018 and complaint under Section 138 N.I. Act are to be quashed. - HELD THAT: - Applying the settled principles governing exercise of inherent jurisdiction, the Court held that quashing is an extraordinary remedy to be exercised sparingly and that the High Court must not conduct a mini trial at the threshold. The learned Magistrate had perused the cheque, notice, affidavit and other documents accompanying the complaint and was satisfied that prima facie grounds existed to proceed. Taking the allegations and documents on record as they stood, the Court found no ground to interfere with the summoning order. The petition seeking quashment was therefore dismissed. [Paras 8, 12, 15, 33]

The petition for quashing is dismissed and the summoning order is upheld.

Inquiry under Section 202 Cr.P.C. in complaints under Section 138 N.I. Act - magistrate's satisfaction from documents in issuance of process - Whether the learned Magistrate was obliged to conduct a mandatory oral inquiry under Section 202 Cr.P.C. before issuing process in the present Section 138 complaint. - HELD THAT: - Relying on the Supreme Court's exposition in In Re: Expeditious Trial of Cases under Section 138 (and subsequent authorities), the Court held that where a magistrate exercises the inquiry function under Section 202 he may examine documents and affidavits and need not in every case record oral evidence; examination of witnesses on affidavit is permissible in Section 138 complaints and in suitable cases the Magistrate may satisfy himself from documents. The learned Magistrate's perusal of the cheque, notice, affidavit and annexures constituted sufficient compliance with Section 202 in the facts of this case. [Paras 13, 14, 15, 16]

Non recording of oral statements did not amount to non compliance with Section 202; the Magistrate lawfully proceeded on documents and affidavit evidence.

Magistrate's satisfaction from documents in issuance of process - no need for detailed reasons when issuing summons - Whether the learned Magistrate's order was vitiated for lack of detailed reasons while issuing summons. - HELD THAT: - The Court followed precedents which hold that there is no legal requirement for a Magistrate to record detailed reasons when issuing summons; the standard at the summons stage is one of prima facie satisfaction that there is sufficient ground to proceed, not an excavation of merits. The absence of an elaborately reasoned order did not render the summoning order bad. [Paras 17, 18]

The contention that the summons order was bad for want of detailed reasons is rejected.

Inadmissibility of fresh evidence in exercise of Section 482 Cr.P.C. - quashing of criminal proceedings under Section 482 Cr.P.C. - Whether documents and material produced with the petition (extraneous to the complaint) could be relied upon to quash the proceedings. - HELD THAT: - The Court reiterated the settled rule that in exercise of Section 482 the High Court is ordinarily confined to the complaint and documents filed therewith and cannot admit fresh evidence to convert the quashing petition into a full fledged trial. Materials not before the Magistrate cannot be relied upon to displace the prima facie case made out by the complaint and its annexures. [Paras 19, 21, 24, 25]

Extra record documents filed with the petition could not be considered and do not warrant quashing.

Presumptions under Section 118 and Section 139 of the Negotiable Instruments Act - Whether the presumption that a cheque was issued for consideration applies at the summoning stage. - HELD THAT: - The Court applied the statutory presumptions under Sections 118 and 139 of the N.I. Act and relevant Supreme Court authority, observing that once the factual basis for raising the presumption is established (e.g., issuance and presentation of the cheque and its dishonour), the Court must raise the presumption unless the drawer adduces evidence to rebut it on a preponderance of probabilities. At the threshold stage of summons, the accused cannot succeed merely by asserting lack of consideration. [Paras 27, 28, 29]

The contention that the cheque was issued without consideration is not tenable at the summoning stage in the face of the statutory presumptions.

Final Conclusion: The High Court dismissed the petition; the summons and complaint under Section 138 N.I. Act were not quashed, the Magistrate's procedure under Section 202 Cr.P.C. and reliance on documents before the court were held lawful, fresh evidence in the quashing petition was inadmissible, and statutory presumptions under Sections 118 and 139 N.I. Act operate at the threshold stage.

Regularization and renewal of loan facility - possession under SARFAESI framework - interim relief pending adjudication before a specialized tribunal - prosecution of applications before the Debts Recovery Tribunal - applicability of MSME revival and rehabilitation framework

Prosecution of applications before the Debts Recovery Tribunal - regularization and renewal of loan facility - Writ petition disposed directing the petitioner to prosecute the pending application before the Debts Recovery Tribunal-II, Ernakulam. - HELD THAT: - The High Court observed that the petitioner had an extant application (I.A.No.3841 of 2023 in S.A.No.668 of 2023) awaiting hearing before the Debts Recovery Tribunal-II, Ernakulam. In the circumstances of the case, the Court concluded that it was just and proper for the petitioner to pursue his claims before the Tribunal and accordingly disposed of the writ petition by permitting prosecution of the said application before the Tribunal. The Court thereby declined to continue adjudication of the substantive dispute in the writ jurisdiction and directed the petitioner to proceed before the specialized forum vested with debt-recovery jurisdiction.

Writ petition disposed permitting the petitioner to prosecute I.A.No.3841 of 2023 in S.A.No.668 of 2023 before the Debts Recovery Tribunal-II, Ernakulam.

Interim relief pending adjudication before a specialized tribunal - possession under SARFAESI framework - applicability of MSME revival and rehabilitation framework - Earlier interim order in the writ petition to remain in force until 01.02.2024. - HELD THAT: - On admission the Court had granted an interim stay on further proceedings against the petitioner subject to a condition of deposit. Noting that the deposit was eventually remitted and that the Tribunal listing was imminent, the Court directed that the interim order passed in the writ petition would continue to enure to the petitioner's benefit only up to 01.02.2024, thereby preserving the status quo for a limited period to enable the petitioner to pursue the remedy before the Debts Recovery Tribunal.

The interim order dated 09.11.2023 shall continue to enure to the benefit of the petitioner till 01.02.2024.

Final Conclusion: The writ petition is disposed of by directing prosecution of the pending application before the Debts Recovery Tribunal-II, Ernakulam; the interim stay granted earlier is continued only until 01.02.2024 to enable the petitioner to pursue his remedy before the Tribunal.