TaxTMI Updates e-Newsletter
Jul 31,2021

Corrigendum - Typographical error - Authorized representative - Advance ruling

Corrigendum - Typographical error - Authorized representative - Correction of the name of the authorized representative in paragraphs 4.1 and 4.2 of the Advance Ruling order dated 13.07.2021. - HELD THAT: - The Authority has examined the impugned Advance Ruling Order No. GST-ARA-113/2019-20/B-29 dated 13.07.2021 and the communication from the applicant pointing out a typographical error in the hearing record. The error consists of an incorrect name for the authorized representative appearing in para Nos. 4.1 and 4.2. On perusal, the Authority is satisfied that the mistake is typographical and requires correction. The corrigendum is issued to replace the incorrectly recorded name with the correct name in the specified paragraphs. The corrected text of para Nos. 4.1 and 4.2 is supplied in the corrigendum and shall be read in place of the earlier text. [Paras 4]

A corrigendum is issued to correct the typographical error: para Nos. 4.1 and 4.2 of the Advance Ruling order dated 13.07.2021 shall be read with the authorized representative named as Mrs. Akbinder Kaur Saini.

Final Conclusion: The Advance Ruling order dated 13.07.2021 is corrected by corrigendum to substitute the name of the authorized representative in paragraphs 4.1 and 4.2 with Mrs. Akbinder Kaur Saini; no other aspects of the order are altered.

Purified water - taxability of waters under Entry No. 24 of Notification No. 1/2017 (Rate) - exemption for water other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de mineralized and water sold in sealed container under Notification No. 02/2017 (Rate) (Entry No. 99) - application of ejusdem generis in construing schedule entries - GST rate of 18% on taxable waters

Purified water - exemption for water other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de mineralized and water sold in sealed container under Notification No. 02/2017 (Rate) (Entry No. 99) - Tertiary Treated Water (TTW) supplied by the applicant is not exempt as 'water' under Entry No. 99 of Notification No. 02/2017 (Rate). - HELD THAT: - The Authority examined the treatment processes applied to sewage and the tested outlet parameters and found that the sewage undergoes processes that remove contaminants rendering the output a purified sewage water described as 'Tertiary Treated Water'. Entry No. 99 of Notification No. 02/2017 exempts only simple/natural water and expressly excludes categories including 'purified' water. Consequently the impugned TTW, being purified sewage water and not simple natural water, does not fall within the exemption of Entry No. 99. The applicant's reliance on ejusdem generis construction was considered but not accepted as the statutory entries and their language indicate that 'purified' waters were intended to be excluded from the exemption entry. [Paras 5]

TTW is not covered by the exemption in Entry No. 99 and is therefore taxable.

Taxability of waters under Entry No. 24 of Notification No. 1/2017 (Rate) - GST rate of 18% on taxable waters - TTW is taxable under Entry No. 24 of Notification No. 1/2017 (Rate) and liable to GST at the combined rate of 18% (9% CGST and 9% SGST) / IGST. - HELD THAT: - Having held that the product is 'purified water' and excluded from the exemption entry, the Authority examined Entry No. 24 of Notification No. 1/2017 (as amended) which covers 'waters' including various categories such as mineral and aerated waters. The amended schedules distinguish drinking water in specified packaging but otherwise bring various types of waters within the rate entry. The TTW supplied for industrial use does not fall within the special drinking water packaging entry and accordingly falls under Entry No. 24. Applying the schedule as amended, the Authority concluded that TTW is taxable at the combined rate of 18% (9% CGST + 9% SGST) / IGST. [Paras 5]

TTW is liable to GST at 18% (9% CGST and 9% SGST) / IGST under Entry No. 24.

Final Conclusion: The Authority rules that the Tertiary Treated Water supplied by the applicant is purified water not covered by the exemption in Entry No. 99 of Notification No. 02/2017 (Rate) and is taxable under Entry No. 24 of Notification No. 1/2017 (Rate) (as amended) at a combined rate of 18% (9% CGST and 9% SGST) / IGST.

Seizure and detention of goods - Provisional release of detained goods - Show cause notice and adjudication - Bank guarantee and security bond for provisional release - Alternative remedy before the assessing authority

Seizure and detention of goods - Provisional release of detained goods - Whether the ambulances detained at the check post ought to remain detained pending adjudication or be provisionally released. - HELD THAT: - The Court noted the petitioner's primary defence that the vehicles were bought for the petitioner's own use to run an ambulance service and not for resale, and that applicable taxes on the inter-State movement had been paid. While the respondent pointed to the existence of statutory show cause notices and available departmental remedies, the Court found it inappropriate to continue detention of the vehicles pending final assessment. Observing that the tax authorities possess power to provisionally release detained goods, the Court directed conditional provisional release to balance the petitioner's commercial interest and the State's revenue concern. The Court required satisfactory financial security in the form of an unconditional bank guarantee for a portion of the potential liability and a bond for the remainder before release.

Vehicles to be released pending assessment on furnishing an unconditional bank guarantee for 25% of possible tax and penalties and a bond for the remaining 75%.

Show cause notice and adjudication - Alternative remedy before the assessing authority - Whether the petitioner must be relegated to departmental proceedings or the Court should grant relief without remitting the matter. - HELD THAT: - The Court observed that the respondent had issued show cause notices dated 21st July 2021 for recovery of unpaid taxes with penalties and that the petitioner had not yet replied. Rather than foreclosing judicial relief, the Court directed the petitioner to avail the departmental remedy by filing replies to the show cause notices within a specified time. The Court left the assessment to the Assessing Officer to be completed in accordance with law after considering the petitioner's replies and permitted personal hearing for the petitioner's authorised representative if requested. By doing so, the Court did not decide the merits of tax liability but remitted the adjudicatory exercise to the assessing authority for fresh consideration.

Petitioner to file replies to the show cause notices; Assessing Officer to decide the notices in accordance with law after considering replies and, if requested, grant personal hearing.

Final Conclusion: Petitions disposed of by directing the petitioner to reply to the show cause notices within the time fixed and by ordering provisional release of the detained ambulances on specified security (25% unconditional bank guarantee and bond for remaining 75%), with the Assessing Officer to adjudicate the show cause notices in accordance with law after considering the petitioner's replies.

Time bar for refund claims under Section 54 of the CGST Act, 2017 - relevant date for limitation in refund matters - availability of remedy by adjustment under Section 34(2) and Section 39(9) of the CGST Act, 2017 - inapplicability of general limitation statutes where statute provides specific relevant date - effect of notifications extending limitation period

Time bar for refund claims under Section 54 of the CGST Act, 2017 - relevant date for limitation in refund matters - inapplicability of general limitation statutes where statute provides specific relevant date - Whether the refund application filed on 15-05-2020 for excess tax paid in the period July, 2017 to March, 2018 is time barred under Section 54 of the CGST Act, 2017. - HELD THAT: - The adjudicating authority found, and this Authority concurs, that Section 54 prescribes the time limit to file a refund application - namely, within two years from the relevant date as defined in Section 54(14). The appellant's contention that the limitation should be reckoned from the date of filing the annual return (5-12-2019) or by invoking the Limitation Act was rejected because the CGST Act furnishes an express definition of "relevant date" for refund claims and where a statute provides the relevant date, recourse to other general limitation laws or inferences from earlier enactments is unnecessary and impermissible. The record shows the appellant did not avail the statutory alternative remedy of adjustment under Section 34(2) / Section 39(9) during the prescribed period and the refund application filed on 15-05-2020, in relation to the stated months of 2017-18, is beyond two years from the applicable relevant date. The claim is therefore time barred and not maintainable. [Paras 7, 9]

Refund application for the period July, 2017 to March, 2018 is time barred under Section 54 and the appeal on this ground is dismissed.

Effect of notifications extending limitation period - proof of date of payment for temporal benefit under notification - Whether the appellant's contention that the time limit for refund was extended by Notification No. 35/2020 (as amended) saves the refund claim for February-March, 2018. - HELD THAT: - The appellant relied on notifications extending the time limit for filings. The Authority observed that the appellant failed to specify dates of payment or disputed amounts for February and March 2018 in the additional submissions and did not demonstrate that those months fell within any extended limitation period relied upon. On the available record and submissions, the notification did not operate to render the claim maintainable and the limitation bar remained effective in respect of the refund claim. [Paras 8, 9]

The plea based on extension notifications does not procure relief; the refund claim for the months in question remains time barred.

Final Conclusion: The appeal is dismissed: the refund application filed on 15-05-2020 for excess tax paid in July, 2017 to March, 2018 is barred by time under Section 54 of the CGST Act, 2017, and the contention based on notifications extending limitation does not avail the appellant.

Time bar under Section 54 (relevant date for refund) - substitution of clause (e) of Explanation 2 to Section 54(14) - effect of amendment - computation of admissible refund under Rule 89(5) of the CGST Rules, 2017 - principles of natural justice (audi alteram partem and speaking orders) - extension of due date by notification for filing refund

Time bar under Section 54 (relevant date for refund) - substitution of clause (e) of Explanation 2 to Section 54(14) - effect of amendment - Application for refund for the period July, 2017 to February, 2018 is time barred under Section 54 of the CGST Act, 2017 as amended. - HELD THAT: - The substituted text of clause (e) of Explanation 2 to Section 54(14) prescribes the due date as the due date for furnishing of return under section 39 for the period in which the claim for refund arises. Substitution obliterated the earlier provision and the amended clause governs applications filed after amendment. Applying the substituted clause, the due date for refund for the period July, 2017 to February, 2018 expired prior to the filing of the application on 13-6-2020; hence that portion of the claim is time barred. The notifications extending due dates were considered and, on the statutory matrix, the application for July-February fell outside the permitted filing period while March 2018 was within the extended time limit. [Paras 7]

Refund claim for July, 2017 to February, 2018 is time barred and is not admissible.

Computation of admissible refund under Rule 89(5) of the CGST Rules, 2017 - Refund claim for the tax period March, 2018 is inadmissible as the computation under Rule 89(5) results in a negative/ non-admissible amount. - HELD THAT: - The adjudicating authority applied the formula in Rule 89(5) of the CGST Rules, 2017 to the returns and figures for March, 2018 and found that the admissible refund worked out to a negative amount; on that basis the authority rejected the refund for March, 2018. The appellate authority examined the record and endorsed the application of Rule 89(5) and the conclusion that no refund was admissible for March, 2018. [Paras 8]

Refund claim for March, 2018 is inadmissible as determined under Rule 89(5).

Principles of natural justice (audi alteram partem and speaking orders) - Adjudicating authority complied with principles of natural justice in issuing the show cause notice and providing opportunity for hearing. - HELD THAT: - The adjudicating authority issued FORM RFD-08 show cause notice, allowed opportunity for personal hearing and replied to appellant's communications. The appellant did not attend the stipulated hearing date nor file a reply before the adjudicating authority; the appellate authority found that the procedure envisaged by Rule 92(3) and the requirement of an opportunity to be heard were satisfied. Consequently, there was no breach of natural justice warranting interference. [Paras 9]

No violation of principles of natural justice is made out; the procedure was followed.

Final Conclusion: The appeal is rejected. The refund claim for July, 2017 to February, 2018 is time barred; the claim for March, 2018 is inadmissible on application of Rule 89(5); and no breach of natural justice was found in the proceedings.

Communication/service of notice on Common Portal - opportunity of hearing / principles of natural justice - consideration of reply and documentary submissions before adjudication - requirement of a speaking order - remand for de novo adjudication

Communication/service of notice on Common Portal - opportunity of hearing / principles of natural justice - Whether the show cause notice (RFD-08) and final order (RFD-06) were effectively communicated and whether the appellant was afforded an opportunity of hearing. - HELD THAT: - The appellate authority found that the show cause notice issued on 19-2-2020 was reflected only by its number on the Common Portal and could not be downloaded by the appellant, and that the appellant received only an email intimation of issuance of the sanction order without the order itself being made available. The authority recorded that, as a result, the appellant was not given an effective service of the notice nor an opportunity to put forward submissions in a manner contemplated by the statute and allied rules, and that principles of natural justice (including provisions requiring opportunity of hearing and recording reasons) were not complied with. Having reached this conclusion, the authority remanded the matter for fresh consideration with directions to afford personal hearing and to verify the appellant's averments regarding communication and hearing. [Paras 5, 6, 7, 8]

Findings on defective communication and failure to afford opportunity of hearing; matter remanded to the Proper Officer to verify the appellant's averments, afford personal hearing and decide afresh.

Consideration of reply and documentary submissions before adjudication - requirement of a speaking order - remand for de novo adjudication - Whether the Proper Officer considered the appellant's reply (GST RFD-09) and the DRC-03 filed, and whether the refund order recorded reasons and considered submissions. - HELD THAT: - The appellate authority observed that although the appellant filed a reply on the portal and submitted DRC-03 to debit the amount as per the prescribed procedure, the Proper Officer did not consider these submissions nor record satisfaction or reasons in the order. Reliance was placed on statutory provisions and rules requiring that a refund not be rejected without giving opportunity of hearing and that the officer's order set out relevant facts and basis of decision. Given the absence of consideration and absence of a speaking order, the authority directed that the Proper Officer examine the appellant's submissions, give an opportunity of personal hearing, record reasons in a speaking order and decide the refund claim de novo. [Paras 5, 7, 8]

Findings that the appellant's reply and DRC-03 were not considered and that the order lacked recorded reasons; matter remanded for verification, consideration of the submissions, grant of personal hearing and passing of a speaking order disposing the refund claim afresh.

Final Conclusion: Appeal disposed by remanding the matter to the Proper Officer with directions to verify the appellant's contentions regarding defective service, to consider the replies and DRC-03, to afford personal hearing, and to pass a reasoned speaking order deciding the refund claim de novo in accordance with the principles of natural justice.

Mandatory nature of Section 144C(1) - jurisdictional error vis-a -vis mere procedural irregularity - right of eligible assessee to raise objections before the Dispute Resolution Panel - binding effect of directions issued by the Dispute Resolution Panel under Section 144C(5) and (10) - non-obstante character of Section 144C - inapplicability of Section 292B to cure incurable illegality

Mandatory nature of Section 144C(1) - non-obstante character of Section 144C - Provisions of Section 144C(1) of the Income Tax Act are mandatory and not merely directory. - HELD THAT: - The Court examined Section 144C as a non-obstante provision which mandates that where an Assessing Officer proposes a variation prejudicial to an eligible assessee arising out of a Transfer Pricing Officer's order, the Assessing Officer must first forward a draft assessment order to the assessee. The statutory scheme grants the assessee a substantive right to file objections before the Dispute Resolution Panel (DRP) and contemplates DRP directions to guide completion of assessment. Precedents of other High Courts and this Court's analysis confirm that the procedure is not a mere formality but integral to the statutory scheme and its protective purpose for eligible assessees. Consequently the omission to pass and furnish the draft order in such cases breaches a mandatory statutory requirement. [Paras 19, 25, 26]

Section 144C(1) is mandatory; the Assessing Officer was obliged to pass and forward a draft assessment order before passing a final order where a prejudicial variation was proposed.

Jurisdictional error vis-a -vis mere procedural irregularity - right of eligible assessee to raise objections before the Dispute Resolution Panel - inapplicability of Section 292B to cure incurable illegality - binding effect of directions issued by the Dispute Resolution Panel under Section 144C(5) and (10) - Failure to comply with Section 144C(1) constitutes a jurisdictional error rendering the assessment order void ab initio and not curable under Section 292B. - HELD THAT: - Applying the mandatory character of Section 144C, the Court held that omission by the Assessing Officer to pass and furnish the draft order deprived the eligible assessee of the statutory right to object before the DRP, thereby striking at the root of the assessment process. The Court rejected revenue's contention that the lapse was a rectifiable procedural mistake, noting the statutory scheme makes DRP directions binding and that Section 292B cannot be read so as to confer jurisdiction where none exists. The Court distinguished authorities relied upon by the Revenue as not on point and emphasised that where the power to pass the order is wanting, the defect is incurable. [Paras 25, 27, 28]

The assessment order, notice of demand and penalty notice dated 6th April, 2021 are vitiated for lack of jurisdiction and are set aside as void ab initio.

Final Conclusion: Writ petition allowed; the assessment order, demand notice and penalty notice dated 6th April, 2021 for Assessment Year 2017-2018 are quashed and set aside for failure to comply with the mandatory procedure under Section 144C(1), with no order as to costs.

Limitation under Section 153(2) - Explanation 1(ii) to Section 153 - reckoning of exclusion period during court stay - official communication by signed and sealed copy as triggering date - effect of filing appeal/SLP on departmental proceedings - natural justice and procedural opportunity

Limitation under Section 153(2) - Explanation 1(ii) to Section 153 - reckoning of exclusion period during court stay - official communication by signed and sealed copy as triggering date - Whether the reassessment orders dated 21.10.2014 were barred by limitation because the period of exclusion under Explanation 1(ii) should be reckoned from the date the interim stay was vacated in open court rather than from the date on which a signed and sealed copy was officially communicated to the department. - HELD THAT: - The Court construed Explanation 1(ii) to Section 153 to exclude the period during which assessment proceedings are stayed by an order or injunction of a court, but held that the competent authority may act only upon official communication of the order. Mere vacatur pronounced in open court or knowledge of the counsels does not suffice for reckoning the restart of limitation; the order must be signed, sealed and communicated to the department (or the copy made ready) before the period is to be treated as having restarted. The Court relied on precedent that the date of pronouncement alone is not the triggering date and emphasised the administrative necessity of an official communication so that authorities act on authenticated orders; without such official communication the department cannot be expected to proceed and cannot treat unverified information from counsels as effective for limitation reckoning. Applying this principle to the facts, the Court found no infirmity in the department's reckoning of limitation and held that the reassessment orders dated 21.10.2014 were within the period permitted after accounting for official communication. [Paras 21, 22, 24, 25]

Reassessment orders of 21.10.2014 are not barred by limitation because limitation restarts only upon official communication of the vacatur (signed/sealed copy or copy made ready), and the department acted within the permitted period.

Effect of filing appeal/SLP on departmental proceedings - natural justice and procedural opportunity - Whether principles of natural justice were violated by the department proceeding with reassessment notwithstanding the petitioner's filing of an SLP and request that proceedings be stayed until the Supreme Court decided the appeal. - HELD THAT: - The Court observed that mere filing of an appeal or SLP, or a request that the department await adjudication by a higher forum, does not automatically bar the authorities from exercising statutory powers unless an interim order to that effect is communicated to them. The petitioner had been given opportunity to file replies and had not obtained any interim stay communicated to the department prior to reassessment. The Court held that the petitioner's request to the department to refrain from acting did not create a legal impediment and that opportunities afforded were not misused such as to establish a breach of natural justice. [Paras 26, 27]

No violation of principles of natural justice; departmental proceedings could lawfully continue in the absence of an interim order communicated to the authorities.

Final Conclusion: Writ petitions dismissed: the High Court held that limitation under Section 153 is to be reckoned from official communication (signed/sealed copy or copy made ready) of vacation of stay, not merely from oral pronouncement or counsel's knowledge, and that filing an appeal/SLP without an interim order does not preclude the department from proceeding; the reassessment orders dated 21.10.2014 were therefore sustainable and no breach of natural justice was made out.

Section 148 notice to non-existing person - curative provision under Section 292B - succession to business under Section 170 - reopening of assessment and validity of proceedings - availability of statutory appellate remedies

Section 148 notice to non-existing person - reopening of assessment and validity of proceedings - curative provision under Section 292B - Validity of the notice issued under Section 148 which was addressed to an incorrectly named / non existing company and consequent validity of reassessment proceedings. - HELD THAT: - The court examined whether the misnaming in the Section 148 notice vitiated jurisdiction. It found that the impugned notice, though addressed as to 'M/s. Sesa Sterlite Industries (India) Limited', involved a bona fide clerical error closely related to the assessee's actual names used over time. The Permanent Account Number (PAN) throughout was correctly quoted, the petitioner had been informed of the amalgamation earlier, responded to departmental communications and engaged in the proceedings, and the department issued corrigenda and proceeded to assess in the correct name. Applying the purpose and intent of the Act and the curative scope of Section 292B, the Court held that where the notice in substance and effect conforms to the Act's intent and is issued to the person actually intended (as evidenced by correct PAN and participation), the misnomer was a curable mistake and did not invalidate the reopening or subsequent assessment. [Paras 9, 10, 11, 13, 14]

The misnaming in the Section 148 notice was a curable error within the ambit of Section 292B; the reassessment proceedings and final assessment are not vitiated on that ground.

Succession to business under Section 170 - Section 148 notice to non-existing person - Whether Section 170 (succession to business) required the notice to be treated as invalid or precluded curability under the facts of the case. - HELD THAT: - The Court considered the submissions invoking Section 170, which deals with succession to business, and the contention that liability shifts and therefore notice to the erstwhile entity could not be cured. Having regard to the factual matrix - prior intimation of amalgamation, the correct PAN being used, corrigenda issued and continuation of assessment in the petitioner's name - the Court observed that Section 170 does not operate to render the departmental rectification and continued proceedings incompetent in these circumstances. The court treated Section 170 and its applicability as fact-sensitive and held that on the facts before it the doctrine of succession did not render the notice incurably invalid. [Paras 7, 9, 13]

Section 170 did not preclude application of the curative approach; succession did not render the notice and proceedings invalid on the facts of this case.

Availability of statutory appellate remedies - reopening of assessment and validity of proceedings - Maintainability of the writ petition challenging the reassessment after completion of the final assessment order. - HELD THAT: - The Court noted that the final assessment order had been passed and that statutory appellate remedies were available under the Income Tax Act. Given the Court's conclusion that the initial misnomer was curable and that the reassessment proceeded following correction and afforded the petitioner opportunity to be heard, the appropriate remedy for any grievance arising from assessment lies in the statutory appeals. Consequently, in the circumstances, interference by writ was declined. [Paras 14]

Writ petition dismissed; petitioner is directed to pursue remedies by way of appeal as provided under the Act.

Final Conclusion: The writ petition challenging the Section 148 notice and consequent reassessment is dismissed: the misnaming in the notice was a curable clerical error fitting within the scope of Section 292B given the correct PAN, participation and departmental corrigenda; Section 170 did not render the proceedings incurably void on these facts; and the petitioner must seek redress through statutory appellate remedies.

Revised return - scheme of amalgamation effective date - judicially sanctioned scheme binding on authorities - consideration of revised returns in terms of court-sanctioned scheme - appellate remedy under the Income Tax Act - limit of writ jurisdiction under Article 226 - assessment order appealable - fact-finding by competent appellate authority

Consideration of revised returns in terms of court-sanctioned scheme - judicially sanctioned scheme binding on authorities - Whether the Assessing Officer violated the High Court's and ITAT's directions by rejecting the claims made in the assessee's revised returns filed pursuant to the sanctioned scheme. - HELD THAT: - The High Court held that its order directing the Revenue to consider the returns filed in terms of the scheme (effective from 01.01.2004) required the competent authorities to consider the returns and the documents in their real letter and spirit, but did not preclude the Assessing Officer from examining original documents and evidence. The Court examined the impugned assessment order and noted the Assessing Officer's finding (recorded in paragraph 9 of the impugned order) that the High Court had fixed the appointed date as 01.01.2004 but had not permitted claims for earlier years; the AO therefore treated the claims as lacking sanction of law for the earlier periods and computed total income accordingly. The Court concluded that the AO had considered the High Court's orders and reached a view on the merits after examining the records, and that this did not amount to disobedience of the High Court or ITAT directions. [Paras 19, 21, 23]

The Assessing Officer did not contravene the High Court's or the ITAT's directions in rejecting the claimed deductions; he was entitled to consider documents and evidence and reach a contrary view.

Revised return - scheme of amalgamation effective date - Whether the High Court's direction obliged the Revenue to accept the revised returns filed by the assessee without further enquiry or scrutiny. - HELD THAT: - The Court clarified that its earlier direction was to consider the returns filed in terms of the sanctioned scheme effective from 01.01.2004, and was not an adjudication accepting the factual merits of the claims. The observations made by the High Court in earlier proceedings were treated as guidelines; competent authorities remain obliged to consider original documents and evidences and to conduct assessment in accordance with law. Acceptance of the revised returns without adjudication would deny the Revenue its opportunity to examine records and deny either party proper adjudication; hence the direction did not amount to mandating automatic acceptance of the revised returns. [Paras 22, 23, 24]

The High Court's direction required consideration of the revised returns in terms of the scheme but did not compel the Revenue to accept them without inquiry.

Appellate remedy under the Income Tax Act - limit of writ jurisdiction under Article 226 - fact-finding by competent appellate authority - Whether writ petitions challenging assessment orders are maintainable without first exhausting the statutory appellate remedy under the Income Tax Act. - HELD THAT: - The Court held that assessment orders are appealable and that adjudication of disputed facts and technical tax issues must ordinarily be conducted by the statutory appellate authorities. The power of judicial review under Article 226 is to scrutinize the decision-making process and ensure conformity with law, not to re-adjudge disputed facts on affidavits and photocopies. Given the technical nature of income-tax assessments and the legislative design to provide an appellate remedy, the petitioners must first exhaust the prescribed appeal process; writ jurisdiction cannot routinely be used to bypass that remedy. [Paras 5, 24, 25, 26, 27]

Writ petitions challenging the assessment orders are not maintainable in the absence of exhaustion of the statutory appellate remedy; the assessee must prefer an appeal under the Act.

Final Conclusion: The writ petitions are dismissed: the High Court's earlier order directed Revenue to consider the revised returns in terms of the sanctioned scheme but did not mandate automatic acceptance; the Assessing Officer lawfully examined documents and reached a contrary view; the assessee must pursue the statutory appeals under the Income Tax Act and exhaust appellate remedies before invoking writ jurisdiction.

Ascertained business liability - contingent liability - remand for fresh consideration - section 14A read with Rule 8D disallowance - fund-flow proof to rebut section 14A - computation under section 115JB - validity of reopening under section 148 after proceedings under section 154

Ascertained business liability - contingent liability - remand for fresh consideration - Allowability of provision for ex-gratia payment claimed in the relevant assessment years - HELD THAT: - The Tribunal held that whether the provision for ex-gratia constitutes an ascertained business liability (and therefore deductible) or a contingent/unascertained liability requires factual and documentary verification in light of the principle in Bharat Earth Movers (that a business liability incurred in the accounting year is deductible if its existence and quantum can be ascertained with reasonable certainty). The assessee produced quantification and an approving order dated 31.03.2010 and the Tribunal noted that the actual payment of a substantial part was made on 06.04.2010; nevertheless, the Tribunal directed remand to the Assessing Officer to examine and verify the basis, the Rules/Policy under which ex-gratia is payable, and the materials relied upon by the assessee to quantify the liability, affording the assessee an opportunity of being heard. The same remand direction was applied to the identical issue in the other assessment year. [Paras 5, 19]

Issue remanded to the AO for fresh consideration to determine whether the liability was an ascertained business liability in accordance with the principles in Bharat Earth Movers; appeals treated as allowed for statistical purposes to this extent.

Section 14A read with Rule 8D disallowance - fund-flow proof to rebut section 14A - Validity and quantum of disallowance under section 14A read with Rule 8D for exempt dividend income - HELD THAT: - The Tribunal upheld the Revenue's invocation of section 14A read with Rule 8D(2)(ii) and 8D(2)(iii). The Assessing Officer found investments were made from a common pool (current accounts) and the assessee failed to furnish a fund-flow breakdown or other evidence to establish that borrowed funds were not used for tax-exempt investments. The Tribunal accepted the CIT(A)'s conclusion that, absent satisfactory records showing source and application of funds, proportionate indirect interest and the 0.5% computation under Rule 8D(iii) were properly applied. The Tribunal observed that the assessee must establish by necessary fund-flow statements that interest-bearing borrowed funds were not utilized for such investments; lacking that, the disallowance stands. The identical conclusion was applied to both AY 2009-10 and AY 2010-11. [Paras 11, 15]

Disallowance under section 14A read with Rule 8D(2)(ii) and 8D(2)(iii) upheld; relevant grounds dismissed.

Computation under section 115JB - Challenge to computation of tax under section 115JB - HELD THAT: - The Tribunal held that computation of income under section 115JB is automatic where the statutory conditions are satisfied. The assessee did not demonstrate any breach of the statutory provisions or any violation of principles of natural justice in the computation. Consequently, the grounds challenging the computation and the alleged absence of a show-cause notice were rejected. [Paras 17]

Grounds challenging computation under section 115JB dismissed.

Validity of reopening under section 148 after proceedings under section 154 - Validity of issuance of notice under section 148 after initiation of proceedings under section 154 - HELD THAT: - The Tribunal agreed with the CIT(A) that sections 154 and 148 serve different statutory purposes. The fact that the Assessing Officer had issued and dealt with a section 154 matter did not preclude initiation of reassessment proceedings under section 148 where the conditions for belief of escapement of income were satisfied. The Tribunal therefore rejected the assessee's contention that initiation of section 148 proceedings was invalid by reason of prior section 154 action. [Paras 20]

Proceedings under section 148 held valid notwithstanding earlier section 154 action.

Final Conclusion: The Tribunal remitted the question of deductibility of the ex-gratia provisions to the Assessing Officer for fresh consideration (both AY 2009-10 and AY 2010-11) to determine whether the liability was an ascertained business liability; disallowances under section 14A read with Rule 8D were upheld for both years; challenges to computation under section 115JB were dismissed; and reassessment proceedings under section 148 after section 154 were held valid. ITA Nos.971 and 1925 partly allowed for statistical purposes; ITA No.972 dismissed.

Revisional jurisdiction under section 263 - reassessment under section 147 - scope of reassessment and Explanation 3 to section 147 - doctrine of merger in reassessment context - limitation under section 263(2) - claim of deduction under section 80IA as subject-matter of original assessment

Revisional jurisdiction under section 263 - reassessment under section 147 - limitation under section 263(2) - Validity of Commissioner's revision under section 263 of the order passed under section 143(3) r.w.s. 147 - HELD THAT: - The Tribunal held that the PCIT purported to revise the assessment order passed under section 143(3) r.w.s. 147. Section 263(2) prescribes a two-year limitation running from the end of the financial year in which the order sought to be revised was passed. The time for revising the original assessment (the order passed under section 143(3) r.w.s. 144C(13)) had expired, whereas the period for revising the reassessment order under section 143(3) r.w.s. 147 was still live. The PCIT, however, sought to evade the bar of limitation by treating the reassessment order as the order to be revised. Applying the principles in CIT v. Alagendran Finance Ltd. and subsequent High Court authorities, the Tribunal concluded that where reassessment is confined to specific escaped income, issues which formed part of the original assessment but did not form part of the reassessment cannot be revised under section 263 with limitation computed from the reassessment. Accordingly, the exercise of revisional jurisdiction in this case was impermissible and the impugned order under section 263 was unsustainable. [Paras 8, 9, 16, 19, 20]

Impugned order under section 263 revising the order passed under section 143(3) r.w.s. 147 is quashed.

Claim of deduction under section 80IA as subject-matter of original assessment - scope of reassessment and Explanation 3 to section 147 - doctrine of merger in reassessment context - Whether the issue of deduction under section 80IA was within scope of reassessment proceedings or part of the original assessment for limitation purposes - HELD THAT: - On the facts, the reasons recorded for reopening under section 147 expressly related to alleged escapement of expenditure on furniture and tools; neither the reasons nor the reassessment proceedings show that the section 80IA deduction was a matter reopened or that it came to the assessing officer's notice during reassessment. The Tribunal analysed section 147 and Explanation 3, observing that while an assessing officer may assess other income that subsequently comes to his notice in reassessment proceedings, that provision does not permit reassessment of matters which were already the subject of the original assessment and are pending appeal. The Tribunal applied the Supreme Court's decision in Alagendran Finance and the jurisdictional High Court's reasoning in A soka Buildcon to hold that the section 80IA claim was dealt with in the original assessment and remains part of that original order; it therefore could not be treated as within the scope of the reassessment for the purpose of computing limitation under section 263(2). [Paras 10, 11, 12, 13, 19]

Deduction under section 80IA was a subject-matter of the original assessment (and pending appeal) and not part of the reassessment; limitation for revisional action runs from the original assessment.

Final Conclusion: The Tribunal allowed the appeal, quashing the PCIT's order under section 263 which sought to revise the reassessment under section 143(3) r.w.s. 147; the claim under section 80IA was held to be part of the original assessment (pending appeal) and the revisional exercise was barred by limitation.

Addition in proceedings under Section 153A read with Section 143(3) in absence of incriminating material seized during search - reliance on statement recorded during search as sole basis for post search additions - long term capital gains already recorded in books of account - inadmissibility of post search presumption and surmise without material evidence

Addition in proceedings under Section 153A read with Section 143(3) in absence of incriminating material seized during search - inadmissibility of post search presumption and surmise without material evidence - Validity of the addition made under proceedings framed u/s 153A read with section 143(3) when no incriminating material was found during the search - HELD THAT: - The Tribunal held that where search proceedings did not yield any incriminating material, additions in assessments completed under Section 153A read with Section 143(3) cannot be sustained if they rest solely on post search inquiries or presumptions. The CIT(A) had deleted the addition after examining records and transactions, and the Tribunal followed the ratio of the jurisdictional High Court in CIT v. Kabul Chawla to hold that, in the absence of seized incriminating material, the Assessing Officer cannot make additions merely on post search inquiries. Coordinate decisions in related matters arising from the same search were relied upon and were unchallenged in substance before the Tribunal and the High Court. [Paras 8, 9]

Addition deleted; assessment framed under Section 153A/143(3) cannot be sustained in absence of incriminating material found on search.

Reliance on statement recorded during search as sole basis for post search additions - long term capital gains already recorded in books of account - Sustainability of addition disallowing claimed long term capital gains where gains were recorded in books and the only adverse material was an oral statement - HELD THAT: - The Tribunal found that the capital gains from sale of shares were recorded in the assessee's books and corresponding receipts were reflected in bank statements. The Assessing Officer's addition was premised primarily on the statement of the assessee (or related person) recorded during search and on post search inquiries. The Tribunal agreed with the CIT(A) that additions founded on the sole statement without any corroborative incriminating material seized during search amounted to presumptions and surmisal not supported by evidentiary material, and therefore were not sustainable. Prior appellate and High Court decisions involving the same group and identical facts were applied. [Paras 7, 11]

Addition made by AO disallowing long term capital gains deleted for want of corroborative incriminating material and because transactions were recorded in books.

Final Conclusion: Following the decisions in connected appeals and the jurisdictional High Court authority that additions under Section 153A/143(3) cannot be sustained in absence of incriminating material seized on search, the Tribunal dismissed the revenue's appeal and upheld deletion of the addition made in relation to long term capital gains.

Classification of payments as fees for technical services vis-a -vis section 194J - tax deduction at source under section 194C as works contract - assessee in default and consequences under section 201(1) and 201(1A) - services provided without human intervention (automated/bandwidth supply) - precedential treatment of bandwidth supply agreements

Classification of payments as fees for technical services vis-a -vis section 194J - tax deduction at source under section 194C as works contract - services provided without human intervention (automated/bandwidth supply) - assessee in default and consequences under section 201(1) and 201(1A) - Payments made by the assessee for bulk purchase of bandwidth from service providers are not fees for technical services under section 194J but fall within the ambit of section 194C as works contract; therefore the assessee is not an assessee in default under sections 201(1) and 201(1A) for short deduction of TDS. - HELD THAT: - The Tribunal examined the colocation/master service agreements and the operational facts, noting that the suppliers provided specified bandwidth connectivity through optical fibre and related infrastructure and that distribution to end-customers was controlled by software without human intervention. On that factual and contractual basis the Tribunal held that the payments relate to supply of bandwidth (a transmission/service delivered through equipment and automated processes) rather than managerial, consultancy or technical services which would qualify as fees for technical services under the charging provision. The Tribunal placed reliance on earlier decisions dealing with identical issues, including the Tribunal's decision in M/s. Primenet Global Ltd. and High Court authorities such as CIT v. Estel Communications P. Ltd. and Skycell Communications Ltd. v. DCIT , which support the view that mere payment for bandwidth does not import renderings of technical services attracting section 194J. Applying that reasoning to the agreements and the nature of supply in the present case, the Tribunal concluded that the AO and the CIT(A) were incorrect in treating the payments as chargeable under section 194J and in holding the assessee to be in default under sections 201(1) and 201(1A). The Tribunal therefore set aside the impugned order and directed deletion of the additions and interest computed on the basis of alleged short deduction of TDS. [Paras 7, 8]

Order of the CIT(A) confirming default under sections 201(1) and 201(1A) read with section 194J is set aside; additions and interest computed for short deduction of TDS are deleted and the appeal is allowed.

Final Conclusion: On the facts and agreement between the parties, payments for bulk purchase of bandwidth supplied and distributed through automated systems do not constitute fees for technical services under section 194J but fall under section 194C as works contract; the Tribunal allowed the appeal and directed deletion of the TDS short-deduction additions and interest.

Treatment of supply of computer software as royalty under a DTAA - distinction between sale/use of software and royalty for copyright - permanent establishment and taxation as business income - precedent of the Hon'ble Supreme Court in Engineering Analysis Centre of Excellence (P) Ltd applied

Treatment of supply of computer software as royalty under a DTAA - distinction between sale/use of software and royalty for copyright - precedent of the Hon'ble Supreme Court in Engineering Analysis Centre of Excellence (P) Ltd applied - Supply of standard computer software by a non-resident to an Indian customer is not taxable in India as royalty under the India-Sweden DTAA where the user only receives a right to use and the supplier retains ownership and intellectual property rights. - HELD THAT: - The Tribunal considered whether receipts from supply of software constituted 'royalty' taxable under the DTAA or were in the nature of a sale/use not attracting royalty treatment. The Assessing Officer had treated the software consideration as royalty. The Tribunal followed the ratio of the Hon'ble Supreme Court in Engineering Analysis Centre of Excellence (P) Ltd , which held that amounts paid by resident Indian end-users/distributors to non-resident software suppliers under end-user license or distribution arrangements do not constitute payment of royalty for use of copyright in computer software and do not give rise to income taxable in India as royalty. Applying that precedent to the software license agreement in the present case - where the customer was given a non exclusive right to use the software for internal business purposes while the assessee retained ownership of the software and its source code and all intellectual property rights - the Tribunal upheld the CIT(A)'s conclusion that the receipts were not taxable as royalty under the DTAA. The Revenue's contention that unlimited, assignable, enterprise wide, perpetual rights were transferred was not accepted on the facts as found by the authorities and on the authority of the Supreme Court decision. The Tribunal therefore dismissed the grounds raised by the Revenue and sustained the deletion of the addition made by the Assessing Officer. [Paras 3, 6, 7]

The appeal is dismissed and the CIT(A)'s deletion of the addition is upheld.

Final Conclusion: Following the Supreme Court precedent in Engineering Analysis Centre of Excellence (P) Ltd , the Tribunal held that the receipts for supply/use of the software were not taxable as royalty under the India-Sweden DTAA; the revenue's appeal is dismissed and the addition deleted.

Penalty under section 271(1)(c) - Concealment of income - Furnishing inaccurate particulars of income - Ad-hoc/estimation additions - Deletion of penalty on plausible explanation/voluntary disclosure

Penalty under section 271(1)(c) - Ad-hoc/estimation additions - Concealment of income - Furnishing inaccurate particulars of income - Whether the penalty under section 271(1)(c) is sustainable where additions were made on an ad-hoc/estimation basis in respect of alleged bogus purchases. - HELD THAT: - The Tribunal affirmed the learned CIT(A)'s deletion of the penalty imposed by the Assessing Officer. The Assessing Officer had imposed penalty after estimating income by applying a percentage to disputed purchases reported to be non-genuine. The Tribunal held that penalty under section 271(1)(c) is sustainable only where concealment of particulars of income or furnishing of inaccurate particulars is established. An addition made on an ad-hoc or estimation basis does not by itself demonstrate concealment or inaccurate particulars. The Tribunal relied on the reasoning of the CIT(A) and a series of precedents (including coordinate Benches and higher courts) cited in the impugned order to the effect that voluntary acceptance of an addition or estimation-based disallowance, or failure to produce creditors where other documentary details were placed on record, does not automatically amount to concealment or furnishing of inaccurate particulars. Having found that the Revenue did not bring cogent material to prove concealment or inaccuracies in the particulars furnished, and that the addition was founded on estimation, the Tribunal concluded that initiation and confirmation of penalty were not justified and upheld deletion of the penalty. [Paras 5, 6]

Penalty imposed under section 271(1)(c) deleted as additions made on ad-hoc/estimation basis did not establish concealment of income or furnishing of inaccurate particulars.

Final Conclusion: The Revenue's appeal is dismissed; the order of the learned CIT(A) deleting the penalty under section 271(1)(c) is upheld because the additions were made on an ad-hoc/estimation basis and concealment or furnishing of inaccurate particulars was not established.

Penalty under section 271(1)(c) of the Income Tax Act - concealment of particulars of income - furnishing inaccurate particulars of income - addition made on ad hoc/estimation basis does not amount to concealment - deletion of penalty where explanation is plausible and not shown to be false

Penalty under section 271(1)(c) of the Income Tax Act - concealment of particulars of income - addition made on ad adhoc/estimation basis does not amount to concealment - deletion of penalty where explanation is plausible and not shown to be false - Sustainability of penalty under section 271(1)(c) in respect of additions made on alleged bogus purchases for A.Y. 2009 6. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) in deleting the penalty imposed by the Assessing Officer. The Assessing Officer had made an addition on account of alleged bogus purchases on an ad hoc/estimation basis after reopening the assessment; no independent evidence was produced to establish concealment or that particulars furnished were false. The Court applied the established principle that penalty under section 271(1)(c) requires proof of concealment of particulars of income or furnishing of inaccurate particulars, and mere disallowance or estimation of purchases does not ipso facto amount to concealment. The assessee had offered a plausible explanation and documentary material (though not the physical transport evidence) and there was no finding that the explanation was false or that particulars in the return were inaccurate. The Tribunal relied on coordinate and higher judicial decisions holding that additions by estimation do not automatically justify penalty and that voluntary or pragmatic acceptance of additions, without proof of concealment or mala fide intent, is insufficient to sustain levy of penalty.

Penalty under section 271(1)(c) deleted for A.Y. 2009 6; revenue s challenge dismissed.

Penalty under section 271(1)(c) of the Income Tax Act - concealment of particulars of income - addition made on ad adhoc/estimation basis does not amount to concealment - deletion of penalty where explanation is plausible and not shown to be false - Sustainability of penalty under section 271(1)(c) in respect of additions made on alleged bogus purchases for A.Y. 2011 6. - HELD THAT: - The facts and legal question for A.Y. 2011 6 were materially identical to those decided for A.Y. 2009 6. The Tribunal applied the same reasoning: additions made by the Assessing Officer on estimation in absence of cogent evidence of concealment or inaccurate particulars cannot sustain a penalty under section 271(1)(c). In view of the decision in the related appeal and the lack of proof of concealment or falsity of particulars, interference with the Commissioner (Appeals) order deleting the penalty was declined.

Penalty under section 271(1)(c) deleted for A.Y. 2011 6; revenue s challenge dismissed.

Final Conclusion: The Tribunal dismissed the Revenue s appeals and upheld the deletion of penalties imposed under section 271(1)(c) for A.Y. 2009 6 and A.Y. 2011 6, holding that additions made on ad hoc/estimation basis without evidence of concealment or furnishing of inaccurate particulars do not sustain imposition of penalty.

Derivative trading not to be treated as speculative transaction under section 43(5) - Clause (d) to proviso of section 43(5) effective from 01/04/2006 (prospective effect) - Set-off of business losses vis-a -vis speculative losses

Derivative trading not to be treated as speculative transaction under section 43(5) - Clause (d) to proviso of section 43(5) effective from 01/04/2006 (prospective effect) - Set-off of business losses vis-a -vis speculative losses - Whether losses incurred by the assessee in exchange traded derivatives (F&O) are speculative losses or normal business losses and hence allowable for set off against business income. - HELD THAT: - The Tribunal applied the legislative position under section 43(5) as amended w.e.f. AY 2006 07 and binding precedents, including the Supreme Court in Snowtex Investment Ltd., which recognise that eligible derivative transactions carried out on a recognised stock exchange are not to be treated as speculative transactions. The AO's reliance on earlier authority treating exchange traded derivatives as speculative was examined in light of later pronouncements and the statutory deeming in clause (d) to the proviso to section 43(5). Given that the assessee's derivative transactions were executed on a recognised stock exchange and thus fall within the scope of clause (d), the losses are to be treated as normal business losses and allowable for set off in accordance with law. The Tribunal therefore sustained the view taken by the CIT(A) allowing set off of derivative losses. [Paras 5, 7, 10]

Losses from exchange traded derivative transactions are business losses (not speculative) under section 43(5) as amended, and are allowable for set off.

Set-off of business losses vis-a -vis speculative losses - Whether the AO was correct in treating and disallowing set off of alleged losses in the cash segment for AY 2014 15. - HELD THAT: - The Tribunal noted the factual finding that for the year under consideration the assessee had overall profit in the cash segment and taxable speculation income, so there were no cash segment losses to be disallowed. On that basis the revenue's ground seeking disallowance of set off of cash segment losses was misplaced. The Tribunal therefore dismissed the second ground of appeal without requiring further factual re examination. [Paras 3, 10]

Ground challenging set off in cash segment dismissed because no cash segment loss existed for the year; the revenue's contention was misplaced.

Final Conclusion: The revenue appeal is dismissed: losses from recognised exchange traded derivatives are business losses under section 43(5) (clause (d) effective from 01/04/2006) and are allowable for set off; the challenge to cash segment treatment fails on the facts for AY 2014 15.

Revisional jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue - possible view taken by the Assessing Officer - estimation of suppressed profits - application of mind by the Assessing Officer

Revisional jurisdiction under section 263 - possible view taken by the Assessing Officer - erroneous and prejudicial to the interest of revenue - application of mind by the Assessing Officer - Validity of exercise of revisional jurisdiction under section 263 in respect of addition made for alleged bogus purchases. - HELD THAT: - The Tribunal found that during the original assessment the Assessing Officer (AO) had specifically examined the suspicious purchases, raised queries, and considered documentary and quantitative stock records, sales correspondence and ledger extracts furnished by the assessee. The AO concluded, after application of mind, that goods were procured from the grey market and that accommodating supplier bills were used, and therefore estimated suppressed profit and made an addition of 1.6% in conformity with relevant judicial precedents. The revisional authority (Pr. CIT) merely disagreed with the quantum of estimation and considered a different approach (including reliance on N.K. Proteins), but did not demonstrate that the AO's conclusion was perverse or legally unsustainable. Where the AO has taken one of the possible views after due application of mind, such a view cannot be treated as erroneous or prejudicial so as to warrant exercise of section 263; a change of opinion by the Pr. CIT is insufficient. The Tribunal also relied on its coordinate decision in the assessee's earlier year where similar revision was quashed, and applied the principle that revisional jurisdiction cannot be exercised when the AO's view is a plausible one. Consequently, the exercise of revisional jurisdiction was held invalid and the order set aside. [Paras 6, 7, 8, 9]

Revisional jurisdiction under section 263 was invalidly exercised and the revisional order is set aside.

Final Conclusion: The appeal is allowed: the Tribunal set aside the revisional order under section 263 in respect of the addition for alleged bogus purchases for AY 2014-15, holding that the Assessing Officer had taken a possible view after due application of mind and the revisional jurisdiction was improperly invoked.

Deduction under section 80P(2)(d) - allowance of proportionate cost and administrative expenses against interest income - deduction under section 80P(2)(c) - deduction for profits attributable to activities other than clauses (a) and (b) - treatment of interest income assessed as income from other sources - principle of mutuality (distinguishing nominal members)

Deduction under section 80P(2)(d) - allowance of proportionate cost and administrative expenses against interest income - treatment of interest income assessed as income from other sources - Whether the assessee is entitled to deduction of proportionate cost, administrative and other expenses against interest income arising from deposits with co-operative banks when such interest income is assessed under the head "Income from other sources". - HELD THAT: - The Tribunal applied the reasoning in Totgars Co-operative Sale Society Ltd. as accepted by the Karnataka High Court and followed by the Bengaluru Bench of the Tribunal in Karkala Co-op. S. Bank Ltd. The Court observed that where interest earned on bank deposits is proposed to be assessed as income from other sources, the assessee is entitled to claim deduction of proportionate cost, administrative and other expenses attributable to earning that interest. Consequently, the Tribunal set aside the CIT(A)'s order and restored the matter to the file of the Assessing Officer with a direction to allow such proportionate deductions if the AO proposes to assess the interest as income from other sources. [Paras 8]

Set aside CIT(A)'s disallowance and remit to AO with direction to allow deduction of proportionate cost, administrative and other expenses if interest is assessed as income from other sources.

Deduction under section 80P(2)(c) - deduction for profits attributable to activities other than clauses (a) and (b) - profits attributable to specific activities - need for segregation and computation - Whether commission income earned on sale of e-stamps is eligible for deduction under section 80P(2)(c) and, if so, the manner of determining the deductible amount. - HELD THAT: - The Tribunal noted that section 80P(2)(c) allows deduction in respect of profits and gains attributable to activities not covered by clauses (a) or (b) and contains no restriction that such income must be earned mainly from members. The Tribunal concluded that commission from sale of e-stamps is not an activity enumerated in clauses (a) or (b) and thus the assessee is prima facie eligible for deduction under section 80P(2)(c). The quantum of deduction, however, depends on determining the profits and gains attributable to the e-stamp commission activity and applying the statutory limits; this computation requires fresh examination by the Assessing Officer. [Paras 9]

Set aside CIT(A)'s rejection and remand to the Assessing Officer for determination of profits attributable to the e-stamp commission activity and computation of deduction under section 80P(2)(c) subject to statutory limits.

Final Conclusion: Both appeals allowed for statistical purposes: (i) the matter of interest income was remitted to the AO with direction to allow proportionate cost and administrative expenses if assessed as other sources income; and (ii) the claim for deduction under section 80P(2)(c) for e-stamp commission was remitted to the AO for computation of profits attributable and grant of deduction within prescribed limits.

Disallowance under section 40A(3) of the Income-tax Act - agency versus principal-to-principal transaction - acceptance by payee and recording in agreement as compliance with the object of section 40A(3) - cash payment exigency and inability of vendors to receive payment through bank

Disallowance under section 40A(3) of the Income-tax Act - acceptance by payee and recording in agreement as compliance with the object of section 40A(3) - cash payment exigency and inability of vendors to receive payment through bank - agency versus principal-to-principal transaction - Whether the cash payments made by the assessee to various vendors for purchase of land could be disallowed under section 40A(3) where payments were recorded in agreements, vendors accepted receipt, some vendors were minors or had no bank account and payments were made due to exigency - HELD THAT: - The Tribunal found that the primary contention of revenue was disallowance under section 40A(3) on account of cash payments. The assessee produced registered agreements, ledger entries and evidence that cash receipts were admitted by the vendors; some vendors were represented by guardians and certain vendors did not have bank accounts. The Tribunal observed that the cash payments were drawn from bank withdrawals and that no authority below had demonstrated that the stated reasons for cash payments were incorrect or that the transactions were bogus. Reliance placed by revenue on Nam Estates was distinguished on the ground that in that case the reasons for cash payments were found to be incorrect, whereas in the present case there was no material casting doubt on the assessee's explanation. The Tribunal applied the principle reflected in the decision relied upon by the assessee that where the payee admits receipt of cash and it is recorded/credited, the legislative object behind section 40A(3) is satisfied. In these circumstances the Tribunal concluded that the disallowance was not warranted and the finding of the lower authorities that the assessee acted as a principal (and not as an agent) did not justify sustaining the addition under section 40A(3). [Paras 5]

The disallowance under section 40A(3) was reversed and the grounds raised by the assessee were allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the disallowance under section 40A(3) in respect of the cash payments made for land purchases and reversed the view of the authorities below.

Penalty under Section 112(b) of the Customs Act, 1962 - mens rea / conscious knowledge requirement for penalty - re-quantification of penalty having regard to the role of the appellants - absolute confiscation of seized goods - corroboration of retracted confession

Penalty under Section 112(b) of the Customs Act, 1962 - mens rea / conscious knowledge requirement for penalty - corroboration of retracted confession - re-quantification of penalty having regard to the role of the appellants - Sustainability and quantum of the penalty imposed on the appellants under Section 112(b) of the Customs Act, 1962. - HELD THAT: - The Tribunal examined whether the ingredients of Section 112(b), which requires that the person "knows or has reason to believe" the goods are liable to confiscation, were proved against the appellants. The adjudicatory record contains only inculpatory statements made on 22-04-2011 which were retracted on 23-04-2011; there is no independent, cogent corroborative evidence on record linking the appellants to smuggling of the seized rough diamonds from Kenya into India. Statements relied upon by Revenue show merely that the appellants dealt in or moved samples of rough diamonds in the market and do not establish that the seized diamonds were smuggled by them. The Tribunal further noted procedural lacunae in the field panchnama and the fact that COFEPOSA orders against the appellants were subsequently revoked by the Central Government, all of which weighed against finding the requisite mens rea. Having regard to its earlier direction to re-quantify penalty on the basis of the value fixed by experts and the role of the appellants, the Tribunal concluded that imposition of the high penalties previously imposed was excessive and not fully justified on the material available. In the facts and circumstances, the Tribunal reduced the penalty to a moderate sum (Rs. 1,00,000/- each) to meet the ends of justice and set aside the remaining penalty imposed on each appellant. [Paras 6, 7, 9, 11]

Penalty under Section 112(b) is not fully sustainable as imposed; penalty reduced to Rs. 1,00,000/- on each appellant and the balance of the penalty is set aside.

Absolute confiscation of seized goods - re-quantification of penalty having regard to the role of the appellants - Validity of absolute confiscation of the seized rough diamonds and finality of their confiscation. - HELD THAT: - The Tribunal recorded that the seized rough diamonds were revalued by the appointed panel of experts and the re-determined value is not disputed. No person claimed the seized diamonds and the order of absolute confiscation has attained finality. The Tribunal upheld the order of absolute confiscation as affirmed in the adjudicating order and in the subsequent administrative order dated 25-04-2018, while modifying only the quantum of penalty as directed by the Tribunal's earlier remand for re-quantification. [Paras 6, 11]

Order of absolute confiscation of the seized rough diamonds is upheld.

Final Conclusion: The appeals are partly allowed: the absolute confiscation of the seized rough diamonds is affirmed, but the penalties imposed under Section 112(b) on each appellant are reduced to Rs. 1,00,000/- each and the remaining penalty amounts are set aside; consequential reliefs, if any, follow in accordance with law.

Priority of secured creditors to realise secured debts by sale of assets over Government dues - priority of charge of a secured creditor over tax dues - no paramountcy of Income Tax dues over secured debt - effect of insertion of priority provision in central enactments (Section 26 E / Section 31 B) - lifting/raising of attachment by Tax Recovery Officer and issuance of No Objection Certificate

Priority of secured creditors to realise secured debts by sale of assets over Government dues - priority of charge of a secured creditor over tax dues - no paramountcy of Income Tax dues over secured debt - lifting/raising of attachment by Tax Recovery Officer and issuance of No Objection Certificate - Whether the petitioner, as a secured creditor and assignee with possession under the SARFAESI regime, has priority over the Income Tax Department so as to entitle it to have the TRO's attachment lifted and to obtain an NOC to sell the secured premises. - HELD THAT: - The court found that the question of priority between secured creditors and tax dues is no longer res integra and that the Income Tax Act does not confer any paramountcy on tax dues over the rights of a secured creditor. Reliance was placed on the Supreme Court decision holding that a secured creditor (being a pledgee/lien-holder) ranks above Government dues, and on this Court's earlier decision which interpreted the post amendment statutory framework to give secured creditors priority. The Court observed that the amendments (introducing the priority provision in the central enactments) make clear that the rights of secured creditors to realise secured debts by sale of secured assets have priority over Government dues, and that earlier contrary authorities were distinguished as preceding the insertion of the statutory priority provision. Applying these principles to the admitted facts - that petitioner held the security, had intervened under the SARFAESI Act, taken possession and notified relevant authorities, and that the TRO had levied attachment but had not responded to requests to lift it - the Court concluded that the petitioner's charge over the premises has priority over the Income Tax Department's claim and that the attachment could not lawfully obstruct the petitioner's rights as secured creditor. [Paras 28, 31, 33, 34]

Petition allowed: Respondent No.1 (TRO) directed within two weeks to raise the attachment dated 17th January 2013 over the specified premises and to grant and issue a No Objection Certificate permitting the petitioner to sell the premises; no order as to costs.

Final Conclusion: The High Court held that the petitioner's charge as a secured creditor has priority over the Income Tax Department's attachment; consequently the TRO was directed to lift the attachment and to issue an NOC allowing the petitioner to proceed with sale of the secured premises.

Restoration of company struck off from register - just ground under Section 252(3) of the Companies Act, 2013 - power of Registrar of Companies to strike off under Section 248 - post-restoration compliance: filing of annual returns and financial statements - restoration not affecting disqualification under Section 164 - conditional restoration subject to costs and undertakings

Restoration of company struck off from register - just ground under Section 252(3) of the Companies Act, 2013 - Restoration of the name of M/s. Ferco Shutters & Seating India Private Limited to the register maintained by the Registrar of Companies - HELD THAT: - The Tribunal considered the statutory power under Section 252 to restore a company's name and applied the concept of 'just' ground under sub section (3). While noting that the company had not filed financial statements and annual returns since incorporation (from Financial Year 2013-14 until strike off) and had been non functional, the Tribunal also took into account the company's future commercial prospects, the blue print for a proposed manufacturing unit and the potential for generating employment. Relying on authorities construing 'just' as equitable, fair and taking into account all facts and circumstances, the Tribunal held that restoration was justified on the grounds presented and that the Registrar's strike off under Section 248 did not preclude restoration in the exercise of Section 252(3).

Allowed; the Registrar of Companies, Chennai is directed to restore the company's status to 'Active' as if the name had not been struck off.

Post-restoration compliance: filing of annual returns and financial statements - conditional restoration subject to costs and undertakings - Terms and conditions imposed upon restoration including timelines for statutory filings, payment of costs and provisos against alienation of assets - HELD THAT: - The Tribunal ordered that upon restoration the company must, within 30 days, file its annual returns, balance sheets and other statutory compliances for the period of default with requisite fees and additional/late charges. Restoration was made subject to payment of a specified cost online, a prohibition on alienation or disposal of valuable assets until compliances are complete, filing an affidavit of compliance within two months, and submission by shareholders of an undertaking concerning non use of company accounts for tainted money during demonetization. These conditions are consequential to restoration and intended to ensure regulatory compliance before the company resumes active status.

Restoration is conditional upon specified filings, payment of cost, affidavit, undertaking and restraint on alienation until compliance is complete.

Restoration not affecting disqualification under Section 164 - preservation of Registrar's power to proceed for late filing - Effect of restoration on directors' disqualification and Registrar's remedial powers - HELD THAT: - The Tribunal clarified that restoration of the company's name does not automatically restore any director disqualified under the provisions of law (referred to as Section 164). Further, the order permitting restoration does not circumscribe the Registrar of Companies from initiating or continuing proceedings against the company or its directors for alleged late filing of forms, documents, returns or other compliance breaches under the Companies Act, 2013.

Restoration does not rehabilitate disqualified directors automatically and does not preclude the Registrar from proceeding against the company or its directors for statutory defaults.

Final Conclusion: The Tribunal allowed the application under Section 252(3) and directed restoration of the company's name on 'just' grounds, subject to specified conditions including filing of past statutory records, payment of costs, affidavits and undertakings; restoration does not revive any director disqualified under law nor bar the Registrar from pursuing proceedings for prior non compliance.

Strike off of company under Section 248 - restoration of company name under Section 252(3) - requirement to file pending financial statements and annual returns - restoration subject to conditions and costs - directors' disqualification under Section 164 - power of Registrar to proceed for late filing and other compliances

Restoration of company name under Section 252(3) - strike off of company under Section 248 - Restoration of the struck-off company's name on the register - HELD THAT: - The Tribunal examined whether the Applicant Company, struck off under the Registrar's action, had demonstrated that it was carrying on business as on the date of strike off and whether restoration would be just. The Company placed evidence including an Income Tax Return acknowledgement for AY 2019-2020, a VAT certificate and bank statements, and records indicating the Company had been active for the two years preceding the strike off. Having considered the materials and the Respondent's report (which raised no substantive objection to restoration), the Tribunal exercised the discretion conferred by Section 252(3) to restore the Company's name, noting the interests of stakeholders, employees and the revenue. The Tribunal therefore allowed restoration on the merits subject to specified conditions. [Paras 7, 8, 9]

The Company's name is restored on the Register as if it had not been struck off.

Requirement to file pending financial statements and annual returns - restoration subject to conditions and costs - directors' disqualification under Section 164 - power of Registrar to proceed for late filing and other compliances - Conditions and ancillary consequences attached to restoration - HELD THAT: - The Tribunal imposed specific conditions on restoration to protect stakeholders and ensure statutory compliance. The Company must file all pending financial statements, annual returns and other statutory compliances for the default period within 30 days of restoration, with requisite fees and additional late fees; pay prescribed costs for revival via the MCA portal; refrain from alienating valuable assets until compliances are complete; file an affidavit of compliance within two months; and have shareholders submit an undertaking regarding non-use of accounts to transact tainted money during demonetization. The Tribunal expressly held that restoration does not automatically remove any disqualification of directors under Section 164 and does not circumscribe the Registrar's power to proceed against the Company or its directors for alleged late filing or other non-compliances. [Paras 9]

Restoration is subject to the enumerated conditions, payment of costs and compliance; directors' disqualifications are not automatically vacated and Registrar retains power to initiate proceedings for defaults.

Final Conclusion: The Tribunal allowed the application to restore M/s. Shifa Housing Private Limited to the register on the ground that the company demonstrated it was carrying on business, subject to filing all pending statutory documents, payment of revival costs, specified undertakings and restrictions, with an express clarification that director disqualifications are not automatically removed and the Registrar may pursue proceedings for late filing or other defaults.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Appointment of Liquidator and duties under the Insolvency and Bankruptcy (Liquidation Process) Regulations - Cessation of moratorium under Section 14 and commencement of moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - Investigation of the corporate debtor's financial affairs including preferential, undervalued and fraudulent transactions - Notice of discharge to employees under Section 33(7) of the Insolvency and Bankruptcy Code, 2016 - Obligation to make public announcement and submission of preliminary report under the Liquidation Regulations

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Commercial wisdom of Committee of Creditors in resolution process - Order for liquidation of the Corporate Debtor was warranted. - HELD THAT: - The Committee of Creditors, constituted with the sole financial creditor, considered the Information Memorandum and the results of two calls for Expression of Interest, found no viable Resolution Applicant and, by commercial decision in its 8th meeting dated 31.03.2021, resolved to liquidate the Corporate Debtor. Having regard to the absence of any opposition from the promoters and guided by precedent cited in the record, the Tribunal accepted the CoC's resolution and ordered liquidation of the Corporate Debtor under Section 33 of the IBC, 2016. [Paras 7]

The Corporate Debtor is ordered to be liquidated.

Appointment of Liquidator and duties under the Insolvency and Bankruptcy (Liquidation Process) Regulations - Intimation to statutory authorities and filing of reports - Investigation of financial affairs including preferential, undervalued and fraudulent transactions - Appointment of the Liquidator and the terms of his engagement, including statutory duties and reporting obligations. - HELD THAT: - The Tribunal appointed Mr. Ramachandran Subramaniam as Liquidator upon his written consent, directing him to act in accordance with the IBC, relevant Rules and the Insolvency and Bankruptcy (Liquidation Process) Regulations. The Liquidator is required to issue the public announcement of liquidation, investigate the corporate debtor's financial affairs with particular reference to preferential, undervalued and fraudulent transactions and file applications as necessary, notify fiscal and regulatory authorities including the Registrar of Companies and the Income Tax Department, and submit a preliminary report within seventy-five days from the liquidation commencement date as mandated by the Regulations. [Paras 8, 9]

Mr. Ramachandran Subramaniam is appointed as Liquidator and directed to perform the statutory duties and file the required reports.

Cessation of moratorium under Section 14 and commencement of moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - Notice of discharge to employees under Section 33(7) of the Insolvency and Bankruptcy Code, 2016 - Effect of liquidation order on the moratorium and consequential notice to employees. - HELD THAT: - The Tribunal declared that the moratorium previously imposed under Section 14 shall cease and a fresh moratorium under Section 33(5) shall commence upon liquidation. In relation to officers, employees and workers of the Corporate Debtor, the order of liquidation is to be deemed a notice of discharge in terms of Section 33(7). [Paras 9]

The earlier moratorium under Section 14 ceases and a fresh moratorium under Section 33(5) begins; the liquidation order constitutes a notice of discharge to employees.

Final Conclusion: The Tribunal allowed the application under Section 33(2) of the IBC, 2016, ordered liquidation of the Corporate Debtor, appointed the consenting Insolvency Professional as Liquidator with specified statutory duties and reporting obligations, and directed the cessation and re commencement of the moratorium with attendant consequences for employees.

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 - dissolution of company under Section 59(8) of the IBC, 2016 - compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - solvency declaration by directors - liquidator's obligations: public announcement, preliminary report, final report, bank account and distribution of assets - statutory notifications to Registrar of Companies, IBBI and Income Tax authorities

Solvency declaration by directors - compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - Whether the statutory and regulatory prerequisites for initiating and conducting the voluntary liquidation process were complied with by the company and the liquidator. - HELD THAT: - The Tribunal examined the record and found that the directors filed affidavits declaring solvency and that audited financial statements for the previous two years were filed with the Registrar of Companies. The special resolution for voluntary liquidation and appointment of the liquidator was passed and notified to the RoC and IBBI within the prescribed time. The liquidator made the required public announcements, submitted the preliminary report within 45 days of commencement, opened a bank account for the liquidation receipts, gave notice to the Income Tax authorities and obtained their No objection, and filed the final report with the RoC and IBBI. On the basis of these documents and filings, the Tribunal concluded that the procedural and statutory requirements under Section 59 read with the applicable Regulations were satisfied. [Paras 6, 7, 8, 10, 12]

Statutory and regulatory prerequisites for voluntary liquidation were complied with.

Liquidator's obligations: public announcement, preliminary report, final report, bank account and distribution of assets - dissolution of company under Section 59(8) of the IBC, 2016 - Whether, having completed the liquidation process and distributed assets to stakeholders, the company should be dissolved. - HELD THAT: - The Tribunal noted the liquidator's account of realisation and settlement of the company's assets, the closure of liquidation bank account application, and the distribution of funds to all six shareholders who filed claims. The final report was filed with the RoC and IBBI as required. Having perused the submissions and documentary evidence, the Tribunal was satisfied that the affairs of the company were wound up and assets liquidated. Exercising the power under Section 59(8) of the IBC, 2016, the Tribunal ordered dissolution of the company. [Paras 11, 12, 13]

The company is dissolved; the liquidation process is complete and dissolution is ordered.

Final Conclusion: The Tribunal, having found compliance with the statutory and regulatory requirements for voluntary liquidation and having accepted the liquidator's account that the company's affairs were wound up and assets distributed, allowed the application and ordered dissolution of M/s. Angalaparameswari Finance Private Limited; registry and liquidator directed to serve this order on the RoC and IBBI.

Commercial wisdom of the Committee of Creditors - compliance with Section 30(2) of the Code - evaluation matrix and RFRP - conflict of interest and collusion - participation of resolution applicants after Adjudicating Authority approval

Commercial wisdom of the Committee of Creditors - compliance with Section 30(2) of the Code - Whether the Adjudicating Authority could interfere with the COC's commercial decision in rejecting the H1 bidder and approving another resolution applicant. - HELD THAT: - The Tribunal applied the principle laid down by the Supreme Court in K. Sashidhar that the commercial wisdom of the COC is paramount and not ordinarily subject to judicial review, provided the resolution plan approved by the COC satisfies the statutory requirements under Section 30(2). The NCLT found no irregularity in the COC's decision to reject the applicant's plan and approve the third respondent's plan where there was no showing that the approved plan failed to meet the requirements entailed by Section 30(2). The Tribunal emphasised that changes to commercial evaluation are permissible so long as the same criteria are applied to all prospective resolution applicants. [Paras 21, 22]

The Adjudicating Authority will not interfere with the COC's commercial decision; no illegality found in rejection of the applicant's plan and approval of the third respondent's plan.

Conflict of interest and collusion - Whether allegations of collusion and conflict of interest against a COC member vitiated the COC's decision. - HELD THAT: - The Tribunal considered the contention that a COC member acted in collusion with the successful resolution applicant. It noted that the COC's recorded voting rejected the applicant's plan and approved the successful plan with 100% voting share. Even if the challenged member's 22.24% vote is excluded, the outcome would still satisfy the statutory voting thresholds (exceeding 66%). In absence of material showing that the approved plan failed Section 30(2) requirements or that the voting outcomes were otherwise tainted, the mere allegation of vested interest did not establish illegality. [Paras 16, 22]

Allegations of collusion/conflict of interest did not invalidate the COC's decision; the contention was rejected.

Participation of resolution applicants after Adjudicating Authority approval - Whether the applicant could challenge the third respondent's participation after the Adjudicating Authority had permitted that participation. - HELD THAT: - The Tribunal observed that the applicant did not challenge the earlier order of the Adjudicating Authority (IA No. 98/JPR/2019) dated 04.04.2019 which permitted the third respondent to participate in the CIRP and submit a resolution plan. Having allowed that order to attain finality, the applicant could not object to the third respondent's subsequent participation in the process. [Paras 18]

The applicant cannot object to the third respondent's participation, having not challenged the Adjudicating Authority's earlier order permitting such participation.

Evaluation matrix and RFRP - Whether the COC/RP breached the RFRP or acted irregularly by changing the Evaluation Matrix and applying it in the process. - HELD THAT: - The Tribunal held that modification of evaluation criteria or evaluation matrix does not per se vitiate the process provided the amended terms are applied uniformly to all prospective resolution applicants. The NCLT recorded that the applicant was invited and participated in the process throughout, was given opportunities to revise its plan, and that the COC applied the evaluation criteria during deliberations. No material was shown to demonstrate unequal application of the revised criteria that would amount to illegality. [Paras 22]

Change in Evaluation Matrix/RFRP did not amount to breach where the altered criteria were applied to all PRAs; no irregularity established.

Final Conclusion: IA No. 201/JPR/2019 is dismissed. The Tribunal found no infirmity in the COC's exercise of commercial judgement, no substantiated collusion or breach of the RFRP, and held that the applicant could not challenge the participation of the third respondent after the Adjudicating Authority had granted permission.

Condonation of delay - submission of proof of claim - admission of claim by the resolution professional - public announcement and 90-day claim period under Regulation 12(2) - timelines under the Insolvency and Bankruptcy Code - protection of approved resolution plan from undisclosed/undecided claims

Condonation of delay - submission of proof of claim - admission of claim by the resolution professional - timelines under the Insolvency and Bankruptcy Code - protection of approved resolution plan from undisclosed/undecided claims - Claims of the trade/operational creditors seeking condonation of delay in filing proof of claim and direction to admit their claims were rejected. - HELD THAT: - The Tribunal found that the applicants, who were long-standing suppliers, failed to submit claims within the timelines envisaged under the Code and that many suppliers had supplied and received payments during the CIRP. The RP is bound by the Code's timelines and cannot perpetually accept claims until the end of CIRP as that would defeat the statutory scheme. Allowing late claims at the stage when a resolution plan has been approved by the Committee of Creditors and is pending before the Adjudicating Authority would prejudice the certainty required for a successful resolution applicant. Reliance was placed on the Supreme Court's reasoning that undisclosed or undecided claims cannot be permitted to surface post approval of a resolution plan, as that would create uncertainty for the prospective resolution applicant. In view of these considerations and the stage of proceedings, the belated applications for condonation and admission of claims were held not maintainable and dismissed. [Paras 13, 14]

Applications IA/247/CHE/2021, IA/248/CHE/2021, IA/446/CHE/2021, IA/447/CHE/2021 and Cont. A/03/CHE/2021 dismissed, without costs.

Submission of proof of claim - admission of claim by the resolution professional - public announcement and 90-day claim period under Regulation 12(2) - protection of approved resolution plan from undisclosed/undecided claims - Application by the claimant asserting to be a financial creditor for direction to adjudicate and admit his claim was rejected for want of timely substantiation and for being belated at a stage when a resolution plan was pending. - HELD THAT: - The Tribunal observed that although the applicant alleged submission of Form C on a specified date, he failed to produce documentary evidence proving submission to the IRP/RP. The purported email relied upon was not found in the RP's records and, in any event, post-dated the 90-day period prescribed for claims. The applicant also did not follow up with the RP until immediately before a crucial Committee of Creditors meeting. Given the absence of proof of timely submission and the advanced stage of the CIRP with a resolution plan approved by the CoC and pending before the Adjudicating Authority, admitting the belated claim would disrupt the finality required by the Code. Accordingly the claim could not be condoned or accepted. [Paras 18, 19]

Application IA/519/CHE/2021 dismissed, without costs.

Final Conclusion: All applications filed by the operational creditors and the financial creditor challenging non-admission or seeking condonation of delay stand dismissed; the Tribunal upheld the primacy of the Code's timelines and the need to protect the finality of an approved resolution plan.

Dissolution of the Corporate Debtor - Liquidation estate - Liquidation costs - Liquidator's fees - Section 54(2) of the Insolvency and Bankruptcy Code, 2016 - Regulation 2A of IBBI (Liquidation Process) Regulations, 2016 - Regulation 4-Liquidator's fee mechanism - Regulation 39D-CoC decision on fee - Compromise under Section 230 of the Companies Act, 2013

Dissolution of the Corporate Debtor - Liquidation estate - Section 54(2) of the Insolvency and Bankruptcy Code, 2016 - Order for dissolution of the corporate debtor where there are no realizable assets to form a liquidation estate. - HELD THAT: - The Adjudicating Authority found on record that the corporate debtor had no realizable assets, ceased operations years earlier, had no office or employees, and no possibility of sale as a going concern. In exercise of powers under Section 54(2) of the IBC, 2016 and having regard to the absence of assets to constitute a liquidation estate or to distribute proceeds to creditors, the Authority concluded that the corporate debtor be dissolved and the liquidator be relieved of his office. The Authority recorded that affairs did not require further investigation and that the stakeholders' consultation supported early dissolution. [Paras 4]

The corporate debtor, M/s. Sristek Clinical Research Solutions Limited, is dissolved with effect from the date of the order and the liquidator stands relieved.

Liquidation costs - Liquidator's fees - Regulation 2A of IBBI (Liquidation Process) Regulations, 2016 - Regulation 4-Liquidator's fee mechanism - Regulation 39D-CoC decision on fee - Compromise under Section 230 of the Companies Act, 2013 - Liability for liquidation costs and quantum of liquidator's remuneration in circumstances where CoC did not contribute and no realizations occurred. - HELD THAT: - The liquidator claimed reimbursement of liquidation costs incurred and a monthly fee. The Authority noted Regulation 2A places liquidation costs on the CoC and that Regulation 4 prescribes the manner of fixing liquidator's fee-either by CoC under Regulation 39D (or by reference to fees in compromises under Section 230 and percentages on realizations). However, here no CoC contribution was made, no compromise under Section 230 was effected, and there were no realizations or distributions to apply percentage-based fee rules. Given these peculiar facts and the sole claimant being the operational creditor who agreed to reimburse costs (with reservation on monthly fees), the Authority exercised its discretion to direct reimbursement of the verified liquidation costs by the original applicant and to fix a lump sum fee to the liquidator for performing his duties. [Paras 5, 6]

The original applicant/operational creditor is directed to reimburse liquidation costs to the liquidator and to pay a lump sum fee of Rs. 1,00,000 to the liquidator.

Final Conclusion: The Adjudicating Authority dissolved the corporate debtor under Section 54(2) IBC due to absence of realizable assets, relieved the liquidator of office, directed the original applicant to reimburse verified liquidation costs to the liquidator and to pay a lump sum remuneration, and ordered the liquidator to hand over records to IBBI and communicate the dissolution to the registrar.

Meaning of "body corporate" in Service Tax Rules and the Companies Act - reverse charge mechanism for service tax - treatment of limited liability partnership (LLP) for reverse charge and rule-based concessions - refund of service tax paid erroneously under reverse charge - Notification No. 30/2012-reverse charge applicability

Meaning of "body corporate" in Service Tax Rules and the Companies Act - treatment of limited liability partnership (LLP) for reverse charge and rule-based concessions - reverse charge mechanism for service tax - Notification No. 30/2012-reverse charge applicability - refund of service tax paid erroneously under reverse charge - Whether a limited liability partnership (LLP) is a "body corporate" for the purpose of attracting service tax liability under the reverse charge mechanism and whether the appellant LLP is entitled to refund of service tax paid under reverse charge. - HELD THAT: - The Tribunal analysed Rule 2(bc) of the Service Tax Rules with reference to the meaning assigned to "body corporate" in clause (7) of Section 2 of the Companies Act and the statutory provisions in the LLP Act declaring an LLP to be a body corporate for certain purposes. It noted that Rule 2(cd) and related notifications permit treating LLPs as partnership firms for limited concessions (such as deferred payment and periodicity) but do not, by that alone, render LLPs "body corporate" for the purpose of imposing reverse charge where Notification No. 30/2012 governs applicability. The Tribunal concluded that the definition regime, read as a whole, excludes an LLP from being treated as a "body corporate" under the provision attracting reverse charge in the period under dispute. On that basis the service tax paid by the appellant under the reverse charge mechanism was held to have been paid erroneously and refundable. The Tribunal directed grant of refund with interest for the period specified in the order.

LLP is not required to pay service tax under the reverse charge mechanism for the period in dispute; the appellant is entitled to refund of the service tax paid under reverse charge and the adjudicating authority is directed to grant refund with interest within the timeframe stated.

Final Conclusion: The appeal is allowed: the Tribunal held that the appellant LLP was not liable to pay service tax under the reverse charge mechanism for the period under dispute and directed refund of the amount erroneously paid with interest, setting aside the impugned order.

Taxability of interest as consideration for service tax - classification of gold loans (metal loans) vis-a -vis interest exemption - safe vault services and requirement of consideration for levy of service tax - onus on Revenue to identify consideration for provision of service

Taxability of interest as consideration for service tax - classification of gold loans (metal loans) vis-a -vis interest exemption - Service tax is not payable on interest earned by the bank on gold (metal) loans for the period in question. - HELD THAT: - The Tribunal's reasoning, adopted by the Appellate Bench, holds that the statutory exclusion of 'interest' from service tax cannot be restricted to loans in cash or rupee terms alone. There is no provision in the Finance Act or Valuation Rules that limits the exemption to cash loans; interest defined under the statutory scheme applies to interest earned on metal loans as well. Consequently, the demand of service tax (with interest and penalty) on interest charged by the bank for lending metal (gold) is unsustainable and is set aside. [Paras 10, 11]

Demand of service tax on interest earned from gold (metal) loans quashed; appeal allowed on this ground.

Safe vault services and requirement of consideration for levy of service tax - onus on Revenue to identify consideration for provision of service - Service tax cannot be levied on alleged safe vault services purportedly provided to foreign suppliers in absence of any identified consideration received from those suppliers. - HELD THAT: - The Tribunal found, and this Bench agrees, that Revenue failed to demonstrate any consideration paid by the foreign suppliers to the bank for alleged safe vault services. The profit margin earned by the bank on subsequent domestic sale arose from transactions with Indian customers and does not establish consideration from the foreign sellers. Since service tax requires consideration for a taxable service, and Revenue did not identify any such consideration received from the foreign suppliers, the demand in respect of safe vault services is without foundation and was rightly set aside. [Paras 9, 11]

Demand of service tax on alleged safe vault services to foreign sellers quashed; appeal allowed on this ground.

Final Conclusion: The impugned order confirming demands of service tax (with interest and penalty) for the period 01.04.2014 to 31.03.2015 - in respect of interest on gold loans and alleged safe vault services to foreign sellers - is set aside and the appeal is allowed.

Condonation of delay - Statutory alternative remedy - Exercise of discretion in condoning delay - Costs as condition for condonation - Concealment of prior proceedings

Condonation of delay - Statutory alternative remedy - Exercise of discretion in condoning delay - Costs as condition for condonation - Concealment of prior proceedings - Whether the delay in filing the appeal against the order dated February 23, 2018 should be condoned. - HELD THAT: - The Tribunal noted that the appellant had a statutory alternative remedy of preferring an appeal against the Commissioner's order but instead filed a writ petition in the High Court which was dismissed on the ground that a statutory remedy existed; thereafter the appellant filed a Miscellaneous Application before the Tribunal and concealed the earlier writ and its dismissal. The Tribunal observed that there was no good reason for not filing the appeal immediately after the High Court's dismissal and that the appellant's conduct warranted criticism. However, having regard to the bonafide prosecution of remedies - approach to the High Court followed by the Miscellaneous Application - the Tribunal exercised its discretion to condone the considerable delay. The Tribunal imposed a conditional order of condonation by requiring payment of costs as a precondition: the appellant is directed to deposit Rs. 1 lakh in the Prime Minister's National Relief Fund within one month and inform the Tribunal; failure to deposit within the stipulated period will result in dismissal of the delay condonation application and consequently of the appeal. The appeal is listed for compliance on August 31, 2021. [Paras 6, 7, 8]

Delay in filing the appeal is condoned on payment of costs of Rs. 1 lakh to the Prime Minister's National Relief Fund within one month; non-deposit will result in dismissal of the condonation application and the appeal.

Final Conclusion: The application for condonation of delay is allowed subject to payment of costs of Rs. 1 lakh to the Prime Minister's National Relief Fund within one month; failure to comply will lead to dismissal of the condonation application and the appeal, and the appeal is listed for compliance on August 31, 2021.

Bona fide purchaser - charge on property as security for tax - Transfers to defraud revenue - protection of State revenue - inordinate delay/lapse by revenue authorities - initiating recovery under Revenue Recovery Act - disciplinary and vigilance action against erring officials

Bona fide purchaser - Transfers to defraud revenue - charge on property as security for tax - inordinate delay/lapse by revenue authorities - Validity of the notice dated 04.10.2012 issued to the petitioner for recovery of sales tax arrears relating to the years 2000-2001 and 2001-2002 against the petitioner who purchased the property in 2006 - HELD THAT: - The petitioner purchased the property in 2006 after verifying encumbrance records and paying consideration, claiming status as a bona fide purchaser. The TNGST Act contemplates that assessed tax becomes a charge on the properties of the person liable and that transfers made to defraud revenue are void unless made for adequate consideration and without notice of pendency of proceedings. The Court found that although the defaulter was aware of proceedings, the authorities did not pursue recovery for many years and the impugned notice was issued to the third party purchaser only in 2012, six years after the sale. Having regard to the protracted inaction and the lapse on the part of the Competent Authorities in pursuing recovery, the Court exercised its supervisory jurisdiction and quashed the impugned order dated 04.10.2012 directing recovery from the petitioner. [Paras 10, 11, 12, 13, 24]

Impugned order Na.Ka.221/2006/A3 dated 04.10.2012 quashed.

Protection of State revenue - disciplinary and vigilance action against erring officials - initiating recovery under Revenue Recovery Act - Mandates on the State to identify and rectify departmental lapses, and to initiate disciplinary, vigilance and recovery measures to protect State revenue - HELD THAT: - The Court recognised that loss to State revenue resulting from negligence, inaction or corrupt practices by tax officials damages public welfare interests. It directed respondents 3 and 4 to issue orders to subordinate authorities to identify cases where actions were not taken or were belated, to initiate appropriate disciplinary and recovery actions against responsible officials, to coordinate with Vigilance and Anti Corruption authorities for surprise checks and criminal action where warranted, to verify service records against declared and actual assets and take action for disproportionate assets, and to ensure periodic, expedited review of long pending revenue cases to protect State revenue. [Paras 23, 24, 25]

Respondents 3 and 4 directed to take the stated departmental, vigilance and disciplinary measures and to ensure periodic review of long pending revenue cases; writ petition allowed subject to these directions.

Final Conclusion: Writ petition allowed; impugned order dated 04.10.2012 quashed. Respondents 3 and 4 directed to cause identification of delayed or omitted recovery actions, initiate disciplinary/vigilance measures against responsible officials including recovery of loss where established, coordinate with anti corruption authorities, verify assets vis a vis service records, and ensure periodic expedited review of pending revenue matters. No order as to costs.

Sampling procedure in NDPS cases - commercial quantity - embargo of Section 37 of the NDPS Act - compliance with Section 50 of the NDPS Act - Bail under Section 439 Cr.P.C.

Sampling procedure in NDPS cases - commercial quantity - Validity of the sampling method adopted by the NCB when only limited bottles were opened and samples drawn, in respect of multiple seized cough-syrup bottles of same batch. - HELD THAT: - The Court examined whether drawing samples from only a few bottles (leaving the remainder sealed in cartons) rendered the prosecution case infirm. The prosecution case was that 200 bottles of phensedyl were recovered, the bottles were of the same size and carried the same batch numbers (PHB7217 and PHB7236). The Court accepted the respondent's contention that identical bottles bearing the same batch number and label, being mass-produced cough-syrup bottles prepared under the same formulation, could not be expected to have differing concentrations. On that basis the Court held that the procedure of drawing a limited number of samples did not vitiate the prosecution case and there was no infirmity in the manner of drawing samples in the facts of this case. The Court further observed that contentions on sampling technique and other alleged procedural lapses are matters that can be tested at trial. [Paras 7, 8]

Sampling procedure challenged by the petitioner does not vitiate the case; no infirmity found in the manner in which samples were drawn given the identical nature and batch numbers of the seized bottles.

Compliance with Section 50 of the NDPS Act - Whether non compliance with the mandatory provisions of Section 50 of the NDPS Act has been established and is a ground for bail. - HELD THAT: - The Court noted the petitioner's contention regarding non compliance with Section 50 but declined to adjudicate the matter at the bail stage. The question of whether any mandatory condition under Section 50 was violated was held to be a matter to be examined during trial and not for determination in the bail proceedings. The Court did not express any view on the merits of the alleged non compliance. [Paras 8]

Alleged non compliance with Section 50 is left open for trial; not decided in the bail application.

Bail under Section 439 Cr.P.C. - embargo of Section 37 of the NDPS Act - Whether the petitioner is entitled to bail in the NDPS prosecution. - HELD THAT: - Having considered the submissions and the nature of recovery (commercial quantity), and having found no infirmity in the sampling exercise on the present facts, the Court applied the statutory scheme and observed the embargo under Section 37 of the NDPS Act in cases involving commercial quantity. The Court concluded that the application for bail lacked merit and that the disputed contentions raised by the petitioner are matters for trial. [Paras 8]

The bail application under Section 439 Cr.P.C. is dismissed.

Final Conclusion: The bail petition is dismissed: the Court found no infirmity in the samples drawn from the seized bottles (given identical bottles and batch numbers) and left any alleged non compliance with Section 50 of the NDPS Act to be examined at trial; no opinion is expressed on the merits.

Quashing of criminal complaint under Section 138 of the Negotiable Instruments Act - Exercise of inherent jurisdiction under Section 482 CrPC - Presumption of liability arising from presumption under Section 139 of the Negotiable Instruments Act - Documents of unimpeachable character as ground for interference - Abuse of process/mala fide or frivolous complaint

Exercise of inherent jurisdiction under Section 482 CrPC - Quashing of criminal complaint under Section 138 of the Negotiable Instruments Act - Abuse of process/mala fide or frivolous complaint - Whether the petition under Section 482 CrPC to quash the complaint under Section 138 NI Act ought to be entertained - HELD THAT: - The High Court reviewed binding precedents which circumscribe the exercise of the extraordinary jurisdiction under Section 482 CrPC and reiterated that such power must be exercised with caution. Quashing is permissible where the complaint does not disclose an offence or is mala fide, frivolous or oppressive, but ordinarily disputed questions of fact and defences of the accused should be left for trial. In the present case the court found prima facie materials on record: the cheque bears the accused's signature, there was no reply to the statutory notice and the elements for invoking Section 138 are demonstrably present on the pleadings. The factual contentions and documentary defences advanced by the petitioners fall within the ambit of matters to be tested by the trial court; they do not establish that the complaint is frivolous or an abuse of process so as to justify quashing at threshold. Accordingly the petition for quashing was not maintainable. [Paras 10, 11, 12, 13]

Petition under Section 482 CrPC to quash the complaint under Section 138 NI Act dismissed; interim stay vacated and trial proceedings to proceed.

Presumption of liability arising from presumption under Section 139 of the Negotiable Instruments Act - Documents of unimpeachable character as ground for interference - Whether the statutory presumption under Section 139 NI Act was rebutted on the record or whether unimpeachable documents justified interference at the quashment stage - HELD THAT: - The Court observed that admission of signature on the cheque invokes the statutory presumption under Section 139 which shifts the initial burden to the accused to rebut. Although the petitioners relied on various documents and alleged forgery, closure of factory, non-delivery of goods and other documentary material, those contentions engage disputed questions of fact and credibility. The court noted that only documents of unimpeachable character would justify summary interference; the material placed by the petitioners did not meet that threshold so as to displace the Section 139 presumption at the threshold. The appropriate forum to test those defences and document authenticity is the trial court where evidence may be led. [Paras 12]

The Section 139 presumption remains operative on the pleadings and the alleged unimpeachable documents do not justify quashing; issues of rebuttal and document authenticity to be adjudicated at trial.

Final Conclusion: The petition to quash the complaint under Section 138 NI Act was dismissed; interim relief was vacated and the trial court proceedings directed to be conducted and concluded within six months, leaving substantive factual disputes and rebuttal of statutory presumption to be examined at trial.