TaxTMI Updates e-Newsletter
Aug 05,2022

Document Identification Number (DIN) - transparency and accountability in indirect tax administration - GST Council recommendations under Article 279A of the Constitution - advisory to States for implementation of administrative measures

Document Identification Number (DIN) - transparency and accountability in indirect tax administration - GST Council recommendations under Article 279A of the Constitution - advisory to States for implementation of administrative measures - Direction to Union of India / GST Council to issue advisory/recommendations to States for implementation of an electronic (digital) generation system of Document Identification Numbers (DIN) for communications of State Tax Officers and encouragement to States to implement the DIN system. - HELD THAT: - The Court observed that implementation of an electronic DIN system for communications issued by tax authorities would promote transparency and accountability in indirect tax administration and is in the larger public interest. It noted that the Central Government had already implemented a DIN system for CBDT communications from 01.10.2019 and that two States (Karnataka and Kerala) have implemented similar systems. Given the GST Council's constitutional power to make recommendations to States under Article 279A, the Court held that the appropriate course is to direct the Union of India and the GST Council to issue advisories, instructions or recommendations to the States to consider and implement a DIN system for all communications from State Tax Officers to taxpayers and other concerned persons. The Court therefore disposed of the petition by issuing that direction and by impressing upon the States to consider implementing the system at the earliest, while directing registrarial circulation of the order to Chief Secretaries of the States. [Paras 6, 7]

Union of India / GST Council directed to issue advisory/instructions/recommendations to the States for implementation of an electronic DIN system; States impressed to consider implementation expeditiously; writ petition disposed.

Final Conclusion: The writ petition is disposed by directing the Union of India and the GST Council to issue advisories/recommendations to the States for implementing an electronic Document Identification Number system to enhance transparency and accountability in indirect tax administration, and the States are urged to consider implementation promptly; registry to send copy of the order to Chief Secretaries of States.

Violation of principles of natural justice - failure to afford fair opportunity of hearing - Ex parte assessment and non speaking order - Quashing of administrative orders and remand for fresh adjudication on merits - Interim relief by deposit requirement, de freezing of bank accounts and bar on coercive steps

Violation of principles of natural justice - failure to afford fair opportunity of hearing - Ex parte assessment and non speaking order - Impugned appellate order and underlying assessment order were legally unsustainable and liable to be quashed for violation of natural justice and for being ex parte and non speaking. - HELD THAT: - The Court found that the assessment order was passed ex parte without affording sufficient time or a fair opportunity to the petitioner to represent its case, and that the order does not assign sufficient or decipherable reasons to show how the amount was determined. The appellate order rejecting the appeal as barred by limitation was also set aside in view of these defects. The Court emphasised that ex parte orders producing civil consequences must adjudicate issues of fact and law and provide reasoned findings; absence of such compliance renders the orders bad in law.

Impugned order dated 17.03.2022 and the assessment order dated 08.08.2019 quashed and set aside for violation of principles of natural justice and for being ex parte and non speaking.

Quashing of administrative orders and remand for fresh adjudication on merits - Interim relief by deposit requirement, de freezing of bank accounts and bar on coercive steps - Matter remanded to the Assessing Authority for fresh adjudication on merits with directions regarding deposit, interim relief and procedural safeguards. - HELD THAT: - The Court directed that the matter be heard afresh on merits after affording adequate opportunity of hearing and that the Assessing Authority must pass a speaking order dealing with issues of fact and law. The petitioner was recorded to have already deposited ten per cent of the total amount as a condition precedent for hearing; if not, the deposit must be made before the next date and the petitioner undertook to additionally deposit ten per cent of the demand within four weeks. The Court ordered immediate de freezing/de attaching of the petitioner's bank account(s) if attached in connection with the proceedings and directed that no coercive steps shall be taken during pendency. The authority was directed to decide the matter expeditiously, preferably within two months of appearance, and the parties were granted liberty to pursue other remedies.

Proceedings remanded to the Assessing Authority for fresh, merit based adjudication after compliance with natural justice; interim directions given for deposits, de freezing of bank accounts and a stay on coercive action.

Final Conclusion: The High Court quashed the ex parte, non speaking assessment and appellate orders for breach of natural justice, remanded the matter for fresh adjudication on merits with directions for interim deposit and de freezing of bank accounts, restrained coercive action during pendency, and required the Assessing Authority to pass a reasoned order after affording opportunity to the parties.

Interim relief in writ petition challenging constitutional validity - challenge to constitutionality of provision of State GST Act - impleading necessary State and State GST authority as respondents - right to make representation against audit report to authority

Interim relief in writ petition challenging constitutional validity - No interim order would be passed in the writ petition challenging the constitutional validity of Section 16(2)(c) of the CGST Act, 2017/SGST Act, 2017. - HELD THAT: - The Court recorded that because the petition raises a direct challenge to the constitutional validity of the statutory provision, there is no scope for granting any interim relief at this stage. The order declines to exercise equitable or interim powers pending fuller adjudication of the constitutional question, and proceeds to direct further pleadings and listing for final hearing.

Interim relief refused; matter directed to proceed to final hearing on merits.

Impleading necessary State and State GST authority as respondents - challenge to constitutionality of provision of State GST Act - State of West Bengal and the State GST authority were ordered to be added as respondents because the writ challenges the constitutionality of a provision of the State GST Act. - HELD THAT: - Noting that the constitutional validity of a provision of the State GST Act is impugned, the Court directed that the State and the concerned State GST authority be impleaded so that they may participate in the adjudication of the constitutional challenge. The petitioner was directed to serve a copy of the writ petition upon the learned Advocate General and the State GST authority.

State and State GST authority to be added as respondents and served with the writ petition.

Respondents to file affidavit in opposition - opportunity to reply and to be listed for final hearing - Respondents were directed to file affidavits in opposition within a specified timeframe and the petitioner given leave to file reply; the matter was listed for final hearing after seven weeks. - HELD THAT: - The Court ordered a timetable for further pleadings: respondents to file affidavit in opposition within four weeks, petitioner to file any reply within two weeks thereafter. The matter was placed on the roster for final hearing after seven weeks, with parties to prepare short written notes of arguments for the hearing.

Timetable for affidavits and replies fixed; matter listed for final hearing with directions on written notes.

Right to make representation against audit report - Pendency of the writ petition will not prevent the petitioner from making representations against the audit report, which the concerned authority shall consider in accordance with law. - HELD THAT: - While the Court refused interim relief, it explicitly preserved the petitioner's procedural right to approach the concerned authority with representations against the audit report referred to in the petition. The authority is directed to consider any such representation in accordance with law, ensuring interim procedural remedies are not foreclosed by the institution of the writ.

Petitioner permitted to make representation against the audit report; authority to consider it in accordance with law.

Final Conclusion: Interim relief declined in view of the constitutional challenge to Section 16(2)(c) of the CGST/SGST Acts; procedural directions issued for filing of affidavits, impleadment of the State and State GST authority, preservation of petitioner's right to make representations against the audit report, and listing for final hearing after seven weeks.

Statutory interest under Section 56 of the Central Goods and Services Tax Act, 2017 - refund processed in tranches does not obviate obligation to pay statutory interest - statutory interest as compensation for use of money - non-applicability of pandemic-related extension orders to deny statutory interest on delayed refunds

Statutory interest under Section 56 of the Central Goods and Services Tax Act, 2017 - refund processed in tranches does not obviate obligation to pay statutory interest - statutory interest as compensation for use of money - Statutory interest is payable to the petitioner on the delayed refund and respondents were obliged to pay interest even though the refund was released in two tranches. - HELD THAT: - The court found on the material placed that the petitioner filed the refund application on 20.07.2021 and the principal refund was released in two tranches on 04.01.2022 and 22.03.2022. The statutory rate of interest prescribed under Section 56 of the Act becomes payable after expiry of 60 days from receipt of the refund application. The obligation to pay interest is compensatory in nature as it represents compensation for use of money; consequently, retention of the refund beyond the statutory period attracts interest. The fact that the respondents processed and released the refund in stages does not absolve them from the obligation to pay interest at the statutory rate on amounts retained beyond the prescribed period. Having applied these principles to the admitted chronology, the court directed payment of interest at the rate prescribed in Section 56 of the Act and instructed respondents to take steps to effect payment. [Paras 9, 10, 12, 13]

Respondents directed to pay statutory interest at the rate prescribed in Section 56 of the Act on the delayed refund, notwithstanding that the refund was paid in two tranches.

Non-applicability of pandemic-related extension orders to deny statutory interest on delayed refunds - Orders and judgments extending limitation or prescribing pandemic-related accommodations do not operate to deny the statutory entitlement to interest on delayed refunds under Section 56. - HELD THAT: - The respondents relied on various pandemic-era orders including the Supreme Court's Suo Motu W.P.(C.) 3/2020 and a Madras High Court decision to justify non-payment of interest on account of delay caused by Covid-19. The court held that those orders do not concern the specific point of grant of statutory interest where refunds are withheld beyond the period prescribed under the Act. Therefore, the pandemic-related extension or accommodation relied upon by respondents was held to be inapplicable to defeat the petitioner's statutory right to interest; the contention was rejected as misconceived. [Paras 11]

Contention that pandemic-related extension orders absolve respondents from paying interest rejected; such orders do not negate the statutory entitlement to interest under Section 56.

Final Conclusion: Writ petition disposed directing respondents to pay statutory interest at the rate prescribed in Section 56 of the Central Goods and Services Tax Act, 2017 on the delayed refund; pandemic-era extension orders held inapplicable to deny that entitlement.

Harassment during enquiry - duty to cooperate with investigating authority - refusal of blanket restraining direction against enquiry - issuance of notice and conduct of enquiry in accordance with law

Harassment during enquiry - duty to cooperate with investigating authority - refusal of blanket restraining direction against enquiry - Prayer for a blanket direction restraining the respondent from harassing the petitioner during the pending enquiry was rejected. - HELD THAT: - The Court observed that the concept of harassment is subjective and cannot be reduced to an objective criterion. Where the petitioner has been issued summons by the respondent and an enquiry is pending, the petitioner is obliged to cooperate with the enquiring authority. In the absence of cooperation, the petitioner cannot seek a broad injunction restraining the respondent from pursuing enquiry activity. Applying these considerations, the Court declined to grant the relief sought and dismissed the petition on merits. [Paras 4, 5]

Petition dismissed; blanket direction restraining the respondent from conducting the enquiry refused; petitioner must cooperate with the enquiry.

Issuance of notice and conduct of enquiry in accordance with law - The Court directed correction of terminology in its earlier order and directed the respondent to issue notice and proceed with the enquiry within a stipulated time. - HELD THAT: - The Court corrected an inadvertent reference in its earlier order by substituting 'Police' with 'respondent/the Superintendent of GST'. It directed the respondent to issue notice to the petitioner within two weeks to cause his appearance for the enquiry and, after making enquiries, to either register a complaint if a cognizable offence is disclosed or proceed further in accordance with law. The direction confines the authority to follow due process in conducting the enquiry. [Paras 3]

Earlier order rectified; respondent directed to issue notice within two weeks and to proceed with the enquiry and further action in accordance with law.

Final Conclusion: The petition seeking a blanket restraint on the respondent's enquiry was dismissed; the order was rectified to replace 'Police' with 'respondent/the Superintendent of GST', and the respondent was directed to issue notice within two weeks and proceed with the enquiry in accordance with law.

Anti-profiteering - benefit of input tax credit - commensurate reduction in prices - application of Section 171 of the CGST Act, 2017 to post-GST launched projects - absence of pre-GST price history as a bar to determination of profiteering

Anti-profiteering - benefit of input tax credit - commensurate reduction in prices - application of Section 171 of the CGST Act, 2017 to post-GST launched projects - Whether the provisions of Section 171 of the CGST Act, 2017 were contravened by the Respondent in respect of the projects under investigation - HELD THAT: - The DGAP investigated supplies of construction service for the period 01.07.2017 to 30.09.2019 and reported that the subject projects (other than the one already dealt with in Order No. 52/2019) had been launched, registered under RERA and first booked in the post-GST regime (registrations dated 27.05.2019 and 09.12.2019, bookings from June 2019). In the absence of any pre-GST price history, there was no basis to compare pre- and post-GST tax rates or input tax credit entitlements. Section 171 is engaged only where there is a reduction in tax rate or an increase in the benefit of input tax credit that must be passed on by commensurate reduction in price. The DGAP found no additional ITC or reduction in tax rate available to the Respondent for these post-GST launched projects; consequently no profiteering under Section 171 was established. The Authority examined the DGAP's findings, the RERA registration and booking chronology and agreed with the DGAP's conclusion that the anti-profiteering provisions do not apply where projects and bookings commenced after implementation of GST and no additional ITC or tax-rate reduction can be identified. [Paras 11, 12, 16, 17, 18]

No contravention of Section 171 of the CGST Act, 2017 is made out in respect of the projects investigated; therefore no profiteering is found.

Final Conclusion: The Authority accepts the DGAP's report and concludes that the anti-profiteering provisions under Section 171 of the CGST Act, 2017 are not attracted in respect of the subject projects launched and booked in the post-GST period; no profiteering is established.

Benefit of input tax credit - commensurate reduction in prices - profiteering - Section 171 of the CGST Act, 2017 - Rule 133 of the CGST Rules, 2017

Benefit of input tax credit - commensurate reduction in prices - Section 171 of the CGST Act, 2017 - Whether the respondent obtained additional input tax credit post-GST and was required to pass the commensurate benefit to recipients by way of reduction in prices - HELD THAT: - The Authority examined DGAP's computation comparing pre-GST (April 2016 to June 2017) and post-GST (July 2017 to September 2019) periods. The DGAP's reconciled figures showed ITC as a percentage of turnover at 2.80% pre-GST and 2.83% post-GST, yielding an incremental benefit of 0.03% of turnover. The Authority accepted DGAP's methodology and calculations, noting no dispute from the respondent on methodology. The Authority rejected the respondent's contention that the negotiated sale price already incorporated ITC benefit because the agreements and cost sheets did not record that the benefit had been considered as part of the contract, and because the respondent also separately claimed to have paid benefits to customers, a contradiction that undermined the assertion of prior adjustment. The Authority further noted DGAP's verification that only a limited number of homebuyers had independently confirmed receipt of benefit, making the respondent's broader claim unsubstantiated for the purpose of discharge of its statutory obligation under Section 171. On these findings the Authority concluded that an additional ITC benefit of 0.03% had accrued and was required to be passed on to recipients. [Paras 8, 9, 10]

Additional ITC of 0.03% of turnover accrued to the respondent and, under Section 171, must be passed on to recipients; computation of the profiteered amount accepted as Rs. 4,44,563 for the project 'Tower F' of 'Anmol Fortune-II' for the investigation period.

Profiteering - Rule 133 of the CGST Rules, 2017 - Relief and compliance measures to be directed in consequence of the finding of profiteering - HELD THAT: - Having determined the profiteered amount, the Authority directed remedial measures under Rule 133. The respondent is ordered to reduce prices commensurate with the ITC benefit and to return the profiteered amount to each eligible recipient along with interest at 18% from the date the amount was profiteered until payment, subject to verification by the jurisdictional CGST/SGST Commissionerate. The Authority noted DGAP's verification report showing limited confirmations from homebuyers and held that the respondent's broader claim of benefits passed could not be accepted as conclusively discharged. The jurisdictional Commissioner is directed to ensure compliance within three months and to publish an advertisement to inform affected recipients, and to report compliance within four months to the Authority and DGAP. [Paras 10, 11, 12, 13]

Respondent ordered to pass the determined profiteered amount to recipients with interest and to comply with ancillary directions (price reduction, advertisement, and compliance reporting) under Rule 133 within prescribed timelines.

Final Conclusion: The Authority accepted the DGAP report and held that M/s. Wadhwa Realty Pvt. Ltd. profiteered by Rs. 4,44,563 in respect of 'Tower F' of 'Anmol Fortune-II' for the period 01.07.2017 to 30.09.2019; the respondent is directed to pass the benefit to eligible recipients with 18% interest and to comply with the Authority's procedural directions under Rule 133 of the CGST Rules, 2017.

Summary order. Petition under Article 32 seeking directions for implementation of electronic Document Identification Number (DIN) system; court noted Karnataka and Kerala have implemented DIN, directed that an advance copy of the petition be furnished to the Central Agency and to the Additional Solicitor General, and listed the matter for further hearing on 18.07.2022.

Condonation of delay - remand for fresh consideration - non-cooperation with assessment proceedings - setting aside appellate orders for lack of cooperation - last opportunity and no adjournment - revival of assessment

Condonation of delay - Delay in filing the appeal was condoned. - HELD THAT: - There was a delay of 844 days in filing the appeal. The Court examined the affidavit filed in support of the application for condonation of delay and was satisfied with the reasons provided. Accordingly, the Court allowed the application and condoned the delay in filing the appeal.

Application for condonation of delay allowed; delay condoned.

Remand for fresh consideration - non-cooperation with assessment proceedings - setting aside appellate orders for lack of cooperation - last opportunity and no adjournment - revival of assessment - Tribunal erred in allowing the appeal without regard to the assessee's failure to cooperate; matter remanded to the Assessing Officer for fresh consideration. - HELD THAT: - The Assessing Officer recorded that the assessee and relevant persons failed to appear and did not cooperate despite repeated notices, which prevented completion of the enquiry. The CIT(A) dismissed the appeal for non-appearance. The Tribunal nevertheless allowed the appeal, stating that facts were not in dispute, a conclusion the High Court found unsustainable because the Tribunal did not record any concession by the revenue and overlooked the assessee's supine conduct. In view of the assessee's failure to cooperate and the incomplete enquiry, the High Court set aside the Tribunal's order and the CIT(A)'s order and remanded the matter to the Assessing Officer for fresh consideration. The Court directed that the Assessing Officer issue a single notice specifying all requirements and persons to be present, that no adjournments be entertained, and that the assessee be given a last opportunity to cooperate; failure to do so will automatically revive the assessment dated 20th March, 2015 and enable recovery and other proceedings.

Appeal allowed; Tribunal and CIT(A) orders set aside; matter remanded to the Assessing Officer with specified directions and condition for revival of the assessment if the assessee fails to cooperate.

Final Conclusion: Delay in filing the appeal was condoned. The Tribunal's order allowing the appeal was set aside because the assessee failed to cooperate in assessment proceedings; the CIT(A) order was also set aside and the matter remitted to the Assessing Officer for fresh consideration with directions that a single notice specify requirements and persons to appear, no adjournments be granted, and that the assessee be given a last opportunity failing which the earlier assessment shall revive and enforcement proceedings may follow. The substantial questions of law were left open.

Validity of show cause notice under Section 148A(b) of the Income tax Act, 1961 - Order under Section 148A(d) of the Income tax Act, 1961 - Reopening of assessment and requirement to disclose basis for reopening - Non disclosure of reports or material relied upon and right to a fair opportunity to reply - Remand for fresh consideration on production of additional material

Validity of show cause notice under Section 148A(b) of the Income tax Act, 1961 - Non disclosure of material/reports relied upon and right to a fair opportunity to reply - Reopening of assessment and requirement to disclose basis for reopening - Impugned show cause notice dated 16th March, 2022 under Section 148A(b) was without requisite particulars and failed to furnish the basis of the alleged escaped income to the petitioner, rendering it unsustainable. - HELD THAT: - The show cause notice primarily alleged that purchases were made from certain non filers but provided no details or identities of those entities, nor any specific information enabling the petitioner to know which transactions were impugned. The absence of particulars meant the petitioner was deprived of a meaningful opportunity to reply. The court therefore found that the show cause notice did not meet the requirement of disclosing the basis on which reopening was proposed and could not stand in its present form.

Show cause notice dated 16th March, 2022 quashed for failure to disclose particulars and the basis for reopening of assessment.

Order under Section 148A(d) of the Income tax Act, 1961 - Non disclosure of reports or material relied upon and right to a fair opportunity to reply - Remand for fresh consideration on production of additional material - Impugned order dated 30th March, 2022 under Section 148A(d) relying on an alleged report which was not supplied to the petitioner was unsustainable and was set aside; respondents permitted to furnish additional material and the matter remanded for fresh decision. - HELD THAT: - The order under Section 148A(d) purportedly depended on a report concluding that the assessee had shown bogus purchases over multiple years, but that report was not furnished to the petitioner and the show cause notice contained no specific allegations. In view of the failure to disclose the report or particulars, the court quashed the order and granted liberty to the respondents to supply additional materials, including any reports, within a limited time. Thereafter the Assessing Officer was directed to decide the matter afresh in accordance with law, preserving the parties' rights and contentions.

Order dated 30th March, 2022 under Section 148A(d) quashed; respondents permitted to furnish additional material within three weeks and the Assessing Officer directed to reconsider and decide afresh in accordance with law.

Final Conclusion: The writ petition is disposed of by quashing the show cause notice dated 16th March, 2022 and the order dated 30th March, 2022; respondents may furnish additional material (including any report) within three weeks and the Assessing Officer shall thereafter decide the matter afresh in accordance with law, with the rights and contentions of the parties kept open.

Violation of principles of natural justice in faceless e-assessment proceedings - inadequate opportunity of hearing and ex parte assessment - show cause notice and draft assessment compliance requirements in e-portal proceedings - remand for fresh adjudication to afford statutory opportunity and video-conference hearing - revisional proceedings under Section 263 do not by themselves bar fresh assessment proceedings

Violation of principles of natural justice in faceless e-assessment proceedings - inadequate opportunity of hearing and ex parte assessment - show cause notice and draft assessment compliance requirements in e-portal proceedings - remand for fresh adjudication to afford statutory opportunity and video-conference hearing - Assessment orders passed ex parte after giving the assessee little or no time to reply to show cause notices and draft assessment orders, in the faceless e-assessment process, resulted in denial of reasonable opportunity and were liable to be set aside and remanded. - HELD THAT: - The Court found that the show cause notices and accompanying draft assessment orders issued through the e-portal afforded the petitioner no time or an unreasonably short time to file responses, which did not constitute a sufficient and reasonable opportunity to be heard. The faceless assessment process required adherence to the procedure for filing written replies and for seeking personal hearing (including by video conference) as set out in the notices, but the assessee was not given an effective opportunity to utilize those avenues. Having regard to earlier decisions of this Court on similar facts, the Court held that the assessment orders completed ex parte were vitiated by breach of the principles of natural justice and therefore set aside the assessment orders and remanded the matter to the Assessing Officer. On remand the Assessing Officer was directed to take up the assessment from the stage of issuance of the show cause notice, permit the petitioner access to the portal, accept written objections and supporting documents within four weeks from service of this order, provide personal hearing (including video conferencing) if requested in accordance with the procedure, and thereafter decide the assessment taking into account written and oral submissions and documents filed by the assessee. [Paras 11, 12]

Assessment orders dated 29.03.2022 and 30.03.2022 set aside; matter remanded for fresh adjudication from show cause stage with directions to afford reasonable opportunity of hearing and follow e-portal procedural safeguards.

Revisional proceedings under Section 263 do not by themselves bar fresh assessment proceedings - Pendency of an appeal against orders passed in revision under Section 263 did not, in itself, preclude the Assessing Officer from proceeding with reassessment. - HELD THAT: - The Court recorded the respondents' submission that an appeal against the Principal Commissioner's revision order was pending before the Tribunal but accepted that such pendency would not prevent the Assessing Officer from completing assessment proceedings. The Court's order setting aside and remanding the assessment was, however, founded on the breach of natural justice and not on the pendency of the appeal; the pendency was not treated as a bar to proceeding but did not obviate the need to afford a fresh, proper opportunity to the assessee on remand. [Paras 10, 12]

Pendency of appeal under revision proceedings does not bar the Assessing Officer from proceeding; remand directed to comply with fair hearing requirements notwithstanding pendency.

Final Conclusion: Writ petitions allowed: assessment orders for AY 2012-2013 and 2013-2014 set aside for failure to afford reasonable opportunity; matters remanded to Assessing Officer to proceed from show cause stage, permitting filing of written objections and documents within four weeks, providing access to the portal and personal/video-conference hearing, and thereafter deciding the assessment afresh; no costs.

Suppressed profits from unaccounted sales - undisclosed investment in unaccounted purchases - adjustment in closing stock on re-cast accounts - misattribution of findings by appellate tribunal - remand for fresh consideration

Misattribution of findings by appellate tribunal - adjustment in closing stock on re-cast accounts - ITAT's finding that the CIT(A) had taken 1% profit on unaccounted sales and treated the balance as unexplained investment was justified. - HELD THAT: - The High Court examined the orders of the CIT(A) and the ITAT and found that the ITAT's statement - that the CIT(A) had taken a profit element of 1% on unaccounted sales and treated the balance as unexplained investment - is not supported by the record of the CIT(A)'s order. The Court noted that if the assessee had adjusted the closing stock in the re-cast accounts, as the ITAT recorded, the question of treating the difference as unexplained investment would not arise. Because the ITAT's factual characterization of the CIT(A)'s order is factually incorrect, that part of the ITAT's reasoning is unsustainable. The Court therefore concluded that the ITAT's finding on this point cannot stand and required reconsideration. [Paras 9]

ITAT's finding in para 11.5.6 attributing the 1% profit adjustment to the CIT(A) is held unsustainable and set aside; matter remanded for re-examination.

Suppressed profits from unaccounted sales - undisclosed investment in unaccounted purchases - remand for fresh consideration - Whether the additions confirmed by the Assessing Officer, CIT(A) and ITAT as suppressed profits and undisclosed investment were maintainable without proper factual foundation. - HELD THAT: - The Court recorded that the Assessing Officer had made additions on account of unaccounted sales and purchases and that those additions were upheld in the first instance by the CIT(A) and thereafter by the ITAT. However, because the ITAT's reasoning relied on an incorrect factual attribution to the CIT(A) (see earlier issue), the High Court found it appropriate to allow the appeal and remit the matter to the ITAT for fresh consideration. The substantive questions of law raised by the assessee were answered in its favour and against the Revenue, but the Court did not undertake fresh adjudication on the merits of the addition; instead it directed the ITAT to re-examine the matter in the light of the observations made by the High Court. [Paras 10]

Appeal allowed; questions of law answered for the assessee and against the Revenue; the case is remanded to the ITAT to re-examine and pass fresh orders.

Final Conclusion: The appeal is allowed; the High Court set aside the ITAT's impugned factual finding as unsustainable and remanded the matter to the ITAT for fresh consideration, answering the questions of law in favour of the assessee and against the Revenue.

Full value of consideration - Section 48 - mode of computation of capital gains - deduction from full value of consideration - contractual allocation of tax liability - proportionate allocation among sellers

Full value of consideration - Section 48 - mode of computation of capital gains - contractual allocation of tax liability - Whether the tax component agreed to be borne by the seller under the share purchase agreement could be excluded from the full value of consideration for computation of capital gains under Section 48. - HELD THAT: - The parties contractually agreed that the sellers would reimburse the companies for taxes levied up to the closing date and, in effect, the agreed sale consideration was the gross sale price less the tax component. Section 48 provides for computing capital gains by deducting the full value of consideration received and allows specified deductions such as expenditure incurred and cost of acquisition. The court recognised that the parties' intention in the share purchase agreement was to treat the sale consideration net of the tax component; therefore the amount actually realised by the appellant in hand (i.e., the agreed price after the tax component is discharged as per the contract) is relevant for computing capital gains. However, the court rejected the contention that tax paid on behalf of the companies could be treated as a general expenditure or cost of acquisition beyond the contractual arrangement, distinguishing payment of company tax from allowable deductions in the hands of the seller. [Paras 9, 10, 16]

The contractual allocation of the tax component permits exclusion of that component from the full value of consideration to the extent recognised under the agreement, but only within the limits imposed by the contractual and factual matrix.

Proportionate allocation among sellers - deduction from full value of consideration - Whether the appellant was entitled to deduct the entire tax component or only a proportionate share from the gross consideration. - HELD THAT: - The tax payments recorded related to taxes of the companies and, under the contractual framework, the obligation to reimburse companies was a joint matter among sellers. The Revenue's contention that the tax component should be distributed among all sellers was accepted by the court as having force. Given that the tax component represented company-level tax liabilities and the appellant was one of multiple sellers, the court held that the appellant could not claim the entire tax component as deduction from her full value of consideration. The tribunal's factual findings about the method of payment and the agreement's clause regarding reimbursement were examined and the court concluded that only the appellant's proportionate share of the tax component is allowable. [Paras 11, 13, 14, 16]

The appellant is entitled to deduction of only 50% of the tax component proportionate to her shareholding; she cannot deduct the entire tax component from the gross consideration.

Final Conclusion: Appeal allowed in part; the assessee is entitled to deduct fifty percent of the tax component agreed under the share purchase agreement from the consideration for computation of capital gains, and the remainder is not deductible in her hands.

Genuineness and creditworthiness of creditors under the principle of Section 68 - share application money treated as undisclosed income - admission of additional evidence by appellate authority - inter se transfer between shareholders not amounting to fresh infusion

Genuineness and creditworthiness of creditors under the principle of Section 68 - share application money treated as undisclosed income - Whether the additions disallowing share application money could be sustained where the assessee produced notarised confirmations, ITRs and bank statements and the shareholders were shown to be existing pre year holders - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the assessee discharged the onus to prove identity, genuineness and creditworthiness of the creditors. The assessee produced notarised confirmations, income tax returns and bank statements evidencing payment to the company in respect of the named shareholders. The facts showed that those shareholders held shares in the company prior to the year under consideration and their shareholding formed part of the opening balance, a matter not disputed by the Revenue. On these materials the Tribunal found that the AO erred in treating the amounts as undisclosed loans/credits and in making the additions under share application money. The Tribunal also noted that the CIT(A) did not grant relief only in respect of amounts pertaining to certain shareholders on which no appeal was preferred by the assessee. [Paras 8, 9]

Addition of Rs. 4,38,86,460 made by the AO on account of share application money deleted; the assessee succeeded in discharging the onus.

Admission of additional evidence by appellate authority - inter se transfer between shareholders not amounting to fresh infusion - Whether the CIT(A) erred in admitting and relying on additional evidence submitted by the assessee and whether an inter se transfer between shareholders could be treated as fresh infusion - HELD THAT: - The Tribunal agreed with the CIT(A)'s exercise to admit the additional evidence tendered before him. It observed that the AO's remand report recorded opportunities given to the assessee but that the material produced before the CIT(A) (notarised confirmations, ITRs and bank statements) was available for consideration and materially relevant to establish the transactions. In respect of the transaction involving Mr. Syed Arshad the Tribunal found that it was an inter se transfer between shareholders which did not result in any increase in the company's share capital nor any fresh infusion of funds into the company's books in AY 2008 09, and therefore the AO erred in disallowing that amount. [Paras 8, 9]

Admission of additional evidence by the CIT(A) was appropriate and the deletion of the addition relating to the inter se shareholder transfer was justified.

Final Conclusion: The Revenue's appeal is dismissed; the additions on account of share application money were deleted as the assessee discharged the onus and the CIT(A) rightly admitted and relied upon the additional evidence, including the finding that the inter se shareholder transfer did not constitute fresh infusion.

Requirement of notice under section 143(1)(a) - jurisdictional validity of Central Processing Centre adjustment without notice - disallowance of tax credit where corresponding income not shown - non-application of mind by appellate authority

Requirement of notice under section 143(1)(a) - jurisdictional validity of Central Processing Centre adjustment without notice - Whether adjustment of TDS credit by CPC without issuing notice under section 143(1)(a) is legally sustainable. - HELD THAT: - The Tribunal held that the mandate of section 143(1)(a) requires that an assessee be put to notice before an adjustment is made in processing. The CPC made the adjustment without issuing any notice to the assessee; that procedural omission vitiates the jurisdictional validity of the adjustment. Consequently, the adjustment carried out by the CPC in the absence of the statutorily required notice cannot be sustained.

Adjustment made by CPC without issuing notice under section 143(1)(a) is vitiated; such adjustment is set aside.

Disallowance of tax credit where corresponding income not shown - non-application of mind by appellate authority - Whether, on merits, the disallowance of the TDS credit was justified and whether the CIT(A) applied his mind to the assessee's factual submissions. - HELD THAT: - On the merits, the assessee had explained the factual position showing that the receipts and the corresponding gain were dealt with by the developer and that the income was reflected in the developer's accounts and returns. The CIT(A) confirmed the disallowance merely because the assessee had not shown the income in its return, without addressing the detailed factual and documentary submissions. The Tribunal found that the CIT(A) did not apply his mind to these submissions and that the disallowance was therefore not sustainable. Having set aside the lower orders for the procedural defect, the Tribunal proceeded to decide the issue in favour of the assessee on merits.

Disallowance of TDS credit was unsustainable on merits given the assessee's submissions and the appellate authority's non-application of mind; issue decided in favour of the assessee.

Final Conclusion: The appeal is allowed: the CPC's adjustment of TDS credit without issuing the notice mandated by section 143(1)(a) is set aside, and on merits the disallowance is found unsustainable due to non-application of mind by the CIT(A); the assessee's claim for TDS credit is accepted.

Power of revision under section 263 - erroneous and prejudicial to the interests of Revenue - plausible view doctrine - application of mind by the Assessing Officer

Power of revision under section 263 - erroneous and prejudicial to the interests of Revenue - application of mind by the Assessing Officer - Validity of revision under section 263 in respect of 'advances for purchase of properties'. - HELD THAT: - The Tribunal examined whether the PCIT rightly formed an opinion that the assessment order was erroneous and prejudicial for not enquiring into advances for properties. The assessee had furnished during assessment full details of advances for properties and the Assessing Officer, after considering those details, refrained from making any addition. There is no material in the record identified by the PCIT to justify a contrary conclusion or to show that the advances were other than as declared. A revision based on the subjective opinion of the PCIT, without evidential basis that enquiries were required or that the Assessing Officer failed to apply his mind, cannot be sustained. Where the Assessing Officer has examined the claim and taken a plausible view, the order is not "erroneous" within the meaning of section 263. The PCIT's set-aside of the assessment on this item was therefore held to be unsustainable. [Paras 11]

Revision under section 263 quashed in respect of advances for properties; the PCIT's opinion was unsupported by evidence and unreasonable.

Plausible view doctrine - erroneous and prejudicial to the interests of Revenue - Validity of revision under section 263 in respect of the average rate of interest adopted for computing disallowance under section 36(1)(iii). - HELD THAT: - The Tribunal observed that the Assessing Officer adopted 14% as the average rate after considering that the assessee borrowed at rates ranging from 8% to 20% and that details of lenders and rates were on record. Consequently, it could not be said that no enquiry was made. Further, the substantive question of disallowance under section 36(1)(iii) has been rendered academic because the Commissioner (Appeals) deleted the addition on appeal. Given the deletion on appeal, the dispute over the correct rate to compute the (now-deleted) disallowance no longer calls for revision. For these reasons the PCIT's revision in relation to the rate was also held unsustainable. [Paras 12, 13]

Revision under section 263 in respect of the rate of interest is unsustainable and academic in view of deletion of the addition on appeal.

Final Conclusion: The Tribunal allowed the assessee's appeal, quashing the PCIT's revision under section 263 both in respect of advances for properties and in respect of the rate of interest for computing the disputed disallowance, holding the revision unreasonable and without adequate material; the appeal is allowed.

Exemption under Section 10(23C)(iiiad) - scope of rectification under Section 154 - permissibility of advancing a new claim after filing return - registration under Section 12A as condition for exemption under Sections 11/12 - scope of revised return and substitution of original return (Pr. CIT v. Wipro principle)

Exemption under Section 10(23C)(iiiad) - scope of rectification under Section 154 - permissibility of advancing a new claim after filing return - Whether claim for exemption under Section 10(23C)(iiiad) could be entertained when raised for the first time by the assessee by way of a rectification under Section 154 for assessment year 2011-12, and whether the assessee existed solely for educational purposes for that year. - HELD THAT: - The Tribunal held that the assessee did not claim exemption under Section 10(23C)(iiiad) in the return filed for AY 2011-12 and sought the exemption for the first time by way of a rectification application under Section 154. Section 154 is confined to correcting mistakes apparent from the record and cannot be used to introduce an altogether new claim that requires substantive examination. The principle in Pr. CIT v. Wipro that a revised return or post-filing step cannot be used to substitute the original return so as to advance an entirely new claim was applied by the Tribunal. On facts, the assessee had no university/educational recognition for the year under consideration, its accounts for the year showed no student fee receipts and comprised donations and membership fees, and registration under Section 12A was granted only with retrospective effect from 01.04.2015 (after the year in question). The Tribunal therefore concluded that (a) the attempt to convert or substitute the original return by seeking a new exemption via Section 154 was impermissible, and (b) on the material then on record the assessee was not shown to be existing solely for educational purposes for AY 2011-12; hence the exemption claim failed on merits as well. [Paras 3, 4, 8]

Rectification under Section 154 could not be used to raise a new claim of exemption under Section 10(23C)(iiiad) for AY 2011-12; on the facts the assessee was not entitled to exemption as it was not shown to exist solely for educational purposes.

Exemption under Section 10(23C)(iiiad) - registration under Section 12A as condition for exemption under Sections 11/12 - Whether the same conclusions on permissibility of the claim and entitlement to exemption apply to assessment year 2013-14. - HELD THAT: - The Tribunal recorded that facts for AY 2013-14 were identical to AY 2011-12 except for a modest amount of fee receipts for 2013-14, which the Bench held did not alter the legal character of the dispute or the applicability of the principles applied to AY 2011-12. Accordingly, the reasoning that a new claim cannot be raised by way of rectification and that the assessee had not established that it existed solely for educational purposes was applied mutatis mutandis to AY 2013-14. [Paras 11, 12]

The conclusions reached for AY 2011-12 apply to AY 2013-14; the appeal for AY 2013-14 is dismissed.

Final Conclusion: Both appeals for AY 2011-12 and AY 2013-14 were dismissed: the Tribunal held that a new exemption claim under Section 10(23C)(iiiad) could not be advanced for the first time by rectification under Section 154 and, on the material before it, the assessee was not shown to exist solely for educational purposes for the years under consideration.

Deemed dividend under section 2(22)(e) - disallowance under section 14A read with Rule 8D - characterisation of withdrawal to protect company as not falling within deemed dividend - repayment with interest and fixed deposit evidence as determinative of true nature of transaction

Deemed dividend under section 2(22)(e) - characterisation of withdrawal to protect company as not falling within deemed dividend - repayment with interest and fixed deposit evidence as determinative of true nature of transaction - Deletion of addition of Rs.3.30 Crores as deemed dividend under section 2(22)(e) upheld. - HELD THAT: - The Tribunal accepted the assessee's case that the sums withdrawn from M/s. Maharashtra Erectors Pvt. Ltd. were placed in a fixed deposit in the assessee's name to protect the interests of the company amid longstanding family litigation and were not an appropriation or application of accumulated profits for the assessee's benefit. The Kotak Mahindra Bank certificate established that the amount was placed as a term deposit without any lien or facility and the realised proceeds (principal plus interest) were subsequently transferred back to the company. On these facts the AO's characterisation of the withdrawal as a loan out of accrued profits attracting section 2(22)(e) was not justified. The Tribunal found no infirmity in the CIT(A)'s reasoning at paragraph 5.3.3 of the impugned order and dismissed the Revenue's challenge to that deletion. [Paras 6]

Order of CIT(A) deleting the addition under section 2(22)(e) is affirmed and Revenue's grounds 1 and 2 are dismissed.

Disallowance under section 14A read with Rule 8D - Deletion of addition made under section 14A read with Rule 8D upheld. - HELD THAT: - The CIT(A) followed its earlier findings for AY 2010-11 and deleted the disallowance. The Tribunal observed that the dividend income arose from the assessee's personal investments and not from business assets, and the Revenue did not produce contrary evidence to justify the disallowance under section 14A/Rule 8D. On this basis the Tribunal found no infirmity in the CIT(A)'s order. [Paras 8]

Order of CIT(A) deleting the addition under section 14A/Rule 8D is affirmed and Revenue's ground 3 is dismissed.

Repayment with interest and fixed deposit evidence as determinative of true nature of transaction - Deletion of addition of interest on the fixed deposit affirmed as consequential to deletion of the deemed dividend addition. - HELD THAT: - The CIT(A) had held that the addition of interest on the fixed deposit would not stand once the principal amount treated as deemed dividend under section 2(22)(e) was deleted. Having upheld the deletion of the deemed dividend, the Tribunal confirmed that the addition of interest on the fixed deposit likewise did not survive. The Tribunal therefore found no infirmity in the CIT(A)'s treatment of the interest addition. [Paras 10]

Order of CIT(A) deleting the addition of interest on the fixed deposit is affirmed and Revenue's ground 4 is dismissed.

Final Conclusion: All grounds raised by the Revenue were dismissed; the Tribunal affirmed the CIT(A)'s deletion of the addition under section 2(22)(e), the deletion of the disallowance under section 14A read with Rule 8D, and the deletion of interest on the fixed deposit, and accordingly dismissed the Revenue's appeal.

Unexplained cash credit under Section 68 - disallowance of interest as non-genuine - genuineness and identity of creditor - statement recorded under Section 131 and cross-examination - crystallisation of liability and mercantile accounting

Unexplained cash credit under Section 68 - disallowance of interest as non-genuine - statement recorded under Section 131 and cross-examination - genuineness and identity of creditor - Addition of Rs.2,77,50,000 as unexplained cash credit and disallowance of interest of Rs.3,42,022 upheld. - HELD THAT: - The Tribunal upheld the findings of the CIT(A) and AO that the alleged loan was not genuine. The AO recorded two statements of the alleged creditor under Section 131, the first stating that amounts received on account of land acquisition were transferred to the appellant and that no loan was given, and the second (upon re-examination) reaffirming the first statement and treating an intervening affidavit as invalid. The assessee was supplied copies of these statements and sought cross-examination but the record shows opportunity was given and the creditor reiterated his position in the second statement. The Tribunal found no rebuttal of the two statements by the assessee and agreed with the appellate authority's conclusion (paras 6.1 to 7.4 of the impugned order) that the transaction lacked genuineness and that the claimed loan/credit could not be accepted, rendering the interest claim inadmissible. [Paras 6]

Addition under Section 68 of Rs.2,77,50,000 and disallowance of interest of Rs.3,42,022 confirmed.

Crystallisation of liability and mercantile accounting - verification of claimed payments - Addition of Rs.38,00,000 on account of claimed excess payment confirmed. - HELD THAT: - The assessee claimed larger payments to three persons but could only substantiate payments totaling the lesser amount. The AO summoned the payees, who in cross-examination reiterated that they received only specific sums and denied receipt of the larger claimed amounts. The CIT(A) examined the cross-examination record (reproduced at page 43 of the impugned order) and found absence of proof for the additional claimed payments. In view of lack of evidence to establish the higher claimed outlay, the appellate authority rightly sustained the addition for the unproved portion. [Paras 8]

Addition of Rs.38,00,000 representing unproven excess payment confirmed.

Crystallisation of liability and mercantile accounting - ascertainment of liability - verification of court documents and cross-examination - Addition of Rs.1,37,00,000 claimed as payable to three land-owners confirmed as the liability was not crystallized. - HELD THAT: - The appellate record shows the alleged payees were unaware that acquisition proceeds were deposited and transferred to the appellant, and upon learning of it they sought the entire compensation. The assessee did not, during cross-examination, assert or prove that the liability of Rs.1,37,00,000 was admitted by the payees; nor did he furnish court documents (suits/complaints) that the CIT(A) had requested. The CIT(A) concluded, after examining the evidence and the absence of the appellant's proffered documentary proof, that the alleged liability was not an ascertained or crystallized obligation during the year under consideration (see paras leading to 8.8). The Tribunal found no error in that conclusion. [Paras 8]

Addition of Rs.1,37,00,000 upheld as the claimed liability was not crystallized.

Final Conclusion: The Tribunal affirmed the findings of the CIT(A) and AO on all contested points-rejecting the genuineness of the alleged loan and interest claim, and confirming the additions for unproved payments and uncrystallized liabilities - and dismissed the assessee's appeal for Assessment Year 2010-11.

Arm's Length Price - Transactional Net Margin Method - Comparability of taxpayers - Extraordinary financial event (merger) affecting comparability - Restriction of transfer pricing adjustment to international transactions - Condonation of delay due to COVID-19

Arm's Length Price - Comparability of taxpayers - Inclusion of Gorani Industries Limited (GIL) in the list of comparables - HELD THAT: - The Tribunal examined the business profile and revenue composition of the assessee and GIL. The assessee's consolidated activity for the relevant year comprised predominantly Manufacturing (77%) with Trading at 23%, whereas GIL's consolidated figures showed Trading at 56% and Manufacturing at 44%. Given that the TPO and parties compared consolidated entity-level margins under TNMM, the substantial difference in Trading-versus-Manufacturing revenue streams leads to materially different profit margins between a manufacturing model and a trading model. For this reason, GIL was found not to be comparable for determination of Arm's Length Price of the assessee's consolidated "Manufacturing Function" transactions and was directed to be excluded from the comparable set. [Paras 5]

Gorani Industries Limited excluded from the list of comparables.

Comparability of taxpayers - Extraordinary financial event (merger) affecting comparability - Inclusion of Butterfly Gandhimathi Appliances Limited (BGAL) in the list of comparables - HELD THAT: - The Tribunal reviewed BGAL's annual report and noted a merger with Gangadharam Appliances Limited (GAL) approved with retrospective effect from 1-1-2009 and incorporated in BGAL's accounts as at 31-3-2012. The merger materially influenced the financial figures for the year under consideration, constituting an extraordinary event which distorted the company's reported results. Such distortion renders BGAL incomparable with the assessee for the purposes of deriving an arm's length margin. On this basis the Tribunal concluded that BGAL should be excluded from the comparable list. [Paras 7, 8, 9]

Butterfly Gandhimathi Appliances Limited excluded from the list of comparables.

Restriction of transfer pricing adjustment to international transactions - Arm's Length Price - Whether the transfer pricing adjustment should be applied at entity level or restricted to the international transactions - HELD THAT: - Relying on precedents of higher forums including the jurisdictional High Court and having regard to the dismissal of SLP against the relevant High Court decision, the Tribunal held that transfer pricing adjustments made at entity level must be confined to the international transactions that were the subject of the transfer pricing scrutiny. Consequently, the Tribunal set aside the impugned entity-level adjustment and directed that the adjustment be restricted to the international transactions only. In view of the exclusions ordered above, the matter was remitted to the AO/TPO for fresh determination of ALP in conformity with these directions, allowing the assessee reasonable opportunity of hearing. [Paras 10, 11]

Transfer pricing adjustment to be restricted to the international transactions; matter remitted to AO/TPO for fresh determination in accordance with the Tribunal's directions.

Final Conclusion: Delay in filing the assessee's cross-objection condoned on account of COVID-19; on merits the Tribunal excluded Gorani Industries Limited and Butterfly Gandhimathi Appliances Limited from the comparable set and directed that any transfer pricing adjustment be restricted to the international transactions, remitting the matter to the AO/TPO for fresh determination consistent with these findings.

Capital gains on transfer under a Joint Development Agreement - year of chargeability of capital gains - treatment of composite SRO registration value as consideration - non-retrospective application of substantive amendment - admissibility of additional grounds requiring factual verification

Capital gains on transfer under a Joint Development Agreement - year of chargeability of capital gains - non-retrospective application of substantive amendment - Capital gains arising on execution of the Joint Development Agreement are chargeable in the assessment year in which the JDA was executed (A.Y.2016-17); section 45(5A) could not be applied retrospectively to alter that position. - HELD THAT: - The Tribunal examined the Joint Development Agreement dated 24.02.2016 and the case law relied upon by parties. Following the coordinate decisions of the jurisdictional High Court and the Tribunal, it accepted that the transfer is complete on execution of the JDA and therefore the capital gain crystallised in the previous year relevant to A.Y.2016-17. The Tribunal also noted and followed the view that the substantive provision relied upon by the assessee could not be given retrospective effect to change the year of chargeability in the facts of this case. The appellate forum found no infirmity in the CIT(A)'s reliance on those authorities and sustained the determination of taxability in A.Y.2016-17. [Paras 14]

The year of chargeability is A.Y.2016-17; the CIT(A)'s view upholding taxation on execution of the JDA is affirmed.

Treatment of composite SRO registration value as consideration - The Assessing Officer's adoption of the composite SRO value for the project and computation of the assessee's 40% share as the consideration for computing long term capital gains was upheld; the assessee's contention that only the superstructure value should be treated as consideration was rejected. - HELD THAT: - The Tribunal reviewed the facts that the SRO record showed a composite market value (land plus constructed area) and that the assessee had not adequately demonstrated a basis for bifurcating the composite figure so as to confine consideration to superstructure alone. The CIT(A) had accepted the AO's computation using 40% of the composite SRO value as the assessee's consideration and arrived at the long term capital gain after allowing indexed cost; the Tribunal found no reason to disturb that conclusion and rejected the assessee's alternative computation as being without basis in the record. [Paras 14, 15]

The computation of consideration on the basis of 40% of the composite SRO value, and the resultant capital gain determination, is sustained.

Admissibility of additional grounds requiring factual verification - The additional ground seeking deduction under section 54F (as pleaded before the Tribunal) was rejected as inadmissible because it was not a pure legal question and required factual verification and record based enquiry. - HELD THAT: - The Tribunal considered the Assessing Officer's report and the chronology showing that the assessee had not claimed the deduction before the AO or the CIT(A) and that the subsequent return relied upon by the assessee was not a valid original return for purposes of introducing the claim. Given these facts, the Tribunal held the additional ground was not a legal ground fit for admission under the rule and involved disputed factual matters requiring verification; accordingly the ground was dismissed at the threshold. [Paras 9]

The additional ground seeking deduction under section 54F is dismissed as inadmissible.

Final Conclusion: The appeal is dismissed; the CIT(A)'s order upholding assessment of long term capital gain in A.Y.2016 17 and the computation based on the SRO composite value is affirmed, and the additional ground for deduction under section 54F is rejected as inadmissible.

Computation of average rate of interest - Diversion of interest-bearing funds and disallowance of interest as business expenditure - Disallowance under section 14A and computation under Rule 8D - Inclusion of mutual fund investments for computation of exempt-income-related disallowance

Computation of average rate of interest - Diversion of interest-bearing funds and disallowance of interest as business expenditure - Deletion of addition made by the Assessing Officer by computing differential interest allegedly chargeable on advances - HELD THAT: - AO computed an average rate of interest paid by the assessee and an average rate earned on advances, concluded that borrowed interest-bearing funds were diverted and that a higher interest ought to have been charged on advances, and made an addition. Before the Commissioner (Appeals) the assessee challenged AO's computation and produced corrected workings; CIT(A) found that the average rate of interest paid was less than the average rate of interest earned and concluded the AO's addition was based on erroneous working. The Tribunal found no error in the CIT(A)'s factual finding and noted that Revenue did not point out any fallacy in those findings. On that basis the Tribunal declined to interfere with the CIT(A)'s conclusion deleting the addition. [Paras 9, 10]

Addition on account of alleged differential interest deleted; Revenue's appeal in respect of that addition dismissed.

Disallowance under section 14A and computation under Rule 8D - Inclusion of mutual fund investments for computation of exempt-income-related disallowance - Validity of Assessing Officer's inclusion of mutual fund investments while computing disallowance under section 14A (Rule 8D) and consequent cross-objection by the assessee - HELD THAT: - Assessee contended that investments in mutual funds (whose income is taxable) should have been excluded from the base for computing disallowance under section 14A read with Rule 8D. The Revenue relied on the audited investment schedule which showed investments including equity shares and entries identified by AO; the Tribunal examined the investment schedule in the audited balance sheet and observed that the assessee's investments included not only mutual funds but also equity share investments (ICICI Advantages) disclosed at the specified amount. On the facts before it, the Tribunal found no merit in the assessee's submission that mutual fund investments ought to have been excluded and held that AO was justified in including the investments for computing the disallowance under Rule 8D. [Paras 14, 15]

Assessee's ground to exclude mutual fund investments from the section 14A (Rule 8D) computation rejected; cross-objection dismissed.

Final Conclusion: Both the Revenue's appeal against deletion of interest addition and the assessee's cross-objection challenging inclusion of investments in the section 14A computation were dismissed; the Tribunal upheld the CIT(A)'s deletion of the interest addition and affirmed the AO's inclusion of investments for the Rule 8D disallowance.

Taxability of partner's remuneration and interest on capital - deductibility under section 40B and effect of non-allowance - chargeability under section 28(v) and proviso regarding adjustment - remand to Assessing Officer for verification of firm's assessment record

Taxability of partner's remuneration and interest on capital - deductibility under section 40B and effect of non-allowance - chargeability under section 28(v) and proviso regarding adjustment - Whether remuneration paid by the partnership firm and interest on capital credited to the partner are taxable in the hands of the partner when the firm shows no business profits, and the applicability of the proviso to section 28(v) in absence of any 40B claim or disallowance by the firm. - HELD THAT: - The Tribunal noted that the firm's books show amounts credited to the appellant as remuneration and interest on capital despite the firm having no business profits. Interest on capital and remuneration are ordinarily charges against firm profits and taxable as business income under the charge in section 28(v). The proviso to section 28(v) contemplates adjustment where such amounts have not been allowed as deductions under section 40B in the hands of the firm. The Tribunal held that disallowance under section 40B can arise only upon a claim by the firm; where the firm has not claimed the deduction, there is no prior disallowance recorded by the Assessing Officer. Given these legal propositions, the Tribunal concluded that the question cannot be finally resolved without examining the assessment record of the partnership firm and whether any claim or disallowance under section 40B was made or recorded. Consequently, the matter was remitted to the Assessing Officer for fresh consideration with reference to the firm's assessment record and after affording the firm a reasonable opportunity of being heard. [Paras 8]

Remand to the Assessing Officer to decide the taxability and applicability of the proviso to section 28(v) with reference to the partnership firm's assessment record and after giving the firm an opportunity of being heard; appeal partly allowed for statistical purposes.

Final Conclusion: The Tribunal remitted the issue of taxability of remuneration and interest on capital to the Assessing Officer for fresh adjudication in light of the firm's assessment record and the interplay between section 40B and the proviso to section 28(v), and accordingly the appeal is partly allowed for statistical purposes.

Services Export from India Scheme (SEIS) - Import-Exporter Code (IEC) - proviso to Section 7 of the Foreign Trade (Development and Regulation) Act, 1992 - legality of delegated legislation - delegated legislation must conform to parent statute - ultra vires

Proviso to Section 7 of the Foreign Trade (Development and Regulation) Act, 1992 - Import-Exporter Code (IEC) - legality of delegated legislation - ultra vires - delegated legislation must conform to parent statute - Validity of eligibility condition in para 3.08(f) of the Foreign Trade Policy requiring an active IEC at the time of rendering services for entitlement to SEIS - HELD THAT: - The proviso to Section 7 of the FTDR Act makes IEC necessary in cases of import or export of services or technology only when the service provider is taking benefit under the foreign trade policy; it does not stipulate that an IEC must exist at the time services were rendered. Clause 3.08(f) of the FTP, by insisting on an active IEC at the time of rendition of services, imposes an additional temporal obligation not mandated by the principal statute. Delegated legislation must conform to and remain within the scope of the parent Act and cannot create substantive rights or obligations beyond those contemplated by the Act. Applying these principles, the Court found that para 3.08(f) imposes a restriction inconsistent with the proviso to Section 7 and is therefore beyond the rule making power, rendering the condition impermissible as a mandatory precondition for SEIS entitlement. [Paras 16]

Clause 3.08(f) of the FTP is inconsistent with the proviso to Section 7 of the FTDR Act and cannot be treated as a mandatory requirement for claiming SEIS.

Services Export from India Scheme (SEIS) - Import-Exporter Code (IEC) - Relief to the petitioner in relation to its SEIS applications for 2015-2016 and 2016-2017 - HELD THAT: - Having held that the FTP condition requiring an active IEC at the time of rendering services is not mandatory, the Court directed respondents to reconsider the petitioner's SEIS applications without insisting on possession of an active IEC at the time the services were rendered. The respondents are directed to take an appropriate decision on the applications within three months from receipt of the order and communicate the decision to the petitioner. [Paras 17]

Respondents to consider the petitioner's SEIS applications afresh without insisting on an active IEC at the time of rendition, and decide within three months.

Final Conclusion: The writ petition is allowed: the FTP condition in para 3.08(f) requiring an active IEC at the time of rendering services is held inconsistent with the proviso to Section 7 of the FTDR Act and cannot be imposed as a mandatory bar; respondents are directed to reconsider the petitioner's SEIS applications for 2015-2016 and 2016-2017 without regard to IEC status at the time of rendition and to decide within three months.

Cancellation of licence without notice - Interim protection against coercive measures - Impleadment of affected officer - Continuation of prior interim order

Impleadment of affected officer - Application for impleadment of the officer who passed the impugned order was permitted to be placed on record and the officer directed to join the proceedings. - HELD THAT: - The Court allowed the impleadment application seeking to array the Additional Commissioner (Tech), who had passed the order dated 19.07.2022, as a party because that order substantially affected the petitioner's rights. The officer was directed to join the proceedings on the listed date either physically or via videoconferencing so that the office responsible for the impugned order is represented and can respond to the challenge to that order.

Impleadment permitted and the officer directed to join the proceedings on the returnable date.

Cancellation of licence without notice - Interim protection against coercive measures - Challenge to the order dated 19.07.2022 cancelling the petitioner's licence without prior notice was entertained and interim protection granted against further precipitate action. - HELD THAT: - The petitioner contended that the impugned order cancelled its licence dated 01.04.2022 without issuing a show cause notice or affording an opportunity of hearing. The Court issued notice and directed that no further precipitate steps be taken pursuant to the order dated 19.07.2022 until the next date, thereby preserving the petitioner's position pending adjudication. The Court also noted the tracking report relied upon by the petitioner indicating the date and time of dispatch of the impugned order and observed that the impugned action appeared to have been taken notwithstanding an earlier order in a connected petition.

Notice issued; interim direction that no further precipitate steps shall be taken pursuant to the order dated 19.07.2022.

Continuation of prior interim order - Interim protection against coercive measures - Application for stay of Instruction No.13/2022-Customs dated 09.07.2022 disposed of by continuation of an earlier interim order. - HELD THAT: - The Court disposed of the stay application in view of an earlier interim order dated 20.07.2022 which, insofar as the petitioner is concerned, directed that the order passed on 13.07.2022 in a connected matter would operate. Having regard to that earlier direction, the Court found no need to pass fresh directions and disposed of the application in identical terms, thereby continuing interim protection already granted.

Application disposed of by directing continued operation of the earlier interim order in favour of the petitioner.

Leave to amend pleadings - Application for permission to amend the writ petition was admitted for consideration and notice issued to respondents. - HELD THAT: - The Court issued notice on the application seeking permission to amend the writ petition and directed the respondents to file reply, if any, within one week. The matter was listed for further hearing on the specified date for adjudication of the amendment request.

Notice issued; reply called for and matter listed for hearing.

Final Conclusion: The Court issued notice and granted interim protection restraining further precipitate action pursuant to the order dated 19.07.2022, permitted impleadment of the officer who passed that order to join the proceedings, continued the effect of the earlier interim order in respect of the challenge to Instruction No.13/2022, and called for replies on ancillary applications including a proposed amendment to the writ petition.

Right to cross-examination under Section 138B(1)(b) - admissibility and evidentiary value of statements of co-accused/third parties - penal liability under Section 112(a) and Section 114AA of the Customs Act, 1962 - bona fide purchaser defence in customs penalty proceedings - requirement of independent corroborative evidence before relying on confession/statement of co-accused

Right to cross-examination under Section 138B(1)(b) - admissibility and evidentiary value of statements of co-accused/third parties - Whether the adjudicating authority could rely on statements of third parties/co-accused without permitting the appellant to cross-examine them under Section 138B(1)(b) of the Customs Act, 1962. - HELD THAT: - The Tribunal found that the Commissioner disallowed the appellant's request to cross-examine witnesses whose statements were relied upon to fasten penalty, and did not record any finding that the exceptional conditions in Section 138B(1) were satisfied. Reliance was placed on precedents holding that statements recorded under Section 108 (or equivalent) acquire evidentiary relevance only if either the person is produced for examination or the authority, in the interest of justice, permits admission after forming a specific opinion; otherwise such statements cannot be treated as proved. The adjudicating authority's acceptance of co-noticee statements without allowing cross-examination vitiated the proceedings and deprived the appellant of the opportunity to test material evidence, thereby stripping those statements of requisite evidentiary value for imposing penalty. [Paras 5, 6]

Statements of third parties/co-accused relied upon by the Commissioner were not admissible evidence in the absence of cross-examination or satisfaction of the conditions in Section 138B(1), and reliance on them vitiated the order-in-original.

Penal liability under Section 112(a) and Section 114AA of the Customs Act, 1962 - bona fide purchaser defence in customs penalty proceedings - requirement of independent corroborative evidence before relying on confession/statement of co-accused - Whether, on the available evidence, penalties under Sections 112(a) and 114AA could be sustained against the appellant for dealing in forged DEPB/VKGUY licences. - HELD THAT: - The Tribunal examined the material relied upon by the Commissioner and found no independent or clinching evidence that the appellant forged the licences or knew of the forgery. The record showed the licences were forged by other named persons, and the appellant had purchased and sold large numbers of licences (most genuine) and had himself filed FIRs and civil proceedings upon discovery of the fraud. The importer (M/s Hindalco) was treated as bonafide by the Commissioner and not penalised; similarly, absent evidence of knowledge or abetment, the appellant's bona fide dealings precluded imposition of penal liability. Further, where the case against the appellant rests primarily on statements of co-accused, those statements can only support penalty if corroborated by independent evidence, which is lacking here. [Paras 5, 7, 8]

Penalties under Sections 112(a) and 114AA could not be sustained against the appellant on the record; the appellant was a bona fide purchaser/seller and there was no independent evidence of knowledge or abetment of forgery.

Final Conclusion: The appeal is allowed; the impugned order-in-original is set aside insofar as it imposes penalties on the appellant, the penalties under Sections 112(a) and 114AA being unsustainable for lack of admissible evidence of the appellant's knowledge or involvement and for denial of cross-examination under Section 138B(1)(b).

Mis-declaration and overvaluation for wrongful duty drawback - availability of drawback on fresh goods only - admissions as evidence - afterthought and concealment - confiscation and re-determination of value under customs valuation rules - penal liability of juristic persons and directors under penal provisions of Customs Act

Mis-declaration and overvaluation for wrongful duty drawback - availability of drawback on fresh goods only - admissions as evidence - afterthought and concealment - confiscation and re-determination of value under customs valuation rules - Validity of rejection of declared export value, confiscation of goods and imposition of redemption fine on the ground that goods were old and used though declared as freshly manufactured to claim higher duty drawback. - HELD THAT: - The Tribunal upheld the finding that the exported goods were old and used despite being declared as freshly manufactured for claiming higher all industries drawback. The second proviso to Rule 3(1) of the Drawback Rules was applied to affirm that drawback is not admissible on goods taken into use after manufacture, i.e. not on old/used goods. The court treated the statements of the appellant and the CHA's F card holder as un-retracted admissions admissible in evidence, which corroborated the DRI officers' visual examination. The appellant's letter dated 31.01.2017 was examined in context and held to be a deliberate concealment and an afterthought because contemporaneous material (statements and CHA deposition) showed that the appellant had knowledge of the goods being old before sending that letter; accordingly the declared value was liable to be rejected and value re determined under the customs valuation rules, and confiscation with redemption fine was sustained. [Paras 7, 8, 9, 10, 11]

Rejection of declared value, confiscation of the goods and redemption fine upheld.

Penal liability of juristic persons and directors under penal provisions of Customs Act - Section 114(iii) and Section 114AA - applicability and intent - admissions as basis for penal mens rea - Sustainability of penalties under Section 114(iii) and Section 114AA of the Customs Act against the company and its Director for intentional mis declaration and overvaluation. - HELD THAT: - The Tribunal held that the penal provisions apply to the person as defined, which includes juristic persons; therefore a company is not excluded from liability. The factual findings of admission, corroboration by the CHA's statement, concealment by the appellant's letter and attendant circumstances (non-production of the letter despite opportunities, packing in HDPE bags) supported the conclusion of deliberate concealment and intentional mis declaration/overvaluation. On these factual and legal bases, imposition of penalties on the company and its Director under Section 114(iii) and Section 114AA was upheld. [Paras 12, 13, 14, 15]

Penalties under Section 114(iii) and Section 114AA imposed on the company and its Director upheld.

Final Conclusion: Both appeals dismissed; the rejection of declared export value, confiscation with redemption fine, and imposition of penalties on the company and its Director under Sections 114(iii) and 114AA of the Customs Act are upheld.

Principle of natural justice - right to cross-examination - probative value of untested evidence - penalty under Section 114(3) of the Customs Act, 1962 - remand for de novo adjudication - acceptance of evidence where witness unavailable under the Indian Evidence Act

Principle of natural justice - right to cross-examination - probative value of untested evidence - penalty under Section 114(3) of the Customs Act, 1962 - Whether confirmation of penalty by relying on statements of witnesses without affording the appellant opportunity of cross-examination infringes natural justice and is legally sustainable. - HELD THAT: - The Tribunal found that both the Adjudicating Authority and the Commissioner (Appeals) recorded reliance on departmental witness statements but did not deal with the appellants' specific requests for copies of relied-upon documents and for opportunity to cross-examine those witnesses. Citing settled authority that evidence not tested by cross-examination has little or no probative value, the Tribunal held that placing reliance on such untested statements amounted to a breach of the principle of natural justice. The Tribunal observed that explanations such as electronic filing and availability of shipping bills were not a substitute for granting the opportunity of cross-examination and that the lower authorities had not addressed the non-compliance with this fundamental procedural right. Consequently, the confirmation of the penalty could not be sustained. [Paras 4, 5, 6]

Confirmation of penalty was set aside because reliance was placed on witness statements without affording the appellants opportunity of cross-examination; such reliance violates natural justice and renders the order unsustainable.

Remand for de novo adjudication - acceptance of evidence where witness unavailable under the Indian Evidence Act - What remedial course should be directed where the procedure of natural justice was not followed in the original adjudication? - HELD THAT: - The Tribunal directed a remand to the Adjudicating Authority to conduct a de novo proceeding. The Authority was directed to furnish copies of relied-upon documents and to afford the appellants the opportunity to cross-examine the concerned witnesses, and to place reliance only on evidence of witnesses who could be cross-examined. The Tribunal permitted that evidence of witnesses whose attendance could not be procured at the time of the first adjudication on account of death or other legal impediment, as contemplated in the Indian Evidence Act, may be accepted only as corroborative evidence. The de novo proceeding was to be completed within six months from receipt of the order. [Paras 7]

Matter remanded for a de novo adjudication with directions to supply relied-upon documents, permit cross-examination, treat unavailable witnesses' evidence only as corroborative, and complete proceedings within six months.

Final Conclusion: The Tribunal allowed the appeals, set aside the Commissioner (Appeals) order confirming penalty under Section 114(3) of the Customs Act, 1962, and remanded the matters for de novo adjudication with directions to furnish relied-upon documents, permit cross-examination, and proceed in accordance with the guidance given, with the de novo proceedings to be completed within six months.

Duty of Customs Broker under Regulation 10(n) of CBLR, 2018 to verify IEC, GSTIN, identity and functioning of client by reliable, independent, authentic documents, data or information - presumption as to genuineness of government-issued certificates and registrations - limits of verification - no obligation on Customs Broker to oversee correctness of government officers' actions or to conduct physical inspection of client premises - reliance on official registrations (GSTIN, IEC, PAN) as satisfying KYC requirements

Duty of Customs Broker under Regulation 10(n) of CBLR, 2018 to verify IEC, GSTIN, identity and functioning of client by reliable, independent, authentic documents, data or information - reliance on official registrations (GSTIN, IEC, PAN) as satisfying KYC requirements - Whether the Commissioner was correct in holding that the appellant Customs Broker violated Regulation 10(n) of CBLR, 2018. - HELD THAT: - Regulation 10(n) requires verification of correctness of IEC and GSTIN, verification of client identity, and verification of functioning at declared address by using reliable, independent, authentic documents, data or information. Verification of IEC and GSTIN is satisfied if the Customs Broker establishes that such documents were in fact issued by the concerned government officers (for example, by online checks or comparing originals); the Regulation does not cast upon the Broker the duty to supervise or re-assess the correctness of actions by government authorities. Official registrations-GSTIN, IEC and PAN-issued by governmental authorities are presumptively genuine and qualify as reliable, independent and authentic evidence of identity and address. The obligation to verify functioning at the declared address can be met by documents, data or information and does not mandate physical inspection of premises in every case. Where the only evidence is a post-facto verification by GST officers that an exporter was "non bonafide" or not traceable at a given address, that does not by itself establish failure of the Broker if the Broker had relied on genuine government-issued registrations and KYC documents. Applying these principles to the present facts, the appellant had produced genuine government-issued KYC documents (GSTIN, IEC, PAN, etc.) and there is no evidence those documents were forged; the DGARM analysis itself was based on departmental registrations. Thus the record does not support a finding that the Broker failed its verification obligations under Regulation 10(n). [Paras 24, 25, 26, 27, 28]

The Commissioner was not correct in holding that the appellant violated Regulation 10(n) of CBLR, 2018; the finding of violation is set aside.

Sanction of revocation of Customs Broker licence - consequential relief where primary finding of violation is vacated - Whether the revocation of the appellant's Customs Broker licence can be sustained. - HELD THAT: - Revocation of the licence was predicated on the finding of contravention of Regulation 10(n). Since the Tribunal finds that the Broker did not fail in discharging the obligations under Regulation 10(n) on the available evidence, the foundational basis for revocation is absent. Where the primary legality of the impugned action is negated, consequential punitive measures dependent on that finding cannot be sustained. [Paras 27, 28]

Revocation of the licence cannot be sustained and is set aside.

Forfeiture of security deposit as consequence of alleged regulatory breach - Whether the forfeiture of the appellant's security deposit is correct. - HELD THAT: - Forfeiture of the security deposit was ordered pursuant to the impugned determination that the Broker breached Regulation 10(n). Having concluded that there was no proven breach on the record, the basis for forfeiture collapses and the order for forfeiture cannot be sustained. [Paras 27, 28]

Forfeiture of the security deposit is not sustained.

Imposition of penalty consequent upon alleged breach of Regulation 10(n) - Whether the imposition of penalty of Rs. 50,000 on the appellant is correct. - HELD THAT: - The penalty was imposed as a consequence of the finding that the Broker violated Regulation 10(n). As that finding is set aside on the evidence and legal analysis, the punitive order lacks foundation and cannot be maintained. [Paras 27, 28]

The penalty imposed cannot be sustained.

Final Conclusion: The impugned order revoking the Customs Broker licence, forfeiting the security deposit and imposing penalty is set aside. The appeal is allowed and the relief consequential to vacatur of the findings is granted.

Interim stay of show cause notices - no coercive steps pending adjudication - service or receipt of show cause notice as trigger for interim relief - liberty to seek directions upon issuance of a show cause notice - time for filing counter-affidavits and rejoinders

Interim stay of show cause notices - no coercive steps pending adjudication - service or receipt of show cause notice as trigger for interim relief - Operation of the interim orders dated 13.07.2022 and 20.07.2022 in cases where show cause notices have been issued and received by the petitioners. - HELD THAT: - The Court applied the interim protection previously granted in W.P.(C.) 10537/2022 to all listed matters in which show cause notices (SCNs) have been issued and received by the petitioners. Consequently, insofar as those matters are concerned, the impugned instruction and any coercive action pursuant to the SCNs shall not be acted upon until further orders of the Court. The order extends the stay on the operation of the SCNs (as recorded in the order passed in W.P.(C.) 10537/2022) to the matters identified where SCNs have been received, thereby making the earlier interlocutory protection operative in those proceedings. [Paras 3, 4]

The interim orders of 13.07.2022 and 20.07.2022 shall operate in all matters where SCNs have been issued and received, and no coercive steps shall be taken in those matters pending further orders.

Interim stay of show cause notices - liberty to seek directions upon issuance of a show cause notice - Operation of interim protection in the matter where a show cause notice has not yet been received by the petitioner (W.P.(C) 10838/2022) and the course if a SCN is subsequently issued. - HELD THAT: - The Court observed that in W.P.(C) 10838/2022 the SCN has not been received by the petitioner. For the present, the earlier order dated 13.07.2022 in W.P.(C.) 10537/2022 will continue to operate in that matter. The Court granted the petitioner the liberty to approach the Court for appropriate directions if and when a SCN is issued and served, thereby preserving the petitioner's right to seek interim relief upon service. [Paras 3, 4]

The order of 13.07.2022 will operate for W.P.(C) 10838/2022 for the time being; if a SCN is subsequently issued, the petitioner may move the Court for appropriate directions.

Interim stay of show cause notices - Grant of stay on the operation of the specific show cause notice dated 11.07.2022 in W.P.(C.) 10537/2022 (interlocutory application CM 31693/2022). - HELD THAT: - In W.P.(C.) 10537/2022 the Court considered the interlocutory application seeking stay of the SCN dated 11.07.2022 (dispatched on 13.07.2022) and ordered a stay on the operation of that SCN until the next date of hearing. That stay forms the basis for extending interim protection to other matters where SCNs have been received. [Paras 2]

The operation of the SCN dated 11.07.2022 in W.P.(C.) 10537/2022 is stayed until the next date of hearing.

Time for filing counter-affidavits and rejoinders - Procedural directions on service, filing of pleadings and listing of matters. - HELD THAT: - The Court issued notice in the listed writ petitions and interlocutory applications, recorded acceptance of notice by counsel for the respondents and granted the respondents three weeks to file counter-affidavit(s). Rejoinders, if any, were directed to be filed before the next date of hearing. The matters were listed for further hearing on the specified date and parties were permitted to act on digitally signed copies of the order. [Paras 5, 6, 7, 8]

Respondents given three weeks to file counter-affidavit(s); rejoinders to be filed before the next date; matters listed for further hearing and parties may rely on digitally signed copies of the order.

Final Conclusion: Interim protection granted in W.P.(C.) 10537/2022 (stay of the SCN dated 11.07.2022 and prohibition of coercive steps) is made operative in all listed matters where SCNs have been issued and received; in the matter where no SCN has been received the earlier order continues to operate and the petitioner has liberty to approach the Court if a SCN is issued; procedural timelines for filing of pleadings and the next listing were directed.

Fair and transparent sale process - Swiss Challenge Method - writ jurisdiction of High Court - role of NCLT in approval of asset sale under resolution framework - Expression of Interest (EOI) - proposed resolution framework for asset monetisation

Writ jurisdiction of High Court - role of NCLT in approval of asset sale under resolution framework - Whether the High Court should exercise writ jurisdiction to intervene in the challenged sale process of the 42.25% stake. - HELD THAT: - The Court declined to exercise its writ jurisdiction and observed that the Proposed Resolution Framework contemplates NCLT approval at the stage of conclusion of sale and transfer of title. The framework prescribes steps including invitation of Expression of Interest, proposal requests to eligible applicants, due diligence, submission of binding offers, declaration of successful applicant by the new board and requirement of NCLT approval before finalising the sale. The Court held that objections to the conduct of the sale process are matters for the NCLT to consider under the resolution process and that it would not adjudicate the merits of the sale in writ jurisdiction. [Paras 8, 10, 11]

Writ jurisdiction refused; petitioner to seek appropriate relief before the NCLT as the resolution framework and NCLT approval are the appropriate fora for challenge.

Fair and transparent sale process - Expression of Interest (EOI) - Swiss Challenge Method - proposed resolution framework for asset monetisation - Whether the impugned advertisement and invitation document, which disclose an existing binding offer and use a process akin to a Swiss Challenge, are impermissible or render the sale opaque and unfair. - HELD THAT: - The Court noted that the Proposed Resolution Framework prescribes an eight-step asset-level process requiring invitation of Expression of Interest, issuance of request for proposal to eligible applicants, due diligence, submission of binding financial offers and NCLT approval. The respondents have adopted a Swiss Challenge method but the Court held that such a method cannot be said to be impermissible per se. The Court also recorded that the petitioner had not submitted an Expression of Interest and therefore had not participated in the process; any legitimate objections to the sale's fairness can be raised before the NCLT as contemplated by the framework. [Paras 8, 9]

Use of a Swiss Challenge method within the stated resolution framework is not impermissible; petitioner's non-submission of EOI militates against relief in writ; concerns about fairness are to be ventilated before the NCLT.

Final Conclusion: Writ petition dismissed without adjudication on merits; the Court refused to exercise writ jurisdiction and directed that challenges to the sale process and its fairness be pursued before the NCLT in accordance with the Proposed Resolution Framework; no costs.

Extinguishment of pre CIRP claims by an approved resolution plan - binding and freezing effect of an approved resolution plan on creditors including Central and State authorities - approval of resolution plan under Section 31 and extinguishment of non plan claims - exercise of writ jurisdiction under Article 226 despite availability of an alternate remedy

Exercise of writ jurisdiction under Article 226 despite availability of an alternate remedy - maintainability of writ petition seeking quashing of adjudication when alternate appellate remedy exists - Whether the writ petition under Article 226 was maintainable despite the respondents' plea of an alternate remedy by way of appeal. - HELD THAT: - The Court held that the existence of an alternate remedy does not automatically oust the High Court's discretionary jurisdiction under Article 226. Relying on the principle that relegation to an alternate remedy is a self imposed limitation and not a fetter on the High Court's power, the Court observed that in appropriate cases a writ petition invoking consequential monetary or declaratory relief may be entertained. Having regard to the facts and to established authorities, the preliminary objection based on availability of an alternate remedy was rejected and the writ petition was entertained. [Paras 6, 7, 9]

The preliminary objection to maintainability grounded on the availability of an alternate remedy was overruled and the writ petition was held maintainable.

Extinguishment of pre CIRP claims by an approved resolution plan - binding and freezing effect of an approved resolution plan on creditors including Central and State authorities - approval of resolution plan under Section 31 and extinguishment of non plan claims - Whether the demand and adjudication against the petitioner relating to transactions for FY 2013-2014 survived after approval of the resolution plan by the Adjudicating Authority. - HELD THAT: - Applying the principle laid down in Ghanshyam Mishra, the Court concluded that once a resolution plan is duly approved by the Adjudicating Authority under Section 31, claims not incorporated in the resolution plan stand frozen and are extinguished; such claims cannot be initiated or continued against the corporate debtor. The material facts show that the CIRP had been initiated with a public notice inviting claims (which included tax authorities), the revenue did not lodge a claim, the resolution plan was approved by the NCLT and thereafter affirmed by NCLAT, and payments under the plan were effected. Allowing the impugned adjudication to stand would burden the petitioner with unexpected claims and frustrate the commercial purpose of the resolution process. In these circumstances the demand adjudicated in the impugned order was held to be extinguished. [Paras 11, 12, 14, 15, 16]

The adjudication/order dated 27.07.2020 was quashed as the demand was extinguished by virtue of the approved resolution plan.

Final Conclusion: Writ petition allowed; impugned order dated 27.07.2020 quashed on the ground that the demand in respect of FY 2013-2014 stood extinguished by the approval of the resolution plan, the petition being maintainable under Article 226; parties to bear their own costs.

Suspension of initiation of corporate insolvency resolution process under Section 10A - Exclusion of defaults arising on or after 25th March, 2020 from CIRP - Minimum threshold limit for initiation of CIRP and its application to Section 9 petitions - Locus to prefer an appeal under Section 61 against adjudicating authority orders - Maintainability of Section 9 petition where post-25 March 2020 invoices are excluded

Locus to prefer an appeal under Section 61 against adjudicating authority orders - Appellant, though not a party to the Section 9 petition before the Adjudicating Authority, has locus to file the present appeal. - HELD THAT: - The Tribunal examined whether the home buyer (appellant) who was neither applicant nor respondent in the Section 9 petition was an aggrieved person entitled to prefer an appeal under Section 61. Having regard to the appellant's direct financial stake as a home buyer of the same project, the withdrawal of an earlier intervention on the Adjudicating Authority's advice and the potential prejudice to the class of home buyers if the CIRP continued (including change in representation in the CoC), the Tribunal found that the appellant was directly affected and thus entitled to challenge the impugned order. The statutory right to appeal under Section 61 was held to extend to the appellant in the circumstances of this case.

Appellant is held to have locus and is entitled to maintain the appeal.

Suspension of initiation of corporate insolvency resolution process under Section 10A - Exclusion of defaults arising on or after 25th March, 2020 from CIRP - Two invoices dated 1st April, 2020 and 4th April, 2020 fall within the period covered by Section 10A and cannot be considered for initiation of CIRP. - HELD THAT: - Section 10A suspends initiation of CIRP for defaults arising on or after 25th March, 2020 for the specified period and clarifies that defaults committed before that date are not covered. The two disputed invoices were issued after 25th March, 2020. The record shows an earlier email dated 4th March, 2020 demanding a lesser amount; the two invoices dated 1st and 4th April, 2020 were raised subsequently and are therefore covered by the suspension. Accordingly, those invoices were held to be barred from being relied upon for initiating insolvency proceedings under Section 9.

The two invoices issued after 25th March, 2020 are excluded by Section 10A and cannot be considered for initiation of CIRP.

Minimum threshold limit for initiation of CIRP and its application to Section 9 petitions - Maintainability of Section 9 petition where post-25 March 2020 invoices are excluded - After excluding the post 25 March, 2020 invoices, the admitted debt falls short of the notified threshold of Rs. 1 crore and the Section 9 petition was not maintainable. - HELD THAT: - The statutory scheme and the central government notification raised the minimum amount of default to Rs. 1 crore for invoking the relevant part of the Code. The Operational Creditor's original claim-by email (4th March, 2020) recorded a lower figure; the demand notice later included the two invoices now excluded under Section 10A. The Tribunal noted inconsistent figures advanced by the Operational Creditor at different stages and declined to traverse historical account by account minutiae. Prima facie, once the two post 25 March invoices are excluded, the debt does not meet the Rs. 1 crore threshold required to maintain a Section 9 petition. On that basis the petition admitted by the Adjudicating Authority was held to be not maintainable.

Section 9 petition was not maintainable as the admitted debt, after excluding the post 25 March invoices, fell below the Rs. 1 crore threshold.

Final Conclusion: The appeal is allowed. The Tribunal held that the appellant had locus to challenge the Section 9 admission; two invoices dated after 25th March, 2020 are barred by Section 10A and cannot be relied upon; and, excluding those invoices the debt falls below the notified Rs. 1 crore threshold, rendering the Section 9 petition not maintainable. The impugned order dated 22nd March, 2022 admitting the Section 9 petition is set aside.

Liquidation under the Insolvency and Bankruptcy Code - Resolution by the Committee of Creditors to liquidate - Appointment of liquidator - Initiation of liquidation under section 33(2) - Liquidation process under Chapter III and IBBI (Liquidation Process) Regulations - Public notice and newspaper publication in liquidation - Cessation of powers of board and vesting of powers in liquidator - Restriction on suits and legal proceedings subject to section 52 and proviso to section 33(5)

Resolution by the Committee of Creditors to liquidate - Initiation of liquidation under section 33(2) - Appointment of liquidator - Liquidation process under Chapter III and IBBI (Liquidation Process) Regulations - Public notice and newspaper publication in liquidation - Cessation of powers of board and vesting of powers in liquidator - Restriction on suits and legal proceedings subject to section 52 and proviso to section 33(5) - Whether the Corporate Debtor should be placed in liquidation and the Resolution Professional appointed as liquidator, and what consequential directions should follow. - HELD THAT: - The Tribunal recorded that the Committee of Creditors, in its fifth meeting dated 15.03.2021, with the requisite majority (100% voting share), resolved that there was no prospect of a viable resolution plan and passed a resolution to liquidate the Corporate Debtor and to authorise the Resolution Professional to file an application under section 33(2) of the Code. On perusal of the application, the CoC resolution and the conduct of the CIRP (including public announcement, valuation exercise and invitation of EoIs with no viable resolution applicant), the Adjudicating Authority was satisfied that liquidation was appropriate. The Tribunal therefore admitted the application under section 33(2) and initiated the liquidation process, appointing the existing Resolution Professional as liquidator in terms of section 34(1). The Tribunal directed that the liquidator shall carry out the liquidation in accordance with Chapter III of the Code and the IBBI (Liquidation Process) Regulations, issue the required public notices in widely circulated newspapers in the State of incorporation, notify the Registrar of Companies for updation of master data, and that all powers of the board and key managerial personnel shall cease and vest in the liquidator. The order also recorded that, subject to section 52 of the Code, no suit or legal proceeding shall be instituted by or against the Corporate Debtor except as permitted under section 33(5) read with its proviso, and that the fees of the liquidator shall be as approved by the CoC. The Tribunal allowed IA 971/2021 and consigned the file to records. [Paras 9, 10]

IA 971 of 2021 allowed; liquidation of the Corporate Debtor ordered; Ms. Nishi Jain appointed as liquidator with directions to proceed under Chapter III of the Code and the IBBI Regulations, to publish public notices, to inform the Registrar of Companies, and for cessation of board powers; suits restrained subject to statutory provisions.

Final Conclusion: The Adjudicating Authority admitted the application under section 33(2) of the Code, ordered liquidation of Salasar Enterprises Private Limited, appointed the Resolution Professional as liquidator and issued consequential directions for carrying out the liquidation process in accordance with the Code and the IBBI Regulations; IA 971/2021 is allowed.

Dissolution of the corporate debtor under Section 54 of the Insolvency & Bankruptcy Code, 2016 - completion of liquidation in accordance with the Code and Regulations - absence of intent to defraud in the liquidation process - exclusion of specified period from the liquidation timeline due to non-cooperation/absconding of suspended directors - discharge of the liquidator and communication to Registrar of Companies

Completion of liquidation in accordance with the Code and Regulations - absence of intent to defraud in the liquidation process - discharge of the liquidator and communication to Registrar of Companies - Whether the liquidation process of the Corporate Debtor has been completed in accordance with the Code and Regulations and whether the Corporate Debtor should be dissolved and the Liquidator discharged. - HELD THAT: - The Tribunal examined the documents and progress reports filed by the Liquidator, including the Assets Memorandum, multiple progress reports, the Final Report dated 27th June 2022 and the bank statements of the liquidation account. The Tribunal found that the affairs of the Corporate Debtor have been wound up and its assets completely liquidated, the liquidation bank account was closed, and the process did not evince intent to defraud any person. The Stakeholders Consultation Committee had been constituted and authorised the Liquidator to seek dissolution. On these facts, the Tribunal concluded that due process under the Code and Regulations was followed and that it would be just and equitable to dissolve the Corporate Debtor. Consequential reliefs-dissolution with immediate effect, forwarding a certified copy of the order to the Registrar of Companies, and discharge of the Liquidator-were ordered. [Paras 10, 11]

The Corporate Debtor is dissolved with immediate effect; the Registry to forward a certified copy to the Registrar of Companies; the Liquidator is discharged; the IA is allowed and the company petition stands closed.

Exclusion of specified period from the liquidation timeline due to non-cooperation/absconding of suspended directors - Whether a specified period during the liquidation should be excluded from the liquidation timeline on account of delay caused by absconding and non-cooperation of the suspended directors. - HELD THAT: - The Tribunal noted that the liquidation process was inordinately delayed because the suspended directors and promoters had absconded and failed to cooperate, obstructing appointment of valuers and other steps. Having regard to these circumstances, the Tribunal excluded the period of 137 days between 19th February 2022 and 5th July 2022 from the period of liquidation. [Paras 9]

The period of 137 days from 19th February 2022 to 5th July 2022 is excluded from the liquidation period.

Final Conclusion: The Tribunal allowed the liquidator's application: Dharam Paul Metal Private Limited is dissolved immediately, the Registrar of Companies is to be informed, the Liquidator is discharged, the IA is disposed of and the original company petition is closed; a 137 day period during liquidation was excluded due to non cooperation by suspended directors.

Maintainability of third party application under Section 60(5) of the Insolvency and Bankruptcy Code - effect of arbitration clause on forum competence of the Adjudicating Authority - jurisdictional boundary between NCLT and civil courts in respect of specific performance of contracts - collusive litigation and doctrine of clean hands

Maintainability of third party application under Section 60(5) of the Insolvency and Bankruptcy Code - Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta & Ors. - Application filed by a non party investment vehicle seeking reliefs under Section 60(5) of the Code is not maintainable before the Tribunal. - HELD THAT: - The applicant was an independent investment vehicle and not a party to the CIRP of either corporate debtor. Applying the principle laid down by the Supreme Court in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta & Ors., the Bench held that the present interlocutory application instituted by a third party was not maintainable under Section 60(5) of the Code. The Tribunal noted the applicant's delayed invocation of remedies and that the application amounted to an afterthought filed when processes had already culminated, reinforcing the conclusion on non maintainability. The Bench also observed that the applicant sought to absolve persons who were its own constituents and to recover only from the Committee of Creditors, reflecting collusive conduct and an attempt to take advantage of its own wrongs, which further detracted from maintainability.

The application by the third party is not maintainable and is dismissed on that ground.

Effect of arbitration clause on forum competence of the Adjudicating Authority - arbitration agreement as a bar to tribunal adjudication of contractual disputes - A contractual arbitration clause providing for reference of disputes to arbitration bars the Tribunal from adjudicating the contractual disputes between the parties under the MOU. - HELD THAT: - The MOU contained a clear arbitration clause providing for referral of disputes to a sole arbitrator in Pune under the Arbitration and Conciliation Act. The Tribunal accepted the respondent's contention that the existence of this clause demonstrates the parties' intention to refer their disputes to arbitration, and that the petitioner's contention that the arbitration clause would not bar filing before the Tribunal did not apply on the facts. Consequently, the Tribunal held it lacked jurisdiction to decide the contractual disputes arising from the MOU in the present proceeding.

The arbitration clause operates as a bar to the Tribunal deciding the contractual disputes in this application; the IA is liable to be dismissed on that score.

Jurisdictional boundary between NCLT and civil courts in respect of specific performance of contracts - exclusive competence of civil courts for specific performance - Relief in the nature of specific performance of the MOU is not to be granted by the Tribunal and belongs to the civil courts' domain. - HELD THAT: - The applicant sought specific performance of the MOU. The Bench relied on settled law that claims for specific performance of contracts are to be pursued before civil courts and that the NCLT is not the appropriate forum to grant such reliefs. Applying this jurisdictional principle, the Tribunal declined to entertain the prayer for specific performance in the present interlocutory application.

The Tribunal has no jurisdiction to grant specific performance; that relief is to be sought before the civil court.

Collusive litigation and doctrine of clean hands - award of costs for exceptional conduct - The application was dismissed as devoid of merits and, in view of the applicants' conduct, the Tribunal imposed costs payable to the Prime Minister's Relief Fund. - HELD THAT: - The Tribunal recorded that the applicants delayed seeking relief, that their communication for refund was belated, and that the applicants had arrayed certain promoters as respondents yet sought refund only from the Committee of Creditors-conduct indicative of collusion and an attempt to evade personal liability. Viewing the application as exceptional and without merit, the Bench imposed costs on the applicant to be paid to the Prime Minister's Relief Fund within two weeks and directed filing of a compliance affidavit. The order preserved the applicant's liberty to initiate appropriate legal proceedings subject to law of limitation.

The IA is dismissed with costs (to be paid to the Prime Minister's Relief Fund) and the applicant remains free to initiate appropriate proceedings subject to limitation.

Final Conclusion: The interlocutory application filed by the non party investment vehicle is dismissed as not maintainable; the Tribunal cannot adjudicate the contractual disputes in view of the arbitration clause and has no jurisdiction to grant specific performance, and costs are imposed on the applicant while preserving the right to pursue appropriate remedies subject to limitation.

Initiation of Insolvency Resolution Process against personal guarantor - Compliance with requirements of Section 94 of the Insolvency and Bankruptcy Code, 2016 - Admission of application under Section 100 upon report under Section 99 - Moratorium consequent to initiation of Insolvency Resolution Process - Functions and duties of Resolution Professional in conducting IR process, claims registration and meetings of creditors

Initiation of Insolvency Resolution Process against personal guarantor - Compliance with requirements of Section 94 of the Insolvency and Bankruptcy Code, 2016 - Admission of application under Section 100 upon report under Section 99 - Application under Section 94 filed by the personal guarantor for initiation of Insolvency Resolution Process was admitted and IR Process was initiated against the applicant. - HELD THAT: - The Tribunal examined the petition filed by the personal guarantor in the prescribed proforma and the compliance affidavit furnished under the directions of the Adjudicating Authority. The Resolution Professional filed a report under Section 99 after obtaining and considering requisite information, documents and clarifications, concluding that the application satisfied the requirements of Section 94 and recording that the corporate debtor had committed default and that the personal guarantor had also defaulted. There being no request from the Resolution Professional for negotiation directions and on the basis of the reasons recorded in the report, the Tribunal found the application in compliance with the provisions of the Code and admitted the petition under Section 100, thereby initiating the Insolvency Resolution Process against the personal guarantor. [Paras 2, 3, 4, 5, 10]

The petition under Section 94 is allowed and admitted; Insolvency Resolution Process is initiated against the personal guarantor.

Moratorium consequent to initiation of Insolvency Resolution Process - A moratorium under the Code was declared from the date of admission for the statutory period applicable to the IR Process. - HELD THAT: - Upon admission of the application and initiation of the IR Process, the Tribunal declared the moratorium with effect from the date of admission and for the duration prescribed by the Code. The Tribunal recorded that during the moratorium pending legal actions in respect of any debt shall be stayed, creditors shall not initiate proceedings, and the debtor shall not transfer, alienate, encumber or dispose of assets, subject to exceptions notified by the Central Government in consultation with regulators. [Paras 5]

Moratorium is declared effective from the date of admission and shall operate for the period specified under the Code.

Functions and duties of Resolution Professional in conducting IR process, claims registration and meetings of creditors - Claims registration, public notice and preparation of list of creditors - The Resolution Professional was directed to perform specified duties: publish public notice, invite and receive claims, prepare list of creditors, and oversee preparation and submission of the repayment plan and conduct of creditors' meeting as prescribed under the Code. - HELD THAT: - The Tribunal appointed the Resolution Professional and directed him to cause publication of a public notice within seven days of uploading the order, invite claims to be registered within twenty-one days, and furnish copies of the notice to the Registry. The Resolution Professional was directed to prepare the list of creditors within thirty days from the notice, assist the debtor in preparing a repayment plan, and submit the plan with his report within twenty-one days from the last date for submission of claims. Directions were also given as to summoning or not summoning a meeting of creditors and to conduct any such meeting in accordance with the statutory provisions, with the Resolution Professional required to record reasons and prepare reports in compliance with the Code and its code of conduct. [Paras 3, 6, 7, 8, 9]

The Resolution Professional is directed to carry out the statutory steps of the IR Process including publication of notice, claims registration, preparation of creditors' list, facilitation of a repayment plan and, if required, convening and reporting on the creditors' meeting.

Final Conclusion: The Tribunal admitted the application under Section 94 and initiated the Insolvency Resolution Process against the personal guarantor, declared the statutory moratorium, appointed the Resolution Professional and directed him to carry out the prescribed steps for claims, creditors' list, repayment plan and related proceedings under the Code.

Initiation of Insolvency Resolution Process for Personal Guarantor - Admission of application under the Insolvency and Bankruptcy Code - Moratorium during Insolvency Resolution Process - Appointment and duties of Resolution Professional - Filing and verification of claims by creditors - Preparation and submission of repayment plan

Initiation of Insolvency Resolution Process for Personal Guarantor - Admission of application under the Insolvency and Bankruptcy Code - Application filed under Section 94 of the IBC by the personal guarantor was admitted. - HELD THAT: - The Resolution Professional, appointed earlier, examined the application and underlying documents and reported that the requirements of Section 94 were satisfied. The report recorded that the corporate debtor had committed default in repayment of loan facilities and that the personal guarantor had also defaulted after invocation of guarantees. On the basis of the report and compliance affidavit filed by the applicant, the Adjudicating Authority found the statutory requirements met and admitted the petition under the Code, thereby initiating the Insolvency Resolution Process against the personal guarantor. [Paras 4, 5]

CP(IB) No.185/Chd/Hry/2021 filed under Section 94(1) is allowed and admitted; Insolvency Resolution Process initiated against the personal guarantor.

Moratorium during Insolvency Resolution Process - Moratorium consequent to admission was declared for the period provided under the Code. - HELD THAT: - On admission of the application, the Adjudicating Authority declared the moratorium operative from the date of admission and lasting for the statutory period of 180 days. The order records the effects of moratorium: stay of pending legal proceedings in respect of any debt, prohibition on creditors initiating legal proceedings, and restraint on the debtor from transferring or encumbering assets, subject to transactions notified by the Central Government in consultation with financial regulators. [Paras 5]

Moratorium declared from date of admission and to continue for 180 days with the statutory consequences.

Appointment and duties of Resolution Professional - Filing and verification of claims by creditors - Preparation and submission of repayment plan - Resolution Professional was appointed and directed to perform statutory duties including public notice, claim registration, preparation of list of creditors and facilitation of repayment plan and meetings. - HELD THAT: - The Resolution Professional appointed under Section 97 was directed to cause publication of public notice inviting claims within seven days of web upload and to receive claims within 21 days of such notice, complying with the information requirements of the Code. The RP was directed to prepare the list of creditors within the prescribed period, assist the debtor in preparing a repayment plan, and submit the plan together with his report within the timeframe mandated by the Code. The RP was also required to record reasons if a creditors' meeting was not to be summoned and, if summoned, to convene and report on such meeting in accordance with the statutory provisions. The RP must perform these functions in conformity with the Code of Conduct under the Code. [Paras 3, 6, 7, 8, 9]

Resolution Professional to publish notice, invite and verify claims, prepare list of creditors, facilitate preparation and submission of repayment plan, and convene creditors' meeting as required; to act in compliance with the Code.

Final Conclusion: The petition under Section 94 was admitted and the Insolvency Resolution Process was initiated against the personal guarantor Anita Bansal; a moratorium was declared and the Resolution Professional was appointed and directed to carry out publication, claims registration, preparation of the creditors' list, facilitation and submission of a repayment plan and conduct of creditors' meetings in accordance with the Code.

Withdrawal of approved resolution plan - binding and irrevocable nature of a submitted resolution plan - absence of provision for withdrawal of a resolution plan after approval by the Adjudicating Authority - precedential effect of Ebix Singapore on post approval modification or withdrawal

Withdrawal of approved resolution plan - binding and irrevocable nature of a submitted resolution plan - Whether a successful resolution applicant can withdraw a resolution plan after it has been approved by the Committee of Creditors and by the Adjudicating Authority. - HELD THAT: - The Tribunal found that the successful resolution applicant's plan had been approved by the CoC and subsequently by the Adjudicating Authority, but the applicant sought to withdraw the approved plan on account of financial difficulties. The Tribunal applied the binding principle stated by the Hon'ble Supreme Court in Ebix Singapore, holding that the insolvency framework does not permit modification or withdrawal of a CoC approved resolution plan at the behest of the successful resolution applicant once it has been submitted to and approved by the Adjudicating Authority. A submitted resolution plan is treated as a considered, binding and irrevocable commitment by the resolution applicant, and there is no statutory provision under the Code or NCLT Rules permitting recall or withdrawal of the approved plan. The Tribunal therefore rejected the application seeking withdrawal as not maintainable in law.

Application for withdrawal of the resolution plan after approval by the CoC and the Adjudicating Authority is not permissible; the IA is rejected and disposed of.

Final Conclusion: The application seeking withdrawal of the resolution plan approved by this Adjudicating Authority was dismissed; the approved resolution plan cannot be withdrawn post approval and the IA 88 of 2020 is rejected and disposed of.

Stay of recovery proceedings - constitution of Tribunal - appointment of Tribunal members - hearings before Tribunal in absence of Chairman - judicial remedy before Tribunal

Stay of recovery proceedings - appointment of Tribunal members - Interim application for stay (IA No. 87842/2022) dismissed. - HELD THAT: - The Court found the averments in the stay application unsatisfactory and noted that the grievance of the petitioner was mitigated by the Government's decision to notify members of the Tribunal on 11.07.2022 with the official notification to be issued shortly. In those circumstances the Court declined to grant the interim relief sought and dismissed the application.

Application dismissed.

Hearings before Tribunal in absence of Chairman - constitution of Tribunal - judicial remedy before Tribunal - Question whether hearings can proceed before the Tribunal in respect of matters listed before it in the absence of the Chairman, and whether a general stay of recovery proceedings should be directed, was left undecided and taken for further consideration. - HELD THAT: - The Court posed inquiries as to whether hearings could lawfully take place before the Tribunal if members are appointed but the Chairman is absent, and whether a blanket stay of recovery proceedings should be ordered given delays in constituting the Tribunal which forced parties to approach the High Court. The learned ASG sought time to obtain instructions. The Court did not adjudicate these questions on merits and listed the matter for further hearing on 02.08.2022.

Issue reserved/listed for further hearing.

Final Conclusion: The interim stay application was dismissed; the Government's decision to notify Tribunal members was recorded as addressing the petitioner's primary grievance; ancillary questions regarding conduct of hearings without a Chairman and any broad stay of recovery proceedings were not decided and have been reserved for further consideration at the next listing.

Judicial review of government tender conditions - Permissible scope of review in defence procurement and national security tenders - Doctrine of Wednesbury reasonableness - Integrity requirement in public procurement - Eligibility condition requiring absence of ongoing enquiry by enforcement agencies - Effect of amalgamation on transfer of liabilities

Eligibility condition requiring absence of ongoing enquiry by enforcement agencies - Integrity requirement in public procurement - Permissible scope of review in defence procurement and national security tenders - Validity of Clause 7.2.19 of the DRDO Procurement Manual, 2020 (requiring an undertaking that no enquiry is pending by CBI/ED/any other government agency) and whether it is arbitrary or violative of Article 14. - HELD THAT: - The tenders relate to sensitive defence research and national security; courts adopt limited review in such procurement matters. Given the nature of the projects, the requirement that bidders declare they are not subject to ban/debarment and that no enquiry by CBI/ED/other agencies is pending is a legitimate integrity-based qualification intended to protect national security and public interest. The condition is not shown to be arbitrary, discriminatory, mala fide or actuated by bias and therefore does not offend Article 14. The Court declines to interfere with the impugned condition in the absence of established illegality, irrationality or procedural impropriety. [Paras 15, 20, 21]

Clause 7.2.19 is valid and not violative of Article 14; the Court will not strike it down.

Judicial review of government tender conditions - Doctrine of Wednesbury reasonableness - Effect of amalgamation on transfer of liabilities - Lawfulness of rejecting the petitioner's bids on the ground of pendency of ED proceedings and related factual findings concerning the petitioner's connection with Alligator Designs Pvt. Ltd. - HELD THAT: - Material on record (including the Attachment Order) indicates that the petitioner is a sister concern of Alligator Designs, shared directors are identified, and assets of the petitioner were provisionally attached; investigations reveal alleged misuse of forged certificates and transfer of proceeds of crime. In this factual matrix, exclusion of the petitioner from the tender process on account of the declared pendency of enforcement proceedings was not arbitrary or discriminatory. Applying the limited scope of judicial review in tender matters-particularly those touching national security-the Court finds no infirmity in the respondents' decision to reject the petitioner's bids. [Paras 16, 22, 23]

The rejection of the petitioner's bids was lawful and will not be interfered with.

Final Conclusion: Writ petition dismissed. The undertaking requirement in Clause 7.2.19 is valid in the defence procurement context, and on the facts showing the petitioner's connection with the transferor company and provisional attachment, the respondents were justified in excluding and rejecting the petitioner's bids.

Attachment of property involved in money-laundering - Provisional attachment - Adjudicating Authority under PMLA - Interim operating of bank accounts - Availability of alternative remedy

Provisional attachment - Adjudicating Authority under PMLA - Validity and challenge to the provisional attachment of the petitioner Company's bank accounts were to be pursued before the adjudicating authority and not by the writ petition in the first instance. - HELD THAT: - The Court noted that the Directorate issued provisional attachment orders under Section 5 of the PMLA Act and forwarded a complaint to the Adjudicating Authority where the matter is registered as O.C.No.1643 of 2022 and notices have been issued to the petitioner. Given that the issue of provisional attachment is pending adjudication before the statutory Adjudicating Authority, the High Court directed the petitioner to raise all contentions regarding the validity of the provisional attachment before that authority. The order reflects the principle that where a specific alternate statutory remedy exists and proceedings are pending before the designated adjudicatory forum under the statute, the forum should be afforded the opportunity to consider the challenge in the first instance. [Paras 15]

Petitioner directed to raise all contentions against provisional attachment before the Adjudicating Authority; challenge not decided on merits by this Court.

Interim operating of bank accounts - Provisional attachment - Interim permission to operate the bank accounts was granted limited to amounts deposited on or after the date of communication of the order, while the provisional attachment remains in force subject to further orders of the Adjudicating Authority. - HELD THAT: - Balancing the competing contentions, the Court observed prejudice to the petitioner's business from complete denial of access to bank accounts but also recognized the Director's recorded reasons and ongoing investigation. In the interest of justice and as an interim measure, the Court allowed the petitioner to operate its bank accounts only with respect to monies deposited on or after the date of communication of the order, while maintaining the provisional attachment otherwise and leaving final decision to the Adjudicating Authority. The Court thereby provided limited interim relief without adjudicating the merits of the attachment. [Paras 16, 17]

Petitioner permitted to operate bank accounts for amounts deposited on or after communication of the order; provisional attachment continues subject to the Adjudicating Authority's further orders.

Final Conclusion: Writ petition disposed of by directing the petitioner to exhaust remedies before the Adjudicating Authority in relation to provisional attachment, while granting limited interim relief permitting operation of bank accounts for amounts deposited on or after the date of communication of this order; provisional attachment remains in force subject to further orders by the Adjudicating Authority.

Look Out Circular (LOC) - Passport cancellation for travel - Issuance of LOC under Office Memorandum dated 22.02.2021 Clause 6[L] - Right to travel as a qualified right - Procedure established by law and post decisional hearing - National interest versus individual interest - Summons under Section 50 of the PML Act - Obligation to cooperate with investigation

Look Out Circular (LOC) - Issuance of LOC under Office Memorandum dated 22.02.2021 Clause 6[L] - Passport cancellation for travel - Validity of the LOC and the refusal to permit the petitioner to depart (passport stamped cancelled) under the Office Memorandum dated 22.02.2021. - HELD THAT: - The Court held that the LOC was issued in accordance with the procedure laid down in the Office Memorandum dated 22.02.2021, specifically Clause 6[L], which permits issuance of LOC in exceptional cases where departure may be detrimental to economic or strategic interests and where inputs justify restraint. The third respondent had recorded a prima facie apprehension-based on investigation showing transfer of funds from the prime accused (the petitioner's brother) to the petitioner and the petitioner's communications indicating an intention to settle abroad-that permitting departure would impede ongoing investigations into money laundering and proceeds of crime. The Court accepted that rights to travel are not absolute and may be curtailed by following prescribed procedure; the Office Memorandum authorises the respondents to seek and obtain LOC in such circumstances. Having regard to the stage and nature of the investigation, the economic interest of the State, and the particular facts before it, the Court found the respondents' action in issuing the LOC and refusing departure to be justified. [Paras 14, 15, 18]

LOC and refusal to permit departure (passport stamped cancelled) were validly issued under the Office Memorandum and are not impermissible in the facts of this case.

Right to travel as a qualified right - Procedure established by law and post decisional hearing - National interest versus individual interest - Obligation to cooperate with investigation - Summons under Section 50 of the PML Act - Whether issuance of LOC and refusal to allow travel violated Articles 14, 19 and 21 of the Constitution and whether reasons for the request were required to be disclosed to the petitioner at this stage. - HELD THAT: - Relying on established precedent and the Division Bench decision in Dr. Bavaguthuraghuram Shetty (considered in the judgment), the Court reiterated that the right to travel abroad is subject to restriction in accordance with procedure established by law and that prior opportunity need not be afforded at the moment of impounding or restraint provided a subsequent hearing is available. The Court observed that national and economic interests may outweigh individual interest when economic offences are under investigation. The request for LOC included reasons recorded in a sealed cover and the Court was satisfied that reasons were placed on record in the note sheet submitted to the Court; disclosure to the petitioner was deferred because investigation remains in progress. The Court emphasised that the petitioner must cooperate with the investigation (summons under Section 50 of PML Act) and that non cooperation supports the justification for restraint. The Court found no violation of Articles 14, 19 or 21 on the material before it. [Paras 16, 17, 19]

No constitutional violation established; reasons for LOC were recorded and non disclosure at this stage was permissible given the ongoing investigation; petitioner must cooperate with the investigation.

Final Conclusion: Writ petition dismissed; the LOC and refusal to permit the petitioner to depart were held to be issued in accordance with the Office Memorandum and justified by the ongoing investigation and the need to protect the economic interest of the State; petitioner may cooperate with the investigating authority and seek withdrawal of the LOC upon satisfying the authorities.

Service tax on composite/indivisible works contracts - definition of "works contract" introduced by Finance Act, 2007 - levy and machinery for taxing service element of works contract - stare decisis and reconsideration of precedent - overruling of Delhi High Court in G.D. Builders

Service tax on composite/indivisible works contracts - definition of "works contract" introduced by Finance Act, 2007 - levy and machinery for taxing service element of works contract - Whether service tax was leviable on composite/indivisible works contracts for the period prior to the amendment of the Finance Act, 1994 (w.e.f. 1st June, 2007). - HELD THAT: - This Court examined the legislative scheme of the Finance Act, 1994 and the effect of the 2007 amendment which introduced a specific definition of "works contract" and thereby made the service component of such contracts taxable w.e.f. 1st June, 2007. Relying on its earlier decision in Commissioner, Central Excise and Customs, Kerala v. Larsen & Toubro Ltd., the Court held that prior to the 2007 amendment there was no specific charging provision or machinery in the Finance Act, 1994 to tax the service element of indivisible/composite works contracts; the taxable categories then enumerated captured service contracts simpliciter and not composite indivisible works contracts. The Court further noted that the 2007 amendment was enacted to split composite works contracts so only the labour/service element would attract service tax thereafter. Consequently, service tax was not leviable on the service element of composite/indivisible works contracts for the period prior to 1st June, 2007. [Paras 5, 8, 13]

Service tax was not leviable on composite/indivisible works contracts for the period prior to 1st June, 2007; the 2007 amendment brought such contracts within the service tax net prospectively.

Stare decisis and reconsideration of precedent - service tax on composite/indivisible works contracts - Whether the decision in Larsen & Toubro Ltd. (holding non-leviability pre-2007) should be re-considered or referred to a Larger Bench. - HELD THAT: - The Revenue sought re-consideration and a reference to a Larger Bench. The Court analysed authorities on stare decisis, emphasizing the need for certainty, continuity and restraint in overruling precedent, and considered factors such as the passage of time since the Larsen & Toubro decision, its subsequent consistent application by this Court, High Courts and Tribunals, finality of numerous decisions following it, and the absence of any review application by the Revenue. Applying these principles, the Court concluded there were no compelling reasons to revisit Larsen & Toubro Ltd., and declined the request for reconsideration or reference to a Larger Bench. [Paras 10, 12]

Prayer to re-consider or refer Larsen & Toubro Ltd. to a Larger Bench is refused; Larsen & Toubro Ltd. remains binding.

Overruling of Delhi High Court in G.D. Builders - service tax on composite/indivisible works contracts - Disposal of the assorted civil appeals and the effect of the Larsen & Toubro decision on the appeals arising from various High Courts and Tribunals (including quashing of assessment orders that levied service tax pre-2007). - HELD THAT: - Applying the binding principle in Larsen & Toubro Ltd., the Court held the Delhi High Court's decision in G.D. Builders to be wholly incorrect and overruled it. Consequently, appeals which had been dismissed by High Courts or Tribunals on the view that service tax was leviable on indivisible/composite works contracts pre-2007 were allowed; the corresponding assessment orders and impugned judgments were quashed and set aside. The Court specifically allowed the listed civil appeals (including those arising from Karnataka, Delhi, Guwahati High Courts and CESTAT decisions) and directed that necessary consequences follow. Civil Appeal No. 6792 of 2010, filed by the Revenue against a CESTAT order, was dismissed. [Paras 13, 14]

Appeals challenging levies of service tax on composite/indivisible works contracts for the period prior to 1st June, 2007 are allowed and the assessment orders are quashed; Civil Appeal No. 6792 of 2010 is dismissed.

Final Conclusion: The Court affirmed that service tax was not leviable on composite/indivisible works contracts for the period prior to the insertion of the definition of "works contract" by the Finance Act, 2007 (w.e.f. 1st June, 2007); refused the Revenue's request to re-consider the Larsen & Toubro precedent; overruled the Delhi High Court in G.D. Builders; allowed the listed appeals quashing pre-2007 service tax assessments on such works contracts and dismissed Civil Appeal No. 6792 of 2010.

Services by way of education as a part of curriculum for obtaining a qualification recognised by law - Exemption from service tax under the negative list - Consideration received as affiliation fee for affiliating institutions - Jurisdiction to issue show cause notice challenging taxability

Services by way of education as a part of curriculum for obtaining a qualification recognised by law - Consideration received as affiliation fee for affiliating institutions - Exemption from service tax under the negative list - Whether the affiliation fee collected by the petitioner-university falls within the exempted category of services by way of education and is not liable to service tax. - HELD THAT: - The Court held that a State university established to further higher education imparts education both directly and through affiliated colleges, regulates the manner of imparting education and conducts examinations. The act of granting affiliation to private colleges and charging affiliation fee is a service rendered in furtherance of providing education. Given that Clause (l) of the negative list contemplates exemption for services by way of education as part of a curriculum for obtaining a recognised qualification, the affiliation fee charged by the University must be regarded as consideration for educational services and thus falls within the exempted category. The respondents did not dispute that consideration received for educational activity is exempt; their case was limited to characterising affiliation fee as not part of such services, which the Court found to be erroneous. [Paras 8, 11]

Affiliation fee collected by the petitioner-university is to be treated as consideration for exempted educational services and is not liable to service tax.

Jurisdiction to issue show cause notice challenging taxability - Appropriate forum to challenge a show cause notice raising a jurisdictional/exclusion question - Whether the petitioner was entitled to approach the High Court immediately on issuance of the show cause notice contesting the jurisdiction to levy service tax, or should have first replied before the adjudicating authority. - HELD THAT: - Ordinarily an assessee is expected to reply to a show cause notice and seek adjudication. However, where the dispute raised concerns the very jurisdiction to demand tax or the exclusion of an activity from levy (a pure question whether the activity is taxable at all), and the Revenue's stance before the Court was to treat the activity as taxable, relegating the petitioner to the adjudicating authority would be inappropriate. The Court exercised its jurisdiction to decide the question of taxability and therefore declined to remit the matter for adjudication. [Paras 12, 13, 14, 15]

Petitioner was entitled to challenge the show cause notice directly in the High Court on the jurisdictional question; the Court need not remit the matter to the adjudicating authority.

Final Conclusion: The show cause notice dated 20.06.2018 is set aside; consequently all actions pursuant to that notice are quashed and the writ petition is disposed of.

Computation of period of limitation - exclusion of first day and inclusion of last day - Application of Section 9 of the General Clauses Act to computation of limitation for statutory refund claims - Application of Limitation Act principles to refund claims under Section 11B of the Central Excise Act - Refund of excess service tax paid on provisional invoices - entitlement where excess payment established - Point of Taxation Rules in relation to continuous supply of works contract and provisional invoicing

Application of Section 9 of the General Clauses Act to computation of limitation for statutory refund claims - Computation of period of limitation - exclusion of first day and inclusion of last day - Application of Limitation Act principles to refund claims under Section 11B of the Central Excise Act - Whether the refund application filed on 06.08.2014 was time-barred or within the period of limitation prescribed under Section 11B of the Central Excise Act. - HELD THAT: - The Tribunal applied the well established rule recognised by Section 9 of the General Clauses Act that in computing a period expressed as 'from' a given date the first day is excluded and the last day included. Reliance was placed on the Hon'ble Supreme Court decision in Tarun Prasad Chatterjee and on Tribunal authority in Collector of Central Excise v. SAIL, which held that the General Clauses Act (and principles of the Limitation Act where relevant) govern computation of limitation for refund claims under Section 11B. Applying that rule, the period for claiming refund begins the day after the relevant date (payment/date of debit) and runs to the inclusive last day; consequently the refund application filed on 06.08.2014 was within the prescribed one year period when the relevant date was excluded in computation. The Tribunal therefore concluded that the departmental finding of a one day delay was incorrect. [Paras 6, 7, 9]

The refund application was filed within time; the rejection of the refund claim as barred by limitation was set aside.

Refund of excess service tax paid on provisional invoices - entitlement where excess payment established - Point of Taxation Rules in relation to continuous supply of works contract and provisional invoicing - Whether the appellant was entitled to refund of excess service tax paid on a provisional basis pending certified invoices. - HELD THAT: - The Tribunal accepted the factual position that the appellant, engaged in continuous works contract supplies, discharged service tax by the due date on a provisional invoice amount because certified invoices were finalised later owing to multi level approvals and remoteness of the contractor. On receipt of certified invoices the actual liability was lower, resulting in an inadvertent excess payment. The appellant furnished invoices and a Chartered Accountant's certificate evidencing the excess payment and filed a refund application under Section 11B read with the relevant provisions of the Finance Act. Having held the claim to be within time, and having found documentary proof of excess payment in the record, the Tribunal allowed the refund with consequential relief as per law. [Paras 2, 6, 9]

The appellant is entitled to refund of the excess service tax paid; the impugned orders rejecting the refund on limitation and related grounds are set aside and the appeal is allowed with consequential relief.

Final Conclusion: The appeal is allowed. The tribunal held that the refund application was filed within time by applying Section 9 of the General Clauses Act (excluding the relevant date in computation) and, on the evidence of excess provisional payment established by invoices and CA certification, set aside the orders rejecting the refund and granted consequential relief as per law.

Composite indivisible works contract - vivisecting a turnkey contract for separate service levies - service tax levy on indivisible works contracts - classification of services versus works contract - site formation services - scope and definition - constitutional separation of taxation powers - exclusion of transgression into State domain

Composite indivisible works contract - vivisecting a turnkey contract for separate service levies - service tax levy on indivisible works contracts - Whether the works executed under the impugned work orders constitute indivisible works contracts and therefore cannot be taxed under the categories of Commercial or Industrial Construction Services and Erection, Commissioning and Installation Services both prior to and after 01.06.2007. - HELD THAT: - The Tribunal examined the work orders and found them to be for complete turnkey works which cannot be vivisected into separate taxable services. Relying on the principle articulated by the Supreme Court in the L&T line of decisions, the court emphasised that composite indivisible works contracts are a distinct species and that attempts to tax the service element without fully segregating any element of transfer of property in goods may be constitutionally impermissible. The adjudicating authority's classification of the disputed works under Commercial or Industrial Construction Services and Erection, Commissioning and Installation Services was held to be unsustainable both prior to and after 01.06.2007 because the nature of the contracts is indivisible and liable, if at all, to the regime applicable to works contracts rather than to separate service categories. [Paras 9, 10]

The demand insofar as raised under Commercial or Industrial Construction and Erection, Commissioning and Installation Services was set aside.

Site formation services - scope and definition - classification of services versus works contract - Whether the works charged under Site Formation Services fall within the defined scope of site formation services or form part of a composite works contract taxable as works contract services. - HELD THAT: - The Tribunal analysed the scope of the relevant work order (which included land development plus erection of various units such as water treatment, effluent treatment and other installations) against the statutory definition of site formation services, which is limited to activities like excavation, soil stabilisation, land reclamation, demolition, horizontal drilling, and similar earthworks. The work order encompassed construction and installation activities beyond the narrow statutory definition and constituted a composite works contract. Consequently the classification under Site Formation Services was not aligned with the definition and could not be sustained; the work falls to be treated as part of a works contract. [Paras 11]

The demand under Site Formation Services was set aside.

Final Conclusion: The appeal is allowed. The demands confirmed under the impugned service categories were held unsustainable because the contracts are composite indivisible works contracts and the demands under Commercial or Industrial Construction, Erection, Commissioning and Installation Services and Site Formation Services were set aside; consequential relief granted as per law.

No question of law arises - factual findings of the adjudicating authority - benefit under Section 140 and Section 142 of the Central Goods and Services Tax Act, 2017

No question of law arises - factual findings of the adjudicating authority - benefit under Section 140 and Section 142 of the Central Goods and Services Tax Act, 2017 - Whether any question of law arises for consideration on the facts of the case and whether the appeals merit interference with the adjudicating authority's factual findings. - HELD THAT: - The Court examined the adjudicating authority's order which specifically sets out the factual aspects of the case, including communications written by the assessee. The Bench expressly recorded that it has not considered or commented upon entitlement to any benefit under Sections 140 and 142 of the Central Goods and Services Tax Act, 2017. On the material before it, the Court found that no question of law arises from the facts presented and there is no occasion for interference with the adjudicating authority's factual conclusions. [Paras 3]

Appeals dismissed as no question of law arises; the adjudicating authority's factual findings are sustained.

Final Conclusion: The Supreme Court dismissed the appeals, holding that no question of law arises from the factual record and declining to interfere with the adjudicating authority's findings; the Court did not address entitlement under Sections 140 and 142 of the CGST Act, 2017.

Manufacture as defined under Section 2(f) of the Central Excise Act - reclamation/re-refining of waste oil does not amount to manufacture - Chapter Note 4 (Chapter 27) - deeming fiction for lubricating oils and lubricating preparations - application of Chapter Note 4 limited to lubricating oils and processes listed therein - Circular No. 1024/12/2016-CX - classification and limitation guidance on re-refined/processed waste oil - extended period of limitation and requirement of suppression/knowledge

Manufacture as defined under Section 2(f) of the Central Excise Act - reclamation/re-refining of waste oil does not amount to manufacture - Chapter Note 4 (Chapter 27) - deeming fiction for lubricating oils and lubricating preparations - Circular No. 1024/12/2016-CX - classification and limitation guidance on re-refined/processed waste oil - Conversion of waste oil/sludge/used oil into reclaimed fuel oil / re-refined used oil does not amount to manufacture attracting Central Excise duty - HELD THAT: - The Tribunal held that mere purification processes (filtering, vacuum distillation, centrifuging, dehydration, removal of impurities) do not produce a new and distinct commodity; the product before and after processing remains oil and the oil content is not consumed in the process. Reliance was placed on precedents holding reclamation of usable oil from used oil does not amount to manufacture. Chapter Note 4 attracts a deeming fiction only for lubricating oils and lubricating preparations when specific processes (labelling/re-labelling, re-packing, or listed treatments rendering product marketable to consumers) are shown; Note 4 is inapplicable where the resultant product is reclaimed fuel oil classifiable under 2710 99 00 rather than lubricating oil under 2710 19 80. The departmental case did not establish that processes listed in Note 4 were undertaken, nor was there evidence of labelling/repacking or marketing as a distinct original product; the appellant marketed the goods as recycled/re-refined. Circular No. 1024/12/2016-CX supports that the chapter note applies only to lubricating oils of Heading 2710 and that other reclaimed products are not covered. Applying these principles, the activity was not manufacture and demands for duty, interest and penalties on that ground could not be sustained. [Paras 5]

The processes undertaken to yield reclaimed fuel oil/re-refined used oil do not amount to manufacture; the departmental demand for excise duty and related penalties is unsustainable on merits.

Extended period of limitation - knowledge of department / no suppression - Circular No. 1024/12/2016-CX - limitation guidance - Demand raised for an extended period is time-barred because there was no suppression and the department had knowledge of the appellant's activities - HELD THAT: - Records showed that between 2004 and 2008-09 the department had repeatedly sought and received information from the appellant about import/receipt and processing of waste/sludge oil; the appellant's position that the processes did not amount to manufacture was communicated and accepted by the department (including a 2010 letter to Customs noting no central excise registration). The department monitored receipts and sealed storage tanks pending test reports, demonstrating awareness of the activity. Circular No. 1024/12/2006-CX (as referred) advises that interpretational issues should lead to demands only for the normal period of limitation. In these circumstances there was no suppression warranting invocation of extended limitation and the extended period demand is legally not sustainable. [Paras 5]

The demand insofar as made for an extended period is barred by limitation and is set aside.

Final Conclusion: Impugned adjudication confirming excise duty, interest and penalties and personal penalty is set aside; appeals are allowed and demands (including extended period demand) do not survive on merits or limitation, with consequential relief as per law.

SSI exemption - packing material / packaging - aggregate value of clearance - inclusion of goods bearing brand name in exemption computation - remand for recomputation of demand with interest and penalty

Packing material / packaging - SSI exemption - aggregate value of clearance - Value of 'catch covers' excluded from aggregate value of clearance for computing eligibility under SSI exemption Notification No.8/2003-CE. - HELD THAT: - The Tribunal followed the coordinate-bench reasoning in the appellants' earlier final order (Kajal Print & Packing Pvt. Ltd. and M/s Beauty Art precedents) which held that 'catch covers' are packaging and fall within the scope of exemption under the relevant notification. The description of 'printed cartons of paper or paperboard' is to be understood in the commercial and industry sense, and no basis exists to distinguish 'catch covers' from such packaging. Accordingly, the value of catch covers should not be included in the aggregate clearance for computing SSI exemption eligibility.

Catch covers treated as packaging and excluded from aggregate value when determining SSI exemption eligibility; appeal allowed to that extent.

Aggregate value of clearance - inclusion of goods bearing brand name in exemption computation - remand for recomputation of demand with interest and penalty - Value of 'diaries' must be included in the aggregate value of clearance for computing eligibility under SSI exemption Notification No.8/2003-CE; matter remanded for recomputation. - HELD THAT: - The Tribunal agreed with the coordinate-bench conclusion that, while catch covers qualify as packaging, diaries do not fall within the exemption as packing material. Consequently, the aggregate clearance must include the value of diaries for the relevant period. The Court therefore remanded the matter to the Adjudicating Authority to determine the correct aggregate value of clearance for the period in question and to recompute the demand, with interest and penalty, in accordance with this finding.

Value of diaries included in aggregate clearance; matter remanded to adjudicating authority to recompute demand with interest and penalty for the period in question; appeal partly allowed.

Final Conclusion: The appeal is partly allowed: the Tribunal holds that 'catch covers' are packing material and shall be excluded from aggregate clearance for SSI exemption purposes, whereas 'diaries' are not packing material and their value must be included; the matter is remanded to the Adjudicating Authority to determine aggregate clearance and recompute the demand with interest and penalty for the period July 2009 to April 2010.

Jurisdiction of Benches of the Appellate Tribunal - bench competence determined by seat of adjudicating authority - non-maintainability for forum incompetence - liberty to file appeal before correct Bench

Jurisdiction of Benches of the Appellate Tribunal - bench competence determined by seat of adjudicating authority - non-maintainability for forum incompetence - Ahmedabad Bench of CESTAT lacked jurisdiction to entertain appeals against adjudication order passed by Principal Additional Director General (Adjudication), DGGI, Delhi; appeals dismissed as non-maintainable. - HELD THAT: - The Tribunal applied the principle that the competent Bench to hear an appeal is the Bench corresponding to the authority which passed the adjudication order. Having noted that the impugned adjudication order was passed by the Principal Additional Director General (Adjudication), DGGI, Delhi, the Ahmedabad Bench held it had no jurisdiction to entertain these appeals. Reliance was placed on earlier decisions dealing with identical jurisdictional controversy and the distinction drawn where the cause of action was said to arise at the place of import was not accepted as displacing the rule that the forum is determined by the seat of the adjudicating authority. Consequently, the appeals were dismissed as non-maintainable by the Ahmedabad Bench. [Paras 3]

Appeals dismissed as non-maintainable for want of jurisdiction of the Ahmedabad Bench; appellants granted liberty to file appeals (with COD) before the Delhi Bench of CESTAT.

Final Conclusion: The Ahmedabad Bench concluded it was not the competent forum to entertain appeals against an adjudication order passed by the Principal Additional Director General (Adjudication), DGGI, Delhi; the appeals are dismissed as non-maintainable and the appellants are permitted to pursue remedy before the Delhi Bench.

By-product versus finished product - finished product requirement for entry tax - scope of entry 'cattle feed' in schedule - strict interpretation of taxing statutes - trade parlance in tariff interpretation

By-product versus finished product - finished product requirement for entry tax - scope of entry 'cattle feed' in schedule - trade parlance in tariff interpretation - strict interpretation of taxing statutes - Whether 'Chuni', a by-product of dal, falls within the entry 'cattle feed' in Sl. No.66 of Part-I of the Schedule to the Orissa Entry Tax Act and is therefore amenable to entry tax. - HELD THAT: - The Court held that Section 26 of the OET Act subjects to entry tax only 'finished products' and that 'Chuni' is merely a by-product (husk of pulses) arising in the manufacture of dal and is not independently sold as cattle feed but used as one of many ingredients in the manufacture of cattle feed. The Tribunal orders uniformly rejecting the Department's plea were noted, and material indicia such as a 2008 tender listing multiple ingredients for cattle feed and the separate listing of 'Chokad' (husk) and 'cattle feed' under Schedule-A of the OVAT Act were relied upon to show that husk and finished cattle feed are distinct commodities. The Court distinguished authorities construing exemptions (where liberal construction may apply and 'including' permits a wider meaning) from construction of taxing statutes, where a strict literal approach is required. Applying the strict rule of interpretation to the OET Act together with trade parlance-whether a purchaser seeking cattle feed would be given plain 'Chuni'-the Court concluded that 'Chuni' is not the same as commercially available 'cattle feed' and therefore does not fall within Entry 66 for the purpose of entry tax. [Paras 12, 16, 18, 19, 20]

Chuni is not 'cattle feed' as appearing in Entry 66 and being a by-product it is not a finished product amenable to entry tax under the OET Act.

Final Conclusion: The revision petitions are dismissed; 'Chuni', being a by-product and not a finished commercial product of 'cattle feed', does not fall within Sl. No.66 of the Schedule to the OET Act and is not liable to entry tax.

Penalty under Section 10 of the Trade Tax Act - mens rea requirement for imposition of penalty - registration in Form A / Certificate of Registration and eligibility to purchase on Form C - unauthorised purchase using Form C - goods integrally connected with manufacture

Penalty under Section 10 of the Trade Tax Act - mens rea requirement for imposition of penalty - Whether imposition of penalty under Section 10 can be sustained in the absence of a bona fide belief (mens rea) that the purchased goods were covered by the certificate of registration. - HELD THAT: - The Court examined the principle that a bona fide belief may negate mens rea and thus preclude penalty (as in the authorities relied upon by the revisionist). It distinguished those authorities on the facts: the revisionist had not applied for registration of the goods in question for the assessment year under consideration, and did not show any bona fide mistake or belief that the railway siding, locomotives and transmitters were covered by any previously issued certificate. The Court found no evidence that the purchases were made under an honest mistake of law or fact; instead the use of Form C for these goods was unauthorised and knowingly done without registration. In these circumstances the absence of a bona fide belief meant that the mens rea requirement (where relevant) was not satisfied in favour of the assessee and the imposition of penalty was justified. [Paras 19, 20, 21, 22, 23]

Penalty under Section 10 was sustainable because the revisionist failed to establish any bona fide belief that authorised purchase on Form C was permissible; the penalty was therefore rightly imposed.

Registration in Form A / Certificate of Registration and eligibility to purchase on Form C - goods integrally connected with manufacture - unauthorised purchase using Form C - Whether railway siding, locomotives, transmitters and related items could be validly purchased on Form C for the assessment year 1989-90 by virtue of being integral to manufacture, notwithstanding absence of registration for those goods for that year. - HELD THAT: - The Court accepted that such items may, in general, be integral to the manufacturing process, and noted that registration for those goods was later granted with retrospective effect from 31.03.1995. However, for the assessment year 1989-90 there was no application or grant of registration covering railway siding, locomotives or transmitters; these goods were not shown to fall within any other class for which the revisionist possessed a certificate. The statutory scheme requires prior registration for a class of goods to permit purchase on Form C. Since the revisionist had neither registration nor a plausible basis to treat those goods as covered by an existing registration during 1989-90, their purchases on Form C were unauthorised and liable to penalty under the Act. [Paras 10, 13, 14, 18]

Purchases of railway siding, locomotives and transmitters on Form C for 1989-90 were unauthorised due to lack of registration for those goods for that period; therefore the imposition of penalty was justified.

Final Conclusion: The revision is dismissed. The Tribunal's order upholding penalty for unauthorised purchases on Form C for the assessment year 1989-90 is affirmed; the questions of law are answered against the assessee and in favour of the revenue.

Definition of "urban land" under Section 2(ea)(v) of the Wealth Tax Act - retrospective amendment by Finance Act, 2013 excluding land classified as agricultural in government records and used for agricultural purposes - validity of reopening of assessment and requirement of communication of reasons - burden of proof to establish agricultural status and evidentiary weight of Collector's/Revenue certificate

Validity of reopening of assessment and requirement of communication of reasons - Reopening of assessment was valid despite contention that reasons recorded were not supplied to the assessee. - HELD THAT: - The Tribunal accepted the Revenue's position that the assessee was aware of the basis for reopening because the reopening related to the classification of the lands as urban. The CIT(A)'s affirmation of validity of reopening (referred to in paragraph 4.4 of his order) was noted. In view of the assessee's knowledge of the subject-matter of reopening and the reiterated finding of the CIT(A), the grounds asserting breach of natural justice and inability to produce evidence during assessment were rejected and the preliminary challenge to the reassessment was dismissed. [Paras 7]

Grounds 1.1, 1.2 and 1.3 contesting reopening and procedural irregularity are dismissed.

Definition of "urban land" under Section 2(ea)(v) of the Wealth Tax Act - retrospective amendment by Finance Act, 2013 excluding land classified as agricultural in government records and used for agricultural purposes - burden of proof to establish agricultural status and evidentiary weight of Collector's/Revenue certificate - The lands at Vastrapur and Rancharda were held to be urban land and liable to wealth-tax; the assessee failed to prove agricultural classification and use. - HELD THAT: - On the merits, the Tribunal observed that the documents produced by the assessee (notably an undated Talati certificate) did not establish that the lands were classified as agricultural in government records or were used for agricultural purposes. The Tribunal emphasised that a certificate from the Collector (or comparable authoritative official) should have been placed on record to substantiate agricultural status. In the absence of such conclusive documentary proof showing classification and use as agricultural land, the Tribunal concurred with the Assessing Officer's finding that the lands fall within the definition of urban land under the Wealth Tax Act and upheld the addition made by the AO and sustained by the CIT(A). The Tribunal rejected the contention based on the retrospective amendment and CBDT circular since the requisite governmental record/evidence was not furnished. [Paras 8]

Ground No.2 contesting classification of the lands as urban is dismissed; the addition stands.

Final Conclusion: The appeal is dismissed in entirety: the reassessment was valid and the Tribunal upheld the finding that the Vastrapur and Rancharda lands are urban land for wealth-tax purposes, as the assessee failed to produce conclusive governmental records proving agricultural classification and use.

Rent - fiction of tax as rent for recovery - municipal tax recoverable as arrears of rent - Section 3(f) monthly rent ceiling under the West Bengal Premises Tenancy Act, 1997 - Section 5(8) obligation to pay municipal tax by tenant - Sections 230 and 231 of the Kolkata Municipal Corporation Act, 1980 - mode of recovery - Order 7 Rule 11 CPC - rejection of plaint

Rent - Section 3(f) monthly rent ceiling under the West Bengal Premises Tenancy Act, 1997 - Section 5(8) obligation to pay municipal tax by tenant - Sections 230 and 231 of the Kolkata Municipal Corporation Act, 1980 - mode of recovery - municipal tax recoverable as arrears of rent - fiction of tax as rent for recovery - Order 7 Rule 11 CPC - rejection of plaint - Whether the share of municipal tax payable by the tenant is to be treated as part of the monthly "rent" for the purpose of determining applicability of the West Bengal Premises Tenancy Act, 1997, and whether the plaint was rightly rejected under Order 7 Rule 11 CPC on that basis. - HELD THAT: - The Court framed the narrow question whether the municipal tax apportioned to the tenant under Section 230 of the Kolkata Municipal Corporation Act, 1980 read with Section 5(8) of the West Bengal Premises Tenancy Act, 1997, is part of the "rent" for applying the monthly rent ceiling in Section 3(f). The term "rent" is not defined in the Tenancy Act and must be ascertained from the agreement and statutory context. Sections 230 and 231 create a statutory mechanism enabling a lessor (person primarily liable) to recover the tenant's apportioned tax by treating it as rent for recovery purposes; this is a legislative fiction to facilitate recovery, not an incontrovertible transformation of tax into a component of agreed rent. Calcutta Gujarati Education Society was correctly read as holding that apportioned tax can be recovered as arrears of rent (a fiction for recovery) but does not automatically convert the tax into part of the contractual rent unless the tenancy agreement expressly incorporates the tax within the rent. The subsequent decision relied upon by the landlord was factually distinguishable because in that contract the parties had expressly included municipal taxes within the rent. Section 18 of the Tenancy Act (automatic revision) applies only where fair rent is fixed by the Controller under Section 17 and is not applicable on the present facts. Applying these principles to the tenancy before the Court, the agreement specified a monthly rent of Rs.10,000 and separately provided for payment of municipal taxes; there is no contractual stipulation that the rent is inclusive of taxes. Consequently, the municipal tax apportioned to the tenant remains recoverable by the landlord as arrears of rent under the statutory fiction, but it does not form part of the monthly "rent" for determining the statutory ceiling in Section 3(f). On that basis the High Court correctly held that the Tenancy Act, 1997 is applicable and that the suit invoking Section 106 of the Transfer of Property Act was impliedly barred; the plaint was therefore rightly rejected under Order 7 Rule 11 CPC. [Paras 5, 8, 11]

The tax apportioned to the tenant is recoverable as arrears of rent (statutory fiction for recovery) but is not part of the contractual monthly "rent" unless the tenancy agreement so provides; accordingly, with the contractual rent being Rs.10,000 per month the Act, 1997 applies and the plaint was rightly rejected under Order 7 Rule 11 CPC.

Final Conclusion: The appeals are dismissed. The High Court rightly held that the municipal tax apportioned to the tenant, although recoverable as arrears of rent by statutory fiction, is not to be treated as part of the contractual monthly rent for the purpose of the ceiling in Section 3(f) of the West Bengal Premises Tenancy Act, 1997; consequently the Act, 1997 applies and the suit under Section 106 of the Transfer of Property Act was impliedly barred. No order as to costs.

Relevance of evidence - scope of cross-examination - trial court's discretion to disallow irrelevant or vexatious questions - impeachment of creditworthiness - application of Sections 5-9 of the Indian Evidence Act to relevance - questions beyond examination-in-chief but confined to relevance

Trial court's discretion to disallow irrelevant or vexatious questions - scope of cross-examination - Whether the Trial Court rightly disallowed two questions put to DW-2 as irrelevant and vague - HELD THAT: - The Court analysed the legal parameters of relevance under the Evidence Act and the permissible ambit of cross-examination. Although cross-examination may go beyond the examination-in-chief and may include questions to impeach credit, it must remain confined to facts relevant to the matter in issue and must not be a roving, scandalous or harassment-driven inquiry. The two questions disallowed - asking whether the witness or his female relatives had taken a friendly loan from any other person, and whether a separate pending case involving the witness's wife existed - had no bearing on the central fact in issue, namely whether the respondent committed the offence under Section 138 of the N.I. Act by issuing the cheque. An answer either way would not assist in determining liability in the instant complaint; the pendency of an unrelated case merely because of a familial link lacks probative connection. The Trial Court therefore did not err in finding the questions vague and irrelevant and in exercising its power to disallow them to prevent harassment and a rambling inquiry. [Paras 16, 18, 19]

The Trial Court correctly disallowed the two questions as irrelevant and vague; there is no perversity or miscarriage of justice in that order.

Relevance of evidence - application of Sections 5-9 of the Indian Evidence Act to relevance - Whether the petition under Section 482 Cr.P.C. was maintainable to assail the Trial Court's order on cross-examination - HELD THAT: - The Court observed that the High Court may examine whether there has been any error or perversity in an order under challenge and that the nomenclature of a petition does not preclude exercise of inherent jurisdiction. Reliance on precedents established that a challenge under Section 482 is competent to test such orders where error is alleged. Accordingly, the petition could not be summarily dismissed on the ground of maintainability and the Court proceeded to examine the merits of the complaint regarding disallowed questions. [Paras 9]

The petition under Section 482 Cr.P.C. was maintainable for considering whether the Trial Court's order suffered from error or perversity.

Final Conclusion: The High Court dismissed the petition on merits, holding that the Trial Court properly exercised its discretion in disallowing the two questions as irrelevant and vague; the petition under Section 482 was maintainable but the disallowance did not occasion perversity or miscarriage of justice.

Presumption under Section 139 of the Negotiable Instruments Act - presumption under Section 118 of the Negotiable Instruments Act - competence of power of attorney holder to file complaint and depose - necessity of personal knowledge by power of attorney holder to prove transaction - proof of transaction and execution of cheque - acquittal for failure to prove transaction

Competence of power of attorney holder to file complaint and depose - necessity of personal knowledge by power of attorney holder to prove transaction - proof of transaction and execution of cheque - presumption under Section 139 of the Negotiable Instruments Act - acquittal for failure to prove transaction - Validity and sufficiency of evidence furnished by the power of attorney holder to prove the transaction leading to issuance and execution of the cheque and the consequent applicability of statutory presumptions. - HELD THAT: - The Court applied the settled principle that a complaint under Section 138 of the Negotiable Instruments Act may be filed and supported by the power of attorney (POA) holder, but the POA holder must possess personal knowledge of the transaction or must have witnessed it as agent of the payee; mere hearsay is insufficient. The complaint in this case did not aver that the POA had witnessed the transaction. PW1 (the POA holder) initially averred personal knowledge in his affidavit but repeatedly admitted on cross-examination that his knowledge was hearsay. After remand and further examination PW1 gave inconsistent answers-at times asserting presence at the transaction and at other times reverting to hearsay-thereby undermining his credibility. Consequently the appellant failed to discharge the initial burden of proving the transaction and execution of the cheque required to attract the statutory presumptions under Sections 118 and 139. The trial court's reliance on PW1's repeated admissions of hearsay and its consequent acquittal were held to be justified and not open to interference. [Paras 11, 15, 16]

The evidence of the power of attorney holder was unreliable and amounted to hearsay; the complainant failed to prove the transaction and execution of the cheque, the trial court's acquittal is justified and the appeal fails.

Final Conclusion: The appeal is dismissed. The trial court's acquittal of the accused is upheld because the complainant failed to adduce convincing evidence (the POA holder's testimony being hearsay and inconsistent) to prove the transaction and attract the statutory presumptions.

Presumption of innocence - bail is the rule and jail is the exception - mandatory compliance of Section 41 and 41A CrPC and consequences of non-compliance - default bail under Section 167(2) CrPC - limited role of arrest on forwarding of charge-sheet under Section 170 CrPC - procedure for summons, bailable warrant and non-bailable warrant under Sections 87-88 CrPC - judicial discretion in issuance of warrants and bonds with reasons - speedy trial obligation and Section 309 CrPC as facet of Article 21 - mandatory release on personal bond under Section 436A CrPC - scope of magistrate and High Court powers under Sections 437 and 439 CrPC and provisos - reasonableness of bond and non-excessive conditions under Section 440 CrPC - categorisation of offences and bail-guidelines (Categories A to D)

Limited role of arrest on forwarding of charge-sheet under Section 170 CrPC - Section 88 CrPC - bond in lieu of custody - Whether an accused must be arrested and produced in custody when the final report/charge-sheet is forwarded under Section 170 CrPC and whether a separate bail application is necessary in such cases. - HELD THAT: - The Court affirmed that Section 170 CrPC is a post-investigation procedural provision and does not mandate arrest or production in custody where the prosecution does not require custody. If the investigating officer believes the accused will not abscond and has cooperated, there is no obligation to arrest; the word 'custody' in Section 170 connotes presentation before the court and not necessarily police or judicial custody. In such situations the court may rely on Section 88 to take bond or surety and there is no need for a separate bail application merely because the charge-sheet is filed. If remand is considered necessary, the accused must be heard and appropriate reasons recorded.

No automatic arrest is required when a charge-sheet is forwarded under Section 170; courts may accept bonds under Section 88 and need not insist on a bail application where custody is not shown to be necessary.

Mandatory compliance of Section 41 and 41A CrPC and consequences of non-compliance - recording reasons for arrest and non-arrest - The legal effect of non-compliance with Section 41 and Section 41A CrPC while exercising arrest powers and the duty of courts in scrutinising compliance. - HELD THAT: - The Court reiterated Arnesh Kumar and held that for offences punishable up to seven years arrest is not automatic; police must have both a reason to believe and record satisfaction that arrest is necessary for one of the statutory purposes. Section 41A requires issuance of notice where arrest is not necessary and compliance with that procedure. The Magistrate must scrutinise the reasons recorded by the police before authorising further detention. Failure to comply with these provisions will inure to the benefit of the accused and entitle him to bail.

Police must comply with Sections 41 and 41A including written reasons; courts must verify such compliance and non-compliance entitles the accused to enlargement on bail.

Default bail under Section 167(2) CrPC - right to personal liberty under Article 21 - The scope and mandatory nature of default bail under Section 167(2) CrPC and its relation to Article 21. - HELD THAT: - The Court emphasised that Section 167(2) embodies the legislative intent to limit pre-trial detention and protect personal liberty; investigation must be completed within prescribed periods and failure to do so gives an indefeasible right to default bail. The provision must be interpreted purposively and not technically, and courts should not permit detention beyond the statutory period absent lawful justification. The right cannot be suspended even by exceptional circumstances like a pandemic.

If investigation exceeds the limits in Section 167(2), the accused acquires the right to default bail and courts must give effect to that right in furtherance of Article 21.

Procedure for summons, bailable warrant and non-bailable warrant under Sections 87-88 CrPC - judicial discretion in issuance of warrants and bonds with reasons - How courts should sequence and exercise discretion in issuing summons, bailable warrants and non-bailable warrants and in taking bonds for appearance. - HELD THAT: - The Court directed that courts should ordinarily issue summons first, then bailable warrants if necessary, and only thereafter non-bailable warrants where justified; reasons must be recorded for issuing warrants. Section 88 confers discretionary power on the court to require bonds for appearance and does not create a right in the person to demand acceptance of bond. The discretion must be exercised judiciously and with due regard for personal liberty.

Courts must prefer summons and bailable process where sufficient, record reasons when issuing warrants, and may take bonds under Section 88 in the exercise of judicial discretion.

Speedy trial obligation and Section 309 CrPC as facet of Article 21 - adjournments and impact on bail - The import of Section 309 CrPC and delay in trial as a factor in bail consideration. - HELD THAT: - Section 309 mandates day-to-day continuation of proceedings where practicable and restricts adjournments; unexplained and avoidable delay in trial, appeal or revision undermines Article 21. Courts must endeavor to minimize adjournments; prolonged delays are a relevant factor favouring grant of bail and may attract the application of Section 436A or other remedial measures.

Unnecessary delay or repeated adjournments affecting trial or appeals is a material factor in favour of bail and courts must apply Section 309 to safeguard speedy trial rights under Article 21.

Mandatory release on personal bond under Section 436A CrPC - exclusion for delay attributable to the accused - The operation and mandatory nature of Section 436A CrPC requiring release on personal bond once detention equals half the maximum sentence. - HELD THAT: - The Court held Section 436A to be substantive and mandatory: when an undertrial has been detained for half the maximum sentence for the offence, the court shall release him on personal bond (subject to limited exceptions and the proviso permitting continued detention for recorded reasons). Periods of delay caused by the accused are to be excluded in computation. The provision applies across investigation, inquiry and trial stages and must be actively implemented by trial and supervisory courts.

When detention equals one-half of the maximum prescribed sentence (after excluding delay attributable to the accused), release on personal bond is mandated under Section 436A, save in exceptional recorded circumstances.

Scope of magistrate and High Court powers under Sections 437 and 439 CrPC and provisos - reasonableness of bond and non-excessive conditions under Section 440 CrPC - The extent of jurisdiction of magistrates and higher courts to grant bail in serious offences and the limits on bond conditions. - HELD THAT: - The Court clarified that a magistrate who otherwise has jurisdiction to try an offence (even if the punishment may extend to life) can consider bail; the restriction in Section 437(1) applies principally to offences exclusively triable by Court of Sessions or where the proviso operates. High Courts and Sessions Courts exercise broader powers under Section 439 and must give statutory notice to prosecutors where required. Section 440 obliges courts to fix bond with due regard to case circumstances and not to impose excessive or impossible conditions; reasonableness and the accused's means must be considered.

Magistrates and higher courts must exercise bail powers purposively: jurisdictional magistrates may entertain bail in many cases, higher courts must comply with notice provisos, and bond conditions must be reasonable and non-excessive.

Categorisation of offences and bail-guidelines (Categories A to D) - application of special Act provisions and economic offences - Adoption and application of the Court's Guidelines categorising offences (A-D) for bail consideration and their interaction with Special Acts and economic offences. - HELD THAT: - The Court framed categories (A: offences punishable 7 years; B: offences punishable >7 years or life/death; C: offences under Special Acts with stringent bail provisions; D: economic offences not covered by Special Acts) and provided indicative approaches: Category A expects liberal exercise of discretion (summons/bailable processes, bonds under Section 88); Categories B/D require case-by-case consideration of seriousness and punishment; Category C follows same approach as B/D but subject to statutory restrictions in special enactments (e.g., NDPS), and Section 436A and other protective provisions apply to special acts unless displaced. The guidelines are advisory and do not fetter judicial discretion.

The Court's categorisation and procedural guidelines (A-D) are to guide subordinate courts in bail matters-promoting summons/bailable process for Category A, case-specific analyses for B and D, and compliance with special Act constraints in C-without fettering judicial discretion.

Directions to States, Union Territories and Courts to implement procedures and monitoring - compliance, monitoring and timelines for disposal of bail/undertrial cases - Issuance of directions to Governments and Courts regarding standing orders, compliance with Sections 41/41A, monitoring undertrials, timelines for bail disposal and reporting. - HELD THAT: - The Court issued binding directions: State Governments/UTs to promulgate standing orders to implement Section 41A (noting Delhi Standing Order No.109 of 2020); investigating agencies must comply with Sections 41/41A and face departmental or contempt consequences for dereliction; High Courts to monitor undertrial release under Section 436A and ensure bail applications/trials are disposed within prescribed timelines (bail applications normally within two weeks, anticipatory bail within six weeks, other suggested targets for trial duration); registries to report compliance within four months. The directions are intended to reduce unnecessary arrests and congested bail litigation.

States, UTs, investigating agencies and courts are directed to adopt standing orders, ensure strict adherence to Sections 41/41A, implement mechanisms under Section 436A and the procedural timelines set out, and to file compliance reports as directed.

Final Conclusion: The Court laid down and approved categorial bail-guidelines (A-D) and a suite of interpretative rulings and directions to safeguard personal liberty: arrest and remand must comply with Sections 41/41A (non-compliance merits bail), forwarding under Section 170 does not mandate arrest or bail-application, statutory safeguards of Section 167(2) and Section 436A entitle accused to default or mandatory release where periods elapse, courts must prefer summons/bailable processes before issuing warrants, bonds and sureties must be reasonable under Section 440, and High Courts/States are directed to issue standing orders, monitor compliance and ensure expedited disposal of bail and undertrial matters.

Abuse of dominant position - Relevant market for instant messaging services using consumer communication apps through smartphones in India - Dominance - Predatory pricing - Imposition of unfair or discriminatory terms and opt out consent - Closure under Section 26(2) for no prima facie case - Separation of regulatory competence between the Competition Act and Information Technology/ privacy law

Closure under Section 26(2) for no prima facie case - Abuse of dominant position - Validity of the Commission's decision to close the matter under Section 26(2) for want of a prima facie case of abuse of dominant position - HELD THAT: - The Tribunal upheld the Commission's conclusion that no prima facie case under Section 4 of the Competition Act was made out against WhatsApp. The Commission had delineated the relevant product and geographic market, examined dominance and the alleged abusive conduct, and concluded that the updated privacy policy and related practices did not demonstrate an unfair imposition or other abuse attracting Section 4. The Tribunal agreed with the Commission's analysis and findings, including the determination that the conduct complained of did not amount to an abuse warranting investigation, and found no infirmity in the Commission's reasoning or conclusion to close the matter under Section 26(2).

The Commission's order closing the matter under Section 26(2) for want of a prima facie case of abuse of dominant position is upheld; the appeal is dismissed.

Relevant market for instant messaging services using consumer communication apps through smartphones in India - Dominance - Delineation of the relevant market and the finding of WhatsApp's dominant position in that market - HELD THAT: - The Tribunal accepted the Commission's delineation of the relevant product market as instant messaging services using consumer communication apps through smartphones in India and the geographic market as India. On the facts recorded by the Commission (including high installation and active usage metrics), the Tribunal concurred that WhatsApp occupied a dominant position in the defined relevant market. The Tribunal, however, emphasised that dominance alone does not attract liability under Section 4 unless accompanied by proven abusive conduct.

The Commission's determination that WhatsApp is dominant in the specified relevant market is accepted.

Predatory pricing - Imposition of unfair or discriminatory terms and opt out consent - Whether the change to WhatsApp's privacy policy, the 2016 removal of subscription fees, or the opt out mechanism amounted to predatory pricing or an imposition of unfair terms constituting abuse under Section 4 - HELD THAT: - The Tribunal endorsed the Commission's findings that (a) free pricing is standard in the consumer communications apps industry and the mere absence of a subscription fee does not establish predatory pricing in the absence of below cost pricing and evidence of recoupment; (b) users were provided notice of the 2016 update and an express opportunity to consent, including an opt out mechanism for certain uses of account information; and (c) the record did not show that the update was imposed in a manner that was unfair or discriminatory within the meaning of Section 4(2)(a). The Tribunal also noted the availability of alternative apps, low switching costs and multi homing, which undermined a claim of foreclosure or inability to switch. Consequently, allegations of predatory pricing and imposed unfair terms were found to lack substance.

Allegations that the 2016 privacy update or the removal of subscription fees amounted to predatory pricing or an unfair imposition are rejected for want of supporting evidence of abuse.

Separation of regulatory competence between the Competition Act and Information Technology/ privacy law - Competence of the Competition Commission/Tribunal to adjudicate alleged breaches of the Information Technology Act or the constitutional right to privacy raised in the complaint - HELD THAT: - The Tribunal agreed with the Commission that questions of compliance with the Information Technology statute and issues squarely about privacy (as distinct from competition effects) fall outside the adjudicatory remit of the Competition Act and the Commission. The Tribunal noted that the Delhi High Court had addressed aspects of the privacy challenge and that matters concerning information technology and data protection are to be considered by the appropriate forum under the relevant statutory scheme. Consequently, the Competition Commission's refusal to entertain IT Act and pure privacy grievances in the present proceeding was held to be appropriate.

Matters alleging breach of the Information Technology Act or standalone privacy grievances are not for determination under the Competition Act in these proceedings and were rightly excluded from the Commission's Section 26(2) consideration.

Final Conclusion: The Tribunal found no infirmity in the Competition Commission's detailed analysis and affirmed the Commission's closure of the matter under Section 26(2) for want of a prima facie case of abuse of dominant position; the Commission's delineation of the relevant market and finding of dominance were accepted, but the allegations of predatory pricing, unfair imposition in the 2016 privacy update, and claims founded solely on the Information Technology Act or privacy law were rejected as not constituting actionable abuse under the Competition Act. The appeal is dismissed.