TaxTMI Updates e-Newsletter
Aug 09,2022

Provisional attachment - Section 83 of the Central Goods and Services Tax Act, 2017 - period of one year for attachment - lifting of attachment - obligation to inform banks on lifting attachment - continuation of investigation subject to law

Provisional attachment - Section 83 of the Central Goods and Services Tax Act, 2017 - period of one year for attachment - lifting of attachment - obligation to inform banks on lifting attachment - Validity and continuance of provisional attachment dated 31.03.2021 and the consequent relief to lift the attachment. - HELD THAT: - The Court held that, on a plain reading of Section 83 of the Central Goods and Services Tax Act, 2017, the statutory maximum timeframe for maintaining a provisional attachment is one year. The respondent did not place on record any fresh or renewed attachment order, and counsel for the respondent accepted the legal position. In the absence of any review or extension of the attachment, the provisional attachment that was ordered on 31.03.2021 cannot continue. The respondent was therefore directed to lift the attachment and to communicate the lifting to the concerned bank within three days of receipt of the order. The Court made clear that lifting the attachment does not preclude the respondent from conducting investigations or taking subsequent lawful steps in accordance with law. [Paras 8, 9, 10]

Provisional attachment dated 31.03.2021 cannot continue; respondent directed to lift the attachment and notify the concerned bank within three days; prayers in clause (a)(i)-(iv) and (b) allowed.

Final Conclusion: Writ petition allowed insofar as provisional attachment ordered on 31.03.2021 is directed to be lifted and banks informed; order does not preclude lawful investigations or subsequent steps by the respondent.

Levy of interest under Section 50(1) of the CGST Act - Chargeability of interest on electronic cash ledger only and not on input tax credit - Retrospective substitution of proviso by the Finance Act, 2021 - Remand for fresh consideration in light of statutory amendment

Levy of interest under Section 50(1) of the CGST Act - Chargeability of interest on electronic cash ledger only and not on input tax credit - Retrospective substitution of proviso by the Finance Act, 2021 - Demand Information Notice dated 18.02.2020 levying interest on gross GST liability was quashed and set aside insofar as it called for payment contrary to the substituted proviso. - HELD THAT: - The petitioner had paid interest after adjusting available input tax credit and challenged the Demand Information Notice which called for interest on gross tax before adjustment. The Court noted the proviso to sub-section (1) of Section 50 inserted with effect from 01.08.2019 and the subsequent substitution of that proviso by the Finance Act, 2021 with retrospective effect from 01.07.2017. Respondent did not contest that the amendment rendered the impugned levy unsustainable. In view of the conceded position and earlier similar decision of this Court, the Demand Information Notice levying interest as communicated on 18.02.2020 was set aside. [Paras 7, 8]

Demand Information Notice DIN-20200262WJ00005DF3DE dated 18.02.2020 is set aside.

Remand for fresh consideration in light of statutory amendment - Retrospective substitution of proviso by the Finance Act, 2021 - Matter remanded to the Superintendent, GST & Central Excise, Bhubaneswar-IX Range for reconsideration taking into account the amendment effected by the Finance Act, 2021. - HELD THAT: - Having set aside the impugned notice, the Court directed that the Superintendent reconsider the demand afresh in the light of the substituted proviso (Finance Act, 2021), which the Court recognised as operative retrospectively. The remand contemplates fresh exercise of administrative power applying the amended proviso to the assessed tax periods, rather than final adjudication on the merits by this Court. [Paras 7]

The matter is remanded to the Superintendent, GST & Central Excise, Bhubaneswar-IX Range for fresh consideration in light of the Finance Act, 2021.

Final Conclusion: Writ petition allowed; the Demand Information Notice dated 18.02.2020 is set aside and the matter is remanded to the Superintendent, GST & Central Excise, Bhubaneswar-IX Range to reconsider the demand having regard to the proviso substituted by the Finance Act, 2021. The petition is disposed of.

Pre-arrest bail / anticipatory bail - Custodial interrogation - Fraudulent availing and passing of Input Tax Credit - Creation of fake entities for passing Input Tax Credit - Prima facie material - Non-necessity of prior assessment or demand notice for prosecution - No requirement of FIR as a condition precedent to arrest

Pre-arrest bail / anticipatory bail - Prima facie material - Application for pre-arrest (anticipatory) bail was rejected. - HELD THAT: - The Court found that the investigation has produced material prima facie indicating the applicant's involvement in the scheme of creating and using fictitious entities to avail and pass on Input Tax Credit without actual supply. Given the nature and extent of the allegations and the material on record, the balance of discretion against granting pre-arrest protection was drawn in favour of the investigating agency. The Court noted prior orders in related proceedings and that interim protection earlier granted was insufficient to rule out need for custodial interrogation. Consequently, the Court declined to exercise its discretion in favour of the applicant. [Paras 11, 14, 15]

The anticipatory bail application is rejected and interim protection is vacated.

Non-necessity of prior assessment or demand notice for prosecution - No requirement of FIR as a condition precedent to arrest - It is not necessary that returns be verified, assessment completed, or a demand notice issued before prosecution or arrest under the CGST Act; registration of FIR is not a condition precedent to arrest. - HELD THAT: - Relying on earlier reasoning of this Court, the judge observed that the scheme of the CGST Act separates assessment provisions from provisions relating to offences and prosecution; therefore, prosecution and arrest may follow on basis of material giving 'reason to believe' without waiting for completion of assessment or issuance of demand. The Court rejected the submission that a prior FIR or verification of returns is a precondition for arrest, noting statutory power to arrest where the authority has reason to believe an offence under the relevant provisions has been committed. [Paras 12]

The submissions that assessment, demand notice or FIR are preconditions to arrest/prosecution are repelled.

Custodial interrogation - Creation of fake entities for passing Input Tax Credit - Fraudulent availing and passing of Input Tax Credit - Custodial interrogation of the applicant is warranted on the material before the Court. - HELD THAT: - The affidavit-in-reply and investigation materials, including identification of multiple fictitious firms, details of transactions, and a money trail in the applicant's accounts, furnish a prima facie case that cannot be fully probed without personal custodial interrogation. The Court held that mere presence before authorities or proffered cooperation would not suffice to facilitate effective investigation and unearth the alleged fraud in all its facets, and that the allegations are of a character that justify custodial interrogation. [Paras 10, 11]

Custodial interrogation is necessary; therefore pre-arrest relief is inappropriate.

Final Conclusion: On the material produced in the investigation showing involvement in creation and use of fictitious entities to fraudulently avail and pass Input Tax Credit, the High Court refused anticipatory/pre-arrest bail, held that assessment, demand notice or FIR are not preconditions to arrest or prosecution under the CGST Act, and vacated the interim protection previously granted.

Blocking of electronic credit ledger - input tax credit - show cause notice - personal hearing - restoration of registration - protection of revenue pending adjudication

Blocking of electronic credit ledger - input tax credit - protection of revenue pending adjudication - Validity and extent of blocking of the assessee's electronic credit ledger in respect of alleged fraudulent availment of input tax credit. - HELD THAT: - The Court recorded that the allegations relate to transactions in financial year 2017-2018 and that respondent authorities, having reason to believe that input tax credit was fraudulently availed, blocked credits claimed under CGST and SGST heads. However, the impugned communication blocked an electronic credit ledger leaving a negative balance and the registration of the assessee was suspended without issuance of a show cause notice. Balancing the assessee's interest and the revenue's protection pending adjudication, the Court restricted the continued blocking to the amount specifically alleged to have been fraudulently availed and directed the authorities to lift any blocking beyond that quantum so as to permit the assessee to continue business activity and file returns.

Blocking of the electronic credit ledger is restricted to the amount alleged to have been fraudulently claimed; blocking beyond that amount is to be lifted.

Show cause notice - personal hearing - restoration of registration - Procedural steps to be followed by the revenue authority before finally determining the disputed credit and effecting registration suspension. - HELD THAT: - The Court found that no show cause notice had yet been issued prior to suspension of registration. To ensure adjudication on merits, the Court directed respondent No.2 to issue a show cause notice within ten days from receipt of the order, afford the assessee reasonable time to file a reply, grant an opportunity of personal hearing and thereafter pass a reasoned order on merits in accordance with law. Pending completion of these steps, the Court directed restoration of the assessee's registration so far as necessary to enable filing of returns.

Revenue to issue show cause notice within ten days, provide opportunity to reply and personal hearing, decide on merits; registration to be restored to enable filing of returns.

Final Conclusion: Writ petition and intra Court appeal disposed by directing restriction of the blocked electronic credit to the specified alleged amount, issuance of a show cause notice within ten days, opportunity to reply and personal hearing, decision on merits thereafter, lifting of any excess blocking and restoration of registration to enable filing of returns.

Ongoing project vs other than ongoing project - option to adopt new scheme without input tax credit or continue under old scheme with ITC - developer-promoter liability for tax on constructed share to land owner-promoter - reverse charge liability for supplies from unregistered persons and the 80% procurement rule - services by employee in course of employment excluded from GST (Schedule III) - manpower supply agency taxable and liable to pay GST - composite (unseverable) contract vs severable contract determining rate and availment of ITC

Ongoing project vs other than ongoing project - option to adopt new scheme without input tax credit or continue under old scheme with ITC - Whether the applicant's project is an "other than ongoing project" and the consequent applicability of Notification Nos. 03/2019 and 04/2019 (new scheme) or the earlier scheme permitting ITC. - HELD THAT: - The Authority found on the material placed that work on the project commenced in June 2018. Notification No. 03/2019 defines "other than ongoing project" as projects commencing on or after 01.04.2019. Accordingly the project does not qualify as an "other than ongoing project". The notification provides a promoter the option to adopt the new scheme (tax without ITC at the specified concessional rates and reversal of credit as on 31.03.2019) or to continue under the earlier scheme with ITC subject to filing the declaration by the stipulated date. The applicant had not opted to continue under the old scheme; therefore the new scheme's rates without ITC apply to the applicant for projects commenced prior to 01.04.2019 if the applicant has opted into the new scheme. [Paras 7, 8]

Project commenced in June 2018 and thus is not an "other than ongoing project"; applicant falls under the scheme applicable to projects commenced before 01.04.2019 and, having not opted for the old scheme, will be governed by the new scheme's rates without ITC.

Developer-promoter liability for tax on constructed share to land owner-promoter - Whether GST on the portion of constructed area shared with the land owner-promoter is payable by the applicant under reverse charge or as liability of the developer-promoter. - HELD THAT: - In respect of projects commenced prior to 01.04.2019 the Notifications allocate liability such that the developer-promoter (applicant) shall pay CGST and SGST on the supply of construction of apartment to the land owner-promoter. If the land owner-promoter subsequently supplies such apartment to buyers before issuance of completion certificate, the land owner-promoter is liable to pay tax on such supplies but is eligible to claim input tax credit of taxes charged by the developer-promoter. Thus the tax on the constructed share allotted to the land owner-promoter is the liability of the developer-promoter and not a reverse charge on the land owner-promoter. [Paras 7, 8]

Tax on the portion of constructed area shared with the land owner-promoter is payable by the developer-promoter (applicant) and not under reverse charge; the land owner-promoter may claim ITC of such tax when eligible.

Reverse charge liability for supplies from unregistered persons and the 80% procurement rule - Whether reverse charge applies in respect of procurement of cement, other inputs, input services and capital goods from unregistered suppliers and the operation of the 80% rule. - HELD THAT: - The Authority recorded that where cement is procured from unregistered suppliers the promoter is liable to pay GST under reverse charge at the applicable rate. Excluding cement, at least 80% of procurement of inputs and input services used in supplying the real estate project must be from registered suppliers; any shortfall attracts GST under reverse charge on the shortfall, measured financial year wise. Capital goods procured from unregistered persons similarly attract reverse charge liability on the promoter. These liabilities arise under the Notifications and the scheme applicable to the project. [Paras 7, 8]

Reverse charge is applicable for supplies from unregistered persons as specified: cement procured from unregistered suppliers, shortfall under the 80% rule (measured year-wise), and capital goods from unregistered persons attract reverse charge on the promoter.

Services by employee in course of employment excluded from GST (Schedule III) - manpower supply agency taxable and liable to pay GST - Whether RCM is applicable to daily wages, labour charges, contract labour, salaries and related employee payments. - HELD THAT: - Services by an employee to the employer in the course of or in relation to employment are listed in Schedule III and are not subject to GST; therefore daily wages and payments to employees do not attract GST under reverse charge. However, supply of manpower or labour by a manpower supply agency is a distinct taxable service (SAC 98519) taxable at the prescribed rate, and the manpower supply agency is liable to pay that tax. Consequently salaries, incentives and similar employee-employer payments are not liable to tax under reverse charge, whereas outsourced manpower supply services are taxable and payable by the agency. [Paras 7, 8]

RCM is not applicable to daily wages, labour charges paid to employees or to salaries, incentives and related employee payments; manpower supply agency services are taxable and the agency is liable to pay GST.

Composite (unseverable) contract vs severable contract determining rate and availment of ITC - Whether different tax rates and ITC treatment can be applied where sale of semi-finished flat is evidenced by two agreements (sale agreement and separate work order for completion). - HELD THAT: - Relying on judicial precedent, the Authority held that where the initial contract for land and building, albeit entered through two documents, constitutes a single composite and unseverable contract, the entire composite consideration attracts the concessional rates under the new scheme: 0.5% CGST and 0.5% SGST for affordable housing and 2.5% CGST and 2.5% SGST for other residential apartments, without ITC. Conversely, any subsequent agreement that is beyond the scope of the initial contract and is severable constitutes an independent contract; supply under such a severable contract will attract the general rate with ITC (observed as 9% CGST and 9% SGST with ITC under the ruling). The distinction between a single composite contract and a separate severable contract controls the applicable rate and ITC availability. [Paras 7, 8]

If the initial land-and-building contract is a single unseverable contract (even if evidenced by two agreements) the concessional rates without ITC apply; if a later work-order is a severable independent contract, that work attracts the applicable rate with ITC (treated in the ruling as 9% CGST & SGST each with ITC).

Proportionate GST on TDR/FSI/long term lease of land for unsold apartments after completion - Whether GST is payable on TDR/FSI or upfront payment for long-term lease of land in relation to residential apartments sold before or after completion. - HELD THAT: - For residential apartments sold before completion, GST is not payable on TDR, FSI or upfront long-term lease payments when such supplies take place after 01.04.2019. However, for residential apartments remaining unsold after completion, the developer-promoter must pay proportionate GST on TDR, FSI or long-term lease of land under reverse charge. [Paras 7, 8]

No GST on TDR/FSI/long-term lease payments where apartments are sold before completion and supply occurs after 01.04.2019; proportionate GST under reverse charge is payable by developer-promoter for unsold apartments after completion.

Final Conclusion: The Authority ruled that the applicant's project, having commenced in June 2018, does not qualify as an "other than ongoing project" and is governed by the transitional scheme for projects commenced before 01.04.2019; the developer-promoter bears tax liability on the share to the land owner-promoter (not by reverse charge), RCM does not apply to employee wages or salaries while manpower supply agency services are taxable by the agency, the 80% procurement rule and reverse charge for unregistered suppliers apply as stated, different rates may be applied between affordable and non-affordable units, and the tax and ITC consequences depend on whether agreements form a single composite contract or are severable.

Benefit of input tax credit - commensurate reduction in price - Section 171 of the CGST Act, 2017 - passing on benefit of reduction in rate of tax or ITC - methodology for computation of profiteering - NAA's determination of profiteering amount - refund with interest under Rule 133(3)(b) of the CGST Rules, 2017 - penalty under Section 171(3A) of the CGST Act, 2017

Section 171 of the CGST Act, 2017 - passing on benefit of reduction in rate of tax or ITC - benefit of input tax credit - methodology for computation of profiteering - Whether the respondent contravened the obligation to pass on the benefit of additional input tax credit to recipients under Section 171(1) of the CGST Act, 2017. - HELD THAT: - The Authority accepted the DGAP's verified computation that compared the ratio of CENVAT/ITC to taxable turnover in the pre-GST period and the post-GST period for the project and found an increase in ITC availability post-GST. The DGAP's methodology - taking ITC and taxable turnover data from statutory returns and the homebuyers list supplied by the respondent, computing proportionate credit relevant to sold units and deriving the incremental ITC percentage - was adopted. The respondent's contrary contentions (inclusion of TRAN-1 VAT credit without supporting VAT returns/assessment; reliance on built-up area instead of saleable area from the homebuyers list; errors in area figures; and treatment of cesses) were examined and rejected where not supported by documentary proof or where methodology would distort the computation. On these findings the Authority concluded that additional ITC accrued to the respondent and was not passed on to buyers, thereby violating Section 171(1). [Paras 35, 36, 42]

The respondent contravened Section 171(1) by not passing on the additional benefit of input tax credit to recipients.

NAA's determination of profiteering amount - refund with interest under Rule 133(3)(b) of the CGST Rules, 2017 - penalty under Section 171(3A) of the CGST Act, 2017 - The quantum of additional benefit/profiteering to be returned to recipients and the remedial measures. - HELD THAT: - Relying on the DGAP's tabulated computation, accepted by the Authority, the incremental ITC percentage (post-GST ratio less pre-GST ratio) was applied to the taxable turnover for the investigation period to compute the profiteered amount. Verification of the respondent's claim of passing benefits was attempted by contacting buyers; responses were inconclusive and insufficient to displace the DGAP's computation. Accordingly, the Authority determined the total profiteered amount for July, 2017 to July, 2020 and directed refund of that amount to identified recipients along with interest at 18% per annum from the date the amount was profiteered until the date of refund, to be paid within three months; failure to comply would invite recovery under the CGST Act. Because the investigation period extended beyond 01.01.2020, the Authority also held the respondent liable to notice for penalty under Section 171(3A) for amounts profiteered from 01.01.2020 onwards. [Paras 38, 39, 40, 41, 42]

The Authority fixed the profiteered amount for July, 2017 to July, 2020 and ordered refund to eligible recipients with interest @18% and directed initiation of penalty proceedings under Section 171(3A) for the period from 01.01.2020.

Final Conclusion: The Authority accepted the DGAP's computation and found that the respondent did not pass on the additional input tax credit to homebuyers for the period July, 2017 to July, 2020, fixed the profiteered amount for that period, directed refund to identified recipients with interest @18% and ordered initiation of penalty proceedings for amounts profiteered from 01.01.2020.

Benefit of input tax credit - commensurate reduction in prices - computation of profiteering - Methodology and Procedure under Rule 126 - retrospective imposition of penalty

Benefit of input tax credit - commensurate reduction in prices - Whether the Respondent accrued additional benefit of ITC post-GST and was required to pass it on to recipients by way of commensurate reduction in prices. - HELD THAT: - The Authority examined DGAP's investigation and the documentary material and accepted the DGAP's finding that the Respondent's ITC-to-turnover ratio increased from 0.44% (pre GST) to 1.68% (post GST), yielding an additional ITC benefit of 1.24% of turnover for the project during 01.07.2017 to 31.03.2019. Applying Section 171(1) of the CGST Act, 2017, read with the Explanation to that section and the Authority's notified Procedure and Methodology under Rule 126, it held that any additional ITC benefit must be passed on to each recipient by way of commensurate reduction in price. The Authority found the DGAP's comparison of ITC to turnover ratios between pre and post GST periods to be an appropriate mechanism to quantify the additional ITC available to the supplier and therefore to determine the commensurate reduction required to be passed on to buyers. [Paras 3, 11]

The Respondent had accrued additional ITC benefit of 1.24% of turnover for the period 01.07.2017 to 31.03.2019 and was required to pass it on to recipients by way of commensurate reduction in prices.

Computation of profiteering - Methodology and Procedure under Rule 126 - Whether the DGAP's methodology for computation of profiteering was valid and whether a single fixed mathematical formula is required across sectors/projects. - HELD THAT: - The Authority held that Section 171 and its Explanation provide the legislative basis for computing the profiteered amount and that the Authority's Notification dated 28.03.2018 under Rule 126 legitimately determines the Procedure and Methodology. It rejected the Respondent's contention that absence of a single prescribed mathematical formula rendered the proceedings arbitrary, explaining that different projects and sectors have inherently different factual matrices (dates of start/completion, payment schedules, area sold, ITC timing etc.), and therefore a uniform formula would be neither practicable nor just. The Authority emphasised that computation is a mathematical exercise that may properly vary with facts and that Rule 126 empowers the Authority to determine methodology and procedure rather than prescribe a rigid universal formula. [Paras 10]

The DGAP's approach and the Authority's Procedure and Methodology under Rule 126 for computation of profiteering are valid; no single fixed formula is required across all projects/sectors.

Computation of profiteering - Whether the profiteered amount was correctly computed and allocated to identifiable recipients and whether the Respondent had passed on the determined amounts. - HELD THAT: - On examination of the DGAP's tabulation and the documentary material, the Authority accepted the computation that the total profiteered amount for the project during 01.07.2017 to 31.03.2019 stood at the amount determined by DGAP. The DGAP had identified 11 recipients to whom the amount related; it was observed that the Respondent claimed to have passed some amounts and produced acknowledgements/cheques. DGAP's subsequent verification of the Respondent's bank statements showed entries corresponding to the payments to eight customers, and the Authority noted that three customers had been shown to have received benefit in excess of their commensurate share which could not be set off against others (only future adjustments for those particular recipients are permissible). The Authority therefore directed the Respondent to pass/return the determined profiteered amounts to the identified recipients along with interest at the prescribed rate within three months if not already passed on. [Paras 3, 12]

The profiteered amount as determined by DGAP is accepted and is to be returned/passed on to the identified 11 recipients with interest, subject to amounts already paid being credited where established.

Retrospective imposition of penalty - Whether penalty under Section 171(3A) could be imposed for the contravention occurring during 01.07.2017 to 31.03.2019. - HELD THAT: - Although the Authority found contravention of Section 171(1) for the period 01.07.2017 to 31.03.2019, it noted that Section 171(3A) (penalty) was inserted with effect from 01.01.2020 by the Finance Act, 2019. Since that penalty provision was not in operation during the period when the contravention occurred, the Authority held that imposing penalty under Section 171(3A) retrospectively would not be permissible. [Paras 13]

Penalty under Section 171(3A) cannot be imposed for the period 01.07.2017 to 31.03.2019 because the provision came into force only w.e.f. 01.01.2020.

Final Conclusion: The Authority accepted DGAP's findings and held that the Respondent realised and retained an additional ITC benefit of 1.24% of turnover for the period 01.07.2017 to 31.03.2019, quantified as the amount determined by DGAP, which must be passed on/returned to the identified 11 homebuyers with interest; the imposition of penalty under Section 171(3A) was not ordered because that provision was not in force during the relevant period.

Benefit of input tax credit - commensurate reduction in prices - profiteering as defined in the Explanation to Section 171 - methodology for computation of profiteered amount - reverse charge mechanism and entitlement to ITC - revenue realised as basis for computation of profiteering - interest on profiteered amount - constitutional challenge to Section 171

Benefit of input tax credit - commensurate reduction in prices - profiteering as defined in the Explanation to Section 171 - Whether the respondent contravened Section 171(1) of the CGST Act, 2017 by not passing on the benefit of additional ITC to recipients in the project 'MJR Clique Hydra'. - HELD THAT: - The Authority accepted the DGAP's investigation that compared ITC availability pre-GST and post-GST and found an increase in the ratio of ITC to turnover from 3.71% (pre-GST) to 8.76% (post-GST), establishing an additional ITC benefit of 5.05% of turnover which ought to have been passed on to each buyer by way of commensurate reduction in price. Section 171(1) mandates passing on any reduction in tax rate or benefit of ITC to each recipient; the Explanation defines 'profiteered' as failure to do so. The Authority held that the benefit must be computed and allocated unit-wise/product-wise and that the DGAP's computations, based on the respondent's own data, correctly determined the aggregate and unit-wise profiteered amount for the project. The respondent's objections regarding alternate notions of 'benefit', reliance on expenditure rather than realised revenue, and oncreased tax rates altering entitlement were considered and rejected as untenable on the facts and law of this case. [Paras 6, 8, 11, 19, 20]

The respondent contravened Section 171(1) by not passing on the additional ITC benefit to buyers of the 'MJR Clique Hydra' project.

Methodology for computation of profiteered amount - revenue realised as basis for computation of profiteering - Whether the methodology adopted by DGAP for computing the profiteered amount (ratio of ITC to turnover using amounts raised from buyers) was valid and in accordance with Section 171. - HELD THAT: - The Authority held that Section 171(1) contemplates a mathematical computation of commensurate reduction and that the Authority is empowered under Rule 126 to determine procedure and methodology. Given differing facts across projects, no single universal formula can be prescribed; methodology must suit sector and case. On the facts, DGAP used the respondent's home buyers list and amounts raised (actual receipts) to allocate the additional ITC proportionately to sold units. The Authority found this approach reasonable and lawful, rejecting the respondent's contentions that computation should be expenditure based, should exclude RCM credits, or should be on accrual rather than amounts raised. DGAP's calculations were therefore affirmed. [Paras 8, 11, 15, 19]

DGAP's methodology and computation of the profiteered amount for the project are valid and are upheld.

Reverse charge mechanism and entitlement to ITC - benefit of input tax credit - Whether ITC availed under reverse charge mechanism (RCM) in the post GST period should be excluded from the computation of additional ITC benefit. - HELD THAT: - The Authority found that in the pre GST regime no ITC was available for supplies from unregistered suppliers, whereas under GST if the respondent paid tax under RCM he became eligible to claim ITC. Such ITC therefore constitutes an additional benefit in the post GST regime. The respondent's plea to exclude RCM related ITC was rejected. [Paras 5, 13, 19]

RCM related ITC availed post GST is part of the additional ITC benefit and is includible in the profiteering computation.

Revenue realised as basis for computation of profiteering - Whether profiteering must be computed on amounts realised (demands raised/receipts) rather than on accrual basis. - HELD THAT: - The Authority accepted DGAP's use of amounts actually raised from buyers (as per the respondent's home buyers list) to compute profiteering, holding that profiteering calculation is to be based on money actually received by the respondent. The respondent's contention that accrued but unrealised revenue should be included was rejected; Section 13 read with Sections 15 and 31 supports use of demand/receipt for valuation in this context. [Paras 15]

Profiteering is to be computed on amounts raised/realised from buyers; DGAP's use of realised revenue is correct.

Constitutional challenge to Section 171 - Whether Section 171 and the Rules thereunder are unconstitutional or otherwise inapplicable so as to stay or drop the investigation. - HELD THAT: - The Authority held that Section 171 and the anti profiteering Rules have legislative approval and are designed to ensure benefits granted by governments are passed to consumers; the Authority's function is not price regulation but ensuring passing on of tax/ITC benefits. The respondent's constitutional objections under Articles 14 and 19(1)(g) and arguments about absence of definition of 'profiteering' were rejected: the Explanation to Section 171 defines 'profiteered'. The plea to keep the matter in abeyance pending constitutional adjudication was refused. [Paras 9, 10]

Section 171 and the Rules are constitutionally valid and applicable; the respondent's challenge is rejected.

Profiteering as defined in the Explanation to Section 171 - interest on profiteered amount - Quantum of profiteering, interest, and relief to recipients for the period 01.07.2017 to 30.09.2019 in respect of the project 'MJR Clique Hydra'. - HELD THAT: - Relying on the DGAP report and the respondent's own data, the Authority determined the aggregate profiteered amount for the project as Rs.1,07,67,330 (inclusive of GST) for the period 01.07.2017 to 30.09.2019, and accepted the unit wise breakup in Annexure 13 of the DGAP report (the applicant's share identified therein). The Authority ordered the respondent to reduce prices commensurately, return the profiteered amount to eligible buyers, and to pay interest at the prescribed rate (18%) on the entire profiteered amount from the date of profiteering to date of payment. The respondent was directed to pass the amounts within three months and compliance and recovery mechanisms were specified. [Paras 20, 21, 22, 23, 25]

Profiteered amount fixed at Rs.1,07,67,330 for 01.07.2017-30.09.2019; respondent to refund/pass on the amount with interest @18% to eligible recipients within 3 months; compliance to be monitored and recovered if not complied.

Methodology for computation of profiteered amount - Whether the DGAP's investigation and computations excluded or mis treated units sold after the Completion Certificate or units without demands, and whether land valuation should have been separately excluded. - HELD THAT: - The Authority found DGAP correctly excluded units booked after the Completion Certificate where GST was not attracted, and correctly limited computation to units for which demands were raised in the relevant periods to avoid distortion. The Authority also found that because the respondent issued consolidated invoices including land and construction, the land value could not be separately excluded from profiteering computation; had separate invoicing been done, exclusion might have followed. The respondent's challenges on these points were rejected. [Paras 16, 18]

DGAP's treatment of post CC bookings, units without demands, and inclusion of land (given consolidated invoicing) is upheld.

Reverse charge mechanism and entitlement to ITC - Remand: Whether the respondent has passed on the benefit of ITC in respect of other projects executed under the same GST registration where common ITC pool is availed. - HELD THAT: - The Authority noted that the respondent admitted execution of other projects under the same registration and that ITC is availed from a common pool for multiple projects. Since DGAP did not investigate those projects, but the admission raises a reasonable suspicion of further profiteering, the Authority directed DGAP to investigate all other projects of the respondent (including named projects) under Rule 133(5)(a) and submit reports per Rule 133(5)(b). This is a remand for fresh investigation and report; merits as to those projects were not decided. [Paras 27]

DGAP is directed to investigate the respondent's other projects for possible profiteering and submit reports; issue remanded for fresh investigation.

Final Conclusion: The Authority upholds the DGAP's findings and determines that M/s MJR Builders Pvt. Ltd. contravened Section 171(1) of the CGST Act, 2017 in relation to the project 'MJR Clique Hydra' for the period 01.07.2017 to 30.09.2019; the profiteered amount is fixed at Rs.1,07,67,330 (inclusive of GST) which the respondent must pass to eligible buyers with interest @18% within three months; the DGAP is directed to investigate the respondent's other projects for similar non compliance.

Allowability of consumption incentives as ascertainable liabilities under the mercantile system of accounting - application of the rule of consistency in successive assessment years - disallowance under Section 14A of the Act read with Rule 8D and its limitation to exempt income - requirement of recording satisfaction before invoking Section 14A - determinative 'due date' for deposit under Section 36(1)(va) - filing date of return under Section 139(1) - effect of post 2021 explanatory amendments and non retrospectivity of 'for removal of doubts' clauses

Allowability of consumption incentives as ascertainable liabilities under the mercantile system of accounting - application of the rule of consistency in successive assessment years - Deletion of addition made by AO in respect of 'consumption debtors' (consumption incentive) was upheld. - HELD THAT: - The Tribunal and the Commissioner (Appeals) found, on the material placed on record, that the consumption incentive constituted an ascertained liability which was credited to individual advertisers' ledger accounts in the same financial year and accordingly reduced the billed income. The assessee consistently followed the mercantile system of accounting and had a history of claiming and obtaining allowance of the expenditure in earlier years; the revenue produced no material to rebut the assessee's evidence. Applying the consistency principle as enunciated by the Supreme Court, the appellate authorities correctly treated the liability as allowable and deleted the addition. The High Court found no infirmity in those concurrent findings of fact and law. [Paras 21, 22, 23, 24]

Order of ITAT upholding deletion of the disallowance in respect of consumption debtors is sustained.

Disallowance under Section 14A of the Act read with Rule 8D and its limitation to exempt income - requirement of recording satisfaction before invoking Section 14A - Addition on account of disallowance under Section 14A was deleted and that deletion was upheld. - HELD THAT: - The Assessing Officer made a disallowance exceeding the exempt income by mechanically applying Section 14A and Rule 8D without recording the requisite satisfaction. The authorities below correctly held that a disallowance under Section 14A cannot exceed the exempt income actually earned and that invocation of Section 14A requires a recorded satisfaction; reliance placed on this Court's precedents precluded reliance on the CBDT circular to the contrary. In those circumstances the excess addition was impermissible and the appellate order deleting it was rightly sustained. [Paras 25, 26, 28, 29]

ITAT's affirmation of CIT(A)'s deletion of the Section 14A addition is upheld.

Determinative 'due date' for deposit under Section 36(1)(va) - filing date of return under Section 139(1) - effect of post 2021 explanatory amendments and non retrospectivity of 'for removal of doubts' clauses - Disallowance under Section 36(1)(va) for late deposit of employees' provident fund contribution was deleted and that deletion was upheld. - HELD THAT: - The Court followed its consistent earlier decisions that for the purpose of Section 36(1)(va) the relevant 'due date' is the due date for filing the return under Section 139(1), not the due date under the labour statute; where payment was made before filing the return the disallowance is not warranted. Although the Finance Act, 2021 inserted explanations purporting to change this position, the Memorandum to the Finance Bill and settled principles on 'for removal of doubts' clauses show the amendment applies prospectively (w.e.f. 1 4 2021) and does not alter the law applicable to AY 2012 13. On the facts the employee contribution was deposited before filing the return and the appellate authorities rightly deleted the addition. [Paras 30, 31, 37, 45, 46]

ITAT's confirmation of CIT(A)'s deletion of the Section 36(1)(va) disallowance is sustained; the Revenue's challenge is rejected.

Final Conclusion: All three impugned additions in the assessment for AY 2012-13 - in respect of consumption incentives, Section 14A disallowance, and late deposit of employees' provident fund contribution under Section 36(1)(va) - were correctly deleted by the CIT(A) and upheld by the ITAT; the High Court found no infirmity in those conclusions and dismissed the Revenue's appeal.

Deduction under section 80HHC - profit derived from exports - positive profit requirement - set-off of losses between export of manufactured and trading goods - interpretation of tax incentive provisions according to statutory wording

Deduction under section 80HHC - profit derived from exports - positive profit requirement - set-off of losses between export of manufactured and trading goods - Whether deduction under section 80HHC is allowable where one limb of the export business shows a loss. - HELD THAT: - The Court applied the binding precedents of the Supreme Court in IPCA Laboratory Ltd and CIT v. K. Ravindranathan Nair and held that the word "profit" in section 80HHC denotes a positive profit. In computing entitlement to deduction, both profits and losses arising from exports of self-manufactured goods and trading goods must be taken into account; losses in one limb are to be set off against profits in the other. If, after such adjustment, the net figure is a loss, no deduction under section 80HHC can be allowed. Although the provision is intended to incentivise exports and is to be given a liberal interpretation, such interpretation must conform to the statutory wording which treats the two limbs together for computation of profit. [Paras 7, 8]

Deduction under section 80HHC denied where net profit after setting off losses is not positive; the Tribunal's order upholding denial is sustained.

Final Conclusion: The substantial question is answered in favour of the Revenue; both appeals are dismissed.

Allowability of interest expense - beneficial owner - power of Commissioner (Appeals) to enhance assessment and requirement of opportunity - disallowance under section 14A read with Rule 8D - requirement of Assessing Officer's satisfaction under section 14A(2) - applicability of section 14A to share income from an AOP

Allowability of interest expense - beneficial owner - power of Commissioner (Appeals) to enhance assessment and requirement of opportunity - Disallowance of interest expenses of Rs. 1,76,36,246/- by the Commissioner (Appeals) and the power of the Commissioner (Appeals) to direct such disallowance to the AO without following enhancement procedure. - HELD THAT: - The Tribunal found that the assessee had declared and the authorities accepted rental income from the commercial property and allowed the standard deduction thereon; the disallowance imposed by the Commissioner (Appeals) was based on the observation that possession was handed over on 31.03.2011 and certain book entries were made on that date. The Tribunal held that when the income from the property was accepted for the relevant period, the Commissioner (Appeals) could not direct disallowance of interest in substitution for the Assessing Officer without observing the statutory procedural safeguards for enhancement, including giving the assessee an opportunity to show cause. On merits the Tribunal also found the Commissioner (Appeals)'s factual conclusion flawed given the assessee's evidence that rentals were received for six months and the accounting entry timing did not negate the assessee's claim. For these reasons the Tribunal reversed the Commissioner (Appeals) and allowed the assessee's ground. [Paras 8, 10, 11]

The disallowance of interest of Rs. 1,76,36,246/- directed by the Commissioner (Appeals) is reversed and ground No.1 is allowed.

Disallowance under section 14A read with Rule 8D - requirement of Assessing Officer's satisfaction under section 14A(2) - applicability of section 14A to share income from an AOP - Validity of the Assessing Officer's disallowance under section 14A (and Rule 8D), and whether section 14A applies to share income from an AOP. - HELD THAT: - The Tribunal recorded that the Assessing Officer had not recorded the statutory satisfaction required under section 14A(2) read with Rule 8D(1) before making any disallowance and had not examined the assessee's suo moto disallowance. Relying on the jurisdictional ITAT precedent in the assessee's own case and on the assessee's submissions, the Tribunal held that the Assessing Officer could not validly make the disallowance without recording the required satisfaction; the first appellate authority cannot cure that deficiency by substituting its own satisfaction. Alternatively, the Tribunal accepted the assessee's legal contention that share income from an AOP does not fall within the category of income to which section 14A is directed, and therefore section 14A is not applicable in the facts of the case. Consequently the suo moto disallowance made by the assessee and any further disallowance by the AO are not tenable. [Paras 13, 15]

Section 14A disallowance is unsustainable: the AO failed to record the required satisfaction and, alternatively, section 14A is not applicable to the assessee's share income from the AOP; the disallowances under section 14A are therefore to be deleted.

Allowability of interest expense - Claim under section 57(iii) (as canvassed in ground No.4) regarding deduction of interest against interest income rendered infructuous by other findings. - HELD THAT: - In view of the Tribunal's acceptance of the assessee's claim for allowance of the interest expense (reversal of the Commissioner (Appeals)'s disallowance) and its conclusion on section 14A, the separate contention seeking deduction under section 57(iii) need not be adjudicated. The ground thus does not require independent decision. [Paras 16]

Ground No.4 rendered infructuous and requires no adjudication in light of the other findings; the interest amount is allowed.

Disallowance under section 14A read with Rule 8D - Validity of the assessee's suo moto disallowances (including TDS interest) and direction to the AO to accept revised computation reversing such suo moto disallowances. - HELD THAT: - Given the Tribunal's conclusion that section 14A is not applicable to the assessee's facts and that the AO did not record requisite satisfaction before making any disallowance, the Tribunal held there is no basis for the suo moto disallowances made by the assessee in its computation (including the TDS interest disallowance). The Tribunal directed the Assessing Officer to accept the revised computation to be filed by the assessee reversing those suo moto disallowances. [Paras 17, 18]

Grounds No.5 and No.6 are allowed; the AO is directed to accept the revised computation reversing the suo moto disallowances and the appeal is fully allowed.

Final Conclusion: The Tribunal allowed the appeal in full for AY 2011-12: the Commissioner (Appeals)'s directed disallowance of interest is reversed; disallowances under section 14A/Rule 8D are deleted because the AO failed to record the required satisfaction and, alternatively, section 14A does not apply to the assessee's share income from an AOP; the Assessing Officer is directed to accept the revised computation reversing the suo moto disallowances.

Eligibility of deduction u/s.80P(2)(a)(i) on interest income from banks for cooperative societies - invocation of u/s.80P(2)(d) in respect of interest income and its distinction from u/s.80P(2)(a)(i) - precedential weight of High Court decisions in absence of a contrary decision of the jurisdictional High Court

Eligibility of deduction u/s.80P(2)(a)(i) on interest income from banks for cooperative societies - precedential weight of High Court decisions in absence of a contrary decision of the jurisdictional High Court - Deduction under section 80P(2)(a)(i) allowed in respect of interest income from banks for A.Y. 2015-16. - HELD THAT: - The Tribunal examined the disallowance by the AO and the affirmation by the CIT(A) that treated interest from banks as 'Income from other sources' and hence ineligible for deduction. Noting prior decisions of the Pune Bench and reliance on the view taken by the Hon'ble Karnataka High Court in Tumkur Merchants (favouring allowance of deduction), the Tribunal found no binding contrary decision of the jurisdictional High Court. The decision in Totgar's Cooperative Sales Society (relied upon by the CIT(A)) concerned a different clause of section 80P and arose on a distinct factual backdrop; therefore it was not germane to the claim under section 80P(2)(a)(i). Applying the consistent view favourable to the assessee, the Tribunal held the interest income to be eligible for deduction under section 80P(2)(a)(i) and overturned the impugned order. [Paras 3, 4, 5]

Appeal for A.Y. 2015-16 allowed; deduction under section 80P(2)(a)(i) on interest from banks permitted.

Invocation of u/s.80P(2)(d) in respect of interest income and its distinction from u/s.80P(2)(a)(i) - eligibility of deduction u/s.80P(2)(a)(i) on interest income from banks for cooperative societies - Disallowance under section 80P(2)(d) in respect of interest income for A.Y. 2017-18 set aside and deduction allowed. - HELD THAT: - For A.Y. 2017-18 the assessment treatment and facts were mutatis mutandis similar to those in A.Y. 2015-16, where interest earned from banks had been disallowed. The AO invoked section 80P(2)(d) and the CIT(A) affirmed the disallowance. Applying the view adopted in the earlier part of the order - that the assessee's claim is governed by the claimable deduction under section 80P(2)(a)(i) and that decisions relied upon by the Revenue on a different sub-clause and fact-situation are not germane - the Tribunal overturned the impugned orders for 2017-18 as well and allowed the deduction. [Paras 6]

Appeal for A.Y. 2017-18 allowed; disallowance under section 80P(2)(d) set aside and deduction permitted.

Final Conclusion: Both appeals (A.Y. 2015-16 and A.Y. 2017-18) are allowed: interest income from banks held eligible for deduction under section 80P (on the stated footing), and the impugned orders disallowing such deduction are overturned.

Cash credits u/s 68 - identity, genuineness and creditworthiness of creditors - adjustment of advances against subsequent sales - books of account not rejected u/s 145(3) - cash deposits during demonetization period - application of Section 115BBE

Cash credits u/s 68 - identity, genuineness and creditworthiness of creditors - Addition of Rs. 1,20,000 made on account of amounts received from two persons upheld. - HELD THAT: - The Tribunal found that in respect of amounts of Rs. 60,000 each received from Sh. Deepak Sharma and Sh. Suresh Kumar no confirmations, PAN details or evidence of their being assessed to tax were furnished. In absence of proof of identity, genuineness and creditworthiness of these creditors the short cash receipts could not be accepted as genuine, and the addition under the cash-credit provisions was sustained. [Paras 6]

Addition of Rs. 1,20,000 upheld.

Adjustment of advances against subsequent sales - books of account not rejected u/s 145(3) - identity, genuineness and creditworthiness of creditors - Addition of Rs. 28,00,000 in respect of advances from four identifiable/related parties deleted. - HELD THAT: - The parties who advanced amounts produced confirmed account copies showing PAN, affidavits, evidence of tax return filing and cash summaries. The Assessing Officer did not doubt the sales made to those parties nor reject the assessee's books of account under section 145(3). Since opening stock, purchases, sales and closing stock were accepted and the advances were subsequently adjusted against sales, the Tribunal held that the documentary evidence justified deletion of the addition and that confirming the addition would amount to double addition. Reliance was placed on coordinate ITAT decisions dealing with demonetisation-period cash sales accepted in books. [Paras 6]

Addition of Rs. 28,00,000 deleted.

Identity, genuineness and creditworthiness of creditors - source of deposits in housing loan account - books of account not rejected u/s 145(3) - Addition of Rs. 48,50,000 on account of cash deposited towards housing loan deleted. - HELD THAT: - The three HUFs who deposited cash produced confirmed accounts, affidavits, ITRs and cash summaries evidencing withdrawals from their assessed businesses. The Tribunal accepted that these HUFs had independent identity and assessed status and that the source of the amounts (source of source) was explained. The fact that they were not co borrowers did not vitiate the genuineness of the transactions. Accordingly the addition was deleted. [Paras 3, 6]

Addition of Rs. 48,50,000 deleted.

Application of Section 115BBE - Invoking of Section 115BBE not sustained insofar as it related to the additions deleted by the Tribunal. - HELD THAT: - Because the Tribunal deleted the additions of Rs. 28,00,000 and Rs. 48,50,000 after accepting documentary proof of transactions and sources, the protective invocation of Section 115BBE by the authorities could not be applied to those deleted additions. The Tribunal therefore ruled that Section 115BBE would not be applicable to the amounts which it deleted. [Paras 6]

Section 115BBE held not applicable to the deleted additions.

Final Conclusion: Appeal partly allowed: addition of Rs. 1,20,000 confirmed; additions of Rs. 28,00,000 and Rs. 48,50,000 deleted; Section 115BBE not applicable to the deleted additions.

Addition on account of unexplained cash deposits - reassessment under section 147/148 - genuineness and proof of a Will - verification of documentary evidence and examination of attesting witness - remand for fresh adjudication after enquiry and opportunity of hearing

Addition on account of unexplained cash deposits - genuineness and proof of a Will - verification of documentary evidence and examination of attesting witness - remand for fresh adjudication after enquiry and opportunity of hearing - Whether the addition made by the Assessing Officer on account of cash deposits should be sustained or the matter should be remitted for verification of the Will produced by the assessee. - HELD THAT: - The Assessing Officer made an addition after framing assessment ex parte on the basis of cash deposits in the assessee's bank account and an enquiry report indicating a sale of land; the assessee later produced a Will and an affidavit of an attesting witness asserting that the cash comprised inheritance. Both the Assessing Officer and the CIT(A) doubted the Will without conducting independent verification or examining attesting witnesses. The Tribunal held that the genuineness of the Will is central to the issue and that the tax authorities were required to verify signatures and other relevant facts or examine the attesting witness before rejecting the Will. In these circumstances the Tribunal did not adjudicate the substantive merits on the existence or genuineness of the Will but directed that the Assessing Officer should re-adjudicate the matter after conducting a proper enquiry into the genuineness of the Will and after affording the assessee an appropriate opportunity of hearing. [Paras 9, 10]

Matter remitted to the Assessing Officer for fresh adjudication after proper verification of the Will and examination (if necessary) of attesting witness, with opportunity of hearing; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the orders below and remitted the matter to the Assessing Officer to re-adjudicate the addition after conducting a proper enquiry into the genuineness of the Will and affording the assessee an opportunity of hearing; appeal allowed for statistical purposes.

Principles of natural justice - Vigilantibus non dormientibus jura subveniunt - unexplained cash deposits treated as income from undisclosed sources - addition as income from undisclosed sources under section 69A read with section 115BBE - obligation to obtain Permanent Account Number under section 139A - consequential interest and penalty - demonetisation-related flagged deposits

Principles of natural justice - Vigilantibus non dormientibus jura subveniunt - Whether the assessee was denied sufficient opportunity of hearing before the NFAC/CIT(A). - HELD THAT: - The Tribunal examined the appellate record and the hearing dates set out by NFAC. Five opportunities to present submissions between April and November 2021 were recorded and the assessee did not file any submissions before NFAC nor offer a satisfactory explanation for non appearance. The Tribunal applied the maxim Vigilantibus non dormientibus jura subveniunt to hold that the assessee, having failed to take the available opportunities, cannot complain of violation of the principles of natural justice. The ground alleging denial of hearing was therefore rejected.

Ground alleging violation of principles of natural justice dismissed.

Unexplained cash deposits treated as income from undisclosed sources - addition as income from undisclosed sources under section 69A read with section 115BBE - obligation to obtain Permanent Account Number under section 139A - demonetisation-related flagged deposits - Whether the addition of the cash deposits amounting to Rs.12,13,500 as income from undisclosed sources (assessed under section 69A read with section 115BBE) was rightly sustained. - HELD THAT: - The Tribunal accepted the finding of the lower authorities that the assessee failed to furnish cogent evidence to establish that the deposits arose from declared business receipts. The assessee obtained PAN only on 10.11.2016 despite admitting a turnover in earlier years in excess of the threshold requiring PAN; returns for prior years were filed on 25.11.2016 during the demonetisation period. The assessing officer and CIT(A) recorded that no purchase bills, sales records or other corroborative evidence were produced to substantiate that the deposited specified bank notes derived from the assessee's business. Given the lack of supporting records and the flagged demonetisation deposits, the amount was properly characterisable as unexplained cash and taxable as income from undisclosed sources under the provisions applied by the assessing authority. The Tribunal found no reason to interfere with the concurrent findings of the lower authorities.

Addition of the demonetisation-period cash deposits as income from undisclosed sources under section 69A read with section 115BBE upheld.

Consequential interest and penalty - Whether the interest and penalty charged require separate adjudication. - HELD THAT: - The Tribunal observed that interest under the relevant provisions and initiation of penalty proceedings arise consequentially from the assessment. As such, those matters did not require independent determination in the appeal and were left intact as consequential to the confirmed assessment addition.

Interest and penalty issues treated as consequential and not separately adjudicated.

Final Conclusion: The appeal is dismissed: the claim of denial of hearing is rejected; the addition of the demonetisation period cash deposits as income from undisclosed sources under section 69A read with section 115BBE is confirmed; interest and penalty consequences remain as determined by the assessing authority.

Recording of objective satisfaction before invoking Rule 8D under section 14A(2) - application of Rule 8D for computation of disallowance in respect of exempt income - mandatory disallowance where exempt income exists but limited by requirement of AO's reasons - ad-hoc disallowance for expenses unsupported by vouchers - assessing officer's duty to record reasons and relevant considerations

Recording of objective satisfaction before invoking Rule 8D under section 14A(2) - application of Rule 8D for computation of disallowance in respect of exempt income - Validity of the disallowance under section 14A read with Rule 8D (including the 0.5% component) where assessee claimed no expenditure in relation to static investments yielding exempt income. - HELD THAT: - The Tribunal held that invocation of Rule 8D to compute disallowance under section 14A is conditional on the Assessing Officer first recording an objective satisfaction, based on the assessee's accounts and relevant considerations, that the assessee's claim about the correctness of its expenditure is incorrect. In the present case the Assessing Officer mechanically applied Rule 8D and computed disallowance (including the 0.5% component) without recording reasons showing why the assessee's explanation - that investments were held from earlier years, were static and no expenditure had been incurred to earn the exempt income - was not acceptable. The Tribunal relied upon earlier decisions which require the AO to state reasons and relevant findings before applying Rule 8D and concluded that no such objective satisfaction was recorded here. Consequently the disallowance confirmed by the CIT(A) was set aside and the assessee's own returned amount was directed to be retained. [Paras 6, 7, 8, 9]

Disallowance under section 14A read with Rule 8D (including the 0.5% addition) deleted for lack of objective satisfaction by the Assessing Officer; ground partly allowed.

Ad-hoc disallowance for expenses unsupported by vouchers - assessing officer's duty to record reasons and relevant considerations - Sustainability of ad-hoc disallowance out of salary and wages where certain vouchers were self-made or not produced. - HELD THAT: - The Tribunal examined the Assessing Officer's nominal disallowance of 5% of salary and wages expenses on account of insufficiency or non-production of vouchers and noted that the CIT(A) had moderated the disallowance to 50% of the AO's addition. Having regard to precedent (including the Allahabad High Court decision referred to) that a 5% disallowance is justified where expenses lack supporting bills/vouchers, the Tribunal found the reduction by the CIT(A) to be reasonable and did not discern any illegality in affirming that limited disallowance. The Tribunal therefore sustained the CIT(A)'s approach and dismissed the ground of the assessee challenging this disallowance. [Paras 10, 11]

Disallowance out of salary and wages upheld as moderated by the CIT(A); ground dismissed.

Final Conclusion: Appeal partly allowed: disallowance under section 14A read with Rule 8D deleted for want of objective satisfaction by the Assessing Officer; ad-hoc disallowance from salary and wages sustained as reduced by the CIT(A).

Credit for tax deducted at source - Section 199 and Rule 37BA - procedure for claiming TDS credit - Section 203 / Rule 31 (TDS certificate) and Form 26AS as evidence for credit - Section 205 - bar against direct demand on assessee where tax is deductible at source - Onus on the assessee to substantiate that tax was deducted by the payer - Remand to Assessing Officer for verification of TDS and corresponding income - Contractual tax gross-up obligations of the borrower - CBDT guidance (OM) on not insisting on deposit for allowing credit

Credit for tax deducted at source - Section 199 and Rule 37BA - procedure for claiming TDS credit - Section 203 / Rule 31 (TDS certificate) and Form 26AS as evidence for credit - Onus on the assessee to substantiate that tax was deducted by the payer - Contractual tax gross-up obligations of the borrower - Whether the assessee is entitled to credit for TDS on interest income where TDS certificates are not produced but the loan agreement and other material indicate tax was to be borne by the borrower and income was received net of tax. - HELD THAT: - The Tribunal examined statutory provisions (section 199 and the rules framed thereunder including Rule 37BA), the provisions requiring issue of TDS certificates and Form 26AS (section 203/203AA and Rules), and the contractual tax gross up clause in the loan agreement. It noted judicial authority that the bar in section 205 operates once it is established that tax was deducted at source and that the failure of the deductor to deposit the TDS or to issue a certificate does not by itself permit recovery from the payee; nevertheless the statutory procedure for claiming credit requires substantiation. Applying these principles to the facts, the assessee did not furnish particulars of TDS amounts or documentary proof (TDS certificates, ledger entries, or Form 26AS) showing the payer had deducted and (where required) remitted tax. While the assessee's contractual rights and the Tribunal's earlier finding on treaty taxability supported the claim that tax was intended to be borne by the borrower, entitlement to credit depends on verification under the statutory scheme. Consequently the Tribunal directed that the question of allowing TDS credit be restored to the Assessing Officer for verification whether the assessee had shown corresponding interest income and whether the payer actually deducted tax, permitting the AO to make inquiries from borrowers and to verify documents; the AO was advised not to insist on proof of deposit as a prerequisite for allowing credit in view of CBDT guidance. Adequate opportunity to the assessee was to be afforded. For these limited purposes the recalled grounds were allowed for statistical purposes and remitted for verification. [Paras 8, 9, 10]

Grounds allowing credit of TDS are allowed for statistical purposes and remitted to the Assessing Officer to verify whether tax was deducted by the payers and whether corresponding interest income is shown; the AO may verify with borrowers and need not insist on deposit as a precondition, and must afford the assessee opportunity to be heard.

Final Conclusion: The recalled grounds concerning TDS credit are allowed for statistical purposes and the matter is remitted to the Assessing Officer for verification of deduction of tax by the payers and corresponding accounting of interest income; the Assessing Officer may make necessary inquiries (including from borrowers), shall not insist on proof of deposit as a precondition for allowing credit (per CBDT guidance), and must give the assessee adequate opportunity of being heard.

Disallowance for delayed payment of provident fund and ESI - treatment of interest on late deposit of TDS as business expenditure - treatment of sundry creditors/purchases as bogus and disallowance of purchases - cessation of liability within the meaning of section 41 of the Income-tax Act - burden on assessee to prove genuineness of purchases and requirement of verification beyond VAT returns

Disallowance for delayed payment of provident fund and ESI - burden on assessee to prove genuineness of payments - Whether additions by the Assessing Officer for late deposit of provident fund and ESI are sustainable. - HELD THAT: - The Tribunal accepted the assessee's evidence that the outstanding provident fund and ESI amounts were deposited into the government treasury before filing the return under section 139(1). Reliance was placed on a coordinate-bench decision favourable to the assessee. The Tribunal held that when payment into the treasury is made before filing the return, the addition for delayed deposit is not sustainable and deleted the addition for the relevant assessment years. The conclusion in AY 2009-10 was applied by parity to AY 2010-11 on the same facts and documentary proof filed before the authorities. [Paras 4, 6]

Additions for delayed deposit of PF and ESI deleted for the assessment years concerned.

Cessation of liability within the meaning of section 41 of the Income-tax Act - burden on assessee to substantiate long-outstanding creditors - Whether the closing balance shown as payable to a long-outstanding creditor could be treated as income by reason of cessation of liability. - HELD THAT: - The Assessing Officer treated a long-standing creditor balance as income under the doctrine of cessation of liability. The CIT(A) recorded that no submissions had been made before it. The Tribunal found that the assessee did press the matter before the Tribunal and furnished ledger details; accordingly the matter was set aside to the CIT(A) for fresh adjudication with a direction to afford the assessee a reasonable opportunity to substantiate the liability. The remand is for verification and adjudication and not for an immediate final finding on merits by the Tribunal. [Paras 4, 6]

Issue remanded to the CIT(A) for fresh consideration after verification and opportunity to the assessee to substantiate the creditor balance.

Treatment of sundry creditors/purchases as bogus and disallowance of purchases - burden on revenue to carry out independent verification beyond VAT blacklisting - Whether purchases disallowed as bogus by relying on returned notices and VAT blacklisting could be sustained without proper cross-verification. - HELD THAT: - The Assessing Officer disallowed a large percentage of purchases based primarily on information from VAT/Sales Tax authorities and returned service of notices. The Tribunal noted absence of independent, proper cross-verification by revenue authorities, that the assessee produced explanations, comparative profit ratios and other material, and that stock had been exhausted by sales. The revenue did not press the matter strongly. Applying these facts and precedents cited by the assessee, the Tribunal concluded the addition made on the basis of 'borrowed satisfaction' from VAT records was not sustainable and deleted the additions relating to the purchases (both the specific purchases for project Green A and the 91% disallowance challenged for other projects). [Paras 6, 7]

Additions disallowing the purchases as bogus deleted and the assessments adjusted accordingly.

Treatment of interest on late deposit of TDS as business expenditure - Whether interest paid for delayed deposit of TDS is allowable as business expenditure. - HELD THAT: - The Tribunal considered the submissions and earlier decisions relied upon by the revenue and the CIT(A). On the question before it, the Tribunal did not accept the assessee's contention to allow the interest as business expenditure and dismissed the assessee's ground challenging the disallowance. The findings for AY 2009-10 were applied to the corresponding ground in AY 2010-11 by parity. [Paras 5, 6]

Assessee's challenge to disallowance of interest on late TDS deposit dismissed; addition sustained.

Final Conclusion: The Tribunal partly allowed the appeals. Additions for delayed deposit of provident fund and ESI were deleted for the years under appeal; additions treating certain purchases as bogus were deleted for lack of independent verification; the question of a long-standing creditor balance treated as cessation of liability was remanded to the CIT(A) for fresh consideration with opportunity to the assessee; the challenge to disallowance of interest on late TDS deposit was dismissed and the additions on that score sustained.

Deduction of employees' contribution to Provident Fund and ESI when paid before the due date of filing return under Section 139(1) - applicability of Section 43B and Section 36(1)(va) as amended by Finance Act, 2021-prospective or retrospective effect - clarificatory amendment doctrine in taxation and effect of retrospective vs prospective operation - precedential effect of jurisdictional High Court decision in Essae Teraoka Pvt. Ltd. on employee contribution deduction

Deduction of employees' contribution to Provident Fund and ESI when paid before the due date of filing return under Section 139(1) - applicability of Section 43B and Section 36(1)(va) as amended by Finance Act, 2021-prospective or retrospective effect - precedential effect of jurisdictional High Court decision in Essae Teraoka Pvt. Ltd. on employee contribution deduction - Employees' contribution to PF and ESI paid before the due date for filing the return under Section 139(1) is allowable as deduction for AY 2018-2019 and the Finance Act, 2021 amendments do not apply to the assessment year under consideration. - HELD THAT: - The Tribunal followed the binding view of the jurisdictional High Court in Essae Teraoka Pvt. Ltd., holding that the term "contribution" in the relevant statutory scheme encompasses both employer and employee contributions and that payments made before the due date for filing the return under Section 139(1) qualify for deduction. The Tribunal examined whether the amendments by Finance Act, 2021 (to Section 36(1)(va) and Section 43B) are clarificatory and retrospective. Applying the principle that a provision said to be "for removal of doubts" cannot be construed as retrospective if it alters the pre-existing law (as exemplified by the Supreme Court's reasoning in M.M. Aqua Technologies Ltd.), the Tribunal concluded that the 2021 amendments change the law adversely to the taxpayer and are not retrospective. The amendments are stated to be effective from 01.04.2021 and therefore are prospective, not affecting AY 2018-2019. On these bases, the disallowance of employees' contributions remitted before the due date of filing the return was deleted and deduction was directed to be allowed. [Paras 7, 8]

Disallowance of employees' contribution to PF and ESI (made before the due date of filing return) is deleted and the deduction is allowed for AY 2018-2019; the Finance Act, 2021 amendments do not apply to the assessment year under consideration.

Final Conclusion: Appeal allowed: the Tribunal directed that employees' contributions to PF and ESI paid before the due date of filing the return under Section 139(1) be allowed as deduction for AY 2018-2019, holding that the Finance Act, 2021 amendments are prospective and do not apply to the assessment year in dispute.

Unexplained cash credits under section 68 - genuineness and creditworthiness of the creditor - reliance on findings of the Settlement Commission for group modus operandi - treatment of income by way of estimation where routed funds not established - disallowance of interest relating to unexplained income

Unexplained cash credits under section 68 - reliance on findings of the Settlement Commission for group modus operandi - genuineness and creditworthiness of the creditor - Addition under section 68 in respect of unsecured loan from Karnimata Commerce Pvt. Ltd.; 10% of the amount credited sustained as income. - HELD THAT: - The Tribunal upheld the CIT(A)'s confirmation of 10% of the amount credited as income. The AO had invoked section 68 treating the unsecured loan as unexplained income after recording material indicating rerouting of funds through third party bank accounts and relying on statements recorded during search and summons. The Settlement Commission's findings concerning the group - including rejection of books, the role of Shri Sunil Kumar Agrawal as the key family member handling funds, and that departmental material did not establish re routing but an estimate of 10% was appropriate - were applied to the assessee. Given the assessee's failure to satisfactorily establish genuineness and the creditor's creditworthiness and in view of the group modus operandi accepted by the Settlement Commission, the Tribunal found no reason to distinguish the assessee's case from other group members and thus declined to disturb the CIT(A)'s treatment of 10% as income. [Paras 10]

The addition sustained by the CIT(A) of 10% of the amount credited under section 68 is upheld and grounds challenging it are dismissed.

Disallowance of interest relating to unexplained income - genuineness and creditworthiness of the creditor - Disallowance of interest paid on the impugned unsecured loan upheld. - HELD THAT: - The Tribunal affirmed the CIT(A)'s disallowance of interest on the unsecured loan because the creditor's creditworthiness was not established in light of the enquires and the Settlement Commission's findings as applied to the assessee. Having given the assessee relief by treating only 10% of the credited amount as income, the Tribunal held that no expense attributable to the remainder of the impugned unaccounted loan can be allowed; accordingly interest connected to that unsecured loan cannot be admitted as deduction. [Paras 11]

The disallowance of the interest on the unsecured loan is upheld and the ground challenging it is dismissed.

Final Conclusion: The Tribunal dismissed the assessee's appeal for Assessment Year 2011-2012, upholding the CIT(A)'s confirmation of 10% of the credited amount as income under section 68 and the disallowance of interest on the impugned unsecured loan.

Allowability of employees' contribution to provident fund and employees' state insurance when paid before the due date for filing return - prospective application of amendment to tax provisions by Finance Act, 2021 - allowability of interest on delayed remittance of tax deducted at source as business expenditure under Section 37(1) - interest under section 201(1A) characterised as levy for delay akin to interest on income tax - Doctrine of stare decisis / respect for binding High Court decisions

Allowability of employees' contribution to provident fund and employees' state insurance when paid before the due date for filing return - prospective application of amendment to tax provisions by Finance Act, 2021 - Doctrine of stare decisis / respect for binding High Court decisions - Employee's contribution to PF/ESI paid before the due date for filing return is deductible; amendment by Finance Act, 2021 does not apply to the relevant assessment year. - HELD THAT: - The Tribunal held that where the assessee remitted employees' contribution to PF/ESI before the due date for filing the return under section 139(1), the amount is allowable as deduction, following the coordinate Bench decision and the binding view of the jurisdictional High Court in Essae Teraoka. The Tribunal further held that the Finance Act, 2021 amendment to the provisions was not declaratory of the prior law but altered the law adversely to the assessee and is prospective (effective from 01.04.2021) and therefore does not apply to the assessment year before it. Reliance was placed on coordinate Bench authorities which reached similar conclusions and the principle of judicial discipline in following the jurisdictional High Court. The addition made by the assessing officer on this account was deleted. [Paras 7, 8]

Employees' contribution to PF/ESI paid before the due date of filing the return is allowable and the addition is deleted; the Finance Act, 2021 amendment is prospective and not applicable to the assessment year in question.

Allowability of interest on delayed remittance of tax deducted at source as business expenditure under Section 37(1) - interest under section 201(1A) characterised as levy for delay akin to interest on income tax - Doctrine of stare decisis / respect for binding High Court decisions - Interest levied under section 201(1A) for delayed payment of TDS is not allowable as a deduction under section 37(1). - HELD THAT: - The Tribunal examined whether interest under section 201(1A) is an expenditure 'wholly and exclusively' for business and concluded it is not. The decision followed the reasoning of the Madras High Court and Supreme Court precedents that interest and penalties are distinct from business expenditure and that interest on delayed remittance of TDS is a levy for delay comparable to interest on income tax. The Tribunal rejected the assessee's submissions based on compensatory character or reliance on section 40(a)(ii) distinctions, holding that section 37(1) parameters govern allowability and that the Madras High Court's view must be followed by the Tribunal. Consequently, the disallowance of interest on delayed TDS was upheld. [Paras 11, 12, 36, 43]

Interest on delayed payment of TDS under section 201(1A) is not an allowable business deduction and the disallowance is sustained.

Final Conclusion: The appeal is partly allowed: deductions in respect of employees' contribution to PF/ESI paid before the due date of filing return are allowed and the related addition deleted; the disallowance of interest on delayed TDS under section 201(1A) is upheld. The stay petition has become infructuous and is dismissed.

Dominant purpose test - charitable purpose under section 2(15) - proviso to section 2(15) and advancement of any other object of general public utility - judicial consistency in tax assessments - reassessment/remand for fresh examination

Judicial consistency in tax assessments - reassessment/remand for fresh examination - Whether the principle of consistency requires the Assessing Officer to follow earlier revenue decisions accepting the assessee's objects and activities, and whether the matter should be remanded for specific findings on this point. - HELD THAT: - The Tribunal held that where there are no material changes in facts and circumstances and no change in law, a view once taken by Revenue in earlier years should not ordinarily be disturbed. The Assessing Officer and the CIT(A) failed to address the assessee's contention that identical activities had been accepted in earlier years. Since the AO did not record reasons why the previously accepted position should not be followed, the Tribunal concluded that the contention merits fresh consideration. The matter is therefore set aside to the file of the Assessing Officer with a direction to examine and record specific findings on whether the earlier acceptance by Revenue continues to apply in the year under consideration after affording the assessee opportunity to be heard. [Paras 13]

Remanded to the Assessing Officer for fresh examination and specific findings on consistency of Revenue's prior acceptance of the assessee's objects and activities.

Charitable purpose under section 2(15) - proviso to section 2(15) and advancement of any other object of general public utility - dominant purpose test - Whether the assessee's objects fall within the specifically enumerated limbs (medical relief, relief of the poor, yoga, etc.) of charitable purpose under section 2(15) so that the proviso to section 2(15) (relating to advancement of any other object of general public utility) does not apply, and whether the AO and CIT(A) erred in treating all objects as 'general public utility' without applying the dominant purpose test. - HELD THAT: - The Tribunal observed that the AO had summarily categorized the assessee's diverse objects as falling under 'general public utility' without first identifying whether they fit the specifically enumerated heads (relief of the poor, medical relief, yoga, etc.). The Tribunal emphasized that the phrase 'any other object of general public utility' is meant to capture objects not covered by the earlier specific limbs, and that where objects fall within the earlier limbs the proviso should not be mechanically applied. Because the AO did not apply the dominant purpose analysis or address the assessee's submissions (and the subsequent fresh registration granted under section 12AA was available for consideration), the Tribunal directed a fresh adjudication by the AO to decide classification under section 2(15) with reasons. [Paras 14]

Remanded to the Assessing Officer to apply the dominant purpose test and record specific reasons whether the assessee's objects fall within the enumerated limbs of section 2(15) or are subject to the proviso.

Dominant purpose test - charitable purpose under section 2(15) - reassessment/remand for fresh examination - Whether, on application of the dominant purpose test and after considering documentary evidence of charitable activities and their cost implications, the income from letting out rooms/halls is ancillary fund raising (and thus compatible with charitable status) or indicative of a commercial/ profit making dominant object. - HELD THAT: - The Tribunal found that the AO relied on the income and expenditure account to conclude that letting out rooms/halls constituted the dominant commercial activity, but did not record findings disputing the assessee's asserted charitable activities and failed to examine expenditures and cost implications of free or concessional services. The Tribunal noted that many charitable activities are provided free and their financial effect may be reflected on the expense side rather than as receipts; this aspect was not examined. Given these lacunae, the Tribunal directed the AO to consider afresh the documentary evidence, examine cost and receipts in relation to charitable activities, call for additional information if necessary, and apply the dominant purpose test in a reasoned manner after giving the assessee an opportunity to be heard. [Paras 15]

Remanded to the Assessing Officer for fresh examination of whether income from letting out premises is ancillary fund raising consistent with charitable purpose or a dominant commercial activity, after considering evidence and cost implications.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and set aside the orders below. The matter is remitted to the Assessing Officer for fresh consideration on (i) whether Revenue should follow its prior acceptance of the assessee's objects (consistency), (ii) proper classification under section 2(15) applying the dominant purpose test and distinguishing enumerated limbs from 'any other object of general public utility', and (iii) whether income from letting out premises is ancillary fund raising or a dominant commercial activity; the AO is to record specific findings after affording the assessee opportunity to produce evidence.

Section 263 jurisdiction - Erroneous and prejudicial to the interest of revenue - Section 40A(3) applicability to payments exceeding Rs.20,000 per day - Section 58(2) - application of provisions of Section 40A to income from other sources - Rule 6DD exceptions - Non-application of mind by Assessing Officer - Remand for fresh verification and assessment

Section 263 jurisdiction - Erroneous and prejudicial to the interest of revenue - Non-application of mind by Assessing Officer - Validity of the Commissioner s exercise of jurisdiction under Section 263 in cancelling the assessment order. - HELD THAT: - The Tribunal upheld the exercise of jurisdiction by the Commissioner under Section 263. The Assessing Officer had framed the assessment after making certain ad hoc disallowances but failed to consider or apply the provisions of Section 40A(3) despite ledger entries showing recurring cash payments exceeding Rs.20,000 per day for material expenses. The failure to examine applicability of Section 40A(3) and related exceptions, and the omission to make necessary enquiries and verifications amounted to an incorrect application of law and non-application of mind. Where the AO has not formed any opinion on a legally relevant provision that is apparent from the records, the Commissioner is entitled to intervene under Section 263; this is distinguishable from a mere change of opinion. Applying the governing tests from authorities on Section 263, the Tribunal found both components satisfied: the AO's order was erroneous in law and prejudicial to the revenue, warranting revision. [Paras 10, 11, 12, 14, 15]

Order under Section 263 cancelling the assessment was validly exercised and upheld.

Section 40A(3) applicability to payments exceeding Rs.20,000 per day - Section 58(2) application of provisions of Section 40A to income from other sources - Rule 6DD exceptions - Remand for fresh verification and assessment - Whether Section 40A(3) applied to the assessee s cash payments and whether the matter required fresh verification by the Assessing Officer. - HELD THAT: - The Tribunal concluded that the ledger accounts showed that a substantial portion (about 52%) of the relevant expenses (kitchen, vehicle running and fuel) were paid in cash exceeding Rs.20,000 per day, a fact not disputed by the assessee and present on the assessment record. By reason of Section 58(2), Section 40A(3) applies to computation of income assessed under 'income from other sources' as it does to business income. The AO was therefore required to test the expenditures against the conditions of Section 40A(3) and the exceptions under Rule 6DD and to verify the necessity and genuineness of recurring cash payments; merely applying tests of genuineness without addressing Section 40A(3) amounted to incomplete application of law. Given the AO s omission to examine these aspects, the Tribunal found it necessary to remit the matter for fresh adjudication, directing the AO to conduct detailed inquiries into individual transactions, apply Section 40A(3) and Rule 6DD as appropriate, and afford the assessee a reasonable opportunity of being heard. [Paras 11, 12]

Applicability of Section 40A(3) to the cash payments is to be examined afresh; matter remanded for verification and fresh assessment in accordance with law.

Final Conclusion: The Tribunal dismissed the assessee s appeal. It upheld the Commissioner s exercise of jurisdiction under Section 263 as the assessment was found erroneous and prejudicial to revenue for failing to consider the applicability of Section 40A(3). The assessment for A.Y. 2015-16 is set aside and the AO is directed to re-examine the transactions in light of Section 40A(3) and Rule 6DD, conduct necessary verifications, and pass a fresh order after affording the assessee a reasonable opportunity to be heard.

Delay in adjudication - show cause notice - reasonable period for adjudication - quashing of proceedings for inordinate delay - principles of natural justice - keeping show cause notices in call book and duty to inform - refund of deposit with interest

Delay in adjudication - quashing of proceedings for inordinate delay - reasonable period for adjudication - principles of natural justice - keeping show cause notices in call book and duty to inform - Whether the show cause notice dated 27/06/1997 could be adjudicated after an inordinate delay of about 24-25 years or ought to be quashed. - HELD THAT: - The Court held that adjudication of a show cause notice must be completed within a reasonable period and that undue delay wholly attributable to the revenue defeats procedural fairness and contravenes principles of natural justice. The judgment applied the settled line of precedents holding that where proceedings are left pending for an inordinate period without justifiable reasons and without informing the party that the matter is kept in call book, the affected party is prejudiced by loss of records and witnesses and by erosion of defence. The Court noted respondents' concession that parties were not informed when the matter was placed on call book and observed that delayed resurrection of long pending show cause notices cannot be justified. Relying on the cited authorities and the Court's own reasoning, the impugned show cause notice was quashed as having become stale and incapable of being adjudicated after such prolonged delay attributable to the revenue. [Paras 18, 19, 21, 22, 26]

Impugned show cause notice dated 27/06/1997 quashed on account of inordinate delay and breach of procedural fairness.

Refund of deposit with interest - equitable award of interest - Whether the deposit of Rs.30,00,000 made by the petitioners in August 1995 should be refunded and whether interest should be awarded. - HELD THAT: - Having quashed the show cause notice, the Court directed refund of the deposit since it was collected in the course of investigation in connection with proceedings that can no longer be adjudicated. Relying on established equitable principles that a person unjustly deprived of money should be repaid with interest, and on prior decisions awarding interest in analogous circumstances, the Court held petitioners entitled to refund of the deposit together with interest. The Court directed refund with accumulated interest and fixed a timeframe for payment. [Paras 23, 24, 25, 27]

Deposit of Rs.30,00,000 to be refunded to petitioners with interest; refund to be made with accumulated interest within eight weeks (as directed).

Final Conclusion: Writ petition allowed: the show cause notice dated 27/06/1997 is quashed for inordinate delay and breach of procedural fairness; the deposit made by petitioners in August 1995 is ordered to be refunded with interest, and refund to be effected within the time directed by the Court.

Speaking order - provisional assessment - finalisation of provisional assessment - self-assessment - re-assessment - principles of natural justice - acceptance of re-assessment in writing - Section 17 - self-assessment, verification and re-assessment under the Customs Act, 1962

Speaking order - acceptance of re-assessment in writing - provisional assessment - finalisation of provisional assessment - principles of natural justice - Section 17 - self-assessment, verification and re-assessment under the Customs Act, 1962 - Whether a speaking order is required on finalisation of provisional assessment where the importer has, in writing, accepted the re-assessed value. - HELD THAT: - The court examined Section 17 of the Customs Act, 1962 concerning self-assessment, verification and re-assessment, and the Customs (Finalization of Provisional Assessment) Regulations, 2018 which govern finalisation of provisional assessments. The record established that the importer had, in response to queries, accepted the re-determined/re-assessed value in writing and requested that no show-cause notice or speaking order be issued. Where the importer confirms acceptance of the re-assessment in writing, Section 17(5) and Regulation 6(4) contemplate finalisation without issuance of a speaking order, while Regulation 6(3) requires a speaking order only when the final assessment is contrary to the provisional assessment. Given the petitioner's written acceptance and the test report confirming the provisional assessment, there was no occasion for the proper officer to pass a speaking order invoking principles of natural justice. The court therefore held that the petitions seeking mandamus for issuance of a speaking order were not maintainable on the facts presented and the reassessments stood finalised in accordance with the statutory scheme and regulations. [Paras 6, 7, 8]

No speaking order was required as the importer had accepted the re-assessed value in writing; the writ petitions are dismissed.

Final Conclusion: The writ petitions are dismissed as the record shows written acceptance of the re-assessed value by the importers and the provisional assessments were finalised in accordance with Section 17 of the Customs Act, 1962 and the Customs (Finalization of Provisional Assessment) Regulations, 2018; no speaking order was required.

Interest under Section 28AB - Non retrospective operation of tax statute - Notification No.47/1996-CUS (NT) - Notice under Section 28 as a precondition to demand - Requirement of allegations of collusion or wilful misstatement or suppression of facts - Determination of duty/interest under Section 28(2)

Interest under Section 28AB - Non retrospective operation of tax statute - Notification No.47/1996-CUS (NT) - Whether Section 28AB and Notification No.47/1996-CUS (NT) could be applied to imports made in 1989-90 - HELD THAT: - The court held that Section 28AB was inserted only by the Finance (No.2) Bill, 1996 and, by its own saving provision, does not apply to cases where the duty became payable before the Finance Bill received Presidential assent. The medical equipments were imported in 1989-90 and thus the duty became payable well before insertion of Section 28AB. Notification No.47/1996-CUS (NT) and Section 28AB therefore could not be invoked retrospectively against the petitioners. The court endorsed the view in Diwan Chand Satya Pal Aggl. Imaging Research Centre (DEL.) that where the provision did not exist at the time of import, it cannot be applied to those imports. [Paras 10, 11]

Section 28AB and the 1996 Notification are not applicable to the 1989-90 imports; interest under Section 28AB could not be demanded on that basis.

Notice under Section 28 as a precondition to demand - Requirement of allegations of collusion or wilful misstatement or suppression of facts - Determination of duty/interest under Section 28(2) - Pre-conditions for charging interest - Whether statutory preconditions under Section 28 were satisfied so as to permit invocation of Section 28AB for charging interest - HELD THAT: - The court examined Section 28 and concluded that interest under Section 28AB can be claimed only after compliance with the preconditions in Section 28(1) and (2): issue of a notice within the prescribed period containing justifiable allegations (including collusion or wilful misstatement or suppression of facts), opportunity to file representation, consideration of that representation and a formal determination of duty or interest by the proper officer. In the present case no notice under Section 28(1) containing such allegations was issued, no representation under that notice was considered and no determination under Section 28(2) was made. Absent these preconditions, the statutory machinery to impose interest was not triggered. [Paras 12, 13, 14]

The pre conditions in Section 28 were not complied with and therefore interest could not be demanded under Section 28AB.

Final Conclusion: The court made the rule absolute: respondents cannot demand interest under Section 28AB for the 1989-90 imports because the provision and the Notification did not operate retrospectively and because the mandatory preconditions in Section 28 for charging interest were not satisfied; the writ petition is disposed.

Refund of security/bank guarantee under customs law - limitation period for refund claims - substantial compliance with prescribed procedure versus hyper technical disallowance - bona fide prosecution of claim and relief from time bar on account of officer/format defects - quashing of order rejecting refund as time barred and remand for fresh decision

Refund of security/bank guarantee under customs law - limitation period for refund claims - bona fide prosecution of claim and relief from time bar on account of officer/format defects - Whether the respondent rightly rejected the petitioner's refund application as time barred when an EODC was issued on 10.10.2018, the petitioner submitted an initial refund request within the limitation period but was directed by the department to file before a different officer and later to use a prescribed form. - HELD THAT: - The Court found on the admitted facts that the petitioner obtained the EODC on 10.10.2018 and promptly filed a refund request to the Commissioner on 24.11.2018. That application was returned by the Commissioner on 30.04.2019 directing the petitioner to file before the Assistant Commissioner (Refunds). The petitioner thereafter filed with the competent officer on 20.05.2019 and pursued the claim, making required compliance when informed to submit Form No.102 on 04.09.2020. The authority rejected the later submission as time barred. The Court held that, in these circumstances, where the petitioner had been bona fide prosecuting the refund claim and acted upon directions of departmental officers, it was arbitrary and hyper technical to treat the claim as barred by limitation because of filing before the initially wrong officer or for initial non compliance with the prescribed format. The determinative reasoning was that the department's own directions and the petitioner's prompt steps disentitle the authority from relying on a technical limitation defence to defeat a substantive refund claim.

The rejection of the refund application as time barred was unwarranted and arbitrary; the petitioner's prosecution of the claim was bona fide and should not be defeated on hyper technical grounds.

Quashing of order rejecting refund as time barred and remand for fresh decision - substantial compliance with prescribed procedure versus hyper technical disallowance - Relief to be granted in view of the Court's finding that the refund claim was wrongly held time barred. - HELD THAT: - Having concluded that the authority erred in holding the application time barred, the Court quashed the impugned communication dated 16.10.2020. The Court directed the concerned authority to treat the petitioner's refund application as within limitation and to decide the same in accordance with law. A reasonable and time bound direction was issued: the authority is to decide the claim afresh within three months from the date of the order. The direction implements the remedial principle that where procedural defects arise from departmental directions or where the claimant has pursued the claim bona fide, administrative officials must dispose the substantive claim on merits rather than reject it on technical limitation grounds.

Impugned order quashed; authority to treat the refund application as within limitation and decide it afresh in accordance with law within three months.

Final Conclusion: The writ petition is allowed: the order rejecting the refund as time barred is quashed; the refund application shall be treated as within limitation and decided by the competent Customs authority in accordance with law within three months. No order as to costs.

Power to discharge at previous stage under Section 245(2) of Cr.P.C. - taking cognizance as authoritative notice of allegations - previous stage of the case (Sections 200-204 and prior to completion of prosecution evidence) - requirement of judicial application of mind before issuance of process

Power to discharge at previous stage under Section 245(2) of Cr.P.C. - taking cognizance as authoritative notice of allegations - requirement of judicial application of mind before issuance of process - Validity of the Magistrate taking cognizance and issuing summons without examining witnesses or otherwise applying judicial mind in the complaint under Section 135(1)(b) of the Customs Act. - HELD THAT: - The Court held that the offence alleged being a warrant case made the provisions of Section 245 Cr.P.C. applicable, and that Section 245(2) empowers a Magistrate to discharge an accused at any previous stage if the charge is groundless. Reliance was placed on the Supreme Court decisions in Ajoy Kumar Ghose and Manharibhai Muljibhai Kakadia to explain that 'taking cognizance' is a concept of wide import and that the 'previous stage' spans from presentation under Section 200 through the stages up to completion of prosecution evidence under Section 244. However, those authorities also require that the Magistrate must have applied judicial mind or taken authoritative notice of the allegations before issuing process. In the present case the learned Magistrate, without recording sworn statements or otherwise conducting the inquiries contemplated at the initial stage, merely received the complaint and straightaway issued summons. The Court found no application of mind or commencement of the Section 200 stage, and therefore concluded that cognizance in the sense necessary to sustain issuance of process had not in fact occurred. For these reasons the Magistrate erred in taking cognizance and issuing summons before the procedure under Sections 200-204 Cr.P.C. was properly followed. [Paras 5, 6, 7, 8, 9]

Proceedings in C.C.No.73 of 2017 as against the petitioners are quashed; the learned Magistrate is at liberty to proceed with the complaint in accordance with law and the petitioners may file an application under Section 245(2) Cr.P.C. in the manner known to law.

Final Conclusion: The Criminal Original Petition is allowed and the cognizance and summons issued in C.C.No.73 of 2017 are set aside for failure by the Magistrate to apply judicial mind and to follow the preliminary procedural stages; the Magistrate may re proceed in accordance with law and the petitioners remain entitled to seek discharge under Section 245(2) Cr.P.C.

Redemption of restricted goods on payment of market value - distinction between prohibited and restricted goods - right to redeem seized goods under Section 125 of the Customs Act - provisional release of seized goods on bond under Section 110-A of the Customs Act - release of seized gold on deposit/payment combined with bank guarantee (50% duty cash + 50% bank guarantee) - adjudication to be completed within a prescribed short period to protect revenue - mere non-declaration and absence of concealment prima facie not proof of smuggling

Redemption of restricted goods on payment of market value - distinction between prohibited and restricted goods - right to redeem seized goods under Section 125 of the Customs Act - release of seized gold on deposit/payment combined with bank guarantee (50% duty cash + 50% bank guarantee) - mere non-declaration and absence of concealment prima facie not proof of smuggling - Whether the petitioner is entitled to release of the seized gold bangles pending adjudication and on what conditions - HELD THAT: - The Court found on the material that the petitioner had been working abroad for 51/2 years, possessed a valid work permit and a foreign bank account, produced the invoice for the purchase and made an oral declaration on arrival; there was no specific denial in the records that a declaration was made nor evidence of concealment in baggage or on body, so prima facie the case did not show smuggling but at most non-declaration requiring adjudication. Relying on the legal distinction between prohibited and restricted imports and the principle of redemption of restricted goods on payment (as explained in the cited authority), and having regard to the statutory right to redeem under Section 125, the Court directed conditional release. Applying precedents of this Court in similar circumstances, the petitioner was ordered to furnish security by way of a bank guarantee for 50% of the assessed customs duty (with implied readiness to pay the balance/alternate deposit as per practice) and upon such security the respondents were directed to hand over the gold bangles within two weeks, while preserving the authority's right to continue adjudication. [Paras 18, 21]

Petitioner entitled to provisional release of the seized gold on execution of a bank guarantee for 50% of the customs duty; respondents to release the gold within two weeks upon such security.

Adjudication to be completed within a prescribed short period to protect revenue - provisional release of seized goods on bond under Section 110-A of the Customs Act - Proceedings required of the Customs authorities after provisional release of the goods - HELD THAT: - The Court made clear that provisional release under the directed security does not foreclose adjudication. The respondents were directed to proceed with and complete adjudication proceedings in the matter to protect revenue, taking into account the petitioner's submissions and the seized material. The Court fixed a specific, limited timeline for completion of the adjudication to ensure expeditious disposal and safeguard public revenue. [Paras 21]

Adjudication proceedings to be carried out by the authorities and completed within three months from receipt of a copy of this order.

Final Conclusion: Writ petition disposed directing provisional release of the seized gold bangles to the petitioner on execution of a bank guarantee for 50% of the customs duty and directing the respondents to complete adjudication within three months; no order as to costs.

Challenge to appellate tribunal order by non-party - exigibility of goods to anti-dumping duty - jurisdiction of Customs, Excise and Service Tax Appellate Tribunal to determine scope/exigibility - judicial restraint from deciding merits in writ proceedings - remand for administrative response / affidavit

Challenge to appellate tribunal order by non-party - the scope of the petition surviving for judicial consideration - HELD THAT: - The petitioner abandoned its substantive prayers seeking a declaration that "Extra Clear Float Glass" is liable to anti dumping duty and an injunction to prevent clearance without levy. Consequently the petition survives only to the extent of the first prayer challenging the Tribunal's order dated 05.07.2019 in Customs Appeal Nos.399 400 of 2011; the Court confined itself to considering the limited challenge to the Tribunal's decision rather than pursuing the broader declaratory and injunctive reliefs relinquished by the petitioner. [Paras 2]

Petition retained only for quashing challenge to the Tribunal's order dated 05.07.2019

Exigibility of goods to anti-dumping duty - judicial restraint from deciding merits in writ proceedings - whether the High Court will decide the substantive question of whether Extra Clear Float Glass is exigible to anti dumping duty - HELD THAT: - The Court declined to adjudicate the exigibility and product scope question in these proceedings. After noting subsequent administrative developments (the Mid Term Review Notification MTR Case No.1 of 2020), the Court held that it could not go into the interpretative question of exigibility in the present writ petition and that such merits were not appropriate for decision at this stage in these proceedings. [Paras 6]

Court will not decide the merits on exigibility of Extra Clear Float Glass to anti dumping duty in the present petition

Jurisdiction of Customs, Excise and Service Tax Appellate Tribunal to determine scope/exigibility - whether the Appellate Tribunal had jurisdiction to decide the question of exigibility/scope - HELD THAT: - The Court expressed its view that the Tribunal would not have jurisdiction to adjudicate the question of the exigibility of the product for anti dumping duty. This observation forms part of the Court's reasoning for refraining from addressing the substantive interpretative issue in the writ petition. [Paras 6]

The Tribunal is viewed as lacking jurisdiction to determine the product exigibility question

Remand for administrative response / affidavit - further course of proceedings and administrative participation - HELD THAT: - Given the economic impact asserted by the petitioner and subsequent administrative action (the Mid Term Review Notification), the Court directed the Department to state its stand. Exercising powers under Article 226, the Court required the Department to file an affidavit addressing the merits and the course of action it intends to pursue in the circumstances disclosed. The matter was directed to be listed for further consideration after the Department's affidavit. [Paras 6, 7]

The Department is directed to file an affidavit on merits and proposed course of action; matter listed for further hearing

Final Conclusion: The petitioner abandoned its declaratory and injunctive reliefs, leaving only the challenge to the Tribunal's 05.07.2019 order; the High Court declined to decide the substantive question of exigibility (and observed that the Tribunal lacks jurisdiction on that question), directed the Department to file an affidavit stating its stand on merits and proposed course of action, and listed the matter for further hearing.

Revalidation of advance licences - executive instruction by way of SALC circular - mandatory compliance with revised input norms (reduction of vitamin mixes) - no provision for revalidation beyond prescribed validity - judicial review limits in policy decisions - decision of Advance Licensing Committee and Policy Relaxation Committee

Executive instruction by way of SALC circular - mandatory compliance with revised input norms (reduction of vitamin mixes) - Whether the respondents were justified in refusing revalidation of the advance licences for failure to comply with the SALC Circular No.5/98-99 requiring reduction of the quantity of vitamin mixes. - HELD THAT: - The Court held that the SALC Circular No.5/98-99 dated 21.01.1999 expressly bifurcated the previously consolidated input norm of 0.227 MT/MT into vitamin mixes = 0.027 MT/MT and mineral mixes = 0.200 MT/MT and directed licensing authorities to follow this instruction while considering revalidation requests. The record showed that the petitioner's authorisations were issued prior to 01.04.1997 and that the petitioner did not accept or comply with the reduction from 227 kg to 27 kg when asked; further, the revalidation requests were considered and rejected by the Advance Licensing Committee and the DGFT on that basis. The High Court's conclusion that consumption details were not required under the 1992-97 policy was held to have overlooked the subsequent executive instruction; non-compliance with that instruction rendered the authorities' refusal to revalidate tenable and not amenable to interference under writ jurisdiction. [Paras 9, 10, 12]

Refusal to revalidate the licences for want of compliance with the SALC circular's requirement regarding reduction of vitamin mixes was valid and rightly sustained.

No provision for revalidation beyond prescribed validity - decision of Advance Licensing Committee and Policy Relaxation Committee - judicial review limits in policy decisions - Whether the High Court could compel revalidation of authorisations notwithstanding the absence of provision for revalidation beyond the prescribed period and the adverse decisions of the ALC/PRC. - HELD THAT: - The Court noted that the authorisations had earlier been accorded extensions up to a maximum of 30 months and that, under the applicable procedure and subsequent policy, revalidation beyond prescribed limits is not a matter of right. The Advance Licensing Committee had recorded that there was no provision to revalidate after 30 months and that the firm had not accepted the reduced input quantity; the Policy Relaxation Committee later rejected implementation of the High Court's direction on policy and feasibility grounds. Applying the settled principle that courts should not substitute their judgment for the executive in matters of policy where there is material and rational basis and the decision is in public interest, the Court held that the writ court erred in directing revalidation and that judicial interference with the committees' policy-based decisions was unwarranted. [Paras 11, 13, 15, 16]

The High Court's direction to revalidate the licences was set aside; the administrative decisions of ALC/PRC and the absence of provision for further revalidation precluded compulsion by the court.

Final Conclusion: The impugned order directing revalidation of the four advance licences was set aside; the appeals are allowed on the grounds that (i) the petitioner failed to comply with the SALC circular's mandatory reduction of vitamin mixes and (ii) revalidation beyond prescribed validity was not warranted and the ALC/PRC decisions were not amenable to judicial compulsion under Article 226.

Inordinate delay vitiating proceedings and violative of natural justice - transshipment and proof of carriage through check-post verification - diversion of imported goods to local market - reliability and sufficiency of utilization/consumption chart - non-disclosure/suppression of factory address and alleged cover-up - verification of transport documents and evidentiary weight of GRs, receipts and vouchers - extension of limitation under proviso to Section 28(1) of the Customs Act

Inordinate delay vitiating proceedings and violative of natural justice - Whether the prolonged delay in concluding the proceedings and passing the impugned order vitiated the proceedings. - HELD THAT: - The Tribunal noted that the show-cause notice was issued on 09.11.2004, the reply filed on 21.03.2005, five personal hearings were recorded, and the final order was passed on 29.06.2018 - a span of about 14 years without any explanation from the Department for the delay. Reliance on High Court authority was noted that undue delay in concluding adjudicatory proceedings violates natural justice and cannot be allowed to hang as a sword over the assessee. The Tribunal found no record attributing the delay to the appellant and held that such inordinate delay vitiated the entire proceedings, while observing the other issues for completeness. [Paras 12, 13]

The inordinate delay of over a decade violated natural justice and vitiated the proceedings.

Transshipment and proof of carriage through check-post verification - verification of transport documents and evidentiary weight of GRs, receipts and vouchers - Whether there was transshipment of the imported material to the appellant's factory in Jaipur and whether the Department's contrary finding was supported by evidence. - HELD THAT: - The Tribunal examined the record and found that the Department's letter relied upon did not specify truck numbers and had not been supplied to the appellant; conversely, a certificate dated 29.01.2005 from the Additional Commissioner verified that the two trucks under specified G.R. numbers crossed the Shahjahanpur check post. Documentary material produced by the appellant and third parties - including G.R. copies rubber-stamped by the State authority, cash vouchers evidencing payment to transporters, receipts, and statements of transporters - collectively supported transshipment to Jaipur. The Department did not adequately rebut these materials nor satisfactorily contradict the transporters' statements. The Tribunal concluded that the evidence of transshipment was satisfactory and the Department's negative finding was not sustainable. [Paras 14, 15]

There was satisfactory proof of transshipment to the appellant's factory; the Department's contrary finding was not supported by record.

Reliability and sufficiency of utilization/consumption chart - diversion of imported goods to local market - Whether the appellant received and utilized the imported material for manufacture of export goods or whether the goods were diverted to the local market. - HELD THAT: - The Tribunal found that the utilization chart and stock statements filed by the appellant were rejected by the Department on slender grounds without giving the appellant an opportunity to reply on that specific contention. The Tribunal accepted the appellant's explanation that wastage and damage in garment manufacturing could account for apparent anomalies between lining material weight and finished product weight, and noted that the statutory provision permitting drawal of samples to test usage was not invoked by Customs at the time of export. There was no positive evidence of local sale or disposition showing diversion. When combined with the finding of transshipment and supporting transport documents and vouchers, the Tribunal held that the allegation of diversion rested on assumptions and was not made out on record. [Paras 16, 17, 18, 19, 20]

The goods arrived at the appellant's factory and were utilized for export manufacture; diversion to the local market was not established.

Non-disclosure/suppression of factory address and alleged cover-up - inordinate delay vitiating proceedings and violative of natural justice - Whether the appellant suppressed the existence/address of a second factory and whether the A.P.E.C. certificate was a belated cover-up. - HELD THAT: - The Tribunal observed that the A.P.E.C. certificate containing the factory address existed from 25.08.1999 and had been renewed subsequently; other documents such as sales tax registration and factory licence dated 1999 supported that address. The Panchanama of 25.06.2003 recorded seizure and sample-drawal from the appellant's factory, indicating D.R.I.'s awareness of the factory location. The Tribunal found no credible basis to treat the 17.03.2004 certificate as the invention of a cover-up. The alleged suppression of the factory address was therefore not established. [Paras 21, 22, 23]

There was no suppression of the factory address nor evidence that the A.P.E.C. certificate was a contrived cover-up.

Inordinate delay vitiating proceedings and violative of natural justice - Whether the impugned order should be set aside. - HELD THAT: - Having answered other issues in favour of the appellant and having found inordinate unexplained delay that violated natural justice, the Tribunal concluded that the impugned adjudication order could not stand. The combined findings on delay, transshipment, unreliability of the Department's assumptions on diversion, and absence of suppression warranted setting aside the order. [Paras 24]

The appeal is allowed and the impugned order is set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the prolonged unexplained delay vitiated the proceedings; on merits it found satisfactory proof of transshipment to the appellant's factory, accepted the appellant's explanation regarding consumption and stock records, rejected the allegation of diversion and of suppression of the factory address, and consequently set aside the impugned order.

Transaction value - Section 14 of the Customs Act, 1962 - Genuineness of post-import price reduction - Remand for fresh consideration

Transaction value - Section 14 of the Customs Act, 1962 - Transaction value of the imported vessel is not confined to the price originally stated in the MOA where a reduced price has been agreed and actually paid by amendment prior to delivery. - HELD THAT: - The Tribunal held that, for the purpose of determining value under Section 14, the fact of actual payment of a reduced price by way of an addendum cannot be ignored merely because an earlier MOA recorded a higher price. However, recognition of the reduced price is subject to scrutiny: where a price reduction is claimed after the original contract, the genuineness and necessity of that reduction must be examined carefully before treating the reduced price as the transaction value. The Tribunal noted that the Commissioner (Appeals) had accepted the lower authority's conclusion without independently examining the genuineness of the addendum and therefore the matter required fresh consideration. [Paras 7]

Reduced price agreed and actually paid may constitute the transaction value under Section 14, but its acceptance requires careful scrutiny of genuineness.

Genuineness of post-import price reduction - Remand for fresh consideration - Whether the addendum (price reduction) is genuine was not finally adjudicated and must be examined afresh by the Commissioner (Appeals). - HELD THAT: - The Tribunal found that the Commissioner (Appeals) had not independently examined the cogency and genuineness of the addendum and had relied on the lower authority's finding. Given the statutory requirement to ensure that a declared transaction value reflects the true price, the Tribunal remitted the matter for fresh consideration of the genuineness and necessity of the price reduction. The Tribunal left all issues open for the appellate authority to decide on reconsideration. [Paras 7, 8]

Impugned order set aside and matter remitted to Commissioner (Appeals) for fresh examination of the genuineness of the addendum.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the matter is remitted to the Commissioner (Appeals) to examine afresh, in particular the genuineness of the addendum effecting the price reduction; all other issues are kept open.

Confiscation of smuggled goods - absolute confiscation - redemption of confiscated goods on payment of fine - penalty under Section 112(a) of the Customs Act, 1962 - admissibility of statements under Section 138B of the Customs Act, 1962 - conspiracy and abetment in smuggling

Confiscation of smuggled goods - absolute confiscation - redemption of confiscated goods on payment of fine - Absolute confiscation of the 25 gold bars concealed in the imported embroidery machines was lawfully imposed and is upheld. - HELD THAT: - The Tribunal found no dispute as to the illicit nature of the transaction and held that, given the facts of concealment and smuggling, there was no illegality in the adjudicating authority ordering absolute confiscation of the gold bars. The appellants' plea that the goods should have been allowed to be redeemed on payment of fine was examined and rejected as inappropriate in the circumstances of the case. [Paras 8]

Absolute confiscation of the gold bars is sustained; prayer for redemption on payment of fine is rejected.

Admissibility of statements under Section 138B of the Customs Act, 1962 - conspiracy and abetment in smuggling - The Tribunal accepted the Department's evidence, including recorded statements and other material, as sufficient to establish the appellants' involvement; the contention of inadmissibility under Section 138B did not persuade the Tribunal to set aside the findings. - HELD THAT: - While the appellants contended that statements recorded by DRI were inadmissible and obtained under duress, the Tribunal reviewed the record and concluded that the Department had produced sufficient evidence to establish that the appellants were conspirators in the smuggling operation. The Tribunal therefore did not find merit in the challenge to the evidentiary basis of the adjudication. [Paras 7, 9]

Challenge to admissibility and reliance on recorded statements is rejected; the material on record is held sufficient to establish involvement in smuggling.

Penalty under Section 112(a) of the Customs Act, 1962 - Penalties imposed on the appellants under Section 112(a) were validly imposed and are sustained. - HELD THAT: - The Tribunal found that the appellants played active roles in the smuggling scheme-one as the mastermind arranging concealment and financial arrangements, the other as facilitator using business channels to effect smuggling-and that the Department's evidence supported imposition of penalty under Section 112(a). The appellants' submissions that they had not committed any act or omission justifying penalty, and that the penalty was excessive, were not accepted. [Paras 9]

Penalties imposed under Section 112(a) are upheld and the appeals are dismissed.

Final Conclusion: The appeals are rejected; the Tribunal upholds the absolute confiscation of the gold bars and the penalties imposed on the appellants, finding the Department's evidence sufficient to establish conspiracy and abetment in smuggling.

Transaction value - actual payment as determinative of value - genuineness and necessity of post contract price reduction - application of Section 14 of the Customs Act, 1962 - remand for fresh consideration

Transaction value - actual payment as determinative of value - application of Section 14 of the Customs Act, 1962 - Whether the transaction value for the imported vessel is the price stated in the original MOA or the reduced price agreed by addendum and actually paid. - HELD THAT: - The Tribunal held that the fact of actual payment pursuant to an addendum cannot be ignored when determining the transaction value under Section 14 of the Customs Act, 1962. While recognising that the original MOA recorded a higher price, the Tribunal emphasised that a subsequent bona fide agreement reducing the price and actual payment pursuant thereto is relevant to the valuation inquiry. However, the Tribunal qualified this principle by noting that any post contract reduction must be subjected to careful scrutiny; the genuineness and necessity of the reduction are matters for examination because artificial or sham amendments would not affect valuation. In the present case the Commissioner (Appeals) accepted the original assessment without examining the cogency or genuineness of the addendum and the reasons for the price reduction, and therefore did not apply the required scrutiny before rejecting the appellant's claim that the reduced price is the transaction value. [Paras 6, 7]

The question of transaction value is remitted to the Commissioner (Appeals) for fresh consideration, including a focused inquiry into the genuineness and necessity of the addendum and the actual payment made pursuant thereto.

Final Conclusion: Impugned order set aside; appeal allowed by way of remand to the Commissioner (Appeals) for fresh consideration of the reduced price's genuineness and its effect on transaction value.

Validity of penalty under Regulation 18 of CBLR, 2018 - Liability of Customs Broker for conduct of H-card holder / employee - Obligations of a Customs Broker under Regulation 10 of CBLR, 2018 and requirement of being the appointed CHA - Revocation and suspension of Customs Broker licence in disciplinary proceedings

Validity of penalty under Regulation 18 of CBLR, 2018 - Liability of Customs Broker for conduct of H-card holder / employee - Obligations of a Customs Broker under Regulation 10 of CBLR, 2018 and requirement of being the appointed CHA - Whether imposition of penalty under Regulation 18 of CBLR, 2018 on the appellant-CHA for participation of its H-card holder in the examination of export consignments was justified. - HELD THAT: - The adjudicating authority had already found that M/s. Ronera Overseas Pvt. Ltd. was the exporter in the disputed shipping bills and M/s. Glowstar International Ltd. was the Customs Broker (CHA) appointed by that exporter. On that factual foundation the Commissioner held that the appellant was not the CHA in those shipments and therefore did not owe obligations under Regulation 10 of CBLR, 2018; accordingly the suspension of the appellant's licence was revoked and the licence restored. Notwithstanding that exoneration, a penalty was imposed on the ground that an H-card holder of the appellant participated in examination and the appellant failed to supervise its employee. The Tribunal examined this approach and held that mere presence or assistance by an H-card holder in the course of examination, without any finding of misconduct or that the appellant was the appointed CHA for those shipments, does not attract penal liability under Regulation 18. The Tribunal therefore concluded that there was no basis for penalising the appellant when the Commissioner had already recorded that the appellant was not the CHA and there was no allegation of mischief by the appellant or its staff. On these determinative findings the penalty was held to be uncalled for and liable to be set aside. [Paras 11, 12]

Penalty imposed under Regulation 18 of CBLR, 2018 set aside as unjustified; no misconduct found against the appellant or its H-card holder and obligations under Regulation 10 did not attach when appellant was not the appointed CHA.

Final Conclusion: Appeal allowed; penalty imposed under Regulation 18 of CBLR, 2018 quashed. The suspension of the appellant's CB licence had already been revoked by the Commissioner and is not interfered with.

Condonation of delay in filing appeal - appellate limitation period - remand for adjudication on merits - opportunity of hearing

Condonation of delay in filing appeal - appellate limitation period - remand for adjudication on merits - Whether the delay of 89 days in filing the appeal, beyond the statutory period of 60 days but within the condonable period, should be condoned and the matter remanded to the Commissioner (Appeals) for decision on merits. - HELD THAT: - The Tribunal observed that the Bill of Entry was assessed on 14.07.2017 and the first appeal was filed on 11.10.2017, resulting in a delay of 89 days. The appellant had submitted a petition before the Commissioner (Appeals) explaining the delay, stating that duty was paid on 17.07.2017, the director was out of station on a business trip and only after his return was it decided to file the appeal through a Kolkata-based customs consultant. The Tribunal found that the appeal, though filed beyond the statutory 60-day period, fell within the condonable period and that an application explaining the reason for delay had been placed on record. In view of these facts and circumstances the Tribunal exercised its discretion to condone the delay and directed that the Commissioner (Appeals) decide the appeal on merits without being influenced by the question of limitation. The Tribunal further directed that a reasonable opportunity of hearing be afforded to the appellant and kept all issues open for fresh consideration, permitting both parties to place evidence in support of their contentions. [Paras 2, 3, 4]

Delay in filing the appeal is condoned and the matter is remanded to the Commissioner (Appeals) to decide the appeal on merits after affording the appellant a reasonable opportunity of hearing; all issues kept open.

Final Conclusion: The Tribunal allowed the appeal by condoning the delay in filing and remanded the case to the Commissioner (Appeals) for fresh adjudication on merits, with liberty to both parties to place evidence and with a reasonable opportunity of hearing.

Look Out Circular (LOC) - Fundamental right to travel abroad / right of free movement - Compoundable offences versus non-compoundable offences - Recourse to LOC only for cognizable offences under IPC or other penal laws - Office Memoranda / consolidated guidelines governing issuance of LOC (Clauses H & I) - Flight risk justification as basis for issuing LOC - Judicial review of executive issuance of LOC

Look Out Circular (LOC) - Compoundable offences versus non-compoundable offences - Recourse to LOC only for cognizable offences under IPC or other penal laws - Validity of the LOC issued against the petitioners when the material on record indicates only compoundable offences and inspection reports are pending ministry's further action. - HELD THAT: - The Court examined the consolidated guidelines (Clauses H & I) which prescribe that recourse to LOC is to be taken in cognizable offences under the IPC or other penal laws and that where there is no cognizable offence the subject cannot be detained or prevented from leaving the country; the originating agency may only request information about arrival/departure. The record showed that inspections were complete, the show-cause notices received by the petitioners indicated alleged offences as being within the scope of compoundable offences, and there was no material establishing involvement in non-compoundable or cognizable offences. The Court further noted absence of any prosecution or FIR and absence of concrete evidence implicating the petitioners in non-compoundable offences. [Paras 11, 12, 16, 17]

The LOC was declared bad in law and inoperative insofar as it restrains the petitioners' overseas travel at the present stage.

Judicial review of executive issuance of LOC - Flight risk justification as basis for issuing LOC - Fundamental right to travel abroad / right of free movement - Whether bald or speculative assertions of 'flight risk' justify continuance of an LOC that interferes with the petitioners' fundamental right to travel. - HELD THAT: - Relying on precedents and the consolidated guidelines, the Court held that mere bald assertions or speculative allegations of potential flight (including unsubstantiated claims about large loans or group-company involvement) do not constitute a sufficient foundation for restricting liberty to travel. The Court observed there were no instances of evasion of summons, no declaration of accounts as NPA, no FIR or criminal proceedings, and no material showing petitioners to be flight risks. The Court treated LOC as a coercive measure affecting civil liberties and therefore amenable to judicial review when issued without adequate material. [Paras 12, 16, 18, 19]

Bald or speculative assertions of flight risk do not justify continuing the LOC; judicial interference was warranted to protect the petitioners' right to travel.

Office Memoranda / consolidated guidelines governing issuance of LOC (Clauses H & I) - Recourse to LOC only for cognizable offences under IPC or other penal laws - Interpretation and application of the Ministry of Home Affairs consolidated guidelines (Clauses H & I) in the facts of this case. - HELD THAT: - The Court applied Clauses H & I of the consolidated guidelines which require that LOC be resorted to for cognizable offences and, where no cognizable offence exists, the originating agency's recourse is limited to being informed of arrival/departure. On the facts, the alleged offences indicated in show-cause notices were at most compoundable and there was no material of cognizable offences; therefore the guidelines did not support detention or prevention of departure in this case. [Paras 11, 12]

The consolidated guidelines did not justify the impugned LOC in the present circumstances.

Judicially imposed conditions for lifting LOC - Cooperation with investigation / requirement to inform departure - Terms on which the Court would lift the LOC and permit overseas travel while protecting the investigatory interest of the authorities. - HELD THAT: - Recognising that the inspection stage was over and that the Ministry's further action was awaited, the Court fashioned conditional relief to balance petitioners' fundamental rights with investigatory needs. Conditions require petitioners to intimate travel to the Registrar of Companies with travel plan and visa copy, furnish a bank guarantee, and cooperate with the Department and any further investigation or inspection. The Court made clear that setting aside the LOC at this stage would not prevent future action if material later justified such steps. [Paras 20, 21]

LOC set aside subject to specified conditions: intimation with travel plan and visa to ROC, furnishing a bank guarantee, and continued cooperation with authorities.

Final Conclusion: Writ petitions allowed: the Court quashed the impugned LOC as unsustainable on the materials then available (which disclosed only alleged compoundable offences and no concrete basis to treat petitioners as flight risks) but permitted overseas travel subject to conditions (intimation with travel plan and visa, bank guarantee, and cooperation), leaving open the possibility of future action if new material warrants it.

Unauthorised representation before statutory forum - representation limited to chartered accountants, company secretaries, cost accountants or legal practitioners - misleading the authority by incorrect party status and fee classification - non-maintainability for lack of clean hands - imposition of costs for mala fide or deceptive conduct - duty of Registry and Commission to verify competence of representatives

Misleading the authority by incorrect party status and fee classification - non-maintainability for lack of clean hands - Filing of the Information and the Appeal in the name of an individual though the appellant was the proprietor of an accreditation firm and had thus misrepresented his status. - HELD THAT: - The Tribunal found that the Informant/ Appellant presented himself as an individual before the CCI and in the present Appeal, whereas the affidavit admitted that he ran a proprietorship accreditation agency. Regulation 49 of the CCI (General) Regulations prescribes different fee slabs for information filed by individuals and by firms/proprietorships. By filing as an individual when the correct capacity was that of a proprietorship, the appellant misled the Commission as to the applicable fee and the nature of the party. The Tribunal held that such conduct amounted to coming before the forum without clean hands and constituted sufficient ground to refuse to examine the merits of the appeal.

The appeal was dismissed on account of the appellant's misrepresentation of party status and the resulting non-maintainability of the proceedings.

Unauthorised representation before statutory forum - representation limited to chartered accountants, company secretaries, cost accountants or legal practitioners - Whether the person who purported to act for the appellant (Mr. Sumit Jain) was competent to represent the appellant before the CCI and the Appellate Tribunal. - HELD THAT: - Sections 35 and 53S of the Competition Act permit appearance before the Commission and Appellate Tribunal only by the person in person or by authorised chartered accountants, company secretaries, cost accountants, legal practitioners or specified officers. The record showed that Mr. Sumit Jain falsely held himself out as counsel and signed multiple documents as 'counsel' or 'authorised representative' despite admitting he was neither an advocate nor any of the other authorised categories. The Tribunal found that such unauthorised representation and impersonation was in direct contravention of the limited classes of authorised representatives under the Act, and that the appellant's proceedings before both forums were therefore improper.

Proceedings were held incompetent because the appellant was represented by a person not authorised under Sections 35 and 53S; this furnished an independent ground for dismissal without adjudicating merits.

Imposition of costs for mala fide or deceptive conduct - Appropriate consequence for the appellant's misleading conduct and the unauthorised representation. - HELD THAT: - Given the appellant's misrepresentation of party status and the impersonation/unauthorised appearance by Mr. Sumit Jain, the Tribunal considered that mere dismissal would not adequately protect the sanctity of proceedings or deter recurrence. The Tribunal therefore exercised its power to impose a monetary sanction to preserve public confidence in judicial and quasi-judicial processes and to penalise the deceptive conduct that prevented adjudication on merits.

The appeal was dismissed and a cost of Rs.1,00,000 was imposed on the appellant to be deposited with the Delhi High Court Legal Services Committee within twenty days, failure of which would invite enforcement steps.

Duty of Registry and Commission to verify competence of representatives - unauthorised representation before statutory forum - Whether the Registry of the Appellate Tribunal and the CCI should take steps to prevent unauthorised representation in future filings. - HELD THAT: - Noting the unauthorised representation in the present case, the Tribunal directed the Registrar to examine the record and take appropriate action in accordance with law, with the Chairperson's approval. The Tribunal also directed that the Registry should henceforth scrutinise appeals filed under the Competition Act to ensure compliance with Section 53S and that the CCI should be vigilant while entertaining information applications so that unauthorised representation is detected at an early stage. These directions are preventative and administrative in nature to curb recurrence of similar abuses.

Registry and the Commission were directed to institute verification measures and take appropriate action to check unauthorised representation in future filings.

Final Conclusion: The appeal was dismissed for procedural non-maintainability arising from the appellant's misrepresentation of party status and from unauthorised representation by a person not falling within the categories permitted by Sections 35 and 53S; a cost was imposed on the appellant and the Tribunal directed Registry and the Commission to adopt measures to prevent unauthorised representation in future filings.

Limitation for Section 7 applications under Article 137 of the Limitation Act - Effect of acknowledgement under Section 18 of the Limitation Act - Promise to pay time barred debt under Section 25(3) of the Indian Contract Act - Exclusion of time spent in recovery proceedings (SARFAESI) from limitation - Power to admit applications/appeals after limitation upon sufficient cause (Section 5 of the Limitation Act) - Duty to allow parties to rectify/complete Form I and file documents before dismissal

Limitation for Section 7 applications under Article 137 of the Limitation Act - Effect of acknowledgement under Section 18 of the Limitation Act - Promise to pay time barred debt under Section 25(3) of the Indian Contract Act - Whether the Section 7 application was barred by limitation and whether the settlement/acknowledgement/agreement executed in December 2018 revived the debtor's liability or constituted a fresh promise bringing the claim within limitation - HELD THAT: - The Court reaffirmed that an application under Section 7 of the IBC falls under the residuary Article 137 and is ordinarily subject to a three year limitation from the date of default. An acknowledgement under Section 18 of the Limitation Act must be made within the original limitation period to restart limitation; an acknowledgement after expiry cannot revive a barred claim. By contrast, Section 25(3) of the Indian Contract Act validates a written and signed promise to pay a debt barred by limitation and such a promise creates a new enforceable obligation (novation), provided the conditions of Section 25(3) are satisfied (reference to writing, signing and distinct promise to pay the time barred debt). The Court observed that the NCLAT did not consider whether the terms of settlement executed on 20th December 2018 constituted a Section 25(3) promise and therefore omitted to examine a potentially determinative point on limitation. The question whether a written agreement of 20th December 2018 exists and, if so, whether it meets Section 25(3) conditions, was left to the Adjudicating Authority for fresh consideration. [Paras 33, 55, 62, 66, 67]

Remitted to the Adjudicating Authority to examine, on evidence, whether any written and signed promise/agreement of December 2018 falls within Section 25(3) (or alternatively whether any acknowledgement under Section 18 applies), and thereby determine if the Section 7 petition is within limitation.

Exclusion of time spent in recovery proceedings (SARFAESI) from limitation - Power to admit applications/appeals after limitation upon sufficient cause (Section 5 of the Limitation Act) - Duty to allow parties to rectify/complete Form I and file documents before dismissal - Whether time spent pursuing remedies under SARFAESI can be excluded in computing limitation and whether NCLAT was justified in closing CIRP proceedings without giving the financial creditor opportunity to explain/document sufficient cause or to file additional documents - HELD THAT: - The Court held that time spent pursuing SARFAESI or other recovery laws cannot be excluded while computing limitation for initiating CIRP; initiation of such proceedings does not toll limitation unless the debt is repaid. The Court also emphasised that NCLT/NCLAT have the discretion to condone delay under Section 5 of the Limitation Act when sufficient cause is shown and that documents may be filed until final dismissal of a Section 7 application (Dena Bank principle). The appellate tribunal erred in closing CIRP proceedings without giving the Financial Creditor notice and an opportunity to rectify defects, file additional affidavits or plead sufficient cause for delay; since an appeal is continuation of original proceedings the procedural safeguards in Section 7(5)(b) and the proviso permitting filing of documents until final disposal ought to have been observed. [Paras 16, 39, 49, 51, 70]

The NCLAT's order closing CIRP proceedings was set aside to the extent of closure; the matter was remitted to the Adjudicating Authority to consider the Section 7 application afresh after permitting parties to file additional affidavits/documents and to explain any sufficient cause for delay.

Final Conclusion: The appeal is allowed: the NCLAT's closure of CIRP proceedings is set aside. The matter is remitted to the Adjudicating Authority to reconsider the Section 7 application in accordance with law, including examination of any December 2018 settlement/agreement under Section 25(3) of the Contract Act, consideration of limitation (including Section 18 acknowledgements) and any plea for condonation under Section 5, after giving both parties an opportunity to file additional affidavits and documents.

Liquidator's powers and duties under Section 35 of the Insolvency and Bankruptcy Code - residuary jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code - overriding effect of Section 238 of the Insolvency and Bankruptcy Code - liquidation estate and de-freezing of bank accounts - time bound liquidation and value maximization

Liquidator's powers and duties under Section 35 of the Insolvency and Bankruptcy Code - residuary jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code - overriding effect of Section 238 of the Insolvency and Bankruptcy Code - liquidation estate and de-freezing of bank accounts - time bound liquidation and value maximization - Whether the Adjudicating Authority was obliged to exercise its jurisdiction under the IBC to direct respondents to withdraw freeze notices and defreeze the corporate debtor's bank accounts, instead of directing the liquidator to pursue government authorities afresh - HELD THAT: - The Tribunal found that the liquidator had made sustained and genuine efforts to persuade the tax authorities and banks to de freeze the corporate debtor's accounts and that those efforts had not succeeded. Section 35 confers on the liquidator powers and duties to take control of assets and to apply to the Adjudicating Authority for such orders as may be necessary for liquidation; these powers include steps to consolidate bank balances into the liquidation estate. Section 60(5), prefaced by a non obstante clause, vests residuary jurisdiction in the Adjudicating Authority to entertain or dispose of any proceeding arising in relation to insolvency or liquidation and may be exercised to remove impediments to the insolvency process. Section 238 gives the Code overriding effect over inconsistent provisions in other laws. Applying these provisions, and having regard to the statutory objective of time bound liquidation and value maximization, the Adjudicating Authority should have exercised its residuary jurisdiction rather than remanding the liquidator to pursue the authorities again. The impugned order erred in failing to provide statutory relief when a persistent stalemate threatened the liquidation timeline and the maximisation objective. Consequently, the Tribunal set aside the impugned order and directed withdrawal of the freeze notices and defreezing of the accounts so as to consolidate the assets into the liquidation estate. [Paras 10, 14, 15, 17, 18]

Impugned order set aside; I.A. treated as allowed and Adjudicating Authority directed to withdraw the freeze notices and the banks directed to defreeze the corporate debtor's accounts, to enable consolidation of the liquidation estate.

Final Conclusion: The appeal is allowed. The Adjudicating Authority's order remanding the liquidator to pursue government authorities was set aside; the tax authorities were directed to withdraw their freeze notices and the banks to defreeze the corporate debtor's accounts so that the funds may be brought into the liquidation estate. No order as to costs.

Res judicata - doctrine of finality of litigation - abuse of process of court - maintainability of appeal under Section 61 of IBC - financial debt under Section 5(8) of IBC - acknowledgement of debt and limitation - CIRP commencement and moratorium under Section 14 of IBC - competence of a non party/shareholder to assail a judgment in rem

Res judicata - doctrine of finality of litigation - abuse of process of court - maintainability of appeal under Section 61 of IBC - competence of a non party/shareholder to assail a judgment in rem - Whether the Appellants are competent to challenge in these appeals the order of the Adjudicating Authority when this Tribunal's earlier judgment in Company Appeal (AT)(Ins) No.183 of 2021 had attained finality on affirmation by the Supreme Court - HELD THAT: - This Tribunal held that the findings recorded in Company Appeal (AT)(Ins) No.183 of 2021 - including that the claim amounted to a financial debt, that limitation did not bar the claim, and related findings - attained finality on affirmation by the Supreme Court in Civil Appeal No. 7715 of 2021. The Court applied the doctrine of res judicata and the principle against re litigation to proceedings under the IBC (citing Ebix Singapore Pte Ltd. and other authorities), observing that permitting re agitation of grounds already decided would amount to an abuse of process and an impermissible attempt to review or sit in appeal over a final judgment. The Tribunal considered the contention that a shareholder or non party may challenge a judgment in rem but concluded that where the judgment has merged with and been affirmed by the Supreme Court, the appellant claiming through the corporate debtor is precluded from re opening those issues in incidental or collateral proceedings. Exceptions such as fraud or lack of jurisdiction were noted as permissible bases for collateral attack, but no such case was pleaded here. Therefore the appellants are disentitled to re argue matters already finally decided. [Paras 31, 32, 34, 40, 41]

Appellants are precluded by res judicata and finality of the earlier judgments from re agitating the same contentions; the appeals are not competent on those grounds.

Financial debt under Section 5(8) of IBC - acknowledgement of debt and limitation - CIRP commencement and moratorium under Section 14 of IBC - maintainability of appeal under Section 61 of IBC - Whether the impugned Adjudicating Authority order admitting the IA and commencing CIRP suffers from illegality or irregularity warranting interference under Section 61 of IBC - HELD THAT: - The Tribunal recorded that the Adjudicating Authority acted in compliance with the directions issued by this Appellate Tribunal in Company Appeal (AT)(Ins) No.183 of 2021 and the Supreme Court's affirmation. The Adjudicating Authority admitted the application, appointed an IRP and directed deposit for IRP expenses and imposed moratorium as mandated by Section 14. The earlier appellate findings - that the claim constituted a financial debt and that limitation did not bar the claim - were relied upon as having attained finality; accordingly there was no fresh illegality or procedural infirmity in the Adjudicating Authority's order to warrant interference. The Tribunal rejected the appellants' submissions that the Adjudicating Authority failed to deal with relationship, limitation or acknowledgment issues, observing that those issues had already been considered and finally decided in earlier proceedings. [Paras 13, 23, 24, 26, 42]

No illegality or irregularity was found in the Adjudicating Authority's order; the admission and commencement of CIRP and consequential directions are sustained.

Final Conclusion: Both appeals are dismissed as devoid of merit: the earlier appellate findings have attained finality and operate as res judicata, and the Adjudicating Authority's order admitting the application and commencing CIRP, with appointment of an IRP and imposition of moratorium, does not warrant interference.

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - rejection of Section 9 application for non-delivery of notice - banker's certificate not mandatory to trigger CIRP under Section 9 of the Insolvency and Bankruptcy Code, 2016 - remand to Adjudicating Authority for decision on merits

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - Demand Notice under Section 8 was duly served on the Corporate Debtor. - HELD THAT: - The Tribunal examined the record and found the Demand Notice dated 12.12.2017 in the Appeal Paper Book and a Speed Post receipt and tracking consignment report showing delivery to the corporate debtor on 20.12.2017 (consignment no. RH305164857IN). The address used was the registered office address of the corporate debtor, which was undisputed and was the same address to which the Section 9 application had been sent. On this basis the Tribunal held that the requirement under Section 8 was complete and the Adjudicating Authority's conclusion that the notice was not delivered was untenable. [Paras 9]

The finding of non-delivery recorded by the Adjudicating Authority is set aside; the Demand Notice was held to have been duly served.

Banker's certificate not mandatory to trigger CIRP under Section 9 of the Insolvency and Bankruptcy Code, 2016 - A banker's certificate is not mandatory as a condition precedent to filing a Section 9 application to trigger CIRP. - HELD THAT: - The Tribunal considered the appellant's bank statement showing an entry for receipt of payment and noted the Supreme Court's observation in Macquarie Bank Limited v. Shilpi Cable Technologies Ltd. that the Code requires "clear evidence of default" but does not restrict such evidence to the banker's certificate under Section 9(3)(c). Relying on that ratio, the Tribunal held that a banker's certificate is not an indispensable prerequisite to initiate CIRP under Section 9, and therefore the Adjudicating Authority erred in rejecting the application solely on that ground. The Tribunal, however, did not decide the merits as to debt or default. [Paras 10, 11]

The Adjudicating Authority's view that absence of a banker's certificate justified rejection of the Section 9 application is incorrect; a banker's certificate is not mandatory to trigger CIRP.

Remand to Adjudicating Authority for decision on merits - The Section 9 application was remitted to the Adjudicating Authority for fresh adjudication on merits. - HELD THAT: - Having set aside the Adjudicating Authority's findings on service and on the necessity of a banker's certificate, the Tribunal declined to express any opinion on the substantive questions of debt and default. The Tribunal directed that the Section 9 application be decided afresh by the Adjudicating Authority in accordance with law and expeditiously, and permitted the respondent to raise all other issues before that forum. [Paras 12]

The impugned order is set aside and the matter is remanded to the Adjudicating Authority for fresh decision on merits.

Final Conclusion: The Appeal is allowed: the Tribunal held that the Section 8 demand notice was duly served and that absence of a banker's certificate is not a ground to reject a Section 9 application; the impugned order is set aside and the Section 9 application is remanded to the Adjudicating Authority for fresh adjudication on merits.

Reasoned order - distribution of liquidation proceeds - waterfall mechanism under section 53 of the IBC - priority of second charge holder vis-a -vis first charge holder - remand for fresh consideration

Reasoned order - distribution of liquidation proceeds - waterfall mechanism under section 53 of the IBC - priority of second charge holder vis-a -vis first charge holder - Impugned Order lacked sufficient reasons and did not clearly address the prayers in MA 520/2019 concerning bifurcation and distribution of sale proceeds; matter remanded to the Adjudicating Authority for a reasoned decision. - HELD THAT: - The Appellate Tribunal examined the Impugned Order disposing MA 520/2019 and found it did not explain how the prayers - seeking bifurcation of amounts to be distributed to lenders, direction to follow the waterfall mechanism under section 53 of the IBC, and a claimed sharing ratio between first and second charge holders - had been dealt with. The Tribunal observed that the Impugned Order merely recorded that the question of priority had been 'answered in the court' without setting out the answer or reasoning, thereby denying the Appellant clarity on its share. Citing the Supreme Court's dicta that reasons are essential to disclose application of mind and to enable appellate review, the Tribunal held that the Impugned Order falls short of the requirement of a reasoned order. In consequence, the Tribunal remanded the matter to the Adjudicating Authority to consider and decide the prayers in MA 520/2019 after giving the parties an opportunity of hearing and to pass a clear, reasoned order expeditiously, having regard to the liquidation-stage urgency. The remand encompasses examination of the factual and legal basis for any proposed sharing ratio and the application of the statutory distribution scheme under section 53 while deciding the competing contentions of first and second charge holders. [Paras 8, 9, 12, 13]

MA 520/2019 is remanded to the Adjudicating Authority to pass an appropriately reasoned and clear order on the prayers therein after hearing the parties, and to do so expeditiously in view of the final stage of liquidation.

Final Conclusion: The appeal is disposed of by remanding MA 520/2019 to the Adjudicating Authority for a clear, reasoned determination of the distribution/bifurcation sought by the Appellant (including consideration of the waterfall mechanism under section 53 of the IBC and any claimed sharing ratio between charge holders) after hearing the parties; no order as to costs.

Applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code - Exclusion of period during pendency of proceedings before BIFR under SICA for computation of limitation - Acknowledgement of liability by entries in audited balance sheets as acknowledgement under Section 18 of the Limitation Act - Initiation of CIRP under Section 7 where debt and default are not disputed

Exclusion of period during pendency of proceedings before BIFR under SICA for computation of limitation - Applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code - Computation of limitation for a Section 7 petition where the corporate debtor was under the jurisdiction of BIFR during a specified period - HELD THAT: - The Tribunal held that the provisions of the Limitation Act apply to proceedings under the Code. Where the corporate debtor had been referred to BIFR under SICA and remained under its purview until dissolution of BIFR, the period during which the reference was pending before BIFR is to be excluded in computing limitation for a remedy under the Code. The Adjudicating Authority's conclusion that the Section 7 petition was hopelessly time-barred without excluding the BIFR period was therefore found to be unsustainable.

The period during which the corporate debtor was under BIFR is excluded for limitation computation; on that basis the Section 7 petition cannot be held time-barred on the reasoning adopted by the Adjudicating Authority.

Acknowledgement of liability by entries in audited balance sheets as acknowledgement under Section 18 of the Limitation Act - Initiation of CIRP under Section 7 where debt and default are not disputed - Whether recurring disclosures of the debt in the audited balance sheets of the corporate debtor constitute an acknowledgment under Section 18 of the Limitation Act and thereby revive or extend limitation for filing a Section 7 petition - HELD THAT: - The Tribunal accepted that the corporate debtor had, in its audited balance sheets for successive years, disclosed and acknowledged the outstanding liability to the financial creditor. Relying on settled law that an appropriate entry in a balance sheet can amount to an acknowledgement under Section 18, the Tribunal found that such disclosure operates to enlarge the period of limitation. Coupled with the exclusion of the BIFR period and the fact that debt and default were not in dispute, the Tribunal concluded that initiation of CIRP under Section 7 was permissible.

Entries in the audited balance sheets amounted to acknowledgement under Section 18 and, together with the excluded BIFR period, render the Section 7 petition within limitation; Section 7 is attracted where debt and default are established.

Final Conclusion: The appeal is allowed; the NCLT order dismissing the Section 7 petition as time-barred is set aside because the BIFR pendency period is excluded for limitation and the audited balance-sheet entries constituted acknowledgements under Section 18, rendering initiation of CIRP under Section 7 permissible.

Financial debt and default under Section 7 of the IBC - inter-corporate deposit as a financial debt - corporate guarantee liability of guarantor - limitation and acknowledgement in balance sheets - effect of pending arbitration or parallel proceedings on Section 7 admissibility - composite transaction versus independent loan transaction

Financial debt and default under Section 7 of the IBC - inter-corporate deposit as a financial debt - The Section 7 petitions were maintainable because a subsisting financial debt and default were established in respect of the inter-corporate deposit. - HELD THAT: - The Tribunal applied the statutory definitions of 'debt', 'default' and 'financial creditor' and held that the inter-corporate deposit constituted a financial debt and that default had occurred. The execution and transfer of money under the ICD were not in dispute and documents enclosed with the petition proved the debt and default. The adjudicating authority's function under Section 7 is limited to ascertaining existence of debt and default and is not to traverse contractual disputes as a civil court; once satisfied, the application must be admitted. [Paras 72, 73, 74, 78, 117]

Application under Section 7 admitted as debt and default in respect of the ICD and related guarantee were established.

Corporate guarantee liability of guarantor - The corporate guarantee executed by the guarantor was operative and permitted initiation of CIRP against the guarantor as well. - HELD THAT: - The Tribunal noted the corporate guarantee's terms, including its independent, continuing character, and relied on precedent that a financial creditor may initiate CIRP against a corporate guarantor. Since invocation of the guarantee and the underlying default against the principal borrower were established, the petition against the guarantor was liable to be admitted. [Paras 11, 64, 65, 66, 78]

CIRP initiation against the corporate guarantor upheld and the adjudicating authority's admission stands.

Limitation and acknowledgement in balance sheets - The petitions were held to be within limitation because the liability was acknowledged in the corporate debtor's balance sheets. - HELD THAT: - Relying on the principle that a written acknowledgment can revive limitation, the Tribunal observed that the corporate debtor had reflected the liability in its balance sheets for the financial years indicated in the petition, and that the Section 7 application filed thereafter was within time. The Tribunal rejected the contention that subsequent changes to notes defeated the acknowledgment for limitation purposes. [Paras 21, 76, 77, 116]

Application not barred by limitation; admission was timely in view of acknowledged liability in financial statements.

Effect of pending arbitration or parallel proceedings on Section 7 admissibility - composite transaction versus independent loan transaction - Pending arbitration and the argument of a composite transaction did not preclude admission of the Section 7 applications. - HELD THAT: - The Tribunal held that the existence of arbitration or other proceedings does not, by itself, bar an application under Section 7; the adjudicating authority's role is to determine whether a financial debt and default are made out, not to resolve all interlinked contractual/contention issues. The contention that the ICD formed part of a larger composite investment transaction was rejected because the ICD was between distinct legal entities and the funds were used for the corporate debtor's expenses; therefore the ICD must be treated as an independent transaction for Section 7 purposes. [Paras 18, 19, 24, 74, 115]

Arbitration or other parallel disputes do not bar admission; the ICD was an independent financial transaction and Section 7 admissibility was not defeated by the composite-transaction argument.

Final Conclusion: Both appeals are dismissed; the NCLT orders admitting the Section 7 petitions (declaring moratorium and appointing interim resolution professional) are upheld as the financial debt, default, and limitation/acknowledgement findings are sustained and pending arbitration or composite-transaction arguments do not preclude admission.

Right to requisition an extraordinary general meeting - injunction restraining implementation of resolutions passed at EGM - shareholders agreement and articles of association binding on appointment of directors - undisputed majority shareholding rights - principle in LIC v. Escorts that a general meeting called by a shareholder cannot be restrained absent prima facie showing of prejudice to company or public interest

Right to requisition an extraordinary general meeting - undisputed majority shareholding rights - shareholders agreement and articles of association binding on appointment of directors - Whether the requisitionists validly convened and held the EGM of SACL in accordance with Section 100 of the Companies Act, 2013 and the amended Shareholders Agreement/Articles of Association, and whether the requisitionists were entitled to move resolutions for reconstitution of the Board. - HELD THAT: - The Tribunal examined the statutory scheme of Section 100 and the factual record showing that the SACL Board did not call the meeting within the statutory period after a valid requisition. The amended and re-stated Shareholders Agreement dated 29.09.2018 (incorporated into SACL's Articles by Article 12) confers on Aapico/SGAH rights to nominate directors proportionate to shareholding. Having found that SGAH held 77.04% in SACL and that the requisition procedure under Section 100(4) was followed when the Board failed to act, the Tribunal held that the requisitionists legitimately exercised their statutory right to convene the EGM and to move resolutions for removal and appointment of directors in accordance with the Articles and SHA. The Tribunal therefore recorded that there was no illegality in convening and holding the EGM on 25.01.2022 and that the Appellants' exercise of rights under the Articles and SHA was lawful. [Paras 63, 64, 71, 73, 74]

The requisitionists validly convened and held the EGM in accordance with Section 100 and the Articles/SHA; the EGM was lawfully called and the resolutions proposed were within the requisitionists' statutory and contractual rights.

Injunction restraining implementation of resolutions passed at EGM - principle in LIC v. Escorts that a general meeting cannot be restrained - Whether the interim injunction granted by the NCLT restraining the Appellants from acting upon or giving effect to resolutions passed at the EGM held on 25.01.2022 was legally sustainable. - HELD THAT: - The Tribunal applied the established principle from LIC v. Escorts that, subject to statutory procedural requirements, a shareholder's right to call and hold a general meeting and to move resolutions cannot be restrained by injunction unless the court/tribunal records a prima facie finding that the proposed decision is prejudicial to the public interest or the company at large. The NCLT's interim order restrained implementation of EGM resolutions without recording a proper prima facie finding of prejudice or explaining how the balance of convenience required such restraint; it relied instead on pendency of foreign/other proceedings and observations about contested rights. The Tribunal found the NCLT order to be contrary to the LIC v. Escorts principle and without proper analysis or recording of necessary findings; accordingly the interim injunction was held to be unsustainable. [Paras 71, 73, 74, 75, 76]

The interim injunction restraining implementation of the EGM resolutions was unsustainable and the impugned NCLT order is set aside.

Final Conclusion: The Tribunal set aside the NCLT's interim order dated 29.03.2022 restraining the appellants from acting upon resolutions passed at the EGM of 25.01.2022, holding that the requisitionists lawfully convened the EGM under Section 100 and the Articles/SHA and that injunctions against implementation of validly passed EGM resolutions cannot be granted absent a recorded prima facie finding of prejudice to the company or public interest; the Tribunal directed the NCLT to proceed to dispose of the company petition within one month.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - financial creditor - disbursement requirement - misuse of the Corporate Insolvency Resolution Process as a recovery mechanism - forum shopping - setting aside admission and nullifying actions of Interim Resolution Professional / Resolution Professional and Committee of Creditors - limitation under the Limitation Act, 1963

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - financial creditor - disbursement requirement - Whether the petition under Section 7 was maintainable when the bank's alleged loan disbursement was made directly to the builder and not to the corporate debtor, affecting the bank's status as a financial creditor. - HELD THAT: - The Tribunal examined the material on record and noted the admitted fact that the disbursal of funds was made to the builder and not directly to the corporate debtor. Relying on the settled principle that a creditor claiming to be a financial creditor must show disbursement of a financial debt to the corporate debtor, the Tribunal held that where funds were not disbursed to the corporate debtor in the nature of financial debt, the creditor's claim under Section 7 is unsustainable. The decision observed that the manner of disbursement is a critical requirement and that absence of such disbursement undermines the petition filed under Section 7. Having applied this legal test to the facts, the Tribunal concluded that the admission of the Section 7 application was not tenable. [Paras 3, 7]

The admission of the application under Section 7 was set aside because the bank failed to establish disbursement of financial debt to the corporate debtor and therefore was not entitled to maintain the Section 7 petition.

Misuse of the Corporate Insolvency Resolution Process as a recovery mechanism - forum shopping - limitation under the Limitation Act, 1963 - Whether the proceedings admitting CIRP were vitiated by forum shopping, multiplicity of parallel proceedings (including DRT and High Court actions), alleged suppression/fraud and delay, thereby justifying setting aside the admission and consequent reliefs. - HELD THAT: - The Tribunal recorded that parallel proceedings existed before other fora (DRT and High Court) and that substantial steps for recovery had been pursued by the bank against the builder and others, including realization of certain amounts. Observing that CIRP cannot be used as a device for debt recovery and noting concerns of forum shopping and the pendency of other remedies, the Tribunal found that the facts pointed to improper use of the Code as a recovery mechanism. The Tribunal also noted the contention on limitation - the debt had become NPA on 05.07.2014 while the Section 7 petition was filed on 11.12.2019 - and treated delay and the existence of alternate remedy proceedings as relevant in concluding that admission ought not to have been sustained. In view of these findings, the Tribunal held that the admission was vitiated and reliefs taken under the insolvency admission should be undone. [Paras 7]

Admission of the CIRP was set aside on the grounds of misuse of the Code as a recovery mechanism, forum shopping and related procedural circumstances; consequent actions by IRP/RP and the Committee of Creditors were declared illegal and set aside.

Setting aside admission and nullifying actions of Interim Resolution Professional / Resolution Professional and Committee of Creditors - What consequential reliefs follow from setting aside the admission of the Section 7 petition? - HELD THAT: - Having set aside the impugned admission order, the Tribunal ordered that all actions taken by the Interim Resolution Professional, Resolution Professional and the Committee of Creditors be declared illegal and set aside. The Tribunal directed immediate handover of records and assets of the corporate debtor to its director and released the corporate debtor from the rigour of CIRP. The Tribunal disposed of the appeal allowing it with these directions and vacated any interim orders. [Paras 7]

The corporate debtor was released from CIRP; actions by IRP/RP and CoC were declared illegal and set aside; the Resolution Professional was directed to hand over records and assets to the director of the corporate debtor immediately.

Final Conclusion: The appeal was allowed: the National Company Law Tribunal's order admitting the Section 7 petition was set aside on the grounds that the bank had not established disbursement of financial debt to the corporate debtor and that the CIRP admission was an improper use of the Code in the context of parallel recovery proceedings and forum shopping; all actions taken in CIRP were declared illegal and the corporate debtor was restored to its pre-CIRP position with directions to hand over records and assets to its director.

Maintainability of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Requirement of material evidence and acknowledgement of debt by the corporate debtor - Burden on the financial creditor to prove disbursement to the corporate debtor

Maintainability of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Requirement of material evidence and acknowledgement of debt - Payment credited to an entity other than the corporate debtor - Application under Section 7 dismissed for lack of maintainability due to absence of sufficient material evidence that the debt was disbursed to the corporate debtor and absence of acknowledgement of debt by the corporate debtor. - HELD THAT: - The Tribunal examined the bank statement relied upon by the financial creditor and found that the amount claimed to have been disbursed was withdrawn and credited in the name of Sehrawat Associates Pvt. Ltd., which is not the corporate debtor named in the petition. The application (Form 5 Part IV) asserts that the disbursement to the corporate debtor occurred on 21.07.2020 by cheque No. 000029, but contemporaneous banking material contradicts this claim. Further, the corporate debtor did not acknowledge the debt in any form and denied liability in its reply to the demand notice. In the absence of sufficient material evidence to link the alleged disbursement to the corporate debtor and without any acknowledgement of debt by the corporate debtor, the Tribunal concluded that the financial creditor failed to discharge the burden of establishing a debt due from the corporate debtor as required for maintainability of a Section 7 application. The Tribunal therefore held the application to be devoid of merits and not fit for admission. [Paras 14, 15, 16]

Application under Section 7 dismissed without cost for want of maintainability and insufficient evidence linking the claimed disbursement to the corporate debtor.

Final Conclusion: The petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 is dismissed without cost for lack of sufficient material evidence that the claimed amount was disbursed to the corporate debtor and in view of no acknowledgment of debt by the corporate debtor.

Admission of application under Section 94 of the Insolvency and Bankruptcy Code, 2016 - initiation of Insolvency Resolution Process against a personal guarantor - declaration of moratorium upon admission - appointment and duties of Resolution Professional under Sections 97, 99, 100 to 106 - public notice inviting claims and timeframe for submission of claims - preparation of list of creditors and repayment plan by Resolution Professional - conduct of meeting of creditors and reporting under Sections 108 to 112

Admission of application under Section 94 of the Insolvency and Bankruptcy Code, 2016 - initiation of Insolvency Resolution Process against a personal guarantor - Application filed under Section 94 by the personal guarantor was admitted and the Insolvency Resolution Process was initiated against the applicant. - HELD THAT: - The Tribunal considered the petition filed by the applicant under Section 94 read with the Personal Guarantors Insolvency Rules, 2019, and the report submitted by the Resolution Professional under Section 99 which confirmed compliance with the requirements of Section 94. The Resolution Professional examined the documents, sought and received information regarding the guaranties, assets, liabilities and filings, and opined that the application satisfies the statutory requirements. No objection was filed by the served creditor. On this basis the Tribunal recorded reasons in the report and admitted CP(IB) No.182/Chd/Hry/2021 under Section 100, thereby initiating the Insolvency Resolution Process against the personal guarantor. [Paras 1, 4, 5, 10]

Application under Section 94 is admitted and the Insolvency Resolution Process is initiated against the personal guarantor.

Declaration of moratorium upon admission - A moratorium was declared with effect from the date of admission for the period specified under Section 101. - HELD THAT: - Upon admission of the application the Tribunal applied the statutory consequences, declaring that pending legal action in respect of any debt shall be stayed, creditors shall not initiate proceedings, and the debtor shall not transfer or dispose of assets, subject to notified exceptions. The moratorium period was fixed to run for the period of 180 days as provided under Section 101. [Paras 5]

Moratorium is declared from the date of admission and shall operate for the period specified under Section 101.

Appointment and duties of Resolution Professional under Sections 97, 99, 100 to 106 - preparation of list of creditors and repayment plan by Resolution Professional - The Resolution Professional appointed earlier is confirmed to perform duties including publication of notice, preparation of list of creditors, and facilitation of the repayment plan process within specified timelines. - HELD THAT: - The Tribunal noted the earlier appointment of the Resolution Professional under Section 97 and the report under Section 99 recommending admission. On admission, the Tribunal directed the Resolution Professional to cause publication of a public notice on the NCLT website and in newspapers within seven days, invite claims to be registered under Section 103 within 21 days, prepare the list of creditors under Section 104 within 30 days of the notice, and assist the debtor in preparing a repayment plan under Section 105. The Resolution Professional is also directed to submit the repayment plan with his report within 21 days from the last date for submission of claims as mandated by Section 106, and to follow the code of conduct under Section 208 while performing functions. [Paras 3, 6, 7]

The appointed Resolution Professional shall perform the statutory duties of notice publication, claims invitation, preparation of list of creditors and submission of repayment plan within the prescribed timeframes.

Public notice inviting claims and timeframe for submission of claims - conduct of meeting of creditors and reporting under Sections 108 to 112 - The Tribunal prescribed the mode and timelines for publication of the public notice, the claims submission period, and the procedure for summoning and conducting meetings of creditors and reporting thereon. - HELD THAT: - The Tribunal directed publication of the public notice in one English and one vernacular newspaper circulating where the debtor resides and uploading on the NCLT website; claims are to be registered within 21 days of publication as required by Section 103. It further explained that the Resolution Professional shall, if required, summon a meeting of creditors in accordance with Sections 106 to 111, ensuring notice periods of not less than 14 days and not more than 28 days, and prepare and submit the report of the creditors' meeting on the repayment plan under Section 112 to the Authority, providing copies to the debtor and creditors. [Paras 6, 8, 9]

Public notice, claims submission and creditor meeting procedures shall be carried out as directed and reports submitted to the Tribunal in accordance with the Code.

Final Conclusion: CP(IB) No. 182/Chd/Hry/2021 filed under Section 94 is allowed and admitted; the Insolvency Resolution Process against the personal guarantor stands initiated, moratorium declared, and the appointed Resolution Professional directed to carry out statutory steps and timelines for claims, creditor list, repayment plan and meetings in accordance with the Code.

Liquidation cost - professional fee of the liquidator - responsibility of financial creditors to contribute liquidation costs - Regulation 2A of the IBBI (Liquidation Process) Regulations, 2016 - liquidation value less than liquidation cost

Liquidation cost - professional fee of the liquidator - responsibility of financial creditors to contribute liquidation costs - Regulation 2A of the IBBI (Liquidation Process) Regulations, 2016 - liquidation value less than liquidation cost - Financial creditors are liable to pay the remaining liquidation cost and the liquidator's professional fee where liquidation value is less than liquidation cost. - HELD THAT: - The Adjudicating Authority recorded that the liquidation value of the corporate debtor is reported to be less than the liquidation cost. Having noted the earlier direction (order dated 09.08.2021) for financial institutions to deposit an initial amount and that one financial institution has already deposited the same, the Tribunal applied Regulation 2A of the IBBI (Liquidation Process) Regulations, 2016. Under that provision, the remaining liquidation cost not paid to the liquidator must be contributed by the financial creditors. On this basis the application for directions to pay the liquidator's fees and liquidation cost was allowed and the financial creditors were directed to pay the quantified liquidation cost to the liquidator within seven days. [Paras 5, 6]

IA/137/IND/2021 allowed; financial creditors directed to pay the remaining liquidation cost to the liquidator within seven days.

Final Conclusion: The interlocutory application is allowed and the Tribunal directs the financial creditors to pay the quantified liquidation cost (including the liquidator's professional fee as assessed) within seven days, in accordance with Regulation 2A of the IBBI (Liquidation Process) Regulations, 2016.

Requirement of not less than sixty-six per cent voting share for liquidation under Section 33(2) of the Insolvency and Bankruptcy Code - Counting of voting shares of Committee of Creditors members present and voting - Application of the principle in Section 30(4) to Section 33(2) - Liquidation order based on approval by members present and voting - Deadlock in Committee of Creditors and preservation of IBC timelines

Requirement of not less than sixty-six per cent voting share for liquidation under Section 33(2) of the Insolvency and Bankruptcy Code - Counting of voting shares of Committee of Creditors members present and voting - Application of the principle in Section 30(4) to Section 33(2) - Whether the Adjudicating Authority can pass a liquidation order under Section 33(1)(a) read with Section 33(2) of the IBC when the resolution for liquidation was passed by members present and voting whose combined voting share was 55.87%, while another CoC member holding the remainder was absent and did not vote. - HELD THAT: - The Tribunal held that the statutory requirement of approval by not less than sixty-six per cent must be read in the context of members who have considered and exercised their voting rights at the meeting. Applying the reasoning in relation to Section 30(4) (as articulated in the cited precedent), members of the Committee of Creditors who are absent from the meeting, either physically or through video-conference, have not considered the matter and therefore their voting shares cannot be counted for the purpose of determining the requisite percentage. Consequently, where a resolution is passed by all members present and voting, the measure for compliance with the threshold is to be calculated with reference to the voting shares of those present. In the present case the sole member present voted in favour and, on the principle adopted, that vote is treated as constituting 100% of the voting shares of members present and voting; thus the requirement of Section 33(2) is satisfied. The Tribunal further observed that permitting absence or abstention to stall liquidation would frustrate the timelines and object of the Code and suggested that the IBBI consider amending the provision to address such deadlocks. [Paras 11, 14, 16, 17, 18]

The Adjudicating Authority can order liquidation under Section 33(1)(a) where the resolution for liquidation is passed by the members present and voting; absent members' voting shares are not to be counted and the resolution in the 5th CoC meeting is treated as satisfying Section 33(2), hence liquidation is ordered.

Final Conclusion: Application allowed; the Corporate Debtor is ordered to be liquidated in accordance with Chapter III of the IBC and the Resolution Professional is appointed as Liquidator, the Tribunal treating the vote of the member present and voting as satisfying the requirement under Section 33(2) because the absent member's share could not be counted.

Contempt of Court - Section 70 of the Insolvency and Bankruptcy Code, 2016 - Non-cooperation of suspended directors - Directions to hand over books of account and documents - Liquidator as officer of the Court - Personal appearance and show-cause notice - Special Officer report

Contempt of Court - Section 70 of the Insolvency and Bankruptcy Code, 2016 - Non-cooperation of suspended directors - Directions to hand over books of account and documents - Special Officer report - Whether the suspended directors had prima facie willfully and deliberately disobeyed the Tribunal's directions and whether contempt proceedings should be initiated requiring their personal appearance. - HELD THAT: - The Tribunal recorded that since the commencement of CIRP and thereafter during liquidation the suspended directors repeatedly failed to furnish books of account, bank statements, tally data and other documents despite express directions dated 07.10.2020, 18.03.2021 and 07.04.2021. The Liquidator's pleadings and chronology of emails, hearings and directions were examined. The Special Officer's report confirmed partial production of documents but identified outstanding items yet to be handed over and recorded specific assurances given by Mr. Om Prakash Pandey which were not fulfilled. The Bench concluded that the conduct of the suspended directors amounted to prima facie misconduct and amounted to a possible contempt of the Adjudicating Authority under Section 70 of the Code, warranting issuance of notice and personal appearance to afford them an opportunity to explain their non-compliance before any penal action is commenced.

Notice issued to the respondents, Om Prakash Pandey and Shri Prakash Pandey, to appear personally before the Adjudicating Authority on 31/08/2022; contemnors summoned to show cause in respect of prima facie contempt for non-compliance with earlier orders.

Final Conclusion: The Tribunal found prima facie deliberate non-cooperation by the suspended directors in disobeying orders to hand over company records, directed issuance of notice and summoned them for personal appearance on 31/08/2022 so they may be heard on the contempt allegations before any penal action is taken.

Limitation under Section 7 and Section 18 of the Limitation Act - effect of written acknowledgements and One Time Settlement proposals on limitation - admissibility of supplementary affidavit and documents submitted by a bank officer - applicability of Section 10A moratorium to pre-25 March 2020 defaults - admission of a Section 7 petition and appointment of Interim Resolution Professional with moratorium under Section 14

Limitation under Section 7 and Section 18 of the Limitation Act - effect of written acknowledgements and One Time Settlement proposals on limitation - The Section 7 petition is within limitation by virtue of written acknowledgements/OTS proposals made by the corporate debtor which invoked Section 18 of the Limitation Act and renewed the period of limitation. - HELD THAT: - The Tribunal accepted the bank's documentary record, including the corporate debtor's settlement proposals and communications (notably the letter dated 25 July 2018 and OTS proposals of 2016, 2019 and 2020), as constituting admissions in writing that revived limitation under Section 18 of the Limitation Act. Reliance was placed on the Supreme Court's exposition that Section 18 operates to restart limitation where the corporate debtor acknowledges liability before the expiration of the prescribed period, and on NCLAT authority recognising OTS letters as acknowledgements for this purpose. In those circumstances the adjudicating authority found the application filed on 30 August 2021 to be within the extended limitation period and thus maintainable. [Paras 20, 21, 22, 23, 27]

Application held to be within limitation due to acknowledgements/OTS proposals; therefore not time-barred.

Admissibility of supplementary affidavit and documents submitted by a bank officer - The supplementary affidavit filed by a senior bank officer and the communication dated 25 July 2018 placed on record therewith are admissible and may be considered. - HELD THAT: - The corporate debtor contended the supplementary affidavit sworn by an officer other than the named applicant was not competent to place the communication on record. The Tribunal observed that the authenticity or existence of the letter dated 25 July 2018 was not disputed by the corporate debtor and that it was placed on record by a senior officer of the bank. The Tribunal held that filing by a public officer of the bank does not render the document inadmissible or incapable of being considered, and rejected the objection. [Paras 24, 25]

Objection to admissibility of the supplementary affidavit and the communication dated 25 July 2018 rejected; documents taken on record.

Applicability of Section 10A moratorium to pre-25 March 2020 defaults - Section 10A bar is not attracted because the default pre-dated 25 March 2020. - HELD THAT: - The Tribunal noted the loan account was declared NPA on 28 July 2013 and that the default occurred well before 25 March 2020. Since Section 10A applies only to defaults on or after 25 March 2020, the Tribunal held the corporate debtor's plea that the petition is barred by Section 10A to be without merit and rejected it. [Paras 26]

Section 10A moratorium held inapplicable; plea based on Section 10A rejected.

Admission of a Section 7 petition and appointment of Interim Resolution Professional with moratorium under Section 14 - The Section 7 petition is admitted; moratorium under Section 14 is declared and an Interim Resolution Professional is appointed. - HELD THAT: - Having found debt and default established, the Tribunal observed the claimed debt exceeded the statutory threshold and that the corporate debtor's dues were admitted by its communications. Consequential reliefs were granted: admission of the petition, imposition of moratorium under Section 14 for the duration of CIRP, directions for public announcement and claims, appointment of the named IRP subject to compliance with regulatory requirements, vesting of management with the IRP, and ancillary directions including deposit for public notice expenses and service of the order on stakeholders and Registrar of Companies. [Paras 27, 28]

CIRP admitted; moratorium imposed; IRP appointed and consequential directions issued.

Final Conclusion: The Tribunal admitted the Financial Creditor's Section 7 petition against the Corporate Debtor, holding the petition within limitation by reason of the corporate debtor's written acknowledgements/OTS proposals, rejecting objections to admissibility of the supplementary affidavit and to Section 10A, and directing commencement of CIRP with moratorium and appointment of an Interim Resolution Professional.

Refusal to admit appeal under proviso to Section 35B where disputed duty/penalty does not exceed fifty thousand rupees - non-admissibility of appeal on account of petty amount involved - dismissal for default/non-appearance under Rule 20 of the CESTAT Procedure Rules, 1982 - exercise of discretion to adjourn or grant time by the Appellate Tribunal under Section 35C

Refusal to admit appeal under proviso to Section 35B where disputed duty/penalty does not exceed fifty thousand rupees - non-admissibility of appeal on account of petty amount involved - Admissibility of the appeal in view of the small amount of dispute and penalty - HELD THAT: - The Tribunal applied the proviso to Section 35B(1) of the Central Excise Act, 1944 which permits refusal to admit an appeal where, inter alia, the amount of fine or penalty determined by the order does not exceed fifty thousand rupees. The disputed Cenvat credit and the penalty imposed are of a petty value; on this ground alone the appeal is non admissible. The Tribunal accordingly treated the appeal as not maintainable on the threshold ground of inadequate monetary stake. [Paras 2]

Appeal held non admissible and liable to be dismissed as the amount involved is below the threshold in the proviso to Section 35B.

Dismissal for default/non-appearance under Rule 20 of the CESTAT Procedure Rules, 1982 - exercise of discretion to adjourn or grant time by the Appellate Tribunal under Section 35C - Dismissal of the appeal for default due to repeated non appearance and adjournment requests - HELD THAT: - The Tribunal noted that the matter had been listed on multiple dates and that the appellant either was not represented or repeatedly sought adjournments. Section 35C(1A) permits adjournments for sufficient cause subject to limits, and Rule 20 empowers the Tribunal to dismiss an appeal for the appellant's default or, alternatively, to hear it on merits. Given the repeated non appearance and adjournments without satisfactory explanation, the Tribunal exercised its discretion under the procedural provisions to dismiss the appeal. [Paras 2, 3]

Appeal dismissed for default after recording repeated non appearance and adjournments; discretionary power to adjourn was not exercised to the appellant's benefit.

Final Conclusion: The appeal is dismissed - held non admissible on the ground that the disputed amount/penalty is below the threshold in the proviso to Section 35B, and, having noted repeated non appearance/adjournments, the Tribunal dismissed the appeal for default in exercise of its procedural discretion.

Summary order. Appeal dismissed for being devoid of merits; delay condoned; pending applications disposed of.

Concurrent findings of fact - appellate restraint in interference with findings of fact - confirmation by appellate tribunal

Concurrent findings of fact - appellate restraint in interference with findings of fact - confirmation by appellate tribunal - Challenge to the findings of fact recorded by the Adjudicating Authority and confirmed by the Appellate Tribunal was not sustainable. - HELD THAT: - The Court was invited to overturn factual findings recorded by the Adjudicating Authority which had been affirmed by the Appellate Tribunal. The Bench found no reason to deviate from the concurrent view taken by the two fora and declined to interfere with those findings of fact. In the absence of any demonstrable error warranting interference with concurrent findings, the appeal was dismissed. [Paras 2, 3]

The civil appeal is dismissed and pending applications, if any, stand disposed of.

Final Conclusion: The Supreme Court dismissed the appeal, refusing to disturb the concurrent findings of fact recorded by the Adjudicating Authority and confirmed by the Appellate Tribunal; pending applications disposed of.

Refund of excise duty paid on de-bonding - conversion of 100% Export Oriented Unit to Domestic Tariff Area unit - identity of unit for entitlement to post-payment refund - place of removal in export transactions is port of export - FOB transaction value includes charges up to port and is not deductible

Refund of excise duty paid on de-bonding - conversion of 100% Export Oriented Unit to Domestic Tariff Area unit - identity of unit for entitlement to post-payment refund - Whether a unit which converted from 100% EOU to DTA and paid excise duty at the time of de-bonding is entitled to refund of the excise duty when the goods are subsequently exported as a DTA unit. - HELD THAT: - The Court held that payment of excise duty at the time of de-bonding to withdraw EOU benefits does not preclude a refund claim where the goods are ultimately exported. The appellate authority correctly found that duty was paid to bring the unit to parity with DTA units and that the unit remained the same though its status changed; there is no legal procedure to deny refund solely because duty was discharged at de-bonding. The revisional authority erred in reversing the orders by treating the EOU and DTA as distinct entities when the registration numbers were identical and there was no material to treat them as different persons. The impugned revisional order was therefore set aside and the appellate/adjudicating findings affirming refund entitlement were restored. [Paras 4, 5, 6]

The petitioner is entitled to claim refund of excise duty paid at de-bonding upon subsequent export by the same unit; the revisional order reversing the appellate/adjudicating orders is set aside.

Place of removal in export transactions is port of export - FOB transaction value includes charges up to port and is not deductible - Whether the place of removal for exported goods is the port of export and whether the FOB transaction value (including charges up to port) was correctly treated for rebate/refund. - HELD THAT: - The Court accepted the appellate authority's reasoning that, for export, the place of removal is the port (or other point from which goods leave India) and that expenses incurred up to that place form part of the transaction value. Relying on the adjudicating authority's view and tribunal decisions cited therein, the appellate authority correctly held that charges up to the port are not deductible and that duty payable on the FOB value (which included expenses from factory gate to port) was appropriately treated for the rebate/refund claim. There was no infirmity in holding FOB as the correct transaction value for the rebate claim. [Paras 3]

The appellate finding that the place of removal is the port of export and that the FOB value (inclusive of charges up to port) is the proper transaction value for the refund/rebate claim is upheld.

Final Conclusion: All petitions are allowed; the revisional orders are quashed and the appellate/adjudicating orders in favour of the petitioner are restored, confirming entitlement to refund and the correctness of treating FOB (inclusive of charges to port) as the transaction value for exported goods.

Entitlement to cash refund of pre GST CENVAT credit under Section 142(3) of the CGST Act - Re credit of unutilised CENVAT credit under Notification No. 27/2012 CX (NT) - Tribunal's jurisdiction to grant relief despite GST regime and effect of saving clause in Section 174 - Deemed refusal and right of appeal where relief is not expressly granted

Tribunal's jurisdiction to grant relief despite GST regime and effect of saving clause in Section 174 - Referral to Larger Bench - Whether this Tribunal should defer hearing or refer the matter to the Larger Bench on questions relating to CENVAT credit refund in the GST era - HELD THAT: - The Tribunal rejected the respondent's submission that the appeal should be kept pending or referred to the Larger Bench. The Tribunal relied on its earlier finding in M/s. Borse India Automotive Systems Pvt. Ltd. that referral to the Larger Bench was made without proper regard to the saving and continuance provisions contained in Section 174 of the CGST Act, which require proceedings under the repealed law to continue as if the amended Act had not come into force. The Tribunal further observed that numerous precedents of the Tribunal have settled the issue and that early hearing was therefore appropriate. For these reasons the suggestion to defer or refer the appeal was not accepted and the appeal was heard on merits. [Paras 4]

Suggestion to await a Larger Bench or to refer the appeal was declined and the appeal was heard by this Bench.

Entitlement to cash refund of pre GST CENVAT credit under Section 142(3) of the CGST Act - Re credit of unutilised CENVAT credit under Notification No. 27/2012 CX (NT) - Deemed refusal and right of appeal - Whether the appellant is entitled to re credit or cash refund of unutilised CENVAT credit accumulated pre GST after the refund claim was rejected as time barred - HELD THAT: - The Tribunal noted that sub para (i) of Para 2 of Notification No. 27/2012 CX (NT) permits a claimant to take back credit equal to the difference between claimed and sanctioned amounts; however, initiation of re credit is conditional upon completion of adjudication and appeal processes or abandonment, and an untimely re credit could amount to taking dual benefits. The Tribunal applied the principle that where a court relief is sought and not expressly granted it is deemed refused, thereby entitling the claimant to appeal. On the facts, the appellant had sought re credit in its appeal before the Commissioner (Appeals) and the rejection of the refund claim operated as a deemed refusal. Having found the appellant to have acted bona fide, the Tribunal held that the appellant is entitled to cash refund of the unutilised CENVAT credit with applicable interest under Section 142(3) of the CGST Act. The Tribunal therefore modified the Commissioner (Appeals) order to direct payment of the refund and interest. [Paras 5, 6, 7]

Appellant is entitled to cash refund of the unutilised CENVAT credit with applicable interest; the Commissioner (Appeals) order is modified and the department directed to pay the refund within two months.

Final Conclusion: The appeal was allowed: the Tribunal declined to defer or refer the matter to a Larger Bench and, on merits, modified the Commissioner (Appeals) order to direct cash refund (with applicable interest) of the appellant's unutilised pre GST CENVAT credit and ordered payment within two months.

Interpretation of statutory note governing set off of tax on purchase of raw materials - meaning of "selling dealer" for entitlement to set off - requirement of tax being shown separately on the body of the bill/invoice for set off - qualification of set off to raw materials actually used in the relevant financial year - scope and authority of appellate interference under Rule 19 of the Orissa Entry Tax Rules, 1999

Meaning of "selling dealer" for entitlement to set off - requirement of tax being shown separately on the body of the bill/invoice for set off - interpretation of statutory note governing set off of tax on purchase of raw materials - Whether the expression 'selling dealer' in Note 1 of List 'C' includes any earlier selling dealer or is limited to the immediate selling dealer from whom the assessee purchased, and whether set off can be claimed where tax is not shown separately on the bill issued by the immediate seller. - HELD THAT: - The Court held that Note 1's language is unambiguous and requires that the tax collected from the dealer be shown 'separately on the body of the bill in respect of sale of raw materials and consumables'. The purpose and plain text of Note 1 indicate that 'selling dealer' refers to the person from whom the assessee purchased the raw materials (the immediate selling dealer), and does not extend to earlier sellers in the chain. There was therefore no scope to expand 'selling dealer' to include any previous seller; entitlement to set off depends on compliance by the immediate seller in showing the tax separately on the purchase invoice kept in the dealer's custody for verification by the Sales Tax Officer.

Expression 'selling dealer' is limited to the immediate selling dealer; set off requires tax to be shown separately on the body of the bill issued by that immediate selling dealer; question answered for the Revenue.

Qualification of set off to raw materials actually used in the relevant financial year - interpretation of statutory note governing set off of tax on purchase of raw materials - Whether set off may be claimed on the basis of a 'straight jacket formula' against the entire sale turnover of finished goods for the year, or is limited to proportionate set off corresponding to raw materials used in that particular financial year. - HELD THAT: - A collective reading of Clauses (i) and (iii) of Note 2 shows that the amount of set off is limited to the sales tax payable on finished products manufactured out of such raw materials and consumables and, in respect of purchases from registered dealers, is eligible for computation of set off 'during the same year' to the extent tax is realized separately on purchase invoices. Thus set off must be proportionate to the actual raw materials used in production of finished products in that financial year. The STO's approach of allowing proportionate set off for material used in that year, as affirmed by the first appellate authority, accords with the statutory scheme and cannot be displaced by a formula allowing set off against entire turnover irrespective of usage in that year.

Set off is confined to proportionate tax on raw materials actually used in production of finished goods in the relevant financial year; question answered for the Revenue.

Scope and authority of appellate interference under Rule 19 of the Orissa Entry Tax Rules, 1999 - Whether the Tribunal acted with material illegality and exceeded its authority under Rule 19 in arriving at its conclusions on entitlement to set off. - HELD THAT: - Having decided that Notes 1 and 2 do not support the broader interpretation adopted by the Tribunal - both as to the identity of the 'selling dealer' and as to the extent of set off - the Court held that the Tribunal's interference with the findings of the assessing and first appellate authorities was not justified. The Tribunal's expansion of the statutory terms amounted to misinterpretation of the taxing provisions and thus exceeded the proper scope of appellate review under the rules.

Tribunal acted beyond its authority in the interpretation adopted; question answered for the Revenue.

Final Conclusion: The Tribunal's order is set aside. The Court answers the framed questions in favour of the Revenue and against the assessee: 'selling dealer' is limited to the immediate seller who must show tax separately on the invoice for set off, set off is proportionate to raw materials actually used in the relevant financial year, and the Tribunal exceeded its authority in adopting a broader interpretation.

Violation of principles of natural justice - quashing of assessment orders - personal hearing - remittance for fresh adjudication - pre-deposit condition

Violation of principles of natural justice - personal hearing - quashing of assessment orders - Assessment orders dated 31.12.2018 set aside on grounds of violation of the principles of natural justice. - HELD THAT: - The appellant did not file objections to the show cause notices and was not afforded an opportunity of personal hearing before the respondent passed the assessment orders. In these circumstances the High Court concurred with the writ court's conclusion that the impugned assessment orders are unsustainable and must be quashed, since they were passed without providing the assessee a chance to be heard. The court therefore remitted the matter for fresh consideration. [Paras 6]

Impugned assessment orders quashed and matter remitted for fresh adjudication after affording personal hearing.

Pre-deposit condition - remittance for fresh adjudication - Condition requiring deposit of 25% of the demand as a pre-condition to reconsideration is unwarranted and is set aside. - HELD THAT: - Although the writ court had quashed the assessments, it imposed a condition that the appellant deposit 25% of the demand as a pre-condition to have the matter heard. The High Court held that imposing such a pre-deposit is unnecessary where the orders are set aside for breach of natural justice. Reliance was placed on co-ordinate authority holding that a pre-deposit condition is unsustainable in similar circumstances. Consequently the conditional deposit requirement was removed and procedural directions were issued: the appellant to file reply/objections within two weeks and the respondent to decide afresh on merits after personal hearing within eight weeks. [Paras 7, 8]

Pre-deposit condition of 25% set aside; appellant to file reply within two weeks and respondent to pass fresh orders after hearing within eight weeks.

Final Conclusion: The appeals are allowed in part: the assessment orders for the assessment years 2011-12 to 2016-17 are quashed for breach of natural justice; the condition of pre-deposit imposed by the writ court is set aside; the appellant shall file its reply within two weeks and the respondent shall reconsider and pass fresh orders on merits after affording personal hearing within eight weeks.

Unfair trade practice - deficiency of service - power of the Consumer Commission to direct refund under Section 14 - concurrent remedies under the Consumer Protection Act and the RERA Act - remedies under Section 18 of the RERA Act are without prejudice to other remedies - interest on refund payable from dates of deposit - adequacy of rate of interest as compensatory relief

Unfair trade practice - deficiency of service - Clauses in the Apartment Buyer's Agreement imposing a low fixed delay-compensation and otherwise one-sided terms are unfair and constitute deficiency of service/unfair trade practice, entitling the allottee to seek refund instead of being compelled to accept possession. - HELD THAT: - The Court applied its precedents in Pioneer and subsequent decisions holding that clauses which are manifestly one-sided, oppressive and which leave the allottee with no real bargain fall within unfair trade practice and amount to deficiency of service. The Agreement's Clause 10 (commitment and grace period) and Clause 13 (delay compensation at Rs.7.50 per sq. ft. per month payable only at final payment) were held to be weighted in favour of the developer and not binding on the consumer. Following the ratio in Pioneer, IREO Grace and other authorities, the Commission rightly declined to give effect to such contractual stipulations and was entitled to treat the consumer's choice to seek refund as a valid remedy. [Paras 10]

The clauses are one-sided and the consumer is not bound to accept possession; relief of refund with interest is available.

Power of the Consumer Commission to direct refund under Section 14 - concurrent remedies under the Consumer Protection Act and the RERA Act - remedies under Section 18 of the RERA Act are without prejudice to other remedies - The Consumer Forum/Commission has jurisdiction and power under the Consumer Protection Act to direct return of the amount paid with interest; the Consumer Act and RERA Act provide concurrent remedies and one does not exclude the other. - HELD THAT: - Relying on Imperia and IREO Grace, the Court held that remedies under the Consumer Protection Act are additional to those under special statutes like RERA. Section 18 of RERA grants a right to refund with interest 'without prejudice to any other remedy available', which confirms concurrency. Section 14 of the Consumer Protection Act empowers the Commission to direct return of the price/charges paid where services are found deficient. Thus the consumer's election to proceed under the Consumer Protection Act is permissible and the Commission properly exercised jurisdiction to direct refund and compensation. [Paras 15, 16, 17]

The Commission rightly exercised its Section 14 power to direct refund with interest; RERA does not oust consumer fora and the remedies are concurrent.

Interest on refund payable from dates of deposit - adequacy of rate of interest as compensatory relief - Interest on the refund is to be calculated from the dates of deposit of each installment; the rate of interest at 9% per annum granted by the Commission is fair and is not interfered with. - HELD THAT: - For restitutionary and compensatory effect, interest must run from the dates on which amounts were paid. The Commission had awarded interest from the date of last deposit; the Court modified that direction to require interest from the dates of deposit of each payment, following precedent. However, the Court found no reason to enhance the rate and upheld the Commission's rate of 9% p.a. The deposit made in Court by the developer under Section 23 was to be adjusted against the final amount payable. [Paras 22]

Interest to be paid from dates of deposit; rate of 9% p.a. sustained; consumer's appeal allowed in part on interest period.

Final Conclusion: The appeal by the developer is dismissed; the consumer's appeal is allowed in part by directing refund of the amounts paid with interest computed from the respective dates of deposit at the rate of 9% per annum; the developer's interim deposit in Court to be adjusted against the final amount; parties to bear their own costs.

Recovery of pay or allowances without opportunity of hearing - Requirement of enquiry or verification before effecting recovery - Entitlement to higher House Rent Allowance on account of additional charge - Effect of undertaking to repay excess payment

Recovery of pay or allowances without opportunity of hearing - Requirement of enquiry or verification before effecting recovery - Lawfulness of initiating recovery of alleged excess HRA without conducting an enquiry or giving an opportunity of hearing to the employees - HELD THAT: - The Court recorded that undisputedly no enquiry was conducted and no show-cause notice was issued prior to commencement of recovery. There was no allegation of misrepresentation or fraud against the respondents. The account section of the Department had adjusted recovery following an internal request, but the absence of any prior verification or opportunity to the employees rendered the recovery unsustainable. Where entitlement is disputed by the employer, verification through enquiry is required before unilateral recovery is effected from salaries. [Paras 4, 7]

Recovery set aside for having been initiated without enquiry or opportunity of hearing.

Entitlement to higher House Rent Allowance on account of additional charge - Whether the respondents were entitled to HRA at the higher rate because they were entrusted with duties of the Indore SEZ - HELD THAT: - The respondents produced appointment orders and other material showing that they were entrusted with additional charge of ISEZ, Indore, and some were regularly posted for the relevant period; these documents were not disputed by the petitioners. Information received under RTI and the Audit Memo indicated that officers posted at Pithampur who were also looking after SEZ work at Indore were treated as entitled to higher HRA. If the Department disputes the factual entrustment, it was incumbent upon it to verify those facts by enquiry rather than unilaterally effecting recovery. [Paras 4, 5]

Respondents' entitlement to HRA @ 20% on account of additional charge was accepted; recovery could not be sustained without factual verification.

Effect of undertaking to repay excess payment - Whether the undertaking given by respondents not to object to recovery precludes judicial relief once entitlement is found in their favour - HELD THAT: - Although the respondents had given an undertaking accepting repayment if excess HRA was found to have been paid, the Tribunal found - and this Court agreed - that the respondents were entitled to HRA @ 20%. Once entitlement is established, the undertaking cannot be used to justify recovery of sums that the employees were lawfully entitled to receive. An undertaking does not override a concluded finding of entitlement. [Paras 8]

Undertaking held ineffective to sustain recovery where entitlement to HRA @ 20% was established.

Final Conclusion: Writ petition dismissed; the Tribunal's order allowing the OA and setting aside the recovery is upheld, the recoveries having been initiated without enquiry and notwithstanding the respondents' established entitlement to the higher HRA.

Defence of unsoundness of mind under Section 84 IPC - legal insanity versus medical insanity - burden of proof under Section 105 of the Evidence Act - proof beyond reasonable doubt - homicidal death - mens rea

Defence of unsoundness of mind under Section 84 IPC - legal insanity versus medical insanity - burden of proof under Section 105 of the Evidence Act - The appellant was not entitled to the benefit of Section 84 IPC on the ground of unsoundness of mind. - HELD THAT: - The Court examined the documentary and oral material regarding the appellant's mental condition and applied the established legal tests for Section 84. Medical observation that the appellant suffered from psychosis at one point was noted, but the trial court and arresting officer observed no abnormality when the appellant was produced and at arrest. The trial record shows the trial was suspended and subsequently resumed when medical reports indicated improvement and the appellant was found fit to enter defence. The appellant did not produce medical records proving continuous treatment prior to the incident. The Court emphasised that Section 84 requires proof of legal insanity at the time of the offence (incapacity to know the nature/quality of the act or that it was wrong or contrary to law) and that the burden under Section 105 Evidence Act lies on the accused to establish such unsoundness on a preponderance of probabilities. The appellant's conduct - absconding after the offence, being arrested the next day with the weapon, and the lack of continuous manifestations of psychosis or corroborative medical documentation - indicated capacity to understand the nature and consequences of his acts. Mere history of mental illness or episodic psychosis, without proof of incapacity at the material time, and without evidence showing lack of understanding of wrongfulness, is insufficient to attract Section 84. Having applied these principles to the facts and evidence, the Court concluded that the defence of unsoundness was not made out. [Paras 39, 41, 42]

Benefit of Section 84 IPC refused; appellant not legally insane at the time of the offence.

Proof beyond reasonable doubt - homicidal death - mens rea - The prosecution established the appellant's guilt for the offences charged and the convictions and sentences awarded by the trial court were upheld. - HELD THAT: - The Court accepted the post-mortem evidence describing homicidal head injuries and the ocular testimony of witnesses who, notwithstanding some hostile witnesses, identified assault by the appellant on the deceased and on the complainant. A lathi was seized and the appellant was arrested near the bus stand. The appellant did not produce defence witnesses or documentary evidence to counter the prosecution case. Applying the standard of proof beyond reasonable doubt, and having rejected the plea of legal insanity, the Court held that the prosecution succeeded in proving the offences under Sections 302 and 307 IPC. The Court further observed that the sentence imposed - life imprisonment for the murder count - is the minimum sentence appropriate in the facts and did not warrant interference on appeal. [Paras 14, 43, 44]

Convictions under Sections 302 and 307 IPC and the sentences imposed by the trial court are affirmed.

Final Conclusion: The appeal is dismissed. The judgment and sentence of the trial court are affirmed; the appellant shall undergo the remaining sentence and a copy of this judgment is to be supplied to him.

Acquittal for failure of prosecution to prove guilt beyond reasonable doubt - Reliance on panchnama and recovery formalities - Hostile witnesses and credibility of prosecution witnesses - Illegalities and irregularities in investigation affecting weight of evidence - Judicial review of trial court's appreciation of evidence

Acquittal for failure of prosecution to prove guilt beyond reasonable doubt - Illegalities and irregularities in investigation affecting weight of evidence - Hostile witnesses and credibility of prosecution witnesses - Reliance on panchnama and recovery formalities - Whether the trial court erred in acquitting the accused where prosecution alleged recovery and seizure of contraband from his shop and relied upon panchnama and prosecution witnesses - HELD THAT: - The High Court examined the trial court's findings and evidence and concluded that the prosecution's case suffered from material irregularities and deficiencies which undermined the reliability of the alleged recovery and seizure. The trial court noted inconsistencies in dates between the raid and the panchnama, absence of the search warrant or documents relating to the raid, failure of the Inspector to explain non-arrest and to substantiate instructions from higher authorities, and the declaration of independent witnesses as hostile who did not corroborate the prosecution's version. Senior departmental witnesses disclaimed knowledge of sealing, deposition in maalkhana, weighing and preparation of site reports. Further, there was no documentary proof of sending the contraband for FSL analysis or receipts from the FSL. These cumulative defects led the trial court to hold that the prosecution had not established its case beyond reasonable doubt. The High Court, after considering those findings (including detailed observations recorded by the trial court), found no legal or factual error in that conclusion and declined to interfere with the acquittal. [Paras 6, 7, 8, 9, 11]

Appeal dismissed; acquittal by the trial court upheld as prosecution failed to prove the charges beyond reasonable doubt in view of the noted irregularities and witness contradictions.

Final Conclusion: The High Court found no infirmity in the trial court's speaking judgment of acquittal and dismissed the appeal, holding that material irregularities in investigation, contradictions and hostile testimony rendered the prosecution's case insufficient to convict.

Medical termination of pregnancy - eligibility under Rule 3B of the Medical Termination of Pregnancy Rules, 2003 - interpretation of Section 3(2)(b) of the Medical Termination of Pregnancy Act, 1971 - interim relief in a writ petition cannot be used to grant substantive relief - challenge to rule on grounds of arbitrariness under Article 14 reserved for adjudication on merits

Interim relief in a writ petition cannot be used to grant substantive relief - Medical termination of pregnancy - Application for interim permission to terminate the petitioner's pregnancy was dismissed. - HELD THAT: - The petitioner sought interim relief to permit termination of pregnancy at 23 weeks 5 days. The Court observed that Rule 3B of the MTP Rules, 2003 prescribes the categories of women eligible for termination up to twenty-four weeks and that, as on date, the rule stands. Granting the interim relief would effectively grant the substantive relief sought under Prayer A and would require the Court to go beyond the statute. Consequently, the Court declined to exercise its powers under Article 226 to permit termination in the interim and dismissed the application. [Paras 6, 7, 10, 11, 12]

Interim application for permission to terminate pregnancy dismissed.

Eligibility under Rule 3B of the Medical Termination of Pregnancy Rules, 2003 - interpretation of Section 3(2)(b) of the Medical Termination of Pregnancy Act, 1971 - challenge to rule on grounds of arbitrariness under Article 14 reserved for adjudication on merits - Notice issued and challenge to Rule 3B limited to Prayer C reserved for adjudication on merits; validity not decided at interim stage. - HELD THAT: - Counsel for the petitioner contended that Rule 3B is violative of Article 14 insofar as it excludes unmarried women. The Court recorded that the question of the rule's vires cannot be decided at the interim stage and that consideration of that challenge requires adjudication on merits; accordingly, notice was issued restricted to Prayer C. The Court therefore did not pronounce on the validity of Rule 3B and left that substantive question to be determined in the main writ petition after hearing and pleadings. [Paras 2, 8, 9]

Notice issued on Prayer C; challenge to Rule 3B reserved for adjudication on merits (no interim declaration of invalidity).

Final Conclusion: The interim application for permission to terminate the petitioner's pregnancy is dismissed; the writ petition has been issued notice restricted to the challenge against Rule 3B of the MTP Rules, 2003, and the validity of that rule will be adjudicated on the merits in the main proceedings.