TaxTMI Updates e-Newsletter
Aug 10,2022

Jurisdictional limits of powers under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - invalidity of seizure proceedings where search relates to immovable premises and not a vehicle - quashing of appellate orders confirming illegal seizure and entitlement to refund with interest subject to adjudication - administrative accountability of revenue officers and direction to departmental head for enquiry

Jurisdictional limits of powers under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - invalidity of seizure proceedings where search relates to immovable premises and not a vehicle - Proceedings initiated under Section 129(3) consequent to the search on 07.08.2018 were without jurisdiction because the Mobile Squad authorities proceeded against goods in a godown while purporting to invoke powers meant for seizure of goods in transit/vehicles. - HELD THAT: - The Court found that two Mobile Squad officers issued separate show cause and seizure notices arising from the same search at the assessee's premises, but described the subject as vehicles (e.g., "UPGODOWN02", "GODOWON") despite the search being directed at immovable godown premises. Section 129(3) could not properly be invoked where there was no action under Section 67 or the required "reasons to believe" for search and seizure of premises, and where officers acted as if seizing goods in transit while actually targeting a godown. The conduct disclosed exercise of powers beyond jurisdiction and negligence in invoking Section 129(3) against goods lying in a premise rather than goods in a vehicle during transportation. On these findings the seizure and demand proceedings were held to be without jurisdiction. [Paras 4, 9, 10, 12]

The proceedings under Section 129(3) arising from the search of the assessee's godown on 07.08.2018 are without jurisdiction and cannot be sustained.

Quashing of appellate orders confirming illegal seizure and entitlement to refund with interest subject to adjudication - The appellate orders dated 26.11.2019 and 22.11.2019 confirming the seizures and demands were quashed and any amounts deposited were ordered to be refunded with interest at 8%, subject to the outcome of the pending adjudication proceedings. - HELD THAT: - Having concluded that the underlying seizure and demand proceedings were initiated without jurisdiction, the Court set aside the orders of the appellate authority which had confirmed those demands. The Court directed that any sums deposited by the petitioner pursuant to the impugned orders be refunded with interest at the stated rate, but preserved the rights of the State to continue adjudication proceedings on their own merits; the refund direction is therefore conditional and limited to amounts paid under the quashed proceedings. [Paras 13, 14]

Orders dated 26.11.2019 and 22.11.2019 are quashed; deposited amounts to be refunded with interest at 8% subject to adjudication proceedings; petitions allowed.

Administrative accountability of revenue officers and direction to departmental head for enquiry - The Court directed that the order be communicated to the Commissioner, Commercial Taxes, U.P., to examine the conduct of the officers concerned and take appropriate disciplinary or corrective action if misconduct is found. - HELD THAT: - While declining to probe officer intent through personal affidavits, the Court recognized officer accountability. It ordered communication of the judgment to the departmental head so that explanations may be called for and appropriate action taken to address the identified misuse of powers and to prevent recurrence. This is an administrative direction aimed at internal departmental accountability rather than a judicial finding of misconduct requiring specific sanctions by the Court. [Paras 11]

The order to be communicated to the Commissioner, Commercial Taxes, U.P., for enquiry and appropriate departmental action to address the officers' conduct.

Final Conclusion: The writ petitions are allowed: the seizure and demand proceedings under Section 129(3) arising from the search of the assessee's godown are held to be without jurisdiction; the appellate orders confirming those demands are quashed and any amounts deposited are to be refunded with interest at 8% subject to adjudication proceedings; the Commissioner, Commercial Taxes, U.P., is directed to examine the officers' conduct and take appropriate departmental action.

Grant of pre-trial bail - Allegation of tax evasion under Central Goods and Services Tax Act, 2017 - Assessment of prima facie grounds at pre-trial stage - Risk of re-offending and misuse of bail - Direction for expeditious trial

Grant of pre-trial bail - Allegation of tax evasion under Central Goods and Services Tax Act, 2017 - Risk of re-offending and misuse of bail - Application for grant of bail to the applicant charged under the Central Goods and Services Tax Act, 2017 was considered and decided. - HELD THAT: - The applicant asserted false implication and denial of the alleged offence. The Union of India opposed bail, relying on allegations that the applicant carried on multiple businesses and had evaded GST, arguing that innocence cannot be determined at the pre-trial stage and that release on bail would risk recurrence of similar activities. Having considered the submissions and the record, the Court found that no sufficient ground was shown for granting bail at the pre-trial stage. The Court declined to adjudicate the ultimate merits of the allegations, confining its observations to the bail proceeding, and rejected the bail application. The trial court was directed to expedite the trial and conclude it preferably within one year from the date of the order if there is no legal impediment.

Bail application rejected; trial court directed to expedite trial preferably within one year; observations confined to bail disposal and not to merits of the case.

Final Conclusion: The High Court dismissed the second bail application of the applicant; no bail granted in the case under section 132(1)(i) of the Central Goods and Services Tax Act, 2017, and the trial court was directed to dispose of the trial expeditiously, preferably within one year, subject to legal impediments.

Inadvertent clerical error in e-way bill and bona fide explanation - detention, seizure and release of goods for transit irregularity - imposition of tax and penalty under provisions governing seizure for transit irregularity - technical breach versus real breach - return of security and penalty deposited

Inadvertent clerical error in e-way bill and bona fide explanation - detention, seizure and release of goods for transit irregularity - imposition of tax and penalty under provisions governing seizure for transit irregularity - technical breach versus real breach - Whether the order of seizure and consequent demand of tax and penalty under the seizure provisions was sustainable where the e-way bill contained an inadvertent error in destination and pin code leading to expiry of e-way bill validity - HELD THAT: - The Court found on the record that the petitioner, an event management firm, had transported LED panels from its office at Katni to Haridwar and had disclosed the intended place of shipment as Kumbh Mela, Haridwar, Uttarakhand. By inadvertence the destination field on the e-way bill contained the petitioner's Madhya Pradesh pin code, which led the software to generate an incorrect shorter validity period (about 100 kms) and caused the e-way bill to expire on 24.12.2020. The consequent seizure and demand of tax and penalty arose solely from that software-generated expiry. The Court accepted the assessee's explanation as bonafide and found no material or allegation of mala fides or intention to transport the goods for sale. The goods were held to be old and the breach characterised as technical rather than real. In those circumstances the imposition of tax and penalty under the seizure provisions was held to be unfounded and perverse, warranting setting aside of the orders and return of any security or penalty deposited. The Court therefore allowed the petition and directed restoration/return in accordance with law. [Paras 4, 5, 6, 7, 8]

The orders of seizure, demand of tax and imposition of penalty were set aside on the ground of an inadvertent e-way bill error and absence of mala fide; deposits made shall be returned in accordance with law.

Final Conclusion: Petition allowed; appellate order dated 5.3.2021 and the order dated 28.12.2020 under the seizure provisions quashed as per findings of inadvertent error and absence of ill-intent, and amounts deposited to be returned in accordance with law.

Extension of period of limitation for assessment on account of wilful suppression or fraud - classification of service as exempt - verdict based on findings of fact by the Tribunal - absence of substantial question of law

Extension of period of limitation for assessment on account of wilful suppression or fraud - verdict based on findings of fact by the Tribunal - Availability of extended period of limitation for assessments relying on wilful suppression of fact or fraud - HELD THAT: - The Tribunal recorded a finding of fact that there was no wilful suppression of fact or fraud by the assessee; consequently the extended period of limitation could not be invoked. The High Court has examined the Tribunal's reasoning and found that the question was resolved on factual findings and settled law as applied by the Tribunal, leaving no room to entertain the extension of limitation in the appeal. [Paras 3, 4, 5]

Tribunal's finding that extended limitation was not available (no wilful suppression/fraud) is upheld.

Classification of service as exempt - verdict based on findings of fact by the Tribunal - Whether the nature of work carried out by the assessee was taxable or exempt - HELD THAT: - The Tribunal, after detailed discussion and reference to earlier decisions, concluded that the services rendered by the assessee fell within the exempt category. The High Court has perused and accepted the Tribunal's factual and legal conclusions on exemption, noting that the controversy was addressed on facts and settled legal position by the Tribunal. [Paras 4, 5]

Tribunal's conclusion that the services were exempt is maintained.

Final Conclusion: The appeal is dismissed; the High Court declines to interfere with the Tribunal's factual findings that there was no wilful suppression or fraud and that the services were exempt, holding that no substantial question of law arises.

Cancellation of registration - show cause notice - opportunity of being heard - revocation of cancellation - quasi judicial decision making - principles of administrative justice - reliance on extraneous materials - renewal of registration - costs for wrongful administrative action

Cancellation of registration - show cause notice - principles of administrative justice - Validity of the show cause notice and the cancellation of registration under the U.P. GST Act. - HELD THAT: - The Court found the initial show cause notice to be opaque and vague, merely alleging that the taxpayer was "non functioning/non existing at the principal place of business" without indicating the inspection date, the report relied upon or the factual basis for that conclusion. Such a vague notice failed to meet the standards required by principles of administrative justice and the mandatory requirement to give a person a fair opportunity to know and meet the case against him. Cancellation of registration is a serious consequence affecting the right to carry on business and therefore requires reasoned, quasi judicial decision making; the impugned cancellation order lacked any reasoning and did not disclose the material on which the opinion was formed. For these reasons the cancellation did not satisfy the test of Section 29 of the Act. [Paras 17, 18, 21]

The cancellation order was held to be unlawful as the show cause notice and the cancellation did not satisfy the requirements of Section 29 and principles of administrative justice.

Revocation of cancellation - opportunity of being heard - reliance on extraneous materials - quasi judicial decision making - Validity of the order rejecting the petitioner's application for revocation of cancellation and the appellate authority's dismissal of the appeal. - HELD THAT: - The order rejecting revocation merely recorded that no "satisfactory explanation" was received and did not engage with the specific averments, documents or the petitioner's request for adjournment. The Appellate Authority failed to consider evidence and submissions placed on record and impermissibly relied upon an earlier inspection/report of 2018 which was not placed before or confronted to the petitioner. Such omission and reliance on extraneous material demonstrate lack of application of mind and absence of reasoned adjudication. Consequently the rejection of the revocation application and the dismissal of the appeal could not be sustained. [Paras 6, 19, 20]

The order refusing revocation and the appellate dismissal were set aside for failure to consider the petitioner's submissions and for reliance on materials not part of the record.

Renewal of registration - costs for wrongful administrative action - Relief to be granted in consequence of the invalidation of the impugned orders. - HELD THAT: - Having found the impugned orders contrary to the mandate of Sections 29 and 30 and principles of adjudication, the Court directed immediate renewal of the petitioner's GST registration. The Court also observed that the arbitrary exercise of power had caused harassment and impeded commerce and ordered payment of costs by the State Government to the petitioner as compensation for the wrongful administrative action. A timeline was fixed for payment of costs with a consequential remedy in case of default. [Paras 22, 23, 24, 25]

The impugned orders were set aside; registration to be renewed forthwith; State directed to pay costs to the petitioner within two months.

Final Conclusion: The High Court set aside the cancellation and the order rejecting revocation, directed immediate renewal of the petitioner's GST registration and awarded costs against the State for the arbitrary exercise of power.

Bail under Section 439 CrPC - Offence of wrongful availment of input tax credit under Section 132(1)(c) of CGST/GGST Acts - Arrest effected by delegated tax authority under powers exercisable akin to police under Section 69 of GGST Act - Compounding of offences as relevant factor in bail exercise - Delay in concluding trial as a relevant consideration for grant of bail - Relevance of prior adjudication/assessment under Chapters XI and XIV before invoking coercive tax-powers

Bail under Section 439 CrPC - Compounding of offences as relevant factor in bail exercise - Delay in concluding trial as a relevant consideration for grant of bail - Applicant granted regular bail in offences registered under the CGST/GGST Acts relating to alleged wrongful availment of input tax credit. - HELD THAT: - The Court exercised its discretion under Section 439 CrPC to release the applicant on regular bail. In reaching this conclusion the Court took into account: (a) the nature of the allegations that the department alleges wrongful availment of input tax credit, (b) the maximum sentence prescribed for the alleged offence, (c) availability of compounding of offences under the statute and the fact that compounding may be permissible after payment of tax, interest and penalty, (d) the delay inherent in criminal proceedings once cognizance is taken and the trial commences, and (e) the applicant's cooperation during the investigation (including custodial interrogation) and the absence of any adjudication finalising tax liability for the same period. Balancing these factors and noting that trial will take time, the Court found it just and proper to grant bail while preserving the prosecution's right to proceed with trial and to pursue compounding or adjudication under the statutory scheme. The Court imposed usual conditions including personal bond, surety, surrender of passport and restrictions on travel and change of residence. [Paras 20, 21]

Application allowed; applicant released on regular bail on executing bond and surety subject to enumerated conditions and compliance with court/authority directions.

Final Conclusion: The High Court allowed the regular bail application and ordered release of the applicant on furnishing a personal bond and surety subject to specified conditions, having regard to the gravity of allegations, availability of compounding, the likely delay in trial, and the applicant's cooperation; the prosecution may continue with trial and seek appropriate remedies if bail conditions are breached.

Refund of IGST paid under reverse charge - validity of Entry No.10 of Notification No.10/2017 IGST (Rate) - ultra vires - reverse charge mechanism - statutory interest on refund - verification and quantification by competent authority - direction to grant refund

Validity of Entry No.10 of Notification No.10/2017 IGST (Rate) - ultra vires - Impugned Entry No.10 of Notification No.10/2017-IGST (Rate) is not a valid basis to levy IGST and the notifications have been held ultra vires by this Court's earlier decision. - HELD THAT: - The Court applied its earlier ruling in Mohit Minerals Pvt. Ltd. (and subsequent coordinate-bench decisions) which declared the relevant notifications to be unconstitutional and ultra vires the GST statute. Having accepted that precedent and the parties' concession as to its applicability, the Court concluded that the impugned Entry No.10 cannot sustain the levy of IGST and thus the petition succeeds on that legal ground. [Paras 6]

The petition is allowed insofar as the levy under Entry No.10 of Notification No.10/2017-IGST (Rate) stands displaced by the Court's prior declaration of ultra vires.

Refund of IGST paid under reverse charge - statutory interest on refund - verification and quantification by competent authority - direction to grant refund - Claim for refund of IGST paid pursuant to Entry No.10 of Notification No.10/2017 is to be allowed subject to verification; respondents directed to verify, quantify and refund the IGST with statutory interest within a stipulated period. - HELD THAT: - In consequence of the ruling that the notifications are ultra vires, the Court directed that the petitioner's refund claim be favourably considered. The competent authority is to verify the amount of IGST paid by the petitioner pursuant to Entry No.10, complete necessary verification/quantification and grant the refund along with statutory rate of interest. The Court prescribed an eight-week timeline from receipt of the order and requisite documents for completion of the verification and disbursement, thereby remitting the computation/verification to the administrative authority for implementation. [Paras 6, 7]

Respondents to verify and grant refund of IGST paid pursuant to Entry No.10 of the notification, with statutory interest, within eight weeks from receipt of this order and necessary documents.

Final Conclusion: The petition is allowed: the impugned Entry No.10 of Notification No.10/2017-IGST (Rate) is treated as having no legal force in view of earlier declaration of ultra vires, and the respondents are directed to verify, quantify and refund the IGST paid by the petitioner pursuant to that Entry along with statutory interest within eight weeks from receipt of this order.

Validity of reverse charge notifications - reverse charge mechanism for IGST on import of goods transported by vessel - refund of IGST paid under an ultra vires notification - entitlement to statutory interest on refund - application of precedent in grant of refund

Validity of reverse charge notifications - reverse charge mechanism for IGST on import of goods transported by vessel - Whether the IGST levied and collected pursuant to Entry No.10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017 (as read with corrigendum) is maintainable or liable to be treated as ultra vires - HELD THAT: - The Court applied its earlier decision in Mohit Minerals Pvt. Ltd. (and followed decisions in co-ordinate cases) holding the impugned Notifications unconstitutional and ultra vires. The petitioner, who imported newsprint on C&F basis and paid IGST pursuant to Entry No.10, invoked the declared invalidity of the notifications. The Court recorded that the vires of Entry No.10 had been negatived by the Division Bench in Mohit Minerals and that subsequent writs seeking refunds were entertained on that foundation. Reliance was also placed on a co-ordinate Bench order in ADI Enterprises directing refunds where the entry was declared ultra vires and noting dismissal of the appeals by the Supreme Court in that context. On this basis the Court held that, in view of Mohit Minerals, the petition is maintainable and the petitioner is entitled to relief. [Paras 5, 6]

The levy under Entry No.10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017 is treated as ultra vires for the purposes of this petition and the petitioner is entitled to relief consequent thereto.

Refund of IGST paid under an ultra vires notification - entitlement to statutory interest on refund - application of precedent in grant of refund - Whether the petitioner is entitled to refund of IGST paid pursuant to Entry No.10 of Notification No.10/2017 and the procedure/timing for grant of such refund with interest - HELD THAT: - Relying on the declared invalidity of the impugned notification, the Court directed that the competent authority shall verify the amount of IGST paid by the petitioner pursuant to Entry No.10 and grant refund along with statutory rate of interest. The Court followed the order in ADI Enterprises which had directed refund with statutory interest within a specified period upon submission of requisite documents. For present petition the respondents were directed to verify and refund the IGST paid and to pay interest thereon within eight weeks from receipt of the order and necessary documents. [Paras 5, 6]

The competent authority shall verify and grant refund of the IGST paid pursuant to Entry No.10 of Notification No.10/2017, together with statutory interest, within eight weeks from receipt of this order and requisite documents.

Final Conclusion: The writ petition is allowed: the impugned levy under Entry No.10 of Notification No.10/2017 is treated as having been declared ultra vires by earlier authority, and the petitioner is entitled to refund of the IGST paid under that entry, with statutory interest, to be verified and disbursed by the respondents within eight weeks.

Deposit of GST arrears as condition for bail - anticipatory protection from arrest subject to deposit - joining investigation as bail condition

Deposit of GST arrears as condition for bail - Whether the petitioner must deposit further amount to meet the court-imposed monetary condition for continued protection from arrest - HELD THAT: - The Court recorded that on 19.04.2022 a direction had been placed for deposit of Rs.1.25 crores and that the petitioner thereafter made various payments. The petitioner had already deposited approximately Rs.2.28 crores. Applying that factual position, the Court directed that the petitioner deposit the balance sum so that the total deposit equals Rs.3.00 crores within eight weeks from the date of the order. The direction operates as a continuing condition for the petitioner's protection from arrest until the next listed date. [Paras 3, 4, 5]

Petitioner directed to deposit the balance to make total deposits Rs.3.00 crores within eight weeks as condition for continued protection from arrest.

Joining investigation as bail condition - anticipatory protection from arrest subject to deposit - Whether the petitioner must cooperate with investigation and the effect of such cooperation on arrest protection - HELD THAT: - The Court required the petitioner to join the investigation as and when directed by the senior intelligence officer. The Court granted interim protection from arrest and listed the matter for further hearing, expressly subject to the monetary deposit and the petitioner's compliance with investigative directions. Non-compliance with these conditions would affect the interim protection granted. [Paras 4, 5]

Petitioner directed to join the investigation when called and afforded protection from arrest until the next hearing, subject to compliance with the deposit and investigative directions.

Final Conclusion: The petition is disposed by directing the petitioner to deposit the balance amount so that total deposits equal Rs.3.00 crores within eight weeks and to join the investigation as directed; interim protection from arrest is granted until the next listing (23.01.2023) subject to these conditions.

Input tax credit entitlement - Vires of denial of input tax credit - Liability of recipient where supplier fails to file returns or pay tax - Challenge under Articles 14 and 19(1)(c) read with Article 265 of the Constitution - Remedy of appeal under Section 107 of the OGST/CGST Act - Interim stay on coercive action conditioned on deposit

Interim stay on coercive action conditioned on deposit - Input tax credit entitlement - Liability of recipient where supplier fails to file returns or pay tax - Vires of denial of input tax credit - Grant of interim protection against coercive action subject to deposit and procedural directions for adjudication of the challenge to denial of input tax credit. - HELD THAT: - The Court entertained the petition challenging the vires of Clause (c) of Sub section (2) of Section 16 of the OGST/CGST Act insofar as it conditions entitlement to input tax credit on tax having been actually paid to the Government, and noted the petitioner's grievance that the assessment under Section 73 impugns the petitioner for the supplier's failure to file Form GSTR 3B. Rather than adjudicating the constitutional challenge on merits, the Court issued notice and permitted the revenue to file a counter affidavit. As an interim measure the Court directed the petitioner to deposit twenty per cent of the tax determined in the assessment order dated 12.05.2022 within four weeks; on such deposit the revenue was restrained from taking coercive action till disposal of the writ petition. Ancillary procedural directions were given for service of process and for filing of the counter affidavit, without deciding the substantive question whether a recipient can be made liable where the supplier has defaulted.

Petitioner to deposit 20% of the tax determined within four weeks; no coercive action to be taken till disposal of the writ petition; notice issued and liberty given to the revenue to file counter affidavit.

Final Conclusion: Notice issued; petition challenging the vires of the input tax credit condition was admitted and interim protection granted by restraining coercive measures on deposit of 20% of the tax determined; substantive issues reserved for final adjudication.

Show cause notice under Section 73(1) - summary of show cause notice in Form GST DRC-01 cannot substitute a proper show cause notice - violation of principles of natural justice - penalty under Section 73(9) limited to 10% of tax dues; 100% penalty not permissible in proceedings under Section 73 - quashing of defective proceedings with liberty to initiate fresh proceedings

Show cause notice under Section 73(1) - summary of show cause notice in Form GST DRC-01 cannot substitute a proper show cause notice - violation of principles of natural justice - Impugned show-cause notice and its summary were defective and violative of principles of natural justice and therefore quashed. - HELD THAT: - The Court found that the show-cause notice issued in the standard GSTN format did not specify the particulars of the alleged contravention nor lay the foundation of the case so as to enable the petitioner to defend itself. Reliance was placed on the High Court's earlier decision in M/s NKAS Services Pvt. Ltd., where it was held that the summary in Form GST DRC-01 cannot substitute the requirements of a proper show-cause notice under Section 73(1). A vague notice which fails to describe the necessary facts or grounds of liability violates the principles of natural justice and precludes adjudication beyond the matters specified in the notice. Applying that reasoning, the Court held the impugned notices to be vague and procedurally infirm and therefore unsustainable. [Paras 7, 9]

Impugned show-cause notice dated 28.08.2020 and the summary in Form GST DRC-01 of the same date are quashed for failure to meet the requirements of a proper notice and for violating principles of natural justice.

Penalty under Section 73(9) limited to 10% of tax dues; 100% penalty not permissible in proceedings under Section 73 - quashing of defective proceedings with liberty to initiate fresh proceedings - Summary of Order in Form GST DRC-07 imposing 100% penalty was impermissible under Section 73(9) and is quashed; however, Revenue is granted liberty to initiate fresh proceedings after issuing a proper show-cause notice. - HELD THAT: - The Court observed that the Summary of Order recorded levy of 100% penalty, which is inconsistent with Section 73(9) where penalty in an adjudication under Section 73 is confined to up to 10% of the tax dues. The imposition of 100% penalty therefore indicated non-application of mind and contravention of statutory limits. Given the procedural defects in the show-cause notice and the impermissible penalty fixation, the impugned Summary of Order in Form GST DRC-07 was set aside. The Court, however, refrained from adjudicating merits and expressly granted the Deputy Commissioner liberty to initiate fresh proceedings in accordance with law by issuing a proper show-cause notice, subject to applicable limitation. [Paras 8, 9]

Summary of Order dated 12.12.2020 in Form GST DRC-07 imposing 100% penalty is quashed; Revenue permitted to initiate fresh proceedings after issuing a legally adequate show-cause notice.

Final Conclusion: Writ petition allowed: the show-cause notice dated 28.08.2020, its summary in Form GST DRC-01, and the Summary of Order in Form GST DRC-07 dated 12.12.2020 are quashed for being vague, procedurally defective and imposing an impermissible penalty; respondent is at liberty to initiate fresh proceedings in accordance with law after issuance of a proper show-cause notice.

Recording of appearance - affidavit to verify counsel's presence - dissolution of provisional attachment - compliance with court direction - production of documents - personal attendance of affiant

Recording of appearance - affidavit to verify counsel's presence - Recording that the counsel for the petitioner was present in Court on 15.07.2022 and directing filing of an affidavit to that effect. - HELD THAT: - The Court accepted the contemporaneous oral confirmation by the respondent's counsel that Mr. Harsh Sethi was present in Court on 15.07.2022 and therefore allowed the application seeking recording of appearance. Noting that ordinarily an affidavit should have accompanied the application, the Court nevertheless recorded the fact of presence and directed Mr. Sethi to place an affidavit on record for purposes of good order within ten days. The Court disposed of the application accordingly. [Paras 1, 2, 3, 4, 5]

Application allowed; presence on 15.07.2022 recorded and counsel directed to file an affidavit within ten days.

Dissolution of provisional attachment - compliance with court direction - production of documents - personal attendance of affiant - Recording of dissolution of the provisional attachment order and directions for compliance, verification and further proceedings including affidavits, production of documents and attendance of the affiant. - HELD THAT: - The Court noted that on 15.07.2022 the respondent informed the Court that the provisional attachment order dated 31.12.2019 had not been extended and would stand dissolved, and the writ petition was disposed of on that basis. Subsequent material placed by the respondent included a statement of the affiant, Mr. Surat Singh, suggesting lack of knowledge of the writ and that he may have been a name-lender; copies of identity documents were also produced which tended to match signatures. In view of these developments the Court required the petitioner's counsel to file an affidavit addressing his oral submissions about instructions by the affiant and the signing of the writ affidavit; directed that affidavit to be filed within one week; recorded that the affiant must be present on the next date; directed production of the documents already handed to the respondent to be brought to Court on the next date; and listed the matter for further hearing. These directions were given to ensure compliance with the earlier order and to enable the Court to proceed on the factual materials now before it. [Paras 11, 12, 13, 14, 15]

Recorded that the provisional attachment was not extended and stood dissolved; directed filing of an affidavit by petitioner's counsel within one week, ordered affiant's attendance and production of documents on the next date, and listed the matter for further hearing.

Final Conclusion: The Court recorded counsel's presence on 15.07.2022 and directed filing of an affidavit; it recorded that the provisional attachment order had not been extended and stood dissolved, and issued directions for compliance, verification by affidavit, personal attendance of the affiant and production of documents, listing the matter for further hearing.

Assessment under Section 62 of the CGST/SGST Act - notice by uploading assessment orders on common portal - option to file return within 30 days of receipt of assessment order - statutory appeal against assessment orders - abeyance of demand notice pending appellate remedy - cancellation of GST registration

Notice by uploading assessment orders on common portal - assessment under Section 62 of the CGST/SGST Act - Whether the assessment orders uploaded on the department's common web portal constituted notice to the appellant of the assessment passed against him. - HELD THAT: - The High Court accepted the Single Judge's finding that the assessment orders were uploaded on the department's common portal and, on that basis, the appellant could not contend that he was not brought to notice of the assessment orders. The court treated portal-upload as effective communication for purposes of invoking the statutory timelines relating to assessment and consequent remedies, and therefore did not interfere with the Single Judge's conclusion on notice. [Paras 5]

Portal upload of assessment orders constituted notice to the appellant and the Single Judge's finding on notice is upheld.

Option to file return within 30 days of receipt of assessment order - statutory appeal against assessment orders - abeyance of demand notice pending appellate remedy - Whether the appellant should be relegated to the statutory appellate remedy and be granted time and interim protection to prefer the appeal despite having filed returns only after receipt of the demand notice. - HELD THAT: - The Single Judge had given the appellant liberty to prefer the statutory appeal and kept the demand notice in abeyance to enable him to approach the appellate authority; the High Court found no reason to interfere with that approach. Having regard to the appellant's contention that returns were filed within 30 days of receipt of the demand notice and the factual matrix, the High Court exercised its supervisory jurisdiction to extend the time afforded by the Single Judge: the appellant was granted one month's time from the date of the order to file the statutory appeal, and the impugned assessment orders/demand notice were directed to be kept in abeyance for that period to enable pursuit of the appellate remedy. [Paras 4, 5, 6]

The appellant is relegated to the statutory appeal; time extended by one month to file the appeal and the assessment orders/demand notice are kept in abeyance for that period.

Cancellation of GST registration - Effect of the appellant's application for cancellation of GST registration on the proceedings. - HELD THAT: - The appellant had applied online for cancellation of GST registration with effect from 31.3.2019, asserting cessation of business after FY 2017-18. The court treated the cancellation application and cessation of business as part of the factual matrix but did not treat them as grounds to sustain the writ attack; instead the court preserved the statutory appellate route and procedural relief (time and abeyance) to enable the appellant to challenge the assessment before the appellate authority. [Paras 2, 3, 6]

Cancellation application and cessation of business were noted as background; relief was limited to extension of time and interim abeyance to pursue the statutory appeal.

Final Conclusion: The High Court declined to interfere with the Single Judge's order that the appellant be relegated to the statutory appellate remedy, granted an extension of one month to file the statutory appeal, and directed that the impugned assessment orders/demand notice be kept in abeyance for that period to enable the appellant to obtain appropriate orders from the appellate authority.

Computation of period of limitation - refund under Section 54 - refund under Section 55 - exclusion of period from 1 March 2020 to 28 February 2022 for limitation - extension of limitation

Computation of period of limitation - refund under Section 54 - exclusion of period from 1 March 2020 to 28 February 2022 for limitation - Whether the Order-in-Appeal sustaining the respondents' claim that the petitioner's refund applications were time-barred should be set aside in view of the notification excluding the period from 1 March 2020 to 28 February 2022 from computation of limitation for filing refund applications under the Act. - HELD THAT: - The petitioner relied upon the extension of limitation as recognised in SMW(C) No.3/2020 and on a subsequent notification dated 05.07.2022 issued by the Central Board of Indirect Taxes which, by clause (iii), expressly excludes the period from 1 March 2020 to 28 February 2022 for computation of the period of limitation for filing refund applications under Section 54 and Section 55 of the Act. Counsel for the respondents accepted the legal effect of the notification and agreed that, on that basis, the Order-in-Appeal which had held the refund claims to be beyond time can be set aside. The court accordingly set aside the Order-in-Appeal. Because the amounts in respect of which refund claims were lodged have already been remitted, no consequential directions were called for. [Paras 4, 6, 7, 8]

Order-in-Appeal set aside in view of the notification excluding 1 March 2020 to 28 February 2022 from computation of limitation for refund applications under Section 54/55; writ petition disposed; no consequential directions necessary.

Final Conclusion: The appeal order holding the petitioner's refund claims time-barred was set aside on account of the CBIC notification dated 05.07.2022 excluding 1 March 2020 to 28 February 2022 from computation of limitation for refund applications under Sections 54 and 55; the writ petition was disposed and no consequential directions were issued as the amounts had been remitted.

Duty to comply with summons under the Central Goods and Services Tax regime - summons under Section 70 of the Central Goods and Service Tax Act, 2017 - protection from arrest pending compliance with summons - authority's obligation to act as per law after personal appearance

Duty to comply with summons under the Central Goods and Services Tax regime - summons under Section 70 of the Central Goods and Service Tax Act, 2017 - Petitioner must join the enquiry and respond to the summons already issued under Section 70 of the CGST Act. - HELD THAT: - The Court recorded that summons under Section 70 had been issued repeatedly and the petitioner had not appeared, citing apprehension of arrest. In the circumstances, the Court directed the petitioner to make himself available before the competent authority on the date specified by that authority and to respond to the summons. The direction is procedural and compulsory: once the petitioner appears, the competent authority is to proceed in accordance with law.

Petitioner directed to join the enquiry and appear before the concerned authority on the date given and respond to the summons issued under Section 70.

Protection from arrest pending compliance with summons - authority's obligation to act as per law after personal appearance - Interim protection against arrest granted to the petitioner until the next listed date. - HELD THAT: - While directing the petitioner to appear and respond to the summons, the Court granted interim relief by restraining arrest in the related complaint until the next date listed, thereby balancing the obligation to comply with summons against the petitioner's apprehension of arrest. The protection is limited in time and conditional upon the next listing.

Until the next date (22.08.2022), the petitioner shall not be arrested in respect of Complaint No. V(15)273/AE/UDR/2020-21.

Final Conclusion: Summons under Section 70 of the CGST Act had been repeatedly issued and the petitioner, though apprehensive of arrest, was directed to appear and respond to the enquiry; meanwhile the Court granted interim protection from arrest in the specified complaint until the next date of listing (22.08.2022), after which the authority will proceed as per law.

Invalid show cause notice for failing to specify the specific fault/charge - vitiation of penalty where notice does not disclose the limb of penalty invoked - penalty under section 271B of the Income Tax Act, 1961 - binding precedents of the jurisdictional High Court

Invalid show cause notice for failing to specify the specific fault/charge - vitiation of penalty where notice does not disclose the limb of penalty invoked - penalty under section 271B of the Income Tax Act, 1961 - Whether the penalty levied under section 271B is vitiated because the show cause notice did not specify the particular fault/charge for which penalty was proposed. - HELD THAT: - The Tribunal examined the show cause notices dated 22.03.2013 and 08.07.2013 and found they did not explicitly state the specific fault or the particular limb of penalty under which proceedings were initiated, leaving the assessee unaware of the case it had to meet. Relying on binding decisions of the jurisdictional High Court, including the Full Bench decision in Mohd. Farhan A. Shaikh and consistent precedents such as the Division Bench view in Manjunatha Cotton and subsequent endorsement, the Tribunal held that a notice which fails to specify the charge or limb of penalty is defective and thus vitiates any consequent penalty. Applying that legal principle to the facts, the Tribunal concluded that the penalty imposed under section 271B could not stand because it flowed from a defective show cause notice, and therefore directed deletion of the penalty. [Paras 4, 5, 6]

The penalty under section 271B is deleted because the show cause notice was defective for not specifying the specific fault/charge.

Final Conclusion: Assessee's appeal is allowed and the penalty levied under section 271B is deleted as the show cause notice was invalid for not disclosing the particular fault or limb of penalty being invoked.

Disallowance under Section 14A limited to exempt income - Retrospective application of amendments to Section 14A - Inclusion of Section 14A disallowance in book profits under Section 115JB - Applicability of Rule 8D in computing book profits

Disallowance under Section 14A limited to exempt income - Retrospective application of amendments to Section 14A - Whether the amendment to Section 14A by Finance Act 2022 applies retrospectively so as to displace earlier decisions restricting disallowance under Section 14A to the amount of exempt income in the relevant previous year. - HELD THAT: - The Tribunal recorded that both the Hon'ble Bombay High Court and the Hon'ble Supreme Court have held that disallowance under Section 14A cannot exceed the exempt income of the relevant previous year, and noted the Revenue's contention that the Finance Act 2022 amendments should be read retrospectively. The Tribunal relied on contemporaneous decisions of the Mumbai Benches of the Tribunal and the Delhi High Court which have held that the 2022 amendments apply from Assessment Year 2022-23 onwards. In view of those authoritative rulings and the explanations in the Memorandum to the Finance Bill 2022, the Tribunal held that the amended provisions do not apply retrospectively so as to overturn the earlier binding judicial pronouncements relied upon by the CIT(A). Accordingly, the CIT(A)'s restriction of the Section 14A disallowance to the amount of exempt income was upheld. [Paras 6, 7]

Ground No.1 dismissed; amendments to Section 14A by Finance Act 2022 do not apply retrospectively for the assessment year under consideration and the CIT(A)'s order restricting disallowance to exempt income is upheld.

Inclusion of Section 14A disallowance in book profits under Section 115JB - Applicability of Rule 8D in computing book profits - Whether the disallowance computed under Section 14A read with Rule 8D should be included in book profits for the purpose of computing tax under Section 115JB. - HELD THAT: - The Tribunal observed that the Special Bench decision in Vireet Investments (Delhi SB) holds that the Section 14A disallowance computed under Rule 8D should not be added back to book profits under Section 115JB. The CIT(A) followed that Special Bench precedent and identical deletions granted earlier for the assessee for AYs 2013-14 and 2014-15. The Revenue did not contend that the operation of those decisions had been stayed or reversed on appeal. In light of binding Tribunal precedent and the absence of any subsisting stay or overruling, the Tribunal found no infirmity in the CIT(A)'s direction to exclude the Section 14A disallowance from book profits. [Paras 8]

Ground No.2 dismissed; disallowance under Section 14A computed under Rule 8D is not to be included in book profits for Section 115JB for the assessment year in question.

Final Conclusion: Both grounds raised by the Revenue were dismissed and the appeal is accordingly dismissed; the CIT(A)'s rulings restricting the Section 14A disallowance to exempt income and excluding the Rule 8D computation from book profits under Section 115JB are sustained for AY 2015-16.

Revisionary jurisdiction under section 263 - Roving or fishing inquiry - Effect of quashing a revision order on consequential assessment - Jurisdictional vires of a second revision order founded on a quashed order

Revisionary jurisdiction under section 263 - Effect of quashing a revision order on consequential assessment - Jurisdictional vires of a second revision order founded on a quashed order - Validity of the second order passed under section 263 dated 13.03.2018 which was founded on an earlier order under section 263 that had been quashed by the Tribunal. - HELD THAT: - The Tribunal examined whether the PCIT could validly invoke revisionary jurisdiction in the second order dated 13.03.2018 when that order and the assessment it directed were founded on an earlier revision order dated 30.03.2015. The earlier revision order dated 30.03.2015 was quashed by the Tribunal by its order dated 18.04.2022. Since the assessment completed on 31.03.2016 under section 143(3) read with section 263 arose solely pursuant to the now-quashed 30.03.2015 revision order, that assessment was rendered infructuous. A subsequent revision order (13.03.2018) which stands on the same nonestablished foundation therefore lacked jurisdictional basis. The Tribunal held that a revision order cannot validly be sustained when its foundational order has been quashed, and that invoking section 263 on the basis of an order already invalidated amounts to acting beyond jurisdiction.

The second revision order dated 13.03.2018 under section 263 is quashed as being without jurisdiction because it was founded on an earlier revision order which had been quashed by the Tribunal.

Final Conclusion: The appeal is allowed: the order passed by the PCIT under section 263 dated 13.03.2018 (and the consequential assessment action founded on the earlier quashed order) is quashed for lack of jurisdiction.

Undisclosed circulating capital (peak credit) - treatment of bank deposits as business turnover - estimation of income by applying presumptive net profit rate - burden of proof to explain bank credits

Treatment of bank deposits as business turnover - estimation of income by applying presumptive net profit rate - Whether the assessing officer was justified in treating total cash deposits in the assessee's bank accounts as gross turnover and estimating income at the presumptive net profit rate - HELD THAT: - The Tribunal recorded that the CIT(A) analysed the pattern of bank transactions and found them not to be in the nature of sale/purchase because of frequent withdrawals and subsequent deposits (same day or shortly thereafter). On that basis the CIT(A) held that the AO was not justified in treating the entire deposits as gross turnover and deleted the addition made on this ground. The Tribunal, after hearing the Departmental Representative and perusing the record, found no reason to interfere with the CIT(A)'s conclusion that the deposits could not be equated to business turnover and sustained the deletion of the AO's estimation of income on that basis. [Paras 7, 8, 9]

Deletion of the addition made by the AO treating total deposits as gross turnover; AO's estimation of income on that basis is set aside.

Undisclosed circulating capital (peak credit) - burden of proof to explain bank credits - Whether the addition on account of peak credit as undisclosed circulating capital in the bank accounts was sustainable and whether any part could be held as genuine accumulated past savings - HELD THAT: - The CIT(A) examined the AO's addition of peak credits as undisclosed circulating capital and accepted the AO's action to an extent but also recognised that the assessee might have had accumulated past savings. In the interest of justice the CIT(A) allowed a part of the peak credit as genuine circulating capital from past savings and confirmed the remaining amount as undisclosed capital. The Tribunal concurred with the CIT(A)'s approach, finding the allowance of a specified amount as accumulated savings and confirmation of the residual addition to be reasonable and sustainable under the provisions of law. Accordingly, the Tribunal sustained the confirmation of the remaining addition as undisclosed circulating capital. [Paras 7, 9]

Allowance of part of the peak credit as genuine accumulated past savings and confirmation of the remaining amount as undisclosed circulating capital is sustained.

Final Conclusion: The CIT(A)'s order is sustained: the AO's treatment of total bank deposits as gross turnover and the consequent income estimation is deleted, while part of the peak credit was allowed as genuine accumulated savings and the remaining addition as undisclosed circulating capital is confirmed; the assessee's appeal is dismissed.

Expenditure incurred wholly and exclusively in connection with transfer - deduction under section 48 in computing capital gains - conversion of capital asset into stock-in-trade - date of transfer for computation of capital gains - cost inflation index applicable to year of transfer - taxability of compensation under section 45(5)(a)/(b) - interest component treated as part of compensation versus interest taxable as income - income by way of interest on compensation and deduction under section 57(iv) - deduction under investment exemption provisons (section 54/54F)

Expenditure incurred wholly and exclusively in connection with transfer - deduction under section 48 in computing capital gains - Deductibility of payments made to Mr. Kishore Mansukhani as expenditure in computing capital gains - HELD THAT: - The Tribunal held that payments to Mr. Mansukhani-agreed as a fixed percentage of prospective compensation and incurred to secure vacant possession/obtain enhanced compensation through protracted litigation-constituted expenditure incurred wholly and exclusively in connection with the transfer and were allowable under the computation rules for capital gains. The Tribunal relied on the agreements, the fact that Mansukhani bore litigation costs and the similarity of facts and precedent (adjacent plot decision) to conclude that the payment was not a diversion of income but an intrinsic cost of effecting the transfer; consequently the Assessing Officer's disallowance is to be deleted and the amount allowed under section 48 while computing capital gains. [Paras 20, 23, 27]

Grounds 1 and 2 of the assessee's appeal allowed; AO directed to delete the disallowance and allow the claimed expenditure in computing capital gains.

Date of transfer for computation of capital gains - cost inflation index applicable to year of transfer - Appropriate year for applying Cost Inflation Index for computation of capital gains - HELD THAT: - The Tribunal accepted the assessee's contention that the earlier acquisition proceedings were rendered void ab initio and that the right to compensation arose only after the High Court/Supreme Court orders culminating on dismissal of SLP. On that factual matrix the transfer for capital gains purposes occurred only upon the Court's direction and payment (FY 2010-11), and therefore CII up to FY 2010-11 must be applied. The Assessing Officer was directed to give effect to this finding when computing capital gains. [Paras 28, 29, 30, 31]

Ground No. 3 of the assessee allowed; AO to apply CII up to FY 2010-11 in computing capital gains.

Taxability of compensation under section 45(5)(a)/(b) - interest component treated as part of compensation versus interest taxable as income - Whether the interest component forming part of the award is to be taxed as capital gains or as income from other sources - HELD THAT: - The Tribunal confirmed the CIT(A)'s reasoning that the assessee acquired the right to compensation only upon the High Court/Supreme Court orders, and the aggregate amount received (including the component described as 'interest' up to the date of acquisition) represented consideration for transfer of the capital asset and falls under the special charging provisions of section 45(5)(a)/(b) read with section 48. The Tribunal directed the AO to ascertain and treat the portion of interest used to compute compensation up to the date of acquisition as capital gains; any balance amount quantified and awarded subsequently as interest for delay (as per Land Acquisition Act provisions when actually triggered/quantified) should be taxed under "Income from Other Sources." The Tribunal relied on the statutory scheme (sections 45(5), 56(2)(viii), 57(iv), 145A and Land Acquisition Act provisions) and relevant case law to distinguish interest used merely as a yardstick for computing enhanced compensation from interest payable as debt or statutory interest. [Paras 36, 39, 41, 42]

CIT(A)'s direction confirmed: interest component up to date of acquisition to be taxed as capital gains under section 45(5)(b) read with section 48; balance, when payable as statutory interest, to be taxed under Income from Other Sources.

Income by way of interest on compensation and deduction under section 57(iv) - Allowability of fifty per cent deduction for interest income taxed under 'Income from Other Sources' - HELD THAT: - The Tribunal observed that where an amount is chargeable under clause (viii) of section 56(2) as interest on compensation, section 57(iv) unambiguously allows a deduction equal to fifty per cent of such income and no other deduction. The Tribunal declined to interfere with the CIT(A)'s direction to allow the 50% deduction for that portion of income falling under section 56(2)(viii). [Paras 44, 45]

Revenue's ground for overturning the 50% deduction rejected; deduction under section 57(iv) to be allowed for interest income taxed as 'Income from Other Sources.'

Deduction under investment exemption provisons (section 54/54F) - Allowability of deduction claimed under section 54F - HELD THAT: - The Tribunal recorded concurrence with the detailed factual and documentary analysis undertaken by the CIT(A) and the Assessing Officer regarding the assessee's claim under section 54F, noting the AO's communications with the bank branch and the factual report. On that basis the Tribunal confirmed the CIT(A)'s allowance to the extent found eligible by the CIT(A). [Paras 46, 47]

Revenue's ground challenging the allowance under section 54F dismissed; CIT(A)'s findings on the section 54F claim confirmed.

Final Conclusion: The assessee's appeal is partly allowed: payments to the facilitator were held deductible in computing capital gains; CII for FY 2010-11 is to be applied; the portion of the award (including components described as 'interest' up to the date of acquisition) is taxable as capital gains under section 45(5) read with section 48 while any statutory interest quantified and paid later is taxable as income from other sources (with 50% deduction under section 57(iv) where applicable); the CIT(A)'s allowance under the exemption provision was upheld. The Revenue's cross-appeal is dismissed.

Income tax exemption on gifts - definition of 'relative' - non-importability of statutory definitions - context-specific statutory interpretation - senior citizens welfare legislation - casus omissus - legislative function versus judicial interpretation

Definition of 'relative' - income tax exemption on gifts - non-importability of statutory definitions - context-specific statutory interpretation - Whether the term 'relative' as defined in Section 2(g) of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 can be treated as equivalent to 'relative' under Section 2(41)/Section 56 of the Income Tax Act, 1961 for the purpose of exemption on gifts. - HELD THAT: - The Court held that the two Acts have distinct objects - the Senior Citizens Act being welfare legislation and the IT Act being fiscal and anti-evasion legislation - and that the legislature deliberately used a narrow definition of 'relative' in the IT Act to prevent misuse and to extend the tax net. A statutory definition in one enactment cannot be imported into another enactment, particularly where the same expression is defined differently and is context-specific. Reliance on explanatory material for the Finance Act, 2010 supports that the restricted definition in the IT Act was intended as a counter-evasion measure. Accordingly, the definition in the Senior Citizens Act cannot be read into the IT Act to enlarge the class exempted from tax on gifts. [Paras 8, 9, 10, 11]

The definition of 'relative' in the Senior Citizens Act cannot be treated as equivalent to the definition in the IT Act for gift-tax exemption; importation of the former into the latter is impermissible.

Casus omissus - legislative function versus judicial interpretation - context-specific statutory interpretation - Whether the Court may read into the statute an expanded meaning to supply an omission and thereby grant the exemption sought by the petitioner. - HELD THAT: - The Court reiterated the settled rule that courts must not supply a casus omissus or read words into a statute to achieve a policy outcome. Where the legislative intention is clear and any omission is deliberate, it is impermissible for the judiciary to fill that lacuna. The petition sought judicial enlargement of the statutory class entitled to exemption, which would amount to rewriting the statute - a role reserved to the legislature - and therefore cannot be permitted. [Paras 12, 13]

The Court will not read words into the statute or supply a casus omissus to extend tax exemption; judicial usurpation of legislative function is impermissible.

Senior citizens welfare legislation - income tax exemption on gifts - Whether the petitioner is entitled to relief (including cancellation of the gift deed or declaration of voidness ab initio) to avoid liability under the IT Act, and whether Sections 3, 4 or 23 of the Senior Citizens Act operate to bar remedies available under law to the Donee. - HELD THAT: - The Court found that the true object of the petition was to avoid gift taxation rather than to advance maintenance and welfare of senior citizens; reliance on Sections 3 and 4 of the Senior Citizens Act to override the IT Act was unsustainable. Section 23 provides additional remedies to senior citizens in certain circumstances but does not restrict the Donee's right to challenge a gift or transfer in accordance with law. Consequently, the relief seeking cancellation or voidance of the gift deed to avert tax liability could not be granted by the writ court in the present proceedings. [Paras 14, 15, 16]

Petition for declaration/cancellation of gift deed to avoid tax liability is dismissed; Sections 3 and 4 of the Senior Citizens Act do not operate to displace the IT Act and Section 23 does not bar the Donee from challenging the gift in an appropriate forum.

Final Conclusion: Writ petition dismissed. The Court declined to equate the 'relative' in the Senior Citizens Act with the narrower class of 'relative' for income-tax exemption on gifts and refused to read words into the statute; the order does not prejudice the Donee's right to seek remedies in accordance with law.

Liability to pay interest under Section 234B of the Income-tax Act - computation of advance tax under Section 209(1)(d) - effect of non-deduction of tax at source on advance tax liability - prospectivity of statutory amendment and non-retrospectivity principle - applicability of delegated notifications under Section 119 to pending waiver applications - preservation of rights and pending proceedings under Section 6 of the General Clauses Act, 1897

Liability to pay interest under Section 234B of the Income-tax Act - computation of advance tax under Section 209(1)(d) - effect of non-deduction of tax at source on advance tax liability - Whether interest under Section 234B is chargeable on an assessee who received amounts without deduction of tax at source prior to the amendment effective from financial year 2012-13. - HELD THAT: - The Court held that for periods prior to financial year 2012-13 an assessee could, in computing advance tax under Section 209(1)(d), reduce the amount of tax 'which would be deductible or collectible at source' even though the payer had in fact paid the assessee without deducting tax. In that legal framework the pre conditions for levy of interest under Section 234B - liability to pay advance tax and non payment/short payment of such tax - are not satisfied. The Court relied on and followed the reasoning in the batch of authorities culminating in the decision in C.A.No.1262/2016 (Director of Income Tax v. Mitsubishi Corporation), which interprets Section 209(1)(d) and holds that the proviso inserted by the Finance Act, 2012 is prospective and did not apply to assessments prior to financial year 2012-13. Consequently, where tax was collectible or deductible at source but not deducted by the payer, the revenue's remedy lay against the payer and interest under Section 234B could not be fastened on the payee for the pre 2012-13 period. The Court therefore upheld the trial Judge's conclusion that no interest under Section 234B was chargeable in the circumstances before it. [Paras 12, 22]

Interest under Section 234B is not chargeable on the assessee for the periods in issue where the payer failed to deduct tax at source prior to the 2012 amendment; the appeals cannot be sustained on that ground.

Applicability of delegated notifications under Section 119 to pending waiver applications - preservation of rights and pending proceedings under Section 6 of the General Clauses Act, 1897 - prospectivity of statutory amendment and non-retrospectivity principle - Whether a waiver application filed in 2003 under the Board's Notification dated 23-05-1996 (permitting waiver for specified classes including 'unavoidable circumstances') could be rejected as not maintainable on the basis of the subsequent Notification dated 26-06-2006. - HELD THAT: - The Court held that the law in force on the date when the application was filed governs the maintainability of that application. The 1996 notification conferred a substantive right to apply for waiver in the classes specified (including clause 2(e) for 'unavoidable circumstances'), and that right, once vested by the filing of the application in 2003, could not be taken away retrospectively by the 2006 notification which altered the classes eligible for waiver. Applying the principles of statutory construction and Section 6 of the General Clauses Act, 1897, the Court concluded that the subsequent notification does not operate to oust consideration of applications pending when it came into force; procedural or delegated legislation that removes a vested substantive right cannot be applied retrospectively unless clearly intended. Consequently, the waiver application was properly maintainable and the Revenue's contention that the later notification ousted jurisdiction was rejected. [Paras 15, 21, 22]

The waiver application filed in 2003 is governed by the 1996 notification; the 2006 notification does not retrospectively deprive the applicant of the right to have the pending application considered.

Final Conclusion: Both appeals by the Revenue are dismissed. The Court affirmed that interest under Section 234B is not chargeable on the assessee for the pre 2012 periods where tax was payable but not deducted by the payer, and that a waiver application filed in 2003 is to be judged by the 1996 notification in force at that time; the Revenue remains free to pursue any other remedies against the assessee or the deductor as permitted by law. No costs.

Arm's Length Price - Transfer Pricing Officer - Resale Price Method - Comparable Uncontrolled Price Method - prescribed methods under Rule 10B for determination of ALP - remand for fresh determination

Resale Price Method - Comparable Uncontrolled Price Method - Arm's Length Price - Validity of the Tribunal's remand to the Transfer Pricing Officer for fresh determination of Arm's Length Price despite rejecting the Resale Price Method and questioning the CUP comparison adopted by the TPO. - HELD THAT: - The Court noted that the Tribunal concluded the Resale Price Method adopted by the assessee was inapplicable while simultaneously finding that the CUP method applied by the TPO was also inappropriate because the TPO had relied on non-AE trial sales in several countries to compare with wholesale sales to the AE in the USA. Although the Tribunal's findings contained internal inconsistencies as to the appropriate method, the Court held that the Tribunal's order remitting the matter to the TPO for fresh determination of ALP in the facts and circumstances of the case did not call for interference. The Court treated the remand as a legitimate exercise requiring the TPO to reassess comparables and methodology afresh rather than substituting its own view on which method must be applied. [Paras 8]

Tribunal's remand for fresh determination of ALP upheld; no interference with the remand despite noted contradictions in the Tribunal's reasoning.

Transfer Pricing Officer - remand for fresh determination - prescribed methods under Rule 10B for determination of ALP - Scope and manner of fresh determination directed to the Transfer Pricing Officer. - HELD THAT: - The Court directed the TPO to redo the entire process of determining the Arm's Length Price of the international transactions with the Associated Enterprise independently and without being influenced by observations made by the Tribunal. The TPO was to consider similar transactions and comparable commodities appropriately, grant the assessee an opportunity of hearing, and render independent findings on the issues involved. The direction emphasises a fresh, uninfluenced adjudicative exercise by the TPO rather than partial remand limited by earlier observations. [Paras 9]

Matter remitted to the TPO to determine ALP afresh after granting the assessee an opportunity of hearing; TPO to be uninfluenced by prior observations.

Final Conclusion: Both tax case appeals disposed of by remitting the determination of Arm's Length Price to the Transfer Pricing Officer for fresh and independent adjudication after affording the assessee an opportunity of hearing; no costs.

Violation of principles of natural justice - reasonable apprehension of bias / nemo judex in sua causa - full and true disclosure in settlement application - procedural maintainability of settlement application under Chapter XIX A - scope of judicial review of Settlement Commission orders under Article 226 - remand to Interim Board for disposal of pending settlement applications

Violation of principles of natural justice - procedural maintainability of settlement application under Chapter XIX A - Whether the order rejecting the settlement application was vitiated by procedural violations and breach of principles of natural justice. - HELD THAT: - The Court examined the statutory scheme of Chapter XIX A and the rules governing procedure before the Settlement Commission, including the requirement to furnish reports, supply copies to the applicant and to afford opportunity to rebut reports. The record showed that a detailed report by the Assessing Officer/J.CIT was filed on 29.09.2016 and relied upon by the Commission which, without affording the appellant adequate time to reply, reserved and then passed the rejection order on 30.09.2016. The Commission also proceeded on materials and directions for investigation without written orders and relied on departmental reports not earlier served in the mandated manner. The Court held that the Commission failed to consider all materials produced before it as required by section 245D(5) and failed to furnish and permit rebuttal of adverse reports, thereby breaching audi alteram partem and the procedural requirements of the Act and the Rules. Because the decision making process was thus flawed, the rejection order was legally unsustainable. [Paras 12, 13, 15, 19]

The rejection order was vitiated by breach of principles of natural justice and procedural violations; it is set aside and the matter remanded for fresh consideration.

Reasonable apprehension of bias / nemo judex in sua causa - scope of judicial review of Settlement Commission orders under Article 226 - Whether the participation of the Vice Chairman (formerly DGIT(Investigation)) in disposal of the application gave rise to a reasonable apprehension of bias invalidating the Commission's order. - HELD THAT: - The Court noted that the Vice Chairman of the Bench had earlier served in positions connected with investigation and subsequent actions taken against the appellant (noting timeline and involvement), and that the possibility of bias could not be ruled out. Relying on established principles that no person should be judge in his own cause and that a reasonable likelihood of bias suffices, the Court observed that even if actual bias is difficult to prove, there must be no reasonable ground to believe a member was likely to be biased. Given the Vice Chairman's prior role in matters related to the appellant, the Court found that the possibility of bias existed and that this tainted the decision making process of the Settlement Commission. [Paras 16, 17, 19]

The participation of the Vice Chairman gave rise to a reasonable apprehension of bias; the order is thereby vitiated.

Full and true disclosure in settlement application - procedural maintainability of settlement application under Chapter XIX A - Whether the Settlement Commission was correct in concluding there was no "full and true disclosure" on the merits, or whether the appellant had disclosed the primary facts required for maintainability. - HELD THAT: - The Court reviewed the statutory requirement that an applicant must make a full and true disclosure of primary facts and that the Commission's enquiry in settlement proceedings is limited to true and full disclosure, cooperation and the manner in which income was derived. Applying the principle that the duty of disclosure extends to primary facts and not to the applicant drawing or conceding all inferences, the Court found that the appellant had disclosed primary facts and produced supporting documents. The Commission's change of view based on departmental reports filed late, reliance on materials without giving opportunity to rebut, and apparent contradictions in its reasoning meant there was no proper nexus between reasons given and the decision. Consequently, the Commission's finding of non maintainability on the ground of non disclosure was unsustainable. [Paras 18, 19]

On the record the appellant had disclosed primary facts and the Commission's finding of no full and true disclosure was not sustainable; the conclusion is set aside for fresh consideration.

Remand to Interim Board for disposal of pending settlement applications - scope of judicial review of Settlement Commission orders under Article 226 - Whether, after setting aside the Settlement Commission's order, the matter should be remanded and whether the Interim Board constituted under the Finance Act, 2021 can entertain and finally dispose of the remanded application. - HELD THAT: - The Court noted the legislative amendments abolishing the ITSC and creating an Interim Board and reviewed the statutory definition of pending applications and the administrative relaxations (press release and order under section 119) permitting certain applications to be treated as pending. The Court held that the restrictive eligibility for the Interim Board applies to fresh filings or pending matters but does not curtail the constitutional power of the High Court to remand a matter for fresh consideration. Consequently, upon remand the original application must be treated as a pending application and can be heard by the Interim Board. The Court directed that the Interim Board dispose of the application on merits and in accordance with law after giving sufficient opportunity to parties and considering all documents, within six weeks from receipt of the order. [Paras 21, 22, 23, 24, 25]

The matter is remanded for fresh consideration and the Interim Board is empowered to entertain and dispose of the remanded application; disposal to be completed within six weeks after notice.

Final Conclusion: The appeal is allowed. The order of the Settlement Commission dated 30.09.2016 rejecting the settlement application and the High Court order dismissing the writ petition are set aside on grounds of procedural unfairness, reasonable apprehension of bias and lack of nexus between reasons and decision. The matter is remanded for fresh consideration; the Interim Board shall treat the application as pending, afford full opportunity to the parties, consider all materials and dispose of the application on merits in accordance with law within six weeks from receipt of this order.

Deductibility of employees' share of PF/ESI under Section 43B - Effect and prospective application of Finance Act, 2021 explanations to Section 36(1)(va) and Section 43B

Deductibility of employees' share of PF/ESI under Section 43B - disallowance under Section 36(1)(va) - The disallowance of the employees' share of PF/ESI deposited after the statutory time under the welfare enactments but before the due date of filing the return is not sustainable and must be vacated. - HELD THAT: - The Tribunal found on the facts that the assessee had deposited the employees' share of PF and ESI before the due date for filing the return for AY 2015-16. Reliance was placed on the Tribunal's earlier decision in Ind Synergy Limited and on several High Court authorities which held that where the payment is made before the due date of filing the return, the amounts fall within the scope of Section 43B and are allowable notwithstanding delay under the welfare enactments. Having considered the contentions of the parties and the binding coordinate bench decision, the Tribunal held that no distinction is to be drawn between employers' and employees' contributions for the purpose of Section 43B and that the AO's disallowance under Section 36(1)(va) could not stand. [Paras 8]

The disallowance of Rs.1,91,013 made by the AO under Section 36(1)(va) is set aside and vacated.

Effect and prospective application of Finance Act, 2021 explanations to Section 36(1)(va) and Section 43B - The clarificatory explanations inserted by the Finance Act, 2021 to Section 36(1)(va) and Section 43B apply prospectively w.e.f. 01.04.2021 (AY 2021-22) and do not affect earlier assessment years. - HELD THAT: - The Tribunal examined the amendments by Finance Act, 2021 (Explanation 5 to Section 43B and Explanation 2 to Section 36(1)(va)) and followed coordinate bench decisions holding those amendments to be prospective. It noted that the CBDT memorandum supports applicability from 1 April 2021. Consequently, the amended explanations do not have bearing on assessment years prior to AY 2021-22, including the present AY 2015-16. [Paras 8]

The Finance Act, 2021 explanations are prospective from 01.04.2021 and are not applicable to the assessment year before the Tribunal.

Final Conclusion: Appeal allowed: the Tribunal set aside the CIT(A)'s order and directed the AO to vacate the disallowance of the employees' share of PF/ESI for AY 2015-16; amendments by Finance Act, 2021 are prospective from 01.04.2021 and do not affect this assessment year.

Limited scrutiny under CASS - revisionary jurisdiction under Section 263 - scope of scrutiny confined to specified reasons - failure to make inquiries or verification - Explanation 2(a) to Section 263 - investments in unquoted equity shares and unsecured loans/advances

Limited scrutiny under CASS - scope of scrutiny confined to specified reasons - revisionary jurisdiction under Section 263 - Validity of Pr. CIT's exercise of revisional jurisdiction under Section 263 in setting aside assessment for non-verification of loss from derivatives where the case was selected for limited scrutiny under CASS - HELD THAT: - The Tribunal held that where a return has been selected for limited scrutiny through CASS the Assessing Officer's enquiry is circumscribed to the specific reasons/issues communicated at selection. Examination of the assessee's claimed loss from derivatives did not form part of the CASS reasons for selection. In those circumstances the Assessing Officer was not vested with jurisdiction to examine that extraneous issue during limited scrutiny, and the Pr. CIT could not validly treat failure to verify such an unrelated issue as rendering the assessment erroneous under Section 263. The Tribunal relied on CBDT Instruction No.20/2015 (29.12.2015) confining limited-scrutiny scope and held that revisional jurisdiction cannot be used to broaden the scope of assessment indirectly. [Paras 9, 10]

Pr. CIT's exercise of revisionary jurisdiction under Section 263 in respect of the loss from derivatives was invalid; the direction to set aside the assessment on that ground was quashed.

Investments in unquoted equity shares and unsecured loans/advances - failure to make inquiries or verification - Explanation 2(a) to Section 263 - revisionary jurisdiction under Section 263 - Whether the Pr. CIT was justified in holding the assessment erroneous and prejudicial to revenue under Section 263 for AO's alleged failure to make inquiries/verification regarding substantial investments in unquoted shares and unsecured loans/advances - HELD THAT: - On perusal of records the Tribunal accepted that substantial fresh investments in unquoted equity shares were reflected in the assessee's balance sheet for the year and that the Assessing Officer had limited his inquiry to a request for details under section 142(1) without undertaking further verification such as ledger scrutiny, broker details or probing the identity/source of investee entities. Explanation 2(a) to Section 263 declares that an order is deemed erroneous and prejudicial if passed without making inquiries or verifications which should have been made. Applying that provision the Tribunal concurred with the Pr. CIT that the AO's order was erroneous insofar as it failed to verify the substantial investments. At the same time the Tribunal recognised the assessee's explanation concerning the composition of investments (opening balance and alleged sources) and directed the AO to consider the assessee's claim in the set-aside proceedings, and accordingly modified the Pr. CIT's order while restoring the assessment to that extent for fresh consideration. [Paras 11, 12, 13]

Pr. CIT was correct in finding the assessment erroneous under Explanation 2(a) to Section 263 for lack of necessary verification of substantial investments; AO is directed to examine the assessee's explanations in the set-aside proceedings, and the Tribunal modified the Pr. CIT's order and restored the assessment for that purpose.

Final Conclusion: Appeal allowed. The Tribunal quashed the Pr. CIT's revision under Section 263 insofar as it related to the assessee's claimed loss from derivatives (being outside the limited CASS-scrutiny scope), while upholding the Pr. CIT's conclusion that the assessment was erroneous for lack of verification of substantial investments in unquoted shares/loans and directing the AO to examine the assessee's explanations in the set-aside proceedings; the assessment order is restored for that limited purpose.

Reopening of assessment beyond four years under the first proviso to Section 147 - failure to disclose fully and truly all material facts - audit objection raised by Internal Audit Party not amounting to failure of disclosure - lack of jurisdiction in reassessment and quashment of reassessment order

Reopening of assessment beyond four years under the first proviso to Section 147 - failure to disclose fully and truly all material facts - audit objection raised by Internal Audit Party not amounting to failure of disclosure - lack of jurisdiction in reassessment and quashment of reassessment order - Validity of reassessment framed under section 147/148 after four years where original assessment was completed under section 143(3). - HELD THAT: - The original assessment was completed under section 143(3) on 30.12.2010. A notice under section 148 was issued on 25.01.2014, i.e., beyond four years from the end of the relevant assessment year. The stated "reasons to believe" record that reopening was proposed on account of an audit objection by the Internal Audit Party that TDS under section 194A had not been deducted on interest paid to certain NBFCs. The reasons do not allege any failure by the assessee to disclose fully and truly all material facts necessary for assessment. In these circumstances the first proviso to section 147 precluded reopening after four years unless such failure of disclosure existed. An audit objection, without a finding of failure to disclose material facts, does not satisfy the statutory requirement for reopening beyond the four year period. Applying these principles, the reassessment order dated 18.02.2014 was held to have been framed without valid jurisdiction and therefore liable to be quashed; consequentially the Tribunal did not adjudicate the merits of the additions made in the reassessment. [Paras 6, 7, 8, 9, 10]

Assessment framed under section 147/143(3) dated 18.02.2014 quashed for want of valid assumption of jurisdiction; reassessment beyond four years unsupported by any failure to disclose fully and truly all material facts.

Final Conclusion: The reassessment framed for AY 2008-09 under section 147/143(3) dated 18.02.2014 was quashed for lack of jurisdiction because reopening beyond four years was based on an audit objection without any finding of failure to disclose material facts; the appeal is allowed and other substantive additions were left open.

Deletion of additions where not based on incriminating material/evidence found during search proceedings - completed assessment years and limitation on reassessment after search - application of jurisdictional High Court precedent in tax assessments

Deletion of additions where not based on incriminating material/evidence found during search proceedings - completed assessment years and limitation on reassessment after search - Validity of additions made by AO in completed assessment years when such additions were not founded on incriminating material/seized evidence discovered during search proceedings. - HELD THAT: - The Tribunal recorded that the Commissioner of Income Tax (Appeals) found the relevant years to be completed assessment years and that the additions made by the Assessing Officer were not founded on any incriminating material or evidence located during the search proceedings. The CIT(A) relied on the decision of the jurisdictional High Court in Kabul Chawla in holding that additions could not be sustained in such circumstances. The Revenue did not point to any flaw in the CIT(A)'s findings before the Tribunal, nor did it produce any contrary binding authority. On that basis the Tribunal upheld the CIT(A)'s deletion of the additions, finding no reason to interfere with the appellate conclusion that additions made in completed assessment years must be supported by incriminating material seized during search proceedings. [Paras 8, 9]

The additions made by the AO were deleted as they were not based on incriminating material found during the search; the CIT(A)'s order was upheld and the Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of additions for Assessment Year 2007-08 on the ground that the additions were not based on incriminating material/seized evidence in completed assessment years and the Revenue failed to controvert the CIT(A)'s reliance on the jurisdictional High Court precedent.

Allowability of subscription fees as business expenditure - reimbursement of expenses and TDS liability - application of the second proviso to section 40(a)(ia) - allowability of partner remuneration under section 40(b) - payments to retired partners as diversion of income by overriding title - cash system of accounting and deduction for tax deducted at source

Allowability of subscription fees as business expenditure - Deletion of disallowance of subscription fees paid for membership of Deloitte Global Network - HELD THAT: - The Tribunal noted that identical issue had been decided in the assessee's own case by coordinate Benches of the ITAT in earlier assessment years and that the Revenue did not dispute those findings nor show distinguishable facts. Relying on those consistent decisions and the absence of any reversal by the jurisdictional High Court, the Tribunal upheld the CIT(A)'s deletion of the addition made by the AO in respect of subscription fees. [Paras 5]

Order of the CIT(A) deleting the disallowance of subscription fees is upheld.

Reimbursement of expenses and TDS liability - application of the second proviso to section 40(a)(ia) - Deletion of disallowance under section 40(a)(ia) in respect of payments made to Deloitte Touche Tohmatsu India Pvt. Ltd. characterised as cost reimbursements - HELD THAT: - The CIT(A) found as a fact that payments were cost-share reimbursements made on a scientific basis without any mark-up and therefore did not constitute income in the hands of the recipient. The Tribunal accepted the factual finding that there was no element of profit, observed that reimbursements do not partake the nature of income for the payee, and noted applicability of the second proviso to section 40(a)(ia) on the facts. In view of these determinations and persuasive coordinate decisions relied upon by the assessee, the Tribunal found no reason to interfere with the deletion of the disallowance. [Paras 10]

Order of the CIT(A) deleting the addition made under section 40(a)(ia) is upheld.

Allowability of partner remuneration under section 40(b) - Deletion of disallowance of partner remuneration claimed by the firm under section 40(b) - HELD THAT: - The CIT(A) examined the partnership deed, the practice of executing a new deed when a partner joins during the year, and confirmations from partners showing payment in accordance with the deed. The Tribunal agreed with the CIT(A)'s factual conclusion that the purported annual amounts in the deed represent remuneration payable for the financial year (and proportionate to period of service where a partner joins mid-year), and that the payments were within the limits under section 40(b). Revenue did not rebut those factual findings. [Paras 15]

Order of the CIT(A) deleting the disallowance under section 40(b) is upheld.

Payments to retired partners as diversion of income by overriding title - Disallowance of payments to retired partners reversed in favour of the assessee - HELD THAT: - The Tribunal followed earlier coordinate-bench decisions in the assessee's own case and various High Court and Tribunal precedents which treated payments to retiring partners, in the factual matrix presented, as diversion of income at source by overriding title and not taxable as the firm's income. Finding the facts identical and no contrary precedent cited by Revenue, the Tribunal set aside the authorities' disallowance and allowed the claim. [Paras 20]

Disallowance of payment to retired partners is deleted and the claim is allowed.

Cash system of accounting and deduction for tax deducted at source - Allowability as deduction of amounts representing tax deducted at source though not paid to recipients in the relevant year - HELD THAT: - The Tribunal observed that under the cash system of accounting adopted by the assessee, TDS deducted by the assessee is deemed, by operation of section 198, to be received by the recipient and the assessee becomes liable for that sum until deposited. The amount of TDS deducted and deposited within time was therefore held to be payment by the assessee on behalf of the recipient and allowable as expenditure. The Tribunal followed its earlier decision in the assessee's own case and found no basis to sustain the disallowance. [Paras 25]

The amount representing TDS is allowable as deduction; the disallowance is set aside.

Cash system of accounting and deduction for tax deducted at source - Foreign tax credit ground not pressed by the assessee - HELD THAT: - Counsel for the assessee did not press the ground relating to foreign tax credit before the Tribunal. [Paras 26]

Ground dismissed as not pressed.

Final Conclusion: The Tribunal, applying coordinate-bench precedents and factual findings of the CIT(A), allowed the assessee's claims: deletion of disallowance of subscription fees, deletion of disallowance under section 40(a)(ia) for reimbursements to DTTIPL, deletion of the partner-remuneration disallowance under section 40(b), deletion of disallowance for payments to retired partners, and allowance of deduction for sums representing TDS; Revenue's appeal for AY 2013-14 is dismissed, the assessee's appeal for AY 2013-14 is partly allowed and the assessee's appeal for AY 2014-15 is allowed.

Ownership of capital asset (HUF versus individual) - claim of exemption under section 54B - claim of exemption under section 54F - application of stamp valuation as deemed consideration and cost computation under sections 50C and 48 - conversion of agricultural land into trading asset / adventure in the nature of trade - addition for unexplained investment under sections 69/69A - revision under section 263 and scope of revenue audit objection saved appeals under clause 10(c) of Board Instruction No. 03/2018

Ownership of capital asset (HUF versus individual) - The plots of land sold did not belong to the respective HUFs and were individual property of the two brothers; the claim that the land was HUF property was unproved and rejected. - HELD THAT: - The Tribunal examined the 1974 partition deed relied upon by the assessees and found no evidence that the land was held as family (HUF) property, no reference to a joint family, no record of partition steps under section 171, no mutation corroborating transfer as HUF property and no sale deed showing HUF ownership. The deed appeared to be a division of self-acquired property by the father among himself and his sons to avoid dispute and did not establish coparcenary or HUF status. Authorities emphasising the necessity of enquiry and proof of partition and title were applied. In consequence, the capital gains could not be held to be non-existent in the hands of the individuals on the basis of HUF ownership, and the assessee's plea that the asset was HUF property was dismissed. [Paras 5]

Assessee's claim that the sold plots were HUF property is dismissed; the plots are held to be individual property of the two brothers.

Claim of exemption under section 54B - claim of exemption under section 54F - Claims for deduction under sections 54B and 54F were rejected: 54B inapplicable because the assets sold were residential plots and not agricultural land; 54F inapplicable because the investment was in agricultural land and no construction of residential house was shown. - HELD THAT: - The Tribunal recorded that the assessees had sold 18/19 residential plots (admitted fact) and that there was no material to show conversion of the purchased agricultural land into residential plots or completion of construction required under section 54F within the statutory period. The factual matrix did not support either exemption: section 54B applies only where agricultural land is the asset sold, which was not the case; section 54F requires investment in construction of a residential house and completion within the statutory time which was not shown. Accordingly, both exemption claims were held to lack factual basis and were disallowed. [Paras 5]

Deductions under sections 54B and 54F are not allowable on the facts and are rejected.

Conversion of agricultural land into trading asset / adventure in the nature of trade - application of stamp valuation as deemed consideration and cost computation under sections 50C and 48 - The plotting and sale of erstwhile agricultural land amounted to an adventure in the nature of trade requiring treatment as business/trading activity for the converted portion; computation of deemed consideration and allocation between capital gain and business income is to be undertaken by the AO. - HELD THAT: - The Tribunal held that where agricultural land is plotted into residential plots and sold, the date of conversion (or commencement of plotting/obtaining civic amenities) is the relevant date when the capital asset becomes a business/trading asset. On that date stamp value may be treated as deemed consideration under section 45(2) and, after appropriation over the number of plots, business income is to be computed for sold plots with the balance carried as trading stock at cost. The Tribunal directed that the AO compute 'capital gain' and 'business income' where and to the extent assessable, applying appropriate valuation (including sections 50C and 48) and allocation, and remitted the matter for assessment accordingly. [Paras 5]

Matter remanded to the AO to determine the date of conversion, apply deemed consideration where applicable, and compute and allocate capital gain and business income.

Addition for unexplained investment under sections 69/69A - The addition made by the AO in respect of unexplained excess investment was not adjudicated on the merits by the CIT(A) and is restored to the file of the AO for fresh consideration; to the extent sustained it may be assessable in the assessee's hands. - HELD THAT: - The Tribunal observed that the assessee had not produced corroborative evidence to prove identity, capacity or genuineness of the alleged creditor/buyer from whom funds were said to have been received, and that material discrepancies existed between amounts of net consideration as declared by the assessee and as adopted by the AO. In view of these unresolved factual issues and the lack of improved case before the CIT(A), the Tribunal found it proper to restore the addition to the AO for verification, computation and adjudication. The Tribunal noted that if the addition under sections 69/69A is sustained, the unexplained investment in the name of the wife may be assessable in her hands. [Paras 5]

Addition restored to the AO for fresh enquiry and adjudication; any sustained addition may be assessable in the assessee's hands.

Revision under section 263 and scope of revenue audit objection saved appeals under clause 10(c) of Board Instruction No. 03/2018 - Revenue appeals arising from assessments made pursuant to the revenue audit objection were maintainable despite the assessees' contention to the contrary; clause 10(c) of Board Instruction No. 03/2018 was to be construed holistically and saved the Revenue's appeals. - HELD THAT: - The Tribunal rejected the contention that the Revenue's appeals were not maintainable because the RAO addressed only denial of exemption under section 54B. It held that the RAO and clause 10(c) should be interpreted purposively since issues arising from audit objections are often intertwined; appeals saved under clause 10(c) could therefore include related grounds. The Tribunal found the assessee's argument misconceived and held the Revenue's appeals maintainable, enabling adjudication on merits. [Paras 3, 4]

Revenue appeals are maintainable and may be adjudicated notwithstanding the scope of the RAO as pleaded by the assessee.

Final Conclusion: The Tribunal dismissed the assessees' claim that the sold plots were HUF property and disallowed the claimed exemptions under sections 54B and 54F. It remanded issues of conversion to trade (with directions to compute deemed consideration and allocate capital gain and business income) and the unexplained investment addition to the Assessing Officer for fresh enquiry and computation, held the Revenue's appeals maintainable, and dismissed the assessees' cross-objections.

Pronouncement of reserved judgment by an officer who has ceased to hold the post - effect of additional charge on competence to deliver reserved judgments - extension of time-limits under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 for pronouncing judgments under the Benami Act - maintainability of writ seeking mandamus to direct pronouncement of judgment

Effect of additional charge on competence to deliver reserved judgments - pronouncement of reserved judgment by an officer who has ceased to hold the post - Whether an officer who was given additional charge and who heard a matter, but ceased to hold the post before pronouncing the reserved judgment, remains competent to pronounce that judgment after a regular incumbent is appointed. - HELD THAT: - The court found that the Member, Adjudicating Authority, Mumbai had only been given additional charge of the New Delhi bench and, on appointment of a regular Member for New Delhi on 08.10.2021, ceased to function as the competent authority for New Delhi. The notification extending time-limits up to 31.03.2022 applied to officers who continued to occupy the post for the extended period; it could not be invoked to permit an officer who had ceased to hold the post to pronounce judgments thereafter. The determinative reasoning is that competence to deliver a judicial order is tied to the holding of the office at the relevant time, and once the additional charge terminated on appointment of the permanent incumbent, the additional-charge holder could no longer be treated as the competent authority to pronounce the reserved orders. [Paras 6, 10, 11]

An officer who ceased to hold additional charge on appointment of the regular Member could not, thereafter, be treated as competent to pronounce the reserved judgment.

Extension of time-limits under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 for pronouncing judgments under the Benami Act - Whether the notification extending time to 31.03.2022 applied to the cases where the officer who had heard the matter had ceased to occupy the chair before that date. - HELD THAT: - The court examined the notification dated 17.09.2021 (S.O. 3814(E)) which extended deadlines to 31.03.2022 for actions under the Benami Act. It held that the extension is applicable to officers who had reserved orders but continued as the Adjudicating Authority during the extended period. Where the officer had not pronounced judgment before ceasing to occupy the post, the extension could not be invoked to enable that former officer to deliver the judgment after cessation. Thus, the temporal extension does not retrospectively confer competence on a person who no longer holds the office. [Paras 10, 11]

The extension to 31.03.2022 did not vest competence in an officer who had ceased to hold the post to pronounce judgments after cessation.

Maintainability of writ seeking mandamus to direct pronouncement of judgment - Whether a writ directing the former additional-charge officer to pronounce the reserved judgment was maintainable. - HELD THAT: - The court emphasized that a writ of mandamus is available only where a legal right exists. The appellants failed to demonstrate any legal right or breach of a notification that would entitle them to an order compelling a person who had ceased to hold the office to pronounce judgment. Reliance on precedents concerning pronouncement by transferred judges or the de facto doctrine was rejected as inapplicable to the facts, since those authorities did not involve an officer who had ceased to be the competent authority by reason of appointment of a regular incumbent. In absence of a demonstrated right or applicable legal principle, interference with the Single Judge's dismissal was unwarranted. [Paras 5, 7, 8, 12]

The writs seeking a mandamus to compel the former additional-charge officer to pronounce the reserved judgments were not maintainable for want of any enforceable right.

Final Conclusion: The appeals are dismissed. The Court held that an officer who had been given additional charge but ceased to occupy the post on appointment of a regular Member could not thereafter be treated as competent to pronounce reserved judgments, the statutory extension to 31.03.2022 did not confer competence on such a former officer, and no writ lay to compel pronouncement of judgment where no legal right was shown.

Prima facie case - discharge under Section 245 CrPC - seizure and recovery - invocation of Section 102 of the Customs Act - revisional jurisdiction under Section 397 CrPC - evidence to be examined for prima facie case and not on golden scales

Prima facie case - discharge under Section 245 CrPC - evidence to be examined for prima facie case and not on golden scales - Whether the learned Magistrate was correct in discharging the accused under Section 245 CrPC in the warrant trial instituted on complaint. - HELD THAT: - The Revisional Court examined whether the Trial Court's discharge was vitiated by perversity. In a warrant trial instituted otherwise than on police report, after evidence under Section 244 CrPC the Magistrate must consider under Section 245(1) whether a case has been made out which, if unrebutted, would warrant conviction; the test is of a prima facie case and not proof beyond reasonable doubt. Applying these principles to the material before the Trial Court - testimony of witnesses to recovery, the independent testing of the article as 24 carat gold, the absence of documents proving legitimate possession and the statutory prohibition on import of gold from the stated area - a prima facie case was made out that the article was smuggled and in the respondent's possession. The High Court concluded that the Trial Court erred in weighing the evidence on 'golden scales' and that the discharge was perverse. [Paras 8, 9]

The Order discharging the respondent under Section 245 CrPC is set aside; a prima facie case having been made out, the discharge was perverse.

Seizure and recovery - invocation of Section 102 of the Customs Act - revisional jurisdiction under Section 397 CrPC - Whether alleged non-compliance with the procedural requirements concerning seizure (including the role of Customs officers and applicability of Section 102 Customs Act) warranted discharge at the Section 245 CrPC stage or required trial scrutiny. - HELD THAT: - The Court recognised contentions about non-invocation or incomplete observance of the provisions governing search and seizure by Customs officers (including reliance on Section 102 Customs Act and related Sections 100 and 101). It observed that invocation of those statutory provisions and the attendant documentary and evidentiary requirements are matters contingent on the facts and must be examined and marshalled at trial; such technical or formal infirmities could not, on the material then before the Magistrate, justify discharge where a prima facie case otherwise existed. Accordingly, the High Court remitted the matter for trial, directing the Trial Court to restore the case file and proceed to trial where those aspects may be tested in full. [Paras 10, 14]

The issues concerning compliance with seizure formalities and the applicability of Section 102 Customs Act are not grounds for discharge at the prima facie stage and are to be examined at trial; the case is restored for trial.

Final Conclusion: Criminal Revision allowed. The High Court set aside the Trial Court's discharge under Section 245 CrPC, held that a prima facie case was made out against the respondent, and directed restoration of the case to the Trial Court for trial; procedural and seizure-related issues to be examined during trial without prejudice to the Trial Court's final findings.

Disqualification under Section 29A of the Insolvency and Bankruptcy Code, 2016 - independent director as defined under Section 149(6) of the Companies Act, 2013 - Regulation 2B of the Liquidation Process Regulations (pre-amendment) - Scheme of Compromise and Arrangement under Section 230 of the Companies Act, 2013 - applicability of Arcelor Mittal principle to liquidation and compromise procedures

Independent director as defined under Section 149(6) of the Companies Act, 2013 - disqualification under Section 29A of the Insolvency and Bankruptcy Code, 2016 - Regulation 2B of the Liquidation Process Regulations (pre-amendment) - Scheme of Compromise and Arrangement under Section 230 of the Companies Act, 2013 - applicability of Arcelor Mittal principle to liquidation and compromise procedures - Whether an independent non-executive director is disqualified from submitting a Scheme of Compromise and Arrangement during liquidation under the pre-amendment wording of Regulation 2B read with Section 29A and Section 35(1)(f) of the IBC. - HELD THAT: - The Tribunal found that an independent non-executive director, as characterised by Section 149(6) of the Companies Act, 2013, does not exercise control over management in the sense contemplated by the definitions of "control" and director-related disqualifications. Applying the reasoning in Arcelor Mittal, which distinguishes de jure and de facto control and confines disqualification to persons who can positively influence management or policy decisions, the Court concluded that the appellant (an independent non-executive director) lacks the control that would attract the disqualification under Section 29A. The Adjudicating Authority had applied the Arun Kumar Jagatramka approach without regard to the date and scope of the amendment to Regulation 2B; it thereby extended disqualification to the appellant under the pre-amendment regime. Having examined the statutory definitions and the Arcelor Mittal interpretation, the Tribunal held that, prior to the amended proviso to Regulation 2B, no disqualification could be attached to an independent non-executive director for proposing a Scheme of Compromise and Arrangement during liquidation, and that the Adjudicating Authority erred in dismissing the application on that ground.

The impugned order dismissing the application was set aside and the appellant, an independent non-executive director, is held not disqualified to submit the Scheme of Compromise and Arrangement during liquidation under the pre-amendment Regulation 2B read with Section 29A/Section 35(1)(f).

Final Conclusion: The appeal is allowed; the order dated 14th December, 2021 dismissing IA No. 4116/(ND)/2021 in CP(IB) No. 2260(ND)/2019 is set aside and the appellant is permitted to submit the Scheme of Compromise and Arrangement during the liquidation process under the pre-amendment regulatory regime.

Restoration of a struck-off company under Section 252(3) of the Companies Act, 2013 - striking off under Section 248(5) of the Companies Act - carrying on business or in operation or otherwise it is just - discretionary restoration limited where company was not in operation / shell company - twenty years limitation for restoration from publication under Section 248(5)

Restoration of a struck-off company under Section 252(3) of the Companies Act, 2013 - carrying on business or in operation or otherwise it is just - discretionary restoration limited where company was not in operation / shell company - Whether the name of the appellant company should be restored to the Register of Companies - HELD THAT: - The Tribunal examined whether the appellant had established that the company was carrying on business or was in operation at the time its name was struck off, or that circumstances otherwise justified restoration. The Registrar of Companies had struck off the company's name under Section 248(5) after noting non-filing of statutory documents since the financial year ending 31.03.2007. The appellant failed to produce invoices, purchase orders or contemporaneous evidence of business operations immediately prior to striking off; the balance sheets later filed (for 2018-19, 2019-20 and 2020-21) reflected nil revenue from operations and income only from other sources, and the appellant had not filed income-tax returns. The Tribunal relied on the principle (as expounded by the NCLAT) that the power to restore under Section 252(3) is discretionary but confined by the requirement that restoration be appropriate where the company was carrying on business or was in operation, or where it is otherwise just; that "or otherwise" cannot be used to permit arbitrary restoration where there is a specific finding that the company was not in operation or was a shell used for impermissible purposes. Applying this reasoning to the facts, and having found insufficient documentary proof that the company was operational when struck off, the Tribunal concluded that restoration was not justified and abstained from interfering with the ROC's action. [Paras 11, 13, 14]

Appeal dismissed; restoration refused and the striking off by the RoC is upheld.

Final Conclusion: The Tribunal dismissed the appeal and declined to restore the company's name, upholding the RoC's striking off on the ground that the appellant failed to demonstrate that the company was carrying on business or in operation when its name was struck off, and that discretionary restoration was not warranted.

Permanent stay of winding up proceedings - proof to the satisfaction of the Court for grant of stay under Section 466 - scheme sanctioned under Section 391 and its statutory effect - company as a going concern - custodia legis - cut-off date for proving claims in winding up - stay as placing winding up order in suspended animation

Permanent stay of winding up proceedings - proof to the satisfaction of the Court for grant of stay under Section 466 - stay as placing winding up order in suspended animation - Whether the winding up proceedings in C.P. No.2 of 1987 have been permanently stayed and what further steps are required for a formal order of permanent stay. - HELD THAT: - The Court found that although no formal order in terms of Section 466 had earlier been recorded by the Company Court or Division Bench, the factual matrix - long continued operation of the approved scheme, absence of steps by the Official Liquidator to take possession or wind up assets for about 35 years, deposits with the Registrar and recurring judicial oversight - indicates that, for all practical purposes, the winding up order has been kept in abeyance and a permanent stay exists on facts. Notwithstanding that practical reality, Section 466 requires an application and proof to the satisfaction of the Company Court before an order staying proceedings 'altogether' can be made. Consequently, a formal order of permanent stay must be passed by the Company Judge after auditing and ascertaining the company's accounts, assets and claims so that the statutory satisfaction required under Section 466 can be recorded.

The Court held that while there is effectively a permanent stay in practical terms, a formal order under Section 466 remains necessary and directed steps to enable the Company Judge to record satisfaction and pass such order in accordance with law.

Company as a going concern - scheme sanctioned under Section 391 and its statutory effect - Whether the Baranagore Jute Factory PLC is to be treated as a going concern operating under a sanctioned scheme and the legal consequences of that status. - HELD THAT: - Relying on the earlier orders and the Supreme Court's findings, the Court accepted that the scheme formulated and sanctioned by the High Court (and considered by the Supreme Court) has been implemented and that the company has functioned as a going concern. The Court noted binding authority that a court-sanctioned scheme under Section 391 has statutory force and, so long as the scheme is being carried out, winding up would not be appropriate. Given the continuing operation under committee arrangements and the substantial compensation funds received and deposited, the court concluded that winding up is not in the interest of justice at present and that revival/management under the scheme has precedence over immediate winding up.

The Court treated the company as a going concern operating under the sanctioned scheme and held that the scheme's statutory efficacy and practical operation militate against ordering winding up at this stage.

Custodia legis - stay as placing winding up order in suspended animation - Whether the Company/BJF is under the custody and supervision of the Court (custodia legis) and the consequences thereof. - HELD THAT: - Having reviewed the long sequence of judicial appointments (Committees of Management, Joint Special Officers, Official Liquidator involvement) and continued Court supervision, the Court agreed with the Company Judge that the company has been transformed into an entity under Court supervision. The court observed that although assets have not formally been taken into Official Liquidator's custody, the company has been monitored at various stages by judicially appointed bodies and therefore functions as an entity custodia legis for present purposes.

The Court upheld that the company effectively remains under custodia legis and is being monitored by Court-appointed mechanisms.

Cut-off date for proving claims in winding up - scheme sanctioned under Section 391 and its statutory effect - What is the appropriate cut-off date for claims to be admitted and quantified for distribution from funds in Court. - HELD THAT: - The Court rejected the Company Judge's adoption of the BIFR reference date as the cut-off. Under Rule 154 of the Company (Court) Rules and consistent with the winding up chronology, the Court held the correct cut-off date is the date of the winding up order, namely 28th October, 1987. The Court further observed that funds lying with the Registrar can be distributed to creditors entitled as on that cut-off date without impediment once claims are audited and quantified.

The cut-off date for filing and adjudication of claims for distribution is 28th October, 1987, the date of the winding up order.

Permanent stay of winding up proceedings - custodia legis - What interim and consequential directions are necessary to enable the Company Judge to adjudicate claims and pass a formal order of permanent stay. - HELD THAT: - Given the factual findings and the need for documentary and financial clarity before recording satisfaction under Section 466, the Court modified the Company Judge's directions. It set aside the three-member Committee of Management appointed below (whose members declined to continue) and appointed a one-member Committee (Hon'ble Justice Bhaskar Bhattacharya, retired) to procure a complete audit by a reputed chartered accountancy firm, prepare inventory of movable and immovable assets with Official Liquidator's assistance, invite and quantify claims up to the cut-off date, and place the audited accounts, inventory and quantified claims before the Company Judge within three months. The Court also directed that assets shall not be sold or encumbered pending this exercise, that funds deposited with the Registrar shall not be released for six months after any formal permanent stay order, and that the one-member Committee may receive a tentative honorarium from the funds in Court.

The Court directed appointment of a one-member Committee to complete audit, inventory and claim quantification within three months, restrained sale/encumbrance of assets and imposed a six-month hold on release of deposited funds after formal order of permanent stay; the three-member Committee earlier constituted was discharged.

Final Conclusion: The appeals are disposed of by modifying the Company Judge's directions: the Court records that, on the facts, the winding up order has been kept in abeyance and the company operates as a going concern under Court supervision, but a formal order of permanent stay under Section 466 must be preceded by an audited account, inventory and quantified claims. A one-member Committee is appointed to complete that exercise within three months, after which the Company Judge will settle claims up to the cut-off date (28.10.1987) and may pass a formal order of permanent stay; assets shall not be sold or encumbered and funds deposited with the Registrar shall be withheld for six months from any order of permanent stay.

Dispensation of statutory meetings - convening meeting of unsecured creditors - notice and advertisement requirements under Companies (CAA) Rules, 2016 - appointment of chairperson and scrutinizer for CAA meeting - compliance with Forms CAA-2, CAA-3 and CAA-4 and Rule 6, 8, 12 and 14 of the Companies (CAA) Rules, 2016

Dispensation of statutory meetings - consent by affidavit of shareholders and creditors - Dispensation of meetings of shareholders and secured creditors of both applicant companies and of unsecured creditors of the Resulting Company. - HELD THAT: - The Tribunal examined the record including audited particulars and affidavits of consent. All four shareholders of each applicant company have furnished affidavits representing their entire shareholding. There are no secured creditors in either company as per the certificate on record. The Applicant Resulting Company has no unsecured creditors. On this basis the Tribunal held that meetings of the shareholders of both applicant companies may be dispensed with; meetings of secured creditors are not warranted in either company; and no meeting of unsecured creditors is required for the Resulting Company. [Paras 8]

Meetings of shareholders of both applicant companies are dispensed with; no meetings of secured creditors are required in either company; no meeting of unsecured creditors is required for the Resulting Company.

Convening meeting of unsecured creditors - quorum and voting rules for CAA meetings - Whether the meeting of unsecured creditors of the Applicant Demerged Company should be convened. - HELD THAT: - Although affidavits from 22 unsecured creditors representing 91.55% in value have been filed, the Demerged Company has a large number of unsecured creditors (90 as per the audit certificate). The Tribunal found that, given the number of unsecured creditors, a meeting must be convened to consider and approve the proposed scheme. [Paras 8, 9, 14, 15]

A meeting of the unsecured creditors of the Applicant Demerged Company shall be held on 10.09.2022 at 11:00 AM by video conference/AV means; quorum and voting shall be as prescribed under Section 103 and applicable Ministry of Corporate Affairs directions.

Notice and advertisement requirements under Companies (CAA) Rules, 2016 - compliance with Forms CAA-2, CAA-3 and CAA-4 and Rule 6, 8, 12 and 14 of the Companies (CAA) Rules, 2016 - appointment of chairperson and scrutinizer for CAA meeting - Directions for conduct of the meeting, including publication, service of notices, appointment of chairperson and scrutinizer, and filing of compliance affidavits and returns. - HELD THAT: - The Tribunal directed that (i) advertisement of the meeting be published in specified English and Hindi dailies at least one month prior, indicating availability of the Scheme and statement as required by the Companies Act; (ii) notices in Form No. CAA-2 with the Scheme and requisite statement be sent to each unsecured creditor at least one month prior by prescribed modes; (iii) the Demerged Company shall send Form CAA.3 notices to statutory authorities with 30-day representation period as per Rule 8; (iv) CA Mr. Dinesh Ajmera is appointed Chairperson for the meeting and Adv. Jatin Sehgal as Scrutinizer; (v) the Chairperson shall file an affidavit evidencing compliance at least seven days before the hearing and shall file the meeting result in Form CAA-4 with an affidavit within seven working days of conclusion. The directions incorporate Rule 6, Rule 8, Rule 12 and Rule 14 obligations and acknowledge the MCA circular disallowing proxies for voting. [Paras 13, 15, 17, 18, 19]

Publication, service of notices, appointments, and filings shall be carried out as directed; the Chairperson and Scrutinizer are appointed; compliance affidavits and Form CAA-4 are to be filed within the specified timelines.

Final Conclusion: The Tribunal allowed CA (CAA) No. 5 of 2022: meetings of shareholders and secured creditors need not be held as directed; the unsecured creditors of the Applicant Demerged Company shall be convened as ordered and the prescribed notice, advertisement, conduct and compliance directions under the Companies (CAA) Rules, 2016 shall be followed.

Sanction of scheme of arrangement under Sections 230-232 of the Companies Act, 2013 - appointed date for scheme - presumption of no objection by statutory authority under Section 230(5) - transfer and vesting of assets, liabilities and employees pursuant to sanctioned scheme - sanction not to confer immunity from statutory liabilities, taxes or enforcement

Sanction of scheme of arrangement under Sections 230-232 of the Companies Act, 2013 - statutory compliance and convening of meetings - Sanction of the Scheme of Arrangement between MIL Industries Limited and MIL Industries & Aerospace Limited. - HELD THAT: - After considering the petition, the Chairman's report of the meetings of equity shareholders and unsecured creditors (which recorded their consent), the valuation report, the statutory auditors' certificate on accounting treatment, and the absence of objections from statutory authorities other than the Regional Director's limited observation, the Tribunal found the Scheme prima facie beneficial and not detrimental to shareholders. All requisite statutory compliances for convening meetings and publication of notices were held to have been fulfilled. On this basis the Tribunal sanctioned the Scheme appended as Annexure-5 to the petition. [Paras 3, 8, 9, 10]

The Scheme of Arrangement is sanctioned.

Appointed date for scheme - Regional Director's objection to ante-dating of appointed date - Revision and fixation of the Appointed Date as 01.04.2022. - HELD THAT: - The Regional Director pointed out that the originally proposed Appointed Date of 15.11.2019 was antecedent beyond one year and not in accordance with the statutory provision noted in the RD's report. The petitioners filed a memo agreeing to fix the Appointed Date as 01.04.2022. The Tribunal took the affidavit on record and directed that the Appointed Date for the Scheme shall be 01.04.2022. [Paras 7, 11]

Appointed Date for the Scheme is fixed as 01.04.2022.

Presumption of no objection by statutory authority under Section 230(5) - service of notice on statutory and regulatory authorities - Effect of absence of representation from the Income Tax Department and other statutory authorities. - HELD THAT: - Notices were served on the Regional Director, RoC, SEBI, stock exchange and the jurisdictional Income Tax Office. The Regional Director filed a report (recording no objection subject to the Appointed Date issue). There was no representation from the Income Tax Department or other statutory authorities; accordingly, in terms of Section 230(5) the Tribunal proceeded on the presumption that the Income Tax Department had no objection to the sanction of the Scheme. [Paras 6, 7]

In absence of representation, the Tribunal presumes no objection from the Income Tax Department.

Transfer and vesting of assets, liabilities and employees pursuant to sanctioned scheme - continuation of pending proceedings against transferee - sanction not to confer immunity from statutory liabilities, taxes or enforcement - Consequences of sanction: transfer/vesting of demerged undertaking, liabilities, employees, continuation of proceedings, and non-impediment to enforcement or tax actions. - HELD THAT: - The Tribunal ordered that all properties, rights, powers, liabilities, obligations and duties of the Demerged Undertaking shall, without further act or deed, be transferred to and vested in the Resulting Company, and that all pending proceedings by or against the Demerged Undertaking shall continue by or against the Resulting Company. It directed transfer of employees on existing terms without interruption, allotment of shares to dissenting members in accordance with the Scheme, filing of revised constitutional documents and requisite filings with the RoC. The Tribunal clarified that the sanction does not amount to exemption from stamp duty, taxes or other charges and will not preclude action in accordance with law if any deficiency or violation of enactments is found. [Paras 10, 11]

Demerged undertaking to be transferred and vested in the Resulting Company; liabilities and employees to stand transferred; pending proceedings to continue against the Resulting Company; sanction does not confer immunity from statutory liabilities or taxes.

Final Conclusion: The Tribunal allowed the company petition and sanctioned the Scheme of Arrangement between the petitioner companies, fixed the Appointed Date as 01.04.2022, recorded the presumption of no objection by the Income Tax Department in absence of representation, directed transfer/vesting of the demerged undertaking (including assets, liabilities and employees) to the Resulting Company and clarified that the sanction does not exempt the parties from statutory liabilities, taxes or enforcement actions.

Natural justice - duty of regulator to act fairly - disclosure obligations of regulator - right to documents for fair trial - Section 473 CrPC-extension of period of limitation in interests of justice - litigation privilege - cherrypicking principle - confidentiality of settlement proceedings

Maintainability of appeal against interlocutory/adjournment order - Section 473 CrPC-extension of period of limitation in interests of justice - duty of regulator to act fairly - Maintainability of the present appeal and propriety of the High Court adjourning the interim application without adjudicating disclosure when criminal revision on limitation was pending. - HELD THAT: - The Court held that the High Court erred in postponing consideration of the interim application seeking disclosure until the main revision on limitation was heard. Given the history of the matter, including an inconclusive investigation, ministerial communications, prior settlement proceedings and SEBI's decision to re-examine and later initiate criminal proceedings, the question of condoning delay under Section 473 CrPC required scrutiny of the manner in which the prosecution was launched. The Court emphasised that initiation of criminal action in commercial matters requires circumspection and that gate-keeping by courts must account for fairness to the accused and public interest. Because the High Court's adjournment effectively deferred consideration of issues central to natural justice and the fairness of initiating prosecution, the appeal was maintainable and the High Court ought to have considered the interim application before deciding limitation. [Paras 24, 28, 30]

The appeal is maintainable; the High Court should not have adjourned adjudication of the interim application and the adjournment was inappropriate in the circumstances.

Natural justice - disclosure obligations of regulator - right to documents for fair trial - litigation privilege - cherrypicking principle - confidentiality of settlement proceedings - Whether SEBI must disclose the expert opinions and report requested by the appellant and whether those documents are protected by litigation privilege or settlement confidentiality. - HELD THAT: - The Court analysed (a) the purpose of disclosure (reliability, fair trial and transparency) as articulated in Takano and related authorities, (b) the nature of the documents sought and their connection to SEBI's investigation, and (c) the scope of claimed privilege and settlement confidentiality. SEBI had admitted that its initial investigation report was inconclusive and that subsequent expert opinions and the Chartered Accountant's report formed part of the extended fact-finding exercise which informed SEBI's decision to initiate prosecution. The Court held that where such opinions and reports are an extension of the investigation and have informed prosecutorial decision-making, they are not cloaked by legal professional privilege under Section 129 of the Evidence Act in the circumstances of this case. The Court further rejected SEBI's reliance on settlement confidentiality as a bar to disclosure when SEBI later invoked criminal proceedings; Regulation 29 of the Settlement Regulations cannot be read to exempt SEBI from disclosure obligations when the material concerned forms part of the investigation underlying prosecution. The Court also condemned selective disclosure by SEBI (cherrypicking), observing that partial disclosure of privileged material while withholding exculpatory portions undermines fair trial and cannot be permitted. [Paras 54, 56, 57, 58, 59]

SEBI was directed to disclose the first opinion of Justice (Retd.) B.N. Srikrishna, the report of Y.H. Malegam, and the second opinion of Justice (Retd.) B.N. Srikrishna; the claimed litigation privilege and settlement confidentiality did not justify withholding these documents in the facts of this case.

Final Conclusion: The appeal is allowed. The High Court should have considered the interim application prior to adjudicating limitation; SEBI's claim to withhold the expert opinions and report on grounds of privilege or settlement confidentiality is rejected in the facts of this case, and SEBI is directed to furnish the specified expert opinions and report forthwith.

Market manipulation via self-trades/single-share trades - Prohibition of manipulative and deceptive devices under Section 12A read with PFUTP Regulations - Impact of manipulative trading on market integrity and investor confidence - Discretion to impose debarment and proportionality review under Section 15Z

Market manipulation via self-trades/single-share trades - Impact of manipulative trading on market integrity and investor confidence - Findings that the appellant executed intentional self-trades (single-share trades) which manipulated the last traded price and thus violated the prohibition on manipulative and deceptive devices. - HELD THAT: - The WTM found that a large number of self-trades were executed through the same terminal ID and that the appellant placed large sell orders followed by single-share buy orders at higher prices which matched its own sell orders, thereby establishing higher LTPs. The WTM concluded, on the preponderance of probabilities, that these repetitive single-share self-trades were intentional and had a positive LTP contribution, thereby artificially inflating the price of the scrip. The SAT affirmed those findings. The Court observed that the statutory framework embodied in Section 12A read with Regulations 3 and 4 of the PFUTP Regulations is aimed at preventing market abuse and preserving market integrity; manipulation cannot be assessed only by quantifying the appellant's direct gain but must be evaluated for its wider adverse effect on market integrity and investor confidence. Applying that principle to the findings of repetitive, manual self-trades executed from the same terminal and designed to create false price ascension, the Court accepted the conclusion that the trades were manipulative and violative of the statutory prohibitions. [Paras 4, 5, 6, 10, 12]

The findings of intentional, manipulative self-trades by the appellant were upheld and held to constitute a breach of the prohibition against manipulative and deceptive devices under the SEBI Act and PFUTP Regulations.

Discretion to impose debarment and proportionality review under Section 15Z - Impact of manipulative trading on market integrity and investor confidence - Whether the four-year debarment from proprietary trading imposed by the WTM was disproportionate and liable to be interfered with by this Court. - HELD THAT: - The Court applied the established standard that interference under Section 15Z is warranted only where the penalty or order is wholly arbitrary or distinctly disproportionate. Noting the WTM's specific consideration of the wider market impact of manipulation (not confined to the appellant's quantifiable gain), the Court found the restraint targeted at protecting market integrity and investor interests. The WTM also left open the appellant's broking operations while restricting proprietary trading for a specified period. In view of the statutory objective to curb market abuse and the facts found by the WTM and affirmed by the SAT, the Court concluded that the debarment was not so disproportionate or arbitrary as to warrant interference. [Paras 11, 12, 14, 15]

The four-year debarment from proprietary trading was held not to be disproportionate or arbitrary; the appellate challenge was dismissed.

Final Conclusion: The Supreme Court upheld the findings of manipulative self-trading against the appellant and declined to interfere with the WTM's four-year debarment from proprietary trading, dismissing the appeals.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - existence of debt and default - acknowledgement of debt in balance sheet and its effect under Section 18 of the Limitation Act, 1963 - one time settlement/OTS and its bearing on maintainability of a Section 7 petition - bank guarantee as an independent contract between beneficiary and bank

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - existence of debt and default - The Adjudicating Authority rightly admitted the Section 7 application by finding that a financial debt was due and a default had occurred. - HELD THAT: - The Tribunal examined the Impugned Order and the material placed before the Adjudicating Authority and concluded that the financial creditor had established both the existence of debt and default. The record showed availing of fund based and non fund based facilities, acknowledgement of debt dated 05.05.2019 and entries in the corporate debtor's balance sheet, and prior OTS proposals that were rejected. Once debt and default are established, the mandate of Section 7 is attracted and admission was appropriate. The Tribunal found the Adjudicating Authority's findings on these facts to be free from legal flaw and sufficient to admit the petition. [Paras 14, 16, 17, 18, 19]

Admission of the Section 7 petition was upheld and the adjudicating authority's order admitting the corporate insolvency resolution process was affirmed.

One time settlement/OTS and its bearing on maintainability of a Section 7 petition - payment towards settlement proposal and interim negotiations - The existence of an OTS proposal and an alleged interim payment did not defeat admission of the Section 7 petition in the facts of this case. - HELD THAT: - The appellant relied on a recent OTS proposal (dated 15.06.2022) and a payment alleged to have been made, seeking time for the bank to respond. The Tribunal noted the record showed earlier OTS proposals were rejected and the later OTS of 15.06.2022 was also rejected by the bank. Given the established debt and default and the rejection of settlement proposals, the pendency of negotiation or an asserted payment did not render the Section 7 application non maintainable or preclude admission. [Paras 4, 5, 9, 16, 19]

The OTS negotiations and the claimed payment did not preclude admission; the request for time to await the bank's response was not accepted and did not affect the order admitting the petition.

Acknowledgement of debt in balance sheet and its effect under Section 18 of the Limitation Act, 1963 - entries in balance sheet as acknowledgement of debt - Entries in the corporate debtor's balance sheet and the specific acknowledgement dated 05.05.2019 amounted to an acknowledgement of debt relevant to the creditor's claim. - HELD THAT: - The Tribunal relied on the Adjudicating Authority's finding, supported by the balance sheet entry and express acknowledgement, that such entries constitute an acknowledgement of debt for the purposes of extending limitation, as recognised by higher authority. These findings reinforced the conclusion that the debt was due and payable and that the financial creditor's claim was properly maintainable before the Adjudicating Authority. [Paras 8, 15, 17]

The balance sheet entry and the acknowledgement of debt were treated as valid acknowledgement of debt and supported the finding of debt and default.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Adjudicating Authority's order admitting the Section 7 petition and imposing moratorium; the impugned order was held to be free from legal infirmity.

Validity of demand notice issued by an advocate - completeness of application under Section 9 - use of IBC as a recovery mechanism versus insolvency resolution - rejecting incomplete Section 9 application - discretion of adjudicating authority to refuse CIRP when creditor uses IBC inappropriately

Validity of demand notice issued by an advocate - An advocate may issue the demand notice under Section 8 of the Code on behalf of an operational creditor and no proof of long period of association is required for that purpose. - HELD THAT: - The Tribunal accepted the Appellant's submission and relied on the Supreme Court decision in Macquarie Bank Ltd. v. Shilpi Cable Technologies Ltd. to hold that a demand notice sent by a lawyer on behalf of an operational creditor complies with Sections 8 and 9 read with the Advocates Act. The Adjudicating Authority's observation that the demand notice was invalid because no document was produced to show the advocate's 'period of association' with the applicant was set aside as unnecessary; statutory forms and rules do not require evidence of an advocate's long association with the creditor to issue the notice. [Paras 9]

Adjudicating Authority's finding that the demand notice was invalid for want of proof of the advocate's period of association is set aside.

Completeness of application under Section 9 - rejecting incomplete Section 9 application - The Adjudicating Authority was justified in rejecting the Section 9 application because the operational creditor failed to annex required documents (such as purchase orders, delivery challans and bank statements) and thus filed an incomplete application. - HELD THAT: - The Tribunal considered statutory requirements under Section 9, the Adjudicating Authority Rules and Regulation 7 and FORM 5/FORM B, which mandate that an operational creditor must annex documents proving the debt and non-payment (invoices/demand notices, supporting contracts/orders, and bank account statements or financial account records where available). The record showed the Appellant had been given time but failed to produce the requisite purchase orders, delivery challans and bank statements. As an incomplete application may be rejected after giving an opportunity to rectify defects (where applicable), the Adjudicating Authority acted within its power in rejecting the petition on the ground of incompleteness. [Paras 12, 14]

Rejection of the Section 9 application on the ground that it was incomplete for want of required documents is upheld.

Use of IBC as a recovery mechanism versus insolvency resolution - discretion of adjudicating authority to refuse CIRP when creditor uses IBC inappropriately - The Adjudicating Authority lawfully exercised its discretion to dismiss the Section 9 petition on merits because the petition amounted to an attempt to use the Code as a recovery tool against a solvent going concern (an MSME), thereby defeating the objectives of the Code. - HELD THAT: - The Tribunal noted that the IBC's object is insolvency resolution and reorganisation, not merely debt recovery, and cited precedents distinguishing 'resolution' from 'recovery' (including Mobilox and other authorities). Where a corporate debtor is a viable going concern and the creditor seeks to invoke CIRP primarily as a recovery mechanism-especially in cases involving small amounts or when the company remains solvent-the Adjudicating Authority may, in appropriate exercise of discretion, refuse to admit the application. The impugned order's findings that the corporate debtor was a going concern, an MSME, and that the petition appeared to be a recovery attempt fell within this principle and were sustained by the Tribunal. [Paras 10, 15, 16, 17, 18]

Adjudicating Authority's rejection of the application on merits for being an inappropriate use of the Code against a going concern/MSME is upheld.

Final Conclusion: The Tribunal set aside only the Adjudicating Authority's finding regarding the advocate's need to show long association, but dismissed the appeal on merits: the Section 9 application was rightly rejected as incomplete for want of required documents and properly refused in the exercise of discretion where the petition amounted to an improper use of the Code as a recovery mechanism against a going concern.

Pre-existing dispute - Operational Creditor's application under Section 9 - Rejection under Section 9(5)(2)(d) of the Insolvency and Bankruptcy Code, 2016 - Applicability of Mobilox Innovations principle - Maintainability of CIRP initiation application

Pre-existing dispute - Rejection under Section 9(5)(2)(d) of the Insolvency and Bankruptcy Code, 2016 - Applicability of Mobilox Innovations principle - Whether the Section 9 application by the Operational Creditor is maintainable in view of an alleged pre-existing dispute between the parties, requiring rejection under Section 9(5)(2)(d). - HELD THAT: - The Tribunal examined the pleadings, the purchase order terms and the correspondence including the rejoinder and reply to the demand notice and found admissions and communications demonstrating disputed contentions as to performance, compliance with contractual conditions (CEA approval and billing to enable tax credit) and counter-claims for costs. The purchase order expressly allocated responsibility for CEA approval and for GST/CENVAT-related billing, and the Operational Creditor admitted non-compliance with those conditions. The Tribunal applied the test in Mobilox Innovations to determine whether a plausible dispute exists that is not a spurious or feeble defence; it concluded that the dispute is genuine and supported by documentary material and communications necessitating further investigation rather than immediate admission of CIRP. As a result, the application cannot be admitted where such a pre-existing dispute is shown on the record and the adjudicating authority is obliged to reject the application under the said provision. [Paras 20, 21, 22, 23, 24]

The Section 9 application is not maintainable because a bona fide pre-existing dispute exists between the parties; the application is rejected and dismissed.

Final Conclusion: The Tribunal dismissed the Section 9 application and declined to admit the CIRP, finding a bona fide pre-existing dispute between the Operational Creditor and the Corporate Debtor requiring rejection under the Mobilox Innovations principle.

Duty of Resolution Professional to receive and collate claims - administrative (non adjudicatory) role of Resolution Professional - requirement to place claim and observations before the Committee of Creditors - opportunity to rectify defective claim forms - admissibility of operational creditor's claim and voting rights

Duty of Resolution Professional to receive and collate claims - administrative (non adjudicatory) role of Resolution Professional - opportunity to rectify defective claim forms - Admissibility of M/s Aggarwal Plasto Chem's claim and whether the Resolution Professional could summarily reject the claim without placing the matter with observations before the CoC. - HELD THAT: - The Tribunal found that the applicant's Form B was received by the corporate debtor/Resolution Professional prior to approval of the resolution plan. The respondent acknowledged receipt but relied on delay and defective attachments as the basis for rejection. Citing the decision of the NCLAT and the settled principle (as explained with reference to Swiss Ribbons) that the Resolution Professional has administrative, not adjudicatory, powers and must receive, collate and maintain an updated list of claims, the Bench held that summary rejection by the RP without presenting the complete facts and affording an opportunity to rectify defects was impermissible. The Tribunal observed that the RP could have requisitioned correct documents and should have placed the claim with his observations before the CoC. Consequently the RP was directed to consider the claim on merits afresh, present the complete facts with his observations to the CoC for a final decision, complete that process within three weeks, and file an affidavit of the CoC decision before the Tribunal within one week thereafter for further consideration in connected proceedings. [Paras 8, 9]

IA No.157/2022 allowed; respondent Resolution Professional directed to reconsider applicant's claim on merits, place complete facts and observations before the CoC within three weeks, and file an affidavit of the decision within one week of that decision.

Requirement to place claim and observations before the Committee of Creditors - administrative (non adjudicatory) role of Resolution Professional - admissibility of operational creditor's claim and voting rights - opportunity to rectify defective claim forms - Admissibility of M/s Ashoka Drugs & Chemicals' claim, including its claim to voting rights, and whether the Resolution Professional erred in not placing the claim with observations before the CoC. - HELD THAT: - The Tribunal recorded that the applicant's claim was filed before approval of the resolution plan but was not placed with observations before the CoC; the RP relied on delay and improper format. Relying on the same authorities and reasoning applicable to claims handling, the Bench held that the RP should have afforded the applicant an opportunity to rectify the claim and should not have summarily rejected it without presenting the matter to the CoC. The RP was directed to reconsider the claim (including the claim for voting rights) on merits, present the complete facts with his observations to the CoC for a final decision within three weeks, and to submit an affidavit of that decision to the Tribunal within one week for consideration alongside the connected resolution plan proceedings. [Paras 8, 9]

IA No.435/2022 allowed; respondent Resolution Professional directed to reconsider the applicant's claim (including voting rights), place complete facts and observations before the CoC within three weeks, and file an affidavit of the CoC decision within one week of that decision.

Final Conclusion: Both IA No.157/2022 and IA No.435/2022 were allowed. The Resolution Professional was directed to reconsider the respective operational creditors' claims on merits, present complete facts with his observations to the Committee of Creditors for final decision within three weeks, and file affidavits of the CoC decisions within one week of those decisions for the Tribunal's further consideration.

Moratorium under section 14 of the Insolvency and Bankruptcy Code - prohibition on institution or continuation of proceedings against the corporate debtor during moratorium - proceedings under Section 7A of the EPF & MP Act as judicial proceedings - protection of social welfare dues under section 36 of the Insolvency and Bankruptcy Code - requirement to file claims within the period specified in the public announcement under Regulation 6 of the IBBI Insolvency Resolution Process Regulations

Moratorium under section 14 of the Insolvency and Bankruptcy Code - prohibition on institution or continuation of proceedings against the corporate debtor during moratorium - Validity of the EPF authorities' orders and recovery notices issued during the moratorium period - HELD THAT: - The Tribunal held that section 14 of the Code imposes a complete prohibition on institution or continuation of proceedings against the corporate debtor, whether assessment, quasi judicial or judicial, so as to shield the debtor from pecuniary attacks and preserve the object of the moratorium. Reliance on the Supreme Court's exposition of the moratorium's purpose under P. Mohanraj was applied to conclude that any proceedings during the moratorium which impose or seek to enforce pecuniary liabilities are barred. On that basis, without expressing an opinion on the merits of the EPF orders, the impugned orders and consequent recovery notices issued during the moratorium were found to be in violation of section 14 and liable to be set aside. [Paras 11, 12, 18]

Orders and recovery notices issued during the moratorium are set aside as being in violation of section 14 of the Code.

Proceedings under Section 7A of the EPF & MP Act as judicial proceedings - prohibition on institution or continuation of proceedings against the corporate debtor during moratorium - Whether the inquiry/assessment under Section 7A of the EPF & MP Act is an assessment proceeding not barred by the moratorium or a judicial proceeding falling within the prohibition - HELD THAT: - The Tribunal examined the nature of proceedings under Section 7A and the respondent's circular, and concluded that such proceedings involve evidence and adjudicatory steps and are described as judicial proceedings (with penal consequences) under the EPF & MP Act. Because they can result in pecuniary liability (including penalty and damages), they are not mere assessment exercises immune from the moratorium. Therefore the contention that Section 7A proceedings are outside the prohibition of section 14 was rejected and the continuation of those proceedings during moratorium was held to be impermissible. [Paras 13, 14, 18]

Proceedings under Section 7A are judicial in nature and, insofar as they were continued during the moratorium, are barred and set aside.

Protection of social welfare dues under section 36 of the Insolvency and Bankruptcy Code - requirement to file claims within the period specified in the public announcement under Regulation 6 of the IBBI Insolvency Resolution Process Regulations - Whether the EPF orders adequately identified dues relatable to named employees/workmen and whether such claims could be proceeded with outside the claims process - HELD THAT: - The Tribunal observed that section 36 protects social welfare dues to employees only insofar as amounts are relatable to particular employees or workmen and that the claims process during CIRP is confined to claims alive on the insolvency commencement date (or within the statutory/public announcement period). The EPF orders lacked particulars such as employee names and PF numbers, and therefore did not establish dues relatable to identified employees. Allowing fresh proceedings to ascertain liabilities after the claims cut off would frustrate the Code's claim collation mechanism. The Tribunal accordingly noted that setting aside the orders would not preclude employees from filing claims with the liquidator under the Code. [Paras 15, 16, 17, 18]

Orders were set aside for lack of identifiable employee related particulars and because the claims process must be respected; employees remain free to file claims under the Code.

Final Conclusion: The Tribunal set aside the EPF authorities' orders and the recovery notices issued during the moratorium as being in violation of section 14 of the Code, held that proceedings under Section 7A of the EPF & MP Act are judicial and barred during moratorium, and noted that employees may still pursue their social welfare claims through the Code's claims process; the listed IAs are disposed of accordingly.

Utilisation of Cenvat credit of basic excise duty for payment of Education Cess and Higher Education Cess - operation of Exemption Notification No. 39/2001-CE - issue no longer res-integra by reason of binding precedents

Utilisation of Cenvat credit of basic excise duty for payment of Education Cess and Higher Education Cess - operation of Exemption Notification No. 39/2001-CE - issue no longer res-integra by reason of binding precedents - Appellant entitled to utilise Cenvat credit of basic excise duty for payment of Education Cess and Secondary & Higher Education Cess while operating under Exemption Notification No. 39/2001-CE. - HELD THAT: - The Tribunal applied its earlier decisions holding that where an assessee avails benefit under Exemption Notification No. 39/2001-CE the Cenvat credit of basic excise duty may be utilized for discharge of Education Cess and Secondary & Higher Education Cess. The Tribunal treated the question as settled by precedent (including appellate and Supreme Court decisions relied upon in prior orders) and held the issue to be no longer res-integra. On that basis the impugned order denying such utilisation was set aside. [Paras 4]

Impugned order set aside and appeal allowed; appellant permitted to utilise basic excise duty Cenvat credit for payment of Education Cess and Secondary & Higher Education Cess.

Final Conclusion: Relying on the Tribunal's earlier precedent and subsequent authoritative decisions, the appeal is allowed and the impugned order is set aside permitting utilisation of basic excise duty Cenvat credit for discharging Education Cess and Higher Education Cess under Notification No. 39/2001-CE.

Delegation of powers under Section 85 of the Tripura Value Added Tax Act, 2004 - Separation of functions of audit, assessment and collection - Validity of notification in the Official Gazette as condition precedent to delegation - Authority of audit team versus assessing authority - Jurisdictional validity of assessment orders and demand notices issued by audit authorities

Delegation of powers under Section 85 of the Tripura Value Added Tax Act, 2004 - Validity of notification in the Official Gazette as condition precedent to delegation - Validity of the notification dated 04.06.2018 delegating powers under Section 31 of the Act to Superintendents of Taxes posted in the Tax Audit Cell. - HELD THAT: - Section 85 permits the Commissioner to delegate any of his powers under the Act by notification in the Official Gazette subject to prescribed restrictions and conditions. The respondents did not place any Gazette notification to show the challenged notifications were published as required. In the absence of publication in the Official Gazette as contemplated by Section 85, the Court drew the inference that the statutory requirement was not complied with and held the notification dated 04.06.2018 to be invalid. The Court emphasised that delegation under Section 85 must be exercised in letter and spirit and that failure to comply with the Gazette publication requirement vitiates the delegation. [Paras 19, 20, 24]

Notification dated 04.06.2018 delegating Section 31 powers to Superintendents of Taxes in the Tax Audit Cell is invalid for non-compliance with the Gazette publication requirement and for exceeding permissible delegation.

Separation of functions of audit, assessment and collection - Authority of audit team versus assessing authority - Jurisdictional validity of assessment orders and demand notices issued by audit authorities - Whether the Superintendent of Taxes in the Tax Audit Cell could, in exercise of the impugned delegation, pass assessment orders, impose penalty and direct recovery (i.e., act as assessing and collection authority) based on audit proceedings. - HELD THAT: - The statutory scheme and Rules distinguish between audit, assessment and collection. Section 28 and Rule 45 contemplate the audit wing to examine records and communicate findings to the assessing authority; audit teams are not to be entrusted with collection functions. The Court observed that audit, assessment and collection are distinct stages handled by different competent authorities and that the powers of assessment are not vested in the audit cell. Consequent actions taken by the 5th respondent-issuing the impugned notices, imposing penalty and directing recovery-were therefore without jurisdiction. The Court directed that the impugned notices be treated as audit reports only and that the audit authority must forward them to the proper assessing authority for action in accordance with law. [Paras 21, 22, 23, 24, 25]

Actions taken by the Tax Audit Cell treating itself as assessing/collection authority are without jurisdiction; impugned notices are to be treated as audit reports and forwarded to the assessing authority for lawful action.

Final Conclusion: Writ petition allowed to the extent indicated: the notification of 04.06.2018 is invalid for non-compliance with Section 85's Gazette requirement and for impermissibly conflating audit with assessment/collection; the impugned notices and assessment action by the Tax Audit Cell are without jurisdiction and shall be treated as audit reports to be forwarded to the assessing authority; order is confined to the present petition and is not to be treated as a judgment in rem.

Applicability of Section 12 of the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 - Entry tax leviability on delivery at factory gate - Intention to take goods into another local area - Exclusion for goods intended to be taken outside the State - Inter-state sale and export - evidentiary standard versus statutory 'intends' test - Burden of proof on revenue to displace purchaser's stated intention

Entry tax leviability on delivery at factory gate - Intention to take goods into another local area - Applicability of Section 12 of the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 - Whether delivery of sugar at the factory gate rendered the sales local and liable to entry tax under Section 12 despite evidence of intention and arrangements for removal outside the State of U.P. - HELD THAT: - The Court held that Section 12(1) imposes liability where a purchaser "intends to bring" goods into a local area within the State; the statutory test is therefore one of intention to cause entry into another local area within the State and is distinct from the higher tests under Sections 3 and 5 of the Central Sales Tax Act. Even if delivery is effected at the factory gate, no liability under Section 12 arises where the purchaser's intention to carry the goods outside the State is established on the basis of invoices, transportation documents, bank payments and related contractual arrangements. The legislature consciously used the word "intends", permitting reliance on documentary evidence of purpose rather than requiring a prior contract antecedent to movement. On the facts, the Tribunal accepted such evidence of intention and the revenue produced no material to rebut that intention; accordingly Section 12 did not apply. [Paras 14, 15, 16, 19, 20]

No liability under Section 12 arose where the purchaser's documented intention to take the goods outside U.P. was established; delivery at factory gate alone did not render the sales local for entry tax purposes.

Inter-state sale and export - evidentiary standard versus statutory 'intends' test - Burden of proof on revenue to displace purchaser's stated intention - Exclusion for goods intended to be taken outside the State - Whether the Tribunal and First Appellate Authority were justified in deleting the entry tax where the revenue did not establish that the goods were not exported or not taken outside the State of U.P. - HELD THAT: - The Court found that the Tribunal's conclusion - based on invoices, transport documents, dispatches from bonded godown, transit insurance and bank receipts - that the goods were dispatched outside U.P. and were not for consumption within another local area of the State, was based on material placed before it. The revenue failed to lead evidence to show perversity or patent error in those findings or to displace the assessee's evidence that the goods were taken outside the State. The higher tests applicable for establishing inter-state or export sales under the Central Sales Tax Act are not requisite for Section 12; accordingly, in absence of contrary evidence, deletion of the entry tax was not perverse. [Paras 6, 9, 20, 21, 22]

Tribunal's deletion of the entry tax was justified; revenue did not produce credible material to rebut the assessee's evidence of removal outside U.P.

Final Conclusion: Delay in filing the revision was condoned; on merits the revision is dismissed - the Tribunal's order deleting the entry tax for A.Y. 2012-13 is upheld as the revenue failed to rebut evidence that the goods were intended to be and were dispatched outside the State of U.P.

Entry tax liability under Schedule interpretation - strict interpretation of taxation statutes - common parlance test for trade-specific words - construction of 'etc.' and ejusdem generis - penalty under Section 7(5) of the OET Act contingent on taxable assessment under Section 7(3)

Entry tax liability under Schedule interpretation - common parlance test for trade-specific words - construction of 'etc.' and ejusdem generis - strict interpretation of taxation statutes - Aluminum extrusions imported into Odisha are not covered by Entry 11 of Part I of the Schedule to the OET Act and therefore not exigible to entry tax @1%. - HELD THAT: - The Court applied the principle of strict construction in taxation and the 'common parlance' test for trade-specific terminology, observing that Entry 11 reads "Sheets, rods etc. of non-ferrous metal including Aluminum." The word 'etc.' is to be read ejusdem generis with the items it follows and therefore limited to articles similar to sheets and rods. Authorities were cited for the proposition that words in a tariff or schedule must be understood as used in trade. The Court found that aluminium extrusions are distinct in form and trade usage from sheets and rods and would not be understood by dealers or consumers as falling within 'sheets, rods etc.' The Court distinguished entries that use broader formulations (for example, "products" or "products thereof") and noted that had the legislature intended to cover all products of non ferrous metals it would have used broader language. Applying these principles, the Court concluded that aluminium extrusions imported into Odisha are not covered by Entry 11 and so are not subject to entry tax at 1%. [Paras 11, 12, 16, 17, 18]

Answered in the negative; held in favour of the assessee and against the Department.

Penalty under Section 7(5) of the OET Act contingent on taxable assessment under Section 7(3) - strict interpretation of taxation statutes - The Tribunal was not justified in upholding levy of penalty under Section 7(5) of the OET Act once the underlying entry tax assessment under Section 7(3) was held not exigible. - HELD THAT: - Having decided that the goods in question were not taxable under Entry 11, the Court held that the basis for imposing penalty under Section 7(5) fell away. The penalty could not be sustained where the foundational assessment of entry tax liability under Section 7(3) was negatived. Consequently, the Tribunal's upholding of the penalty was set aside. [Paras 19]

Answered in the negative; penalty set aside.

Final Conclusion: The Tribunal's order and the orders of the STO and ACST are set aside: aluminium extrusions imported into Odisha are not exigible to entry tax under Entry 11 for AY 2004-05, and the penalty under Section 7(5) cannot be sustained; the petition is disposed accordingly.

Maintainability of complaint under Section 138 of the Negotiable Instruments Act where filed prematurely - cause of action accrual and the 15 days rule under the proviso to Section 138 - liberty to file a fresh complaint after dismissal for premature filing - benefit of proviso to Section 142(b) of the Negotiable Instruments Act

Maintainability of complaint under Section 138 of the Negotiable Instruments Act where filed prematurely - cause of action accrual and the 15 days rule under the proviso to Section 138 - liberty to file a fresh complaint after dismissal for premature filing - benefit of proviso to Section 142(b) of the Negotiable Instruments Act - Whether dismissal of the complaint as prematurely filed without granting liberty to present a fresh complaint was legally sustainable, and whether the complainant should be permitted to file a fresh complaint with the benefit of Section 142(b). - HELD THAT: - The High Court found that the trial Court correctly held the complaint to be premature because it was filed before the expiry of 15 days from receipt of the statutory notice; that part of the trial Court's finding was not challenged. However, relying on the law laid down by the Hon'ble Supreme Court in Yogendra Pratap Singh, the Court observed that when a complaint under Section 138 is dismissed as prematurely filed, the complainant must ordinarily be granted liberty to file a fresh complaint based on the same cause of action. The Supreme Court's direction treats any fresh complaint filed within one month from the date of decision in the criminal case as eligible for condonation under the proviso to clause (b) of Section 142; consequently, a trial Court dismissing a complaint solely on the ground of prematurity ought to afford the complainant an opportunity to present a fresh complaint and, where appropriate, consider condonation under Section 142(b). The only illegality found in the impugned order was the absence of such liberty; the High Court therefore allowed leave to appeal and modified the trial Court's order to permit the complainant to file a fresh complaint and to entitle him to the benefit of Section 142(b) if applicable.

The appeal is partly allowed by modifying the trial Court's order: the complainant is permitted to file a fresh complaint on the same cause of action and, if so filed, the trial Court shall consider and, if appropriate, grant the benefit of Section 142(b) of the Negotiable Instruments Act.

Final Conclusion: The High Court allowed leave to appeal, held that dismissal of the complaint as premature was correct but remedied the trial Court's failure to grant liberty to file a fresh complaint, and directed that any fresh complaint be considered with regard to condonation under Section 142(b).

Power under Section 540 Cr.P.C. to summon witnesses - Scope of Section 540 Cr.P.C. not limited by stage of trial - Essential for just decision of the case - Summoning bank official to produce banking records as witness - Quashing under inherent jurisdiction of Section 482 Cr.P.C.

Power under Section 540 Cr.P.C. to summon witnesses - Scope of Section 540 Cr.P.C. not limited by stage of trial - Essential for just decision of the case - Summoning bank official to produce banking records as witness - Whether the learned Magistrate rightly exercised jurisdiction under Section 540 Cr.P.C. in summoning the Bank Manager to produce bank records relating to the complainant's alleged transfer to the accused's account. - HELD THAT: - Section 540 Cr.P.C. confers on the court a wide power to summon any person as a witness, to examine any person present though not summoned, or to recall and re-examine witnesses, and makes it obligatory to do so if the court considers the evidence essential for the just decision of the case. The power may be exercised at any stage of the proceedings provided the court bona fide considers the step necessary for a just decision. The learned Magistrate examined the application, noted the averments that the complainant's account was debited and the accused's account credited, and recorded that evidence from the Bank Manager and the bank record was essential to determine whether the alleged transfer of funds occurred. The Magistrate gave reasons, relied on the mandatory limb of Section 540 and applicable precedent, and concluded that calling the Bank Manager as a witness to produce the record would not prejudice the accused who retained the right to cross-examine and to meet the evidence. There was therefore no illegality or excess of jurisdiction in summoning the bank official and directing production of the record; the order was a reasoned exercise of the statutory power in the interests of a just decision. [Paras 12, 15, 16, 17, 18]

The impugned order summoning the Bank Manager and directing production of the bank record under Section 540 Cr.P.C. is valid and sustainable; the petition under Section 482 Cr.P.C. is without merit.

Final Conclusion: The High Court dismissed the petition under Section 482 Cr.P.C., upheld the Magistrate's reasoned order summoning the Bank Manager and bank record under Section 540 Cr.P.C., and directed the learned Magistrate to proceed expeditiously with the trial.

Admissibility of additional documents after close of evidence under Section 294 Cr.P.C. - Forensic examination of disputed negotiable instrument under Section 243 Cr.P.C. read with Section 45 Indian Evidence Act - Reverse burden in negotiable instruments cases where signature and issuance are admitted - Right to fair trial under Article 21 vis-a -vis permitting late documentary evidence

Admissibility of additional documents after close of evidence under Section 294 Cr.P.C. - Right to fair trial under Article 21 vis-a -vis permitting late documentary evidence - Whether the trial court erred in rejecting the petition under Section 294 Cr.P.C. seeking to exhibit documents after close of defence evidence. - HELD THAT: - The High Court held that the trial court did not err in rejecting the application for exhibition of documents filed after the close of evidence. The petitioner had earlier examined two defence witnesses and thus had ample opportunity to exhibit and prove the documents during the defence; filing the petition at the stage when the case was posted for argument engendered legitimate doubts about its bonafides and suggested delaying tactics. While recognising that both parties are entitled to a fair trial, the Court observed that where two reasonable views are possible and the lower court has taken one view, the revisional court should not substitute its own. In these circumstances permitting late exhibition without a request to recall witnesses for proof would not serve the interests of justice and would impair case management and finality. [Paras 10]

The rejection of petition No. 7172 under Section 294 Cr.P.C. was upheld as justified and proper.

Forensic examination of disputed negotiable instrument under Section 243 Cr.P.C. read with Section 45 Indian Evidence Act - Reverse burden in negotiable instruments cases where signature and issuance are admitted - Whether the trial court erred in refusing to send the disputed cheque for forensic examination pursuant to the petition under Section 243 Cr.P.C. read with Section 45, Evidence Act. - HELD THAT: - The Court found that the trial court rightly refused the request for scientific opinion because the petitioner had admitted issuing the cheque, admitted his signature and the firm seal, and also admitted the underlying dealings and part payment. Given these admissions, the reverse onus applicable in negotiable instrument prosecutions would apply and the accused failed to show what additional purpose would be served by forensic examination. The High Court further observed that the facts of the authorities relied upon by the petitioner were materially different and therefore did not assist him. On this factual matrix, sending the instrument for examination was unnecessary and would not change the admitted position. [Paras 12]

The trial court's rejection of petition No. 7174 for forensic examination of the cheque was upheld as legal and proper.

Final Conclusion: Criminal Revision Petition dismissed for lack of merit; impugned order dated 01.04.2021 affirmed and parties directed to bear their own costs.