TaxTMI Updates e-Newsletter
Aug 20,2020

Power of inspection, search and seizure under Section 67 - Authorization by an officer not below the rank of Joint Commissioner - Document Identification Number (DIN) requirement and exceptions for communications - Concurrent audit under Section 65 and investigation under Section 67 - Voluntary payment under Section 74(5) and its relation to Sections 49 and 50 - Acceptance of cash/cheque during investigation under proviso to Rule 87(3) - Provisional attachment of bank accounts under Section 83 in the context of Section 67 proceedings - Judicial review under Article 226 where allegations lack substantiation

Document Identification Number (DIN) requirement and exceptions for communications - Validity of seizure order and summons in absence of DIN and applicability of DIN-exceptions - HELD THAT: - The Court held that the Central Board's DIN requirement aims at transparency and an audit trail but does not render invalid a seizure order issued in the presence of the person at the time of inspection. Exhibit P4 (seizure order) issued to the appellants in their presence did not require a DIN and need not be subsequently regularised; summons and other communications, where applicable, must bear a DIN but here the summons were regularised by generation of DIN during the proceedings and the appellants accepted the genuineness of those DINs. Consequently the contention that Exhibit P4 was invalid for lack of DIN failed. [Paras 9, 10, 11]

Exhibit P4 and the summons are not invalidated for lack of DIN; the DIN requirement does not vitiate the seizure made in the presence of the appellants.

Power of inspection, search and seizure under Section 67 - Authorization by an officer not below the rank of Joint Commissioner - Whether the search and seizure effected by the Senior Intelligence Officer (SIO) was invalid for want of requisite 'reasons to believe' under Section 67 - HELD THAT: - The scheme of Section 67 empowers a proper officer not below the rank of Joint Commissioner to inspect and, where satisfied, to authorize another officer to search and seize. The statutory 'reason to believe' required of the officer not below the rank of Joint Commissioner is that goods liable to confiscation or material relevant to proceedings are secreted in a place; that officer may then authorize another officer. The authorization (Form GST INS-01) showed the Directorate General had reason to believe as required and the SIO was validly authorized under Section 67(2). The reasons recorded by the authorized officer in Exhibit P4 as to prima facie relevance of seized material flowed from and were consistent with the authorization and did not vitiate the seizure. Reliance on the principle that a statutory order must stand on its recitals (Mohinder Singh Gill) was held inapplicable to the authorization/authorization chain under Section 67. [Paras 12, 13, 14, 15]

Search and seizure effected by the SIO were valid because the SIO was properly authorized under Section 67 and the requisite reason to believe was recorded by the competent officer.

Concurrent audit under Section 65 and investigation under Section 67 - Permissibility of simultaneous audit under Section 65 and investigation under Section 67 - HELD THAT: - The Court distinguished routine audit under Section 65 from the more onerous investigation under Section 67 and held that they are independent procedures. Initiation of an investigation under Section 67 while an audit under Section 65 was pending did not, by itself, render the investigation invalid. The appellants had been issued notice calling for details and the progression from notice to audit and then investigation did not establish that the appellants were taken by surprise; the Court accepted the Department's stand that, in view of investigation commencing, the audit would not be continued. [Paras 16, 17]

Simultaneous initiation and continuation of audit and investigation is not impermissible; no infirmity found in commencing Section 67 proceedings while Section 65 audit was pending.

Voluntary payment under Section 74(5) and its relation to Sections 49 and 50 - Acceptance of cash/cheque during investigation under proviso to Rule 87(3) - Rule 142 and intimation prior to deposit - Legality of accepting a cheque/payment during investigation and whether such acceptance required prior notice, assessment or generation of prescribed electronic forms - HELD THAT: - The Court analysed Chapters on Payment and Assessment and held that Sections 49 and 50 govern voluntary payments and do not limit the mechanism by which a person may tender payment during an investigation. Section 74(5) permits the person under investigation to pay tax, interest and a reduced penalty before a notice under Section 74(1); Rule 142(2) permits such voluntary payment and its subsequent intimations/formal acknowledgement. The proviso to Rule 87(3) (c) authorises an officer carrying out investigation or enforcement activity, or an officer authorised by him, to collect amounts by cash, cheque or demand draft during investigation or enforcement, and such collection need not follow generation of the regular forms. Accordingly, the cheque tendered (Exhibit P3) was held received in a manner sanctioned by the statute and rules; the Court found no extortion on the statutory/Rule basis and noted the cheque remained unencashed. [Paras 20, 21, 22, 23, 24]

Acceptance of the cheque/payment during investigation was permissible under Section 74(5) and the proviso to Rule 87(3); Rule 142 does not make such payment dependent on prior intimation by the officer.

Provisional attachment of bank accounts under Section 83 in the context of Section 67 proceedings - Validity of attachment of bank accounts in the present case where Section 67 proceedings were pending - HELD THAT: - The Court declined to examine in depth attachment orders made after dismissal of the writ petition, observing limits of appellate review in this proceeding, but addressed the legal principle distinguishing the present facts from Kaish Impex. In Kaish Impex the attachment was interfered with because Section 70 was not specified in Section 83 and the entity attached was twice removed from the person under investigation. Here, the accounts attached belong to the taxable person against whom Section 67 enquiry has been initiated; Section 83 provisional attachment for protecting revenue in the context of specified proceedings can apply. The Court also rejected the submission that natural justice mandates a hearing prior to attachment for protection of revenue, noting that prior notice may defeat the purpose of attachment; whether hearing is required before disbursal was left open. [Paras 25, 26, 27]

Provisional attachment of the appellants' bank accounts in the context of Section 67 proceedings was not legally impermissible on the grounds advanced; Kaish Impex is distinguishable.

Judicial review under Article 226 where allegations lack substantiation - Whether the writ petition should be entertained on allegations of harassment, illegal custody and extortion in absence of substantiating material - HELD THAT: - The Court held that allegations of harassment and high-handedness, unsupported by substantiating material, do not justify exercise of extraordinary writ jurisdiction. Search and seizure operations carried out by statutory authority may cause discomfort but such inconvenience, without corroborative material establishing illegality, cannot be characterized as unlawful detention or harassment in a petition under Article 226. The Court declined to adjudicate those allegations on merits in the writ jurisdiction and left open the appellants' remedy to pursue proceedings with supporting evidence. [Paras 11]

Writ petition on grounds of harassment and coercion was premature and unsustained for want of substantiation; Article 226 relief refused on those points.

Final Conclusion: The appeal is dismissed. The Court upheld the validity of the Section 67 authorization and seizure, found the DIN requirement inapplicable to seizure made in the appellants' presence, held that simultaneous audit and investigation did not vitiate proceedings, approved acceptance of payment/cheque during investigation under the statutory scheme and rules, and found provisional attachment of the appellants' bank accounts not impermissible on the grounds urged; allegations of harassment were not entertained for lack of substantiation.

Bail under Section 439 of the Cr.P.C. - parity in grant of bail - statement recorded under the GST Act - role and nexus in alleged tax evasion - medical vulnerability/COVID-19 as a consideration for bail - cooperation with trial and bail conditions

Parity in grant of bail - role and nexus in alleged tax evasion - statement recorded under the GST Act - medical vulnerability/COVID-19 as a consideration for bail - cooperation with trial and bail conditions - Whether the petitioner Vijay Kumar Nair is entitled to bail on the same terms as co-accused Amit Bothra and Ashok Daga. - HELD THAT: - The Court considered the comparative facts and evidence placed on record, including that the allegations of clandestine tax evasion were primarily directed against the firm M/s Vishnu Essence and its partners, while the petitioner is proprietor of a different firm M/s AAA Enterprises and was alleged to be a trader/supplier or commission agent. The petitioner's non-connection as partner of M/s Vishnu Essence was not rebutted. Though the department relied upon statements recorded under the GST Act and investigative material alleging a proximate nexus, the learned Additional Solicitor General did not point out any substantial distinction between the petitioner's case and those of the co-accused who had been granted bail. The petitioner also raised infirmities in the recording of statements and reliance upon them, and invoked advanced age and medical ailments amid the COVID-19 pandemic as additional grounds. Balancing these factors and without adjudicating the merits, the Court found that parity with the co-accused and the material on record warranted release on bail, subject to the same terms and conditions imposed earlier, including cooperation with the trial and other bail conditions.

The petition is allowed and the petitioner is directed to be released on bail on the same terms as those imposed in respect of co-accused Amit Bothra and Ashok Daga, subject to standard conditions including cooperation with the trial.

Final Conclusion: The application for bail is allowed on the same terms as granted to the co-accused, without commenting on the merits; all pending interlocutory applications stand closed.

Grant of bail under section 439 Cr.P.C. - cognizable non-bailable offence under Section 132 of the GST Act - statements recorded under Section 70 of the GST Act - limited weight of confessional statements during the life or availability of the author - default bail under Section 167 Cr.P.C. - economic offences and bail jurisprudence - conditions of bail: cooperation, non-tampering with witnesses and surrender of passport

Grant of bail under section 439 Cr.P.C. - statements recorded under Section 70 of the GST Act - limited weight of confessional statements during the life or availability of the author - cognizable non-bailable offence under Section 132 of the GST Act - default bail under Section 167 Cr.P.C. - conditions of bail: cooperation, non-tampering with witnesses and surrender of passport - Application for grant of bail to the petitioner Kishore Wadhwani in crime no.23/2020. - HELD THAT: - The Court considered the prosecution case including reliance on stickers and identity cards found on vehicles and statements recorded under Section 70 of the GST Act which allegedly connect the petitioner to clandestine tax evasion. The petitioner denied involvement, contending that he was merely the landlord and that statements were retracted as made under duress; further, no independent documentary evidence directly tying him to the evasion was produced for detention purposes. The Court observed that confessional statements under Section 70 cannot be afforded conclusive weight during the author's lifetime or availability and that elaborate discussion of confidential evidence would be inappropriate on bail application. The prosecution's contentions about potential hampering of investigation and alleged assault during search were noted, but the Court found no requirement to continue custodial interrogation and that the petitioner was entitled to be released on bail. Accordingly, without commenting on merits, bail was granted subject to stringent conditions including execution of a personal bond with solvent surety, cooperation with trial, prohibition on tampering with witnesses, avoidance of criminal activity and surrender of passport / restraint on leaving the country without prior permission of the Court. [Paras 10, 11]

Petition allowed and petitioner Kishore Wadhwani released on bail on furnishing a personal bond with one solvent surety subject to specified conditions.

Final Conclusion: Bail allowed to the petitioner Kishore Wadhwani in the GST-related criminal prosecution, subject to execution of bond and conditions (co-operation with trial, non-tampering with witnesses, abstention from criminal activity and surrender/ non-departure without Court permission); no adjudication on merits.

Refund of tax collected - refund to the dealer who deposited tax - mandamus to decide representation - advance ruling on NIL rate of tax

Mandamus to decide representation - refund of tax collected - Direction to the Managing Director of respondent no.1 to decide the petitioner's representation dated 20.09.2019 within a specified time and disposition of substantive prayer for refund by way of writ. - HELD THAT: - The writ petition seeking mandamus for correction of outward supplies in the Annual Return 2017-2018 and refund of GST deducted from the petitioner's security deposit was not allowed by granting the substantive reliefs. Instead, having regard to the factual background and contentions, the court disposed of the petition by directing the Managing Director of Uttarakhand Seeds and Tarai Development Corporation Ltd. to take a decision on the petitioner's representation dated 20.09.2019 at the earliest and in any event within eight weeks from production of a certified copy of the order. The court thereby required the competent corporate authority to consider and decide the claim for refund/rectification rather than itself directing immediate correction or payment under writ jurisdiction.

Petition disposed of by directing respondent no.1 to decide the representation within eight weeks; substantive prayer for writ-ordered refund/rectification not granted.

Refund to the dealer who deposited tax - advance ruling on NIL rate of tax - Court declined to grant a writ direction to tax authorities to refund the GST directly to the petitioner on the ground that statutory scheme permits refund to the dealer who deposited the tax. - HELD THAT: - Counsel for the tax authority urged, and the court recorded, that under the statutory scheme a refund of GST can be made to the dealer who actually deposited the tax, and therefore prayer seeking a writ directing the GST Authorities to refund the amount directly to the petitioner could not be granted. The court accepted this statutory position as the basis for not issuing a direction to the Competent Authority to effect refund to the petitioner and instead directed intra-corporate decision-making by respondent no.1. The petitioner's reliance on the advance ruling that damaged wheat seeds attract NIL rate of GST is part of the factual matrix to be considered by respondent no.1 in deciding the representation.

No writ direction issued to GST authorities to refund to the petitioner; refund remedy to be pursued through respondent no.1 and statutory channels.

Final Conclusion: Writ petition disposed of by directing the Managing Director of Uttarakhand Seeds and Tarai Development Corporation Ltd. to decide the petitioner's representation dated 20.09.2019 within eight weeks of production of the certified copy of this order; no writ was issued directing the GST Authorities to refund tax directly to the petitioner, the court recording that refund under the statutory scheme is payable to the dealer who deposited the tax.

Principles of natural justice - opportunity of personal hearing - reliance on documents not disclosed in show cause notice - right to cross-examine witnesses - production of additional documents - quashing of order - remand for fresh consideration - direction to furnish documents relied upon - dispose afresh in accordance with law - video conferencing hearing - expedited disposal in view of perishable goods - compliance with Government circular dated 31.12.2018

Principles of natural justice - opportunity of personal hearing - reliance on documents not disclosed in show cause notice - Impugned penalty order set aside as being in contravention of principles of natural justice for relying on documents not disclosed and for denial of personal hearing. - HELD THAT: - The Court found that the impugned order placed reliance on several documents and circumstances which were neither referred to nor enumerated in the show cause notice and which were not brought to the notice of the petitioner before passing the order. It is not in dispute that no personal hearing was afforded. The petitioner was not permitted to cross-examine witnesses with reference to those documents nor given opportunity to produce additional documents. In these circumstances the impugned order suffers from a breach of the principles of natural justice, warranting quashing without touching the merits of the underlying controversy. [Paras 5, 6]

Impugned order quashed on ground of violation of principles of natural justice.

Remand for fresh consideration - direction to furnish documents relied upon - right to cross-examine witnesses - production of additional documents - dispose afresh in accordance with law - compliance with Government circular dated 31.12.2018 - video conferencing hearing - expedited disposal in view of perishable goods - Matter remitted to Assistant Commissioner for fresh disposal with directions to afford sufficient opportunity and ancillary procedural safeguards. - HELD THAT: - Having quashed the impugned order for breach of natural justice, the Court remitted the matter for fresh consideration. The Assistant Commissioner is directed to furnish to the petitioner copies of all documents relied upon in the impugned order and any other documents proposed to be relied upon, to afford the petitioner an opportunity to cross-examine witnesses with reference to those documents and to produce additional documents in support of his contentions. The respondent is directed to dispose of the matter afresh in accordance with law, bearing in mind the Government circular dated 31.12.2018 issued under Section 168 of the Act. In view of the pandemic exigency the petitioner may be permitted to contest the proceedings by video conferencing at his own cost, and because the goods involved are perishable the proceedings are to be concluded within one month. [Paras 6, 7]

Quashed order remitted for fresh disposal with specified directions to ensure fair opportunity and expedited adjudication.

Final Conclusion: The penalty order is quashed for breach of natural justice and the matter is remitted to the Assistant Commissioner for fresh disposal in accordance with law after furnishing documents relied upon, permitting cross-examination and production of documents, complying with the Government circular dated 31.12.2018, allowing video conferencing if requested, and concluding proceedings within one month due to perishability of goods.

Classification of goods for levy of GST - applicability of GST rate - challenge to show cause notice - re classification request and administrative consideration by the GST Council

Challenge to show cause notice - classification of goods for levy of GST - applicability of GST rate - Relief of quashing the show cause notices was not granted; the court did not adjudicate the correctness of classification or applicable GST rate for AUS ingredient based sanitizers. - HELD THAT: - The petition sought quashing of show cause notices alleging misclassification of AUS (Ayurvedic/Unani/Siddha) ingredient based sanitizers as alcohol based sanitizers and contesting imposition of GST at 18% instead of 12%. The Court refrained from deciding the merits on classification or the correct rate of tax. Instead, on the representation made by the petitioner, the Court directed that the representation be forwarded to the establishment of the GST Council for appropriate consideration in accordance with law and requested that the Council take up the matter at the earliest. No adjudication on the validity of the show cause notices or on the correct tariff classification was undertaken by the Court.

The court declined to quash the show cause notices and directed that the petitioner's representation be forwarded to the GST Council for consideration; the question of classification and applicable GST rate remains for administrative consideration.

Final Conclusion: The petition was disposed by directing the respondents to forward the petitioner's representation to the GST Council for appropriate consideration; the substantive dispute on classification and applicable GST rate was not decided by the Court.

Classification as Essential Commodity under the Essential Commodities Act - judicial review of Government policy decisions - manifestly unreasonable or arbitrary - regulation of prices under the Essential Commodities Act - challenge to rate of tax only if confiscatory

Classification as Essential Commodity under the Essential Commodities Act - judicial review of Government policy decisions - manifestly unreasonable or arbitrary - regulation of prices under the Essential Commodities Act - Writ relief seeking direction to extend notifications classifying masks and sanitizers as 'Essential Commodity' and to continue price regulation under the Essential Commodities Act was not warranted. - HELD THAT: - The decision whether to include items within the list of essential commodities and to continue corresponding regulatory measures is a policy decision for the Government. Judicial interference is appropriate only if the decision is shown to be manifestly unreasonable or arbitrary. The record, including the Office Memorandum noting availability and lack of adverse reports, discloses a considered governmental conclusion that continued inclusion and controls were unnecessary. The petitioners produced no material demonstrating that the respondents' assessment was erroneous; speculative concerns about potential future profiteering do not convert the policy choice into arbitrariness. Moreover, during the period of coverage the regulatory measure in issue related only to price control and did not impose broader restrictions relied upon by the petitioners. [Paras 4, 5]

No mandamus; petition for extension or re inclusion of masks and sanitizers as essential commodities and continuation of price regulation dismissed.

Challenge to rate of tax only if confiscatory - judicial review of Government policy decisions - Prayer to direct reduction of GST rate on masks and sanitizers was not maintainable in writ jurisdiction in absence of any showing that the rate is confiscatory. - HELD THAT: - Rate of tax is not ordinarily justiciable unless it is shown to be confiscatory in nature. The petition contained no argument or material demonstrating that the applicable GST rate met that threshold. A mere assertion that the rate is excessive does not suffice to command issuance of a writ directing reduction of tax. Accordingly, the Court declined to intervene in the fiscal policy choice reflected by the GST rate. [Paras 6, 7]

Petition seeking reduction of GST rate on masks and sanitizers dismissed for want of a confiscatory-rate challenge.

Final Conclusion: The writ petition seeking extension of essential commodity classification and price regulation for masks and sanitizers, and seeking reduction of GST rate thereon, is dismissed: the Court will not override the Government's policy determination absent manifest unreasonableness, nor order tax reduction absent a showing that the tax is confiscatory.

Inclusion of reimbursed service tax in aggregate amount for computation under Section 44BB(2) - statutory levy reimbursed by service recipient not forming part of assessable aggregate receipts - precedential application of a prior High Court decision

Inclusion of reimbursed service tax in aggregate amount for computation under Section 44BB(2) - statutory levy reimbursed by service recipient not forming part of assessable aggregate receipts - Amount representing service tax reimbursed to the appellant by its customers is not to be included in the aggregate amount referred to in sub section (2) of Section 44BB of the Act. - HELD THAT: - The Court, after hearing counsel, concluded that the substantial question of law raised in the appeal had already been decided in favour of an assessee by the High Court in Income Tax Appeal No.40 of 2012 (reported (2019) 414 ITR 1 (Uttarakhand)). That earlier decision held that amounts reimbursed to a service provider by the service recipient representing service tax (a statutory levy) paid by the service provider did not form part of the aggregate amounts in clauses (a) and (b) of sub section (2) of Section 44BB. Applying and following that precedent, the Court answered the substantial question of law in favour of the appellant, holding that the reimbursed service tax should not be included for computation under Section 44BB(2). [Paras 2, 3]

Substantial question answered in favour of the assessee; reimbursed service tax not includible in the aggregate amount under Section 44BB(2).

Final Conclusion: Appeal disposed of by following the earlier High Court decision reported in (2019) 414 ITR 1 (Uttarakhand): reimbursed service tax received from customers does not form part of the aggregate amount under Section 44BB(2).

Wilful attempt to evade tax - possession of books with false entries - voluntary disclosure of undisclosed income - seizure under Section 132 - payment of tax and official acknowledgement - quashing of criminal proceedings

Wilful attempt to evade tax - possession of books with false entries - voluntary disclosure of undisclosed income - seizure under Section 132 - payment of tax and official acknowledgement - Whether the offences under Section 276C(2) of the Income Tax Act are attracted against the petitioner - HELD THAT: - The Court examined the statutory concept of a wilful attempt to evade tax, which requires conduct such as possession of books containing false entries, making false entries, omission of relevant entries, or causing circumstances enabling evasion. The petitioner voluntarily disclosed the undisclosed income during the search/inspection conducted on 18.12.2012. Relevant books of account were seized on that inspection and were not handed back before the last date for filing the return; as a result the petitioner could not file the return by the statutory date. The petitioner subsequently filed the belated return, paid the tax demanded, and the revenue formally acknowledged receipt of the tax. On these facts the Court found absence of the requisite wilful intention to evade payment of tax and that the ingredients of Section 276C(2) were not made out. [Paras 5, 6, 7]

Offence under Section 276C(2) not attracted; criminal proceedings unsustainable and liable to be quashed.

Final Conclusion: The petition is allowed and the criminal proceedings in E.O.C.No.576 of 2017 on the file of the Additional Chief Metropolitan Magistrate (Economic Offences), Egmore, Chennai are quashed; connected petitions closed.

Draft assessment order - void ab initio - jurisdictional defect - scheme of Section 144C - eligible assessee - transfer pricing adjustment on outstanding receivables - interest on receivables - international transaction - tax deduction obligation under Section 195 - tax deduction under Section 192 - allowability of reimbursement of salary of expatriates - credit for prepaid taxes

Draft assessment order - void ab initio - jurisdictional defect - scheme of Section 144C - eligible assessee - Draft assessment order framed in the name of a non existent amalgamating company is void ab initio and vitiates the subsequent proceedings under the Section 144C scheme. - HELD THAT: - The Transfer Pricing Officer had framed its order in the name of the amalgamated company (the appellant) and the definition of eligible assessee under the Section 144C scheme requires the draft assessment to be forwarded to that eligible assessee. The Assessing Officer, however, issued the draft assessment order in the name of the dissolved/amalgamating company which, on the date of the draft, did not exist as a person. Issuance of a valid draft order is a jurisdictional prerequisite to invoke the Section 144C process; a draft order in the name of a non existent person cannot confer jurisdiction and is therefore incurably void. The tribunal applied precedent holding that such a defect is not curable under general rectification provisions and accordingly allowed the grievance. [Paras 5, 6, 7, 8, 13]

Draft assessment order in the name of the non existent company is void ab initio; consequent proceedings are null and the grievance is allowed.

Transfer pricing adjustment on outstanding receivables - interest on receivables - international transaction - Transfer pricing adjustment imputed by treating outstanding receivables as unsecured advances and imputing interest is deleted. - HELD THAT: - The TPO characterised delayed receipts from associated enterprises as unsecured loans and imputed interest using LIBOR plus mark up. The assessee demonstrated it was debt free, had adequate cash flows, did not pay or earn comparable interest from unrelated parties and was a 100% captive service provider. On these facts the tribunal found no merit in treating outstanding receivables as a separate interest bearing international transaction and set aside the adjustment. [Paras 15, 16, 17, 18, 20]

TP adjustment of Rs. 22.16 lakhs on outstanding receivables is deleted.

Tax deduction obligation under Section 195 - tax deduction under Section 192 - allowability of reimbursement of salary of expatriates - Disallowance under section 40(a)(i) arising from alleged failure to deduct tax under Section 195 on reimbursements of expatriate salary costs is deleted; Section 195 did not apply where tax was deducted under Section 192 and the reimbursements were payments to the assessee's own employees. - HELD THAT: - The Assessing Officer treated reimbursements of expatriate salary costs as fees for included services and invoked non deduction under Section 195 with corresponding disallowance. The assessee produced the secondment/salary reimbursement agreement, TDS certificates, Forms 15CA/15CB and showed it was the real and economic employer, had borne salary costs and deducted tax under Section 192. The terms of the agreement established that secondees were employees of the assessee and payments were reimbursements of salaries paid by the assessee. On these facts and in light of applicable precedents distinguishing Centrica, the tribunal concluded Section 195 did not apply and directed deletion of the addition. [Paras 22, 30, 31, 32, 33]

Addition/disallowance on account of alleged failure to deduct tax under Section 195 is deleted.

Credit for prepaid taxes - Assessee to be given credit for prepaid taxes in accordance with law. - HELD THAT: - The tribunal directed the Assessing Officer to allow credit for prepaid taxes as per the statutory provisions, noting that appropriate documents are on record and credit must be granted in accordance with law. [Paras 34, 35]

Assessing Officer directed to give credit of prepaid tax as per law.

Final Conclusion: The appeal is allowed: the draft assessment framed in the name of a non existent company is void ab initio making the assessment proceedings invalid; on merits the tribunal deleted the transfer pricing addition on outstanding receivables and the disallowance for alleged failure to deduct tax under Section 195, and directed grant of credit for prepaid taxes.

Exemption under section 54F of the Income tax Act - utilisation of capital gains for purchase/construction within three years - capital gains account scheme - due date of filing return under section 139(4) of the Income tax Act - deposit in capital gains account scheme before due date of filing under section 139(1)

Exemption under section 54F of the Income tax Act - due date of filing return under section 139(4) of the Income tax Act - capital gains account scheme - Whether payment made towards purchase/construction of new residential house up to the due date for filing return under section 139(4) can be treated as utilisation of capital gains for claiming exemption under section 54F despite non deposit in the capital gains account scheme before the due date of filing under section 139(1). - HELD THAT: - The Tribunal followed the view of the coordinate Bench and the Hon'ble Karnataka High Court in K. Ramachandra Rao that where the assessee has invested/paid amounts equivalent to capital gains towards the purchase/construction of a new residential house within the three year period, payments made up to the due date prescribed for filing the belated/revised return under section 139(4) are to be treated as utilisation of capital gains for the purpose of claiming exemption under section 54F. The Tribunal declined to give determinative weight to the contrary view that strict deposit in the capital gains account scheme before the due date under section 139(1) is an absolute precondition to the exemption, and held that the payments shown to have been made by the assessee up to the time allowable under section 139(4) satisfy the statutory requirement of utilisation of capital gains. Applying that principle to the admitted facts, the Tribunal concluded that the assessee who paid amounts up to the due date under section 139(4) is entitled to claim relief under section 54F, and directed the Assessing Officer to consider such amounts for granting the deduction. [Paras 10, 11]

Impugned order set aside; assessing officer directed to consider amounts utilised by the assessee for purchase of the house up to the time allowable under section 139(4) for deduction under section 54F.

Final Conclusion: Appeal allowed in part; the Tribunal set aside the CIT(A)'s confirmation of addition and directed the Assessing Officer to allow exemption under section 54F to the extent of amounts shown to have been utilised by the assessee up to the due date for filing under section 139(4), with consequential adjudication by the Assessing Officer.

Condonation of delay - bonafide mistake of tax consultant - combined appeal against multiple quarterly orders - assessee in default for non-deduction of tax at source - remand for fresh adjudication on merits

Condonation of delay - bonafide mistake of tax consultant - combined appeal against multiple quarterly orders - Delay of 502 days in filing three separate appeals before the CIT(A) is condoned. - HELD THAT: - The original appeal filed by the assessee on 20.04.2017 against the four quarterly orders was within the period of limitation but was mistakenly filed as a single combined appeal due to a bonafide mistake by the assessee's tax consultant. The CIT(A) treated the single appeal as pertaining only to the first quarter and rejected condonation petitions for the remaining three quarters. Having regard to the factual position that an appeal was timely filed (albeit combined) and the explanation of a genuine bonafide mistake, the Tribunal exercised its discretion to condone the delay of 502 days in filing the three appeals before the CIT(A).

Delay of 502 days is condoned and the impugned orders dismissing the appeals in limine are set aside.

Remand for fresh adjudication on merits - assessee in default for non-deduction of tax at source - Matters remitted to the CIT(A) for fresh adjudication on merits after condonation of delay. - HELD THAT: - Having condoned the delay, the Tribunal directed that the three appeals be restored to the file of the CIT(A) for consideration on merits. The CIT(A) is to decide the appeals afresh, giving the assessee an appropriate opportunity of hearing, in respect of the findings that had treated the assessee as assessee in default for non-deduction of tax at source for the respective quarterly orders.

Matters remitted to the CIT(A) for fresh adjudication on merits with directions to afford the assessee an opportunity of hearing.

Final Conclusion: The Tribunal allowed the appeals for statistical purposes by condoning the delay of 502 days in filing the three appeals and setting aside the CIT(A)'s orders which had dismissed them in limine; the matters are remitted to the CIT(A) for fresh adjudication on merits with an opportunity of hearing.

Revisional jurisdiction under section 263 of the Income-tax Act - erroneous order prejudicial to the revenue - Doctrine of merger of revisional order and finality of assessment - Onus under section 68 - proof of identity, creditworthiness and genuineness of shareholders - Explanation 2(c) to section 263 - non compliance with Board orders or instructions - Unsustainable in law test and permissible alternative view (Malabar Industries test)

Revisional jurisdiction under section 263 of the Income-tax Act - erroneous order prejudicial to the revenue - Unsustainable in law test and permissible alternative view (Malabar Industries test) - Whether the Second Principal Commissioner of Income tax satisfied the statutory condition precedent under section 263 before invoking revisional jurisdiction in respect of the AO's reassessment dated 07 12 2016. - HELD THAT: - The Tribunal applied the twin limb test in Malabar Industries that revision under section 263 is permissible only if the AO's order is both erroneous and prejudicial to the revenue. On examination of the reassessment file and the First Pr. CIT's directions, the Tribunal found that the Second AO had carried out the specific enquiries mandated by the First revisional order: he summoned the assessee's director, examined books, bank statements and filings, issued notices under section 133(6) to shareholders, received extensive documentary replies and verified identity, source and creditworthiness of investors (documents running to over 352 pages). The AO accepted the transactions and made only a small disallowance under section 14A; his satisfaction on the identity, genuineness and creditworthiness of subscribers was a plausible view supported by evidence and judicial precedents. The Second Pr. CIT's conclusion of 'lack of enquiry' was held to be vague, unsubstantiated and not shown to render the AO's view unsustainable in law. The Tribunal therefore held that the jurisdictional precondition under section 263 was not satisfied and the Second Pr. CIT erred in interfering. [Paras 54, 55, 56]

The Second Pr. CIT did not satisfy the condition precedent under section 263; his exercise of revisional jurisdiction was without jurisdiction and is quashed.

Doctrine of merger of revisional order and finality of assessment - Onus under section 68 - proof of identity, creditworthiness and genuineness of shareholders - Whether the Second Pr. CIT could re exercise revisional jurisdiction over a reassessment which had been made pursuant to a prior revisional order of an earlier Pr. CIT on the same subject matter (share capital and premium). - HELD THAT: - The Tribunal found that the First Pr. CIT had set aside the original assessment and directed a de novo enquiry with specific directions as to examination of books, bank accounts and verification of identity, source and genuineness of shareholders. The Second AO conducted that de novo assessment in compliance with those directions and accepted the share capital/premium after verification. In these circumstances the Tribunal held that the Second Pr. CIT, as a successor incumbent, could not supplant the earlier revisional order by re opening the very same subject matter without pointing to any specific defect in the AO's investigatory or adjudicatory process. Allowing such unrestricted re revision would negate finality; where the AO has complied with the earlier revisional directions and taken a plausible view supported by evidence, the doctrine of merger operates and further intervention requires demonstration that the AO's view is unsustainable in law or fact. No such demonstration was made by the Second Pr. CIT. [Paras 56, 57]

The Second Pr. CIT was not justified in re opening the same subject matter after a de novo reassessment complied with the First Pr. CIT's directions; his second revisional order is invalid.

Final Conclusion: The Tribunal allowed the appeal: the impugned order dated 14 03 2019 of the Second Principal Commissioner under section 263 was quashed because the condition precedent for revision was not satisfied and the Second Pr. CIT could not validly re open the subject matter after a de novo reassessment carried out in compliance with the earlier revisional directions; appeal allowed.

Actual receipt versus notional journal entry for share application money - Inapplicability of section 68 where no amount is actually credited in the relevant year - Explanation and burden under section 68 - Requirement of independent inquiry by assessing officer to falsify evidence

Actual receipt versus notional journal entry for share application money - Inapplicability of section 68 where no amount is actually credited in the relevant year - Addition under section 68 confirming share application money credited in books where cheques were neither presented nor encashed during the relevant year is not sustainable. - HELD THAT: - The Tribunal found on the material before it that cheques representing share application money, although dated before 31.3.2013, were presented and encashed only after the end of the accounting year; consequently no real receipt or inflow of cash had occurred in the previous year relevant to Asstt.Year 2013-14 and the accounting entries were notional. Applying the principle that section 68 applies where a sum is actually found credited in the books for the previous year and the assessee fails to satisfactorily explain its nature and source, the Tribunal held that where there is no actual consideration received in that year the provision cannot be invoked. The Tribunal relied on analogous findings in earlier decisions examining identical facts, and rejected the proposition that the mere issuance or dating of cheques before the year-end suffices to treat the amounts as credited in the relevant year. The determinative legal principle articulated is that absence of actual receipt in the accounting year precludes application of section 68 to that year, and therefore no inquiry under section 68 can be sustained for Asstt.Year 2013-14. [Paras 6, 7, 8]

Addition of Rs. 2.00 crores made under section 68 deleted for Asstt.Year 2013-14 as no actual amount was credited in that year.

Explanation and burden under section 68 - Requirement of independent inquiry by assessing officer to falsify evidence - Whether the Assessing Officer's inquiry into identity, creditworthiness and genuineness of share applicants needed to be determined in the relevant year where no amount was actually received. - HELD THAT: - The Tribunal recorded that the assessee placed extensive material on record but observed that it was not necessary to examine or evaluate the identity, creditworthiness or genuineness of the applicants for the purposes of Asstt.Year 2013-14 because the primary threshold under section 68 - that a sum be credited in the books in that previous year - was not met. The Tribunal further noted that even if the AO had doubts, inquiry under section 68 presupposes a real credit in the relevant year; absent such a credit, there was no occasion to probe the evidentiary material of the applicants for that assessment year. Accordingly, the need for the AO to conduct independent enquiries to falsify the documents did not arise for Asstt.Year 2013-14. [Paras 8]

No requirement to inquire into identity/creditworthiness for Asstt.Year 2013-14; therefore addition under section 68 not sustainable and deleted.

Final Conclusion: The Tribunal allowed the appeal for Asstt.Year 2013-14, deleting the addition of Rs. 2.00 crores made under section 68 because the amounts were not actually received or credited in the relevant year and hence section 68 was inapplicable.

Long-term capital gains exemption under section 10(38) - addition as unexplained income under section 68 - estimated commission addition - onus on assessee to prove genuineness and shifting burden on revenue to rebut - reliance on third party statements and requirement of opportunity to cross examine (principle of natural justice) - additions based on suspicion, surmise or conjecture unsustainable - alleged manipulation/rigging of share price and necessity of tangible link

Long-term capital gains exemption under section 10(38) - addition as unexplained income under section 68 - estimated commission addition - onus on assessee to prove genuineness and shifting burden on revenue to rebut - additions based on suspicion, surmise or conjecture unsustainable - Whether the Long Term Capital Gains claimed as exempt and the consequential estimated commission addition could be sustained as unexplained income in the absence of cogent material linking the assessee to alleged manipulation. - HELD THAT: - The Tribunal found that the assessee had produced direct documentary evidence of purchase, demat credit, sale through recognised stock exchange, contract notes, bank receipts and market trading data, and that the shares were acquired pursuant to an approved scheme of amalgamation. On this material the assessee discharged the onus to prove genuineness of the transactions and the onus shifted to the revenue to rebut the same. The revenue's case rested primarily on third party statements and on search outcomes relating to third parties, without establishing any tangible link between those third parties and the assessee, and without conducting independent investigations to corroborate the allegation of price rigging. The Tribunal emphasised that additions founded on suspicion, surmise or conjecture cannot be sustained and that reliance on third party statements which were not confronted by providing opportunity of cross examination undermined their evidentiary value. In these circumstances the revenue failed to discharge the shifted burden to dislodge the assessee's claim of exemption and to justify the estimated commission addition. [Paras 6, 7, 8, 13]

Addition of the claimed Long Term Capital Gains and the estimated 2% commission were deleted.

Final Conclusion: The Tribunal allowed the appeals in part: the additions treating the declared Long Term Capital Gains as unexplained income and the consequent estimated commission were deleted for A.Y. 2014 15; consequential issues of interest and penalty were left open being consequential.

Income from house property - Income from other sources - Amenity charges - Composite nature of leave and licence and amenities agreements - Application of precedent in Shambhu Investment Pvt. Ltd.

Amenity charges - Income from house property - Income from other sources - Composite nature of leave and licence and amenities agreements - Application of precedent in Shambhu Investment Pvt. Ltd. - Whether amenity charges received by the assessee are taxable as income from house property or as income from other sources. - HELD THAT: - The Tribunal held that the amenity charges arise from facilities (RCC frame common areas, marble/granite in lobbies, kotah in staircases, elevators, CCTV, water supply etc.) which are integral parts of the building and coterminous with the licence of premises. The two agreements - the licence and the amenities agreement - are composite and dependent on each other so that the amenity charges cannot be effectively segregated from rental receipts. The Tribunal relied on the assessee's earlier Tribunal decision in respect of an earlier year where identical agreements and amenities were held to constitute income from house property, and further applied the principle in Shambhu Investment Pvt. Ltd. to conclude that such receipts fall under income from house property. On this basis the Tribunal reversed the Assessing Officer and CIT(A), directing that the amenity charges be treated as income from house property and not as income from other sources. [Paras 6, 7, 8]

Amenity charges are taxable as income from house property; orders of the AO and CIT(A) are reversed and the appeal is allowed.

Final Conclusion: The assessee's appeal is allowed: amenity charges declared are to be treated as income from house property for A.Y. 2011-12 and not as income from other sources; the Assessing Officer is directed to give effect accordingly.

Erroneous order prejudicial to the interests of revenue - treatment of government incentive as revenue or capital receipt - two views doctrine / sustainable view taken by assessing officer - section 263 of the Income-tax Act, 1961 - Rule 34(5)(c) of the Appellate Tribunal Rules - pronouncement within 90 days - extension of time for pronouncement owing to COVID-19 lockdown

Erroneous order prejudicial to the interests of revenue - treatment of government incentive as revenue or capital receipt - two views doctrine / sustainable view taken by assessing officer - section 263 of the Income-tax Act, 1961 - Validity of the Principal CIT's order under section 263 holding the assessment as erroneous insofar as prejudicial to the interests of revenue by treating the VAT refund incentive as revenue receipt. - HELD THAT: - The Tribunal noted that the assessee received a VAT-refund incentive which the AO treated as a capital receipt not chargeable to tax, while the Principal CIT held it to be revenue in nature and invoked section 263. The Tribunal observed that the assessee's identical contention had earlier succeeded before the Tribunal in the assessee's own case, and that the AO had taken one of two possible views. Applying the principle that an assessing officer's order cannot be treated as erroneous and prejudicial to the revenue where a plausible view has been taken (as explained by the Supreme Court in Max India and Malabar Industries), the Tribunal held that the AO's treatment was sustainable in law and did not amount to an error under section 263. Consequently the revision order under section 263 was not maintainable. [Paras 7, 8, 9]

The PCIT's order under section 263 is quashed and the AO's assessment treating the incentive as a capital receipt is sustained.

Rule 34(5)(c) of the Appellate Tribunal Rules - pronouncement within 90 days - extension of time due to COVID-19 lockdown - pronouncement of orders within 90 days - Permissibility of pronouncing the Tribunal's order beyond the 90-day period prescribed by Rule 34(5)(c) in light of the COVID-19 lockdown. - HELD THAT: - The Bench acknowledged the Rule 34(5)(c) requirement to pronounce orders within 60 days (extendable ordinarily up to 90 days) but recognised the exceptional disruption caused by the COVID-19 lockdown. Relying on contemporaneous judicial practice and pragmatic interpretation, the Tribunal treated the lockdown period as exigent circumstances justifying exclusion from the 90-day computation and proceeded to pronounce the order after that period. The Tribunal recorded that extraordinary pandemic-related restrictions warranted the extension and that pronouncement beyond 90 days was therefore permissible in the circumstances. [Paras 10, 11]

The delay in pronouncement beyond 90 days on account of the COVID-19 lockdown is justified and the order is pronounced as on date.

Final Conclusion: The assessee's appeal is allowed: the Principal CIT's revision order under section 263 is quashed and the assessing officer's treatment of the VAT refund incentive as a capital receipt is sustained; the Tribunal's pronouncement beyond the 90-day period is held permissible in view of COVID-19 lockdown disruptions.

Fee under Section 234E - processing of e-TDS statement - provisional levy under Section 200A(1)(c) - CBDT Circular No. 3 of 2018 Para 10 exceptions - low tax effect limits for filing appeals by the Revenue - Central Processing Centre (CPC) as part of the Income Tax Department

Fee under Section 234E - CBDT Circular No. 3 of 2018 Para 10 exceptions - low tax effect limits for filing appeals by the Revenue - Whether the Department's appeals are maintainable despite low tax effect and whether any exception in Para 10 of CBDT Circular No. 3 of 2018 applies to permit contesting the matter on merits. - HELD THAT: - The Tribunal found that the quantum of fee involved in the appeals is below the monetary threshold prescribed for filing appeals by the Revenue. Para 10(a) of the Circular (constitutional validity cases) is inapplicable because the learned CIT(A) did not hold Section 234E to be constitutionally invalid nor did he decide the constitutional question; the assessee only referred to pending proceedings. Exception 10(e) is confined to additions based on information from external law enforcement agencies (CBI/ED/DRI/SFIO/DGGI etc.). The TDS statement in the present cases was filed on TRACES and processed centrally by the Department's Central Processing Centre (CPC), which is staffed by departmental officers holding concurrent jurisdiction with the Assessing Officer. CPC therefore does not qualify as an external law enforcement agency for the purpose of Para 10(e). Consequently, none of the exceptions in Para 10 apply and the low tax effect circular remains binding on the Revenue. [Paras 11, 14, 16, 17]

Appeals dismissed on account of low tax effect; exceptions in Para 10 of CBDT Circular No. 3 of 2018 do not apply so the Department cannot contest the matter on merits in these appeals.

Processing of e-TDS statement - Central Processing Centre (CPC) as part of the Income Tax Department - CBDT Circular No. 3 of 2018 Para 10(e) - Whether processing of the TDS statement by the Central Processing Centre amounts to information received from an external law enforcement agency falling within exception 10(e) of the CBDT Circular. - HELD THAT: - The Tribunal examined the source and nature of processing. The TDS statement was uploaded on TRACES and processed by CPC-TDS, a unit manned by officers of the Income Tax Department who exercise concurrent jurisdiction with the Assessing Officer under relevant departmental provisions. The CPC's functions, though centrally organised, are part of the Department's machinery and not external law enforcement inputs as envisaged by exception 10(e). Therefore, processing and intimation by CPC cannot be equated with information from outside enforcement agencies that would justify overriding the low tax effect limits. [Paras 15, 16]

Processing by CPC does not bring the case within exception 10(e); CPC is not an external law enforcement agency for the purposes of the Circular.

Final Conclusion: Both appeals filed by the Revenue for the stated assessment years are dismissed on account of low tax effect; the Tribunal did not adjudicate the departmental contentions on merits as the exceptions to the low tax effect policy were held inapplicable.

Rejection of transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Redetermination of assessable value using value of identical/similar goods under Rule 5 - Use of NIDB data and internet/market prices for valuation - Confiscation of imported goods with option of redemption on payment of fine - Demand of differential customs duty and interest - Penalty for undervaluation under Section 114A of the Customs Act, 1962 - Penalty for mis-declaration under Section 114AA of the Customs Act, 1962 - Obligation to afford opportunity/natural justice in valuation proceedings

Rejection of transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Redetermination of assessable value using value of identical/similar goods under Rule 5 - Use of NIDB data and internet/market prices for valuation - Obligation to afford opportunity/natural justice in valuation proceedings - Declared transaction value was rightly rejected and assessable value correctly re-determined on the basis of identical/similar goods data and internet prices. - HELD THAT: - The adjudicating authority compared the invoice value with contemporaneous NIDB entries for identical/similar silicon sealants and with minimum bulk prices available on internet, found the declared unit values to be significantly lower and thus amenable to rejection under Rule 12. Though the authorities noted a range of prices, in order to adopt a conservative approach they used the lowest NIDB price for assessment while also observing internet rates that supported higher market values. The appellant failed to produce contemporaneous documentary proof (purchase orders, agreements or costing) to sustain the declared value despite opportunities to do so. The Commissioner (Appeals) and this Tribunal found the re-determined value proximate to market realities and consistent with valuation principles, and concluded that the procedure met requirements of natural justice. [Paras 5, 7, 10, 14]

Rejection of declared value and re-determination of assessable value at the value of identical/similar goods upheld.

Confiscation of imported goods with option of redemption on payment of fine - Principle of mis-declaration affecting confiscation - Confiscation of the seized goods with option to redeem on payment of a fine was validly ordered. - HELD THAT: - On factual findings of mis-declaration (absence of MRP/RSP stickers, discrepancy in tape length and undervaluation), the Adjudicating Authority invoked confiscation provisions and offered the statutory option of redemption on payment of a fine. The Commissioner (Appeals) confirmed the factual basis for confiscation and this Tribunal, noting absence of cogent contrary evidence from the appellant, sustained the order. [Paras 2, 7, 10, 14]

Order of confiscation with option of redemption on payment of fine confirmed.

Demand of differential customs duty and interest - Appropriation of amounts paid on provisional release - Demand for differential duty and recovery with interest, and appropriation of sums deposited on provisional release, was upheld. - HELD THAT: - Having re-determined the assessable value, the authorities computed and confirmed differential customs duty as chargeable; the provisional release conditions included deposit of differential duty which was appropriated against the confirmed demand. The Commissioner (Appeals) validated the computation and this Tribunal found no error in confirming the demand and appropriation in view of the accepted re-determined value. [Paras 3, 7, 10, 14]

Demand of differential duty with interest confirmed and amounts deposited on provisional release appropriated against the demand.

Penalty for undervaluation under Section 114A of the Customs Act, 1962 - Penalty for mis-declaration under Section 114AA of the Customs Act, 1962 - Imposition of penalties under Section 114A and Section 114AA on the importer was justified and sustained. - HELD THAT: - The adjudicating authority imposed statutory penalties for wilful undervaluation and mis-declaration after recording findings on the absence of supporting documentary evidence for the declared transaction value, discrepancies in declared particulars and the importer's inability to rebut contemporaneous market data. The Commissioner (Appeals) agreed with these findings. This Tribunal, noting the appellant's failure to produce cogent evidence despite being a regular importer, upheld the imposition of penalties. [Paras 6, 7, 10, 14]

Penalties under Section 114A and Section 114AA confirmed.

Final Conclusion: The appeal is dismissed. The Tribunal upholds rejection of declared value, re-determination of assessable value, confirmation of confiscation with redemption option, demand and appropriation of differential duty with interest, and imposition of penalties under Sections 114A and 114AA.

Foreign-going vessel - re-importation and entitlement under Notification No.94/1996 - requirement of Bill of Entry for imported vessels - territorial jurisdiction of the Proper Officer under Section 28 - invocation of extended period of limitation - seizure and confiscation proceedings under Section 124 - joint and several confirmation without apportionment

Foreign-going vessel - requirement of Bill of Entry for imported vessels - The vessel MV Darya Manthan was not a foreign-going vessel during the impugned period. - HELD THAT: - The appellants failed to establish that the vessel proceeded beyond Indian territorial waters or undertook operations outside territorial waters during the period in dispute. The vessel had permission for coastal run at Dhamra and undertook dredging within port/territorial waters; no definitive proof was produced to show operations beyond territorial waters. Consequently the appellants could not avail the benefit of the inclusive part of the definition of foreign-going vessel in Section 2(21). [Paras 6]

MV Darya Manthan cannot be treated as a foreign-going vessel during the impugned period.

Re-importation and entitlement under Notification No.94/1996 - requirement of Bill of Entry for imported vessels - The appellants are not entitled to benefit under Notification No.94/1996 for the 2011 import because the conditions for re-import exemption were not established. - HELD THAT: - The Tribunal found no records (Bills of Entry/Shipping Bills) to correlate earlier exports and subsequent imports of the vessel; appellants admitted non-filing of such documents. In absence of the prescribed documentary proof and fulfilment of conditions attendant on Notification No.94/1996, re-import treatment could not be allowed. The court further noted that re-imports do not carry blanket exemptions and that the claimed benefit cannot be retrospectively claimed without satisfying the notification's conditions. [Paras 7]

Claim for re-import exemption under Notification No.94/1996 is rejected for lack of requisite documentary proof and non-fulfilment of conditions.

Territorial jurisdiction of the Proper Officer under Section 28 - seizure and confiscation proceedings under Section 124 - Commissioner of Customs, Cochin lacked jurisdiction to demand customs duty for import acts that were complete at Paradeep Port; the adjudication by Cochin was without authority. - HELD THAT: - The act of importation was complete at Paradeep where permission for conversion to coastal run was accorded and Bills of Entry for stores/bunkers were accepted. Section 28's scheme requires the 'Proper Officer' to be the officer in whose jurisdiction the non-payment or short-levy occurred; Cochin could not assume Paradeep's functions merely because provisional deposits were made in Cochin for provisional release. Where confiscation action under Section 124 is contemplated, Paradeep Customs, as the proper jurisdictional authority, should have been the forum to initiate proceedings concerning the import. Cochin's demand and adjudication therefore exceeded its territorial authority. [Paras 8, 9, 10, 11]

Demand and adjudication by the Commissioner of Customs, Cochin are beyond jurisdiction and unsustainable.

Invocation of extended period of limitation - requirement of Bill of Entry for imported vessels - Extended period of limitation under Section 28(4) cannot be invoked in this case. - HELD THAT: - The Tribunal observed that departmental officers at Paradeep were aware of the vessel's movements, had boarded and inspected documents, and had permitted coastal run; various circulars and an acknowledged ambiguity in practice existed regarding filing Bills of Entry for vessels prior to the 2012 clarification. Given the department's knowledge and the appellants' bona fide belief amid changing practice, suppression, fraud or collusion necessary to invoke extended limitation was not established. [Paras 12]

Invocation of the extended period of limitation is not tenable.

Joint and several confirmation without apportionment - The adjudication confirming duty jointly on multiple noticees without specifying individual liabilities is legally defective and unenforceable. - HELD THAT: - The impugned order confirmed aggregate duties jointly on the owner and disponent owners but did not state the exact amount payable by each noticee. The Tribunal held that an order confirming duty must specify individual liabilities; absence of apportionment renders the order unenforceable and invalid. [Paras 13]

Joint confirmation of duty without apportionment is invalid and renders the order unenforceable.

Final Conclusion: For the reasons stated - the vessel was not a foreign-going vessel during the relevant period; re-import exemption under Notification No.94/1996 could not be allowed for want of required documentation; Cochin Customs had no jurisdiction to demand and adjudicate the import duty which was complete at Paradeep; extended limitation could not be invoked; and the impugned order was also legally infirm for confirming joint liabilities without apportionment - the impugned adjudication order is set aside and the appeals are allowed with consequential relief as per law.

Invocation of Section 13(4) of the SARFAESI Act - maintenance of status quo as interim relief - initiation under Section 7 of the Insolvency and Bankruptcy Code, 2016 - moratorium under Section 14 of the IBC - approval of a Resolution Plan by the NCLT - issue of a No Dues Certificate - handing over of title documents and physical possession

Issue of a No Dues Certificate - approval of a Resolution Plan by the NCLT - handing over of title documents and physical possession - Whether the applicant bank could be permitted to hand over the title documents and physical possession of the suit property to the corporate debtor after receipt of amounts under the approved Resolution Plan and issuance of No Dues Certificates. - HELD THAT: - The Court recorded that the Resolution Plan approved by the NCLT resulted in infusion of funds and payment of amounts due; consequently the applicant issued a No Dues Certificate on 24th July, 2020 and the plaintiff also issued a No Dues Certificate in respect of amounts paid into the plaintiff's account. Those facts were accepted by counsel for the plaintiff and no party opposed the present application. In view of satisfaction of the debt and issuance of No Dues Certificates, the court found it appropriate to permit the applicant to hand over the title documents and physical possession of the suit property to the corporate debtor. [Paras 14, 15, 16, 18]

Application allowed; applicant permitted to hand over title documents and physical possession of the suit property to Defendant No. 3.

Maintenance of status quo as interim relief - approval of a Resolution Plan by the NCLT - issue of a No Dues Certificate - Whether the civil suit for permanent injunction could be disposed of following payment of amounts and issuance of No Dues Certificates pursuant to the approved Resolution Plan. - HELD THAT: - The Court noted that the Resolution Plan had been approved by the NCLT, the moratorium had been discontinued, and all amounts claimed by the plaintiff against Defendant No. 3 had been paid with corresponding No Dues Certificates issued. Parties were ad idem that the plaintiffs' grievances stood redressed and no party opposed disposal. Accordingly, nothing substantive survived for adjudication in the suit and the Court directed disposal of the suit and drawing up of the decree-sheet in the stated terms. [Paras 12, 13, 15, 18, 19]

CS(COMM) 1020/2018 disposed of and decree drawn up, the suit being decreed in the terms recorded as all amounts claimed have been paid and No Dues Certificates issued.

Final Conclusion: The application is allowed; having regard to the approval of the Resolution Plan, payment of amounts and issuance of No Dues Certificates, the applicant is permitted to hand over title documents and physical possession of the suit property to the corporate debtor and the suit is disposed of with a decree in the terms recorded.

Maintainability of writ under Article 226 against orders of appellate tribunal - superintendence over tribunals and limits of judicial interference in administrative conduct of hearings - mode of hearing - virtual hearing versus physical hearing - mandamus to direct manner or platform of judicial/tribunal hearings - jurisdictional bar to quash appellate direction by writ

Maintainability of writ under Article 226 against orders of appellate tribunal - jurisdictional bar to quash appellate direction by writ - High Court's jurisdiction to entertain a writ seeking quashing of an order of the National Company Law Appellate Tribunal directing expeditious hearing - HELD THAT: - The Court held that the prayer to quash and set aside the order dated 21.07.2020 passed by the NCLAT directing expeditious hearing was misconceived. An order of the appellate tribunal of the nature impugned is required to be challenged by way of the statutory remedy and cannot be displaced by a writ under Article 226. The petitioner's attempt to use writ jurisdiction to dislodge the appellate direction would amount to setting aside the order of the appellate tribunal, which the High Court does not have jurisdiction to do in the circumstances described. The Court therefore treated that limb of the petition as dehors jurisdiction and not entertainable.

Prayer to quash the NCLAT order is not maintainable before this Court and is rejected.

Mode of hearing - virtual hearing versus physical hearing - mandamus to direct manner or platform of judicial/tribunal hearings - superintendence over tribunals and limits of judicial interference in administrative conduct of hearings - Whether the High Court can direct the adjudicating authority to conduct hearings physically rather than virtually or to prohibit a mixed mode of hearing - HELD THAT: - The Court determined that the choice of medium or platform for conducting hearings is dependent on availability of resources, technology and directives issued by competent authorities, and is for the adjudicating authority or its appellate authority to decide. Under Article 226 the High Court cannot issue mandamus directing an authority as to the particular medium of hearing when no specific prayer for such relief has been made to the authority itself. Grievances about connectivity or the web platform are to be ventilated before the adjudicating authority or appellate authority so that they may upgrade or change the platform; the High Court will not prescribe the manner in which the authority must conduct hearings. The Court also noted that there was no contemporaneous record in the impugned order to support the petitioner's assertions that hearings were being conducted partly physically and partly virtually.

High Court will not direct the mode or platform of hearing; complaints about virtual hearing platform should be raised before the adjudicating or appellate authority.

Final Conclusion: The writ petition is rejected; attempt to quash the appellate order is not maintainable before this Court and the Court will not direct the mode of tribunal hearings. Petition dismissed with costs of Rs. 10,000/-.

Validity of valuation under the IBBI (Liquidation Process) Regulations, 2016 - Effect of non-payment of External Development Charges on change of land use - Scope of adjudicating authority in testing valuation and sale notice during liquidation - Duty of liquidator to conduct sale on "as is where is" basis and discover market price - Abuse of process and imposition of costs for obstructive litigation

Validity of valuation under the IBBI (Liquidation Process) Regulations, 2016 - Duty of liquidator to conduct sale on "as is where is" basis and discover market price - Whether the valuation reports and consequent reserve price and sale notice dated 15.05.2019 were contrary to Regulation 35 of the IBBI (Liquidation Process) Regulations, 2016 and therefore liable to be set aside. - HELD THAT: - The Tribunal examined the valuers' reports and the process followed by the liquidator. The valuers expressly recorded that municipal records show the land as agricultural though earlier used for industrial purposes, and considered circle rates, zoning restrictions and realization potential including commercial redevelopment. The sale was conducted on an "AS IS WHERE IS, AS IS WHAT IS" basis with disclosure of relevant material facts in the sale notice and with opportunity given to the appellant to produce evidence or a higher bidder. The record shows the first auction drew no bids and the second attracted the highest bid at the determined reserve. The Tribunal held that the valuation was made in accordance with Regulations 34-35 and that the reserve price did not operate as an outer limit or bar to bidding higher amounts. The appellant failed to produce evidence to show any defect in valuation or that a prudent bidder was prejudiced by the sale notice. Accordingly, there was no infirmity in the valuation or sale notice that warranted setting them aside. [Paras 36, 37, 40, 41, 42]

Valuation reports and the sale notice dated 15.05.2019 are valid and were rightly upheld; no interference warranted.

Effect of non-payment of External Development Charges on change of land use - Scope of adjudicating authority in testing valuation and sale notice during liquidation - Whether the Adjudicating Authority lacked jurisdiction to determine the nature of the land (agricultural v. industrial) and whether, on the materials, the land-use change had occurred. - HELD THAT: - The Tribunal noted the Adjudicating Authority framed the dispute as one over the correctness of valuation and the sale notice under the Regulations and did not purport to decide an abstract land-use title. The statutory scheme for change of land use under the Controlled Area Rules requires payment of External Development Charges (EDC) and fulfillment of stipulated conditions before permission is granted. The Corporate Debtor had received a demand for EDC which was not paid; municipal and town-planning communications and admissions on record supported that formal change of land use had not been granted. On these materials the Tribunal concluded that, notwithstanding past industrial use, the land remained agricultural for purposes relevant to valuation because the conditions for formal conversion had not been satisfied. [Paras 28, 31, 32, 33, 34]

The Adjudicating Authority did not exceed jurisdiction in resolving the valuation/sale notice dispute and, on the record, the land remained agricultural because EDC/other conversion conditions were not complied with.

Abuse of process and imposition of costs for obstructive litigation - Whether the appellant's conduct constituted an abuse of the liquidation process and whether the cost of Rs. 50,000 imposed by the Adjudicating Authority was justified. - HELD THAT: - The Adjudicating Authority found that the appellant repeatedly litigated objections without producing evidentiary support or a competing bidder despite opportunities granted to do so, thereby delaying the liquidation process. The Tribunal reviewed the record of prior directions allowing the appellant to place evidence before the liquidator and to produce any bidder willing to offer a higher price; the appellant failed to avail these opportunities and the earlier challenge had become infructuous after a fresh valuation and sale notice. In these circumstances the costs were viewed as a proportionate response to obstructive and baseless litigation that impeded asset realisation. [Paras 4, 41, 43]

The appellant's conduct amounted to impermissible delay of the liquidation process and the imposition of costs of Rs. 50,000 was justified and rightly upheld.

Final Conclusion: The appeals are dismissed. The valuation and sale process conducted by the liquidator under the IBBI (Liquidation Process) Regulations, 2016 was valid; the land, despite past industrial use, remained agricultural for the purposes of valuation due to non-compliance with conversion conditions; and the imposition of costs on the appellant for delaying the liquidation was appropriate. No interference is called for.

Corporate insolvency resolution process - financial creditor - financial debt - decree-holder - execution of decree - threshold for allottees under real estate project - Rule 11 (settlement/withdrawal before constitution of Committee of Creditors) - moratorium and appointment of interim resolution professional

Rule 11 (settlement/withdrawal before constitution of Committee of Creditors) - moratorium and appointment of interim resolution professional - Permissibility of allowing withdrawal/settlement under Rule 11 of the NCLAT Rules in the facts of this case. - HELD THAT: - The Tribunal held that powers under Rule 11 may be exercised to permit withdrawal or record settlement prior to constitution of the Committee of Creditors, but such exercise is discretionary and must consider the interests of all stakeholders. Where the settlement is confined to a subset of creditors and does not protect the interests of a large number of claimants, permitting withdrawal would be inappropriate. In the present case the Settlement Deed covered only Respondent Nos.1 and 2 and did not address claims of numerous other allottees and creditors; allowing withdrawal on that basis would jeopardise the legitimate interests of other stakeholders and would amount to a travesty of justice. Consequently, the settlement could not be allowed to defeat the collective insolvency process in the circumstances of this case. [Paras 14]

Settlement enabling withdrawal under Rule 11 was not permissible as it was not all encompassing and would prejudice other claimants.

Financial creditor - financial debt - decree-holder - execution of decree - threshold for allottees under real estate project - Whether Respondent Nos.1 and 2, being decree holders by virtue of UP RERA Recovery Certificate, were maintainable as Financial Creditors under Section 7 of the I&B Code to initiate corporate insolvency resolution process. - HELD THAT: - The Tribunal analysed the definitions of 'financial creditor' and 'financial debt' and the explanatory clause deeming amounts raised from an allottee to have the commercial effect of a borrowing. It observed that Respondent Nos.1 and 2 approached the Adjudicating Authority as decree holders seeking execution of a Recovery Certificate issued by UP RERA under the Real Estate (Regulation and Development) Act, 2016. A decree holder, though a 'creditor', does not ipso facto qualify as a 'financial creditor' unless the underlying obligation falls within the inclusive definition of 'financial debt' (i.e., disbursed for time value of money or covered by clauses in Section 5(8)). Execution of a decree/Recovery Certificate is a mechanism of realisation and cannot be converted into an application under Section 7 to trigger insolvency. Citing precedent to the effect that a Section 7 application cannot be used to execute a decree, the Tribunal concluded that Respondent Nos.1 and 2 were pursuing execution of the Recovery Certificate and not insolvency resolution, and therefore their Section 7 application was not maintainable. [Paras 21, 22, 23, 24]

Respondent Nos.1 and 2, as decree holders seeking execution of the Recovery Certificate, could not maintain an application under Section 7 as Financial Creditors; the Section 7 application was not maintainable.

Final Conclusion: The admission order dated 17th March, 2020 initiating CIRP is set aside; the application under Section 7 filed by Respondent Nos.1 and 2 is dismissed; all consequential orders including moratorium and appointment of Interim Resolution Professional are declared illegal and set aside; the Corporate Debtor is released to function through its Board, claimants are permitted to pursue independent remedies, and the period from filing of each claim before the Interim Resolution Professional till disposal of this appeal shall be excluded for limitation purposes.

Date of default - classification as Non-Performing Asset (NPA) - limitation under Article 137 of the Limitation Act - acknowledgement of debt under Section 18 of the Limitation Act - effect of filing balance-sheet/annual return on limitation - exclusion/extension of limitation for proceedings under SARFAESI Act or before DRT

Date of default - classification as Non-Performing Asset (NPA) - limitation under Article 137 of the Limitation Act - Whether the application under Section 7 of the I&B Code was barred by limitation having regard to the date of default. - HELD THAT: - The Tribunal held that the date of default for computing limitation under Article 137 is the date on which the corporate debtor's account was classified as NPA. The account was classified as NPA on 20th February, 2010; consequently the limitation period for instituting proceedings under Section 7 commenced from that date. In the absence of any written acknowledgement by the corporate debtor within three years from that date, the Section 7 application filed thereafter is time-barred. The Adjudicating Authority's finding that the debt was barred by limitation is affirmed.

The application under Section 7 is barred by limitation as the date of default is the date of classification as NPA, i.e. 20th February, 2010.

Acknowledgement of debt under Section 18 of the Limitation Act - effect of filing balance-sheet/annual return on limitation - Whether reflection of the financial debt in the corporate debtor's balance-sheets/annual returns for the relevant period amounts to an acknowledgement of liability under Section 18 extending the period of limitation. - HELD THAT: - Relying on the four-Member Bench decision in V. Padmakumar v. SASF & Anr., the Tribunal observed that filing of balance-sheet/annual return is mandatory under the Companies Act and attracts penal consequences for non-compliance; therefore such statutory filings cannot be treated as an acknowledgement under Section 18 of the Limitation Act. Accepting the appellant's contention would render limitation meaningless because balance-sheets are filed routinely every year. The Tribunal accordingly rejected the submission that the debt's reflection in balance-sheets for financial years commencing 2010-2016 constituted a written acknowledgement sufficient to extend limitation.

Reflection of the debt in balance-sheets/annual returns does not constitute acknowledgement under Section 18 and does not extend the period of limitation.

Exclusion/extension of limitation for proceedings under SARFAESI Act or before DRT - limitation under Article 137 of the Limitation Act - Whether prosecution of recovery proceedings before the DRT or action under the SARFAESI Act excludes or extends the period of limitation for initiating CIRP under Section 7. - HELD THAT: - The Tribunal reaffirmed its earlier conclusions that proceedings under Section 13 of the SARFAESI Act or recovery proceedings before the DRT do not operate as prosecutions in a court of first instance, appeal or revision for the purpose of exclusion under the Limitation Act. The pendency of recovery proceedings before the DRT or actions under SARFAESI therefore neither shifts the date of default nor excludes/extends the limitation period for filing an application under Section 7. The judgment of the DRT and its appeal do not move the crucial date of default from the date of NPA classification.

Proceedings under the SARFAESI Act or before the DRT do not exclude or extend the limitation period for a Section 7 application; the date of default remains the NPA classification date.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority was correct in holding the Section 7 application time-barred as the date of default is the NPA classification (20th February, 2010), balance-sheet filings do not amount to acknowledgement under Section 18, and proceedings under SARFAESI or before the DRT do not extend or exclude the limitation period.

Pre-existing dispute - operational debt - Section 9 of the Insolvency and Bankruptcy Code, 2016 - notice of dispute within ten days - plausible contention requiring further investigation - adjustment/set-off of tranche payment - consummation of slump sale

Pre-existing dispute - notice of dispute within ten days - Mobilox jurisprudence on pre-existence of dispute - Whether the Adjudicating Authority rightly rejected the Section 9 application on the ground of a pre-existing dispute. - HELD THAT: - The Tribunal applied the test in Mobilox to ascertain whether a dispute existed prior to receipt of the demand notice and whether that dispute was a plausible contention requiring further investigation rather than a spurious defence. The record shows correspondence and a jointly executed Letter dated 08.01.2019 evidencing adjustments and disputes over completion of tranche conditions prior to the demand notice, and the corporate debtor replied to the demand notice within the ten day period raising those disputes. The Tribunal found these documents and communications sufficient to establish that the dispute was pre existing and not patently feeble, thereby falling within the Mobilox parameters for rejecting a Section 9 petition when such notice of dispute exists. [Paras 25]

The Adjudicating Authority correctly rejected the Section 9 application on the ground of a pre-existing dispute; the dispute is a plausible contention requiring further investigation.

Operational debt - adjustment/set-off of tranche payment - consummation of slump sale - Whether the Applicant established the existence of an unpaid operational debt and default such as would mandate admission under Section 9. - HELD THAT: - The Tribunal examined the contractual scheme of the Business Transfer Agreement and contemporaneous communications demonstrating that the transfer consideration was structured into closing consideration and tranche payments subject to conditions precedent. The corporate debtor produced evidence of payments made, and of a mutual adjustment/set off recorded in the parties' Letter dated 08.01.2019 and other correspondence, as well as assertions that certain tranche conditions remained unfulfilled. Given these facts and the admitted post transfer communications, the Tribunal concluded that the applicant had not established an undisputed operational debt due and payable such as required for admission under Section 9, particularly in light of the legitimate contest about completion of tranche conditions and agreed adjustments. [Paras 25, 26]

The applicant failed to prove an undisputed operational debt and default; the Adjudicating Authority therefore rightly dismissed the Section 9 application.

Final Conclusion: The appeal is dismissed. The National Company Law Tribunal's order rejecting the Section 9 application is upheld because the corporate debtor had raised a pre-existing, plausible dispute (and asserted contractual adjustments/set offs) prior to service of the demand notice, and the applicant did not establish an undisputed operational debt payable as required for admission under Section 9.

Pre-existing dispute - admission of Section 9 application - opportunity to defend - quashing of initiation of corporate insolvency resolution process (CIRP) - restitution of management to Board of Directors - CIRP costs and fees - quantification and direction to Operational Creditor

Pre-existing dispute - admission of Section 9 application - opportunity to defend - The admission of the Section 9 application was improper because a pre-existing dispute stood on record and the Adjudicating Authority proceeded without giving proper consideration to that dispute. - HELD THAT: - The Tribunal found that the Operational Creditor's own pleadings and annexures disclosed alleged deficiencies in performance, termination of the work order by the Corporate Debtor by e-mail dated 17th November 2016, and correspondence evidencing disputes on workmanship and timelines. The Corporate Debtor had replied to the Section 8 notice (Annexure A-8) raising these contentions. In these circumstances the Adjudicating Authority ought to have recognised the existence of a pre-existing dispute and not admitted the Section 9 petition; proceeding to admit the application without addressing the dispute and without affording a proper opportunity to the Corporate Debtor/Appellant to defend the claim was held to be inappropriate. For these reasons the Tribunal quashed the impugned admission order and dismissed the Section 9 application on merits. [Paras 6, 7, 8]

Appeal allowed; impugned order admitting the Section 9 application is quashed and set aside and the Section 9 application is dismissed.

Quashing of initiation of corporate insolvency resolution process (CIRP) - restitution of management to Board of Directors - CIRP costs and fees - quantification and direction to Operational Creditor - Consequential orders flowing from the quashing of the Section 9 admission: restoration of management and procedure for determination of CIRP costs and fees. - HELD THAT: - Upon quashing the admission, the Tribunal directed that actions taken by the Interim Resolution Professional/Resolution Professional (IRP/RP) consequent to the impugned order are set aside and the Corporate Debtor is released from the rigours of the insolvency process, with management to be returned to the Board of Directors. The Tribunal further directed the IRP/RP to place particulars of CIRP costs and fees before the Adjudicating Authority; the Adjudicating Authority is to examine those particulars and, if found correct, direct the Operational Creditor to pay the specified costs and fees within such time as may be fixed. This provision requires the Adjudicating Authority to undertake limited verification/quantification of costs rather than rehearing the merits of the dispute. [Paras 8]

Actions by IRP/RP consequent to the impugned order are quashed and set aside; the Corporate Debtor is to be restored to its Board of Directors; IRP/RP to place particulars of CIRP costs and fees before the Adjudicating Authority for examination and direction to the Operational Creditor to pay.

Final Conclusion: The appeal is allowed: the Adjudicating Authority's order admitting the Section 9 petition is quashed and the petition dismissed; the CIRP actions are set aside and management is restored to the Corporate Debtor's Board; the IRP/RP shall submit particulars of CIRP costs and fees to the Adjudicating Authority for verification and direction to the Operational Creditor to pay. No costs.

Power of Committee of Creditors to order liquidation during CIRP - Interpretation of liquidation under Section 33(2) of the I&B Code - Effect of Explanation to Section 33(2) - liquidation prior to preparation of information memorandum - Non-justiciability of the commercial wisdom of the Committee of Creditors

Power of Committee of Creditors to order liquidation during CIRP - Interpretation of liquidation under Section 33(2) of the I&B Code - Effect of Explanation to Section 33(2) - liquidation prior to preparation of information memorandum - Whether the Committee of Creditors (CoC), and thereby the Resolution Professional, may validly move for liquidation of the corporate debtor at any stage of CIRP before confirmation of a resolution plan, including before preparation of the information memorandum, and whether the Adjudicating Authority erred in passing the liquidation order on the basis of such CoC decision. - HELD THAT: - The Court examined the amended text of Section 33(2) and its Explanation, holding that the Explanation expressly empowers the CoC to take a decision to liquidate the corporate debtor at any time after its constitution and before confirmation of a resolution plan, including prior to preparation of the information memorandum. The record disclosed that the IRP had convened CoC meetings in which the question of publishing Form G/Expression of Interest was placed before the CoC, that the CoC deferred publishing EoI in an earlier meeting, and that at the subsequent CoC meeting the CoC, with the requisite voting share, resolved that the company had not been working for years and there was no prospect of a resolution plan and therefore decided to liquidate and requested the IRP to file for liquidation. Given the statutory imprimatur in the Explanation to Section 33(2) and the factual record of a unanimous commercial decision by the CoC, the Adjudicating Authority acted within the statutory framework in passing a liquidation order upon being intimated of the CoC decision. The Tribunal further applied the principle that commercial decisions of the CoC fall within their commercial wisdom and are non-justiciable, insofar as courts and tribunals do not substitute their view for the CoC's commercial determination when the legislative scheme confers such decisional authority on the CoC. [Paras 16, 17, 18, 19, 21]

The decision of the CoC to liquidate the corporate debtor before taking further steps for inviting EoI/processing a resolution plan was held to be within the statutory power under Section 33(2) as explained, and the Adjudicating Authority did not err in passing the liquidation order.

Final Conclusion: The appeal is dismissed: the Tribunal found no illegality in the Adjudicating Authority's liquidation order which was grounded on a unanimous commercial decision of the CoC taken within the powers conferred by Section 33(2) (as explained) of the I&B Code; commercial wisdom of the CoC is not amenable to judicial interference in the circumstances.

Pre-existing dispute under Section 8(2) - admissibility of Section 9 application - existence of operational debt exceeding Rs. 1 lakh - reliability of documentary evidence and corroboration - spurious or illusory dispute - application of Mobilox principle

Pre-existing dispute under Section 8(2) - application of Mobilox principle - Whether the Corporate Debtor had a pre-existing dispute which would bar admission of the Section 9 application. - HELD THAT: - The Tribunal applied the Mobilox principle that any 'existence of a dispute' must have existed prior to receipt of the demand notice. The Appellant relied on earlier correspondence, confirmations and journal entries; however, the material on record showed that the documents relied upon were dated after the demand notice or contained material discrepancies. The Tribunal found that the alleged confirmations and journal entries were not contemporaneous pre-existing disputes: signatures and dates did not inspire confidence, some signatories had resigned before the dates on the documents, and ledger entries produced by the Appellant were not reflected in the Operational Creditor's records. The Tribunal further observed that the Corporate Debtor's defences were internally inconsistent (claiming reconciliation yet disputing liability) and were not substantiated by reliable documentary evidence. Applying these findings, the Tribunal concluded that no bona fide pre-existing dispute had been established to defeat the Section 9 claim. [Paras 5, 6]

No pre-existing dispute existed on the material placed before the Adjudicating Authority; the alleged dispute was spurious and could not prevent admission of the Section 9 application.

Reliability of documentary evidence and corroboration - admissibility of Section 9 application - existence of operational debt exceeding Rs. 1 lakh - Whether the Adjudicating Authority erred in admitting the Section 9 application given the documentary record and payments pleaded by the Operational Creditor. - HELD THAT: - The Tribunal examined the ledger entries, RTGS records and correspondence. It accepted the Operational Creditor's plea that certain amounts (two RTGS transfers) had been paid and therefore were not part of the claimed operational debt. The Tribunal also noted that confirmatory documents relied upon by the Appellant were dated after the demand notice and contained inconsistencies, and that the Appellant failed to explain why entries would appear only in the Corporate Debtor's ledger and not in the Operational Creditor's books. In view of the credible documentary trail for payment of certain transactions and the lack of reliable contemporaneous evidence disproving the remainder of the debt, the Tribunal found no illegality in the Adjudicating Authority's conclusion to admit the Section 9 petition. [Paras 6, 7]

Admittance of the Section 9 application was proper on the record; the Adjudicating Authority did not commit illegality or infirmity in admitting the petition.

Spurious or illusory dispute - reliability of documentary evidence and corroboration - Whether the dispute raised by the Corporate Debtor was illusory and required further investigation or remand. - HELD THAT: - The Tribunal found the alleged dispute to be moonshine and upstretched to erase liability, noting material discrepancies in dates and signatures, absence of tri-partite or board authorisation for alleged transfers to sister concerns, and that certain confirmations were executed after the demand notice. The Tribunal concluded that the Appellant did not raise a plausible contention necessitating further fact-finding or remand, since the documentary inconsistencies undermined the credibility of the defence and there was no cogent reason to reopen factual inquiry at the admission stage. [Paras 5, 6]

The dispute was held to be spurious/illusory; no remand or further investigation was required and the Adjudicating Authority's admission stands.

Admissibility of Section 9 application - Procedural relief sought by the Resolution Professional in IA No. 1509 of 2020. - HELD THAT: - An interlocutory application by the Resolution Professional alleged non-cooperation and breaches by the Appellants and sought directions. The Tribunal noted that a separate application under Section 19(2) was pending before the Adjudicating Authority and declined to grant operative directions, leaving the Resolution Professional free to pursue the matter before the Adjudicating Authority for decision in accordance with law. [Paras 8]

IA disposed with liberty to the Resolution Professional to seek appropriate relief before the Adjudicating Authority.

Final Conclusion: The Appeal is dismissed; the Adjudicating Authority's admission of the Section 9 application is affirmed as there was no bona fide pre-existing dispute on the record and the contested documents were found unreliable. The Resolution Professional's separate application is left to be decided by the Adjudicating Authority.

Operational debt - Default for the purposes of Insolvency and Bankruptcy Code - Admissibility of Section 9 application - Pre existing dispute and corroborative documentary evidence - Admission by corporate debtor as evidence of debt - Remand for admission and opportunity to settle prior to admission

Operational debt - Admission by corporate debtor as evidence of debt - Admissibility of Section 9 application - Default for the purposes of Insolvency and Bankruptcy Code - Pre existing dispute and corroborative documentary evidence - Whether the Section 9 application should have been dismissed where the respondent had on record admitted outstanding sums and documentary evidence showed an operational debt exceeding the statutory threshold, in absence of a pre existing dispute. - HELD THAT: - The Tribunal held that the Adjudicating Authority erred in dismissing the Section 9 application. The appellate court recorded that the operational debt exceeded the statutory threshold of one lakh and that notices under Section 8 had been sent. Documentary material placed before the Adjudicating Authority and this Tribunal included ledger/statements and email communications in which the corporate debtor confirmed balances (notably emails of 08.10.2016 and 17.05.2018), and the corporate debtor admitted a part of the debt. The Tribunal applied the principles in Mobilox (requiring documentary evidence to show the debt is due and payable and absence of a pre existing dispute) and Macquarie (admission by corporate debtor is sufficient to demonstrate debt and default) to conclude that there was no pleaded or established pre existing dispute that would bar Section 9 relief. The Tribunal also found that inconsistencies in parties' accounts did not displace the admitted documentary confirmations and that the Adjudicating Authority had failed to appreciate the documents on record. On these bases the Section 9 application was held fit for admission. [Paras 23, 24]

The Section 9 application was to be admitted because operational debt exceeding the threshold was established by documentary evidence and admissions by the respondent, and no pre existing dispute barred the claim.

Remand for admission and opportunity to settle prior to admission - Whether the matter should be remitted to the Adjudicating Authority for admission and to afford the corporate debtor an opportunity to settle prior to admission. - HELD THAT: - The Tribunal set aside the impugned order and remitted the matter to the Adjudicating Authority with directions to admit the application under Section 9 after giving notice to both parties, and to enable the corporate debtor to settle the matter prior to admission. The direction constitutes a remand for admission coupled with an administrative opportunity for settlement before formal admission of insolvency proceedings. [Paras 24]

The impugned order was set aside and the case remitted to the Adjudicating Authority to admit the Section 9 application after notice and to permit the corporate debtor to attempt settlement prior to admission.

Final Conclusion: The impugned order dismissing the Section 9 petition was set aside; the Tribunal held that documentary evidence and admissions established an operational debt exceeding the threshold and remitted the matter to the Adjudicating Authority to admit the application after notice and to permit settlement efforts prior to admission.

Commercial wisdom of Committee of Creditors - Material irregularity in exercise of powers by the Resolution Professional - Regulation 36A - invitation for Expression of Interest and rejection of belated EOIs - Principles of natural justice (one who hears must decide) - Maximization of value in CIRP

Regulation 36A - invitation for Expression of Interest and rejection of belated EOIs - Material irregularity in exercise of powers by the Resolution Professional - Acceptance by the Resolution Professional, with CoC approval, of resolution plans submitted after the deadline without publishing a fresh public invitation in Form G and without following the prescribed process. - HELD THAT: - The Tribunal found that the deadline for submission of resolution plans was 08th January 2019 and that two plans were submitted and opened within that timeline. Two other plans were accepted by the Resolution Professional after that deadline without any fresh public invitation under Regulation 36A or Form G. Although notices in Form G had been published earlier, the Resolution Professional deviated from that procedure when accepting the belated plan. The Tribunal held that if the CoC intended to extend timelines it was mandatory to publish a fresh Form G and fix a new deadline; absent that, acceptance of belated EOIs/plans after bids were opened and deliberated upon was arbitrary, illegal and violative of due process. The Tribunal emphasised that the power of the Resolution Professional to conduct CIRP cannot be exercised in a manner that is ab initio illegal or contrary to the Regulations, and that the conduct in this case vitiated the CIRP. [Paras 27, 31, 57]

Acceptance of resolution plans after the deadline without publishing a fresh Form G and following the due process was illegal and arbitrary; the acts of the Resolution Professional in this regard vitiated the CIRP.

Commercial wisdom of Committee of Creditors - Material irregularity in exercise of powers by the Resolution Professional - Whether the act of accepting a belated resolution plan can be treated as an exercise of the CoC's commercial wisdom. - HELD THAT: - Relying on the law that the CoC's commercial decisions are non-justiciable except on limited statutory grounds, the Tribunal nevertheless held that the non-justiciability of commercial wisdom does not cloak or validate illegal or arbitrary procedures. While CoC may exercise commercial wisdom in selecting a plan, it cannot approve conduct that is itself illegal or a material irregularity in the RP's exercise of powers. The Tribunal distinguished between permissible commercial decision-making and approval of procedures that contravene the Code and Regulations, holding that approval cannot validate an otherwise unlawful process. [Paras 29, 44, 57]

An act that is an illegal or arbitrary exercise of power by the Resolution Professional cannot be insulated as an exercise of the CoC's commercial wisdom; such material irregularity is open to challenge.

Regulation 36A - invitation for Expression of Interest and rejection of belated EOIs - Applicability of the amended Regulation 36A (effective 04.07.2018) to a CIRP that commenced before that date (CIRP commencement dated 14.05.2018). - HELD THAT: - The Tribunal noted that Regulation 36A was amended w.e.f. 04th July 2018 and there is nothing in the amended provision providing for retrospective operation. Regulation 36A(6) indicates that the amended regulations apply to CIRPs commencing on or after 04th July 2018. Since the corporate debtor's CIRP commenced on 14th May 2018, the amended Regulation 36A does not retrospectively apply to this CIRP. Nonetheless, the Tribunal observed that irrespective of retrospective application, the procedural requirement of publishing a public invitation (Form G) to extend timelines remains the proper mechanism to accept further EOIs. [Paras 47, 48]

The amended Regulation 36A (w.e.f. 04.07.2018) does not apply retrospectively to a CIRP that commenced on 14.05.2018; however, extension of timelines for EOIs still required adherence to the public invitation procedure (Form G) as a matter of due process.

Principles of natural justice (one who hears must decide) - Validity of the order passed by a reconstituted Bench when one member of the Bench had not heard arguments in the proceedings. - HELD THAT: - The Tribunal applied the maxim 'one who hears the matter must decide' and Rule 150(2) of the NCLT Rules, observing that MA No.1039 of 2019 was heard and reserved for order by a Single Member Bench. Subsequently the matter was decided by a reconstituted Division Bench that included a Technical Member who had not heard the arguments. The Tribunal held that the Technical Member had no occasion to hear the submissions on MA No.1039, yet formed part of the Bench that passed the impugned order, which violated principles of natural justice and the applicable rule requiring the Bench which heard the matter to pronounce the order. [Paras 53, 56, 57]

The impugned order was invalid insofar as it was passed by a reconstituted Bench that included a member who had not heard the arguments; this amounted to a breach of natural justice.

Material irregularity in exercise of powers by the Resolution Professional - Commercial wisdom of Committee of Creditors - Remedial direction: whether the matter should be remitted for fresh consideration by the CoC and adjudicating authority. - HELD THAT: - Having found that the Resolution Professional accepted belated plans without following due process and that the Adjudicating Authority failed to address the specific illegalities raised, the Tribunal set aside the impugned orders dated 28.11.2019. The Tribunal directed the CoC to take a fresh decision in light of its findings and to consider only the resolution plans submitted within the stipulated timeline, within ten days. The Tribunal further directed that if no decision is communicated and the CIRP timeline has expired, the Adjudicating Authority is to pass an order for liquidation. There was no order as to costs. [Paras 58]

Impugned orders set aside; matter remitted to the CoC to reconsider the resolution plans submitted within the stipulated timeline within ten days, failing which the Adjudicating Authority shall pass appropriate orders (including liquidation if timeline expired).

Final Conclusion: The appeals were allowed. The Tribunal held that the Resolution Professional's acceptance of belated resolution plans without publishing a fresh public invitation (Form G) and without following due process was illegal and could not be insulated as the CoC's commercial wisdom; the amended Regulation 36A (w.e.f. 04.07.2018) is not retrospectively applicable to a CIRP commencing on 14.05.2018; the impugned orders were also vitiated by a breach of natural justice as a reconstituted Bench included a member who had not heard the matter. The impugned orders dated 28.11.2019 were set aside and the CoC was directed to reconsider the resolution plans submitted within the prescribed timeline within ten days, failing which the Adjudicating Authority to act as directed.

Violation of moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016 - Contractual default, force majeure and procedure for termination under the Power Purchase Agreement (notice, cure period and specific performance) - Fixed tariff bid accepted in a PPA and non-revisability of tariff agreed by bidding - Enforceability of an approved resolution plan and its binding in rem effect under Section 31 of the Insolvency and Bankruptcy Code, 2016

Violation of moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016 - Contractual default, force majeure and procedure for termination under the Power Purchase Agreement (notice, cure period and specific performance) - Fixed tariff bid accepted in a PPA and non-revisability of tariff agreed by bidding - Termination of the PPA by GRIDCO was in violation of the moratorium and contrary to the contractual procedure and therefore unsustainable. - HELD THAT: - The PPA incorporated a fixed tariff of Rs. 7 per kWh quoted and accepted through the competitive bidding process and contained separate clauses dealing with force majeure (Clause 14) and default and termination (Clause 17). The plant ceased supply after storm damage, an event squarely within the force majeure clause. Clause 17 prescribed that the non-defaulting party must issue a default notice and, if the default is not rectified within one month, may seek specific performance until the default is cured; if the default is cured within six months the agreement revives. GRIDCO terminated the PPA after the Corporate Insolvency Resolution Process had commenced and moratorium was in place, and did not comply with the contractual procedure (no default notice/termination in accordance with Clause 17.4). Accordingly, the Adjudicating Authority rightly held the termination to be in violation of Section 14(1) of the I&B Code and contrary to the PPA, and directed restoration of the PPA. The Appellants' contention that market tariffs justify unilateral alteration or termination was rejected because the tariff was a commercial term fixed by bidding and not amenable to unilateral revision in the circumstances. [Paras 15, 16]

The termination by GRIDCO is set aside as violative of the moratorium and not in conformity with the contractual termination procedure; restoration of the PPA is warranted and GRIDCO cannot unilaterally alter the tariff.

Enforceability of an approved resolution plan and its binding in rem effect under Section 31 of the Insolvency and Bankruptcy Code, 2016 - Approval of the Resolution Plan in favour of Respondent No.4 is final and binding on all stakeholders, including GRIDCO. - HELD THAT: - The Resolution Plan submitted by Respondent No.4 was approved by the committee of creditors and by the Adjudicating Authority and that approval was upheld by this Tribunal in the connected appeals which remain unchallenged. Under Section 31, an approved resolution plan is binding in rem on the corporate debtor and all stakeholders; consequently the successful resolution applicant takes the corporate debtor's business subject to the subsisting obligations in the PPA. GRIDCO, which had notice of the CIRP and the moratorium, is bound by the approved plan and cannot be permitted to evade obligations by contending for revision of the tariff after the plan's approval. [Paras 17, 18]

The approved Resolution Plan is binding on GRIDCO and other stakeholders; the Appellant's challenge to the PPA's subsistence or attempt to revise tariff in light of the approved plan is not tenable.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's order setting aside GRIDCO's termination of the PPA and directing its restoration was legally correct; the approved resolution plan in favour of Respondent No.4 is final and binding on GRIDCO and other stakeholders.

Commercial wisdom of the Committee of Creditors - ineligibility under Section 29A of the I&B Code - compliance with Section 30(2) of the I&B Code - backdoor control by erstwhile management - supervisory role of the Adjudicating Authority in ensuring statutory compliance - liquidation under Section 33(1)(b) of the I&B Code

Ineligibility under Section 29A of the I&B Code - compliance with Section 30(2) of the I&B Code - backdoor control by erstwhile management - Validity of the Adjudicating Authority's refusal to approve the Resolution Plan and its view that the approved plan did not qualify as a resolution plan under Section 30(2) because it facilitated continued control of the erstwhile management. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's conclusion that the Restructuring Plan approved by the Committee of Creditors was in substance a device enabling the former Managing Director to retain substantial stake and effective control of the Corporate Debtor. Given Parliament's intent to exclude persons whose misconduct contributed to a company's default, the Adjudicating Authority was required to ensure that the successful plan did not amount to a backdoor entry by an ineligible person. The Settlement Agreement and the new shareholding pattern, placed before the CoC but not meaningfully considered for withdrawal under Section 12A, demonstrated that the erstwhile promoter would continue in a dominant position. The Tribunal agreed that such a plan did not meet the statutory requirements of Section 30(2) and that approval could rightly be declined for that reason. The reasoning emphasizes that protection against re-entry of culpable management is integral to the Code and justifies scrutiny beyond mere commercial evaluation by the CoC. [Paras 4, 6]

The Adjudicating Authority correctly declined to approve the plan on the ground that it failed to satisfy Section 30(2) as it enabled backdoor control by an ineligible person.

Commercial wisdom of the Committee of Creditors - supervisory role of the Adjudicating Authority in ensuring statutory compliance - liquidation under Section 33(1)(b) of the I&B Code - Whether the Adjudicating Authority improperly interfered with the commercial wisdom of the Committee of Creditors by declining to approve the Resolution Plan and ordering liquidation. - HELD THAT: - The Tribunal reiterated that while the CoC's commercial judgment on feasibility and viability is ordinarily final and not to be interfered with, the Adjudicating Authority retains a supervisory duty to ensure statutory eligibility and conformity with Section 30(2). The Adjudicating Authority did not overturn the CoC's commercial assessment as a matter of preference; rather it found the approved plan legally non-compliant because it emanated from circumstances amounting to participation by a person who should be excluded under the statute. In these circumstances the Adjudicating Authority's decision to refuse approval and to direct liquidation under the Code was within its jurisdiction and aligned with the object of the legislation. The Tribunal found no legal infirmity in that course. [Paras 5, 7]

The Adjudicating Authority did not improperly interfere with the CoC's commercial wisdom and was justified in refusing approval and proceeding to liquidation where statutory non-compliance was established.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority rightly declined to approve the plan which, by enabling continued control of the erstwhile management and failing to meet Section 30(2) requirements, involved participation by a person disentitled under the Code; the order directing liquidation is sustained as legally sound.

Default under the Insolvency and Bankruptcy Code - financial debt and proof of default - admissibility of application under Section 7 of the IBC - role of records of information utility and other documentary evidence - pendency of civil proceedings and overriding effect of the IBC - solvency of corporate debtor not determinative of default - prohibition on using Adjudicating Authority as a recovery forum - fraudulent or malicious initiation under Section 65

Financial debt and proof of default - role of records of information utility and other documentary evidence - Whether the Appellant proved existence of a financial debt and occurrence of default sufficient to admit the Section 7 application - HELD THAT: - The Tribunal found that the appellant produced documentary evidence - bank transaction showing transfer, receipt/acknowledgement of inter-corporate deposit, post-dated cheque, ledger entries showing interest received, balance confirmation, and Form 26AS reflecting payment of interest and TDS - which together established that a financial debt of Rs. 25,00,000 was disbursed and remained payable with agreed interest, and that default had occurred. The Tribunal applied the principles in Innoventive Industries and Swiss Ribbons, observing that Section 7 admission is triggered by satisfaction that a default has occurred on the basis of records of an information utility or other evidence produced by the financial creditor; the adjudicating authority erred in drawing adverse inferences from non-production of certain NBFC loan formalities when the material in Form I/Part V and accompanying documents sufficed to show a debt and default. Consequently the application was complete and should have been admitted.

The Tribunal held that the financial creditor had proved the financial debt and default and that the Section 7 application was complete and ought to have been admitted.

Pendency of civil proceedings and overriding effect of the IBC - Whether pendency of a civil suit/interim order before a civil court justified rejection of the Section 7 application - HELD THAT: - The Tribunal held that the Adjudicating Authority erred in treating the pendency of a civil suit and an alleged interim prohibitory order as a bar to admission. Section 238 gives the IBC overriding effect over inconsistent laws; a civil court injunction does not displace the adjudicating authority's duty under Section 7 to ascertain default on the basis of records of the information utility or other evidence. A civil court's interim view is not a ground to reject a Section 7 application where documentary evidence establishes default.

Pendency of civil proceedings or an interim civil injunction did not justify rejection of the Section 7 application.

Solvency of corporate debtor not determinative of default - prohibition on using Adjudicating Authority as a recovery forum - Whether the Corporate Debtor's apparent solvency or the view that the Tribunal is not a recovery forum justified rejection of the application - HELD THAT: - The Tribunal emphasised that insolvency law focuses on determination of default, not on the corporate debtor's ability to pay or on an assessment of commercial merits. The Adjudicating Authority improperly drew a presumption from balance-sheet figures that a solvent company would not default and therefore rejected the petition. The Tribunal explained that inability to pay and default are distinct concepts; the fact that a corporate debtor shows funds or solvency in accounts does not negate documentary proof of default nor permit rejection on the ground that the forum is for recovery. Section 65, dealing with fraudulent or malicious initiation, cannot be used to reject a bona fide Section 7 petition in the summary admission stage unless malafide is demonstrated.

The Tribunal held that reported solvency or the prospect of recovery does not preclude admission under Section 7, and that the Adjudicating Authority erred in rejecting the application for being a 'recovery' matter.

Requirement of loan documentation for NBFC transactions - admissibility of Form I / particulars in Part V - Whether non-production of certain NBFC loan-specific documents and particulars in Part V warranted rejection of the Section 7 application - HELD THAT: - The Tribunal noted that the Adjudicating Authority drew adverse inferences from absence of particulars about an NBFC loan application and other prescribed loan formalities. It held that the adjudicating authority's role is limited to ascertaining default based on information utility records or other evidence; absence of particular NBFC internal documents does not automatically render an otherwise complete Section 7 application incompetent where sufficient evidence of debt and default exists in Form I and accompanying records. The Tribunal applied Supreme Court guidance that Form I lists illustrative evidentiary sources and that documentary proof of obligation and non-payment is the determinative factor.

The Tribunal held that non-production of certain NBFC-specific loan formalities did not justify rejection when the application and accompanying documentary evidence established a financial debt and default.

Final Conclusion: The appeal is allowed; the impugned order rejecting the Section 7 application is set aside and the Adjudicating Authority is directed to admit the application and pass the order of admission within seven days from the date of this order.

Principles of Natural Justice - Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process - default and admission of debt - completeness of application under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - One Time Settlement (OTS) and withdrawal of petition - moratorium

Principles of Natural Justice - opportunity to file reply - Whether the admission order violated the Principles of Natural Justice by not affording the Corporate Debtor an opportunity to file a reply. - HELD THAT: - The Tribunal found that the Corporate Debtor had repeatedly appeared before the Adjudicating Authority and was repeatedly granted time to pursue settlement efforts, including specific adjournments from 01.02.2019 to 28.03.2019 and further extensions (orders dated 28.02.2019 and 08.04.2019) and correspondence seeking further time. The Adjudicating Authority's file shows that the Corporate Debtor chose not to file a formal reply and instead sought settlement and was afforded multiple opportunities. The Tribunal therefore concluded that there was no denial of opportunity and no breach of natural justice in admitting the Section 7 petition. [Paras 11, 12, 13]

No violation of the Principles of Natural Justice; adequate opportunity was afforded and the contention of denial is without basis.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - completeness of application under Rule 4 - default and admission of debt - One Time Settlement (OTS) and withdrawal of petition - Whether the Adjudicating Authority rightly admitted the Section 7 petition given completeness of the application and admitted default arising from failure to comply with the OTS. - HELD THAT: - The Tribunal recorded that an earlier Section 7 petition (Company Petition No.1788 of 2018) had been withdrawn upon an OTS offered by the Corporate Debtor, which included post dated cheques that were subsequently dishonoured. The petitioner thereafter filed the present petition (No.27 of 2019) after revocation of the OTS and demand for payment. The Adjudicating Authority afforded further opportunities for settlement but, on failure of payment and in view of admitted default exceeding the statutory threshold, found the Form 1 application to be complete and the statutory conditions for admission under Section 7 satisfied. The Tribunal agreed with this approach, noting that while the Code does not require repeated indulgence, the Adjudicating Authority had nevertheless afforded opportunities and correctly admitted the petition when default persisted. [Paras 14, 15, 16]

Admission under Section 7 was valid; the application was complete and default was admitted, warranting initiation of CIRP and the moratorium.

Final Conclusion: The appeal is dismissed; the impugned order dated 20th August 2019 admitting the Section 7 petition and initiating the CIRP is upheld, with no order as to costs.

Provisional attachment under Section 5(1)(b) of the Prevention of Money Laundering Act, 2002 - cessation of provisional attachment after 180 days under Section 5(3) - confirmation/retention of attachment by the Adjudicating Authority under Section 8(3) - permissibility of withdrawal of writ petition where statutory exit route has operated

Provisional attachment under Section 5(1)(b) of the Prevention of Money Laundering Act, 2002 - cessation of provisional attachment after 180 days under Section 5(3) - confirmation/retention of attachment by the Adjudicating Authority under Section 8(3) - permissibility of withdrawal of writ petition where statutory exit route has operated - Whether the provisional order of attachment dated 31st January, 2020 remained in force and whether the petitioner could be allowed to withdraw the writ petition after expiry of the statutory period. - HELD THAT: - The Court held that under Section 5(1)(b) the Director may provisionally attach proceeds of crime, but Section 5(3) expressly provides that every order of attachment made under Section 5(1) shall cease to have effect after the expiry of 180 days unless earlier superseded by an order under Section 8(3). No order under Section 8(3) confirming or directing retention of the attachment had been passed by the Adjudicating Authority in respect of the petitioner. Given that the statutory 180 day period has elapsed, the provisional attachment no longer remained in force by efflux of time. In those circumstances the Court could not prevent the petitioner from taking advantage of the statutory exit route and permitted withdrawal of the writ petition. The Court observed that allowing withdrawal would not prejudice the parties' rights or contentions in any future proceedings before this or any other forum.

The provisional order of attachment ceased to have effect by efflux of time and the writ petition was dismissed as withdrawn; application to extend the provisional attachment was not acceded to.

Final Conclusion: Writ Petition W.P. 5955(W) of 2020 dismissed as withdrawn and connected application disposed of; the provisional attachment dated 31 January 2020 has ceased to operate by efflux of the 180 day period and no Section 8(3) confirmation was on record.

Area-based exemption under Notification No.50/2003-CE - commencement of commercial production - acceptability of initial/temporary production arrangements - entitlement to exemption where production commenced prior to cutoff date - precedential value of Tribunal's earlier decision

Area-based exemption under Notification No.50/2003-CE - commencement of commercial production - acceptability of initial/temporary production arrangements - precedential value of Tribunal's earlier decision - Whether the appellant was entitled to the area-based exemption under Notification No.50/2003-CE where production was shown to have commenced before 31.03.2010 though initial production employed a temporary/smaller tank and not the full declared machinery. - HELD THAT: - The Tribunal found on the material on record that production had begun prior to 31.03.2010. The adjudicating authority's conclusion that exemption was barred because all declared machinery were not in commercial use was not accepted. The Tribunal applied its earlier decision in Appeal No. E/53207 of 2015 (Final Order No.57493/2017 dated 26.10.2017) where similar facts - initial production using a small/temporary tank followed by use of full capacity later - led to allowance of the exemption as production had commenced before the cutoff date. The Revenue had not produced any subsequent appellate overturning of that precedent. In these circumstances the Tribunal held that initial use of temporary arrangements to start production does not defeat entitlement where commercial production commenced before the stipulated date, and followed the earlier Tribunal precedent to set aside the Commissioner's order confirming duty and penalty.

The impugned order was set aside and the appellant held entitled to the area-based exemption under Notification No.50/2003-CE.

Final Conclusion: The appeal is allowed; following the Tribunal's earlier precedent, the appellant is held entitled to the area-based exemption as commercial production commenced prior to 31.03.2010, and the demand, interest and penalty confirmed by the Commissioner are set aside.

Claiming exemption from sales tax - issuance of Form 9 - application for appropriate exemption form within prescribed time - no re-opening of completed assessments - assessments to be made according to law

Claiming exemption from sales tax - issuance of Form 9 - application for appropriate exemption form within prescribed time - Respondents are entitled to apply for issuance of Form 9 or any other appropriate form to claim exemption from sales tax for the assessment years in question and such application must be made within three months. - HELD THAT: - The appellants' counsel conceded that if the respondents make a request for issuance of Form 9 or any other appropriate form for claiming exemption in respect of the assessment years in question, the form will be issued. On that basis the Court authorised the respondents, if so advised, to make the claim to which they are legally entitled, subject to making the application within the time directed. The Court's direction is procedural and permissive: it does not itself adjudicate entitlement on the merits of the exemption claim but requires the appellants to furnish the appropriate form upon request so that the respondents may pursue their statutory remedy. The Court also clarified that the filing of such application shall not disturb or re-open any assessment already completed; any assessments to be made thereafter shall be carried out in accordance with law.

Application for issuance of Form 9 or any other appropriate form shall be filed by the respondents within three months and the appellants shall furnish the form; this will not affect earlier claims nor re-open completed assessments and any assessments will be made according to law.

Final Conclusion: The appeal is disposed of by directing that, on request, the appellants shall issue Form 9 or an appropriate form to enable the respondents to claim sales-tax exemption for the assessment years in question, subject to the three-month time limit and without affecting prior claims or reopening completed assessments; assessments, if any, shall proceed in accordance with law.

Limitation of assessment proceedings under section 29(6) of the U.P. Value Added Tax Act, 2008 - recall of ex-parte order under section 32 of the U.P. Value Added Tax Act, 2008 - stay of recovery during appellate proceedings

Limitation of assessment proceedings under section 29(6) of the U.P. Value Added Tax Act, 2008 - recall of ex-parte order under section 32 of the U.P. Value Added Tax Act, 2008 - stay of recovery during appellate proceedings - Whether, where the assessee contends that proceedings could not be continued after the end of the assessment year as per section 29(6), a complete stay of recovery should have been granted pending appeal. - HELD THAT: - The Court accepted the applicant's contention that the Assessing Authority had recalled an ex-parte order and that, by reason of the limitation prescribed in section 29(6), the continuance of proceedings beyond the assessment year was contested as not permissible. Given that the central contention before the First Appellate Court was that no proceedings could validly be drawn against the applicant under the statutory limitation, the Court held that the protection afforded by a partial stay (90%) was inadequate to meet the nature of the legal challenge. In those circumstances, when the core plea in appeal is that the proceedings themselves are time-barred under the statutory provision, a complete stay of recovery was appropriate to preserve the applicant's right and to prevent irreparable prejudice pending adjudication of that question.

The Court held that a complete stay of recovery ought to have been granted while the question of limitation under section 29(6) was pending in appeal.

Stay of recovery during appellate proceedings - Whether the Court should direct interim protection and a timetable for disposal of the First Appeal where only a partial stay had been granted below. - HELD THAT: - Balancing the applicant's contention of invalidity of proceedings under section 29(6) and the respondent's submission that a 90% stay was sufficient, the Court found it proper to grant interim relief and to ensure expedition. The Court exercised its revisional power to order that the disputed demand remain stayed in full for a limited period and directed that the First Appeal be heard and decided within four months from the date of this order, or that the stay shall cease earlier upon disposal. This remedy was tailored to secure the applicant's position pending adjudication while protecting the departmental interest by limiting the duration of the stay and imposing a clear timetable.

The Court directed that the disputed demand shall remain stayed for four months or until disposal of the First Appeal, whichever is earlier, and directed the First Appellate Court to decide the appeal within four months.

Final Conclusion: Revision allowed to the extent of granting a complete interim stay of the disputed demand for a period of four months or until disposal of the First Appeal, whichever is earlier, and directing the First Appellate Court to hear and decide the appeal within four months.

Right to fair opportunity to lead evidence - dismissal for non-appearance of witness - remand for fresh evidence - acquittal in complaint under Section 138 of the Negotiable Instruments Act

Right to fair opportunity to lead evidence - dismissal for non-appearance of witness - remand for fresh evidence - acquittal in complaint under Section 138 of the Negotiable Instruments Act - Whether the trial Court erred in dismissing the complaint and acquitting the accused when the complainant's witness (PW-1) was absent and the complainant's counsel sought time to produce him, and whether the matter required remand for fresh trial evidence. - HELD THAT: - The High Court found on perusal of the trial Court's order sheet that the complainant's GPA holder had been examined and the matter was posted for cross-examination of PW-1 on 29.06.2019. The order indicates PW-1 was absent and the complainant's advocate sought time to secure his presence. The trial Court dismissed the complaint and acquitted the accused without affording the additional opportunity sought. The High Court held that such summary dismissal, in the circumstances shown, was erroneous and that granting one further opportunity to the complainant to lead the evidence would not cause prejudice to the respondent-accused. Consequently, the High Court set aside the impugned order of dismissal and acquittal and remanded the matter to the trial Court with directions to afford full opportunity to the complainant to lead evidence and to proceed expeditiously, while requiring the complainant to remain present when necessary and permitting the trial Court to act in accordance with law if attendance is not secured. [Paras 7, 8, 9, 10]

Impugned order of dismissal and acquittal set aside; matter remanded to trial Court for fresh disposal after affording the complainant an opportunity to lead evidence and with directions for expeditious trial and securing parties' presence.

Final Conclusion: The High Court allowed the appeal, set aside the trial Court's order of dismissal and acquittal in C.C. No.496/2017 dated 29.06.2019, and remanded the matter for trial after affording the complainant a fair opportunity to lead evidence, with directions to proceed expeditiously and ensure parties' attendance.

Offence under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - proof of legally enforceable debt - dishonour of cheque for insufficiency of funds - service of statutory notice - standard for appellate/revisional interference

Offence under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - proof of legally enforceable debt - dishonour of cheque for insufficiency of funds - service of statutory notice - The conviction under Section 138 of the Negotiable Instruments Act is valid - HELD THAT: - The Court examined the complainant's oral and documentary evidence, the accused's admissions in cross-examination and the evidence of DW-2 (the complainant's father). PW-1 testified to the loan, encashment of an earlier cheque, issue of the cheque in question for repayment and its dishonour with the bank endorsement of 'insufficiency of funds'. The accused did not disown the cheque and admitted handwriting and ownership aspects in cross-examination. DW-2's evidence acknowledged business transactions with the accused and denied that the cheque was merely a blank cheque misused by the son. The notice under registered post returned 'not claimed' and the notice by certificate of posting was not returned, permitting the court to treat the statutory notice as served. In these circumstances the statutory presumption under Section 139 was reinforced by primary evidence and admissions, and the defence contention that the transaction was only with DW-2 remained unproved. The Courts below therefore rightly concluded that a legally enforceable debt existed, the cheque in question was issued for repayment, it was dishonoured for insufficiency of funds and the ingredients of Section 138 were satisfied. [Paras 12, 13, 14, 15, 16]

Conviction under Section 138 of the Negotiable Instruments Act is upheld.

Standard for appellate/revisional interference - Whether the judgment of conviction and sentence deserved interference by the revisional court - HELD THAT: - The revisional court reviewed the trial and appellate records, evidence and admissions and found no illegality or perversity in the concurrent findings of fact recorded by the Courts below. The accused's alternative theory that the transaction was solely with DW-2 was not supported by corroborative evidence and was contradicted by DW-2's own testimony. The sentence awarded was considered proportionate to the proven guilt. Consequently there was no ground for interference in revision. [Paras 6, 14, 15, 16]

Revision petition is dismissed; the conviction and sentence are not interfered with.

Final Conclusion: The High Court dismissed the revision petition, upheld the conviction under Section 138 of the Negotiable Instruments Act and declined to interfere with the sentence, finding the statutory presumption and the complainant's evidence reinforced by admissions to be sufficient to establish a legally enforceable debt, cheque issuance, dishonour and valid service of notice.