TaxTMI Updates e-Newsletter
Aug 20,2022

Revocation of cancellation of registration - Requirement to furnish returns and deposit tax, interest, penalty and late fee before revocation - Condonation of delay - Opportunity of being heard - Duty of the proper officer to consider application for revocation

Revocation of cancellation of registration - Requirement to furnish returns and deposit tax, interest, penalty and late fee before revocation - Opportunity of being heard - Interpretation and application of Section 30 of the Act read with Rule 23(1) of the OGST Rules in respect of prerequisites and procedure for revocation of cancellation of registration. - HELD THAT: - The Court construed Section 30(1) and Rule 23(1) as prescribing that an application for revocation of cancellation of registration must be submitted in FORM GST REG-21 to the proper officer within thirty days from service of the cancellation order. The first proviso to Rule 23(1) mandates that where registration was cancelled for failure to furnish returns, no application for revocation shall be entertained unless the returns are furnished and any tax due in terms of such returns is paid along with interest, penalty and late fee. The subsequent provisos require that all returns due from the date of cancellation till the date of revocation shall be furnished within thirty days from the date of revocation. The statute also requires that an application shall not be rejected unless the applicant has been given an opportunity of being heard. These statutory conditions are obligatory prerequisites which the proper officer must ensure are satisfied before ordering revocation. [Paras 6, 7]

Section 30 read with Rule 23(1) requires timely application in FORM GST REG-21, furnishing of outstanding returns and payment of tax, interest, penalty and late fee as preconditions for consideration of revocation, and the applicant must be afforded opportunity of being heard.

Condonation of delay - Duty of the proper officer to consider application for revocation - Whether the proper officer should be directed to condone delay and consider the petitioner's application for revocation subject to compliance with statutory prerequisites and facilitation for filing returns. - HELD THAT: - On the conceded facts and the petitioner's expressed willingness to furnish all outstanding returns and deposit tax, interest, penalty and late fee, the Court directed that if the petitioner files an application for revocation within thirty days from the date of the order, the proper officer shall condone the delay and consider the application. The Court directed the proper officer to open the portal and permit filing of returns to enable the petitioner to discharge statutory liabilities. Such consideration by the proper officer is to be in accordance with law and conditioned upon the petitioner depositing the required amounts and complying with the procedural requirements under Rule 23(1). [Paras 8]

If the petitioner files the revocation application within thirty days, the proper officer shall condone the delay, facilitate filing of returns and receipt of dues, and thereafter consider the application for revocation in accordance with law.

Final Conclusion: Writ petition disposed with direction that petitioner may file application for revocation within thirty days; on such filing the proper officer shall condone delay, enable filing of returns and receipt of tax, interest, penalty and late fee, and thereafter consider the application in accordance with law.

Detention, seizure and release of goods and conveyances in transit under Section 129 CGST - Requirement to serve order of detention or seizure before detention - Requirement to issue notice within seven days and to give opportunity of being heard before determining penalty - Validity of adjudication where proceedings are concluded ex parte without statutory notice or hearing

Requirement to serve order of detention or seizure before detention - Requirement to issue notice within seven days and to give opportunity of being heard before determining penalty - Validity of adjudication where proceedings are concluded ex parte without statutory notice or hearing - Impugned adjudication and appellate orders were vitiated by procedural infirmity for failure to comply with Section 129's requirements to serve detention/seizure order and to afford opportunity of hearing before determining penalty. - HELD THAT: - The Court examined Section 129 and Rule 68 and noted that no goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods and that the proper officer must issue a notice within seven days of detention specifying the penalty and thereafter pass an order within seven days of service, after giving an opportunity of being heard. In the present case the detention, show-cause and adjudication were initiated and concluded on the same date; there is no record substantiating the respondent's assertion that the proceedings were expedited at the taxpayer's instance. The appellate order likewise did not cure the procedural lapse. For these reasons the adjudication order dated 20th September, 2021 and the appellate order dated 17th February, 2022 suffer from procedural infirmity and from lack of proper opportunity to the petitioner or the person transporting the goods to defend themselves, and are therefore liable to be set aside. [Paras 6]

Adjudication order dated 20th September, 2021 (Form GST MOV-09) and appellate order dated 17th February, 2022 are set aside for failure to comply with statutory notice and hearing requirements.

Detention, seizure and release of goods and conveyances in transit under Section 129 CGST - Validity of adjudication where proceedings are concluded ex parte without statutory notice or hearing - The matter is remitted to respondents for fresh decision after affording statutory opportunity to the petitioner. - HELD THAT: - Having set aside the impugned orders on procedural grounds, the Court did not rule on the substantive merits of liability but permitted the respondents to take a fresh decision. Any fresh adjudication must comply with the procedural mandates of Section 129, including serving the order of detention/seizure, issuing the statutory notice within the prescribed period and affording the person concerned an opportunity of being heard before determining penalty or releasing goods. The respondents remain at liberty to proceed afresh consistent with the Act. [Paras 6]

Respondents permitted to take fresh decision after giving due opportunity as provided under the Act; writ petition allowed to this extent.

Final Conclusion: Writ petition allowed; impugned adjudication and appellate orders set aside for procedural infirmity, and respondents are permitted to decide afresh after complying with Section 129's requirements to serve detention/seizure order, issue statutory notice and afford opportunity of hearing.

Transitional credit - Form GST-TRAN-1 and TRAN-2 - opening of portal for filing within prescribed window - finality of Apex Court directions - verification of claims by officers with reasonable opportunity

Form GST-TRAN-1 and TRAN-2 - opening of portal for filing within prescribed window - transitional credit - finality of Apex Court directions - Petitioners entitled to avail the window directed by the Apex Court for filing or revising Form GST-TRAN-1 and TRAN-2 to claim transitional credit and writ petitions disposed accordingly. - HELD THAT: - The High Court held that the issue of non-filing of Form GST-TRAN-1/TRAN-2 within the stipulated period is governed by the directions of the Apex Court in Union of India v. Filco Trade Centre Pvt. Ltd. and another dated 22.07.2022. That order directs GSTN to open the common portal for filing or revising TRAN-1 and TRAN-2 from 01.09.2022 to 31.10.2022 and permits any aggrieved registered assessee to file or revise the forms irrespective of pendency or disposal of writ petitions or ITGRC decisions. The Court noted that respondents concede the applicability of the Apex Court's directions to the petitioners and, in view of those directions, there is no need for separate adjudication of the petitions on merit. The Court recorded the Apex Court's concomitant directions that GSTN ensure absence of technical glitches and that concerned officers are afforded 90 days thereafter to verify claims on merits after granting reasonable opportunity to parties; allowed transitional credit is to be reflected in the Electronic Credit Ledger. [Paras 2, 11, 12]

Writ petitions disposed to enable petitioners to file or revise Form GST-TRAN-1 and TRAN-2 within the window 01.09.2022 to 31.10.2022 and avail transitional credit subject to verification in terms of the Apex Court's directions.

Final Conclusion: The writ petitions are disposed of so that the petitioners may avail the window period fixed by the Apex Court (01.09.2022-31.10.2022) to file or revise Form GST-TRAN-1/TRAN-2 for claiming transitional credit, with verification and post-filing scrutiny to follow as directed by the Apex Court.

Transitional credit - filing of Form TRAN-1 and TRAN-2 - reopening of GSTN portal for filing - verification of transitional credit claims by tax officers within a stipulated period - reflection of allowed transitional credit in the Electronic Credit Ledger - liberty to avail benefit of Supreme Court directions

Liberty to avail benefit of Supreme Court directions - filing of Form TRAN-1 and TRAN-2 - Writ petition disposed as withdrawn with liberty to the petitioner to avail the relief granted by the Supreme Court in Union of India v. Filco Trade Centre Pvt. Ltd. permitting filing/revision of TRAN-1/TRAN-2. - HELD THAT: - The High Court recorded that the Supreme Court in Filco Trade Centre Pvt. Ltd. directed GSTN to open a common portal for filing TRAN-1 and TRAN-2 from 01.09.2022 to 31.10.2022, allowed aggrieved registered assessees to file or revise forms irrespective of earlier writs or ITGRC decisions, required GSTN to ensure technical stability, and mandated that concerned officers have 90 days thereafter to verify claims and pass orders, with allowed credits to be reflected in the Electronic Credit Ledger. In light of those directions and the petitioner's request to take benefit thereof, the petitioner was permitted to withdraw the writ petition and given liberty to proceed under the Supreme Court's directions. The Court therefore recalled its earlier order of 05.07.2022 to the extent necessary to allow withdrawal with the stated liberty. [Paras 2, 4]

Writ petition disposed as withdrawn with liberty to avail the relief granted by the Supreme Court in Filco Trade Centre Pvt. Ltd.; no costs.

Final Conclusion: The writ petition is disposed of as withdrawn, the petitioner being granted liberty to avail the Supreme Court's directions permitting filing or revision of TRAN-1/TRAN-2 during 01.09.2022-31.10.2022 and to pursue verification and credit-reflection procedures as directed; no order as to costs.

Assessment of unregistered persons - show-cause notice and opportunity to be heard - alternative statutory remedy and writ jurisdiction - interim relief in fiscal matters - binding effect of High Court orders - compliance with procedural rules for assessment

Alternative statutory remedy and writ jurisdiction - show-cause notice and opportunity to be heard - Maintainability of writ petition challenging Demand-cum-Show Cause Notice issued under Section 63 at the show-cause stage. - HELD THAT: - The Court held that writ jurisdiction should not be invoked at the stage of a show-cause notice where the statutory adjudicatory process under Section 63 and the Rules has been initiated and an adequate alternative remedy exists. Citing Supreme Court precedents and principles of self-imposed restraint, the Court observed that issuance of a show-cause notice is a condition precedent to determination of liability, the assessee must be afforded the opportunity to reply, and factual adjudication should ordinarily be conducted by the proper officer before resort to Article 226. The petitioner's challenge to the notice without exhausting the statutory process or demonstrating breach of natural justice or lack of jurisdiction was therefore premature. [Paras 6]

Writ petition at show-cause stage is premature and not maintainable; petitioner relegated to participate in the Section 63 proceeding.

Interim relief in fiscal matters - binding effect of High Court orders - Whether interim stay of the assessment proceedings should be granted in view of pending Supreme Court proceedings on the question whether 'royalty' is a 'tax' and interim orders of other courts. - HELD THAT: - The Court refused to grant stay of the Section 63 proceedings. It noted subsequent interim orders passed by the Supreme Court in related matters which did not restrain statutory authorities from proceeding with assessment, and emphasised that interim orders of other High Courts are not binding and have only persuasive value. The Court also referred to the public interest in fiscal matters and the established principle that different Benches may pass interim orders on varied terms; consequently, parity with interim orders of other High Courts was not a ground to restrain the Proper Officer from proceeding. [Paras 5, 7]

Prayer for stay of assessment/proceedings refused; assessment under Section 63 may continue.

Compliance with procedural rules for assessment - show-cause notice and opportunity to be heard - Validity and procedural sufficiency of the Demand-cum-Show Cause Notice in Form GST ASMT-14 and summary in Form GST DRC-01 under Rule 100(2). - HELD THAT: - The Court examined the impugned documents and found that the Proper Officer has issued the show-cause notice in Form GST ASMT-14 with grounds and served the summary in Form GST DRC-01, thereby complying with Rule 100(2). The notice disclosed the components of proposed tax, interest and penalty and afforded the petitioner an opportunity to reply; accordingly, there was no illegality, irrationality or procedural impropriety rendering the notice invalid at this stage. [Paras 6]

Show-cause notice found to be in compliance with statutory procedure and not liable to be quashed at this stage.

Assessment of unregistered persons - show-cause notice and opportunity to be heard - Whether the petitioner is entitled to exemption from registration/payment of GST on royalty by reason of the pending nine-Judge reference on whether 'royalty' is a 'tax'. - HELD THAT: - The Court declined to accept the contention that pending constitutional reference prevents initiation or completion of assessment under Section 63. It held that the Proper Officer is competent to examine on available materials whether the petitioner is liable for compulsory registration and GST liability under the charging provisions; the pendency of the Supreme Court reference does not automatically entitle an unregistered person to exemption from the statutory assessment process. [Paras 5, 6, 7]

Petitioner is not absolved from the statutory assessment process by reason of the pending reference; liability to be determined by the Proper Officer.

Final Conclusion: Writ petition challenging Demand-cum-Show Cause Notice under Section 63 dismissed as premature; the petitioner is directed to file reply/objection within fifteen days and to participate in the statutory assessment proceedings, which shall be decided by the Proper Officer in accordance with law.

Interest on delayed payment under Section 50 of the OGST/CGST Act - appeal under Section 107 of the CGST/OGST Act - condonation of delay and Section 14 of the Limitation Act, 1963 - withdrawal of writ petition and leave to pursue statutory remedy - vires challenge left open for future adjudication

Appeal under Section 107 of the CGST/OGST Act - withdrawal of writ petition and leave to pursue statutory remedy - Disposition of the writ petitions by permitting withdrawal to enable filing of appeals under Section 107 and direction to the Appellate Authority to admit and decide such appeals on merits. - HELD THAT: - The Court permitted the petitioner to withdraw the writ petitions filed against adjudication orders dated 28th February, 2022 and observed that the writ petitions were filed within the period prescribed under Section 107 of the CGST/OGST Act.Having regard to the petitioner's election to pursue the statutory appellate remedy, the Court directed that if appeal(s) are filed within two weeks, and statutory requirements are complied with, the Appellate Authority should admit the appeal(s) and decide them on merits in accordance with law. This direction is procedural and intended to secure the adjudication of the dispute before the proper statutory forum rather than on writ jurisdiction. [Paras 8, 10]

Writ petitions disposed of on allowing withdrawal and direction that appeals filed within two weeks be admitted and decided on merits.

Condonation of delay and Section 14 of the Limitation Act, 1963 - appeal under Section 107 of the CGST/OGST Act - Treatment of any delay in filing appeal and consideration of condonation petitions. - HELD THAT: - The Court observed that petitions for condonation of delay filed along with the appeal(s) shall be considered favourably in view of the pendency of the writ petitions before this Court, invoking Section 14 of the Limitation Act, 1963 read with Section 107 of the CGST/OGST Act. The observation directs the Appellate Authority to take a facilitative view on condonation applications arising from the period during which the writ petitions were pending. [Paras 9]

Condonation petitions to be considered favourably where appeals are filed, having regard to pendency of writ petitions under Section 14 Limitation Act read with Section 107 CGST/OGST Act.

Interest on delayed payment under Section 50 of the OGST/CGST Act - vires challenge left open for future adjudication - Petitioner's challenge to the vires of sub-sections (1) and (2) of Section 50 of the OGST/CGST Act was not pressed and is left open. - HELD THAT: - At the hearing the petitioner expressly declined to press the constitutional challenge to the vires of sub-sections (1) and (2) of Section 50 (and corresponding provisions) and sought liberty to agitate the question in an appropriate case. The Court accepted this position and allowed the issue to remain open for determination in an appropriate proceeding in future, thereby not adjudicating the constitutional challenge in these petitions. [Paras 5]

Challenge to vires of Section 50(1) and (2) not adjudicated; matter left open for future agitations.

Final Conclusion: Both writ petitions were disposed of on the petitioner's election to withdraw and pursue appeals under Section 107; appeals filed within two weeks are to be admitted and decided on merits, condonation applications arising from pendency of the writs are to be favourably considered under Section 14 of the Limitation Act, and the constitutional challenge to Section 50(1)-(2) was not pressed and remains open.

Search, seizure and retention of assets under Section 67 - Interpretation of Section 67(2) proviso and Section 67(3) - Meaning of "relied upon" in a show cause notice - Return of seized documents/books/things pending conclusion of proceedings - Mandamus for refund of seized amount - Retention of seized cash until completion of adjudication - Direction to complete assessment/adjudication within fixed time - Relief for non-compliance by officers (payment to a charitable institution)

Search, seizure and retention of assets under Section 67 - Interpretation of Section 67(2) proviso and Section 67(3) - Meaning of "relied upon" in a show cause notice - Mandamus for refund of seized amount - Retention of seized cash until completion of adjudication - The petitioner's claim for a mandamus directing refund of the amount seized from his residence is not maintainable and the amount may be retained by the Department until adjudication if it has been "relied upon" in the show cause notice. - HELD THAT: - The Court examined the provisions governing inspection, search and seizure and the second proviso to Section 67(2) together with Section 67(3). The proviso protects items not "relied upon" for issuance of notice by requiring their return within 30 days, but its language also contemplates retention of seized assets by the Department while enquiry or proceedings under the Act are pending. The Court construed the phrase "relied upon" broadly and noted that the show cause notice expressly referred to the seized amount; accordingly the absence of formal appropriation of the money towards liability did not mandate immediate restitution. For these reasons the petition for mandamus for refund was rejected and the Department was held entitled to retain the seized amount until completion of adjudication, subject to eventual refund if not appropriated in accordance with law. [Paras 10, 12, 13, 14, 15]

Mandamus for refund rejected; amount may be retained where it is shown to have been "relied upon" in the show cause notice and until adjudication is complete; refund to follow upon conclusion unless lawfully appropriated.

Direction to complete assessment/adjudication within fixed time - Consideration of request for cross-examination - The respondents are directed to consider the petitioner's request for cross-examination in accordance with law and to complete the proceedings, including consideration and grant of cross-examination if appropriate, within six weeks from issuance of the order. - HELD THAT: - The Division Bench had earlier fixed an outer time limit for completion of assessment proceedings. In the present order the Court specified that the respondents shall consider the petitioner's request for cross-examination in accordance with law. If the respondents conclude that such cross-examination should be granted, it shall be accommodated, and all adjudicatory proceedings shall be completed within six weeks from issuance of the present order. The Court recorded the parties' undertaking to cooperate in adhering to these timelines. [Paras 16, 17]

Proceedings, including consideration/grant of any request for cross-examination, to be completed within six weeks from date of this order.

Relief for non-compliance by officers (payment to a charitable institution) - Contempt/non-compliance with judicial timeline - Respondents were held accountable for an unexplained two-month delay in forwarding the Division Bench's earlier order and were directed to pay a specified amount to a charitable institution as consequence of that delay. - HELD THAT: - The Court observed that there was an unexplained delay of two months in forwarding the Division Bench's order to the Assessing Officer. Given the senior rank of the officers and the absence of an acceptable explanation, the Court found failure to exhibit necessary diligence in effecting compliance. As a remedial measure the officers were put to terms and directed to pay a sum to the Cancer Institute, Adayar, Chennai within two weeks of the order. [Paras 8, 9]

Respondents directed to pay the specified amount to the Cancer Institute, Adayar, Chennai within two weeks for the intervening delay in forwarding the earlier order.

Final Conclusion: Writ Petition dismissed. The Court held that seized cash which is referred to and "relied upon" in the show cause notice may be lawfully retained by the Department until completion of adjudication and is liable to be refunded thereafter if not appropriated in accordance with law; the respondents must consider any legitimate request for cross-examination and complete adjudication within six weeks; respondents were also directed to make a payment to a charitable institution for the unexplained delay in complying with an earlier order.

Genuineness of donation - effect of withdrawal or cancellation of approval on deduction under Explanation to Section 35(1)(iii) - entitlement to deduction not vitiated by subsequent cancellation of donee's registration - requirement of positive material showing connivance to disallow donation - precedent: subsequent withdrawal of approval does not defeat deduction where conditions were fulfilled at time of payment

Genuineness of donation - effect of withdrawal or cancellation of approval on deduction under Explanation to Section 35(1)(iii) - requirement of positive material showing connivance to disallow donation - Donation made by the assessee to the two organisations cannot be held not genuine or disentitled to deduction merely because the donees' registrations were subsequently cancelled with retrospective effect, in absence of material establishing connivance. - HELD THAT: - The Tribunal and the CIT(A) recorded factual findings that there was no material establishing the assessee's connivance in any scheme of bogus billing or in misappropriation by the donees; suspicion alone was held insufficient to deny the claim. The Court applied the Explanation to Section 35(1)(iii), which provides that deduction shall not be denied merely because approval granted to the donee was withdrawn after the payment. Reliance was placed on the principle in Chotatingrai Tea & Ors. that once the assessee has fulfilled the statutory conditions for claiming deduction at the time of payment and the amount has not demonstrably come back to the assessee, subsequent withdrawal of the donee's certificate does not automatically defeat the deduction. In these circumstances the Tribunal's conclusion that the donations were allowable was not perverse.

Tribunal's order upholding the allowance of the donations is sustained; the appeal is dismissed.

Final Conclusion: Revenue's appeal is dismissed; the substantial question of law is answered against the revenue and the Tribunal's order allowing the donations is upheld.

Jurisdictional fact - beneficial owner - notice under Section 10(1) of the BM Act - enquiry under Section 10(2) of the BM Act - assessment under Section 10(3) of the BM Act - distinction between information and intelligence (CBDT Guidelines) - time for issuance of notice/preferable 30 days (CBDT Guidelines) - principles of natural justice

Jurisdictional fact - beneficial owner - notice under Section 10(1) of the BM Act - enquiry under Section 10(2) of the BM Act - Whether the Assessing Officer was required to decide the jurisdictional fact of beneficial ownership before issuing a notice under Section 10(1) of the BM Act - HELD THAT: - The Court held that Section 10 read as a whole contemplates issuance of a notice on receipt of information and thereafter the making of such inquiry as the Assessing Officer considers necessary under Section 10(2), with assessment under Section 10(3) to follow on consideration of accounts, documents and other material. A segregated preliminary adjudication of the 'jurisdictional fact' (i.e., beneficial ownership) prior to issuing the Section 10(1) notice is not mandated by the statute. The definition clause in Section 2(11) cannot be construed as a positive enactment requiring a separate pre-notice determination. The Assessing Officer is empowered to examine and decide the question of beneficial ownership in the course of the enquiries contemplated by Section 10 and by using the discovery and production powers vested under Section 8. Applying settled principles of fiscal statute interpretation and having regard to the scheme of Chapter III of the BM Act and relevant authorities, the Court answered this question in the negative. [Paras 25]

No separate preliminary adjudication on beneficial ownership was required before issuing the Section 10(1) notice; the Assessing Officer may examine the jurisdictional fact in the course of enquiry under Section 10.

Time for issuance of notice/preferable 30 days (CBDT Guidelines) - distinction between information and intelligence (CBDT Guidelines) - Whether the Impugned Notice was invalid for being issued beyond thirty days without prior approval as per CBDT Guidelines - HELD THAT: - The Court observed that the CBDT Guidelines distinguish between 'information' and 'intelligence' and state a preference that notices under Section 10(1) be issued within thirty days from the end of the financial year in which such information was received, subject to conditions. However, the Court declined to presume at this interlocutory stage that the Assessing Officer had the requisite information earlier and thus that the notice was issued beyond thirty days without approval. Given the reference dated 06.08.2021 cited in the Impugned Notice and the inability to draw the presumption urged by the petitioner before the Assessee has responded and the Assessing Officer has completed enquiries, the Court would not hold the notice invalid on the ground alleged. [Paras 31]

The petitioner's challenge that the notice was invalid for being issued beyond thirty days without approval is not sustained at this stage; no such invalidation is made.

Principles of natural justice - assessment under Section 10(3) of the BM Act - Whether the Impugned Notice was impermissible for failing to take into account the ITAT decision in ITA Nos.1211-1217/BANG/2019 - HELD THAT: - The Court noted that the Impugned Notice is detailed, sets out transactions and documents, and affords the petitioner an opportunity to be heard and to produce documents and evidence. As the petitioner had not yet filed a response or produced materials for the Assessing Officer's consideration, the Court would not opine that the notice was impermissible for having failed to consider the ITAT judgment at this stage. The Assessing Officer is required to consider the explanations and material that the assessee may produce during the enquiry and assessment process. [Paras 32]

The challenge that the notice is impermissible for not considering the ITAT decision is rejected; the Assessing Officer may consider the ITAT order and the petitioner's responses during the proceedings.

Final Conclusion: Writ petition dismissed. The High Court held that the Assessing Officer may issue a notice under Section 10(1) and examine the question of beneficial ownership in the course of enquiry under Section 10(2) and assessment under Section 10(3); the challenges that the notice was vitiated by delay beyond thirty days or by failure to consider the ITAT decision were not sustained at this stage. Liberty granted to the petitioner to raise appropriate defences before the Assessing Officer in further proceedings.

Speaking order requirement before reassessment - disposal of objections to notice under Section 148 of the Income Tax Act - GKN Driveshafts principle - remand for disposal of objections and fresh consideration - opportunity of hearing before disposing objections

Speaking order requirement before reassessment - disposal of objections to notice under Section 148 of the Income Tax Act - GKN Driveshafts principle - opportunity of hearing before disposing objections - Validity of the reassessment order dated 31st March, 2022 where the assessing officer proceeded without disposing the assessee's objection to the notice under Section 148 by a reasoned speaking order in accordance with the law laid down in GKN Driveshafts (India) Ltd. - HELD THAT: - The Court found on the record and parties' submissions that the assessing officer passed the impugned reassessment order without considering and disposing of the assessee's objection dated 8th July, 2021 to the notice under Section 148. Reliance was placed on the binding principle in GKN Driveshafts (India) Ltd. that objections to reopening must be dealt with by a reasoned speaking order before proceeding with reassessment. The Revenue was unable to produce any contemporaneous record demonstrating disposal of the objection; documents produced were irrelevant and showed non-application of mind. In these circumstances the Court concluded that the reassessment order was made in clear violation of the GKN principle and was not sustainable. The matter was therefore remitted to the assessing officer with directions to first decide the objection by a reasoned and speaking order after affording the assessee an opportunity of hearing, and only thereafter to proceed further in the reassessment subject to the outcome of that decision.

Impugned assessment order quashed; matter remanded to the assessing officer to dispose of the objection to the Section 148 notice by a reasoned speaking order after hearing the petitioner, and further proceedings to depend on that outcome.

Final Conclusion: The writ petition is allowed: the reassessment order dated 31st March, 2022 is quashed for failure to dispose of the objection to the Section 148 notice by a reasoned speaking order in conformity with GKN Driveshafts; the matter is remitted to the assessing officer to decide the objection after hearing the assessee and to proceed thereafter in accordance with that decision.

Imposition of penalty under section 271(1)(c) where income surrendered during survey is declared in the return - addition to income as a precondition for levy of penalty under section 271(1)(c) - Explanation 1 to section 271(1) and its applicability to additions or disallowances - Explanations 5 and 5A applicable to search cases under section 132 and not to survey under section 133A - distinction between income added by the Assessing Officer and income voluntarily offered in the return

Imposition of penalty under section 271(1)(c) where income surrendered during survey is declared in the return - addition to income as a precondition for levy of penalty under section 271(1)(c) - Explanation 1 to section 271(1) and its applicability to additions or disallowances - Explanations 5 and 5A applicable to search cases under section 132 and not to survey under section 133A - Penalty under section 271(1)(c) cannot be levied on income which was voluntarily surrendered during a survey and duly declared in the return where the Assessing Officer made no addition or disallowance. - HELD THAT: - The Tribunal held that Explanation 1 to section 271(1) deems to represent income in respect of which particulars have been concealed only the amount that is added or disallowed in computing total income. A particular income can be 'added' only when it was not offered in the return; if the assessee offers the income in the return, it cannot be said to have been added by the AO for the purposes of Explanation 1. Explanations 5 and 5A, which permit levy of penalty even where income is declared in a return, apply specifically to cases of search under section 132 and are not applicable to surveys under section 133A. In the present case the assessee surrendered income during survey and promptly included it in the return; the AO accepted the returned income and made no addition. Thus there was no 'amount added or disallowed' on which Explanation 1 could operate, and consequently the income so declared could not constitute the basis for penalty under section 271(1)(c). The Tribunal distinguished MAK Data Pvt. Ltd. on facts, observing that in MAK Data the assessed income exceeded the returned income because the addition was made by the AO during assessment; that factual matrix is absent here. [Paras 3, 4, 5, 6]

Penalty imposed under section 271(1)(c) set aside as the income surrendered during survey was declared in the return and no addition was made by the AO.

Final Conclusion: The appeal is dismissed; the order of the CIT(A) deleting the penalty imposed under section 271(1)(c) in respect of the income declared following survey is affirmed.

Limitation for passing order under Section 201(1) of the Income tax Act - prospective effect of amendment to Section 201(3) - assessee in default for failure to deduct TDS - exemption under Section 10(5) - Leave Travel Concession - void ab initio for want of jurisdiction

Limitation for passing order under Section 201(1) of the Income tax Act - prospective effect of amendment to Section 201(3) - void ab initio for want of jurisdiction - Whether assessment orders under Section 201(1)/201(1A) passed in March 2018 were time barred and therefore void for want of jurisdiction. - HELD THAT: - The Tribunal found that the assessing orders impugned were passed after expiry of the applicable limitation period. The record shows summons in January 2018 and assessment orders dated 30/31 March 2018 in respect of the relevant TDS proceedings. The amendment to Section 201(3) by Finance Act (No. 2), 2014, made applicable from 1/10/2014, could not be applied retrospectively to extend limitation where the right accrued earlier. Reliance on the view in Tata Teleservices (Gujarat High Court) and subsequent coordinate bench decisions leads to the conclusion that the amended limitation provision could not be invoked to validate orders rendered beyond the pre amendment limitation. The CIT(A) erred in treating filing dates of corrigenda/statements to invoke the amended provision. Because the impugned orders were beyond the prescribed period, they were without jurisdiction and could not be sustained; accordingly the Tribunal did not proceed to adjudicate the substantive contention on taxability of LTC/LFC reimbursements. [Paras 8, 11]

Impugned assessment orders under Section 201(1)/201(1A) are void ab initio as barred by limitation; therefore they are quashed.

Final Conclusion: Appeals allowed; impugned demands set aside because the assessment orders were time barred and void for want of jurisdiction, rendering further determination of the substantive LTC/LFC issues unnecessary.

Depreciation on goodwill and brand value acquired on succession - transfer as a going concern under section 47(xiii) and its effect on cost to successor - fifth proviso to section 32(1) - applicability limited to year of succession - determination of actual cost under Explanation 3 to section 43(1) - valuation of intangible assets by independent valuer and admissibility of such valuation - expenditure for employee welfare (establishing schools) deductible as business expenditure - section 14A and Rule 8D - disallowance limited to extent of exempt income - shifting of profits to related concerns - requirement of proof of non-arm's-length/colourable device - condonation of delay in filing appeal

Depreciation on goodwill and brand value acquired on succession - transfer as a going concern under section 47(xiii) and its effect on cost to successor - determination of actual cost under Explanation 3 to section 43(1) - valuation of intangible assets by independent valuer and admissibility of such valuation - fifth proviso to section 32(1) - applicability limited to year of succession - Whether depreciation is allowable to the assessee-company on brand/goodwill transferred from the predecessor partnership firm and if so at what value and from which year - HELD THAT: - The Tribunal held that the transfer of the business as a going concern from the partnership firm to the company satisfied the conditions of section 47(xiii). The brand valuation prepared by the independent valuer was examined and found supported by projections, discounting methodology and actual sales data; Revenue failed to demonstrate defects sufficient to reject the valuation. The Tribunal rejected the approach of treating the brand at nil value, overruled the view taken below and accepted the brand value at the amount determined by the valuer. The Tribunal further held that the fifth proviso to section 32(1) applies only to the previous year of succession and does not preclude depreciation in subsequent years; where the successor is entitled to depreciation, the AO must allow depreciation from the year in which the successor is entitled, even if the assessee omitted to claim it for earlier years. Accordingly the AO was directed to allow depreciation on the accepted brand value in accordance with law.

Brand/goodwill value accepted as per valuer; depreciation to be allowed on that value and from the year the successor is entitled; AO directed to compute accordingly.

Expenditure for employee welfare (establishing schools) deductible as business expenditure - Whether construction expenditure incurred by the assessee for schools for employees' children is deductible as business expenditure or disallowable as expenditure for another entity - HELD THAT: - On the facts the Tribunal found that the schools (Anbu Illam and RJ Mantra Tulir School) were established to provide education and welfare to the employees' children in a remote area where no nearby schools existed; the company had an object in its memorandum permitting establishment of educational institutions and the facilities served the business by providing welfare to the workforce. Considering authorities on employee-welfare expenditure and the factual matrix (longstanding welfare activity, number of employees served, use of premises in connection with business), the Tribunal held the expenditure to be in the course of business and directed the AO to allow the construction costs and related interest.

Construction expenses for the employee schools and related interest are allowable as business expenditure; additions deleted/directions issued to AO.

Section 14A and Rule 8D - disallowance limited to extent of exempt income - Whether disallowance under section 14A read with Rule 8D as made by the AO is sustainable or requires restriction - HELD THAT: - The assessee did not challenge the CIT(A)'s restriction of disallowance to the extent of exempt income and accepted the position in light of binding authorities. The Tribunal found no infirmity in the CIT(A)'s order and confirmed that the disallowance under section 14A/Rule 8D is to be limited to the extent of exempt income as directed by the appellate authority.

CIT(A)'s order restricting the section 14A/Rule 8D disallowance to the extent of exempt income is sustained.

Shifting of profits to related concerns - requirement of proof of non-arm's-length/colourable device - Whether additions made by AO treating profit as diverted to sister concern on account of alleged book-entry sales are sustainable - HELD THAT: - The Tribunal examined the material and noted that the assessee and the sister concern were distinct taxable entities, that the sales documentation, tax audits and transfer-pricing scrutiny did not show that the transaction price was excessive or not at arm's length, and that Revenue did not demonstrate that the arrangement produced any tax benefit in an overall sense (since the firm's profits were taxable). The Tribunal observed that disallowance for excessive/colourable transactions must be founded on proof that prices were not arm's length or that the device altered tax liability; where no such infirmity was shown, the AO's addition based on alleged profit shifting was untenable. On the facts the additions were deleted.

Additions on account of alleged shifting of profit to sister concern deleted; AO's treatment held without basis.

Deductibility of foreign tour expenses - Whether foreign tour expenses claimed by the assessee are deductible as incurred wholly and exclusively for business - HELD THAT: - The assessee failed to establish the business nexus of the foreign tour expenditure. In absence of documentary evidence connecting the trip to business purposes or demonstrating one of the recognized tests for employee-related payments, the Tribunal upheld the AO and CIT(A) in disallowing the foreign tour expenses.

Disallowance of foreign tour expenses confirmed.

Condonation of delay in filing appeal - Whether the short delay (five days) in filing the appeal against the revision order is to be condoned - HELD THAT: - The Tribunal considered the explanation for the five-day delay (year-end work, audits, local festivals) and, viewing the delay as short and the reasons satisfactory, exercised discretion to condone the delay and admit the appeal.

Delay of five days condoned and appeal admitted; revision order of PCIT quashed in light of merits adjudicated.

Final Conclusion: The appeals arising from AYs 2010-11 to 2016-17 were partly allowed: the Tribunal accepted the independent valuer's brand valuation and directed allowance of depreciation to the successor company (with the fifth proviso to section 32(1) not restricting subsequent years), allowed construction costs for employee schools as business expenditure, sustained CIT(A)'s limitation of section 14A/Rule 8D disallowance to exempt income, deleted additions for alleged profit shifting to the sister concern, and confirmed disallowance of unexplained foreign tour expenses. In the separate appeal against the PCIT's revision for AY 2009-10 the Tribunal condoned the short delay and quashed the revision order.

Unexplained cash credits under section 68 - Assessment under section 153A - Onus of proof under section 68 - Accommodation entries and bogus share capital/share premium - Use of seized/incriminating material in post search assessments - Shifting of onus where information is unverifiable

Assessment under section 153A - Use of seized/incriminating material in post search assessments - Whether additions could be sustained under assessments completed after search (u/s 153A) in the absence of incriminating material found and seized. - HELD THAT: - The Tribunal found that the plea of absence of incriminating material was not taken before the Assessing Officer and was belatedly raised on appeal. The record showed that a plethora of documents incriminating in nature were recovered during the search, including material from the bogus entry operator, and these were available to and utilised by the Assessing Officer. The CIT(A) had cogently rejected the assessee's contention and the Tribunal concurred that the Assessing Officer was entitled to rely on seized material and other information in framing assessment under section 153A; therefore the addition was not made 'dehors' incriminating material. [Paras 7]

The plea that additions were made without any incriminating material is rejected and the use of seized/incriminating material in the 153A assessment is upheld.

Unexplained cash credits under section 68 - Onus of proof under section 68 - Shifting of onus where information is unverifiable - Accommodation entries and bogus share capital/share premium - Whether the share capital and share premium introduced could be treated as unexplained cash credits and added to income under section 68. - HELD THAT: - The Assessing Officer, and thereafter the CIT(A), found that substantial share application monies/premium had been routed through paper companies linked to known bogus entry operators; many investor entities were not traceable at the addresses provided and were not produced for verification. Documentary evidence furnished by the assessee (PAN, ROC extracts, limited bank statements, audited accounts) was held insufficient in the circumstances to discharge the onus under section 68. The authorities applied the test of human probabilities, reliance on surrounding circumstances and precedents which permit detailed scrutiny in cases of accommodation entries. Given the non existence or unverifiability of subscribing entities and the patterns indicative of accommodation entries, the sums introduced were held to be unexplained cash credits and added to the assessee's income. [Paras 8, 9]

The addition of the share capital and share premium as unexplained cash credits under section 68 is sustained.

Onus of proof under section 68 - Shifting of onus where information is unverifiable - Whether the assessee discharged the onus to prove identity, genuineness and creditworthiness of share applicants. - HELD THAT: - Both the Assessing Officer and the CIT(A) found that the assessee did not adequately discharge the onus. Although certain documents and bank statements were produced, the AO's enquiries showed that the subscribing entities could not be physically verified and were not produced for cross verification; bank statements lacked narrations and exhibited suspicious timing of credits. The authorities held that merely furnishing names, PAN and ROC entries is not invariably sufficient for a private company and that where enquiries produce unverifiable or doubtful information the onus shifts back to the assessee to take reasonable steps (including producing principal officers) to satisfy the AO. The Tribunal agreed with this approach in the facts of the case. [Paras 8]

Assessee failed to discharge the onus under section 68 and the onus rightly shifted back to it; consequence is addition.

Final Conclusion: Appeal dismissed. The orders of the Assessing Officer and the CIT(A) upholding the addition of share capital and share premium introduced in Assessment Year 2006-07 as unexplained cash credits under section 68 (in proceedings under section 153A), and the related findings on onus and accommodation entries, are affirmed.

Allowability of commission payments as business expenditure under section 37 of the Income-tax Act - remand for de novo consideration - verification and examination of third-party agents under section 133(6) of the Income-tax Act - res judicata does not apply across assessment years; each year to be independently adjudicated - onus on assessee to substantiate nature of services and genuineness of payments

Allowability of commission payments as business expenditure under section 37 of the Income-tax Act - remand for de novo consideration - verification and examination of third-party agents under section 133(6) of the Income-tax Act - Commission payments claimed in assessment year 2009-2010 are to be examined afresh by the Assessing Officer for allowability under section 37. - HELD THAT: - The Tribunal, after considering the materials produced by the assessee (including party-wise break-up and past assessment orders showing allowance in other years), concluded that a fresh independent examination is required rather than applying findings from other assessment years. The Hon'ble High Court had earlier set aside the Tribunal's cryptic order and directed de novo consideration. The Tribunal noted that in the assessee's own case for AY 2006-07 the matter had been remitted to the AO who, after issuing notices under section 133(6) and verifying confirmations and agreements from agents, allowed the payments except for amounts where confirmations were not received. Given that many commission payments were to the same parties year-to-year and that third-party confirmations, agreements, payments by account-payee cheques and TDS deductions were available, the Tribunal restored the issue to the file of the AO with directions that the assessee cooperate and the AO afford a reasonable opportunity and verify the genuineness and reasonableness of the commission payments. [Paras 4, 6, 7, 8, 9]

Issue restored to the file of the Assessing Officer for de novo consideration; assessee to furnish details and be afforded opportunity of hearing.

Allowability of commission payments as business expenditure under section 37 of the Income-tax Act - remand for de novo consideration - res judicata does not apply across assessment years; each year to be independently adjudicated - Commission payments claimed in assessment year 2010-2011 are restored to the Assessing Officer for fresh adjudication. - HELD THAT: - In view of the decision in the lead appeal concerning AY 2009-2010 (where identical issues were remitted for fresh consideration), the Tribunal allowed both Revenue's and assessee's appeals in respect of AY 2010-2011 for statistical purposes and remitted the matter to the AO. The Tribunal applied the same reasoning that each assessment year must be independently examined and that the AO should verify the payments and supporting material before concluding on allowability under section 37. [Paras 10]

Appeals allowed for statistical purposes; issue remitted to the Assessing Officer for de novo consideration.

Allowability of commission payments as business expenditure under section 37 of the Income-tax Act - remand for de novo consideration - Commission payments claimed in assessment year 2008-2009 are restored to the Assessing Officer for fresh adjudication. - HELD THAT: - This appeal by the Revenue raised the identical question of allowability of commission payments. Given the Tribunal's decision to remit the identical issue in the lead appeal (AY 2009-2010) for de novo consideration by the AO, the Tribunal similarly remitted the dispute for AY 2008-2009 to the AO for independent examination and verification in accordance with law. [Paras 11]

Issue remitted to the Assessing Officer for de novo consideration; order passed accordingly.

Final Conclusion: All appeals disposed of by restoring the question of allowability of commission payments for AY 2009-10, 2010-11 and 2008-09 to the Assessing Officer for fresh, independent consideration (the assessee to cooperate and the AO to afford opportunity and verify third party confirmations and agreements); appeals otherwise allowed for statistical purposes.

Gifts from relative exempt from tax - identification and creditworthiness of donor - genuineness of transaction under section 68 - presentation/clearance date variance not fatal to genuineness - share of profit from partnership exempt under section 10(2A)

Gifts from relative exempt from tax - identification and creditworthiness of donor - genuineness of transaction under section 68 - presentation/clearance date variance not fatal to genuineness - Addition of Rs.1,00,00,000 treated as unexplained cash credit/gift held to be not sustainable. - HELD THAT: - The Tribunal found that the assessee established the identity and creditworthiness of the donor (mother in law) by furnishing the gift deed, cheque details and the donor's returns and PAN. The Assessing Officer's and CIT(A)'s doubts based on variance between dates in the gift deed and bank clearance were held to be attributable to delay in presentation of cheques and not sufficient to reject the transaction. Once the three ingredients required under the law for accepting the credit/gift - identity of donor, capacity/creditworthiness and genuineness of transaction - were satisfied, the sum could not be treated as taxable. It was also held that the subsequent remittance or use of the gifted amount by the assessee is immaterial to the question of the genuineness of the gift. [Paras 11]

Addition of Rs.1,00,00,000 made on account of the alleged gift is set aside.

Share of profit from partnership exempt under section 10(2A) - Addition of Rs.1,00,419 being share of profit from partnership sustainment set aside. - HELD THAT: - The Tribunal held that share of profit received by the assessee from the partnership firm is exempt under the statutory provision applicable to partnership profits. The learned CIT(A) sustained the addition without adequate reasoning; on legal view the amount constitutes exempt share of profit and cannot be included in the taxable total income. [Paras 12]

Addition of Rs.1,00,419 being share of profit from the partnership firm is deleted.

Final Conclusion: The appeal is allowed: the additions of Rs.1,00,00,000 (gift from mother in law) and Rs.1,00,419 (share of partnership profit) are set aside for A.Y.2016 17 and the Assessing Officer is directed to delete these additions.

Penalty under section 271(1)(c) - bona fide explanation - furnishing inaccurate particulars - disclosure of material facts - mere disallowance not amounting to concealment - distinction between quantum and penalty proceedings - Explanation 1(B) to section 271(1)(c)

Penalty under section 271(1)(c) - bona fide explanation - furnishing inaccurate particulars - disclosure of material facts - mere disallowance not amounting to concealment - distinction between quantum and penalty proceedings - Whether penalty under section 271(1)(c) is leviable where the assessee disclosed the claim in the return, offered an explanation that was found to be bona fide, and the disallowance arose from a routine/technical quantum adjustment - HELD THAT: - The Tribunal upheld the CIT(A)'s factual finding that the assessee had disclosed the particulars of the claim in the return and had offered a bona fide explanation which was substantiated. It recorded the settled principle that penalty proceedings are distinct from quantum proceedings and that mere disallowance of a claim does not automatically amount to concealment or furnishing of inaccurate particulars. The Tribunal relied on the reasoning in authority cited by the CIT(A) to the effect that where divergent or debatable legal views exist and full facts are disclosed, an assessee taking a reasonably arguable position is not liable to penalty. The CIT(A)'s conclusion that Explanation 1(B) applied - i.e., that the explanation was bona fide and all material facts were disclosed - was not rebutted by the Revenue, and the fact that the claim was accepted in the subsequent assessment year reinforced the finding of bona fides. In these circumstances the rigors of section 271(1)(c) were held not attracted and deletion of penalty was proper. [Paras 7, 8]

Penalty imposed under section 271(1)(c) deleted; CIT(A)'s order upheld and Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal against deletion of penalty for AY 2011-12, holding that the assessee had disclosed material facts, offered a bona fide and substantiated explanation and that mere disallowance in quantum did not justify invoking section 271(1)(c).

Section 10(13A) exemption - house rent allowance - exemption where residential accommodation is owned by assessee or family - proof of actual payment of rent - colourable device

Section 10(13A) exemption - house rent allowance - proof of actual payment of rent - occupation of accommodation owned by spouse - Whether the assessee is entitled to exemption under Section 10(13A) in respect of house rent paid despite the residential accommodation being owned/occupied within the family - HELD THAT: - The Tribunal examined the claim for deduction under Section 10(13A) in the light of precedents. Relying on the Division Bench decision in ITA No.715/Ahd/2013 (Bajrang Prasad) and the decisions of the Punjab & Haryana High Court in CIT v. M.S. Gujral and CIT v. Justice S.C. Mittal, the Tribunal observed that the statutory entitlement under Section 10(13A) turns on (a) occupation of residential accommodation by the assessee and (b) actual expenditure incurred by way of payment of rent. The cited authorities establish that an assessee occupying accommodation owned by a family member or even by himself may still satisfy the requirements of Section 10(13A) if there is evidence of actual payment and occupation and the transaction is not a sham. The Tribunal found these precedents applicable and directed that, in the circumstances, the assessee is entitled to the exemption under Section 10(13A). The Tribunal did not disturb other aspects of the assessment and limited its decision to the allowance of the house rent claim as per the law and precedents. [Paras 5, 8]

Assessee entitled to deduction under Section 10(13A) in respect of house rent paid; appeal partly allowed.

Final Conclusion: The Tribunal, following binding precedents, allowed the assessee's claim for exemption under Section 10(13A) in respect of rent paid and accordingly partly allowed the appeal; the remaining findings of the CIT(A) are sustained.

Annual Lettable Value - Income from House Property - stock-in-trade - notional annual letting value - prospective application of Section 23(5) - conflicting High Court precedents

Annual Lettable Value - Income from House Property - stock-in-trade - notional annual letting value - conflicting High Court precedents - ALV of unsold flats held as stock-in-trade of a builder/developer is assessable under the head "Income from House Property" or not. - HELD THAT: - The Tribunal considered rival authorities including decisions of the Delhi and Gujarat High Courts and coordinate Bench precedents of the ITAT, Mumbai. Distinguishing cases that dealt with actual rental receipts, the Tribunal held that where unsold flats are shown as stock-in-trade and are not let out (thus yielding no rental income), estimating a notional Annual Lettable Value and bringing it to tax under the head "Income from House Property" is not justified. Preferencing the ratio in CIT vs. Neha Builders and subsequent coordinate Bench decisions, the Tribunal concluded that income arising on sale of such flats is business income and the ALV of unsold flats forming part of stock-in-trade could not be determined and assessed under the head "Income from House Property" for the year under consideration. The Tribunal also noted that the statutory provision inserted as Section 23(5) by the Finance Act, 2017 (effective from A.Y. 2018-19) is prospective and therefore irrelevant to the assessment year before it. [Paras 6]

ALV of the seven unsold flats held as stock-in-trade could not be assessed under the head "Income from House Property"; the addition made by the Assessing Officer is vacated.

Chapter VI-A deduction - deduction rendered academic - Whether denial of deduction under Chapter VI-A (section 80C) by reason of assessment under "Income from House Property" remains contested after vacating the ALV addition. - HELD THAT: - Because the Tribunal set aside the ALV addition and vacated assessment of notional house property income, the issue concerning disallowance of the Chapter VI-A deduction became academic. The Tribunal recorded that, in view of the vacation of the addition, the ground challenging denial of the deduction stands rendered infructuous. [Paras 7]

Ground challenging denial of deduction under Chapter VI-A is dismissed as having been rendered academic/infructuous.

General grounds of appeal - Disposition of the general reserved ground of appeal. - HELD THAT: - The miscellaneous/general ground reserved by the assessee was considered and dismissed by the Tribunal as not requiring separate relief in light of the substantive decisions rendered. [Paras 8]

General ground of appeal dismissed.

Final Conclusion: The appeal is allowed to the extent that the addition of notional Annual Lettable Value in respect of seven unsold flats shown as stock-in-trade for A.Y. 2013-14 is vacated and deleted; the challenge to denial of Chapter VI-A deduction is dismissed as academic; the general ground is dismissed; the Assessing Officer is directed to give effect to this order.

Exemption under Section 11 for notified area development authority - penalty under Section 271(1)(c) for concealment of income - proviso to Section 2(15) and its inapplicability to notified area development authority - binding effect of a jurisdictional High Court decision on similar facts - penalty cannot be sustained where the claim is a debatable question of law

Penalty under Section 271(1)(c) for concealment of income - exemption under Section 11 for notified area development authority - penalty cannot be sustained where the claim is a debatable question of law - binding effect of a jurisdictional High Court decision on similar facts - Whether the penalty levied under Section 271(1)(c) for A.Y. 2012-13 is sustainable where the quantum appeal allowing exemption under Section 11 in favour of the assessee was decided by the Tribunal and the jurisdictional High Court. - HELD THAT: - The Tribunal held that the quantum appeal in ITA No.102/Rjt/2016 was allowed in favour of the assessee by applying the decision of the Gujarat High Court in Ahmedabad Urban Development Authority, and the Revenue's R/Tax Appeal (R/Tax Appeal No.760 of 2019) was dismissed by the High Court. In view of the High Court's decision applying Section 11 exemption to a notified area development authority, the Tribunal concluded that the penalty for concealment could not stand because the underlying tax liability was resolved in favour of the assessee. The Tribunal also relied on established principle that penalty under Section 271(1)(c) is not attracted where the matter involves a bona fide or debatable question of law and where there is no positive material to infer conscious concealment; on these bases the appellate authority's deletion of the penalty was sustained. [Paras 8, 9]

Penalty levied under Section 271(1)(c) for A.Y. 2012-13 deleted and Revenue's appeal dismissed.

Exemption under Section 11 for notified area development authority - proviso to Section 2(15) and its inapplicability to notified area development authority - binding effect of a jurisdictional High Court decision on similar facts - Whether exemption under Section 11 is available to the assessee for A.Y. 2015-16 in view of the jurisdictional High Court's decision in the assessee's own case for A.Y. 2012-13. - HELD THAT: - The Tribunal observed that the facts for A.Y. 2015-16 were similar to those adjudicated for A.Y. 2012-13 and, respectfully following the jurisdictional High Court's dismissal of Revenue's appeal (which applied Section 11 exemption to the notified area development authority and held the proviso to Section 2(15) inapplicable), the Tribunal upheld the CIT(A)'s allowance of exemption. Given the High Court's authoritative ruling on the point and the comparable factual matrix, the Tribunal rejected Revenue's grounds contending widespread commercial activity and the applicability of the proviso to Section 2(15). [Paras 15]

Revenue's appeal for A.Y. 2015-16 dismissed; exemption under Section 11 allowed following the jurisdictional High Court decision.

Final Conclusion: Both appeals filed by the Revenue (against deletion of penalty for A.Y. 2012-13 and against allowance of exemption for A.Y. 2015-16) are dismissed; the Tribunal followed the jurisdictional High Court's ruling that the assessee, as a notified area development authority, is eligible for exemption under Section 11 and that penalty for concealment cannot be sustained where the legal claim is debatable and the quantum appeal has been decided in the assessee's favour.

Allowability of trademark licence/royalty as revenue expenditure - treatment of payment for acquisition of a trade mark as capital expenditure - deduction of employer's contribution to provident and ESI funds under s.36(1)(va) of the Act - applicability of Section 43B to deductions under s.36(1)(va) - precedential effect of tribunal and High Court decisions

Allowability of trademark licence/royalty as revenue expenditure - treatment of payment for acquisition of a trade mark as capital expenditure - precedential effect of tribunal and High Court decisions - Deletion of addition disallowing Trademark Licence Utilisation Fees - HELD THAT: - The Assessing Officer treated the licence fees paid for use of the trade mark "Vimal" as payment for acquisition of a capital asset under the definition of capital asset and made an addition. The CIT(A) set aside that disallowance, and the Tribunal has upheld the CIT(A)'s order. The Tribunal applied its earlier decisions in the assessee's own cases for preceding assessment years and noted undisputed facts: the trade mark is owned by another company and the payments were made under a registered licence agreement and debited to selling and distribution expenses. Respectfully following the Tribunal's earlier rulings on identical facts and characterisation of the payments as royalty/licence for use (revenue in nature), the addition was deleted and the Revenue's appeal dismissed. [Paras 7]

Addition in respect of Trademark Licence Utilisation Fees deleted; Revenue appeal dismissed.

Deduction of employer's contribution to provident and ESI funds under s.36(1)(va) of the Act - applicability of Section 43B to deductions under s.36(1)(va) - precedential effect of High Court decisions - Disallowance of deduction for delayed payment of employees' contribution to PF/ESIC under s.36(1)(va) - HELD THAT: - The assessee challenged the addition made for delayed payment of employer's contribution to PF/ESIC under s.36(1)(va), contending reliance on a Karnataka High Court decision in Essae Teraoka (P.) Ltd. vs. DCIT . The Tribunal found the assessee's appeal covered by the jurisdictional High Court decision in CIT vs. Gujarat State Road Transport Corporation and, accordingly, affirmed the disallowance. The CIT(A)'s confirmation of the addition was therefore sustained and the assessee's appeal dismissed. [Paras 8]

Addition for delayed PF/ESIC contribution upheld; assessee's appeal dismissed.

Final Conclusion: Both cross appeals are dismissed: the Revenue's appeal against deletion of the trademark licence fees addition is dismissed (addition deleted), and the assessee's appeal against the disallowance for delayed PF/ESIC contribution is dismissed (addition sustained).

Penalty under section 271(1)(c) - concealment of particulars of income - client code modification - addition to income - deletion of additions in quantum proceedings - penalty liable to be set aside if basis of penalty is deleted

Penalty under section 271(1)(c) - client code modification - deletion of additions in quantum proceedings - Whether the penalty imposed under section 271(1)(c) can be sustained after the additions on which the penalty was based have been deleted in quantum proceedings. - HELD THAT: - The Tribunal examined the fact that the additions to the assessee's income were made by the AO on the basis of alleged client code modifications and that penalty under section 271(1)(c) was levied for concealment of particulars of income. The assessee subsequently obtained complete relief in the quantum appeal where the Tribunal found that client code modifications, without further investigation or corroborative evidence (such as proof of cash transfer or that the modifications occurred at the instance of the assessee), could not support the addition. Having deleted the additions in the assessee's quantum proceedings, the Tribunal held that the foundational basis for the penalty no longer subsists. In view of the deletion of the income addition in ITA No. 908/Ahd/2018 (order dated 23-03-2021) and the reasoning that the authorities below had not carried out necessary verification, the penalty confirmed by the AO and the CIT(A) could not be sustained and therefore had to be set aside. [Paras 4, 5]

Penalty under section 271(1)(c) set aside because the additions on which the penalty was based have been deleted in the assessee's quantum proceedings.

Final Conclusion: The appeal is allowed and the penalty levied under section 271(1)(c) is set aside in view of the deletion of the quantum additions on which the penalty was founded.

Addendum to show-cause notice treated as a fresh show-cause notice - limitation bar to corrigendum increasing demand or altering grounds - show-cause notice as the foundation of demand - provisional assessment defence rejected where corrigendum introduces new matters

Addendum to show-cause notice treated as a fresh show-cause notice - limitation bar to corrigendum increasing demand or altering grounds - show-cause notice as the foundation of demand - The corrigendum issued six years after the original show-cause notice materially altered the original notice and is therefore a fresh show-cause notice which is barred by limitation. - HELD THAT: - The Court compared the original show-cause notice dated 11th March, 1993 with the corrigendum dated 19th January, 2000 and found that the corrigendum both enhanced the demand and adverted to matters not contained in the original notice. Reliance was placed on the Tribunal's view in Wipro Information Technology that an addendum effecting material changes amounts to a fresh SCN, a view approved by the Supreme Court, and on the principle explained in Commissioner of Central Excise v. Gas Authority of India Ltd. that the SCN is the foundation of the demand and cannot be extended to bring in new matters. The Court also noted recent authority quashing a similarly time-barred corrigendum. On this basis the corrigendum could not be treated as an extension of the original SCN and was hit by limitation; the CEGAT's rejection of the limitation plea on the sole ground that the original assessments were 'provisional' was not accepted in view of the material alteration effected by the corrigendum. Consequently the adjudication and appellate orders confirming the enhanced demand could not stand. [Paras 10, 11]

The corrigendum is a fresh show-cause notice barred by limitation; the impugned orders confirming the enhanced demand are set aside.

Final Conclusion: The petition is allowed: the orders of the Commissioner dated 29th February, 2000 and of the CEGAT dated 9th January, 2002 are quashed and the matter disposed in favour of the appellant.

Withdrawal of immunity under Section 127H of the Customs Act - principles of natural justice - requirement of notice and opportunity to be heard before withdrawal of immunity - remand for fresh hearing with production of evidence - jurisdiction to challenge orders of the Settlement Commission

Withdrawal of immunity under Section 127H of the Customs Act - principles of natural justice - requirement of notice and opportunity to be heard before withdrawal of immunity - Validity of the Settlement Commission's unilateral withdrawal of immunity without issuing notice or placing the fresh evidence before the petitioner. - HELD THAT: - The Settlement Commission withdrew immunities granted earlier solely on the basis of a letter from the investigating agency (DRI), finding concealment of material evidence and fabrication of documents. No notice was issued to the petitioner and the alleged fresh evidence was neither identified nor put to the petitioner. The court held that such unilateral withdrawal, without affording the affected party notice and an opportunity to meet the evidence, is contrary to the principles of natural justice. Consequently, the impugned order of withdrawal was set aside and the matter remanded: the respondent must furnish the petitioner with the evidence relied upon, issue notice, hear the petitioner and the investigating agency/assessing officer, and thereafter pass appropriate orders in accordance with law.

Order withdrawing immunity set aside for violation of natural justice; respondent directed to give notice, produce the evidence relied upon, rehear parties and pass fresh orders in accordance with law.

Jurisdiction to challenge orders of the Settlement Commission - Maintainability of the writ petition in the High Court challenging the Settlement Commission's order. - HELD THAT: - The court noted prior authority holding that challenges to orders of the Settlement Commission are ordinarily to be brought before the forum where the assessing officer is located, and that the Settlement Commission's seat in Chennai is for administrative convenience. However, since the present petition challenges a subsequent procedural act (withdrawal of immunity) for breach of natural justice rather than the substantive settlement order itself, the court refrained from finally deciding the question of maintainability and left it open while deciding the procedural relief on merits.

Question of maintainability left open; court proceeded to set aside the withdrawal order on natural justice grounds.

Remand for fresh hearing with production of evidence - Whether the order of the court in this matter is to operate as a precedent in other matters. - HELD THAT: - The court expressly clarified that the decision it rendered on the merits in this case is founded on the specific facts as recorded and the procedural infirmity identified, and is not intended to serve as a precedent in other matters where the substantive settlement order is challenged.

Order confined to the facts of the case and not to be treated as precedent in other matters.

Final Conclusion: Writ petitions allowed: the Settlement Commission's order dated 31.01.2019 withdrawing immunity is set aside for breach of natural justice; respondent to supply the evidence relied upon, issue notice, rehear the petitioner and investigating agency/assessing officer and pass fresh orders in accordance with law; maintainability left open and the judgment is not to be treated as a precedent in other cases.

Right of an examinee summoned under Section 108 of the Customs Act to have his advocate present during interrogation within visible but beyond hearing distance - Videography of interrogation proceedings - Statements recorded under Section 108 treated as judicial proceedings for evidentiary consequences

Right of an examinee summoned under Section 108 of the Customs Act to have his advocate present during interrogation within visible but beyond hearing distance - Allegation-based reasonable apprehension justifying presence of counsel - Whether the petitioners are entitled to have their advocate present at a visible but beyond hearing distance during interrogation by officers of the DRI pursuant to summons under Section 108 of the Customs Act. - HELD THAT: - The Court applied the principle in Vijay Sajnani to permit an advocate to be present within visible distance but beyond hearing range during interrogation of persons summoned under Section 108 of the Customs Act. The petitioners relied on specific allegations that their business associate was beaten and coerced into making statements, which the Court found raised a reasonable apprehension of similar treatment. While the respondent relied on authority disallowing counsel during such examination, the Court considered the allegations and the Supreme Court's guidance in Vijay Sajnani and concluded that, in the circumstances of this case, the relief should be granted to allay the petitioners' apprehensions and protect fairness of the process. [Paras 13, 14]

Petitioners to be interrogated in the presence of an advocate positioned at a visible but not audible distance, in accordance with the Vijay Sajnani direction.

Videography of interrogation proceedings - Recording of proceedings for transparency and preservation of record - Whether the interrogation proceedings should be videographed. - HELD THAT: - Relying on directions of the Supreme Court in related jurisprudence, the Court directed that the interrogation proceedings be videographed to ensure transparency and to preserve an objective record of the examination. This direction was made as an ancillary measure alongside permitting the presence of counsel, to further safeguard the rights of the examinees and the integrity of the investigation. [Paras 14]

Interrogation proceedings shall be videographed in terms of the Supreme Court's orders referenced by the Court.

Final Conclusion: Writ petitions allowed: petitioners shall be interrogated by DRI officers in the presence of an advocate seated at a visible but not audible distance, and the interrogation proceedings shall be videographed; petitions disposed of accordingly.

Hazardous waste classification - inspection by authorised chartered engineer - release on payment of appropriate customs duty - finality of appellate order - confiscation and re-export of imported goods

Hazardous waste classification - inspection by authorised chartered engineer - release on payment of appropriate customs duty - finality of appellate order - confiscation and re-export of imported goods - Whether the imported used printers were liable to be treated as hazardous waste requiring confiscation or re-export, notwithstanding the order of the Commissioner (Appeals) and subsequent directions of the High Court for release after inspection. - HELD THAT: - The Tribunal held that the narrow issue had already been finally determined by the High Court which directed release of goods that had been inspected by authorised chartered engineers on payment of appropriate customs duty and fulfilment of statutory conditions. Having regard to the High Court's orders and the fact that the goods were thereafter cleared for domestic consumption, the alternative remedies of absolute confiscation or re-export could no longer be given effect to. The Tribunal therefore found the Revenue's appeal to be infructuous and declined to take a contrary view to the High Court's determination that authorised inspection and release on payment of duty was appropriate, and that the Commissioner (Appeals) order setting aside the Order in Original stood upheld. [Paras 7, 8]

Revenue's appeal dismissed and the impugned order of the Commissioner (Appeals) upheld.

Final Conclusion: Following the High Court's directions that goods inspected by authorised chartered engineers be released on payment of appropriate customs duty and after fulfilment of conditions, the Tribunal dismissed Revenue's appeal as infructuous and upheld the Commissioner (Appeals) order allowing release rather than confiscation or re export.

Redemption fine - confiscation and redemption under Section 125 - penalty under Section 112(a) - discretion in fixation of fine and penalty - power of Commissioner (Appeals) to confirm, modify or annul under Sections 128 and 128A

Redemption fine - confiscation and redemption under Section 125 - discretion in fixation of fine and penalty - Validity of reduction by Commissioner (Appeals) of the redemption fine imposed in lieu of confiscation of imported used tyres. - HELD THAT: - The Tribunal examined whether the Commissioner (Appeals) was justified in reducing the redemption fine (and permitting release on payment thereof) by reference to the ratio of the Bangalore CESTAT decisions which fixed redemption fine as a percentage of the enhanced value. The Tribunal found that the undervaluation in the case was modest (about 10%) and that the Commissioner (Appeals) had applied the Bangalore Bench's approach to fix the redemption fine at an equivalent percentage. The Revenue's reliance on the Calcutta High Court decision was considered but the Tribunal observed that the High Court had, on the facts before it, upheld the power of the appellate authority to permit release on payment of redemption fine and had evaluated the adequacy of the quantum in that factual context. Given the limited extent of undervaluation here and the appellate authority's assessment, the reduction of the redemption fine was not shown to be arbitrary or unsustainable. [Paras 10, 11]

The reduction of the redemption fine by the Commissioner (Appeals) is upheld and the Revenue's challenge to that reduction is rejected.

Penalty under Section 112(a) - discretion in fixation of fine and penalty - power of Commissioner (Appeals) to confirm, modify or annul under Sections 128 and 128A - Validity of reduction by Commissioner (Appeals) of the penalty imposed under Section 112(a) and the appellate power to modify penalty. - HELD THAT: - The Tribunal held that the Commissioner (Appeals) legitimately exercised the statutory appellate power to modify the penalty. Sections 128 and 128A empower the Commissioner (Appeals) to make further inquiry and pass such order as he thinks just and proper, including confirming, modifying or annulling the order appealed against. The Commissioner (Appeals) reduced the penalty by applying the percentage approach followed by the Bangalore Bench. The Revenue's submission that penalty should be higher on punitive grounds did not persuade the Tribunal, which found no illegality in aligning the penalty with the benchmark relied upon by the Commissioner (Appeals). [Paras 12, 13]

The reduction of the penalty by the Commissioner (Appeals) is sustainable; the appellate authority acted within its powers and the Revenue's appeal against the penalty reduction is dismissed.

Final Conclusion: The appeal by the Revenue is dismissed. The impugned order of the Commissioner (Appeals) reducing the redemption fine and the penalty is upheld; the Commissioner (Appeals) acted within the scope of appellate powers and the reductions were not shown to be arbitrary.

Transaction value - rejection under Rule 12 - identical goods - substantially the same quantity - technical opinion - extra consideration - evidence of remittance

Transaction value - rejection under Rule 12 - justification for rejection - Whether the transaction value declared in Bill of Entry No 9040630 dated 03-10-2020 was rightly rejected under Rule 12 of the Customs Valuation Rules, 2007 and re-determined under Rule 4. - HELD THAT: - The adjudicating authorities rejected the declared transaction value solely by reference to a prior import of items described as "Integrated Circuits" without adducing cogent reasons for doubting the truth or accuracy of the declared price. The record contains no allegation or evidence of any payment of consideration over and above the invoice value. The Tribunal applied settled principles that transaction value can be discarded only upon cogent reasons and after affording the importer an opportunity to justify the value; mere difference in unit price in another bill of entry, without further inquiry or specific grounds, does not suffice. Consequently, the invocation of Rule 4 after rejecting the transaction value under Rule 12 was unsustainable in the absence of reasons to discard the declared transaction value. [Paras 8, 10]

Declared transaction value cannot be rejected; the assessment rejecting the declared value is unsustainable.

Identical goods - substantially the same quantity - technical opinion - Whether the comparison with an earlier import (Bill of Entry No 8784248 dated 11-09-2020) to determine value was legally permissible given differences in description, function and quantity. - HELD THAT: - The authorities compared the impugned consignment with an earlier import merely on the basis of the generic description "Integrated Circuit". The Tribunal observed that "Integrated Circuit" is a generic description encompassing numerous distinct items with different functions. No technical opinion was obtained to establish that the two consignments were identical in nature and commercial level. Further, the earlier consignment involved a substantially different and far smaller quantity, and the Tribunal noted that price normally varies with volume. Under Rule 4, transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity must be used; where quantity and functional characteristics are not comparable and no technical comparison is made, relying on the earlier bill for valuation is legally unsustainable. [Paras 8, 9]

Comparison with the earlier import was impermissible; the goods were not shown to be identical nor in substantially the same quantity, and no technical opinion supported the comparison.

Extra consideration - evidence of remittance - Whether there was any evidence of undisclosed or extra consideration that would justify discarding the declared transaction value. - HELD THAT: - The Tribunal noted that the appellants produced bank remittance evidence through e-Sanchit for a prior import and that there is no allegation or proof of any flow of extra consideration from the importer to the overseas supplier in respect of the impugned bill of entry. Relying on precedents (as discussed in the judgment) the Tribunal held that, absent evidence of payments over and above invoice value, the transaction value cannot be discarded. The department failed to produce any material to show undisclosed consideration or manipulation of documents. [Paras 4, 8, 10]

No evidence of extra consideration was shown; therefore the transaction value could not be discarded on that ground.

Final Conclusion: The Tribunal found that the authorities failed to give cogent reasons, did not obtain technical comparison, and produced no evidence of extra consideration; the rejection of the declared transaction value and re-determination of value were unsustainable. Customs Appeal No. 20321 of 2021 is allowed and the impugned order is set aside with consequential relief as per law.

Conditional exemption notification and pre-import conditions versus post-import monitoring - non-scheduled (passenger) service - non-scheduled (charter) service - interpretation of Civil Aviation Requirements (CAR) and DGCA clarifications - doctrine of merger and effect of dismissal of appeal by Supreme Court - jurisdiction of customs to verify compliance of conditions certified by another statutory authority - requirement of published tariff and issuance of air tickets - per incuriam and stare decisis among coordinate benches

Doctrine of merger and effect of dismissal of appeal by Supreme Court - Whether the reference to the Larger Bench is rendered infructuous by the dismissal of the Department's Civil Appeal against the Tribunal's decision in Reliance Transport. - HELD THAT: - The Tribunal examined the scope and limits of the doctrine of merger as explained by the Supreme Court. The Supreme Court's dismissal of the Civil Appeal as "devoid of any merit" did not address or adopt the reasons and therefore did not constitute a declaration of law under Article 141. Following authorities which limit merger to the operative part or where the superior court has spoken on and adopted the subordinate court's reasoning, the Larger Bench held that the dismissal did not extinguish the need for reference and the matter remained open for examination by a larger bench.

The reference to the Larger Bench has not become infructuous by reason of the dismissal of the Civil Appeal.

Non-scheduled (passenger) service - air transport service - Whether the appellants have used the aircraft only for non-scheduled (passenger) services as defined in the exemption notification. - HELD THAT: - The Tribunal analysed the definitions in the Aircraft Rules: air transport service (transport for any remuneration) and scheduled air transport service (same two or more places, published timetable or recognisable systematic series, each flight open to members of the public). If any of the scheduled-service conditions is absent, the service qualifies as non-scheduled (passenger). The appellants transported persons for remuneration and held DGCA non-scheduled operator permits renewed without objection; consequently both limbs of the Explanation to Condition No.104 were satisfied and the use qualified as non-scheduled (passenger) service.

The appellants have not violated Condition (b) of the Explanation and have provided non-scheduled (passenger) services.

Non-scheduled (passenger) service - non-scheduled (charter) service - Civil Aviation Requirements (CAR) and DGCA clarifications - Whether an aircraft imported for non-scheduled (passenger) services can be used for non-scheduled (charter) services. - HELD THAT: - The Tribunal contrasted the broader definition of non-scheduled (passenger) services with the narrower charter category. CAR 1999 (and CAR 2010) and DGCA clarifications permit NSOP holders to conduct charter operations; CAR 2010 expressly includes charter operations within non-scheduled services and permits carriage either per seat or by whole-aircraft charter. The exemption notification does not bar chartering by NSOP permit holders. A charter-specific registration is directed at small-aircraft relaxations and does not restrict NSOP holders from charters.

An aircraft imported for non-scheduled (passenger) services can lawfully be used for non-scheduled (charter) services.

Private aircraft - public transport and remuneration - Whether the aircraft imported by the appellants can be classified as a "private aircraft". - HELD THAT: - Applying definitions in the Aircraft Rules, public transport includes carriage of persons for remuneration; an air transport undertaking whose business includes carriage for hire or reward is public. The absence of a published tariff or predominant use by group-company personnel does not convert remunerated carriage into private use. The Tribunal held that use for remuneration (even pursuant to contracts or agreements) makes the aircraft public transport aircraft, not private aircraft.

The aircraft cannot be classified as private aircraft on the facts and definitions considered.

Jurisdiction of customs to verify compliance of conditions certified by another statutory authority - undertaking and enforcement - Whether the Customs Authority can examine the validity of DGCA permission in the absence of cancellation of that permit by DGCA. - HELD THAT: - The exemption was granted based on Ministry of Civil Aviation recommendations and conditions specified by DGCA/CAR. The Tribunal held that DGCA and the civil aviation authorities are the competent monitor of operational compliance; customs may act on the customs undertaking only when the civil aviation authority finds a breach (or where the undertaking's remedies are invoked). Precedents emphasise that where a fiscal benefit is granted on the basis of another statutory authority's certificate, that authority is the primary monitor; customs' verification jurisdiction is limited to facts not requiring interpretation of another enactment.

Customs cannot independently examine the validity of DGCA permission absent DGCA cancellation or a finding by the civil aviation authority of breach.

Requirement of published tariff and issuance of air tickets - civil aviation requirements - Whether it is mandatory for the importer to issue air tickets or to publish tariff to comply with the Conditions for non-scheduled (passenger) service. - HELD THAT: - The Tribunal found no requirement in the Aircraft Rules or the Explanation to Condition No.104 that a tariff must be published for non-scheduled (passenger) services; publication obligations in rule 135 apply to scheduled services. CAR 1999 and policy guidelines do not mandate ticket issuance for non-scheduled operations; CAR provisions and DGCA practice show tickets are not essential for charter or many non-scheduled services. Non-issuance of tickets, therefore, does not of itself negate compliance.

It is not mandatory for the importer to issue air tickets or publish tariff to meet the non-scheduled (passenger) service condition.

Civil Aviation Requirements 2010 (CAR 2010) as codification - retrospective applicability of regulatory guidance - Whether CAR 2010 merely amalgamates CAR 1999 and CAR 2000 and whether it is explanatory/codificatory of earlier DGCA clarifications. - HELD THAT: - The Tribunal reviewed CAR 2010 and found it unifies CAR 1999 and CAR 2000, expressly includes charter operations within non-scheduled services, and records prior DGCA clarifications. CAR 2010 restates and codifies earlier positions and serves an explanatory role regarding the interplay between passenger and charter non-scheduled operations.

CAR 2010 amalgamates and codifies CAR 1999 and CAR 2000 and is explanatory of earlier DGCA clarifications.

Per incuriam and stare decisis among coordinate benches - Whether the decision in Sameer Gehlot was rendered per incuriam and therefore not binding as held by King Rotors. - HELD THAT: - The Tribunal revisited the per incuriam doctrine and concluded that a bench of coordinate jurisdiction should not lightly label an earlier coordinate decision per incuriam unless it is shown the earlier court acted in ignorance of a binding statute or authority. King Rotors' characterization-that the earlier bench failed to appreciate post-importation aspects of the undertaking-did not demonstrate ignorance of binding law or statute. Hence King Rotors was incorrect in declaring Sameer Gehlot per incuriam.

The division bench in King Rotors was incorrect to hold that Sameer Gehlot was rendered per incuriam.

Final Conclusion: The Larger Bench answered the framed questions by holding that the reference remains live despite the Supreme Court dismissal of the Civil Appeal; the appellants' imports satisfied the non-scheduled (passenger) service condition; NSOP permit-holders may lawfully perform charter operations; the aircrafts in question are not private aircrafts under the Aircraft Rules; customs cannot re-examine DGCA permissions absent DGCA action; issuance of tickets or publication of tariff is not mandatory for NSOP compliance; CAR 2010 codifies earlier CARs and DGCA clarifications; and King Rotors was wrong to deem Sameer Gehlot per incuriam. The appeals were to be listed back to regular benches for further hearing.

Classification as instruments and apparatus for measuring or checking pressure - Classification as parts and accessories of motor vehicles - Note 2 to Section XVII - exclusion of Chapter 90 articles from parts and accessories - General Rules for the Interpretation (GRI-1) - Electrical pressure gauges and differential pressure gauges - Heading 9026 20 00 - instruments for measuring or checking the pressure

Classification as instruments and apparatus for measuring or checking pressure - Classification as parts and accessories of motor vehicles - Note 2 to Section XVII - exclusion of Chapter 90 articles from parts and accessories - Heading 9026 20 00 - instruments for measuring or checking the pressure - Electrical pressure gauges and differential pressure gauges - Differential pressure sensors (DPS) and tyre pressure monitoring sensors (TPMS) imported for use in vehicles are classifiable under sub-heading 9026 20 00. - HELD THAT: - The devices under consideration are instruments that measure pressure of gases and operate by electrical phenomena (piezo-resistive sensing elements and ASICs in DPS; battery-driven pressure sensors with RF transmission in TPMS), and thus fall within the description of pressure-measuring instruments encompassed by Heading 9026. The General Rules for the Interpretation (GRI-1) require classification to follow the terms of the headings and notes. Note 2 to Section XVII excludes articles of Chapter 90 from being treated as parts and accessories of Section XVII, and the general explanatory notes identify pressure gauges (including differential and electrical types) as examples under Chapter 90. Although certain multi-instrument clusters have been held to be classifiable as parts of motor vehicles where no specific Chapter 90 entry applied, the present devices answer specifically to Tariff Item 9026 20 00. Precedents cited by the applicant (including the CESTAT decisions) support treating precision measuring devices as falling under Heading 9026 when a specific entry exists. For these reasons, despite being used principally with motor vehicles, DPS and TPMS are excluded from Heading 8708 by Note 2 to Section XVII and are properly classifiable under sub-heading 9026 20 00. [Paras 6, 7]

DPS and TPMS are classifiable under sub-heading 9026 20 00 of the First Schedule to the Customs Tariff Act, 1975.

Final Conclusion: The Advance Ruling Authority determines that the differential pressure sensor and the tyre pressure monitoring system imported for use in vehicles are instruments for measuring pressure and are classifiable under sub-heading 9026 20 00; they are not classifiable as parts and accessories under Heading 8708 due to the exclusion of Chapter 90 articles from Section XVII.

Classification under Heading 8518 - loudspeakers (principal function test) - Note 3 to Section XVI - composite machines/principal function - determination of sub-heading by number of drive units - GRI 4 - goods most akin - HSN explanatory notes on loudspeakers

Classification under Heading 8518 - loudspeakers (principal function test) - determination of sub-heading by number of drive units - Note 3 to Section XVI - composite machines/principal function - Wireless speaker device Model No. P5B83L is classifiable under sub-heading 8518 21 00. - HELD THAT: - The device is a single speaker single drive unit (a sub woofer) mounted in an enclosure whose principal function is to reproduce sound by converting electrical variations into mechanical vibrations transmitted to air. The HSN explanatory notes describe loudspeakers as performing the converse function of microphones and remaining classifiable in Heading 8518 where the main function of the whole is to act as a loudspeaker. Note 3 to Section XVI requires composite or multifunction machines to be classified according to the component performing the principal function; accordingly, the presence of Wi Fi and Bluetooth connectivity, and requirement of internet connection or pairing with Echo devices, are ancillary features and do not change the principal function of the product as a loudspeaker. Both active and passive speakers fall under Heading 8518; the sub heading is determined by the number of drive units in the enclosure, and a single drive unit attracts classification under sub heading 8518 21 00. The alternative suggestion that the product be classified by analogy under another heading by application of GRI 4 is not persuasive because the product's principal function and physical character make Heading 8518 the appropriate classification. [Paras 5, 6]

Classified under sub heading 8518 21 00 of the First Schedule to the Customs Tariff Act.

Final Conclusion: The Authority rules that the wireless speaker device Model No. P5B83L is classifiable as a loudspeaker and, being a single drive unit in an enclosure, falls under sub heading 8518 21 00.

Sale of the corporate debtor as a going concern - distribution of assets under Section 53 - operational creditor status and rights - Regulation 32A - identification of assets and liabilities for going concern sale - non-obstante clause in Section 53 - powers and duties of the liquidator under Section 35 - doctrine of clean slate for auction purchaser

Sale of the corporate debtor as a going concern - distribution of assets under Section 53 - operational creditor status and rights - non-obstante clause in Section 53 - doctrine of clean slate for auction purchaser - Whether pre CIRP electricity dues of the corporate debtor are automatically transferred to an auction purchaser who acquires the corporate debtor as a going concern in liquidation and can the distribution licensee recover those dues directly from the purchaser. - HELD THAT: - The court held that the Insolvency and Bankruptcy Code is a complete code for distribution of proceeds in liquidation and that Section 53 sets out a statutory order of priority for payment of claims from liquidation proceeds. Section 53(1)(f) is the category in which operational creditors fall, and the non obstante clause in Section 53 prevents other laws or parties from cutting across that priority. Regulation 32A of the Liquidation Process Regulations permits identification and sale of grouped assets and liabilities as a going concern, but it confines "liabilities" to those identified by the committee of creditors or, failing that, by the liquidator in consultation with the committee. Regulation 32A(3) does not operate to transfer all pre CIRP liabilities automatically to the purchaser. Allowing the distribution licensee to recover pre CIRP electricity dues directly from the purchaser would permit the operational creditor to jump the statutory priority, resulting in a double claim (on sale proceeds and on purchaser) and undermining Section 53. The court therefore held that pre CIRP electricity dues already admitted in the insolvency/liquidation process must be satisfied through the liquidation estate in accordance with Section 53 and cannot be enforced separately against the successful auction purchaser merely because the sale notice described the sale as a going concern on "as is where is" or "without recourse" basis. [Paras 53, 60, 61, 63, 65]

Pre CIRP electricity dues do not automatically transfer to the auction purchaser; such dues, if claimed and admitted, are to be realised from the liquidation estate and distributed in accordance with Section 53, and the distribution licensee cannot enforce those dues directly against the purchaser.

Regulation 32A - identification of assets and liabilities for going concern sale - powers and duties of the liquidator under Section 35 - doctrine of clean slate for auction purchaser - Whether the distribution licensee may refuse to grant a new electricity connection to the purchaser on the ground of outstanding pre CIRP dues and whether the court should direct grant of connection. - HELD THAT: - Having concluded that pre CIRP dues must be realised through the liquidation process and not by saddling the purchaser with those liabilities, the court found that the distribution licensee's insistence on payment of the admitted dues as a condition for a fresh connection was untenable. The petitioners had been declared successful bidder, taken possession and applied for a new connection; the admitted claim of the licensee stood to be satisfied from liquidation proceeds in the statutory order. In consequence, the licensee could not refuse to process or grant the new connection solely on the ground of those pre CIRP dues; the licensee was directed to process and provide the connection without insisting on payment of the contested dues, subject to compliance with other formalities. [Paras 63, 65, 67]

The distribution licensee is directed to process and grant the petitioners' application for a new electricity connection without insisting upon payment of the pre CIRP dues (which are to be realised, if admitted, through liquidation in terms of Section 53); grant to be effected promptly after compliance with other formalities.

Final Conclusion: Writ petition allowed. The court ruled that pre CIRP electricity dues admitted in the insolvency/liquidation proceedings cannot be enforced against the successful auction purchaser of the corporate debtor as a going concern; such dues must be discharged from the liquidation estate in accordance with Section 53, and the distribution licensee was directed to process and provide the new electricity connection without insisting on payment of those dues.

Liquidation under the Insolvency and Bankruptcy Code, 2016 - sale as a going concern in liquidation - priority of distribution under Section 53 of the IBC - non obstante clause of the IBC - transfer of pre CIRP liabilities on slump/going concern sale - powers and duties of the liquidator to verify and admit claims - Regulation 32 A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - refusal of electricity connection by distribution licensee on account of alleged pre sale dues

Sale as a going concern in liquidation - transfer of pre CIRP liabilities on slump/going concern sale - Regulation 32 A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - priority of distribution under Section 53 of the IBC - Whether a going concern or slump sale effected in liquidation automatically transfers all pre CIRP liabilities of the corporate debtor to the purchaser and permits operational creditors to recover outside the priority scheme of the IBC. - HELD THAT: - The court examined the integrated scheme of the IBC governing liquidation (Chapter III) and the ancillary Liquidation Process Regulations. It noted that the liquidator has the power to verify and admit claims and to group assets and liabilities for sale as a going concern, but that Regulation 32 A confines the liabilities transferred in a going concern sale to those liabilities identified and earmarked by the committee of creditors or, failing that, by the liquidator in consultation with the consultation committee. Section 53 prescribes a mandatory order of priority for distribution of proceeds and, being preceded by a non obstante clause, displaces inconsistent claims under other laws. Allowing operational creditors to claim pre CIRP dues by treating a going concern sale as transferring all liabilities would subvert the statutory pecking order in Section 53. Accordingly, the expression "going concern sale" in the liquidation context must be read subject to the Code and its Regulations and does not effect an automatic transfer of all pre CIRP liabilities to the purchaser. [Paras 36, 37, 42, 43, 46]

A going concern sale in liquidation does not automatically transfer all pre CIRP liabilities to the purchaser; liabilities transferable are those identified/earmarked in accordance with the Code and Regulations, and Section 53's distribution priority cannot be bypassed.

Refusal of electricity connection by distribution licensee on account of alleged pre sale dues - liquidator's admission of claims - non obstante clause of the IBC - Whether the distribution licensee could refuse to grant a fresh electricity connection to the purchaser of assets in liquidation unless the purchaser paid alleged outstanding dues of the erstwhile owner which had not been admitted in the liquidation process. - HELD THAT: - Applying the legal conclusions on liquidation sales, the court held that the distribution licensee could not insist on payment of alleged pre sale dues as a precondition for providing a new connection to the auction purchaser where such dues were not properly part of the liquidation admission and distribution process under the IBC. The court observed that the licensee's remedy, as an operational creditor, lies in the liquidation claim process and the distribution regime of Section 53; it cannot unilaterally jump the statutory priority by withholding supply to the purchaser. The court therefore found the respondent's reliance on internal regulations and provisions of the Electricity Act insufficient to override the Code's scheme in the facts of this liquidation sale. [Paras 26, 35, 40, 41, 48]

The refusal to grant new electricity connection conditioned on payment of alleged outstanding pre sale dues not admitted in the liquidation was unsustainable; the distribution licensee must comply with the Code and Regulations and cannot require such payment as a precondition to supply.

Final Conclusion: The writ petition was allowed: the High Court held that a going concern/slump sale in liquidation does not automatically transfer all pre CIRP liabilities to the purchaser and that the distribution licensee could not withhold a new electricity connection by demanding payment of alleged pre sale dues not admitted in the liquidation; the WBSEDCL was directed to provide connection on compliance with other formalities, within one month.

Amendment to Regulation 39(3) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - power of the Resolution Professional to call for fresh or 'final compliant' resolution plans - evaluation matrix, feasibility and viability of resolution plans under Section 30 - restriction on considering resolution plans received after time specified under Regulation 36-B / Regulation 39(1-B) - role and commercial wisdom of the Committee of Creditors in evaluating and voting on resolution plans - duty to produce minutes of the Committee of Creditors and consequences of nondisclosure

Amendment to Regulation 39(3) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - power of the Resolution Professional to call for fresh or 'final compliant' resolution plans - restriction on considering resolution plans received after time specified under Regulation 36-B / Regulation 39(1-B) - Whether the amendment to Regulation 39(3) empowered the Resolution Professional or the CoC to call for fresh or additional 'final compliant' resolution plans beyond the timelines already fixed under the Code and Regulations. - HELD THAT: - The Tribunal analysed the substituted text of Regulation 39(3) and related sub regulations (including (3 A), (3 B) and (1 B)), and the statutory scheme for submission and evaluation of resolution plans under Section 30 and Regulations 36A/36B/39. The amendment, which came into effect on 07.08.2020, mandates that the CoC evaluate received plans as per the evaluation matrix, record deliberations on feasibility and viability, and vote on compliant plans simultaneously. Read harmoniously with Regulation 36 B and sub regulation (1 B) of Regulation 39, the amendment applies to plans already received within the time fixed by the committee and does not authorise inviting new plans or extending time for submission beyond the time specified by the competent authority. The RP's invitation by e mail dated 13.08.2020 for a 'final compliant' plan was a misinterpretation of the amendment and did not confer power to call fresh plans after the prescribed cut off. [Paras 55, 56, 57, 60, 61]

The amendment to Regulation 39(3) does not permit calling for fresh or additional resolution plans beyond the time already fixed; the RP could not lawfully invite a 'final compliant' plan as done by the e mail of 13.08.2020.

Evaluation matrix, feasibility and viability of resolution plans under Section 30 - role and commercial wisdom of the Committee of Creditors in evaluating and voting on resolution plans - Whether declaration of the Appellants as H 1 bidder conferred a vested right to have the CoC put only their plan to vote, thereby prohibiting consideration of other compliant plans. - HELD THAT: - The Tribunal noted that declaration as H 1 bidder follows evaluation by the CoC under the approved evaluation matrix but is an intermediate step; approval under Section 30(4) requires the CoC to consider feasibility and viability and to vote (requiring prescribed voting share). Being declared H 1 does not create a vested right to exclusive voting on that plan; the CoC retains its commercial wisdom to negotiate, seek modifications and ultimately vote on compliant plans in accordance with law. Thus the status of H 1 is relevant but not determinative of final approval. [Paras 46, 47, 60]

Declaration as H 1 bidder does not entitle the Appellants to demand exclusive consideration or an assured approval; the CoC must follow statutory evaluation and voting processes.

Duty to produce minutes of the Committee of Creditors and consequences of nondisclosure - power of the Resolution Professional to call for fresh or 'final compliant' resolution plans - Whether the Adjudicating Authority and the parties were properly placed to adjudicate the challenge to the RP's 13.08.2020 communication in absence of the minutes of the CoC meeting dated 12.08.2020, and what inference arises from nondisclosure. - HELD THAT: - The Tribunal observed that the RP relied on a CoC decision taken on 12.08.2020 to justify inviting final compliant plans, but failed to produce the minutes of that meeting despite specific requests and applications. The Tribunal held that withholding the minutes was prejudicial and unacceptable; in the absence of those minutes the asserted CoC decision could not be accepted at face value. Given the discrepancy between the RP's descriptions and the missing minutes, the Tribunal drew an adverse inference against the RP regarding the purported CoC decision and his unilateral interpretation/actions in calling for fresh plans. [Paras 49, 53, 57, 58, 59]

Failure to produce the CoC minutes undermined the RP's reliance on a CoC decision and justified an adverse inference; the 13.08.2020 communication could not be sustained on the basis of unproduced minutes.

Interim relief-stay on voting - setting aside of impugned order and consequent directions to CoC - Whether the impugned order of the Adjudicating Authority dated 07.05.2021 in I.A. No. 606 of 2020 should be interfered with and what consequential directions should follow. - HELD THAT: - Having found that the Adjudicating Authority misinterpreted Regulation 39(3) and failed to insist on production of the CoC minutes of 12.08.2020, and having drawn adverse inference against the RP for inviting fresh plans, the Tribunal concluded that the appellants had made out a prima facie case for interference. The Tribunal therefore set aside the impugned order, held the RP's e mail/letter dated 13.08.2020 to be illegal and non est, and directed the CoC to consider only the plans submitted prior to 12.08.2020 and to proceed in accordance with law. [Paras 64, 65, 66, 67]

Impugned order dated 07.05.2021 is set aside; the RP's letter dated 13.08.2020 is declared illegal and non est, and the CoC is directed to consider the resolution plans submitted prior to 12.08.2020 in accordance with law.

Final Conclusion: The Tribunal allowed the appeal, set aside the Adjudicating Authority's order of 07.05.2021, held that the amendment to Regulation 39(3) does not permit calling fresh/final compliant plans beyond prescribed timelines, declared the RP's 13.08.2020 communication illegal and non est, drew an adverse inference for nondisclosure of CoC minutes, and directed the CoC to consider only the plans submitted prior to 12.08.2020 and proceed in accordance with the Code and Regulations.

Power under Section 19(2) of the Insolvency and Bankruptcy Code to direct delivery of records - obligation of suspended management to extend assistance and cooperation to the Resolution Professional - duty to produce accounting records in soft and physical form for audit and look-back verification - remedies for non-compliance including recourse to local police and filing appropriate application before the Adjudicating Authority

Power under Section 19(2) of the Insolvency and Bankruptcy Code to direct delivery of records - duty to produce accounting records in soft and physical form for audit and look-back verification - obligation of suspended management to extend assistance and cooperation to the Resolution Professional - Resolution Professional's petition under Section 19(2) for direction to suspended directors to deliver accounting data and records for the period 01.04.2014 to 31.03.2017 was allowed. - HELD THAT: - The Tribunal noted that the Resolution Professional, appointed after commencement of CIRP, sought accounting data and physical records from the suspended directors for the period 01.04.2014 to 31.03.2017 to enable audit of transactions. Respondents contended that soft data was corrupted and that only data from 01.04.2017 was available. The Tribunal applied the statutory obligation on the suspended management to assist and cooperate with the Resolution Professional as envisaged by the Code, observing that even if soft data were corrupted, hard copy records ought to have been maintained and produced for audit purposes. In exercise of its power under Section 19(2), and on the material showing repeated requests and alleged removal of data, the Tribunal directed the suspended directors to hand over both soft and physical accounting records for the stated period and to provide required assistance to the RP within fifteen days. The Tribunal also recorded that, in case of non-compliance, the RP would have the liberty to seek assistance of local police and to move an appropriate application before the Adjudicating Authority. [Paras 5, 6]

IA No.711/2020 is allowed; respondents directed to hand over accounting data and physical records for 01.04.2014 to 31.03.2017 to the Resolution Professional within fifteen days and to render assistance; RP entitled to approach local police and/or move appropriate application on non-compliance.

Final Conclusion: The application under Section 19(2) is allowed; suspended directors are directed to deliver the accounting records (soft and physical) for 01.04.2014 to 31.03.2017 to the Resolution Professional within fifteen days, failing which the RP may seek police assistance or file an appropriate application before the Adjudicating Authority.

Service of demand notice in Form 3 - Existence of operational debt and default - Dispute of operational debt - Limitation for filing under Section 9 - Threshold requirement for admission of Section 9 petition - Admission under Section 9(5)(i) - Moratorium under Section 14 - Appointment of Interim Resolution Professional and vesting of management under Section 17 and duties under Section 18

Service of demand notice in Form 3 - The demand notice in Form 3 dated 20.07.2020 was duly served on the corporate debtor. - HELD THAT: - The petition records that the demand notice was issued by e-mail to the corporate debtor at specified e-mail addresses and the petitioner produced the e-mail which was delivered and which received a reply. The Tribunal found the documentary proof of delivery and reply on record and treated service as established for the purposes of the Section 9 petition. [Paras 5, 9]

Service of the demand notice was held to be proper and proved.

Existence of operational debt and default - Dispute of operational debt - The operational debt and default stood established and was not shown to be disputed by the corporate debtor. - HELD THAT: - The petitioner produced ledger entries and invoices evidencing supply of construction services and the claimed unpaid amount. The corporate debtor did not appear or file any reply despite service and was proceeded against ex parte. The petitioner also filed an affidavit under Section 9(3)(b) stating that, notwithstanding a reply, the corporate debtor had not cleared dues and had only indicated contingent payment after receipt from a third party. On the material on record the Tribunal concluded the liability was undisputed and that debt and default were proved. [Paras 3, 10, 12, 13]

The operational debt and default were held proved and undisputed.

Limitation for filing under Section 9 - The Section 9 petition was filed within limitation. - HELD THAT: - The petition was filed on 17.09.2020 while the date of default was recorded as 17.10.2019. The Tribunal compared the date of filing with the date of default and concluded that the petition complied with the applicable limitation requirement for initiating proceedings under Section 9. [Paras 4, 11]

The petition was held to be within limitation.

Threshold requirement for admission of Section 9 petition - The monetary threshold for admission was satisfied and the petition in Form 5 was complete. - HELD THAT: - The Tribunal examined Form 5 and accompanying documents and found that the claimed unpaid operational debt exceeded the statutory threshold in force prior to the relevant amendment. The petition was found to be complete in all material particulars and supported by invoices and ledger entries demonstrating the claim and default. [Paras 12]

Threshold requirement was satisfied and the petition was complete.

Admission under Section 9(5)(i) - Moratorium under Section 14 - Appointment of Interim Resolution Professional and vesting of management under Section 17 and duties under Section 18 - The petition was admitted under Section 9(5)(i); moratorium under Section 14 was declared and an Interim Resolution Professional was appointed with the management vested in him. - HELD THAT: - Having found service, debt and default, absence of a dispute, compliance with limitation and completeness of the petition, the Tribunal held that the conditions of Section 9(5)(i) were satisfied and admitted the petition initiating CIRP. The statutory moratorium was directed to operate from the date of the order until completion of the CIRP or earlier orders under Sections 31 or 33. Mr. Harsh Garg was appointed as Interim Resolution Professional; the management's powers were directed to stand suspended and vest in the IRP who was directed to perform duties under Section 18, make public announcement, collate claims, constitute the Committee of Creditors and file periodic reports. Directions were also given regarding cooperation by the corporate debtor and specific compliance under applicable regulations. [Paras 14, 15, 16, 17]

The petition was admitted; moratorium imposed; Interim Resolution Professional appointed and vested with management and duties as directed.

Final Conclusion: The Section 9 petition filed by the operational creditor was admitted: service and default were proved, the claim was not shown to be disputed, the petition was within limitation and met the threshold and formal requirements; corporate insolvency resolution process is initiated, moratorium directed to operate, and an Interim Resolution Professional appointed with directions for conduct of the CIRP and deposit of interim expenses by the petitioner.

Admission of company petition under Section 9 of the Insolvency and Bankruptcy Code - existence of debt and default - limitation for filing Section 9 petition - forfeiture of right to file reply for non-compliance - initiation of Corporate Insolvency Resolution Process (CIRP) - appointment of Interim Resolution Professional - moratorium under Section 14 - public announcement of CIRP - vesting of management in the IRP/RP during CIRP - deposit towards initial CIRP costs

Existence of debt and default - limitation for filing Section 9 petition - forfeiture of right to file reply for non-compliance - admission of company petition under Section 9 of the Insolvency and Bankruptcy Code - Whether the Section 9 company petition was maintainable and liable to be admitted on the basis of proved debt and default and compliance with limitation and procedural requirements. - HELD THAT: - The Tribunal examined the invoices, purchase orders, delivery acknowledgements, demand notice and proof of service and found that the Operational Creditor established the existence of a debt and default by the Corporate Debtor. The date of default was recorded as 14.06.2021 and the petition filed on 22.02.2022 was held to be within limitation. The Corporate Debtor failed to file a reply despite adjournments and non-compliance with directions, leading this Bench to treat the corporate debtor's right to file a reply as forfeited. In the absence of any challenge to the Operational Creditor's claim and having satisfied the statutory pre-conditions, the Company Petition met the legal requirements for admission under Section 9.

Petition under Section 9 admitted as the Operational Creditor established debt and default, the petition was within limitation, and the corporate debtor's opportunity to reply was forfeited.

Initiation of Corporate Insolvency Resolution Process (CIRP) - appointment of Interim Resolution Professional - moratorium under Section 14 - public announcement of CIRP - vesting of management in the IRP/RP during CIRP - deposit towards initial CIRP costs - Reliefs and directions to follow upon admission, including appointment of IRP, imposition of moratorium, public announcement, management vesting and deposit of initial CIRP costs. - HELD THAT: - On admission, the Tribunal directed initiation of CIRP and appointed an Interim Resolution Professional from the IBBI panel. The Operational Creditor was directed to deposit an initial sum towards CIRP costs to be utilised by the IRP solely for expenses until the Committee of Creditors decides fees. The order imposed the statutory moratorium with the specified consequences (prohibition of institution or continuation of suits, restraint on transfer or disposal of assets, and suspension of recovery actions), required immediate public announcement of the CIRP, and provided that management of the corporate debtor shall vest in the IRP/RP with suspended directors and employees obliged to furnish records and information to the IRP. Ancillary statutory exceptions and notifications were left as provided by law.

CIRP ordered; IRP appointed; moratorium, public announcement, management vesting and deposit directions issued as part of the admission order.

Final Conclusion: The Company Petition under Section 9 is admitted; Corporate Insolvency Resolution Process is initiated against the corporate debtor, an Interim Resolution Professional is appointed, the statutory moratorium is imposed, public announcement and vesting of management in the IRP are directed, and the Operational Creditor is directed to deposit initial CIRP costs.

Admissibility of Section 7 application under IBC, 2016 - Financial debt and default - Acknowledgement of debt in commercial accounts - Effect of arbitration clause on initiation of CIRP - Jurisdiction of Adjudicating Authority - Authority of financial creditor to file application - Appointment of Interim Resolution Professional - Interim funding to IRP - Moratorium under Section 14

Admissibility of Section 7 application under IBC, 2016 - Financial debt and default - Acknowledgement of debt in commercial accounts - Application under Section 7 of IBC, 2016 admitted on the ground of established financial debt and default. - HELD THAT: - The Tribunal found that the corporate debtor had acknowledged the loan and its liability in the notes to the balance sheet for the year ending 31.03.2019, describing the unsecured loan and the ECB loan received at LIBOR + 3%; the applicant produced disbursement charts and bank statements substantiating the advances made between 21.07.2017 and 05.11.2018. Having regard to these contemporaneous records and the absence of repayment or contest by the corporate debtor to the legal notice, the financial debt and default were held to be established and the application satisfied the requirements of Section 7(5). The Tribunal therefore admitted the application and ordered initiation of CIRP. [Paras 7, 9, 11, 12]

Application under Section 7 admitted and CIRP ordered to be initiated against the corporate debtor.

Jurisdiction of Adjudicating Authority - Tribunal has jurisdiction to entertain the Section 7 application. - HELD THAT: - The registered office of the corporate debtor is situated in Vadodara District, Gujarat, and on that basis the Tribunal held it has territorial jurisdiction to try the application. [Paras 10]

Adjudicating Authority has jurisdiction to entertain and try the application.

Limitation and date of default - Financial debt and default - The application is within the period of limitation based on the date of last disbursement as date of default. - HELD THAT: - Relying on the disbursement details showing advances from 21.07.2017 to 05.11.2018 and treating the last disbursement as the relevant date of default, the Tribunal concluded that the petition filed on 31.08.2020 fell within the permissible period and was not barred by limitation. [Paras 9]

Application is within limitation and not barred by law.

Effect of arbitration clause on initiation of CIRP - Admissibility of Section 7 application under IBC, 2016 - Existence of an arbitration clause in the JV agreement does not bar admission of the Section 7 application where default of financial debt is established by the corporate debtor's own records. - HELD THAT: - The corporate debtor relied on a JV agreement containing an arbitration clause providing SIAC arbitration and exclusion of Part I of the Arbitration Act. The Tribunal observed that despite the JV agreement's arbitration provisions, the admitted default shown in the corporate debtor's own financial statements and accompanying documents sufficed to establish financial debt and default under Section 7; consequently, the arbitration clause could not be invoked as a defence to oppose initiation of CIRP in the face of such admission. [Paras 6, 11]

Arbitration clause in the JV agreement does not preclude admission of the Section 7 application where default is established.

Authority of financial creditor to file application - Applicant had authority to file the Section 7 petition as evidenced by board resolution and related authorisation. - HELD THAT: - The Tribunal noted the Board Resolution dated 03.08.2020 authorising Mr. Guneet Chaudhary to sign and verify the company petition on behalf of the applicant, and accepted this as showing requisite corporate authority to institute the application. [Paras 1, 7]

Applicant was properly authorised to file the Section 7 application.

Appointment of Interim Resolution Professional - The proposed IRP was appointed subject to there being no disciplinary proceedings pending against her. - HELD THAT: - The applicant proposed Ms. Poonam Basak as IRP and the Tribunal recorded that the required consent in Form 2 and disclosures under the IBBI Regulations were on record; accordingly, the IRP was appointed subject to the condition that no disciplinary proceedings are pending against her. [Paras 13]

Ms. Poonam Basak appointed as Interim Resolution Professional on the stated condition.

Interim funding to IRP - Financial creditor directed to deposit interim funds with the IRP to meet initial expenses. - HELD THAT: - In exercise of its powers to ensure the IRP can perform assigned functions, the Tribunal directed the financial creditor to deposit a specified sum with the IRP within one week of receipt of the order; the amount is to be accounted by the IRP and is subject to adjustment by the Committee of Creditors. [Paras 14]

Financial creditor directed to deposit interim funds with the IRP, subject to adjustment by the Committee of Creditors.

Moratorium under Section 14 - Upon admission of the Section 7 application, statutory moratorium under Section 14(1) follows in relation to the corporate debtor. - HELD THAT: - The Tribunal ordered that, consequent to admission of the application, the moratorium envisaged under Section 14(1) would operate and the prohibitions under clauses (a) to (d) of Section 14(1) would apply; the operation of Sections 14(2) to 14(4) was also preserved during the moratorium period in accordance with the Code. [Paras 15]

Moratorium under Section 14 follows and relevant provisions of Sections 14(2) to 14(4) remain in force.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the financial creditor, having found the financial debt and default established by the corporate debtor's own records; territorial jurisdiction was affirmed, the petition was held within limitation, the arbitration clause in the JV agreement was held not to bar initiation of CIRP in these circumstances, Ms. Poonam Basak was appointed as Interim Resolution Professional (subject to no disciplinary proceedings), interim funding by the financial creditor was directed, and the statutory moratorium under Section 14 was declared to follow.

Binding effect of approved resolution plan - Claims frozen and extinguished upon approval of resolution plan - Scope of Section 60(5) of the IBC in relation to claims not arising from the resolution plan - Adjustment of refunds and receivables against crystallized resolution claims - Reconnection of supply subject to compliance with formalities and payment of requisite amounts

Binding effect of approved resolution plan - Claims frozen and extinguished upon approval of resolution plan - Scope of Section 60(5) of the IBC in relation to claims not arising from the resolution plan - Adjustment of refunds and receivables against crystallized resolution claims - Whether claims or adjustments not incorporated in an approved resolution plan can be pursued or set off against parties after approval of the plan - HELD THAT: - The Tribunal held that once a resolution plan is approved and a creditor's claim is crystallized and pegged under the plan, claims which are not part of the resolution plan stand frozen and extinguished for all practical purposes. The Adjudicating Authority cannot permit initiation or continuance of proceedings in respect of claims outside the approved plan; Section 31 binds all stakeholders. The applicant (corporate debtor / resolution purchaser) cannot both accept the benefit of the haircut under the plan and separately treat any internal accounting adjustments or tariff-based refunds as its own receivables to be recovered from the creditor. Where an adjustment in the creditor's internal accounts results in a refund or reduction arising from events prior to approval of the plan, that adjustment cannot be pressed as a separate claim against the creditor in a manner that undermines the crystallized amount under the plan. The Tribunal rejected the applicant's attempt to offset or appropriate amounts beyond the crystallized resolution claim and held that Section 60(5) does not extend to entertain claims not arising out of or related to the resolution plan. [Paras 6, 26, 27, 28, 47]

Application to enforce or adjust amounts beyond the crystallized resolution claim was rejected; claims not part of the approved plan cannot be pursued or set off.

Reconnection of supply subject to compliance with formalities and payment of requisite amounts - Adjustment of refunds and receivables against crystallized resolution claims - Whether the respondent (DVC) was obligated to reconnect electricity supply unconditionally and whether any direction for reconnection should be subject to compliance and payment - HELD THAT: - The Tribunal observed that while the resolution plan is binding, the applicant is not entitled to unconditional reconnection without fulfilling relevant formalities and depositing requisite amounts. Having found no merit in the applicant's claim to stay demands beyond the crystallized sum, the Tribunal directed that DVC shall give connection to the applicant in accordance with DVC's rules on completion of formalities and payment of requisite amounts by the corporate debtor within one month. The Tribunal therefore dismissed the interlocutory application but granted a limited direction for reconnection contingent on compliance. [Paras 22, 37, 48, 49]

I.A. dismissed; DVC directed to reconnect supply after applicant completes formalities and pays requisite amounts within one month.

Final Conclusion: The interlocutory application was dismissed. The Tribunal held that the approved resolution plan (pegging DVC's claim at the crystallized amount) binds the parties and bars pursuit or set off of claims not part of the plan; the applicant cannot appropriate refunds/adjustments so as to undermine the crystallized claim. DVC was directed to reconnect supply subject to the applicant completing formalities and payment of requisite amounts within one month.

Liability of proprietor for debts of proprietorship concern - maintainability of section 7 petition against a corporate person for debt incurred by a proprietorship concern - application of the Code to proprietorship firms - acknowledgement of debt and effect on limitation - admission of petition under section 7 of the IBC and initiation of CIRP

Liability of proprietor for debts of proprietorship concern - The corporate debtor, being the proprietor of the proprietorship concern The Mining & Engineering Corporation, is liable for the liabilities incurred by that proprietorship concern. - HELD THAT: - Relying on authoritative exposition that a sole proprietorship concern is equated with its proprietor, the Tribunal held that the proprietorship has no separate juristic existence and the real party liable is the proprietor. Applying this principle to the facts, since the corporate debtor carries on business as proprietor of The Mining & Engineering Corporation, it bears responsibility to discharge the liabilities of that proprietorship concern and therefore can be proceeded against for those liabilities. [Paras 11]

The corporate debtor is liable to discharge the debts of the proprietorship concern and cannot claim separate legal identity to escape liability.

Maintainability of section 7 petition against a corporate person for debt incurred by a proprietorship concern - application of the Code to proprietorship firms - A petition under section 7 of the IBC is maintainable against the corporate debtor for the debt incurred by the proprietorship concern carried on by that company. - HELD THAT: - The Tribunal noted that the Code applies to proprietorship firms and that a 'corporate debtor' includes a corporate person who owes a debt. Where a company (a corporate person) operates as the proprietor of a proprietorship concern, the company, in its role as proprietor, may owe the debt incurred by the proprietorship. The Tribunal further examined the MOU relied upon by the corporate debtor and found the Financial Creditor was not a party thereto, the MOU was unsigned by her and the amounts differed; accordingly the MOU did not preclude maintainability of the petition against the corporate debtor. [Paras 11]

The section 7 petition against the corporate debtor is maintainable notwithstanding that the debt arose in relation to the proprietorship concern.

Acknowledgement of debt and effect on limitation - The petition is within limitation because the corporate debtor acknowledged the debt and deducted TDS, and an act of acknowledgment renders the claim not barred by limitation. - HELD THAT: - The Tribunal observed that the date of default was pleaded as 30.09.2016 and the petition was filed on 27.09.2019. It found that the corporate debtor had, by confirmation of accounts and by deducting TDS on payments to the Financial Creditor (with entries up to 01.04.2019 and TDS last deposited on 30.09.2016), acknowledged the debt. Such acknowledgments amount to admissions of liability and prevent the petition from being barred by limitation. Having regard to the admitted default and the acknowledgments, the petition was complete and maintainable. [Paras 10, 11]

The claim is within limitation and the acknowledgments by the corporate debtor constitute admission of debt, supporting admission of the section 7 petition.

Final Conclusion: The Company Petition under section 7 is admitted; moratorium is declared; public announcement to be made; Shri Bimal Kanti Choudhary is appointed as Interim Resolution Professional and the CIRP shall proceed in accordance with the Code and applicable regulations.

Extension of liquidation period - deemed certified copies as original title deeds - declaration of trust deeds and deeds of mortgage as null and void - removal of charges from Registrar of Companies portal - power of liquidator to sell assets in liquidation

Extension of liquidation period - power of liquidator to sell assets in liquidation - Grant of an extension to the liquidation period and consequential direction to complete liquidation and apply for dissolution. - HELD THAT: - The Liquidator moved an application seeking extension of the liquidation period. After hearing the Liquidator's submissions, the Tribunal found it appropriate to permit additional time for the Liquidator to complete the liquidation process. The Tribunal granted an extension shorter than prayed for, allowing six months' extension and directed the Liquidator to complete liquidation within that extended period and to file for dissolution of the corporate debtor thereafter. The order recognises the Liquidator's duty under the insolvency regime to realise assets expeditiously and frames the extension as a limited, mandated timeline to achieve that objective.

Extension of the liquidation period granted for six months; Liquidator to complete liquidation within the extended period and file for dissolution.

Deemed certified copies as original title deeds - declaration of trust deeds and deeds of mortgage as null and void - removal of charges from Registrar of Companies portal - power of liquidator to sell assets in liquidation - Treatment of untraceable original title deeds, validity of specified trust deeds and mortgage deeds, and ancillary directions enabling sale of the corporate debtor's properties. - HELD THAT: - The Liquidator informed the Tribunal that original title deeds for several properties could not be traced, impeding sale. The Tribunal directed the Liquidator to give paper publication notifying the public that originals are untraceable and declared that authenticated certified copies of the conveyance deeds obtained from the concerned registry, when procured by the Liquidator making specific reference to this order, shall be deemed to be the original title deeds. Further, the Tribunal declared specified Trust Deeds and Deeds of Mortgage dated April 24, 2010; September 21, 2010; September 28, 2011; November 26, 2011; September 26, 2011; and November 22, 2011 to be null and void and invalid forthwith. Consequent to that declaration, the Tribunal directed the Liquidator to communicate the order to the Registrar of Companies, West Bengal, and directed the Registrar to remove the reflected charges from its portal within ten days of receipt. Finally, the Tribunal recorded that, in view of these directions, the Liquidator is at liberty to sell the company's properties in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016, ensuring strict compliance with applicable statutory requirements.

Authenticated certified copies of conveyance deeds obtained by the Liquidator shall be deemed originals; the specified Trust Deeds and Mortgage Deeds are declared null and void; Registrar of Companies, West Bengal to remove charges within ten days of receipt; Liquidator permitted to sell properties in accordance with law.

Final Conclusion: The Tribunal granted a six month extension of the liquidation period and allowed the Liquidator's application regarding untraceable title deeds by deeming authenticated certified conveyance copies as originals, declared certain trust and mortgage deeds invalid, directed the Registrar of Companies, West Bengal to remove corresponding charges, and authorised the Liquidator to sell the corporate debtor's properties in compliance with the IBC.

Services by way of education as part of a curriculum for obtaining a qualification recognised by law (Clause (l) of Section 66D) - Exemption from service tax for educational services - Bundled service - essential character test for incidental activities - Jurisdiction to issue show cause notice proposing levy of service tax

Services by way of education as part of a curriculum for obtaining a qualification recognised by law (Clause (l) of Section 66D) - Exemption from service tax for educational services - Affiliation fees received by the University are to be treated as consideration for educational services exempt from service tax. - HELD THAT: - The University, established under the State Universities Act, performs functions of imparting education both directly and through affiliated colleges, including regulation of curriculum and conduct of examinations. The fee charged from affiliated colleges for affiliation is a service rendered in furtherance of providing education and therefore falls within the activity contemplated by Clause (l) of Section 66D which places education as part of a curriculum for obtaining a recognised qualification on the exemption list. The respondents' contention that affiliation fee is a separate commercial consideration for affiliating private institutions is rejected as erroneous; the activity of granting affiliation is integrally linked to the educational service rendered by the University and is exempt from service tax. [Paras 8, 11]

Affiliation fee received by the petitioner is exempt from service tax as part of educational services and cannot be taxed.

Bundled service - essential character test for incidental activities - Exemption from service tax for activities incidental to education - Rent received from buildings let out for canteen, bank and similar facilities is incidental to and naturally bundled with the educational service and thus exempt once educational activity is exempted. - HELD THAT: - The buildings let out by the University provide facilities (canteen, bank, etc.) that are essential for effective functioning of the institution in furtherance of imparting education. Under the bundled service rule, where various elements are naturally bundled in the ordinary course of business, the bundle is treated as a single service which gives it its essential character. As these activities are incidental and naturally bundled with the University's educational service, the rent received is part of the exempted activity and therefore not liable to service tax. [Paras 12, 13, 14, 15]

Rent from buildings used to provide essential facilities to the University is incidental to the exempt educational service and is exempt from service tax.

Jurisdiction to issue show cause notice proposing levy of service tax - The show cause notice and consequential demand issued by the Authority were not sustainable and are set aside. - HELD THAT: - Although ordinarily an assessee should respond to a show cause notice before approaching the Court, this case concerns the core question whether the activity of granting affiliation and the related receipts are taxable at all. The respondents had taken a clear stand before the Court that affiliation fees were taxable. Given the legal determination that the affiliation fees and incidental rents fall within the exemption, it is inappropriate to remit the petitioner to the adjudicating authority. Accordingly, the impugned show cause notice and the statement of demand have been quashed and further action pursuant to them set aside. [Paras 16, 17, 18]

Impugned show cause notice and statement of demand are set aside; further action pursuant thereto is quashed.

Final Conclusion: The writ petition is allowed: the show cause notice dated 20.04.2018 and the statement of demand dated 28.02.2019 are quashed, holding that affiliation fees and rents incidental to the University's educational activity fall within the exemption from service tax, and consequential actions are set aside.

Pre-deposit requirement under Section 35F - entertainment of appeal - principles of natural justice - verification of statutory compliance by the Appellate Authority - restoration of appeal for adjudication on merits

Pre-deposit requirement under Section 35F - entertainment of appeal - verification of statutory compliance by the Appellate Authority - principles of natural justice - Appellate Authority ought not to reject appeal on an erroneous impression that pre-deposit was not made without verifying records and affording opportunity to demonstrate compliance; matter remitted for verification and fresh consideration. - HELD THAT: - The High Court observed that Section 35F prescribes a pre-deposit threshold which is a condition for entertaining an appeal, but the Appellate Authority rejected the appeal on the apparent premise that the mandatory pre-deposit for filing the appeal was not made. The Court did not enter into the merits of the underlying tax dispute or decide whether the pre-deposit had in fact been made. Instead, noting the petitioner's contention (and the appellate order's reasoning), the Court directed the petitioner to place before the Commissioner (Appeals) the documents showing compliance with the statutory pre-deposit requirement. The First Appellate Authority was directed to verify the production of such documents and statutory compliance and, upon being satisfied, to restore the appeal to file and proceed to decide it on merits in accordance with law. The Court thus remedied the procedural deficiency by remitting the matter for verification and fresh consideration rather than adjudicating the substantive compliance or merits itself. [Paras 6, 7]

Writ petition disposed by relegating the petitioner to the First Appellate Authority for verification of pre-deposit compliance and, if satisfied, restoration and adjudication of the appeal on merits.

Final Conclusion: The High Court did not decide the substantive compliance with the pre-deposit requirement or the merits of the appeal; it remitted the matter to the Commissioner (Appeals) to verify the petitioner's documentary proof of pre-deposit, restore the appeal if statutory compliance is shown, and proceed to decide the appeal on merits in accordance with law.

Rule 6(5) of the CENVAT Credit Rules - non-obstante clause allowing full credit for specified services unless used exclusively for exempted services - Availability of CENVAT credit for Insurance auxiliary services - Removal of restriction by omission of Rule 6(5) with prospective effect - Precedential reliance on CESTAT-Delhi decision

Rule 6(5) of the CENVAT Credit Rules - non-obstante clause allowing full credit for specified services unless used exclusively for exempted services - Availability of CENVAT credit for Insurance auxiliary services - Whether CENVAT credit of service tax paid on insurance auxiliary services was correctly denied on the ground that those services related to non-taxable investment portion of unit linked insurance policies for the period 01.04.2005 to 15.05.2008. - HELD THAT: - Sub-rule (5) of Rule 6 of the CENVAT Credit Rules contains a non-obstante clause which permits allowance of the whole of service tax credit on services specified therein, including insurance auxiliary services, unless such service is used exclusively in relation to providing exempted services or manufacture of exempted goods. The omission of sub-rule (5) took effect from 16.05.2008; the period under consideration predates that omission. The undisputed factual position was that the assessee provided insurance auxiliary services concerning life insurance and that no exempt service was provided by the assessee. Applying the statutory test in Rule 6(5), the credit could not be denied merely because the underlying insurance policy contained a non-taxable investment component where the assessee did not itself provide an exempt service. [Paras 8, 10]

Credit allowed: the denial of CENVAT credit was not sustainable for the period in question and CESTAT's conclusion to permit credit was upheld.

Precedential reliance on CESTAT-Delhi decision - Whether the CESTAT was justified in placing reliance on the CESTAT-Delhi decision in Max New York Life Insurance Co. Ltd. in arriving at its conclusion. - HELD THAT: - The CESTAT followed the reasoning of the CESTAT-Delhi Bench in Max New York Life Insurance Co. Ltd., which addressed the same legal proposition under Rule 6(5) and insurance auxiliary services. Given the identical statutory provision and similar facts, the High Court found no error in adopting that precedent as part of the reasoning to allow credit for the period before omission of Rule 6(5). [Paras 10]

Reliance found to be justified; CESTAT's use of the cited decision was upheld.

Final Conclusion: The appeal is dismissed. The CESTAT's order setting aside the original adjudication and allowing CENVAT credit in respect of insurance auxiliary services for the period 01.04.2005 to 15.05.2008 is upheld.

Reliance on Income Tax records/26AS for service tax demand - reopening of audited period/change of opinion after departmental audit - distinction between trading turnover and taxable service value - limitation and extended period - fraud or suppression - reconciliation statement and CA certificate as evidence to displace departmental computation

Reliance on Income Tax records/26AS for service tax demand - distinction between trading turnover and taxable service value - Validity of demand founded on figures from Income Tax Portal and profit & loss account without segregating trading turnover from taxable services. - HELD THAT: - The Tribunal found that the impugned demand was based primarily on Income Tax Portal figures and entries in the profit and loss account, and that the adjudicating authority failed to exclude trading turnover while computing value of taxable services despite the assessee having produced VAT returns and audited accounts. The Bench noted that the assessee had been audited by the Service Tax Department up to Financial Year 2013-14 and that VAT returns for Financial Years 2015-16 and 2016-17 disclosed sales turnover on which VAT was paid. Considering the reconciliation statements and Chartered Accountant certificates submitted before the adjudicating authority, as well as the VAT returns recorded in the order, there was no occasion to sustain the demand which had been computed by taking the higher of P&L/ITR figures without appropriate classification or verification of source documents. [Paras 8, 9, 11]

Demand based on Income Tax/Profit & Loss figures without excluding trading turnover or proper verification set aside for the periods under consideration.

Reopening of audited period/change of opinion after departmental audit - Whether demand can be sustained for periods already audited by Service Tax authorities merely on a change of opinion. - HELD THAT: - The Tribunal recorded that the assessee had been audited by the Service Tax Department up to Financial Year 2013-14 and that records for those periods had been examined. The Bench held that where records have been duly audited by the department, a demand cannot be raised for the same period simply on a subsequent change of opinion based on departmental data from another source. Accordingly, the demand for the audited period could not be sustained on that ground. [Paras 8]

Demand for periods already subject to departmental audit cannot be sustained merely by a later change of opinion and is therefore not maintainable.

Limitation and extended period - fraud or suppression - Whether the extended period of limitation could be invoked in view of alleged fraud or suppression where demand was founded on Income Tax Portal data. - HELD THAT: - The Tribunal found no ingredient of fraud or suppression with intent to evade tax. Citing the principle applied by a co-ordinate Bench that a demand based solely on Income Tax Portal data does not ordinarily attract extended limitation, the Bench held that the demand for the period up to March 2015 is barred by limitation. In absence of fraud or suppression, penalty linked to the extended assessment was also not sustainable. [Paras 10]

Demand for periods up to March 2015 barred by limitation; associated penalty set aside for lack of fraud or suppression.

Reconciliation statement and CA certificate as evidence to displace departmental computation - Whether reconciliation statements, CA certificate and VAT returns furnished by the assessee suffice to displace the departmental demand for Financial Years 2015-16 and 2016-17. - HELD THAT: - On consideration of the reconciliation statements, Chartered Accountant certificate and the VAT returns (which disclosed sales turnover on which VAT was paid), the Tribunal concluded that the adjudicating authority had no occasion to sustain the demand computed by taking higher figures from P&L/ITR without reconciling trading and service receipts. The material produced before the authority was sufficient to rebut the departmental computation for Financial Years 2015-16 and 2016-17. [Paras 9, 11]

Demand for Financial Years 2015-16 and 2016-17 set aside in view of reconciliation, CA certificate and VAT returns filed by the assessee.

Penalty for delayed filing and non-production of documents - penalty linked to substantive demand where demand set aside - Sustainability of penalties imposed along with the confirmed demand. - HELD THAT: - The Tribunal observed absence of any element of fraud or suppression which would justify imposition of penalties concomitant with the demand. Given that the substantive demand was set aside for limitation and on merits for later years, and that the demand arose from departmental reliance on Income Tax data without adequate verification, the penalties imposed were held to be liable for deletion. [Paras 10, 11]

All penalties imposed along with the demand set aside.

Final Conclusion: The appeal is allowed: the demand for periods up to March 2015 is barred by limitation and set aside; the demand for Financial Years 2015-16 and 2016-17 is set aside upon consideration of reconciliation statements, CA certificate and VAT returns; all penalties are deleted; consequential relief to follow as per law.

Time of completion of service and raising of invoice - service tax liability on accrual basis - interest under Section 75 - mismatch between Form-26AS and ST-3 return - demand and penalties set aside

Time of completion of service and raising of invoice - interest under Section 75 - Demand of interest under Section 75 on alleged delayed payment of service tax - HELD THAT: - The Tribunal found on the material placed (invoices, chart and handing over certificates) that the appellant raised invoices within days or within a month after the principal-service receiver certified and issued the handing over certificate, which marked completion of the service under the contract. The appellant booked the service in its accounts and declared and paid tax upon raising those invoices. The Revenue's contention rested on the work-order period shown in invoices, but the Tribunal accepted the contractual completion date evidenced by handing over certificates as the date on which the liability crystallised for accrual-based accounting. On that basis the Tribunal concluded there was no delay in payment of service tax and the demand of interest under Section 75 was unsustainable. [Paras 7]

Demand of interest under Section 75 set aside.

Service tax liability on accrual basis - mismatch between Form-26AS and ST-3 return - demand and penalties set aside - Demand of service tax on Rs.1,05,050/- based on mismatch between Form 26AS and ST-3 return for April, 2017 to June, 2017 - HELD THAT: - The Tribunal accepted the appellant's explanation that the amount in question had been booked and charged to service tax in the previous financial year 2016-2017 because service tax is payable on accrual basis. Form 26AS, reflecting payments/receipts on a cash basis, therefore showed an apparent mismatch with the ST-3 return. The Tribunal held that the demand raised on the basis of Form 26AS cash entries was wrongly raised against an accrual-basis liability already discharged in the earlier year, and accordingly the demand and all penalties were not sustainable. [Paras 8, 9]

Demand of service tax on Rs.1,05,050/- and all penalties set aside.

Final Conclusion: The appeal is allowed: the demand of interest under Section 75 is set aside; the demand based on the Form 26AS-ST-3 mismatch for April, 2017 to June, 2017 is held to be wrongly raised because the liability was discharged on an accrual basis in FY 2016-2017; all penalties are set aside.

Inordinate delay in adjudication - limitation under Section 11A of the Central Excise Act, 1944 - quashing of show cause notices - Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019

Inordinate delay in adjudication - limitation under Section 11A of the Central Excise Act, 1944 - quashing of show cause notices - Impugned show cause notices issued in 2008 were liable to be quashed on account of inordinate delay in adjudication under Section 11A of the Central Excise Act, 1944. - HELD THAT: - The Court applied the time-limits and principles in Section 11A, observing that the statutory prescription that the Central Excise Officer determine the amount within the specified period ('within six months' or 'within one year' as applicable) is not to be stretched indefinitely by the phrase 'where it is possible to do so'. In the present case the show cause notices were issued in 2008 and remained undecided for an inordinate period. The only explanation offered in the written statement-that the matter had been transferred to the Call Book as per CVIC guidelines-was not a plausible or cogent justification for non-adjudication within the prescribed time. The Court followed the reasoning in M/s Shree Baba Exports (and subsequent affirmation by the Supreme Court) that belated adjudication after many years without a satisfactory explanation renders the notices unsustainable. Consequently, the impugned show cause notices issued in 2008 were quashed. Other contentions raised in the writ petition were left open for adjudication.

Impugned show cause notices dated 04.09.2008 and 12.11.2008 issued in 2008 are quashed for inordinate delay in adjudication; other issues are kept open.

Final Conclusion: Writ petition allowed to the extent that the two show cause notices issued in 2008 are quashed on the ground of inordinate delay in adjudication under Section 11A; remaining issues reserved.

CENVAT Credit on inputs - denial of credit due to supplier not being manufacturer - effect of final adjudication in supplier's favour on recipient's claim - entitlement of recipient where output duty has been paid on final product - recipient's obligation to examine supplier's manufacturing status

CENVAT Credit on inputs - denial of credit due to supplier not being manufacturer - effect of final adjudication in supplier's favour on recipient's claim - entitlement of recipient where output duty has been paid on final product - recipient's obligation to examine supplier's manufacturing status - Whether the appellant, as recipient of goods, is entitled to CENVAT credit claimed on inputs where proceedings against the supplier were dropped and the supplier's position was upheld on appeal, and whether the recipient could be denied credit on the ground that the supplier was not a manufacturer or that the recipient failed to examine the supplier's status. - HELD THAT: - The Tribunal noted that the Commissioner had denied credit on the basis that the consignor's goods were not manufactured and that the recipient should have examined whether duty was rightly charged by the supplier (paragraph 7). The Tribunal recorded that the departmental proceedings against the supplier were dropped by the jurisdictional Commissioner and that that outcome was subsequently upheld by the Tribunal and by the High Court (paragraph 8). Applying the settled legal position that CENVAT credit cannot be denied on inputs merely because the activity does not amount to manufacture where output duty has been paid on the final product, the Tribunal found no reason to deprive the recipient of the claimed credit. Consequently the impugned adjudication denying credit was held legally unsustainable and was set aside (paragraphs 8-9). [Paras 7, 8, 9]

The denial of CENVAT credit in the impugned order is set aside and the appeal is allowed, the appellant being entitled to the CENVAT credit claimed.

Final Conclusion: The impugned Order-in-Original denying CENVAT credit is quashed; appeal allowed and the appellant granted consequential relief in law.

Imposition of penalty under Rule 12(6) of Central Excise Rules, 2002 - substantial compliance doctrine - penalty requires mala fide, suppression or misrepresentation - effect of GST regime on excise return filing obligations

Imposition of penalty under Rule 12(6) of Central Excise Rules, 2002 - substantial compliance doctrine - effect of GST regime on excise return filing obligations - penalty requires mala fide, suppression or misrepresentation - Validity of imposition of late fee/penalty under Rule 12(6) for non-filing of ER-1 returns for July 2017 to February 2018. - HELD THAT: - The appellant admitted delay in filing ER-1 returns for July 2017 to February 2018 but had been regularly filing returns up to 30 June 2017 and had obtained GST registration and was filing GST returns for the period in question. The Tribunal found that the delay occurred immediately after the commencement of the GST regime (w.e.f. 1 July 2017) and that there was no evasion of duty, suppression of facts, misrepresentation or mala fide on the part of the appellant. Applying the principle that where there is substantial compliance with the statutory scheme and absence of culpable intent, invocation of Rule 12(6) as a penal measure is not warranted, the Tribunal held that imposition of the late fee/penalty in the circumstances was improper. The Tribunal relied on its earlier decisions dealing with identical facts and legal questions and concluded those decisions squarely covered the present case; accordingly the impugned order confirming the penalty was set aside. [Paras 7, 8, 9]

The penalty imposed under Rule 12(6) for non-filing of ER-1 returns for July 2017 to February 2018 was set aside and the appeal allowed.

Final Conclusion: Appeal allowed; the order imposing late fee/penalty under Rule 12(6) for the period July 2017 to February 2018 is set aside in view of substantial compliance and absence of mala fide, relying on earlier Tribunal decisions.

Denial of MODVAT/Modvat credit - Classification of steel as alloy or non-alloy under Chapter Note 1(f) of Chapter 72 - Principle against revenue taking inconsistent stands in cases of similarly situated assessees - Applicability and invocation of extended period of limitation (Section 11A) - Reliance on supplier statements and right to cross-examination / principles of natural justice - Liability of job-worker when principal manufacturer's case succeeds

Denial of MODVAT/Modvat credit - Classification of steel as alloy or non-alloy under Chapter Note 1(f) of Chapter 72 - Validity of denial of Modvat credit in respect of inputs used for manufacture of ERC and MLJ on the ground that inputs were non-alloy steel. - HELD THAT: - The Tribunal held that the adjudicating authority failed to apply independent mind and ignored material contemporaneous records showing that inputs were of grade EN-45 and thus alloy steel under Chapter Note 1(f), Chapter 72. Invoices and challans (including job work challans) described grade EN-45, technical literature and supplier statements supported the appellants' case, and the revenue produced no substantive evidence to rebut the chemical composition or classification. The fact that duty rates were the same in the pre compounded levy period and inconsistent invoice descriptions did not permit denial of credit. The Tribunal therefore set aside the denial of Modvat credit for ERC and MLJ. [Paras 11, 12, 13, 14, 15]

Denial of Modvat credit for inputs used in manufacture of ERC and MLJ set aside; credit upheld.

Denial of MODVAT/Modvat credit - Classification of steel as alloy or non-alloy under Chapter Note 1(f) of Chapter 72 - Whether inputs used for manufacture of Rail Anchor were alloy steel (and therefore eligible for Modvat credit) despite Railway specification references. - HELD THAT: - The Tribunal found that Railway Specification T-24/65 permitted use of materials meeting alternative spring steel specifications and required performance (hardness) tests, which could be met by chromium-alloyed steel. Contemporaneous test reports showed chromium content of 0.32%-0.38% and authoritative technical material supported that chromium 0.3% renders steel 'alloy' under Chapter Note 1(f). The Commissioner wrongly ignored these records, improperly rejected test reports and did not seek further inquiry or cross examination. On merits and by comparison with the adjudication in the sister concern case, the denial of credit for Rail Anchor was unsustainable. [Paras 18, 19, 20, 21, 22]

Denial of Modvat credit in respect of inputs for Rail Anchor set aside; credit upheld.

Denial of MODVAT/Modvat credit - Principle against revenue taking inconsistent stands in cases of similarly situated assessees - Whether Modvat credit in respect of Fish Plate and Loose Jaw bars purchased from M/s Bengal Hammer Industries was properly denied on the basis that commercial invoices were raised by a different unit. - HELD THAT: - The Tribunal accepted the finding in the sister concern adjudication that Bengal Hammer was the manufacturer, appropriate central excise invoices had been issued by the manufacturing unit, the supplier maintained a single bank account and payment was made to the manufacturer. The Commissioner's reliance on internal unit invoicing particulars to deny credit was unfounded and amounted to travelling beyond the show cause allegations. The revenue failed to prove non fulfillment of conditions of the relevant notification, and the findings in Manash Forgings were persuasive and not meaningfully distinguished. [Paras 23, 24, 25, 26, 27]

Denial of Modvat credit for Fish Plate and Loose Jaw set aside; credit upheld.

Denial of MODVAT/Modvat credit - Reliance on supplier statements and right to cross-examination / principles of natural justice - Applicability and invocation of extended period of limitation (Section 11A) - Whether credit in respect of input rounds used for Suspension Shackle could be denied on supplier statements and whether extended period of limitation was properly invoked. - HELD THAT: - The Tribunal found the communications relied upon by the Commissioner to be unreliable, incredulous and not tied to the specific invoiced supplies; two supplier communications were identical and inherently untrustworthy. The Commissioner also erred in accepting the third supplier's statement without allowing the assessee to inspect supplier records and cross examine the witness, violating natural justice. On limitation, the Tribunal held that credits were taken openly on duty paying documents that were filed, examined and defaced by the Department; no specific suppression was shown and the matter was essentially a classification dispute, so extended limitation could not be invoked. Accordingly the denial of credit and attendant interest/penalty were unsustainable. [Paras 28, 29, 30, 31, 32]

Credit for Suspension Shackle inputs upheld; invocation of extended limitation rejected and interest/penalty set aside.

Liability of job-worker when principal manufacturer's case succeeds - Denial of MODVAT/Modvat credit - Whether the job worker (ASRM) can be independently saddled with excise liability when the principal manufacturer's (Mak Engineering) liability is set aside. - HELD THAT: - Proceedings against ASRM were founded on the same core case as that against Mak Engineering (that non alloy ingots were hot rolled). There was no independent evidence to sustain liability against ASRM beyond the case against the principal. As the Tribunal allowed Mak Engineering's appeal on merits, it followed that ASRM could not be held liable independently; the Tribunal also noted that where allegations against a principal fail, connected job worker liability cannot be sustained. [Paras 33]

Appeal of ASRM allowed; no independent liability sustained against the job worker.

Final Conclusion: The Tribunal set aside the impugned de-novo adjudication order dated 21.02.2012, allowed the appeals of M/s Mak Engineering Industries Limited and M/s Alloy Steel Rolling Mills, upheld Modvat credit in respect of the contested inputs, rejected invocation of the extended period of limitation and annulled the confirmed interest and equivalent penalty, with consequential reliefs.

Classification of goods as cereals versus residuary entry - Trade parlance / common parlance test for classification - Declared goods under Section 14 CST Act and first-point tax restriction - Burden of proof on Revenue for tax classification - Resort to residuary entry as last measure

Classification of goods as cereals versus residuary entry - Trade parlance / common parlance test for classification - Declared goods under Section 14 CST Act and first-point tax restriction - Burden of proof on Revenue for tax classification - Resort to residuary entry as last measure - Robinson Barley and Purity Barley manufactured by the petitioner are not taxable under the entry for cereals at the first-point rate and must be classified under the residuary entry. - HELD THAT: - The Court examined the commercial character of the products and held that Robinson Barley and Purity Barley are commercially distinct, processed products and not plain barley in trade parlance. The petitioner's own description (fortification with calcium and iron and processing to produce powdered/tinned product) demonstrates transformation into a distinct commercial article. The Court applied the common parlance / trade sense test and found that a purchaser asking for 'barley' would not be supplied Robinson or Purity Barley and vice versa. The decision of a coordinate Bench in Satyanarayan Bhandar, which addressed the same product and concluded that Robinson Barley is a new commercial commodity distinguishable from barley, was followed and treated as binding. While Section 14 CST Act and first-point tax restrictions were considered, the Court found them inapplicable to classify the product as a declared cereal for the lower rate because the product is not the same as the declared good in common commercial understanding. The Court also observed that the Revenue discharged its burden to show that the product is subject to the residuary entry by reliance on the petitioner's own description of processing and fortification; hence there was no ambiguity requiring construction in favour of the assessee or recourse to the specific entry at 4%. Reliance on authorities urging plain meaning, burden on Revenue, or resort to residuary entry only as last measure did not assist the petitioner in view of the factual and precedential finding that the product is a distinct commercial commodity. [Paras 14, 19, 20, 21, 23]

Robinson Barley and Purity Barley are taxable under the residuary Entry 189 of List C of the Rate Chart and not under the cereals entry; the revision petitions are dismissed.

Final Conclusion: The Court dismissed the petitions and held that Robinson Barley and Purity Barley are commercially distinct processed products and must be classified under the residuary entry of the rate chart rather than as cereals liable to the first-point lower rate.

Reassessment in certain cases under Section 10 of the Odisha Entry Tax Act - limitation period for reassessment (seven years) - assessment barred by limitation - onus of proof for prior payment of entry tax - capitalization of pre-operative expenses and Accounting Standards (AS-10 and AS-16) - remand for fresh consideration of assessment

Reassessment in certain cases under Section 10 of the Odisha Entry Tax Act - limitation period for reassessment (seven years) - assessment barred by limitation - Validity of reassessment under Section 10 in respect of tax periods from 01.04.2013 to 31.03.2014 - HELD THAT: - The Court construed the expression "year" and "tax period" in the Act and observed that the end of the year to which the tax periods 01.04.2013 to 31.03.2014 relate is 31.03.2014. Section 10(1) permits service of notice for reassessment within seven years from the end of that year. Since the impugned notice in Form E32 was served on 13.01.2022, after lapse of seven years from 31.03.2014, the Assessing Authority lacked competence to reopen assessment for the 2013-14 year. Consequently the reassessment insofar as it relates to 01.04.2013 to 31.03.2014 is time barred and must be set aside. [Paras 6]

Reassessment for the tax period 01.04.2013 to 31.03.2014 is barred by limitation and set aside.

Reassessment in certain cases under Section 10 of the Odisha Entry Tax Act - onus of proof for prior payment of entry tax - capitalization of pre-operative expenses and Accounting Standards (AS-10 and AS-16) - remand for fresh consideration of assessment - Whether the reassessment for tax periods 01.04.2014 to 30.09.2015 is sustainable and whether the Assessing Authority must consider the petitioner's contention that the capitalized plant and machinery figures pertain to earlier years and have already suffered entry tax - HELD THAT: - The Court found that the petitioner had placed before the Assessing Authority written submissions explaining that the large addition in Schedule-11 for FY 2014-15 represented capitalization of work in progress and pre operative expenses incurred from FY 2009 10 onwards in compliance with Companies Act and applicable Accounting Standards. The Court observed that the Assessing Authority had not given due consideration to those explanations and that the question whether the goods had already suffered entry tax is a factual matter on which the onus lies on the assessee to adduce evidence. In view of these deficiencies in the impugned proceeding, the Court held the assessment insofar as it related to the periods 01.04.2014 to 30.09.2015 could not be sustained and remanded the matter to the Sales Tax Officer for fresh enquiry, verification of documents and appropriate adjudication after affording opportunity to produce books of account and evidence. [Paras 7, 8, 9]

Assessment for the tax periods 01.04.2014 to 30.09.2015 is set aside and remanded to the Assessing Authority for fresh consideration after verification of the petitioner's submissions and documents.

Final Conclusion: The reassessment order dated 31.03.2022 is quashed insofar as it relates to 01.04.2013 to 31.03.2014 as barred by limitation; the remaining periods 01.04.2014 to 30.09.2015 are remitted to the Sales Tax Officer for fresh enquiry and adjudication after verification of the petitioner's records and opportunity to be heard, with directions to conclude the proceedings within the stipulated time.

Assessment to the best of his judgment - assessment of escaped tax within five years - reasonable period for completion of assessment - re-assessment not equivalent to original assessment - limitation under Section 7-A as benchmark for delay in Section 6(3) assessments

Reasonable period for completion of assessment - assessment to the best of his judgment - limitation under Section 7-A as benchmark for delay in Section 6(3) assessments - Whether the assessments framed under Section 6(3) for the years 2003-04 to 2007-08 were barred by limitation or concluded beyond a reasonable period. - HELD THAT: - The Court held that Section 6(3) prescribes no express period of limitation but, following the principle in Bharat Steel Tubes Ltd., an assessment must be completed within a reasonable period. Given the facts - inspection on 17.5.2007, taxes paid by the assessee in 2007-2008, intelligence report dated 24.4.2008 received in the assessing officer's office only on 29.12.2012, proposition notice issued on 12.2.2014 and final orders on 28.2.2014 - the assessing authority's inaction and long delay rendered the completion of assessment unreasonable. The Court accepted that, although Section 7-A is a provision for assessment of escaped tax, the five-year period prescribed therein is a proper benchmark to determine what would ordinarily constitute a reasonable period for completion of an assessment; concluding original assessments under Section 6(3) made beyond that period were ex facie not in conformity with the legislative intent to avoid indefinite delay. The Court therefore confined the consequence of delay to negativing interest and penalty while preserving the tax liability where taxes had in fact been collected pursuant to the 2007 inspection. [Paras 12, 13, 16]

Assessments under Section 6(3) for 2003-04 to 2007-08 were completed beyond a reasonable period; the five-year limitation under Section 7-A is an appropriate benchmark, and the questions of law are answered in favour of the assessee subject to non-refund of taxes paid.

Re-assessment not equivalent to original assessment - assessment of escaped tax within five years - Whether provisions relating to re-assessment (assessment of escaped tax) can be applied to or imported into Section 6(3) when computing the period of limitation. - HELD THAT: - The Court observed that provisions like Section 7-A (and decisions such as Filter Co. on reassessment) apply where an assessment has already been made and escapement or under-assessment is being addressed; where no original assessment exists, re-assessment provisions cannot be mechanically invoked. The Court found Filter Co. inapposite to justify invoking reassessment provisions for cases where no prior assessment was made. Nonetheless, for the purpose of determining what constitutes a reasonable period for completing an assessment under Section 6(3), the five-year period in Section 7-A was adopted as a practical benchmark; this adoption was for assessing delay and not for converting Section 6(3) into a provision of re-assessment. [Paras 14, 15, 16]

Re-assessment provisions do not automatically apply where no prior assessment exists; Section 7-A cannot be directly read into Section 6(3) as a re-assessment provision, although its five-year period may be adopted as a benchmark to assess reasonableness of delay.

Final Conclusion: Revision petition allowed in part: the assessment orders are modified by setting aside interest and penalty but confirming tax liability (taxes paid pursuant to 2007 inspection are not refundable); any interest/penalty recovered shall be refunded within ninety days and thereafter Section 12 of the Act will apply; prayer for refund with interest rejected.

Applicability of Section 300(1) CrPC (bar on retrial on same facts) to prosecutions under the Negotiable Instruments Act and the IPC - Distinction between ingredients of offences under Section 138 NI Act and offences under Sections 406/420 IPC (mens rea and statutory presumption) - Abuse of process by initiating parallel criminal proceedings - Conflict of precedent and reference to a larger bench for uniformity of law

Conflict of precedent and reference to larger bench for uniformity of law - Applicability of Section 300(1) CrPC (bar on retrial on same facts) to prosecutions under the Negotiable Instruments Act and the IPC - Existence of conflicting two-Judge Bench decisions on whether proceedings under Section 138 NI Act preclude subsequent prosecution under provisions of the IPC on the same facts, and the necessity of referring the legal question to a larger bench. - HELD THAT: - The Court examined competing two-Judge Bench decisions: (a) Sangeetaben Mahendrabhai Patel (and follow-on M/s V.S. Reddy and Sons) which held that differing ingredients of Section 138 NI Act and IPC offences may permit separate prosecutions despite overlapping facts, and (b) G. Sagar Suri and Kolla Veera Raghav Rao which held that Section 300(1) CrPC bars prosecution for a different offence on the same facts, effectively precluding prosecution under IPC when NI Act proceedings exist. The Court found these decisions, rendered by benches of equal strength, to be in conflict. Observing that conflicting two-Judge Bench precedents on the same question should not stand unresolved, the Court formulated specific questions addressing (i) which line of authority lays down the correct law and (ii) whether, on similar allegations, prosecution under the special enactment (NI Act) and under the IPC can both proceed unaffected by prior conviction or acquittal, and whether Section 300(1) CrPC applies. Given this conflict and the need for consistency, the Court concluded the matter requires adjudication by a larger bench rather than resolving it in the present appeal. [Paras 12, 13]

Reference made to a larger bench to decide the formulated questions of law regarding the interplay between Section 138 NI Act prosecutions, offences under the IPC on the same facts, and the operation of Section 300(1) CrPC.

Final Conclusion: Leave granted; because binding two-Judge Bench authorities are in conflict on whether prosecutions under Section 138 NI Act and offences under the IPC on the same facts are barred by Section 300(1) CrPC, the questions of law identified in the judgment are referred to a larger bench for authoritative decision; the substantive controversy in the present appeal is not finally decided by this Court.

Quashing of criminal complaint under Section 482 Cr.P.C. - Liability of company director under Section 141(1) of the Negotiable Instruments Act - Requirement to aver specific role of a director for prosecution under Section 138 of the Negotiable Instruments Act - Judicial notice of Registrar of Companies records - Application of guidelines in State of Haryana v. Bhajan Lal for exercise of extraordinary jurisdiction

Quashing of criminal complaint under Section 482 Cr.P.C. - Judicial notice of Registrar of Companies records - Requirement to aver specific role of a director for prosecution under Section 138 of the Negotiable Instruments Act - Whether the criminal complaint in C.C.No.1027 of 2019 could be quashed as against the petitioner who had ceased to be a director prior to the alleged offence. - HELD THAT: - The Court found that the petitioner had resigned as a director on 05.02.2016 and that resignation was accepted and recorded by the Registrar of Companies, as evidenced by Form DIR-12 and the Registrar's web-portal records. The averments in the complaint alleging that each director was responsible for day-to-day affairs were vague and did not specifically attribute any role to the petitioner, nor did they allege that he was a signatory or otherwise in charge on the date the cheques were issued. The Court held that authenticated records of the Registrar of Companies may be taken judicial notice of when exercising extraordinary jurisdiction under Section 482 Cr.P.C. and, in the light of the requirement that a complainant must make specific averments about the role of a director for prosecution under Section 138 read with Section 141(1) of the Negotiable Instruments Act, the petitioner need not be compelled to face trial. The Court applied the Bhajan Lal guidelines to conclude that the complaint was liable to be quashed as against the petitioner where the foundational factual allegation (that he was a director at the relevant time and responsible for day-to-day management) was contradicted by statutory records and not specifically pleaded in the complaint. [Paras 7, 8, 9, 10, 11]

The complaint is quashed as against the petitioner; the petitioner cannot be prosecuted on the present complaint in respect of the alleged dishonour of the cheques.

Final Conclusion: Criminal Original Petition allowed; the complaint in C.C.No.1027 of 2019 is quashed insofar as it concerns the petitioner, and the trial court is directed to proceed to dispose of the remaining matter within three months from receipt or upload of this order.

Quashing of criminal proceedings under inherent powers of the High Court (Section 482 CrPC) - Limitation for filing complaint under Section 138 of the Negotiable Instruments Act - Distinction between giving and receipt of notice in Section 138 prosecutions - Exercise of inherent jurisdiction where factual disputes are sub judice - Impleading of non-party and its effect on exercise of supervisory jurisdiction

Limitation for filing complaint under Section 138 of the Negotiable Instruments Act - Distinction between giving and receipt of notice in Section 138 prosecutions - Limitation point in the Section 138 NI Act complaint was not finally adjudicated by the High Court and was left for determination by the trial court after fresh hearing. - HELD THAT: - The High Court observed that the trial court had recorded that the question of limitation remained sub judice and had postponed a conclusive decision until final disposal. The High Court noted authorities relied upon by both sides concerning computation of limitation and the legal distinction between 'giving' and 'receipt' of the statutory notice but declined to decide the limitation issue in exercise of its supervisory jurisdiction because the contested question of fact and law was pending before the trial court. The High Court therefore directed the trial court to decide the point of limitation afresh after affording both parties an opportunity to be heard and remitted the matter for determination in accordance with law. [Paras 5, 6, 8, 10]

Limitation issue remanded to the trial court for fresh consideration and decision after hearing both parties.

Quashing of criminal proceedings under inherent powers of the High Court (Section 482 CrPC) - Exercise of inherent jurisdiction where factual disputes are sub judice - Impleading of non-party and its effect on exercise of supervisory jurisdiction - Whether the High Court should exercise its inherent jurisdiction under Section 482 CrPC to quash the entire Section 138 NI Act proceeding at this stage. - HELD THAT: - The High Court declined to exercise its inherent jurisdiction to quash the NI Case No. 67/2018. The court observed that the limitation question - the primary ground for the quashing petition - remained pending before the trial court and that a new party (respondent No. 4) had been impleaded in the petition though not a party to the complaint. In view of the existence of sub judice factual and legal disputes and the newly impleaded non-party, the High Court found it inappropriate to render an effective or final decision by quashing the proceedings at this stage and instead disposed the petition while directing the trial court to decide the limitation point afresh. [Paras 5, 7, 8, 9, 11]

Petition under Section 482 CrPC dismissed; High Court refused to quash the NI Act proceeding and directed trial court to decide the limitation issue after fresh hearing.

Final Conclusion: The petition under Section 482 CrPC seeking quashing of the Section 138 NI Act complaint is dismissed. The question of limitation was not finally decided by the High Court and is remitted to the trial court for fresh hearing and decision in accordance with law; the interim stay is vacated.