TaxTMI Updates e-Newsletter
Aug 22,2019

Condonation of delay - statutory limitation for appeals under Section 100 of the CGST Act, 2017 - interpretation of proviso empowering the Appellate Authority to condone delay not exceeding thirty days - exclusion of general limitation remedy by a special statute - maintainability of appeal filed beyond the extended period

Condonation of delay - interpretation of proviso empowering the Appellate Authority to condone delay not exceeding thirty days - statutory limitation for appeals under Section 100 of the CGST Act, 2017 - Application for condonation of delay in filing the appeal under Section 100 of the CGST Act, 2017. - HELD THAT: - The Appellate Authority examined Section 100(2) of the CGST Act and its proviso which permits extension of time by the Authority only where it is satisfied that the appellant was prevented by sufficient cause, and limits such condonation to a period "not exceeding thirty days" beyond the initial thirty days. On a plain construction, the total permissible period for presenting the appeal before this Authority is 60 days from communication of the advance ruling, and the proviso permits only a further extension of up to 30 days. Relying on settled Supreme Court authority construing analogous special statutory limitation provisions, the Authority held that where a special statute prescribes a specific limitation period and a limited extension, the general discretionary provision (Section 5 of the Limitation Act) is excluded. Applying this principle to the facts, the appeal was filed 145 days after communication of the AAR order; the Authority therefore concluded it had no power to condone such delay and rejected the condonation application. [Paras 9, 10, 11, 12, 13]

Application for condonation of delay rejected; appeal held to be time-barred.

Maintainability of appeal filed beyond the extended period - classification of Evacuated Tube Collectors for concessional rate - Whether the substantive question of eligibility of Evacuated Tube Collectors (ETC) for the concessional rate under Sl. No. 234 of Notification No. 01/2017 was adjudicated. - HELD THAT: - Because the appeal was dismissed as time-barred, the Authority did not proceed to consider the merits of the substantive question concerning the classification of ETCs and entitlement to the concessional rate. The AAR's earlier findings on classification and the characterisation of 'solar power-based devices' were therefore left unadjudicated by this Appellate Authority. The Authority expressly recorded that the question of merit does not arise in view of dismissal on limitation grounds. [Paras 14]

Substantive issue of concessional rate eligibility was not adjudicated as the appeal was dismissed on time-bar grounds.

Final Conclusion: The application for condonation of delay is refused and the appeal is dismissed as time-barred; the Appellate Authority did not decide the substantive question on entitlement of Evacuated Tube Collectors to the concessional rate.

Settlement Commission applications u/s 245(D)(1) - whether or not the disclosure was full and true? - scope of report-based decision - principles of natural justice - audi alteram partem - permissible stage for consideration of seized/impounded material - limitation on supplementation of incomplete report -

Court quashed [2019 (3) TMI 702 - GUJARAT HIGH COURT] the Settlement Commission's orders because it impermissibly allowed the Commissioner/CIT(DR) to supplement the Principal Commissioner's preliminary report at the section 245D(2C) stage by reliance on seized/impounded material, breaching the statutory scheme and principles of natural justice. The matters are restored to the Settlement Commission at the section 245D(2C) stage for fresh decision within fifteen days; operation of this judgment stayed for four weeks to enable the respondents to seek further remedy - HELD THAT:- This petition has become infructuous.

Accordingly, the special leave petition is dismissed as having become infructuous.

Rejection of books of account - Application of net profit rate under section 44AD when books maintained under section 44AB - Estimation of income on basis of admission made during assessment proceedings - Admissibility and legal effect of conditional admission during assessment - Treatment of interest and rental receipts as income other than business income

Rejection of books of account - Application of net profit rate under section 44AD when books maintained under section 44AB - Validity of estimating net profit at 8% despite alleged maintenance of books and turnover exceeding one crore - HELD THAT: - The Court upheld the factual conclusion recorded by the authorities that the assessee's books were not reliably maintained: substantial payments were made in cash, vouchers were self-made and not verifiable, stock register and quantitative tally were not maintained. On these findings of fact the Assessing Officer rejected the books and applied an 8% net profit rate on gross receipts for estimation of income. The Commissioner (Appeals) and the Tribunal sustained that conclusion, noting the assessee's admission of the net profit rate during assessment proceedings and the absence of corroborative documentary evidence to displace the estimate. The High Court found no error in these factual findings or in treating an 8% net profit as a reasonable estimate on the material before the authorities.

The estimation of income by applying net profit rate at 8% was held valid and the rejection of books by the revenue authorities was upheld.

Estimation of income on basis of admission made during assessment proceedings - Admissibility and legal effect of conditional admission during assessment - Whether the assessment framed by applying 8% net profit on the basis of the assessee's statement, contrary to regular assessment procedure, was justified - HELD THAT: - The Court accepted the view of the lower authorities that the assessee had made an admission of an 8% net profit during the course of assessment (order sheet entry) and that the admission was treated as if detected by the Assessing Officer in response to show cause. The Court noted that a subsequent retraction in appeal, prompted by initiation of penalty proceedings, did not vitiate the original admission where no corroborative evidence was produced to show the books were reliable. Since the finding that books were unreliable was based on evidence, the application of the estimate in the assessment proceedings did not offend the assessment procedure in a manner warranting interference.

The framing of assessment on the basis of the assessee's admission and consequent application of the 8% net profit rate was held justified; no procedural infirmity was found to warrant interference.

Treatment of interest and rental receipts as income other than business income - Correctness of treating interest from fixed deposits and lease rent from JCB as income other than business income - HELD THAT: - The record showed that the assessee had not disclosed interest from FDRs and lease rent from JCB machines in the assessments. The authorities added these receipts to the total income. The High Court agreed with the lower authorities' conclusion that these receipts were not reflected properly in the assessee's books and that their addition to income was warranted on the material before the authorities.

The treatment of the interest and rental receipts as income (separate from the declared business profit) and their inclusion in total income was upheld.

Final Conclusion: The appeal is dismissed. The High Court affirmed the factual findings of the revenue authorities regarding rejection of books, the reasonableness of estimating net profit at 8%, and the addition of undisclosed interest and rental receipts; the substantial questions of law were answered against the assessee and in favour of the Revenue.

Eligibility for deduction under Section 80IB(10) in respect of housing projects approved before 01.04.2005 - prospective operation of Section 80IB(10)(d) - reopening of assessment under Section 147/148 on alleged change of opinion or fresh information - requirement of completion certificate and its relevance to Section 80IB(10) eligibility

Eligibility for deduction under Section 80IB(10) in respect of housing projects approved before 01.04.2005 - prospective operation of Section 80IB(10)(d) - Section 80IB(10)(d) as inserted w.e.f. 01.04.2005 is prospective and does not apply to housing projects approved before 01.04.2005; accordingly the assessee remained eligible for deduction under Section 80IB(10) for the disputed years. - HELD THAT: - The Court accepted the Tribunal's factual finding that the statutory text of Section 80IB(10) prior to 01.04.2005 did not impose a condition requiring project completion or obtaining a completion certificate within four years. The High Court relied on and applied the reasoning in the decisions of the Bombay High Court in CIT vs. Brahma Associates and the Supreme Court in CIT vs. Sarkar Builders , which held that clause (d) inserted w.e.f. 01.04.2005 operates prospectively and cannot be applied to projects approved before that date. The Court observed that prior to 01.04.2005 local authorities could approve housing projects with permissible commercial user under Development Control Regulations and that the legislative restriction introduced by clause (d) from 01.04.2005 could not be given retrospective effect. In view of these legal conclusions and the Tribunal's finding that no statutory pre-condition of completion certificate within four years existed prior to the amendment, the assessee's claim under Section 80IB(10) could not be denied on the ground now sought to be applied retrospectively.

Claim for deduction under Section 80IB(10) allowed for projects approved before 01.04.2005; clause (d) is prospective and not applicable.

Reopening of assessment under Section 147/148 on alleged change of opinion or fresh information - requirement of completion certificate and its relevance to Section 80IB(10) eligibility - Reassessment initiated under Section 147/148 was unsustainable because the initiating material did not amount to tangible fresh information warranting a change of opinion; therefore reassessment was set aside. - HELD THAT: - The Court noted that reassessment was initiated on the basis of observations made during assessment proceedings for AY 2006-07 alleging non obtaining of a completion certificate within four years. However, once it is determined that no such completion certificate condition existed under Section 80IB(10) prior to 01.04.2005, the purported new information did not constitute tangible material justifying reopening under Section 147. The Tribunal had found that the reassessment proceeded on a mere change of opinion and lacked requisite fresh tangible material; the High Court upheld that conclusion and held the reassessment to be bad in law, directing restoration of the assessee's claim under Section 80IB(10).

Reopening of assessment for the disputed years quashed; reassessment held to be invalid and deduction under Section 80IB(10) to be allowed.

Final Conclusion: Both appeals dismissed. The Tribunal's order setting aside the reassessment and directing grant of deduction under Section 80IB(10) for projects approved before 01.04.2005 is upheld: clause (d) inserted w.e.f. 01.04.2005 is prospective and the reassessment based on no fresh tangible information amounted to an impermissible change of opinion.

Exercise of jurisdiction under Section 263 - Erroneous and prejudicial to the interests of the revenue - Application of mind by the Assessing Officer - Non-discussion of replies in assessment order - Relegation to Assessing Officer for verification of creditors and unsecured loans

Exercise of jurisdiction under Section 263 - Erroneous and prejudicial to the interests of the revenue - Application of mind by the Assessing Officer - Non-discussion of replies in assessment order - Relegation to Assessing Officer for verification of creditors and unsecured loans - Validity of the Commissioner s exercise of jurisdiction under Section 263 in setting aside part of the assessment and directing re-examination of unsecured loans and creditors for A.Y. 2007-08 - HELD THAT: - The Assessing Officer issued notices under Section 143(2) and 142(1), raised 28 queries and received written replies with documentary evidence; thereafter an assessment order under Section 143(3) dated 15.12.2009 accepted the return. The Commissioner issued a Section 263 notice and, while accepting the claim on share capital, set aside the assessment insofar as unsecured loans and creditors and directed the AO to call for and verify details. The Court examined the twin conditions from Malabar Industrial Co. that jurisdiction under Section 263 can be exercised only where the AO's order is (i) erroneous and (ii) prejudicial to the interests of the revenue. The Court held that mere non-mention or briefness in an assessment order does not, by itself, establish absence of application of mind; where queries were raised and replied to with documentary evidence and the AO passed the assessment thereafter, the Commissioner must point to specific instances of erroneous finding or lack of application of mind causing prejudice. In the present case the Commissioner relied on the assessee's replies but did not demonstrate that the AO's order was erroneous or prejudicial in respect of unsecured loans and creditors; consequently the partial setting aside and relegation back to the AO was unsustainable. [Paras 21, 22, 23]

The exercise of jurisdiction under Section 263 in relation to unsecured loans and creditors was unjustified; the revisional order dated 09.02.2012 and the ITAT order dated 02.04.2013 upholding it are set aside and the appeal is allowed in favour of the assessee.

Final Conclusion: The High Court held that the Assessing Officer had applied his mind after issuing queries and accepting documentary replies; the Commissioner failed to demonstrate that the assessment order was erroneous and prejudicial to revenue, hence the Section 263 revisional order and the ITAT s upholding thereof were set aside and the appeal allowed.

Onus of proof - assessee's burden to produce evidence - expenditure wholly and exclusively for business - explanation to Sec. 37(1) - perversity in appellate order - reversal and restoration of orders

Assessee's burden to produce evidence - onus of proof - expenditure wholly and exclusively for business - explanation to Sec. 37(1) - Whether the persons disclosed by the assessee rendered services for which commission was paid and whether those payments were deductible - HELD THAT: - The tribunal found, after examining enquiries and replies from third parties, that the assessee failed to produce evidence identifying the persons through whom services were rendered or the nature of services, and therefore the primary evidence of the nature of services was not on record. The tribunal held that when such primary evidence is absent, it is not possible to conclude that the expenditure was wholly and exclusively for business or that the explanation to Sec. 37(1) would apply, and accordingly reversed the order of the CIT(A) and restored the order of the AO. The High Court agreed with the tribunal's factual conclusion as a plausible view, emphasising that the onus of proof lay on the assessee and that the revenue was under no obligation to prove a negative. The Court noted that a compilation submitted before it did not show any foundation in the tribunal's order (no such submission was recorded before the tribunal), and an earlier Division Bench order cited by the assessee did not lay down any binding ratio applicable to these facts. In view of these considerations the Court declined to admit the appeal.

Appeal dismissed; tribunal's factual finding that the assessee failed to prove services and the consequent restoration of the AO's order upheld.

Final Conclusion: The High Court declined to admit the appeal, agreeing with the tribunal's factual conclusion that the assessee did not discharge the onus of proving that services were rendered for the commission paid; the tribunal's reversal of the CIT(A) and restoration of the AO's order is left intact and the appeal is dismissed.

Taxation of a permanent establishment - most-favoured taxation / "not be less favourably levied" - double taxation avoidance agreement - operation of Section 90(2) of the Income-tax Act - treatment as domestic company for rate purposes

Taxation of a permanent establishment - most-favoured taxation / "not be less favourably levied" - operation of Section 90(2) of the Income-tax Act - treatment as domestic company for rate purposes - Rate of tax applicable to the permanent establishment of a foreign enterprise in India for Assessment Year 1991-92. - HELD THAT: - Article 24(2) of the India-Japan Double Taxation Avoidance Agreement provides that taxation on a permanent establishment of an enterprise of one Contracting State in the other Contracting State shall not be less favourably levied than the taxation levied on enterprises of that other State carrying on the same activities. Section 90(2) of the Income-tax Act gives effect to such agreements by applying the Act only to the extent that its provisions are more beneficial to the assessee. Applying Article 24(2) together with Section 90(2), a permanent establishment of a Japanese entity in India cannot be subjected to a higher or less favourable rate of tax than that applicable to comparable Indian enterprises carrying on the same activities. Consequently, for the purpose of determining the applicable rate, the permanent establishment must be treated as subject to the rate applicable to a domestic company carrying on similar activities, and could not properly be assessed at the higher rate (65%) assigned to non-domestic companies in the present assessment year. The Tribunal's reliance on the absence of a Central Board circular in declining that treatment was unjustified; the clear words of the bilateral agreement and statutory recognition suffice to require the favourable treatment.

The Tribunal was incorrect in holding the applicable rate as 65%; the permanent establishment must be taxed at the rate applicable to a domestic company carrying on similar activities for Assessment Year 1991-92.

Final Conclusion: Reference answered: the rate of tax applicable to the assessee's permanent establishment for Assessment Year 1991-92 is the rate applicable to a domestic company carrying on similar activities; the Tribunal's order assessing at 65% is set aside and the matter disposed of accordingly.

Reopening of assessment on the basis of reason to believe - requirement of tangible material forming a live link with the reasons to believe - prohibition on roving or fishing enquiries in reassessment proceedings - power of Assessing Officer to call for production of documents in reassessment - limitation for reopening of assessment - scope of reassessment and Explanation 3 to Section 147 - sanction/approval for issuance of notice to reopen assessment

Limitation for reopening of assessment - Whether the reopening under Section 147 was barred by limitation prescribed under Section 149 - HELD THAT: - The Court examined the dates of filing of the return and the date of issuance of notice and held that the notice dated 22.03.2018 was within the limitation period prescribed by law for reopening the assessment for the assessment year 2011-12. Accordingly, initiation of proceedings was not invalid on the ground of limitation.

The reopening was within the statutory limitation period and therefore not barred by limitation.

Power of Assessing Officer to call for production of documents in reassessment - prohibition on roving or fishing enquiries in reassessment - Whether the Assessing Officer in exercise of jurisdiction under Section 147 can compel the assessee to produce records/documents/particulars in respect of disclosures made in the return - HELD THAT: - The Court held that an Assessing Officer cannot use the reassessment machinery as a means to conduct a roving or fishing inquiry and compel the assessee to produce documents before the Assessing Officer has tangible material on record forming the basis of a "reason to believe" that income has escaped assessment. The power to require production of evidence in the course of original assessment (under Sections 142/143) cannot be supplanted by reopening proceedings where no tangible material exists; the assessee can be required to produce documents only after the officer has formed a belief based on materials in his possession.

The Assessing Officer could not compel production of documents in the circumstances of this case where reassessment was initiated without tangible material and in effect constituted a roving enquiry.

Requirement of tangible material forming a live link with the reasons to believe - reopening of assessment on the basis of reason to believe - Whether there was tangible material available with the Assessing Officer establishing a live link between the reasons recorded and the formation of belief that income had escaped assessment - HELD THAT: - Applying the test affirmed by the Supreme Court (Kelvinator and subsequent authorities), the Court found that the reasons recorded merely stated absence of supporting documents and sought to search for material by initiating reassessment. The reasons did not disclose any tangible material in the Assessing Officer's possession from which a belief of escapement could legitimately be formed. An advisory or general instruction to verify agricultural income did not constitute tangible material or a live link to justify reopening in this case.

There was no tangible material in possession of the Assessing Officer creating a live link with the recorded reasons; reopening on that basis was illegal.

Scope of reassessment and Explanation 3 to Section 147 - Whether the Assessing Officer could travel beyond the recorded reasons and disallow expenses claimed by the assessee relying on Explanation 3 to Section 147 - HELD THAT: - The Court noted that because the reopening itself was held to be dehors the statutory prescriptions (for want of tangible material), it was unnecessary to decide the expanded scope under Explanation 3 in the present case. The Court declined to express an opinion on the broader ambit of Explanation 3 and left that question open for an appropriate case.

Not decided on merits; left open for future adjudication as reopening was quashed.

Final Conclusion: The writ petition is allowed. The notice dated 22.03.2018 initiating reassessment and the final assessment order dated 26.12.2018 with the consequent demand are quashed and set aside because the reopening was not founded on tangible material forming a live link with the reasons to believe and amounted to an impermissible roving enquiry; no costs.

Assumption of jurisdiction under section 153C - incriminating material - disturbing a concluded assessment - evidentiary value of share transfer deed and company records - treatment of alleged gift as unexplained income

Assumption of jurisdiction under section 153C - incriminating material - disturbing a concluded assessment - Whether the Assessing Officer validly assumed jurisdiction under section 153C on the basis of documents seized from a third party and whether the concluded assessment for Assessment Year 2006-07 could be reopened on that basis. - HELD THAT: - The Tribunal held that a jurisdictional challenge under section 153C can be raised at the ITAT stage where no fresh facts require investigation and the material relied upon is on record. The seized document relied on by the revenue was a bank certificate found at a third party's premises. The certificate merely recorded the existence and balance of a disclosed bank account already shown in the assessee's return and computation for the year; it did not indicate any undisclosed or unaccounted income. The Tribunal applied the principle that a concluded assessment may be reopened under section 153C only if incriminating material unearthed during the search contains information pointing to undisclosed income for the relevant year. Because the bank certificate did not disclose any unaccounted income or new information material to the assessment, it could not be treated as incriminating material to disturb the concluded assessment. The Tribunal therefore found the assumption of jurisdiction and consequent additions to be unsupportable on the material seized. [Paras 12, 13, 14, 15, 16]

Assumption of jurisdiction under section 153C was not justified on the basis of the seized bank certificate and the concluded assessment could not be disturbed on that ground; grounds 1 to 3 allowed.

Evidentiary value of share transfer deed and company records - treatment of alleged gift as unexplained income - Whether the addition made treating the alleged gift of shares as undisclosed income can be sustained on merits in the face of documentary and confirmatory evidence of transfer. - HELD THAT: - On merits, the Tribunal examined the documents produced by the assessee: share transfer deed, company certificate confirming transfer and attachment of share transfer stamps, annual return/Form 20B showing the assessee as shareholder, affidavit and confirmation by the donor, and related material. The AO's basis for disbelieving the transfer was the donor's balance sheet which continued to show the shares; the Tribunal held that an apparent accounting error in the donor's books cannot override the overwhelming corroborative evidence of transfer. The Tribunal noted that the company had certified the date and correctness of the transfer and explained the separate attachment of transfer stamps. Rejection of evidence on mere technical grounds (for example, affidavit stamping or reliance on the donor's balance sheet without further inquiry) was held to be improper; if further verification was required, the AO/CIT(A) should have made specific enquiries (for example, from the company's share registry) rather than disbelieve the company-filed annual return. In absence of evidence that the donor continued to hold or subsequently sold the shares, the addition under section 68 (treating the gift as unexplained) was unjustified. The Tribunal therefore directed deletion of the addition. [Paras 17]

Addition treating the gifted shares as undisclosed income deleted; grounds 4 and 5 allowed.

Final Conclusion: The appeal is allowed: (a) the assumption of jurisdiction under section 153C could not be sustained as the seized bank certificate was not incriminating and could not disturb the concluded Assessment Year 2006-07 assessment; and (b) on merits the addition treating the alleged gift of shares as unexplained income is deleted in view of the corroborative share transfer documentation and company records.

Jurisdiction of ITO (Intelligence) to issue notice under section 133(6) - prior approval for issuance of section 133(6) notice by authorities below Director/Commissioner - validity of penalty under section 272A(2)(c) - time-limit for imposition of penalty under section 275(1)(c) measured from initiation of penalty proceedings - reasonable cause for non furnishing of information as pleaded under section 2738

Jurisdiction of ITO (Intelligence) to issue notice under section 133(6) - prior approval for issuance of section 133(6) notice by authorities below Director/Commissioner - Whether the ITO (Intelligence) had jurisdiction and valid authority to issue the notice under section 133(6). - HELD THAT: - The Tribunal examined earlier decisions dealing with the scope of section 133(6) and the effect of the 1995 amendment which provided that information may be called for in relation to an "enquiry or proceedings" and that authorities below the rank of Director or Commissioner may exercise the power in respect of an inquiry only with prior approval. On identical facts the Cochin Bench had held that the ITO (Intelligence) issued the notice after obtaining necessary approval from the Director and that the Supreme Court decision in Kathiroor Service Co-op Bank Ltd. confirmed that notices under section 133(6) may validly seek general information from financial institutions even where no specific pending proceeding exists. Applying those authorities, the Tribunal concluded that the ITO (Intelligence) had jurisdiction to issue the notice under section 133(6) and that the statutory approval requirement, where applicable, had been complied with in the facts of the case. [Paras 4]

ITO (Intelligence) had jurisdiction and valid authority to issue the notice under section 133(6); the notice was validly issued after requisite approval.

Validity of penalty under section 272A(2)(c) - reasonable cause for non furnishing of information as pleaded under section 2738 - Whether penalty under section 272A(2)(c) for failure to furnish information called under section 133(6) was maintainable in the absence of reasonable cause. - HELD THAT: - The Tribunal considered whether the assessee had established a reasonable cause for non compliance as contemplated in the provision referred to in the record (section 2738). The earlier Cochin Bench decision applied to factually identical cases observed that the assessees had not furnished valid reasons for non submission, that multiple notices went unanswered and that there was lack of cooperation when departmental officers sought the information. In the absence of any substantiated or legally tenable excuse made out by the assessee, the Tribunal upheld the imposition of penalty under section 272A(2)(c). [Paras 4]

Penalty under section 272A(2)(c) is maintainable as the assessee failed to demonstrate reasonable cause for non furnishing of information.

Time-limit for imposition of penalty under section 275(1)(c) measured from initiation of penalty proceedings - Whether the penalty order was barred by limitation under section 275(1)(c) and from what date the limitation period is to be computed. - HELD THAT: - Relying on the reasoning in the prior Tribunal decision, the Tribunal noted that section 275(1)(c) prescribes the period for imposition of penalty calculated from the date on which penalty proceedings are initiated (i.e., issuance of notice under section 274). In the cited case the penalty proceedings were initiated by a section 274 notice dated 12.8.2014 and the penalty order was passed within the period permitted by section 275(1)(c). The contention that the earlier notice under section 133(6) should be treated as initiation of penalty proceedings was rejected because section 275(1)(c) looks to initiation of penalty proceedings, which occurs on issuance of the section 274 notice. [Paras 4]

The penalty order is within the time limit prescribed by section 275(1)(c); it is not barred by limitation.

Final Conclusion: Applying the Tribunal's earlier reasoned decision on identical facts, the appeal is dismissed and the penalty imposed under section 272A(2)(c) is upheld.

Reopening of assessment under section 147/148 - service of notice under section 148 as a jurisdictional requirement - limitation and effect of delayed service - burden under section 68 to prove identity, creditworthiness and genuineness of share capital - unexplained cash credit addition under section 68 - application of precedents including NRA Iron & Steel on high premium/private placement

Reopening of assessment under section 147/148 - service of notice under section 148 as a jurisdictional requirement - limitation and effect of delayed service - Validity of initiation of reassessment proceedings under section 147/148 and whether notice/service and sanction requirements were complied with - HELD THAT: - Tribunal considered the reasons recorded, the issue and service of notice and the sanction/approval material and held that the Assessing Officer had validly assumed jurisdiction to reopen the assessment. The Tribunal accepted the position that issuance of notice within limitation vests jurisdiction to proceed and that service under section 148 is a jurisdictional requirement for completion of reassessment; however, on the facts it found service and related formalities to have been satisfied and that the AO had complied with the procedural mandates including furnishing reasons and disposing of objections as contemplated by GKN Driveshafts. The Tribunal also rejected the contention that delayed service rendered the proceedings time barred, observing that the return filed in response to the notice was treated as filed in the relevant financial year and subsequent steps including issuance of notice under section 143(2) and completion under section 153 fell within prescribed timelines. The Tribunal further examined the challenge to the sanction/ITNS forms and accepted the Revenue's explanation that the form placed before the Tribunal represented an office copy and did not vitiate initiation. The Tribunal therefore dismissed the assessee's grounds attacking reopening, service and limitation and upheld the jurisdictional validity of the reassessment.

Reopening under section 147/148 was validly initiated, service and sanction/formalities were held to be compliant and the limitation challenge was rejected.

Burden under section 68 to prove identity, creditworthiness and genuineness of share capital - unexplained cash credit addition under section 68 - application of precedents including NRA Iron & Steel on high premium/private placement - Whether the assessee discharged the onus under section 68 in respect of share capital and share application money or the amounts were liable to be treated as unexplained cash credits - HELD THAT: - The Tribunal reviewed the assessment record, the inquiries conducted by the AO (including notices under section 133(6)) and the documentary material produced for numerous corporate subscribers. It applied the settled principle that the initial onus to prove identity, creditworthiness and genuineness of the transaction lies on the assessee and that mere filing of primary documents is not always sufficient. On the facts the AO found striking similarities in confirmations, partial bank statements, inconsistent/contradictory documents, meagre or nil incomes of subscriber entities, rapid deposits/withdrawals and unexplained variations in premium paid for shares. The Tribunal considered and followed the Supreme Court's reasoning in NRA Iron & Steel and other precedents emphasising heightened scrutiny in private placements/high premium cases. Concluding that the assessee failed to satisfactorily establish the three cumulative ingredients under section 68, the Tribunal upheld the AO's view that the amounts were unexplained credits and confirmed the addition made under section 68.

Assessee failed to discharge the onus under section 68; addition treating the share capital/application money as unexplained cash credit was upheld.

Principles of natural justice and ex parte disposal - obligation of appellate authority to provide opportunity of hearing - Allegation that the CIT(A) disposed of the appeal ex parte in breach of principles of natural justice - HELD THAT: - The Tribunal examined the appellate record and the notices issued by the CIT(A). It found that the CIT(A) had issued notices and fixed hearings but the assessee failed to appear or comply with directions. On that basis the Tribunal held that the CIT(A) adjudicated the appeal on the material before him and that no breach of natural justice occurred warranting interference. The Tribunal therefore rejected the contention that the CIT(A)'s order was ex parte in a manner that vitiated the decision.

No violation of natural justice: the CIT(A) afforded opportunity but the assessee did not comply; the complaint against ex parte disposal was rejected.

Final Conclusion: The Tribunal dismissed the assessee's appeal. It held the reopening under section 147/148 to be valid and within limitation, found no breach of natural justice by the CIT(A), and on merits upheld the addition under section 68, concluding that the assessee failed to prove the identity, creditworthiness and genuineness of the share capital/application money.

Genuineness of share trading losses arising from client code modifications - treatment of long term capital gains as unexplained cash credits and section 68 - assessment by way of unexplained cash credits under section 69C - reopening of assessment - scope of "information" and "reason to believe" for issuance of notice u/s 147/148

Genuineness of share trading losses arising from client code modifications - reopening of assessment - scope of "information" and "reason to believe" for issuance of notice u/s 147/148 - Deletion of addition treating the assessee's loss as bogus which was attributable to client code modifications; validity of reassessment insofar as it led to that addition - HELD THAT: - On the facts the Tribunal found no material to show any violation of exchange rules or any mismatch between the assessee's books and stock exchange confirmations. Co ordinate bench decisions dealing with identical facts were applied mutatis mutandis. The Tribunal observed that client code modifications, if not shown to be against rules or to cause mismatch, cannot by themselves justify treating the loss as bogus; suspicion and conjecture are not substitutes for tangible material. Although the reopening principles (existence of "information" or "reason to believe") were discussed by the lower authorities, the appellant did not press the reopening challenge; the Tribunal nevertheless examined the record and, on the merits, deleted the disallowance in respect of the loss arising from the modified client codes. [Paras 5]

Impugned disallowance arising from client code modifications deleted; former appeal ITA No.774/Kol/2018 partly allowed.

Treatment of long term capital gains as unexplained cash credits and section 68 - assessment by way of unexplained cash credits under section 69C - test of human probabilities and cogent evidence versus suspicion - Whether the assessee's claimed long term capital gains and related sale proceeds should be assessed as unexplained cash credits under section 68 and whether an addition under section 69C was justified; consequential disallowance of brokerage/commission - HELD THAT: - The Tribunal analysed the documentary evidence produced by the assessee (contract notes, demat statements, bank payments, STT compliance and other supporting papers) and compared that material with the record relied upon by the Revenue. Absent any specific material linking the assessee to entry operators or any evidence showing fabrication, and where investigation wing reports or third party statements relied upon by the AO were not placed before the assessee for opportunity to rebut, the Tribunal held that the additions rested on suspicion and generalisations. Applying precedents emphasising that suspicion, however strong, cannot substitute for evidence and that transactions supported by admissible third party documents must be considered, the Tribunal deleted the additions assessed under sections 68 and 69C and directed that any consequential disallowance of commission/brokerage stand reversed as a corollary. [Paras 7, 8]

Impugned additions under section 68 and section 69C deleted; latter appeal ITA No.775/Kol/2018 allowed and related commission disallowance to stand reversed as a corollary.

Final Conclusion: Both appeals succeeded in respect of the substantive tax consequences: the disallowance treating the loss from client code modified transactions as bogus was deleted (former appeal partly allowed) and the additions in respect of alleged bogus LTCG and unexplained credits (including the section 69C consequence and related commission disallowance) were deleted (latter appeal allowed).

Presumption as to contents of seized documents under Sec.292C - Seized documents to be read in toto - Rebuttable presumption in search proceedings - Requirement of more than bare suspicion for assessment

Presumption as to contents of seized documents under Sec.292C - Seized documents to be read in toto - Requirement of more than bare suspicion for assessment - Whether the seized diary (Annexure A2 - Page 13) establishes the source of cash applied to capital expenditure on Hotel Courtyard Marriot and whether the Assessing Officer could accept parts of the seized record and reject other parts to make additions. - HELD THAT: - The Tribunal examined the seized diary and the statutory presumption under Sec.292C (and related sub-section of Sec.132) that, in search proceedings, contents of documents found are to be presumed true unless rebutted. The authorities relied upon require more than bare suspicion before making an assessment and hold that documents found in search should be read as a whole rather than accepted piecemeal. The seized diary set out receipts of cash against 'bogus purchases' and contemporaneous applications of that cash to specified items of capex for the hotel (flooring, bathroom fittings, electrical fittings, furniture and interiors). The Assessing Officer had accepted that the unexplained investments were made but declined to recognise the diary's entries as to the source for part of the expenditures, speculating instead about alternative sources without adducing material to support that view. The Tribunal held that such a selective, half hearted acceptance of the seized document was impermissible: absent material to rebut the statutory presumption, the diary must be accepted in toto and the source entries relied upon. Applying that principle, the Tribunal agreed with the CIT(A)'s allowance of Rs. 2,00,74,000 (flooring and bathroom fittings) and further found that the remainder of the capex (electrical fittings and furniture/interiors aggregating to Rs. 1,88,04,000) was likewise shown by the seized diary to have been funded from the cash received against the bogus purchases. Consequently, having regard to the declaration of bogus purchases by the assessee and the diary entries, the additions made by the A.O. were vacated in full. [Paras 6, 7, 8, 10, 11]

The statutory presumption in respect of the seized diary is not rebutted; the diary must be read in toto and establishes that the entire capital expenditure of Rs. 3,88,78,000 on the hotel was sourced from cash received against bogus purchases, and the additions made by the Assessing Officer are deleted.

Final Conclusion: The Tribunal dismissed the revenue's appeal and allowed the assessee's appeal: the additions of Rs. 3,88,78,000 made by the Assessing Officer were deleted after holding that the seized diary, read in entirety and afforded the statutory presumption, established the source of the expenditures as cash generated from declared bogus purchases.

Transfer pricing comparables selection - Arm's length price benchmarking - Working capital adjustment in transfer pricing - Risk profile adjustment in transfer pricing - Non-speaking order and failure to consider objections - Opportunity of being heard before adjudication

Transfer pricing comparables selection - Arm's length price benchmarking - Non-speaking order and failure to consider objections - Adjudication on inclusion and exclusion of selected comparables was remitted to the Commissioner of Income Tax (Appeals) for fresh consideration. - HELD THAT: - The Tribunal found that the Commissioner of Income Tax (Appeals) had not properly considered the assessee's objections on a number of comparables and, in some instances, had passed non speaking orders. Both parties agreed that the comparables should be reexamined. In view of the Ld. CIT(A)'s failure to record reasons and the need to give the assessee a fair opportunity to ventilate its objections, the Tribunal restored the issue of inclusion/exclusion of the eight disputed comparables to the file of the Ld. CIT(A) with a direction to adjudicate after providing reasonable opportunity to the assessee. [Paras 5, 6]

Issue restored to the file of the Ld. CIT(A) for fresh adjudication on the comparables after affording the assessee a reasonable opportunity.

Working capital adjustment in transfer pricing - Risk profile adjustment in transfer pricing - Claims for working capital and risk adjustments were remitted for reconsideration by the Commissioner of Income Tax (Appeals). - HELD THAT: - The assessee had contended that appropriate adjustments for differences in working capital and risk profile between it and the comparables were not made. Both parties accepted that these issues required re examination. The Tribunal therefore directed that these aspects be restored to the Ld. CIT(A) for fresh adjudication, with the Ld. CIT(A) to provide the assessee a reasonable opportunity to present its submissions. [Paras 5, 6]

Issue of working capital and risk adjustments restored to the file of the Ld. CIT(A) for fresh consideration after affording the assessee a reasonable opportunity.

Opportunity of being heard before adjudication - Non-speaking order and failure to consider objections - The Tribunal directed that the Ld. CIT(A) must provide reasonable opportunity to the assessee to be heard while re adjudicating the remitted issues, observing that prior appellate reasons were inadequate. - HELD THAT: - Having recorded that the Ld. CIT(A) did not properly consider the assessee's submissions and in some instances issued non speaking rulings, the Tribunal emphasized the necessity of affording the assessee a fair hearing on the remitted matters. The parties agreed to restoration for this limited purpose and the Tribunal therefore mandated that the Ld. CIT(A) adjudicate the remitted issues after providing reasonable opportunity to the assessee. [Paras 5, 6]

Direction issued to the Ld. CIT(A) to provide reasonable opportunity to the assessee while re adjudicating the remitted issues.

Final Conclusion: The Tribunal restored the disputed comparables and the issues of working capital and risk adjustments to the file of the Ld. Commissioner of Income Tax (Appeals) for fresh adjudication after affording the assessee a reasonable opportunity to be heard; the assessee's appeal is allowed for statistical purposes.

Summary order. The appeal by the Revenue was treated as not pressed because the tax effect was below the stipulated monetary limit and the appeal was disposed of as not pressed.

Weighment of containers - obligation of port authorities - privity of contract - locus standi - compliance with SOLAS guidelines - public notice and administrative instructions

Weighment of containers - public notice and administrative instructions - The effect of the CBEC instructions and the Commissioner of Customs public notices on the obligation to weigh containers at the petitioner's weighbridges. - HELD THAT: - The Court examined the CBEC instructions dated August 18, 2011 and the relevant public notices and held that while those communications require weighment of containers, they do not prescribe that weighment must be carried out specifically at the weighbridges installed and operated by the petitioner. The Customs authorities' position, as recorded, is that containers must be weighed in accordance with the circulars; Customs has not asserted a requirement that weighing be done exclusively at the petitioner's facilities. Consequently, the circulars cannot be read to create a legal obligation on the respondents to ensure that all DPD and DPE containers passing through Kolkata Dock are weighed only on the petitioner's weighbridges.

The CBEC instructions and public notices do not compel weighing of containers exclusively at the petitioner's weighbridges; no such enforceable right was established in favour of the petitioner.

Privity of contract - locus standi - obligation of port authorities - Whether the petitioner, by virtue of its arrangement with HSCL and occupation of port land, has locus to seek an order compelling the Kolkata Port Trust or Customs to have containers weighed at the petitioner's weighbridges. - HELD THAT: - The Court found on the material that the petitioner had no privity of contract with the Kolkata Port Trust; the lease was granted to HSCL and there is no record that KoPT permitted HSCL to put the petitioner into possession of any part of the lease area. The petitioner's alleged occupation was therefore not shown to be authorised by the Port Trust. In these circumstances, the Court held that there is no legal basis to require the Port Trust or Customs to compel all container weighment to occur at weighbridges installed by a person who occupies port land without requisite permission. The lack of contractual privity and absence of demonstrated authority for the petitioner's possession undermined any locus to obtain the relief sought.

The petitioner lacks privity and requisite locus to compel the respondents to route weighment of all DPD and DPE containers through the petitioner's weighbridges; the writ petition therefore fails on this ground.

Final Conclusion: The writ petition is dismissed. The CBEC instructions and public notices require weighment of containers but do not mandate that such weighment be performed exclusively at the petitioner's weighbridges, and the petitioner, lacking contractual privity and authorised possession of the port land, has no locus to seek the relief prayed for.

Violation of principles of natural justice - transitional protection under Foreign Trade Policy - confiscation versus redemption under customs law - duty to furnish documents relied upon with show cause notice - remedy of setting aside order and release of goods on payment of duty

Violation of principles of natural justice - duty to furnish documents relied upon with show cause notice - Whether the adjudication suffered from breach of natural justice by issuing the show cause notice without supplying relied upon documents, giving inadequate time and refusing a reasonable opportunity of hearing. - HELD THAT: - The Tribunal found that the original authority issued the show cause notice on 28/05/2019, served it late in the day, fixed a hearing for the next morning and did not furnish the documents relied upon. The appellant sought a week's time and copies of relied documents and an opportunity for cross examination; this request was not considered and the order was passed without granting a fair hearing. The Tribunal applied established principles that prior notice of adverse material, reasonable time to prepare and opportunity to test evidence are minimum standards of fair decision making, and concluded the procedure adopted was a gross violation of natural justice rendering the order arbitrary. [Paras 6, 8]

Impugned order set aside on ground of violation of natural justice.

Transitional protection under Foreign Trade Policy - confiscation versus redemption under customs law - Whether the imported goods were protected by transitional provisions of the Foreign Trade Policy and whether absolute confiscation was warranted. - HELD THAT: - The Tribunal examined the dates of advance payment and import and accepted the appellant's evidence that advance payments were made on 29/10/2018 and 13/11/2018 and the goods were imported prior to 18/12/2018, the implementation date of the notification requiring BIS certification. On this factual foundation the Tribunal held the appellant was covered by the transitional provisions in the FTP and authorities had misapplied the exclusion. Separately, the Tribunal held that even if the imports were in breach of the post notification requirement, absolute confiscation was not warranted; the goods, if otherwise liable, ought to have been permitted redemption against payment of fine under the relevant customs provisions rather than confiscated outright. [Paras 6, 7]

Appellant covered by transition provision; confiscation not warranted and goods to be released on payment of appropriate duty (and redemption was the proper remedy).

Remedy of setting aside order and release of goods on payment of duty - What relief should follow from the findings on natural justice and FTP transition? - HELD THAT: - On the combined findings that the adjudication was vitiated by breach of natural justice and that the appellant was entitled to transitional protection, the Tribunal directed that the impugned Order in Original be set aside and the original authority be directed to immediately release the goods on payment of appropriate duty. The Tribunal therefore provided consequential relief rather than remanding the entire matter for fresh adjudication. [Paras 7]

Impugned order set aside; goods to be released on payment of appropriate duty and appeal allowed with consequential relief.

Accountability of adjudicating authority - Whether any action should be taken against the adjudicating authority for the manner of proceedings. - HELD THAT: - The Tribunal recorded that the adjudicating authority detained and delayed release of goods which did not require BIS, ignored the High Court direction, and hurried the show cause to avert contempt proceedings, reflecting mala fide conduct and bias. In the interest of justice and as a mark of censure the Tribunal imposed a personal fine on the adjudicating officer to be paid from his salary to the Chief Minister's Distress Relief Fund and advised caution in future. [Paras 8]

A fine on the adjudicating authority imposed and directions for payment to the Chief Minister's Distress Relief Fund.

Final Conclusion: The appeal is allowed: the Order in Original and its confirmation are set aside for breach of natural justice and on merit the appellant is entitled to transitional protection under the FTP; the goods shall be released on payment of appropriate duty and the adjudicating authority is censured by imposition of a personal fine payable to the Chief Minister's Distress Relief Fund.

Confiscation under Section 111 of the Customs Act - burden of proof under Section 123 of the Customs Act - insufficiency of suspicion as substitute for evidence - verification of supplier records and corroboration of bills

Confiscation under Section 111 of the Customs Act - burden of proof under Section 123 of the Customs Act - verification of supplier records and corroboration of bills - insufficiency of suspicion as substitute for evidence - Whether confiscation of the seized gold and imposition of penalties were sustainable in view of the evidence produced by the respondents and the Department's failure to verify the supplier chain - HELD THAT: - The Tribunal accepted the Commissioner(Appeals) finding that the respondent who possessed the seized gold produced a bill evidencing licit procurement and that the supplier (M/s. Prerak Gems) confirmed the sale. The Department did not verify the supplier's source (M/s. XEHAAN Capital Services) and thus failed to discharge the onus of proving the smuggled or foreign origin of the goods once the respondents produced credible procurement documentation. The Tribunal endorsed the principle that suspicion, including retraction of an earlier statement or erasure of serial numbers, cannot substitute for affirmative evidence required to sustain confiscation under the Customs Act. On this basis the burden placed on the Department under Section 123 remained unmet and the confiscation and penalties could not be upheld. [Paras 5, 6]

The order of the Commissioner(Appeals) setting aside confiscation and penalty is sustained and the Revenue's appeals are dismissed.

Final Conclusion: The Tribunal upheld the Commissioner(Appeals) conclusion that the respondents had adduced credible evidence of licit procurement and that the Department's failure to verify the supplier's records left it unable to prove smuggling; consequently confiscation and penalties imposed by the adjudicating authority were set aside and the Revenue's appeals are dismissed.

Refund of Special Additional Duty - Condition 2(b) of Notification No. 102/2007-Cus - Requirement of endorsement on sale invoices - Validity of computer-generated invoices as copies of original - Consolidated invoice value and impossibility of availing credit - Procedural non-compliance not to defeat substantive benefit

Refund of Special Additional Duty - Condition 2(b) of Notification No. 102/2007-Cus - Requirement of endorsement on sale invoices - Validity of computer-generated invoices as copies of original - Consolidated invoice value and impossibility of availing credit - Whether the appellant's refund claim for special additional duty could be allowed notwithstanding the department's finding that the sale invoices were computer printouts and lacked the endorsement required by condition 2(b) of Notification No. 102/2007-Cus. - HELD THAT: - The Tribunal found that the appellant produced computer-generated sale invoices which, as presented, contained the requisite endorsement under condition 2(b) of the Notification and, in any event, reflected a consolidated sale value without separate disclosure of duty paid. The consolidated nature of the invoice meant no recipient could realistically claim credit of the additional duty; this factual position was further supported by letters from buyers confirming they had not availed any credit. Reliance upon decisions cited by the appellant was accepted as holding that where the invoice shows a consolidated value and duty is not shown separately, the purpose of the endorsement (to prevent credit being taken) is effectively achieved and mere procedural defects should not defeat the substantive entitlement to refund. Applying those precedents and on the material before it, the Tribunal concluded the conditions of the Notification were satisfied and the departmental rejection on the ground of computer printouts lacking endorsement was not sustainable. [Paras 6]

The impugned order rejecting the refund claim was set aside and the appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appellant's appeal, holding that the computer-generated consolidated invoices together with buyer declarations satisfied the condition in Notification No. 102/2007-Cus and that procedural infirmity could not defeat the substantive refund of the special additional duty; the rejection by the Commissioner (Appeals) was set aside with consequential relief.

Refund of Special Additional Duty (SAD) under Notification No. 102/2007-Cus. - payment of appropriate sales tax/VAT may be nil and still satisfy notification condition - binding effect of the Tribunal's earlier decision in the appellant's own case - rescinded notification not relevant to present claim

Refund of Special Additional Duty (SAD) under Notification No. 102/2007-Cus. - payment of appropriate sales tax/VAT may be nil and still satisfy notification condition - C.B.E.&C. Circular No. 6/2008 clarification on refund applicability - binding effect of the Tribunal's earlier decision in the appellant's own case - Entitlement to refund of the 4% Special Additional Duty paid on import under the conditions of Notification No. 102/2007 where the rate of sales tax/VAT applicable on subsequent sale is NIL. - HELD THAT: - The Tribunal found the issue no longer res integra in view of its earlier Final Order Nos. 20564-20581/2017 in the appellant's own case and other Tribunal precedents which allowed refund of SAD under Notification No. 102/2007. The Tribunal relied on the clarification in C.B.E.&C. Circular No. 6/2008 which states that the notification requires payment of "appropriate Sales Tax or VAT" but does not condition the refund on the rate of such tax being equal to or higher than the SAD; accordingly a lower rate or a NIL rate does not disentitle the importer. The authorities below erred in relying on the Supreme Court decision concerning Notification No. 34/1998-Cus., which was subsequently rescinded by Notification No. 58/1998-Cus.; reliance on a rescinded notification is not tenable. Applying the ratio of the earlier Tribunal decision, the condition in Notification No. 102/2007 is satisfied where the appropriate sales tax/VAT is NIL and the appellant is eligible for refund of the SAD paid.

Impugned order set aside; appeal allowed and appellant held entitled to refund of the SAD paid, following the Tribunal's earlier decision and the Circular clarification.

Reliance on rescinded Notification No. 34/1998-Cus. not tenable - inapplicability of Supreme Court decision on rescinded notification - Validity of reliance by the authorities on the Supreme Court decision relating to Notification No. 34/1998-Cus. in the facts of this case. - HELD THAT: - The Tribunal observed that Notification No. 34/1998-Cus. had been rescinded by Notification No. 58/1998-Cus.; therefore the Supreme Court decision interpreting the former notification could not be invoked to deny refund under Notification No. 102/2007 as applicable to the present imports. The authorities below wrongly placed reliance on that decision when the rescinded notification and its conditions were not operative for the period and notification under consideration.

Reliance on the Supreme Court decision concerning the rescinded notification is rejected; such reliance does not support denial of the refund claim under Notification No. 102/2007.

Final Conclusion: The appeal is allowed; the impugned orders are set aside and the appellant is held entitled to refund of the 4% Special Additional Duty paid on import under Notification No. 102/2007, applying the Tribunal's earlier decision and the C.B.E.&C. clarification that a NIL rate of sales tax/VAT satisfies the notification condition; reliance on the rescinded Notification No. 34/1998-Cus. is unsustainable.

Fast Track Exit (FTE) Guidelines - defunct company - nil asset and liability - striking off from Register of Companies - procedural compliance and notice to stakeholders - creditor within the meaning of Section 252(3) - subsequent undertaking by director - subsequent event - director's liability under Section 179 of the Income Tax Act, 1961

Fast Track Exit (FTE) Guidelines - procedural compliance and notice to stakeholders - striking off from Register of Companies - Validity of ROC's decision to strike off the company's name under the FTE scheme and compliance with prescribed procedure. - HELD THAT: - The Tribunal found on the materials filed by ROC, including contemporaneous annexures, that the procedure mandated by the FTE Guidelines - including issuance of 30 days' notice by email, publication on the MCA Portal and opportunity to stakeholders (including the Income Tax Department) to raise objections - was followed in letter and spirit. While the Guidelines treat ROC's decision as final, the appellate forum may examine whether fundamental principles were observed; on the record ROC complied with the procedural requirements and the striking off was properly notified in the Gazette. [Paras 5, 6]

ROC's decision to strike off the company under FTE is valid and procedurally compliant.

Defunct company - nil asset and liability - creditor within the meaning of Section 252(3) - Whether the Revenue was a creditor at the time of striking off and whether the company was outside the definition of a 'defunct company' by virtue of assets/liabilities or assessable income. - HELD THAT: - The Court observed that a prerequisite for FTE is that the company be defunct, meaning nil assets and nil liabilities and not carrying on business for the prescribed period. The Revenue bore the onus to demonstrate that the company possessed assets or liabilities or derived assessable income on the material date. The Revenue did not disclose particulars of any assets or liabilities or otherwise prove that the company was not defunct when ROC struck off its name. Moreover, the Revenue had not raised any demand or passed an assessment prior to the striking off; absence of a quantified demand meant it did not qualify as a 'creditor' under the cited provision at the material time. [Paras 5, 6]

Revenue was not a creditor at the time of striking off and failed to establish that the company was not a defunct company; challenge to striking off on these grounds fails.

Subsequent undertaking by director - subsequent event - director's liability under Section 179 of the Income Tax Act, 1961 - Whether the subsequent assessment and an undertaking by an erstwhile director could justify restoration of the company's name. - HELD THAT: - The Tribunal treated the assessment order and the director's undertaking, both occurring after the striking off, as subsequent events not amenable to appellate jurisdiction in the present appeal to justify restoration. It noted that any alleged breach of the undertaking by the director is a matter the Revenue may pursue before the Tribunal or appropriate forum. Separately, the Court observed that striking off a private company does not absolve directors of statutory liability under the Income Tax Act; mechanisms exist to pursue directors for tax liabilities, and the existence of that mechanism undermines the Revenue's case for restoration absent proof of assets or operation of the company. [Paras 7, 8]

Subsequent assessment and director's undertaking do not warrant restoration of the company's name; directors' personal liability remains enforceable under tax law.

Final Conclusion: The appeal is dismissed; the Tribunal's order upholding ROC's striking off is sustained as legally sound and procedurally compliant, leaving the Revenue free to pursue available remedies in light of the observations made.

Restoration of company name - striking off under Section 248 of the Companies Act, 2013 - power of Tribunal to restore name under Section 252(1) of the Companies Act, 2013 - imposition of costs for non-compliance with statutory filing obligations - conditional restoration subject to compliance and consequential actions

Restoration of company name - striking off under Section 248 of the Companies Act, 2013 - Whether the name of the Company should be restored notwithstanding its striking off by the Registrar of Companies. - HELD THAT: - The Tribunal found on the material placed by the appellant that the company continued to carry on regular operations evidenced by audited financial statements, bank statements, licences and income tax returns for the years in question. Although the Registrar formed an opinion of non operation due to non filing and issued notices leading to striking off, the factual material established that the company was in operation. The Tribunal therefore concluded that restoration of the company's name was warranted and allowed the appeal by invoking its statutory power to restore the company as if its name had not been struck off. [Paras 8, 9]

Appeal allowed; Registrar directed to restore the company's name and consequent status/records to that of an active company.

Imposition of costs for non-compliance with statutory filing obligations - conditional restoration subject to compliance and consequential actions - Whether restoration should be subject to conditions including payment of costs and filing of pending statutory documents, and the nature of those conditions. - HELD THAT: - The Tribunal noted the absence of any plausible explanation for the non filing which precipitated the Registrar's action and the failure to respond to statutory notices. To instill a culture of timely compliance and to deter recurrence, the Tribunal imposed a cost of Rs. 25,000 for each year of default to be paid online and directed the appellant to file all pending annual accounts and annual returns for the specified years within 45 days after restoration, along with prescribed fees/additional fee/fine as decided by the ROC. The Tribunal also directed personal supervision of compliance by the company's representative, permitted delivery of certified copy to the ROC, and directed publication of the order in the Official Gazette after compliance. It clarified that the order is confined to the violations leading to striking off and does not preclude the ROC from taking action for other violations. [Paras 8, 9]

Restoration made conditional on payment of costs for each year of default, filing of pending statutory documents within 45 days, specified compliances and procedural steps including publication; ROC retains power to act on other violations.

Final Conclusion: The appeal was allowed: the Tribunal directed restoration of the company's name to active status, imposed costs for each year of default and ordered the filing of pending statutory documents and related compliances within a stipulated period; restoration is subject to those conditions and does not bar the Registrar from proceeding against any other violations.

Scheme of Amalgamation - Sanction under Section 230 & 232 of the Companies Act, 2013 - Transfer and vesting of assets and liabilities - Appointed date - Service on regulatory authorities and affidavit of compliance - No objection from Reserve Bank of India - Report of the Regional Director, Ministry of Corporate Affairs - Report of the Official Liquidator - Dissolution of the transferor company

Scheme of Amalgamation - Sanction under Section 230 & 232 of the Companies Act, 2013 - Service on regulatory authorities and affidavit of compliance - No objection from Reserve Bank of India - Report of the Regional Director, Ministry of Corporate Affairs - Report of the Official Liquidator - Transfer and vesting of assets and liabilities - Dissolution of the transferor company - Sanction of the Scheme of Amalgamation between Vivek Trade & Investment Pvt. Ltd. (Transferor) and Unistar Resources and Trades Pvt. Ltd. (Transferee) and consequential orders - HELD THAT: - The Tribunal considered the petition for sanction of the Scheme of Amalgamation with the appointed date stated in the Scheme and the affidavits of consent by shareholders and unsecured creditors which had led to dispensation of convening meetings. The petitioners filed affidavits of compliance and effected service upon the regulatory authorities as directed. The Reserve Bank of India conveyed its no-objection. The Regional Director (Ministry of Corporate Affairs) filed a reply noting no complaints and that the transferor is an RBI-registered NBFC and that RBI had given NOC; the Income Tax Department had not furnished comments to the RD. The Official Liquidator filed a report recording no complaints and expressing that the affairs of the transferor did not appear to have been conducted prejudicially to members or public interest. Having heard counsel and the authorised representative of the Regional Director and on the basis of the consents, statutory compliances, regulatory responses and the reports on record, the Tribunal found no impediment to sanctioning the Scheme. Consequential provisions for transfer and vesting of all properties, rights, liabilities and proceedings to the Transferee, issue and allotment of shares as per the Scheme, dissolution of the Transferor from the appointed date, filing of the schedule of assets, and compliance for registration with the Registrar of Companies were directed. [Paras 14, 15, 16, 17, 18]

The Scheme of Amalgamation is sanctioned; assets, rights and liabilities of the Transferor are transferred and vested in the Transferee with effect from the appointed date; the Transferor shall stand dissolved and the other consequential directions as set out in the order shall be complied with.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the two petitioner companies (with effect from the appointed date), directed transfer and vesting of assets and liabilities, issue of shares by the Transferee, dissolution of the Transferor, and ancillary filings and compliances; the connected company petition is disposed of with no order as to costs.

Restoration of company name to the Register of Companies - Restoration under Section 252(3) of the Companies Act, 2013 - Strike off under Section 248 of the Companies Act, 2013 - Failure to file financial statements and annual returns as ground for striking off - Imposition of costs and conditional restoration - Registrar of Companies' continuing power to take action for other violations

Restoration of company name to the Register of Companies - Strike off under Section 248 of the Companies Act, 2013 - Restoration of M/s. Jindal Nirman Private Limited to the Register of Companies - HELD THAT: - The Tribunal examined the facts that the Company had been struck off from the Register by the ROC on the basis of a reasonable belief that it was not carrying on business and had failed to file statutory returns. The Tribunal accepted the appellant's material showing investment in real estate, continuing assets, bank statements and income-tax records and concluded that striking off could cause irreparable loss and legal difficulty in dealing with the properties. While noting non-compliance by the company with filing obligations, the Tribunal found sufficient basis to order restoration and directed the ROC to restore the company's status as if its name had not been struck off, with consequential activation of status and DINs. [Paras 6, 12, 13, 15, 17]

Appeal allowed and ROC directed to restore the company's name on the Register of Companies.

Failure to file financial statements and annual returns as ground for striking off - Imposition of costs and conditional restoration - Imposition of conditions and costs as prerequisite to restoration - HELD THAT: - The Tribunal recorded that the Company had not filed financial statements and annual returns for the listed financial years and had not offered a justified reason for non-compliance. On that basis the Tribunal held that a reasonable cost should be imposed for each year of default and that restoration should be conditional. Accordingly the Tribunal imposed a year-wise cost (quantified in the order) and directed the company to file all pending statutory documents for Financial Years 2011-12 to 2017-18 along with prescribed fees, additional fee or fines as decided by the ROC within 30 days of restoration; it also required payment of the aggregate cost by online payment within 15 days and personal oversight by the company's representative for compliance. [Paras 5, 11, 16, 17]

Restoration granted subject to filing of all pending documents, payment of prescribed fees/additional fees/fines, and payment of the costs as directed.

Registrar of Companies' continuing power to take action for other violations - Authority of ROC to initiate further proceedings for other violations not covered by restoration - HELD THAT: - The Tribunal made clear that its order is confined to the violations which led to the striking off and that the ROC remains free to take appropriate action in accordance with law for any other violations or offences committed by the company prior to or during striking off. The ROC's contention that, upon restoration, the company must comply with statutory requirements and that failure thereafter could permit re-striking was noted and endorsed. [Paras 9, 17]

Restoration does not preclude the ROC from taking further action for any other violations in accordance with law.

Final Conclusion: The appeal is allowed: the Tribunal directs restoration of M/s. Jindal Nirman Private Limited to the Register of Companies subject to filing of pending financial statements and annual returns for Financial Years 2011-12 to 2017-18 with prescribed fees/additional fees/fines, payment of costs as ordered, and compliance with the other conditions; the ROC may still take appropriate action for any other violations.

Resolution Plan approval under Section 31 - Duty of Interim/Resolution Professional to receive and collate claims under Section 18(1)(b) - Claims arising after the Insolvency Commencement Date are not collatable as pre insolvency claims - Estoppel by acceptance of classification, voting and receipt under the approved Resolution Plan - Finality and vested rights following implementation of an approved Resolution Plan - Waterfall mechanism under Section 53 not determinative at the stage of plan approval - Delay, laches and belated challenge to claim verification are barred

Duty of Interim/Resolution Professional to receive and collate claims under Section 18(1)(b) - Claims arising after the Insolvency Commencement Date are not collatable as pre insolvency claims - Resolution Plan approval under Section 31 - Whether Bharat Petroresources Ltd. could assail the approval of the Resolution Plan on ground that its claim for amounts accruing after the Insolvency Commencement Date was not collated. - HELD THAT: - The Tribunal held that the Interim/Resolution Professional's duty under Section 18(1)(b) is to receive and collate claims in respect of debts payable before the initiation of the corporate insolvency process. Bharat Petroresources Ltd.'s claim partly related to future costs accruing after the Insolvency Commencement Date and therefore was not a claim that could be collated under Section 18(1)(b). The Resolution Professional correctly did not collate that future component, and mere non collation of a post commencement claim does not furnish a ground to assail the approval of the Resolution Plan under Section 31. [Paras 30, 31, 32, 33, 34]

The challenge by Bharat Petroresources Ltd. to the approval of the Resolution Plan on account of non collation of its post commencement claim is rejected.

Duty of Interim/Resolution Professional to receive and collate claims under Section 18(1)(b) - Estoppel by acceptance of classification - Resolution Plan approval under Section 31 - Whether GAIL (India) Ltd. can challenge its classification as an 'other creditor' where it filed claims in Form F instead of Form B and was treated differently from a similarly situated party. - HELD THAT: - The Tribunal found GAIL had filed claims in Form F (for creditors other than operational or financial creditors) despite being similarly situated to another party who filed in Form B and was classified as an operational creditor. Under Section 18(1)(b) the Interim Resolution Professional must receive and collate claims, but a claimant's mistaken choice of form is its own error. The Information Memorandum reflected the categorizations and the Successful Resolution Applicant legitimately relied on it. Given the near parity in treatment between financial and operational creditors under the plan, no interference was warranted with the classification adopted. [Paras 35, 36, 37, 38, 39]

GAIL's challenge to its classification is dismissed; it cannot fault the Resolution Professional for GAIL's filing in the wrong form.

Estoppel by acceptance of classification, voting and receipt under the approved Resolution Plan - Finality and vested rights following implementation of an approved Resolution Plan - Resolution Plan approval under Section 31 - Whether IFCI Limited can object to its treatment as an unsecured financial creditor under the Resolution Plan after having accepted classification, voted for the plan and received payments thereunder. - HELD THAT: - The Tribunal recorded that IFCI's claim had been included as unsecured in the Information Memorandum and that IFCI had not objected to such classification at the relevant times; it had voted in favour of the plan and accepted payments under it. Having accepted the benefits of the implemented plan without reservation, IFCI is estopped from contesting the treatment of its claim. The appellate challenge made after having taken the plan's payments and benefits cannot be entertained. [Paras 49, 50, 51, 52]

IFCI's appeal is barred by estoppel and is dismissed.

Delay, laches and belated challenge to claim verification are barred - Duty of Interim/Resolution Professional to receive and collate claims under Section 18(1)(b) - Resolution Plan approval under Section 31 - Waterfall mechanism under Section 53 not determinative at the stage of plan approval - Whether Bharat Heavy Electricals Ltd. is entitled to relief on account of alleged wrongful rejection/reduction of its claim by the Resolution Professional where it did not challenge the collated claim within the prescribed procedure and raised intervention only at the stage of plan approval. - HELD THAT: - The Tribunal noted BHEL's claims were collated to a certain extent by the Resolution Professional and that BHEL did not prefer the statutory remedy under Section 60(5) against the Resolution Professional's decision. A belated intervention at the plan approval stage, long after claims had been collated and after implementation of the plan, was impermissible. The Tribunal also observed that the principle of the waterfall in Section 53 is not the operative test at the plan approval stage in the manner urged. Given the delay, absence of timely challenge to the claim verification and the completed implementation of the plan, no relief was granted to BHEL. [Paras 53, 63, 64, 65]

BHEL's challenge is dismissed for being belated and for failure to avail the statutory remedy against the claim verification.

Final Conclusion: All appeals against the Adjudicating Authority's approval of the Resolution Plan are dismissed: the challenges by Bharat Petroresources Ltd., GAIL (India) Ltd., IFCI Limited and Bharat Heavy Electricals Ltd. fail on the grounds that post commencement claims are not collatable as pre insolvency claims, claimants' own procedural errors or acceptance of classification and benefits estop them from relief, and belated challenges to claim verification cannot be entertained after implementation of the Resolution Plan.

Exclusion of period for computing insolvency resolution period under Section 12 - maximum 270-day timeline for completion of CIRP and non-extendability beyond 270 days - liquidation on expiry of CIRP where no viable resolution plan is in place (Section 33) - referral to Insolvency and Bankruptcy Board of India or Central Government for prosecution under Section 74(3) - procedure for referring alleged offences under the I&B Code and requirement of opportunity of hearing - use of Section 213 of the Companies Act, 2013 as a route to seek investigation before referral for prosecution - Adjudicating Authority's duty to follow principles of natural justice and Section 424 of the Companies Act when referring matters

Exclusion of period for computing insolvency resolution period under Section 12 - maximum 270-day timeline for completion of CIRP and non-extendability beyond 270 days - Whether any period ought to be excluded in computing the 270-day CIRP timeline so as to permit continuation or restarting of the resolution process. - HELD THAT: - The Tribunal examined the factual matrix and submissions and held that, in the absence of any extraordinary situation justifying exclusion, there was no ground to exclude any period for computing the 270-day insolvency resolution period. The fact that a plan approved under Section 31 was not implemented does not constitute a ground to exclude time. Although, in principle, if an approved plan emerges well within 270 days and a plan fails to materialise, the Adjudicating Authority may, in appropriate circumstances, permit the Committee of Creditors to consider other pending plans or call for fresh plans, such course cannot be adopted where more than 270 days have elapsed and no case is made out to exclude any period. The Tribunal therefore declined to exclude any period and applied the statutory timelines strictly. (Paras 32-33) [Paras 32, 33]

No period is to be excluded; more than 270 days having elapsed, no extension or restart of the CIRP is permissible on the facts.

Liquidation on expiry of CIRP where no viable resolution plan is in place (Section 33) - Adjudicating Authority's duty under Section 33 to pass liquidation order - Whether the Adjudicating Authority was obliged to pass an order of liquidation in view of the elapsed CIRP timeline and non-implementation of the approved plan. - HELD THAT: - The Tribunal analysed Section 33 and related subsections and concluded that where the Adjudicating Authority does not receive a viable resolution plan within the insolvency resolution period or the plan approved is not implemented and no application under Section 33(3) by an aggrieved person is pending to defer liquidation, the Adjudicating Authority has no option but to pass an order of liquidation. The Tribunal observed that, since more than 270 days had passed and no valid exclusion of period was made out, the Adjudicating Authority is required to pass liquidation orders and the liquidator must follow the statutory procedures thereafter. (Paras 34-41, 39) [Paras 37, 38, 39, 40, 41]

Adjudicating Authority must pass appropriate liquidation order in accordance with Section 33; liquidation to follow statutory procedure.

Referral to Insolvency and Bankruptcy Board of India or Central Government for prosecution under Section 74(3) - procedure for referring alleged offences under the I&B Code and requirement of opportunity of hearing - Adjudicating Authority's duty to follow principles of natural justice and Section 424 of the Companies Act when referring matters - Whether the Adjudicating Authority may, without providing opportunity to the suspected parties, refer the matter for prosecution under Section 74(3) of the I&B Code to the IBBI or Central Government, and what procedure must be followed. - HELD THAT: - The Tribunal held that the I&B Code, read with Section 236, makes clear that no Special Court will take cognizance of offences under the Code save on a complaint by the Board or Central Government (or an authorised person). Because the Board or Central Government are ordinarily not parties to CIRP proceedings, the Adjudicating Authority cannot directly refer persons for prosecution without affording them opportunity of hearing. Applying Section 424 of the Companies Act, the Tribunal held that before referring any matter to IBBI or the Central Government for institution of proceedings under Chapter VII (including Section 74(3)), the Adjudicating Authority must afford the parties a reasonable opportunity of being heard and, if satisfied after such process, may request the Central Government (or the Board) to investigate or take steps as permissible (including invoking Section 213 procedures where appropriate). The appellate court set aside the impugned liberty granted to the Resolution Professional and Committee of Creditors to move IBBI/Central Government without this procedural safeguard, and clarified the proper route and safeguards for referral. (Paras 42-50, 46-50, 48-50, 52) [Paras 47, 48, 49, 50, 52]

Adjudicating Authority cannot refer suspected contraventions to IBBI/Central Government for prosecution without giving reasonable opportunity of hearing; referral should follow the procedure indicated (including resort to Section 213 where appropriate) and comply with principles of natural justice.

Use of Section 213 of the Companies Act, 2013 as a route to seek investigation before referral for prosecution - interaction between Section 213 and Chapter VII prosecution under the I&B Code - Whether and how Section 213 of the Companies Act can be utilised to seek investigation into the affairs of the corporate debtor before any referral for prosecution under Section 74(3) of the I&B Code. - HELD THAT: - The Tribunal observed that although Section 213 has not been formally adopted into the I&B Code, Section 213 provides a mechanism by which the Tribunal (on application by any person or otherwise) may, upon satisfaction and after giving reasonable opportunity, order an investigation by inspectors appointed by the Central Government where circumstances suggest fraud or misconduct. The Tribunal opined that the Adjudicating Authority may require parties to move under Section 213 read with Section 74(3) so that, after investigation and hearing, the Adjudicating Authority can decide whether to request referral to the Board or Central Government for prosecution under the I&B Code (and, where appropriate, for offences punishable under the Companies Act). Consequently, the Tribunal granted liberty to the Resolution Professional, Committee of Creditors or any creditor to move under Section 213 read with Section 74(3) before the Adjudicating Authority, which must afford notice and follow the Section 213 procedure before deciding referral. (Paras 49-51, 52) [Paras 49, 50, 51, 52]

Parties may move the Adjudicating Authority under Section 213 read with Section 74(3); the Adjudicating Authority must follow Section 213 procedure (with notice and investigation) before deciding whether to refer matters for prosecution.

Final Conclusion: The appeals are disposed. On the facts the Tribunal refused to exclude any period for computing the 270-day CIRP limit and directed that the Adjudicating Authority shall pass appropriate liquidation orders under Section 33. The Tribunal set aside the impugned liberty to directly approach IBBI/Central Government for prosecution and held that any reference for action under Section 74(3) must be preceded by due process and reasonable opportunity to the parties-including, where appropriate, an application under Section 213 of the Companies Act so that the Adjudicating Authority may, after hearing and investigation, decide on referral to the Board or Central Government.

Moratorium under Section 14 of the Code - invocation of corporate guarantee - appropriation/encashment of fixed deposits - verification of claims as on the insolvency commencement date - bankers' general lien and appropriation rights - role and duties of the Resolution Professional under the CIRP regulations - liquidator and Adjudicating Authority to act in accordance with law

Invocation of corporate guarantee - appropriation/encashment of fixed deposits - moratorium under Section 14 of the Code - verification of claims as on the insolvency commencement date - Validity of the bank's appropriation/encashment of the Corporate Debtor's fixed deposits after commencement of CIRP and whether endorsements constituted invocation of the corporate guarantee. - HELD THAT: - The Adjudicating Authority found that the endorsements and notices relied upon by the bank did not amount to an effective invocation of the corporate guarantee prior to insolvency commencement. The Tribunal agreed that the Corporate Insolvency Resolution Process commenced on 14.11.2017 and any appropriation or withdrawal from the Fixed Deposit Receipts after that date - including the appropriation on 30.11.2017 and subsequent intimations - was barred by the moratorium. Allowing such appropriation would frustrate the obligation of the interim Resolution Professional/Resolution Professional to verify claims as on the insolvency commencement date and would defeat the object of the moratorium and the relevant CIRP regulations governing verification and preservation of assets. The bank's actions were therefore held to be not permissible.

The appropriation/encashment of the Corporate Debtor's FDRs after commencement of CIRP was not permissible and the endorsements did not constitute effective invocation of the corporate guarantee.

Status as Financial Creditor upon invocation of guarantee - bankers' general lien and appropriation rights - Claim of the bank to be treated as a Financial Creditor by virtue of having invoked the corporate guarantee. - HELD THAT: - The Adjudicating Authority rejected the bank's plea to be treated as a Financial Creditor on the facts pleaded, observing that the purported steps taken by the bank did not amount to an effective invocation taking it outside the moratorium prohibition. The Tribunal recorded agreement with that conclusion and observed that the bank had unnecessarily contested the proceedings of the Resolution Professional who was discharging duties under the Code. Interim participation in the Committee of Creditors was permitted earlier only subject to outcome of these appeals, but the Adjudicating Authority's finding rejecting the bank's claim was not disturbed.

The bank's claim to be a Financial Creditor by virtue of invocation of the guarantee was rejected.

Liquidator and Adjudicating Authority to act in accordance with law - verification of claims as on the insolvency commencement date - Effect of subsequent liquidation order on the appeals and directions as to further action. - HELD THAT: - During the pendency of the appeals the Corporate Debtor was ordered into liquidation and the bank's claim before the Liquidator was being processed. In view of these developments the Tribunal declined to interfere with the impugned order and emphasised that the Liquidator and the Adjudicating Authority are bound to act in accordance with law in adjudicating claims and taking further steps under the Code and applicable regulations.

Appeals disposed of without interference; Liquidator and Adjudicating Authority to proceed and act in accordance with law.

Final Conclusion: The Appellate Tribunal upheld the Adjudicating Authority's view that the bank's appropriation/encashment of the Corporate Debtor's FDRs after commencement of CIRP was impermissible and rejected the bank's claim to be a Financial Creditor on the asserted invocation; in view of subsequent liquidation the Tribunal declined to interfere and directed the Liquidator and Adjudicating Authority to act in accordance with law.

Liquidated damages - operational debt under Section 5(21) of the Code - crystallisation of debt upon adjudication - maintainability of petition under Section 9 of the Code - scope of the Adjudicating Authority under the Insolvency Code

Liquidated damages - operational debt under Section 5(21) of the Code - crystallisation of debt upon adjudication - maintainability of petition under Section 9 of the Code - Whether the claim for liquidated damages claimed by the petitioner constitutes an operational debt within the meaning of Section 5(21) of the Insolvency and Bankruptcy Code and whether the petition under Section 9 is maintainable. - HELD THAT: - The Tribunal held that the claim in dispute pertains to liquidated damages arising from breach of the Power Purchase Agreement and is not an operational debt as envisaged under Section 5(21) of the Code. Following the principle that a claim for liquidated damages remains a claim for damages until adjudicated, the Tribunal relied on the ratio in Union of India v. Raman Iron Foundry that a right to claim damages does not amount to a debt payable eo instanti and crystallisation requires adjudication. The Tribunal further cited judicial authority to the effect that a stipulation for a named sum by way of liquidated damages becomes a debt only upon adjudication and assessment by a court or competent forum (see E-City Media Pvt. Ltd. v. Sadharta Retail Ltd. and related decisions ). Applying these principles to the admitted facts - notably that the petitioner had neither supplied goods nor rendered services and that the alleged liability arises from non-performance of contractual obligations - the Tribunal concluded the claim is a non-crystallised claim for damages and cannot be treated as an operational debt within the Code. The Tribunal observed that the Insolvency Code and the jurisdiction of the Adjudicating Authority under Section 9 are confined to operational debts as defined, and do not extend to adjudication of the reasonableness or crystallisation of liquidated damages. The Tribunal therefore found the petition outside the scope of Section 9 and not maintainable, while reserving the petitioner's right to pursue the claim under the appropriate law or forum. [Paras 31, 32, 33, 34, 35]

Petition dismissed as not maintainable under the Insolvency and Bankruptcy Code; petitioner granted liberty to pursue the claim before the appropriate forum.

Final Conclusion: The Tribunal dismissed the Section 9 petition on the ground that the claimed liquidated damages are not an operational debt under Section 5(21) of the Code as they have not been crystallised by adjudication; the petitioner is at liberty to seek recovery by resort to the appropriate forum or law.

Withdrawal of application under Section 9 of the I&B Code - settlement prior to constitution of Committee of Creditors - setting aside admission order under Section 9 of the I&B Code - exercise of inherent powers under Rule 11 of the NCLAT Rules - lifting of moratorium and closure of CIRP proceedings - entitlement of Interim Resolution Professional to fees and costs - contempt remedy for non payment of IRP dues

Withdrawal of application under Section 9 of the I&B Code - settlement prior to constitution of Committee of Creditors - setting aside admission order under Section 9 of the I&B Code - exercise of inherent powers under Rule 11 of the NCLAT Rules - lifting of moratorium and closure of CIRP proceedings - The effect of a settlement reached between the operational creditor and the corporate debtor prior to constitution of the Committee of Creditors and the consequent permission to withdraw the Section 9 application and set aside the admission order. - HELD THAT: - The Tribunal, applying the principle reflected in the cited decision of the Supreme Court and exercising its inherent powers under Rule 11 of the NCLAT Rules, accepted the parties' settlement made before constitution of the Committee of Creditors and permitted the operational creditor to withdraw the Section 9 petition. In consequence the impugned admission order dated 23rd April, 2019 was set aside, all orders passed pursuant to that admission (including appointment of Interim Resolution Professional and declaration of moratorium) were vacated, and the Adjudicating Authority was directed to close the insolvency proceedings. The corporate debtor was released from the rigour of the insolvency process and restored to the control of its Board of Directors with immediate effect.

Allowed withdrawal of the Section 9 application; admission order set aside; moratorium lifted and CIRP proceedings closed; corporate debtor released to its Board.

Entitlement of Interim Resolution Professional to fees and costs - contempt remedy for non payment of IRP dues - The amount payable to the Interim Resolution Professional and the mechanism for recovery if the balance remains unpaid. - HELD THAT: - The Tribunal determined that the Interim Resolution Professional was entitled to a professional fee and reimbursement of expenses incurred. The Tribunal quantified the entitlement as a consolidated sum and recorded amounts already paid; it directed the corporate debtor to pay the unpaid balance within a stipulated period and expressly left open the remedy for the IRP to initiate contempt proceedings before the Appellate Tribunal in the event of non compliance with the payment direction.

IRP entitled to the directed fee and costs; corporate debtor to pay the outstanding balance within 15 days; contempt proceedings permitted for non payment.

Final Conclusion: The appeal is allowed: the Section 9 petition was permitted to be withdrawn on settlement reached prior to constitution of the Committee of Creditors, the admission and consequential orders were set aside and CIRP closed; the Interim Resolution Professional's fee and costs were quantified and the corporate debtor directed to pay the outstanding balance within 15 days, failing which contempt proceedings may be initiated.

Power of the Tribunal to dismiss an appeal for want of prosecution - duty of an appellate body to decide appeals on merits - remedy of restoration of appeal and condonation of delay - requirement of opportunity of hearing before passing appellate orders

Power of the Tribunal to dismiss an appeal for want of prosecution - duty of an appellate body to decide appeals on merits - requirement of opportunity of hearing before passing appellate orders - remedy of restoration of appeal and condonation of delay - Validity of the Tribunal's dismissal of the appeal for want of prosecution and the appropriate remedy. - HELD THAT: - The High Court held that the Appellate Tribunal is obligated to dispose of appeals by passing an order on the merits rather than dismissing a properly filed appeal solely for the appellant's absence when the appeal is called on for hearing. Reliance was placed on the principle, as explained in the cited precedents, that the Tribunal's jurisdiction is to determine the correctness of the decision appealed against and to pass orders thereon after affording an opportunity to the parties; a power to dismiss for default would circumvent that obligation and frustrate the appellate scheme. Consequently, where an appeal has been dismissed for want of prosecution, the appropriate course is to set aside such dismissal and relegate the matter to the Tribunal to decide the appeal on merits after affording the parties an opportunity of hearing, with the petitioner having the remedy of seeking restoration and condonation of delay as necessary.

Impugned order dated 12.8.2014 setting aside; the matter is remitted to the Tribunal to decide the appeal on merits after affording an opportunity of hearing; petitioner may seek restoration/condonation as appropriate.

Final Conclusion: The High Court set aside the Tribunal's dismissal for want of prosecution and remitted the appeal for fresh decision on merits after hearing the parties; the petition is disposed of accordingly.

Clandestine removal - corroboration of scribbling pads/slips/notebooks as admissible evidence - preponderance of probability standard in economic offences - remand for quantification after accounting for job-work and recorded receipts - extended period of limitation under proviso to Section 11A - penalty liability of persons in charge under Rule 26 of the Central Excise Rules, 2004

Clandestine removal - corroboration of scribbling pads/slips/notebooks as admissible evidence - preponderance of probability standard in economic offences - Charge of clandestine removal against the appellants was established - HELD THAT: - The Tribunal upheld the Commissioner's finding that clandestine removal was established by correlating multiple sources of evidence seized from the appellants, third parties and employees/contractors - including loose slips, serially numbered sheets and a notebook - and supportive documents such as payment vouchers and parallel invoices. The Court accepted the Commissioner's methodical comparison of entries across files and worksheets, and held that scribbling pads/slips recovered from persons performing paid duties are admissible and carry evidentiary value. Proof to arithmetical accuracy is not required; a case founded on cogent, corroborative material satisfying the preponderance of probability is sufficient. Retraction of statements and absence of statements from some persons did not vitiate conclusions where other corroborative evidence existed. The Tribunal therefore affirmed the finding of clandestine removal. [Paras 4]

Charge of clandestine removal established and upheld

Extended period of limitation under proviso to Section 11A - Extended period for invocation of duty was attracted and the claim of time-bar was rejected - HELD THAT: - The Tribunal agreed with the Commissioner that the evasion could only be unearthed after investigation by DGCEI, thereby attracting the proviso to Section 11A. Consequently, the appellants' plea of time-bar was held untenable. [Paras 4]

Extended period attracted; time-bar plea rejected

Penalty liability of persons in charge under Rule 26 of the Central Excise Rules, 2004 - Penalty imposed on the Managing Director and Executive Director sustained but reduced - HELD THAT: - The Tribunal found that, having established clandestine removal, persons at the helm were liable to penalty under Rule 26. While upholding the imposition of penalty on the Managing Director and Executive Director, the Tribunal exercised its discretion to reduce the penalties in view of (i) equal penalty already imposed on the assessee, (ii) substantial portions of demand having been dropped by the Commissioner, and (iii) prolonged litigation. [Paras 4, 5]

Penalties on the two directors sustained but reduced to Rs. 5 lakhs each

Remand for quantification after accounting for job-work and recorded receipts - Quantification of clandestine removal remanded for recomputation taking into account quantities accounted for and materials received on job-work/conversion basis - HELD THAT: - The appellants raised for the first time before the Tribunal that the Commissioner's quantification did not take into account actual goods accounted for and materials received on job-work basis, which, if accepted, would reduce the confirmed quantity. In the interest of justice the Tribunal remitted the matter to the original authority to recompute the clandestine quantity after giving the appellants an opportunity to submit evidence proving quantities accounted and job-work receipts. Specific directions were given: appellants to submit evidence within four weeks and the original authority to complete recomputation within, as may be practicable, a further twelve weeks. [Paras 2, 4, 5]

Matter remanded to original authority for recomputation of clandestine quantity after accounting adjustments

Appellate challenge to dropping of demand - Department's appeal against the Commissioner's dropping of certain demands dismissed - HELD THAT: - The Department had challenged the Commissioner's decision to drop demand for specified periods (including the period April 2003 to August 2003) on the ground of lack of signatures or serial numbering in certain slips. The Tribunal found no error warranting interference and dismissed the Department's appeal in that regard. [Paras 3, 5]

Department's appeal dismissed; Commissioner's dropping of specified demand upheld

Final Conclusion: The Tribunal upheld the finding of clandestine removal on the basis of corroborative documentary evidence recovered from the appellants and associated parties, affirmed attraction of the extended limitation period, sustained penalty liability of the directors but reduced the penalties, dismissed the Department's appeal against the Commissioner's dropping of certain demands, and remanded the matter to the original authority for recomputation of the clandestinely removed quantity after taking into account quantities actually accounted and received on job-work/conversion basis.

Admissibility of statements recorded under Section 14 - testimony and cross-examination of statements under Section 9D of the Central Excise Act - requirement of corroborative evidence for clandestine clearance - use of third party evidence to establish duty liability

Requirement of corroborative evidence for clandestine clearance - use of third party evidence to establish duty liability - Demand for duty based solely on statements and third party investigation evidence without independent corroboration is not sustainable. - HELD THAT: - The Tribunal found no discrepancy at the appellant's premises and observed that the Revenue relied primarily on statements recorded during investigation and conclusions of DGCEI regarding clandestine supply and use of inputs. Mere admissions in statements, without independent corroborative evidence demonstrating receipt of inputs, their use in manufacture and clandestine clearance of finished goods, are insufficient to establish liability. The Tribunal followed its earlier decisions in which similar allegations unsupported by tangible evidence were held to remain allegations only. In the absence of efforts by the Revenue to adduce corroborative material showing how inputs were used and how finished goods were clandestinely cleared, the demand could not be confirmed. [Paras 6, 8]

Demand confirmed against the assessee on the basis of uncorroborated statements and third party investigation evidence set aside.

Admissibility of statements recorded under Section 14 - testimony and cross-examination of statements under Section 9D of the Central Excise Act - Statements recorded during investigation were not properly proved because the adjudicating authority did not tender them for testimony nor allow cross examination as required, rendering those statements inadmissible as the sole basis for demand. - HELD THAT: - The Tribunal relied on its precedent that statements recorded during investigation must be proved in terms of the procedure contemplated by Section 9D (testimonial proof and opportunity for cross examination) before being acted upon in adjudication. In the present case the adjudicating authority did not testify to the statements nor were they subjected to cross examination by the assessee. Consequently, the statements forming the foundation of the charge of clandestine manufacture and clearance could not sustain the demand. [Paras 7]

Statements relied upon by the Revenue are not sustainable because the required testimonial proof and opportunity for cross examination were not afforded; therefore they cannot form sole basis for confirming demand.

Final Conclusion: Following the absence of corroborative evidence and the failure to test investigational statements through testimony and cross examination, the Tribunal set aside the impugned order and allowed the appeals with consequential relief.

Clandestine removal - corroborative evidence - stock statement furnished to bank as evidentiary basis - entitlement to Cenvat credit on receipt of inputs - non-payment to supplier and denial of Cenvat credit

Clandestine removal - corroborative evidence - stock statement furnished to bank as evidentiary basis - Differences between a stock statement furnished to a bank and statutory records cannot, by themselves and without corroborative evidence, sustain an allegation of clandestine removal of goods. - HELD THAT: - The Tribunal examined whether an inflated stock statement submitted to a bank may justify a demand for duty on the ground of clandestine removals. Relying on prior decisions of this Tribunal and the Apex Court, it held that the Revenue must establish capacity and a link between purchase of inputs, manufacture and clandestine removal by independent and corroborative evidence (for example, records of input sources, power consumption, seizures or other documentary proof). A mere discrepancy between bank stock statements and statutory records, particularly where the bank officials were not subjected to cross-examination and no further corroboration was produced, is insufficient to substantiate clandestine removals. Consequently the demand of duty founded solely on such discrepancy was held unsustainable. [Paras 7]

Demand of duty based solely on discrepancy between bank stock statement and statutory records is set aside for want of corroborative evidence and for denial of opportunity to test bank evidence.

Entitlement to Cenvat credit on receipt of inputs - non-payment to supplier and denial of Cenvat credit - Non-payment to the supplier does not, by itself, disentitle the assessee from availing Cenvat credit where inputs have been received and used. - HELD THAT: - The Tribunal considered whether failure to pay the supplier could justify denial of Cenvat credit. Interpreting Rule 3 of the Cenvat Credit Rules, 2004, it concluded that entitlement to credit arises on receipt of inputs and their use in manufacture; the rule does not condition credit on payment to the supplier. Absent contrary evidence that the inputs were not received or not used, non-payment alone cannot be the basis for denial of Cenvat credit. [Paras 7]

Denial of Cenvat credit on the sole ground of non-payment to the input supplier is set aside; credit cannot be denied in absence of evidence that inputs were not received or used.

Final Conclusion: The appeals are allowed; the demand of duty and the denial of Cenvat credit insofar as they rested on the bank stock-statement discrepancy and on non-payment to the supplier are set aside, and the penalties imposed on the appellants are rescinded.

Cash discount - transaction value - price actually paid or payable for the goods when sold - deductibility of conditional/post sale adjustments from assessable value - binding effect of Supreme Court precedent - judicial discipline in following precedent

Cash discount - transaction value - price actually paid or payable for the goods when sold - binding effect of Supreme Court precedent - Whether duty is payable on cash discount declared on the invoice even when the buyer did not avail the discount and the discount amount was subsequently recovered - HELD THAT: - The Tribunal held that it is bound by the decision of the Hon'ble Supreme Court in Purolator India Ltd and by earlier Tribunal precedents applying the same principle. The statutory concept of "transaction value" (the price actually paid or payable for the goods when sold) must be understood with reference to the value at the time and place of clearance. Where a cash discount is part of the agreed price at the time of sale and is reflected in the invoice and contractual terms governing delivery/clearance, that discounted price is the transaction value. Following Purolator, a conditional cash discount which is contained in the agreement and operative at the time of sale is deductible to determine value on clearance; therefore the mere fact that a buyer subsequently failed to avail the discount and paid the higher amount does not convert the initially agreed discounted price into an assessable value at the time of clearance. Applying this principle to the facts, the impugned demand for duty on the amount of cash discount not availed by buyers was set aside.

The impugned order confirming duty on unavailed cash discount is set aside and the appeal is allowed, following Purolator India Ltd.

Final Conclusion: Appeal allowed; impugned order set aside and demand for duty on the declared cash discount (not availed by buyers) rejected in view of binding Supreme Court precedent and judicial discipline.

CENVAT credit reversal - interest under Rule 14 of the CENVAT Credit Rules - penalty under Section 11AC - utilisation of CENVAT credit - refund of excess reversal

CENVAT credit reversal - interest under Rule 14 of the CENVAT Credit Rules - utilisation of CENVAT credit - penalty under Section 11AC - Liability to pay interest and penalty in respect of wrongly availed CENVAT credit reversed before issuance of show-cause notice. - HELD THAT: - The Tribunal found that the appellant had reversed the ineligible CENVAT credit prior to issuance of the show-cause notice and the records (CENVAT credit account) showed an available credit balance of around Rs. 1 crore during the disputed period, indicating that the credit was not utilised. Applying the principle that interest under Rule 14 is not payable where inadmissible credit has been taken but not utilised, and having regard to the prior authority relied upon, the Tribunal held that the appellant is not liable to pay interest under Rule 14. In consequence of the reversal having been made before initiation of demand, imposition of penalty under Section 11AC (as sustained in the original order) was not warranted and the Commissioner (Appeals) correctly set aside the penalty to that extent. [Paras 6]

Appellant not liable to pay interest under Rule 14 and penalty under Section 11AC is not sustained insofar as it relates to the reversed credit.

Refund of excess reversal - CENVAT credit reversal - Claim for refund of excess CENVAT credit reversed inadvertently and verification required by original authority. - HELD THAT: - The appellant pleaded that an excess reversal of CENVAT credit had been made inadvertently and identified specific amounts for the relevant periods. The Tribunal observed that neither the original authority nor the Commissioner (Appeals) had given any finding on the allegation of excess reversal. Consequently, the Tribunal directed the original authority to verify from records the claim of excess reversal so that the appellant may pursue appropriate legal recourse for refund. This direction relates to verification and computation of any excess reversed amount and does not constitute an adjudication on the merits of the refund claim. [Paras 6]

Matter remitted to the original authority for verification of the alleged excess reversal; appellant free to pursue refund proceedings thereafter.

Final Conclusion: Appeal disposed: the Tribunal holds that interest under Rule 14 and penalty under Section 11AC are not payable in respect of CENVAT credit reversed before issuance of the show-cause notice and remits the question of excess reversal for verification by the original authority, permitting the appellant to seek refund thereafter.

Entertainment tax - interim order kept in abeyance - bank guarantee as condition for vacatur of encumbrance - service of assessment orders under due acknowledgement - opportunity to be heard as mandated in law - completion of assessment proceedings where records not traceable

Interim order kept in abeyance - bank guarantee as condition for vacatur of encumbrance - Modification of the interim order dated 29.07.2019 by permitting dealing with the immovable property subject to furnishing bank guarantee and consequent setting aside of the impugned communication dated 08.07.2019 upon compliance. - HELD THAT: - The court, having considered the writ petitioner's plea of urgent medical need and her offer to furnish a bank guarantee, exercised its discretion to modify the earlier interim restraint. The petitioner was directed to furnish a bank guarantee through her son's bank account in a form acceptable to the third respondent within one week. The order provides that on such bank guarantee being furnished in the prescribed manner, the impugned communication dated 08.07.2019 will stand set aside automatically. This treatment balances the temporary protection previously accorded as an encumbrance against the petitioner's demonstrated urgency and bona fides while securing the respondents' revenue claim by an executable guarantee.

Interim restraint modified; furnishing of bank guarantee within one week permitted and, on compliance, the impugned communication dated 08.07.2019 shall stand set aside.

Service of assessment orders under due acknowledgement - opportunity to be heard as mandated in law - Obligation of the third respondent to serve the assessment orders on the writ petitioner and the petitioner's right to assail the same. - HELD THAT: - The court directed that upon receipt of the bank guarantee, the third respondent must serve copies of the assessment orders concerned on the writ petitioner under due acknowledgement within a fortnight. The petitioner was afforded the statutory right to challenge those assessment orders in the manner provided by law. The direction ensures that the petitioner receives formal notice of the assessments and an opportunity to contest them, thereby implementing the requirement of fair hearing before any coercive consequence can be pursued.

Third respondent to serve assessment orders on petitioner within a fortnight post-furnishing of bank guarantee; petitioner entitled to challenge the orders in accordance with law.

Completion of assessment proceedings where records not traceable - opportunity to be heard as mandated in law - Procedure to be followed if the third respondent is unable to locate or serve the historical assessment orders. - HELD THAT: - Recognising the age of the assessments and potential difficulty in locating files, the court directed that if the third respondent cannot locate or serve the assessment orders, fresh assessment proceedings shall be completed in accordance with law after giving opportunity to the writ petitioner as mandated. The court fixed a timeline for this administrative exercise to prevent undue delay, requiring completion within 12 weeks from the date of receipt of a copy of the order. This direction remands the matter to the assessing authority for fresh action consistent with procedural fairness.

If assessment orders cannot be located or served, the assessing authority shall complete assessment proceedings after giving the petitioner opportunity as mandated in law, within 12 weeks from receipt of this order.

Final Conclusion: The writ petition is disposed of by modifying the interim order: petitioner permitted to furnish a bank guarantee acceptable to the third respondent within one week, upon which the impugned communication dated 08.07.2019 will stand set aside; the third respondent must serve the assessment orders on the petitioner within a fortnight thereafter, and if the orders cannot be located, fresh assessment proceedings shall be completed after giving the petitioner an opportunity to be heard within 12 weeks. No order as to costs.

Maintainability of writ petition where efficacious statutory remedy exists - relegation to statutory appellate remedy - interim stay of recovery pending statutory appeal - treatment of appeal as filed within time when instituted within court-prescribed period - expeditious disposal of appeal by appellate authority

Maintainability of writ petition where efficacious statutory remedy exists - relegation to statutory appellate remedy - Whether the writ petition could be entertained notwithstanding the existence of an efficacious statutory appellate remedy. - HELD THAT: - The Single Judge found a strong prima facie case on the question of perversity in the assessment order but considered that detailed factual examination would encroach upon the appellate authority's functions; accordingly the learned Single Judge declined to decide the matter on merits and relegated the appellant to the statutory appeal route. On appeal, the Division Bench upheld that approach, holding that where the issue requires examination of factual aspects and record appraisal (including books of account), the statutory appellate remedy is efficacious and ordinarily ought not to be bypassed. The Court also noted the Single Judge's recognition of prima facie merit but found no illegality in relegating the appellant to appeal rather than quashing the assessment in writ jurisdiction. [Paras 3, 6]

The writ petition was not entertained on merits; the appellant was relegated to pursue the statutory appeal as the appropriate remedy.

Treatment of appeal as filed within time when instituted within court-prescribed period - expeditious disposal of appeal by appellate authority - Whether, in view of the particular circumstances, the appellate authority should be directed to treat and dispose of the statutory appeals expeditiously and accept appeals filed within the limited time granted. - HELD THAT: - Recognising the special circumstances and the Single Judge's observation of a strong prima facie case, the Court exercised discretion to facilitate the appellate remedy. The appellant was granted two weeks to file statutory appeals against the assessment and refund rejection; if filed within that period the appellate authority was directed to treat the appeals as timely and to dispose of them after hearing at the earliest and, in any event, within two months from receipt. The direction was confined to the facts of the case and expressly not to be treated as precedent. [Paras 6]

Appellant granted two weeks to file appeals; appellate authority to treat them as duly instituted if filed within that period and to decide them within two months.

Interim stay of recovery pending statutory appeal - Whether recovery/realisation of the disputed amount in the assessment should be deferred pending disposal of the statutory appeals. - HELD THAT: - As a component of facilitating the appellate remedy and considering the special circumstances, the Court directed that until disposal of the appeals as ordered, realization of the disputed amount under the assessment order shall be kept in abeyance. The relief was expressly limited to the particular circumstances of the case and to the period until final disposal of the appeals directed to be decided expeditiously. [Paras 6]

Realization of the disputed amount under the assessment order is stayed until disposal of the statutory appeals as directed.

Final Conclusion: The Division Bench declined to quash the assessment in writ jurisdiction but, in view of prima facie merit and special circumstances, permitted the appellant two weeks to file statutory appeals to be treated as timely and directed the appellate authority to decide them within two months, with recovery of the disputed amount stayed until such disposal; the relief is confined to the facts of this case and is not a precedent.

Entertainment tax - non-receipt of notice / procedural fairness - interim restraint on alienation of immovable property - abeyance of administrative communication - risk of irreversible auction

Entertainment tax - non-receipt of notice / procedural fairness - abeyance of administrative communication - Whether the impugned communication relating to alleged entertainment tax arrears should be put in abeyance in view of the petitioner's claim of non-receipt of prior notice and denial of arrears. - HELD THAT: - The writ petitioner asserted that the cinema theatre had been closed since 2000, denied any arrears for the periods referred to in the impugned communication and specifically stated that no notice or communication was received prior to the impugned communication dated 08.07.2019. Respondents accepted notice and sought time to obtain instructions. Having regard to the petitioner's contention that there is no tax arrear, the claim of non-receipt of any prior notice, and the prospect of an irreversible action (auction) in respect of immovable property, the court exercised its discretion to preserve the status quo by keeping the impugned communication in abeyance until the next date of listing, thereby protecting the petitioner from immediate consequences of the communication while respondents obtain instructions. [Paras 6]

Impugned communication kept in abeyance until next listing; petitioner and persons claiming under her restrained from dealing with the immovable property mentioned in the communication until then.

Final Conclusion: On the petitioner's specific assertions of non-receipt of prior notice, denial of entertainment tax arrears and risk of irreversible auction of property, the Court granted interim protection by keeping the impugned communication in abeyance and restraining any dealing with the specified immovable property until the next listing.

Exclusive jurisdiction of Collector to order confiscation - confiscation proceedings independent of criminal prosecution - inconsistency with the Code of Criminal Procedure bars Magistrate's power to release seized property - power to sell seized things subject to speedy wear and tear or public interest - distribution of sale proceeds governed by Collector's order and by court's order where prosecution is instituted

Exclusive jurisdiction of Collector to order confiscation - The Collector has exclusive jurisdiction under Section 72(2) of the United Provinces Excise Act, 1910 to order confiscation of a conveyance used in the commission of an offence, independent of prosecution. - HELD THAT: - The Court noted that Section 72(1) makes vehicles used in carrying contraband liable to confiscation and Section 72(2) expressly empowers the Collector to order confiscation "whether or not a prosecution for such offence has been instituted". The proviso to sub-section (2) further vests in the Collector alone the power to accept a fine in lieu of confiscation not exceeding market value. The statutory scheme thus vests the power of confiscation and the alternative power to impose a fine exclusively in the Collector, and that power is independent of any criminal trial or its outcome. [Paras 13, 16, 30]

Collector exclusively empowered to order confiscation and to impose fine in lieu thereof under Section 72.

Confiscation proceedings independent of criminal prosecution - Confiscation proceedings under the Act are distinct and independent from criminal prosecution and are not contingent on the result of the latter. - HELD THAT: - Relying on earlier precedents and the wording of Section 72(2), the Court treated confiscation as a separate and parallel procedure with its own object - speedy and effective adjudication regarding confiscation and stopping misuse of vehicles - distinct from the object of criminal prosecution, which is punishment. The Court observed that the statute contemplates confiscation "whether or not a prosecution" is instituted and referred to authorities holding confiscation is not punitive in the same sense as criminal punishment. [Paras 14, 15, 27, 30]

Confiscation proceedings are independent of criminal prosecution; confiscation may be ordered irrespective of prosecution outcome.

Inconsistency with the Code of Criminal Procedure bars Magistrate's power to release seized property - Where the Act prescribes a special procedure for disposal of seized property, the general powers of criminal courts under Sections 451, 452 and 457 of the Code are inconsistent and must yield to the Act; consequently a Magistrate lacks jurisdiction to order release of the vehicle contrary to the Act's scheme. - HELD THAT: - The Court applied Section 5 of the Code and Section 4(2) read with the Act to conclude that offences under the Act are to be dealt with subject to the special provisions of the Act. The judgment followed Narender and related authorities: where a statute makes special provision regarding confiscation and disposal, the general provisions of the Code on custody and disposal of property must yield. Thus the power of a criminal court to release property (interim or final) is excluded to the extent inconsistent with the Act's scheme for confiscation and disposal. [Paras 21, 23, 24]

Magistrate's general powers under the Code to release seized property are inconsistent with and yield to the Act; Magistrate cannot order release contrary to the Act.

Power to sell seized things subject to speedy wear and tear or public interest - distribution of sale proceeds governed by Collector's order and by court's order where prosecution is instituted - Section 72(3) permits the Collector to sell seized things (except intoxicants) if subject to speedy wear and tear or expedient in public interest; subsections (4) and (8) govern distribution of sale proceeds, including where prosecution is instituted. - HELD THAT: - The Court explained that sub-section (3) is an exception to sub-section (2) enabling the Collector to order sale by auction where items are perishable or sale is in public interest, and that such sale is complete though the distribution of sale proceeds is subsequently regulated by sub-section (4). Where prosecution is instituted, sub-section (8) provides that disposal is in accordance with the court's order but still subject to sub-section (4)'s regime for distribution of sale proceeds. Thus the Act contemplates sale in specific circumstances and prescribes how proceeds are to be dealt with thereafter. [Paras 17, 18, 22]

Collector may sell seized non-intoxicant items subject to wear and tear or public interest; distribution of proceeds is regulated by Section 72(4) and, where prosecution is instituted, by the court's order subject to sub-section (4).

Exclusive jurisdiction of Collector to order confiscation - High Court's order upholding the Collector's confiscation was not in error on the jurisdictional question, but the matter is remitted for judicial review of the confiscation order. - HELD THAT: - The Supreme Court found no error in the High Court's conclusion on the Collector's jurisdiction to confiscate. However, since the High Court decided the matter only on the question of jurisdiction, the Supreme Court directed remittal to the High Court to exercise its power of judicial review over the Collector's confiscation order (as affirmed by the District Judge) to examine other aspects as necessary. [Paras 31]

No interference with High Court's jurisdictional conclusion; case remitted to High Court for judicial review of the confiscation order.

Final Conclusion: The appeal is dismissed on the jurisdictional point: the Collector has exclusive power under Section 72 to order confiscation (and to order sale in specified circumstances), confiscation proceedings are independent of criminal prosecution, and the Magistrate's general powers under the Code to release property yield to the Act; the matter is remitted to the High Court to exercise judicial review of the confiscation order affirmed by the District Judge.

Exclusion of civil court jurisdiction - implied bar to jurisdiction - adequacy and effectiveness of statutory remedy - finality of tribunal orders - onerous pre-condition (deposit) does not render remedy inadequate - jurisdictional challenge for non compliance with statutory procedure - ubi jus ibi remedium

Exclusion of civil court jurisdiction - implied bar to jurisdiction - finality of tribunal orders - Whether civil courts are barred from entertaining suits challenging property tax assessments under the Delhi Municipal Corporation Act, 1957 - HELD THAT: - The Court held that the Act creates a liability for payment of tax and simultaneously provides a statutory remedy by way of appeals to the Municipal Taxation Tribunal, and that Section 171 gives finality to orders of that Tribunal. Where a liability not pre existing at common law is created by statute and a complete machinery including an appellate forum and intended finality is provided, the jurisdiction of the ordinary civil courts is impliedly barred. The absence of an express ouster does not prevent an implied bar when the statute furnishes a special and final remedy for determination of the statutory right or liability. Applying established precedents, the Court concluded that the scheme of the Act demonstrates legislative intendment to exclude civil court jurisdiction in respect of assessments under the Act. [Paras 9, 11, 12, 14]

Civil courts' jurisdiction is impliedly barred in respect of disputes relating to property tax assessments under the Act.

Adequacy and effectiveness of statutory remedy - onerous pre-condition (deposit) does not render remedy inadequate - Whether the statutory pre condition of deposit of the amount in dispute makes the remedy under the Act so onerous as to be inadequate, thereby preserving the maintainability of a civil suit - HELD THAT: - The Court considered the contention that the requirement to deposit the full amount of property tax before preferring an appeal makes the statutory remedy onerous and inadequate. Relying on precedent, the Court held that the existence of an onerous or burdensome condition in the statutory remedy does not, by itself, render the alternate remedy inadequate so as to permit maintenance of a civil suit. The Court specifically rejected the High Court's view that the deposit condition rendered the remedy ineffective, confirming that an alternate remedy under the statute remains adequate unless shown to be wholly ineffectual. [Paras 14, 15]

The deposit pre condition does not render the statutory remedy inadequate; it does not justify entertaining a civil suit.

Jurisdictional challenge for non compliance with statutory procedure - ubi jus ibi remedium - Whether a civil court may be approached where there is an allegation that the statutory forum has not complied with fundamental provisions of the statute or with principles of judicial procedure, and whether such a plea was made in the plaint - HELD THAT: - The Court reiterated that even where jurisdiction is excluded expressively or by necessary implication, civil courts retain jurisdiction to examine matters where the statutory provisions have not been complied with or where the statutory forum has not acted in conformity with fundamental principles of judicial procedure. However, examination of the plaint revealed no allegation of non compliance with statutory provisions or of denial of fundamental procedural rights; the challenge in the plaint was to an allegedly erroneous order only. As no jurisdictional or constitutional infirmity was pleaded, the exception permitting civil court intervention did not apply. [Paras 6, 8, 16]

Civil court jurisdiction remains available for allegations of statutory non compliance or breach of fundamental judicial procedure, but no such allegations were pleaded here; therefore the civil suit was not maintainable.

Remand for fresh consideration - adequacy and pleadings - Whether the Division Bench of the High Court was justified in remanding the suit for fresh consideration by the learned Single Judge - HELD THAT: - The Division Bench had remanded the matter for fresh consideration to determine maintainability in light of whether the statutory remedy was onerous and whether limited relief was available. The Supreme Court found that the plaint contained no pleadings of statutory non compliance or fundamental infirmity and merely alleged error in assessment; given that absence, there was nothing for the Single Judge to re examine on remand. The Division Bench's remand was therefore unnecessary. [Paras 3, 16, 17]

The Division Bench's order remanding the matter was set aside; remand was unnecessary because the plaint lacked allegations entitling civil court jurisdiction.

Final Conclusion: The appeals are allowed; civil courts are impliedly barred from entertaining suits challenging municipal property tax assessments under the Act where the statutory remedy is available and final, the deposit condition does not render that remedy inadequate, and no pleadings were made alleging statutory non compliance or breach of fundamental judicial procedure; the Division Bench's remand is set aside.