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Issues: Whether GST at 18% on the DNB course fee is exempt in view of the notification dated 17 June 2021, and whether the enhanced course fee applies to ongoing courses irrespective of the year of joining.
Outcome: Notice issued returnable on 3 September 2021, with further proceedings listed on that date and dasti permitted.
Summary order. Notice issued returnable on 3 September 2021; Dasti permitted; matter listed on 3 September 2021 for further proceedings and interim application noted.
Refund of excess electronic cash ledger balance - interest on delayed refund - proviso to Section 54(1) of the CGST Act and Rule 89(1) of the CGST Rules - Common Goods and Services Tax Electronic Portal - direction to dispose refund application by a reasoned order within a stipulated time - judicial acceptance of counsel's undertaking binds the party
Refund of excess electronic cash ledger balance - interest on delayed refund - direction to dispose refund application by a reasoned order within a stipulated time - judicial acceptance of counsel's undertaking binds the party - Respondents directed to process and dispose of the petitioner's refund application by a reasoned order within four weeks, and the writ petition disposed on that basis. - HELD THAT: - Learned counsel for Respondent nos.2 and 3 stated that the petitioner's refund application is being processed and will be disposed of by a reasoned order in accordance with law within four weeks. The Court accepted this statement and treated it as binding on those respondents. In consequence, the Court disposed of the writ petition while leaving open the petitioner's right to challenge the respondents' eventual decision in accordance with law. The Court also left the parties' rights and contentions otherwise undetermined. The order envisages disposal of the refund claim on merits by a reasoned order and does not decide the substantive entitlement; interest and statutory provisions relied upon by the petitioner remain subject to adjudication by the respondents when they pass the reasoned order. [Paras 4, 5]
Writ petition disposed of on the basis of the respondents' undertaking; respondents bound to decide the refund application by a reasoned order within four weeks; petitioner free to challenge the decision in accordance with law.
Final Conclusion: The petition is disposed of on the respondents' undertaking to process and pass a reasoned order on the refund application within four weeks; the petitioner's remedy to challenge that order is preserved and other rights and contentions are left open.
Outcome: The writ petition was disposed of with a direction to the respondent to decide the petitioner's representation by a speaking order within two weeks.
Judicial review of administrative action - direction to decide representation - requirement of a speaking order - consideration of representation for installment facility
Direction to decide representation - requirement of a speaking order - consideration of representation for installment facility - Direction to respondent No.3 to decide the petitioner's representation (Annexure P-3) by passing a speaking order within a stipulated time - HELD THAT: - The petitioner sought quashing of the statutory notice or, alternatively, a direction to provide an instalment facility to clear tax liabilities, on account of curtailed operations during the pandemic and Government control. The Court found the petitioner's request for adjudication of its representation to be fair. Exercising supervisory jurisdiction under Articles 226 and 227 of the Constitution, the Court did not adjudicate the merits of the tax notice but directed respondent No.3 to consider and decide the representation (Annexure P-3) on its own merits. The Court mandated that the decision be a speaking order and set a two week time frame from receipt of the certified copy of the order for compliance. [Paras 3]
The writ petition is disposed of by directing respondent No.3 to decide the representation (Annexure P-3) by passing a speaking order within two weeks from receipt of certified copy of this order.
Final Conclusion: Writ petition disposed of by a direction to respondent No.3 to decide the petitioner's representation by a speaking order within two weeks; no adjudication on merits of the statutory notice was undertaken.
Exhaustion of appellate remedy - appellate remedy under Section 107 - judicial review under Article 226 - extraordinary writ jurisdiction - dispensing with appellate remedy in exceptional circumstances - final fact finding role of the appellate authority - challenge to assessment orders - principles of natural justice and jurisdictional grounds in appeal
Exhaustion of appellate remedy - appellate remedy under Section 107 - final fact finding role of the appellate authority - judicial review under Article 226 - dispensing with appellate remedy in exceptional circumstances - Writ petitions challenging GST assessment orders dismissed for failure to exhaust the statutory appellate remedy; High Court declined to entertain merits of disputed factual and mixed questions. - HELD THAT: - The Court noted that the impugned assessment orders informed the petitioner of the right to appeal to the Deputy Commissioner (ST) within three months and observed that the petitioner instead filed writ petitions challenging the appreciation of documents and objections. The High Court held that where an appellate remedy is provided under the TNGST Act, particularly under Section 107, the statutory appeal must ordinarily be exhausted before invocation of the extraordinary writ jurisdiction. The Court explained that the appellate authority is the primary fact finding forum and that adjudication of disputed facts and mixed questions of law and fact should be undertaken by the original and appellate authorities with regard to evidence and documents. Dispensing with the appellate remedy is an exception to be exercised only in cases of imminent urgency or irreparable harm that cannot be compensated. The scope of judicial review under Article 226 was described as scrutiny of the legality of the process and procedure adopted by authorities, not substitution for adjudication on disputed facts on the basis of affidavits in writ proceedings. The petitioner was accordingly permitted to prefer the prescribed appeal raising factual and legal grounds (including jurisdictional and natural justice contentions), and the appellate authority was directed to decide it on merits expeditiously and in accordance with law. [Paras 5, 6, 7, 8, 9]
Writ petitions dismissed for non exhaustion of the statutory appellate remedy; petitioner granted liberty to file the prescribed appeal which the appellate authority shall decide on merits expeditiously.
Final Conclusion: The High Court dismissed the writ petitions, holding that the petitioner must exhaust the appellate remedy under the TNGST Act (Section 107) before seeking relief under Article 226; the petitioner is permitted to file the statutory appeal and the appellate authority is directed to decide it on merits and in accordance with law as expeditiously as possible.
Issues: (i) Whether the writ court could interfere notwithstanding the availability of an alternative statutory remedy when the impugned assessment order was alleged to be ex parte and violative of natural justice; (ii) Whether the assessment and consequential appellate orders were liable to be quashed for want of adequate hearing and reasons, with consequential directions for fresh adjudication and related reliefs.
Issue (i): Whether the writ court could interfere notwithstanding the availability of an alternative statutory remedy when the impugned assessment order was alleged to be ex parte and violative of natural justice.
Analysis: The existence of a statutory appellate remedy does not bar writ interference where the order is ex facie bad in law. A jurisdictional or procedural defect going to the root of the matter, especially violation of the principles of natural justice, justifies exercise of writ jurisdiction. The court found that no sufficient opportunity had been afforded before passing the order and that the matter could not be left to the alternative remedy in such circumstances.
Conclusion: The writ petition was maintainable and interference was justified in view of the breach of natural justice.
Issue (ii): Whether the assessment and consequential appellate orders were liable to be quashed for want of adequate hearing and reasons, with consequential directions for fresh adjudication and related reliefs.
Analysis: The impugned assessment order was treated as ex parte and lacking sufficient reasons for determination of tax liability. Since the order entailed civil consequences and was passed without adequate opportunity of hearing, it could not stand. The appellate order, being founded on the same proceedings, also could not survive. The court accordingly set aside both orders, directed de-freezing/de-attaching of the bank account, accepted the deposit already made, required further deposit as recorded, and directed fresh consideration by the assessing authority after due hearing.
Conclusion: The assessment order and the appellate order were quashed, and the matter was remitted for fresh decision after affording adequate opportunity to the assessee.
Final Conclusion: The decision grants relief to the assessee by undoing the impugned tax and appellate orders, restoring the matter to the assessing authority for fresh adjudication on merits after compliance with natural justice.
Ratio Decidendi: A writ court may interfere despite an available statutory remedy where the impugned tax order is ex parte, lacks adequate reasons, and is passed in breach of natural justice; such an order cannot be sustained and must be set aside for fresh adjudication after hearing.
Violation of principles of natural justice (fair opportunity of hearing) - quashing of ex parte assessment order - non-speaking order / absence of sufficient reasons - remand for fresh hearing and reassessment - deposit as precondition for entertaining appeal - de-attachment / defreezing of bank accounts subject to conditions - power of High Court to interfere despite availability of statutory remedy where order is bad in law
Violation of principles of natural justice (fair opportunity of hearing) - quashing of ex parte assessment order - non-speaking order / absence of sufficient reasons - Validity of the ex parte assessment order dated 31.01.2020 and the summary order in Form GST DRC 07. - HELD THAT: - The Court found that the assessment order was passed ex parte without affording sufficient time or a fair opportunity to the petitioner to represent her case, thereby violating the principles of natural justice. The order also did not contain sufficient reasons intelligible from the record to support the determination of the amount due. For these defects-lack of fair hearing and a non speaking assessment-the High Court held the impugned orders to be bad in law and quashed them.
Impugned assessment order dated 31.01.2020 and the summary order in Form GST DRC 07 were quashed.
Power of High Court to interfere despite availability of statutory remedy where order is bad in law - Whether the High Court was precluded from entertaining the writ petition because a statutory remedy of appeal existed. - HELD THAT: - Although an alternative statutory remedy existed, the Court held that it is entitled to intervene where, on the face of the record, the impugned order is bad in law-in this case because of procedural unfairness and absence of reasons. The availability of statutory remedies did not oust the Court's jurisdiction to quash an order that suffers from fundamental legal infirmities.
High Court entertained the petition and quashed the impugned orders notwithstanding availability of alternate statutory remedy.
Remand for fresh hearing and reassessment - Whether the matter should be remitted to the Assessing Officer for fresh consideration. - HELD THAT: - Having quashed the ex parte order for violation of natural justice and for being non speaking, the Court directed that the Assessing Officer shall afford adequate opportunity of hearing to the petitioner to place on record documents and materials as required. The Assessing Officer is to pass a fresh order after such hearing and decide the matter on merits expeditiously, preferably within two months from the petitioner's appearance. The Court expressly left the merits open.
Matter remitted to the Assessing Officer for fresh hearing and decision on merits after affording adequate opportunity.
Deposit as precondition for entertaining appeal - de-attachment / defreezing of bank accounts subject to conditions - Interim and consequential directions regarding deposit, de attachment of bank accounts and related undertakings. - HELD THAT: - The Court accepted the petitioner's statement that ten per cent of the demanded amount had been deposited as a precondition for filing the appeal and directed the petitioner to deposit an additional ten per cent of the demand within four weeks. The deposit was ordered to be without prejudice to the parties' rights and subject to the Assessing Officer's order, with refund if found in excess. Consequentially, the Court directed immediate de freezing/ de attachment of the petitioner's bank account(s) linked to the impugned proceedings. The petitioner was also directed to appear before the Assessing Officer on the specified date and cooperate in the proceedings.
Petitioner to make specified additional deposit; bank accounts to be de attached immediately; deposits to be subject to final orders and refundable if excessive.
Final Conclusion: The High Court quashed the ex parte assessment and consequential orders for breach of natural justice and lack of reasons, retained jurisdiction despite the existence of statutory remedies, remitted the matter to the Assessing Officer for fresh hearing and decision on merits, and directed interim measures including specified deposits and immediate de attachment of the petitioner's bank accounts.
MAT credit under section 115JAA - interpretation of 'tax' to include surcharge and education cess - application of Explanation 2 to section 115JB for computation of MAT credit - respect for ITR Form No. 6 calculation in determining MAT credit
MAT credit under section 115JAA - interpretation of 'tax' to include surcharge and education cess - Whether MAT credit carried forward under section 115JAA must be allowed against the gross tax liability including surcharge and education cess or only against income-tax excluding surcharge and cess. - HELD THAT: - The Tribunal upheld the view that while allowing MAT credit under section 115JAA the gross tax amount - income-tax together with applicable surcharge and education cess - must be taken into account. The Tribunal agreed with the reasoning in SREI Infrastructure Finance Ltd. (Calcutta High Court) which, following the Supreme Court precedent in CIT v. Tulsyan Nec Ltd., treated 'income-tax' as including surcharge and cess for the relevant purposes. The Tribunal observed that the statutory ITR Form No.6, when correctly filled, computes MAT credit on the gross tax amount, and noted subsequent decisions of various benches and High Courts applying the same interpretation. Applying these authorities and the statutory scheme, the Tribunal found no reason to interfere with the CIT(A)'s allowance of MAT credit on the gross tax including surcharge and cess, and dismissed the departmental appeal. [Paras 8, 9]
MAT credit under section 115JAA is to be allowed against the gross tax liability including surcharge and education cess; revenue appeal dismissed.
Final Conclusion: The Tribunal dismissed the revenue appeal and upheld the CIT(A)'s direction to allow MAT credit for Assessment Year 2016-17 on the gross tax liability inclusive of surcharge and education cess, following the Calcutta High Court decision in SREI and the Supreme Court precedent cited therein.
Liability to deduct tax at source on allowances - exemption under Section 10(14) of the Income tax Act - allowability of specified allowances under Rule 2BB of the Income tax Rules - effect of subsequent CBDT circulars on earlier instructions - consequence of assessment/order under Section 201
Liability to deduct tax at source on allowances - exemption under Section 10(14) of the Income tax Act - allowability of specified allowances under Rule 2BB of the Income tax Rules - effect of subsequent CBDT circulars on earlier instructions - Whether the Life Insurance Corporation of India was obliged to deduct tax at source while paying conveyance and additional conveyance allowance to its development officers for Financial Year 1999-2000. - HELD THAT: - The Court accepted the findings of the Income Tax Officer and the Commissioner that LIC had a statutory obligation to deduct tax at source on the allowances in question. The Court rejected LIC's reliance on an earlier CBDT circular of 19th November 1986 because subsequent amendments to Section 10(14) (with effect from 1st April 1989) and later CBDT instructions and circulars (including those of 18th March 1991 and 23rd March 1995) altered the legal position and rendered earlier clarifications inapplicable from AY 1989-90 onwards; a specific clarification was communicated to LIC on 4th January 2001. The Court noted that Rule 2BB(1) prescribes the types of allowances but does not fix their extent of allowability; after the amendment it is the expenditure actually incurred by the employee which alone could qualify, and reimbursements by LIC treated as exempt could not be allowed where the expenditure was not actually incurred by the employee. The Court recorded that LIC's practice of having development officers certify expenditures and treating a portion of the allowances as exempt was found inconsistent with Section 10(14) read with Rule 2BB, and CBDT communications (including the communication dated 12th March 1997) had already pointed out that no portion of an allowance can qualify for exemption unless the allowance is notified under Section 10(14)(i). In light of these conclusions, the Court found no basis to interfere with the orders under Section 201 holding LIC liable for the short/non-deduction. [Paras 13, 14, 15, 16, 17]
The impugned orders holding LIC liable to pay the tax not deducted under Section 201 were upheld and the writ petition was dismissed.
Final Conclusion: The High Court dismissed LIC's petition and upheld the orders under Section 201 holding LIC liable for short/non-deduction of tax on conveyance/additional conveyance allowances for Financial Year 1999-2000; the interim order was vacated.
Principles of natural justice - meaningful opportunity of being heard - non-compliance with the statutory mandate of Section 144B - assessment under Section 143(3) of the Income Tax Act - remand for fresh consideration
Principles of natural justice - meaningful opportunity of being heard - assessment under Section 143(3) of the Income Tax Act - Assessment order dated 27th April, 2021 under Section 143(3) was passed without affording the petitioner an adequate and meaningful opportunity of being heard. - HELD THAT: - The Court examined the sequence of communications and observed that the draft assessment order cum show cause notice dated 20th April, 2021 required a response by 23rd April, 2021. The petitioner sought an adjournment on 25th April, 2021, citing closure of offices due to a complete lockdown in Delhi between 19th April, 2021 and 27th April, 2021. The respondent contended that earlier notices had been issued and that the adjournment application was filed after the last date for response. The Court found that the earlier notices were issued under Section 142(1) and not under Section 144B; therefore the specific statutory mandate embodied in Section 144B was not complied with. The Court also took judicial notice of the lockdown during the relevant period and concluded that, in the circumstances, the petitioner was not afforded an adequate and meaningful opportunity to respond to the draft assessment, resulting in a violation of principles of natural justice Impugned assessment order dated 27th April, 2021 is set aside on grounds of violation of natural justice and non-compliance with the statutory procedure; matter remanded to the respondent for fresh consideration in accordance with law. Non-compliance with the statutory mandate of Section 144B - remand for fresh consideration - Whether non-compliance with the procedural requirement under Section 144B vitiated the assessment proceeding. - HELD THAT: - On perusal of the record the Court found that notices relied upon by the Revenue were issued under Section 142(1) and not under Section 144B. Because Section 144B prescribes the specific procedure to be followed before finalising assessment, the Court held that failure to follow that statutory procedure rendered the assessment process infirm. In view of the procedural lapse and the factual circumstance of lockdown preventing effective participation by the petitioner, the appropriate remedy was to set aside the assessment and remit the matter to the respondent to take steps afresh in compliance with the statutory scheme and to afford the petitioner a meaningful opportunity to be heard. Proceeding vitiated by non-compliance with Section 144B; assessment set aside and remanded for fresh action in accordance with law. Final Conclusion: The assessment order dated 27th April, 2021 under Section 143(3) is quashed for failure to comply with the statutory procedure and for denial of a meaningful hearing; the matter is remitted to the respondent for fresh consideration in conformity with law.
Pre-deposit for stay of demand - Administrative instructions binding on revenue - Discretion to require higher pre-deposit under paragraph 4(B) of the Office Memorandum - Refund of excess recovery
Administrative instructions binding on revenue - Pre-deposit for stay of demand - Discretion to require higher pre-deposit under paragraph 4(B) of the Office Memorandum - Whether the Office Memorandum dated 29th February, 2016 as amended by Office Memorandum dated 25th August, 2017 obliges the Assessing Officer to grant stay of recovery on payment of 20% of the disputed demand and whether any requirement of a higher pre-deposit must be supported by reasons under paragraph 4(B). - HELD THAT: - The Court held that the Government must follow standards and rules prescribed by it, and the Office Memorandum dated 29th February, 2016 as modified by the Office Memorandum dated 25th August, 2017 provides that, as a norm, stay of demand pending first appeal before CIT(A) is to be granted on payment of 20% of the disputed demand. Where the Assessing Officer considers it necessary to demand a higher lump sum payment, such a course falls within paragraph 4(B) and requires specific reasons demonstrating that the case falls within the exceptional circumstances enumerated therein. The Court therefore read the OM as prescribing 20% as the standard pre-deposit for stay, subject to a reasoned exercise of discretion by the Assessing Officer when invoking paragraph 4(B). [Paras 9, 10, 11, 12]
The Office Memorandum prescribes 20% as the normal pre-deposit for stay of demand; any requirement of a higher pre-deposit must be justified by reasons under paragraph 4(B).
Refund of excess recovery - Pre-deposit for stay of demand - Whether the respondent must refund amounts recovered in excess of 20% of the disputed demand for the Assessment Years 2015-16 and 2016-2017. - HELD THAT: - The Court found that no order under Section 245 for adjustment of refunds had been passed and that the Assessing Officer had not given any specific reasons invoking paragraph 4(B) to justify recovery in excess of 20%. In the absence of such an order or reasoned direction, recoveries beyond the standard 20% are not permissible under the Office Memorandum. Consequently, the respondents were directed to refund the amount adjusted in excess of 20% of the disputed demand for the specified assessment years within four weeks. [Paras 11, 12, 13]
Respondents directed to refund amounts recovered in excess of 20% for Assessment Years 2015-16 and 2016-2017 within four weeks.
Final Conclusion: The Court directed that the Office Memorandum's norm of a 20% pre-deposit for stay of demand applies, any deviation requiring reasoned invocation of paragraph 4(B), and ordered refund of recoveries in excess of 20% for Assessment Years 2015-16 and 2016-2017 within four weeks; the writ petitions are disposed of.
Deduction under Section 80-IA - interpretation of "previously used" in Section 80-IA(3) - whether lease constitutes transfer for the purposes of Section 80-IA(3) - formation of an undertaking by transfer of machinery or plant - beneficial construction of tax exemption provisions
Whether lease constitutes transfer for the purposes of Section 80-IA(3) - formation of an undertaking by transfer of machinery or plant - Lease of windmills by the assessee does not per se amount to a transfer that would disqualify the undertaking under Section 80-IA(3). - HELD THAT: - The Court applied the principle laid down by the Supreme Court in Bajaj Tempo Ltd. that lease cannot be treated as necessarily amounting to a formation of an undertaking by transfer of building, machinery or plant. The determinative inquiry is whether the transfer played the dominant or formative role in bringing the new undertaking into existence - i.e., whether but for the transfer the undertaking could not have come into being. A mere lease, without factual findings that the lease was the decisive factor in formation of the undertaking, does not render the undertaking ineligible. The Tribunal's conclusion treating the lease as a transfer was therefore an error of law insofar as it did not consider the scope of the word "formed" and the settled authorities construing it.
The Tribunal's finding that lease of windmills amounted to transfer disqualifying the assessee under Section 80-IA(3) was set aside; lease alone does not amount to such transfer.
Interpretation of "previously used" in Section 80-IA(3) - deduction under Section 80-IA - beneficial construction of tax exemption provisions - An asset is "previously used" for the purposes of Section 80-IA(3) only if it has been actually physically used earlier; a mere claim for depreciation by a prior owner does not, by itself, establish previous use to deny the deduction. - HELD THAT: - The Court construed the phrase "previously used" in the light of the purpose of Section 80-IA as a beneficial fiscal provision intended to encourage industrial activity. On a plain reading, "previously used" denotes actual physical use of the machinery or plant before its installation by the assessee. The Assessing Officer drew an adverse inference solely from the lessor's claim of depreciation, without evidencing actual prior physical use of the windmills; such inference is impermissible. Applying the settled approach of construing exemptions beneficially, the Court agreed with the CIT(A) that mere depreciation claims by the lessor do not convert the assets into 'previously used' goods for disqualification under Section 80-IA(3).
The Tribunal's conclusion that the assets were 'previously used' solely because the lessor had claimed depreciation was set aside; absence of proof of actual prior physical use means the disqualification does not apply.
Final Conclusion: The tax case appeals are allowed. The Tribunal's orders denying deduction under Section 80-IA are set aside and the orders of the CIT(A) allowing the deduction are restored; the substantial questions of law are answered in favour of the assessee.
Faceless assessment - opportunity of personal hearing - principles of natural justice - procedure under Section 144B - assessment rendered non est if not made in accordance with procedure - remand for fresh consideration with direction to grant hearing and pass reasoned order
Opportunity of personal hearing - Faceless assessment - principles of natural justice - Validity of an assessment order passed without granting a requested personal hearing under the faceless assessment scheme and compliance with principles of natural justice. - HELD THAT: - The Court examined Section 144B(7)(vii)-(viii) in the context of the Faceless Assessment Scheme and held that where a variation is proposed in a draft or revised draft assessment order and the assessee requests personal hearing, the request must be considered. The use of the word 'may' in clause (vii) does not absolve the revenue of the obligation to consider a bona fide request for personal hearing, particularly in the absence of prescribed standards, procedures or processes for approval of such requests. In the present case no personal hearing was granted despite specific requests and the final order was essentially a reiteration of the draft order, causing a breach of the mandatory procedure under the Scheme and a violation of the principles of natural justice. The Court relied on the reasoning in the predecessor Division Bench decision in Sanjay Aggarwal to reinforce that failure to grant or consider personal hearing requests where variation is proposed warrants setting aside the assessment. [Paras 8]
Impugned assessment order set aside on account of violation of principles of natural justice and mandatory procedure under the Faceless Assessment Scheme.
Procedure under Section 144B - assessment rendered non est if not made in accordance with procedure - Consequences of non-compliance with the procedural requirements of Section 144B, including the effect of Section 144B(9). - HELD THAT: - The Court noted that Section 144B(9) provides that assessments made under section 143(3) or section 144 on or after 1 April 2021 shall be non est if not made in accordance with the procedure laid down under Section 144B. Given that the faceless assessment procedure and the opportunity for personal hearing (where variation is proposed) form part of that statutory procedure, non-observance of these prescribed steps renders the assessment invalid. Applying this statutory principle to the facts, the Court found the assessment non est for want of compliance with the procedure and consequently set it aside. [Paras 6, 9]
Assessment found to be invalid for non-compliance with the procedure under Section 144B and set aside.
Remand for fresh consideration - opportunity of personal hearing - reasoned order - Relief to be granted and further course of action following setting aside of the assessment order. - HELD THAT: - Having declared the assessment invalid for procedural non-compliance and breach of natural justice, the Court directed that the matter be remitted to the Assessing Officer. The AO is required to grant an opportunity of hearing to the petitioner by video conferencing and thereafter to pass a reasoned order in accordance with law, observing the procedural safeguards and considering any submissions made at the hearing. The remand is for fresh consideration in light of the statutory procedure and the need to afford the petitioner a hearing. [Paras 9]
Matter remanded to the Assessing Officer with direction to grant a video-conference hearing and thereafter pass a reasoned order.
Final Conclusion: The assessment order dated 09.06.2021, demand notice and consequential proceedings for Assessment Year 2018-19 are set aside for non-compliance with the Faceless Assessment Scheme and principles of natural justice; the matter is remanded to the Assessing Officer to grant a video-conference hearing and pass a reasoned order in accordance with law.
Reopening of assessment under Section 147/148 of the Income Tax Act - Validity of reopening based on assessment order of another assessment year - Opportunity to file objections and personal hearing (GKN principle) - Remand for consideration of additional objections and documents - Limitations on creating precedential entitlement by granting additional opportunity
Validity of reopening based on assessment order of another assessment year - Reopening of assessment under Section 147/148 of the Income Tax Act - The challenge to the reopening of assessment for Assessment Years 2009-10 and 2010-11 was not finally adjudicated on merits but was remitted for further consideration in light of materials which the assessee did not earlier place before the Assessing Officer. - HELD THAT: - The petitioner alleged that the reopening for AYs 2009-10 and 2010-11 was founded on the assessment order for AY 2008-09 and that identical materials had earlier led to dropping of reopening proceedings for AY 2007-08. The Court found that several documents and the order dropping proceedings for AY 2007-08 were not placed before the Assessing Officer in the objections dated 23.07.2014; consequently the Assessing Officer had no opportunity to consider those materials when disposing of the objections to the reopening. Given this omission, and recognising that the GKN opportunity to be heard doctrine had already been applied, the Court considered it appropriate in the interests of justice to permit the assessee to file additional objections with the omitted documents so that the Assessing Officer may consider them on merits and pass an appropriate order. The Court expressly refrained from deciding the substantive legality of the reopening on the present record and instead directed fresh consideration by the Assessing Officer after giving the revenue an opportunity to deal with the newly placed materials.
Petitioner permitted to file additional objections and documents within two weeks; Assessing Officer to consider the additional objections on merits, afford opportunity including personal hearing if sought, and dispose of them by passing an additional order within eight weeks of receipt.
Opportunity to file objections and personal hearing (GKN principle) - Limitations on creating precedential entitlement by granting additional opportunity - An additional opportunity to file objections was granted to the petitioner despite earlier omission to place certain materials, but the grant of such relief was confined to the peculiar facts of the case and not to be treated as a precedent creating a general right for other taxpayers. - HELD THAT: - The Court noted that the GKN doctrine (opportunity to be heard before reopening is finalised) had been complied with earlier, but the assessee omitted to include certain vital materials in its objections. Considering the impressed nature of the newly produced materials and in the interest of justice, the Court allowed a one-time additional opportunity to submit those materials and objections for consideration by the Assessing Officer. The Court cautioned that this direction arose from the factual matrix of the present case and that similar relief should not be assumed as an entitlement in other cases.
Additional opportunity granted to the petitioner to file objections and materials; the grant is limited to the present facts and shall not constitute a precedent or create a general right for other assessees.
Final Conclusion: Writ petitions disposed by permitting the assessee to file additional objections and documents within two weeks; the Assessing Officer shall consider and dispose of those additional objections on merits, after affording opportunity including personal hearing if sought, within eight weeks; no costs.
Prosecution under Section 276C(2) for willful attempt to evade payment of taxes - immunity from prosecution where aggregate tax, interest and penalty is below administrative threshold - administrative circular F.No.285/160/90/IT(INV)/190 dated 07.02.1991 - threshold for initiating prosecution - quashing of criminal proceedings under inherent powers of the High Court
Prosecution under Section 276C(2) for willful attempt to evade payment of taxes - administrative circular F.No.285/160/90/IT(INV)/190 dated 07.02.1991 - threshold for initiating prosecution - Whether the criminal proceedings in C.C. No.692/2015 under Section 276C(2) and Section 277 of the Income Tax Act should be quashed on account of the aggregate amount of tax, interest and penalty involved being below the threshold prescribed in the administrative circular. - HELD THAT: - The Court examined paragraph 5(iv) of the Government of India, Ministry of Finance circular F.No.285/160/90/IT(INV)/190 dated 07.02.1991 which states that prosecution for an offence under Section 276C(2) need not be initiated where the aggregate amount of tax, interest and penalty involved is less than Rs. 10,000/-. The material on record and the complainant's own case show that the aggregate amount involved in the alleged offence is below that threshold. Applying the administrative instruction, the Court concluded that initiation of prosecution in the facts of this case is impermissible and warrants quashing of the criminal proceedings instituted against the petitioners. [Paras 8]
Proceedings in C.C. No.692/2015 are quashed and the petition is allowed.
Final Conclusion: The petition is allowed and the criminal proceedings pending in C.C. No.692/2015 before the Principal Civil Judge & JMFC, Gokak, are quashed as the aggregate amount involved is below the threshold for initiating prosecution prescribed by the administrative circular.
Deduction under section 36(1)(viia)(c) for provisions for bad and doubtful debts - treatment of 'Reserve for bad and doubtful debts' as a provision in books of account - allowability of deduction where nomenclature in financial statements differs from statutory phraseology - interaction between RBI asset-classification/provisioning norms and Income-tax assessment of deductible provisions
Deduction under section 36(1)(viia)(c) for provisions for bad and doubtful debts - treatment of 'Reserve for bad and doubtful debts' as a provision in books of account - allowability of deduction where nomenclature in financial statements differs from statutory phraseology - Whether the amount shown in the books as 'Reserve for bad and doubtful debts' qualifies as a 'provision for bad and doubtful debts' and is allowable as a deduction under section 36(1)(viia)(c) for Assessment Year 2011-12. - HELD THAT: - The Assessing Officer disallowed the claimed deduction on the ground that no provision for bad and doubtful debts was created in the books. The Commissioner (Appeals) found on examination of the financial statements that the assessee had created an entry described as 'Reserve for bad and doubtful debts' amounting to the specified sum, and treated that entry as a provision for bad and doubtful debts. The Revenue did not point out any infirmity in the factual finding of the Commissioner (Appeals) before the Tribunal. In the absence of any challenge to that finding, the Tribunal accepted the Commissioner (Appeals)'s conclusion that the amount in the books constituted a provision qualifying for deduction under section 36(1)(viia)(c). [Paras 7, 8]
The addition disallowing the claimed deduction was restricted by the Commissioner (Appeals) and the Revenue's appeal is dismissed.
Deduction under section 36(1)(viia)(c) for provisions for bad and doubtful debts - interaction between RBI asset-classification/provisioning norms and Income-tax assessment of deductible provisions - allowability of deduction where book provision exceeds claimed deduction - Whether the Assessing Officer was justified in making an addition by denying part of the deduction claimed under section 36(1)(viia)(c) for Assessment Year 2014-15, when the books showed aggregate provisions and the assessee had claimed a smaller amount in return. - HELD THAT: - The Assessing Officer treated a large portion of the aggregate provisions as not constituting provision for doubtful assets and denied the corresponding portion of the deduction, observing that RBI classification/norms could not override Income-tax provisions. The Commissioner (Appeals) examined the accounts, found that aggregate provisions for bad and doubtful debts recorded in the books exceeded the amount claimed in the return, and noted that the Assessing Officer had already allowed a part of the claim. The Commissioner (Appeals) concluded there was no ground for the addition, and the Revenue did not demonstrate any flaw in that factual and legal conclusion before the Tribunal. Consequently, the Tribunal upheld the Commissioner (Appeals)'s deletion of the addition. [Paras 13, 14]
The addition made by the Assessing Officer was deleted by the Commissioner (Appeals) and the Revenue's appeal is dismissed.
Final Conclusion: Both appeals filed by the Revenue against the Commissioner (Appeals)'s orders for Assessment Years 2011-12 and 2014-15, seeking disallowance of claimed deductions under section 36(1)(viia)(c), are dismissed as the Tribunal found no error in the factual findings and conclusions of the Commissioner (Appeals) regarding the existence and allowability of the provisions recorded in the books of account.
Disallowance under section 14A read with Rule 8D - Application of section 14A where no exempt income is earned - Direct nexus between expenditure and exempt income - Precedential effect of High Court decisions on section 14A
Disallowance under section 14A read with Rule 8D - Application of section 14A where no exempt income is earned - Precedential effect of High Court decisions on section 14A - Deletion of the disallowance made under section 14A read with Rule 8D where the assessee did not earn any exempt dividend income during the year. - HELD THAT: - The Tribunal accepted the assessee's uncontested factual position that no exempt dividend income was earned in the relevant years. The Commissioner (Appeals) had followed earlier decisions of the Delhi High Court (including Chemnivest Ltd. and IL & FS Energy Development Co. Ltd.) and decisions holding that section 14A does not permit disallowance where no exempt income is received. Revenue did not place any contrary binding authority or point out any error in the CIT(A)'s reliance on those decisions. In those circumstances, and having regard to the requirement that disallowance under section 14A operates in relation to exempt income actually earned, the Tribunal found no reason to interfere with the deletion of the addition made by the Assessing Officer and dismissed the appeal. The Tribunal applied the cited precedents and the uncontested factual finding (no dividend income) as determinative of the section 14A claim. [Paras 10, 11, 12]
The deletion of the disallowance under section 14A read with Rule 8D was upheld and the Revenue's appeals for A.Y. 2013-14 and A.Y. 2014-15 were dismissed.
Final Conclusion: Where the assessee did not receive exempt dividend income in the relevant year and Revenue failed to controvert that fact or cite contrary binding authority, disallowance under section 14A read with Rule 8D was not sustained; the Revenue's appeals for A.Y. 2013-14 and A.Y. 2014-15 are dismissed.
Admission of additional evidence under Rule 46A - duty to consider remand report - remand to Assessing Officer for fresh adjudication - assessment under section 143(3) of the Income-tax Act, 1961 - restoration for fresh assessment after opportunity to assessee
Admission of additional evidence under Rule 46A - duty to consider remand report - remand to Assessing Officer for fresh adjudication - assessment under section 143(3) of the Income-tax Act, 1961 - Whether the CIT(A) was justified in rejecting the additional evidence filed by the assessee under Rule 46A and whether the matter should be restored to the Assessing Officer for fresh consideration. - HELD THAT: - The assessee filed additional evidence before the CIT(A) under Rule 46A and the CIT(A) obtained a remand report from the Assessing Officer. The remand report recorded that the AO had not been able to verify the transactions properly while framing the assessment under section 143(3) because the case or the AO was in transit due to departmental restructuring, and recommended restoration of the matter to the AO with sufficient time to inquire into each transaction. The assessee expressly stated it had no objection to the AO being given additional time to inquire and to a conclusive remand report. The CIT(A), however, rejected the additional evidence without addressing the material facts set out in the remand report or providing the AO the opportunity the AO himself had requested. In these circumstances the CIT(A)'s refusal to admit and consider the additional evidence was not justified. The appropriate course is to restore the issues to the file of the Assessing Officer for fresh examination and verification of the additional evidence after giving the assessee due opportunity.
Additional evidence rejected by the CIT(A) set aside; matter restored to the Assessing Officer for fresh adjudication and verification of the additional evidence after providing opportunity to the assessee.
Final Conclusion: The appeal is allowed for statistical purposes and the matters are restored to the Assessing Officer for fresh consideration and verification of the additional evidence filed by the assessee, after giving the assessee appropriate opportunity.
Deduction for bad debts under section 36(1)(vii) - ordinary course of banking business - writing off irrecoverable deposits in accounts - RBI guidelines and directions to Urban Cooperative Banks on provisioning - precedential value of coordinate Benches of the Tribunal
Deduction for bad debts under section 36(1)(vii) - ordinary course of banking business - writing off irrecoverable deposits in accounts - RBI guidelines and directions to Urban Cooperative Banks on provisioning - Whether the amount written off by the assessee on account of fixed deposits placed with Madhupura Mercantile Co-op. Bank Ltd., which was under liquidation, is allowable as a deduction under section 36(1)(vii) as irrecoverable in the ordinary course of banking business. - HELD THAT: - The Tribunal held that the deposits placed by the assessee-bank with MMC Bank were in the ordinary course of its banking business and the assessee had written off the amount as irrecoverable in its books in accordance with its bye-laws and in conformity with Reserve Bank of India instructions to Urban Cooperative Banks to make full provision against exposure to MMC Bank. The assessee demonstrated creation and utilisation of an Investment Depreciation Fund and MMC Bank FD Depreciation Fund through appropriation from profit & loss, and compliance with RBI guidance formed a material part of the conclusion that the loss was genuine and properly written off. The Tribunal also relied on decisions of coordinate Benches dealing with substantially similar facts, which recorded that statutory findings and RBI actions (including cancellation of MMC Bank's licence and the factual impossibility of recovery) supported allowance of the write off as business loss/deduction under the relevant provision. The Revenue did not point to any distinguishing factual circumstance warranting a contrary view. Applying these determinative considerations, the Tribunal accepted the ld. CIT(A)'s conclusion that both conditions for allowance under section 36(1)(vii) were satisfied - the amount was irrecoverable and represented money lent/placed in the ordinary course of banking business - and therefore rejected the addition made by the Assessing Officer. [Paras 6, 7]
The write off of the FDRs placed with MMC Bank is allowable as a deduction under section 36(1)(vii) and the addition made by the Assessing Officer is deleted.
Final Conclusion: Revenue's appeal is dismissed and the order of the ld. CIT(A) deleting the addition is confirmed.
Deduction under section 80P(2)(a)(i) - Principle of mutuality - Construction of "members" in light of the relevant Co operative Societies Act - Registration under Karnataka Souharda Sahakari Act, 1997 vis a vis Co operative Societies Act, 1959
Deduction under section 80P(2)(a)(i) - Principle of mutuality - Construction of "members" in light of the relevant Co operative Societies Act - Registration under Karnataka Souharda Sahakari Act, 1997 vis a vis Co operative Societies Act, 1959 - Whether the assessee is entitled to deduction claimed under section 80P(2)(a)(i) having regard to membership composition, mutuality and its registration status. - HELD THAT: - The Tribunal noted conflicting findings at assessment and CIT(A) levels that the society had admitted regular, associate and nominal members, that substantial business/income related to nominal/associate members and that the society is registered under the Karnataka Souharda Sahakari Act, 1997 rather than as a co operative society under the Co operative Societies Act, 1959. Applying the Supreme Court's direction that the expression "members" in section 80P(2)(a)(i) must be construed with reference to the definition in the relevant co operative statute, the Tribunal held that the matter requires fresh examination in the light of the Supreme Court's decision in Mavilayi Service Cooperative Bank Ltd. The Tribunal therefore remitted the issue to the Assessing Officer to re examine entitlement to the deduction taking into account the construction of "members" under the applicable co operative law and the effect on the principle of mutuality. [Paras 13, 14]
Remitted to the Assessing Officer for fresh examination of entitlement to deduction under section 80P(2)(a)(i) in light of the Supreme Court's guidance; appeal allowed for statistical purposes.
Final Conclusion: The Tribunal did not decide the merits of the claim for deduction under section 80P(2)(a)(i). The matter is remitted to the Assessing Officer for fresh consideration of whether the society satisfies the requirement of "members" and the principle of mutuality under the applicable co operative statute (per Mavilayi Service Cooperative Bank Ltd.), and the appeal is allowed for statistical purposes.
Deduction under section 80IA - substantial compliance - filing of audited accounts and tax audit report/Form 10CCB as curable defect - effect of belated return on entitlement to statutory deduction - liberal construction once threshold of applicability is crossed
Deduction under section 80IA - substantial compliance - filing of audited accounts and tax audit report/Form 10CCB as curable defect - effect of belated return on entitlement to statutory deduction - Whether deduction claimed under section 80IA could be disallowed solely because the return of income was filed belatedly. - HELD THAT: - The Tribunal found that the assessee had filed audited accounts, the tax audit report and Form No. 3CCB (for claiming deduction under section 80IA) which contained the requisite particulars and were available to the assessing officer, and that the assessee was unable to file the return by the due date because it could not pay the self-assessment tax due to financial stringency. The Tribunal applied the principle that once the threshold for applicability of a deduction is crossed, provisions should be construed liberally and technical deficiencies which are curable should not defeat substantive entitlement. Reliance was placed on precedents and the Tribunal's view that filing of the audit report/Form 10CCB is a curable defect which can be remedied and the claim considered on merits when the essential statutory purpose is fulfilled. There was also no finding by the assessing officer that the assessee was ineligible on merits. On these facts the Tribunal directed that the deduction be allowed and observed that the decision should not be treated as a precedent for other years. [Paras 8, 9, 11]
Deduction under section 80IA allowed despite belated filing of the return; assessing officer directed to allow the claimed deduction.
Final Conclusion: Appeal allowed; the assessing officer is directed to allow the deduction claimed under section 80IA for AY 2013-14 on the facts that audited accounts, tax audit report and Form No. 3CCB were on record and the delay in filing the return was due to financial stringency.
Treatment of income declared as business income versus income from other sources - double addition - ITR-4 and presumptive taxation - correction under Section 154 of the Income-tax Act
Treatment of income declared as business income versus income from other sources - double addition - ITR-4 and presumptive taxation - correction under Section 154 of the Income-tax Act - Whether the addition of Rs. 6,49,849/- treated as income from other sources by CPC and confirmed by the CIT(A) was unsustainable where the assessee had declared the same as business income in ITR-4 and had not opted for any presumptive scheme, and whether such addition would constitute a double addition requiring deletion. - HELD THAT: - The assessee filed ITR-4 declaring commission income from LIC and post office under the head "profit from business & profession", showing receipts and claimed business expenses and net profit. CPC processed the return by treating the commission reflected in Form 26AS as income from other sources and made an addition of Rs. 6,49,849/-. An application under Section 154 to rectify was rejected and the CIT(A) upheld the addition on the premise that the assessee had filed a wrong ITR and had wrongly declared income under a presumptive scheme. The Tribunal noted that the assessee and his authorised representative consistently maintained that no presumptive scheme was opted and that full particulars of income and expenditure were offered under business income in ITR-4. Revenue failed to demonstrate that the assessee had availed a presumptive scheme at any stage. The commission income had TDS reflected in Form 26AS but represented the same business receipts declared in the return. In these circumstances sustaining the addition would amount to taxing the same receipts twice. Having regard to the record, the Tribunal concluded that the CIT(A)'s confirmation was not justified and directed the assessing officer to delete the addition. [Paras 8, 9]
Addition of Rs. 6,49,849/- deleted and appeal allowed; assessing officer directed to give effect to deletion.
Final Conclusion: The Tribunal allowed the appeal for A.Y. 2017-18, set aside the addition treated as income from other sources, held that the assessee had declared the receipts as business income in ITR-4 and had not adopted a presumptive scheme, and directed deletion of the addition to avoid double taxation.
Appeal to High Court where case involves a substantial question of law - no appeal to High Court against Appellate Tribunal orders relating to the rate of duty of customs or to the value of goods for purposes of assessment - appeal to Supreme Court under Section 130E(b) in respect of orders relating to rate of duty or value of goods
No appeal to High Court against Appellate Tribunal orders relating to the rate of duty of customs or to the value of goods for purposes of assessment - appeal to Supreme Court under Section 130E(b) in respect of orders relating to rate of duty or value of goods - appeal to High Court where case involves a substantial question of law - Maintainability of writ petition challenging the Appellate Tribunal's order dated 12.04.2002. - HELD THAT: - The Court held that Section 130 of the Customs Act provides for appeals to the High Court from Appellate Tribunal orders only where the High Court is satisfied that the case involves a substantial question of law, and that orders relating to the determination of the rate of duty of customs or the value of goods for purposes of assessment are excluded from such appeals to the High Court. Further, Section 130E(b) permits appeal to the Supreme Court in respect of Appellate Tribunal orders concerning the rate of duty or the value of goods. Applying these statutory provisions, the Court concluded that the present writ petition attacking the Tribunal's order is not maintainable before the High Court and that the petitioner must seek redress in the appropriate forum, namely by pursuing the remedy available under Section 130E where applicable. [Paras 2, 5, 6]
Writ petition dismissed as not maintainable; petitioner permitted to approach the appropriate forum for relief.
Final Conclusion: The writ petition challenging the Appellate Tribunal's order is dismissed for want of maintainability because orders relating to rate of duty or value of goods are not cognisable by the High Court under Section 130; remedy, if any, lies under Section 130E before the Supreme Court.
Export obligation - Export Obligation Discharge Certificate (EODC) - EPCG scheme and concessional duty subject to export obligation - recovery of duty foregone - keeping proceedings in abeyance pending DGFT regularisation - penal measures and confiscation under the Customs Act
Export obligation - Export Obligation Discharge Certificate (EODC) - recovery of duty foregone - Whether appellants had fulfilled the export obligation within the stipulated time and whether issuance/submission of EODC prior to the appellate order precluded demand of duty foregone. - HELD THAT: - The Tribunal found on the record that the EPCG licences and imports related to 2007-08, and that the export obligations were in fact fulfilled on 31.03.2011, well within the licence period. Although the EODC could not be issued within 30 days due to delays in DGFT regularisation, the certificate was ultimately issued on 30.03.2017 and was produced before the Commissioner (Appeals) prior to determination of the appeal. The sole ground on which the original demand was confirmed was non-production of EODC; where the export obligation has been fulfilled and the EODC issued (even if issued after the original adjudication but before the appellate decision), the law and precedents require that the demand for recovery of duty foregone cannot be sustained. The Tribunal relied on earlier judicial decisions holding that customs authorities should not coerce recovery where regularisation/EODC issuance is pending before DGFT and that submission or issuance of EODC must be taken into account. Consequently the demand confirmed for want of EODC was held unsustainable. [Paras 9, 10, 11, 12, 13]
The demand for recovery of duty foregone was held to be unjustified and set aside because the export obligation had been fulfilled in time and the EODC was issued and placed on record prior to the appellate decision.
Keeping proceedings in abeyance pending DGFT regularisation - Export Obligation Discharge Certificate (EODC) - EPCG scheme and concessional duty subject to export obligation - Whether adjudicating authorities ought to have kept the proceedings in abeyance pending DGFT's decision on regularisation and issuance of EODC. - HELD THAT: - The Tribunal observed that CBIC Circular No.16/2017-Cus (02.05.2017) directs that where proof of application for EODC regularisation has been submitted to DGFT, the customs proceedings may be kept in abeyance until DGFT decides the matter. In the present case the appellant had communicated pendency of the application and the delay in issuance of EODC was not attributable to the appellant. The original adjudicating authority proceeded to confirm recovery notwithstanding the pending regularisation and the Commissioner (Appeals) ignored the EODC produced before him. Such conduct was held to be improper and contrary to the circular and judicial precedent, and therefore liable to be set aside. [Paras 8, 11, 12, 13]
Proceedings should have been kept in abeyance pending DGFT regularisation; failure to do so and ignoring the issued EODC rendered the impugned orders unsustainable.
Penal measures and confiscation under the Customs Act - recovery of duty foregone - Whether coercive recovery, confiscation or penalties could be validly imposed where EODC showed fulfillment of export obligation. - HELD THAT: - The Tribunal noted there was no finding that the appellant intentionally defeated revenue. Where the export obligation is satisfied and EODC issued, recovery of duty waiver and imposition of penalties/confiscation on that basis is improper. The orders confirming duty, confiscation and penalties were therefore unsustainable in view of the EODC and settled law that issuance of EODC precludes such recovery. [Paras 9, 11, 13]
The coercive recovery and confirmation of penalties/confiscation were quashed as inappropriate in face of EODC demonstrating fulfillment of export obligations.
Final Conclusion: Appeals allowed; impugned orders confirming demand were set aside as appellants had fulfilled export obligations in time and EODC was issued and produced before the appellate forum, and the authorities should have kept proceedings in abeyance pending DGFT regularisation; Registrar directed to summon the concerned Commissioner (Appeals) to explain ignoring the EODC.
Issues: Whether the appeal survived after approval of the Resolution Plan under the Insolvency and Bankruptcy Code, 2016, and whether pre-approval claims against the corporate debtor stood extinguished.
Analysis: The Resolution Plan had been approved by the National Company Law Tribunal and was held to be in accordance with section 30(2) of the Insolvency and Bankruptcy Code, 2016 and the relevant CIRP Regulations. The approved plan expressly bound the corporate debtor, its creditors and governmental authorities in terms of section 31(1) of the Code. As the appeal related to a claim arising prior to the approval date, and the plan provided for extinguishment of pre-approval liabilities and proceedings, nothing survived for adjudication.
Conclusion: The appeal did not survive after approval of the Resolution Plan and was disposed of.
Ratio Decidendi: Once a Resolution Plan is approved under section 31(1) of the Insolvency and Bankruptcy Code, 2016, it binds all stakeholders and extinguishes pre-approval claims and proceedings covered by the plan.
Extinguishment of pre-approval claims under an approved Resolution Plan - Resolution Plan binding on corporate debtor, creditors and governmental authorities - Effect of NCLT approval under section 31(1) of the Insolvency and Bankruptcy Code - Corporate Insolvency Resolution Process (CIRP) - Finality of proceedings and disposal of pending appeals consequent to approved Resolution Plan
Extinguishment of pre-approval claims under an approved Resolution Plan - Resolution Plan binding on corporate debtor, creditors and governmental authorities - Finality of proceedings and disposal of pending appeals consequent to approved Resolution Plan - Whether the pending appeal survives after approval of the Resolution Plan by the NCLT which extinguished claims and liabilities existing prior to the NCLT approval date. - HELD THAT: - The Tribunal recorded that the NCLT, in the insolvency proceedings, approved the Resolution Plan and expressly held that the plan is binding on the corporate debtor and its creditors including the Central Government and other authorities, in terms of the statutory scheme. The Resolution Plan provided for extinguishment or waiver of all claims and liabilities of the company in respect of periods prior to the NCLT approval date and the payment schedules under the plan have been completed. Given the NCLT's approval and the terms of the Resolution Plan extinguishing pre-approval claims, the underlying dispute in the present appeal, which arose prior to the NCLT approval date, no longer survives for adjudication. [Paras 4, 5]
The appeal is disposed of as being extinguished by the NCLT-approved Resolution Plan.
Final Conclusion: The appeal was dismissed as not surviving in view of the NCLT's approval of the Resolution Plan, which rendered pre-approval claims and related proceedings extinguished and binding on the parties.
Scheme of Amalgamation - sanction under Sections 230 to 232 of the Companies Act, 2013 - power of Tribunal to sanction scheme subject to conditions - auditor's certificate confirming compliance with applicable accounting standards - transfer of assets and liabilities on amalgamation - no waiver of statutory liabilities or bar on initiation of proceedings - compliance with observations of Registrar of Companies and Regional Director - registration of Tribunal order with Registrar of Companies - dispensation of convening meetings of shareholders and creditors
Scheme of Amalgamation - sanction under Sections 230 to 232 of the Companies Act, 2013 - power of Tribunal to sanction scheme subject to conditions - Sanction of the Scheme of Amalgamation between Edreams Edusoft Private Limited (Transferor) and Indiavidual Learning Limited (Transferee). - HELD THAT: - The Tribunal examined the petition filed under Sections 230-232 and the accompanying material including the auditor's certificate, reports of ROC and RD, the Official Liquidator's scrutiny report and statutory authorities' communications. Finding that the Scheme is comprehensive, prima facie fair and reasonable, not detrimental to members, creditors or public policy, and that requisite pre-conditions under the Companies Act and Rules have been complied with, the Tribunal was satisfied that it could grant sanction. The sanction is, however, granted subject to compliance with the various undertakings and observations recorded by statutory authorities and other conditions set out in the Order. [Paras 9, 10, 12]
The Scheme is provisionally sanctioned, subject to compliance with the undertakings and statutory observations recorded by the Tribunal.
Effective date of amalgamation - transfer of assets and liabilities on amalgamation - Effective date of the amalgamation and vesting of assets and liabilities in the Transferee Company. - HELD THAT: - The Tribunal accepted the date proposed in the Scheme as the effective date and ordered that upon the Scheme becoming effective the investment of the Transferee Company in the Transferor Company shall stand cancelled and that assets, liabilities and obligations of the Transferor Company shall stand transferred and vested in the Transferee Company in accordance with the Scheme. The sanction was made operative from the effective date stated in the Scheme, while preserving the Scheme's provisions regarding vesting. [Paras 7, 12, 13]
The Scheme is sanctioned with the effective date as 1st April, 2020 and assets and liabilities shall vest in the Transferee Company accordingly.
No waiver of statutory liabilities or bar on initiation of proceedings - power of Tribunal to sanction scheme subject to conditions - Whether sanction of the Scheme extinguishes or waives statutory liabilities or prevents initiation of enforcement or regulatory proceedings. - HELD THAT: - The Tribunal reiterated the settled legal position that sanctioning an arrangement does not operate to waive past violations or statutory liabilities and does not prevent statutory authorities from initiating proceedings for alleged contraventions. The Transferee Company will inherit liabilities of the Transferor Company, and statutory authorities remain free to take action and to approach the Tribunal for directions by filing appropriate applications. [Paras 11, 13]
Sanction does not waive any pre-existing violations or liabilities; statutory authorities retain the right to initiate proceedings and seek directions.
Compliance with observations of Registrar of Companies and Regional Director - auditor's certificate confirming compliance with applicable accounting standards - Obligations to comply with observations made by ROC/RD and to abide by auditor's certificate regarding accounting treatment. - HELD THAT: - The Tribunal noted the observations made by the ROC and RD concerning matters such as authorized capital clubbing, shareholding/CCPS records, related party compliances and convening of meetings (as applicable). It recorded the petitioners' explanations and documents, and directed that the Scheme is to be sanctioned subject to compliance with the undertakings and observations of statutory authorities. The Tribunal relied upon the auditors' certificate confirming that the accounting treatment in the Scheme conforms to applicable accounting standards as a material compliance requirement. [Paras 4, 5, 10, 12]
Petitioners must comply with the observations of ROC/RD and adhere to the accounting treatment certified by auditors; sanction is subject to such compliance.
Registration of Tribunal order with Registrar of Companies - direction to Registrar for filing/registration - Requirement to file a certified copy of the Tribunal's order and the Scheme with the Registrar of Companies. - HELD THAT: - In terms of the Companies (Compromises, Arrangements and Amalgamations) Rules, the Tribunal directed the companies to deliver a certified copy of the Order along with the Scheme to the Registrar of Companies for registration within the time prescribed by the Rules. This is a statutory compliance step consequent to sanctioning the Scheme. [Paras 13]
The company must, within thirty days of receipt of this Order, deliver a certified copy of the Order and the Scheme to the Registrar of Companies for registration.
Final Conclusion: C.P.(CAA) No. 48/BB/2020 disposed of by provisionally sanctioning the Scheme of Amalgamation of Edreams Edusoft Private Limited with Indiavidual Learning Limited with effect from 1 April 2020, subject to compliance with auditors' certification, observations of statutory authorities and other conditions; sanction does not extinguish any statutory liabilities and the order is to be filed with the Registrar of Companies within thirty days.
Scheme of Amalgamation - Appointed Date - sanction under Section 230(6) read with Section 232(3) of the Companies Act, 2013 - transfer and vesting of assets and liabilities - continuation of pending proceedings - employee engagement on amalgamation - issue and allotment of shares as consideration - filing of certified copy with Registrar of Companies and dissolution of transferor companies
Scheme of Amalgamation - sanction under Section 230(6) read with Section 232(3) of the Companies Act, 2013 - Appointed Date - Sanction of the Scheme of Amalgamation between the four Transferor Companies and the Transferee Company with effect from 01.04.2018. - HELD THAT: - The Tribunal considered the petition for sanction of the Scheme, noting unanimous board approvals, affidavits of consent from shareholders and creditors, statutory audit certificates confirming accounting treatment, service of statutorily required notices and publication, and receipt of representations from the Regional Director and the report of the Official Liquidator. No objector opposed the Scheme. Having perused the records and submissions and having regard to the compliance with statutory formalities, the Tribunal sanctioned the Scheme to be binding with effect from the Appointed Date 01.04.2018. [Paras 3, 4, 5, 6, 7]
The Scheme of Amalgamation is sanctioned and shall be binding with effect from 01.04.2018.
Transfer and vesting of assets and liabilities - transfer pursuant to Section 232(4) - Transfer and vesting of all properties, rights, powers, debts, liabilities, duties and obligations of the Transferor Companies to the Transferee Company as from the Appointed Date. - HELD THAT: - Pursuant to the sanctioned Scheme and in exercise of powers under Section 232(4) of the Companies Act, 2013, the Tribunal directed that all assets and specified rights of the Transferor Companies be transferred and vested in the Transferee Company and that all debts, liabilities, duties and obligations be transferred to and become those of the Transferee Company from the Appointed Date, subject to existing charges and as provided in the Scheme. [Paras 7]
All assets, rights, debts and liabilities of the Transferor Companies are transferred to and shall vest in/become those of the Transferee Company from the Appointed Date.
Employee engagement on amalgamation - Engagement of employees of the Transferor Companies by the Transferee Company in accordance with the Scheme. - HELD THAT: - The Tribunal directed that employees of the Transferor Companies shall be engaged by the Transferee Company as provided in the Scheme, thereby securing continuity of employment arrangements post-amalgamation. [Paras 7]
Employees of the Transferor Companies shall be engaged by the Transferee Company as provided in the Scheme.
Continuation of pending proceedings - Continuation of proceedings, suits and appeals by or against the Transferor Companies by or against the Transferee Company. - HELD THAT: - The Tribunal ordered that all proceedings and/or suits and/or appeals pending by or against the Transferor Companies shall be continued by or against the Transferee Company in accordance with the Scheme, ensuring legal continuity of pending matters. [Paras 7]
Pending proceedings by or against the Transferor Companies shall be continued by or against the Transferee Company.
Issue and allotment of shares as consideration - Obligation of the Transferee Company to issue and allot shares to shareholders of the Transferor Companies as per the Scheme. - HELD THAT: - The Tribunal directed the Transferee Company to issue and allot, without further application, the shares to which the shareholders of the Transferor Companies are entitled under the Scheme, noting that the exchange ratio had been fixed on a fair and reasonable basis and supported by a report of auditors/chartered accountants. [Paras 3, 7]
The Transferee Company shall issue and allot the shares to the Transferor Companies' shareholders in terms of the Scheme.
Filing of certified copy with Registrar of Companies and dissolution of transferor companies - Requirement to file certified copies of the Tribunal's order with the Registrar of Companies and consequent dissolution of the Transferor Companies. - HELD THAT: - The Tribunal directed that each of the Transferor Companies and the Transferee Company shall, within thirty days of receipt of the order, cause a certified copy to be delivered to the Registrar of Companies for registration, and upon such filing the Transferor Companies shall be dissolved with effect from the date of filing of the certified copies; the Registrar is to consolidate the records accordingly. The Tribunal also granted leave to file the Schedule of Assets in prescribed Form No. CAA7 within three weeks. [Paras 7, 8]
Certified copies of the order shall be filed with the Registrar of Companies and, upon filing, the Transferor Companies shall stand dissolved; Schedule of Assets to be filed as directed.
Statutory compliance and reports of Regional Director and Official Liquidator - Satisfaction of statutory formalities and consideration of representations/reports from the Regional Director and Official Liquidator. - HELD THAT: - The Tribunal took note of compliance with statutory requirements including notices to statutory/sectoral authorities and advertisement, the RD's representations and final report, and the Official Liquidator's report that the affairs of the Transferor Companies did not appear to have been conducted in a manner prejudicial to members or public interest. These materials informed the Tribunal's satisfaction to sanction the Scheme. [Paras 4, 5, 6, 7]
Statutory formalities have been complied with and the RD's and Official Liquidator's reports do not preclude sanction; the Tribunal is satisfied to approve the Scheme.
Dismissal of erroneously filed petition - Disposition of Company Petition (CAA) No. 28/KB/2021 as dismissed/withdrawn. - HELD THAT: - The Tribunal recorded that Company Petition (CAA) No. 28/KB/2021 was erroneously uploaded as a fresh case instead of filing old documents on the e-filing portal and dismissed it as withdrawn. [Paras 1, 10]
Company Petition (CAA) No. 28/KB/2021 is dismissed as withdrawn.
Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the four Transferor Companies and North Bengal Promoters Private Limited to be effective from 01.04.2018, directed transfer and vesting of assets and liabilities, continuation of pending proceedings, engagement of employees, allotment of consideration shares, filing of the Schedule of Assets and certified copy with the Registrar of Companies (upon which the Transferor Companies shall be dissolved), and dismissed the erroneously filed Company Petition (CAA) No. 28/KB/2021 as withdrawn.
Dispensing with meetings under Section 230(1) read with Section 232(1) - Consent by all shareholders to dispense meeting - Consent by creditors to dispense meeting - No requirement of meeting where auditors certify NIL creditors - Service of notice under Section 230(5) with authority representation period - Filing of affidavit proving service and compliance
Dispensing with meetings under Section 230(1) read with Section 232(1) - Consent by all shareholders to dispense meeting - Meeting of equity shareholders of the Applicant Companies for considering the Scheme dispensed with. - HELD THAT: - The Tribunal recorded that all equity shareholders of Applicant Nos.1 to 3 have given their consent to the Scheme by way of affidavits annexed to the application. On that basis and after perusal of records and submissions, the Tribunal allowed the application to dispense with holding meetings of the equity shareholders for the purpose of considering the Scheme. [Paras 4, 9]
Meetings of equity shareholders of Applicant Nos.1 to 3 are dispensed with.
Consent by creditors to dispense meeting - Dispensing with meetings under Section 230(1) read with Section 232(1) - Meeting of secured creditors and meeting of unsecured creditors of Applicant No.1 for considering the Scheme dispensed with. - HELD THAT: - The Tribunal noted that secured creditors of Applicant No.1 representing 100% in value and unsecured creditors of Applicant No.1 representing 94.36% in value have given their consent to the Scheme by affidavits annexed to the application. Having considered the consents and the records, the Tribunal exercised its power to dispense with the meetings of those classes of creditors. [Paras 5, 6, 9]
Meetings of secured creditors of Applicant No.1 and of unsecured creditors of Applicant No.1 are dispensed with.
No requirement of meeting where auditors certify NIL creditors - No meeting required to be held for secured and unsecured creditors of Applicant Nos.2 and 3 as auditors' certificates verify NIL creditors. - HELD THAT: - The application and accompanying auditors' certificates established that Applicant Nos.2 and 3 have NIL secured and unsecured creditors. On that factual basis the Tribunal directed that there is no requirement to hold meetings for those classes of creditors. [Paras 7, 9]
No meetings required for secured and unsecured creditors of Applicant Nos.2 and 3.
Service of notice under Section 230(5) with authority representation period - Directions issued for service of notice under Section 230(5) to specified authorities and the period for filing representations. - HELD THAT: - The Tribunal directed that notice under Section 230(5) of the Companies Act, 2013, with accompanying documents including the Scheme and statement, shall be served on the Regional Director (Eastern Region), Registrar of Companies, Official Liquidator (High Court Calcutta), and the Income Tax Department having jurisdiction, clearly indicating the PAN of the company concerned. The notice is to be sent within two weeks and must specify that any representation be filed before the Tribunal within 30 days from receipt, with a copy to the authorised representative of the applicant(s). If no representation is received within that period, it shall be presumed the authorities have no representation. [Paras 10]
Notice under Section 230(5) to be served on the specified authorities within two weeks and representations, if any, to be filed within 30 days.
Filing of affidavit proving service and compliance - Applicants directed to file an affidavit proving service of notices and compliance with directions. - HELD THAT: - The Tribunal required the applicant(s) to file an affidavit evidencing service of the notices and compliance with the directions contained in the order, thereby ensuring administrative compliance before further steps in the CAA proceedings. [Paras 11]
Applicant(s) to file an affidavit proving service and compliance of directions.
Disposal of company application - Company Application (CAA) No.95/KB/2021 disposed of accordingly. - HELD THAT: - Having passed the foregoing directions and dispensed with the specified meetings, the Tribunal disposed of the instant company application while permitting urgent certified copies subject to formalities. [Paras 12, 13]
CAA No.95/KB/2021 disposed of; urgent certified copy may be supplied on compliance with formalities.
Final Conclusion: The Tribunal allowed the first-stage application under Sections 230(1) and 232(1) of the Companies Act, 2013 to dispense with specified meetings-equity shareholders of all applicants, secured and unsecured creditors of Applicant No.1-and held that no meetings were required for Applicant Nos.2 and 3 due to NIL creditors; it directed service of statutory notices under Section 230(5) on specified authorities within two weeks, required filing of an affidavit proving service, and disposed of CAA No.95/KB/2021.
Scheme of Amalgamation - dispensing with meeting of shareholders and creditors - consent by shareholders and creditors by affidavits - no requirement of meeting where secured creditors are nil or paid and issued no-dues certificate - service of notice under Section 230(5) of the Companies Act, 2013 - filing and annexure of modified scheme
Dispensing with meeting of shareholders and creditors - consent by shareholders and creditors by affidavits - Meetings of equity shareholders of Applicant No.1 and Applicant No.2 with respect to the Scheme are dispensed with. - HELD THAT: - The Tribunal examined the record and accepted the Applicants' affidavits showing that all equity shareholders of both Applicant companies had given their consent to the Scheme. In view of unanimous consent evidenced by the affidavits, the statutory requirement to convene meetings of equity shareholders for considering the Scheme was dispensed with and no meeting of equity shareholders need be held.
Meetings of equity shareholders of both Applicant companies dispensed with; no meeting required.
Dispensing with meeting of shareholders and creditors - consent by shareholders and creditors by affidavits - Meeting of unsecured creditors of Applicant No.1 and Applicant No.2 for considering the Scheme are dispensed with to the extent of creditors who have given consent as shown in affidavits. - HELD THAT: - The Tribunal noted that unsecured creditors of Applicant No.1 representing 91.66% in value had given affidavits of consent, and unsecured creditors of Applicant No.2 representing 100% in value had given affidavits of consent. Having regard to the consents filed and the statutory scheme, the Tribunal dispensed with holding meetings of unsecured creditors to consider the Scheme.
Meetings of unsecured creditors as to the consenting creditors dispensed with; no meeting required.
No requirement of meeting where secured creditors are nil or paid and issued no-dues certificate - No meeting of secured creditors of Applicant No.1 or Applicant No.2 is required. - HELD THAT: - The Applicants produced an auditors' certificate verifying NIL secured creditors for Applicant No.1, and a no-dues / account-closure certificate showing secured creditor of Applicant No.2 had been paid subsequent to filing. On that basis the Tribunal held there was no requirement to convene meetings of secured creditors.
No meetings of secured creditors required for either Applicant.
Service of notice under Section 230(5) of the Companies Act, 2013 - Directions issued for service of notice and accompanying documents on specified regulatory authorities under Section 230(5). - HELD THAT: - The Tribunal ordered that notice under Section 230(5) of the Companies Act, 2013 along with the Scheme and statement be served on the Regional Director (Eastern Region), Registrar of Companies, Official Liquidator (High Court Calcutta) and the Income Tax Department, by hand, post or email within two weeks. The notice must inform those authorities that any representation be filed within 30 days of receipt and be sent simultaneously to the Applicants' authorised representative. The Applicants must file an affidavit proving service and compliance.
Notice to specified regulatory authorities to be served within two weeks; Applicants to file affidavit proving service.
Filing and annexure of modified scheme - The Company Applications for modification and for consents/deletions are allowed and the modified Scheme is to be annexed to notices to regulatory authorities. - HELD THAT: - The Tribunal allowed Company Application No.108/KB/2021 for modification of the Scheme (change in status of Applicant No.1 from private to public) and Company Application No.109/KB/2021 relating to subsequent consents and deletion of specified prayers. The Tribunal directed that the modified Scheme be annexed to the notice to be served upon the regulatory authorities and recorded deletion of the listed prayers from the main application. Thereby the main Company Application was disposed of accordingly.
Both Company Applications allowed; modified Scheme to be annexed and specified prayers deleted; main application disposed of.
Final Conclusion: The Tribunal, on the materials and affidavits filed, dispensed with convening meetings of equity shareholders and the consenting unsecured creditors, held that no meetings of secured creditors were required, allowed the applications to modify and regularise consents (directing annexure of the modified Scheme), ordered service of notices on specified authorities under Section 230(5) and directed filing of proof of service; the Company Applications are allowed and disposed of.
Inclusion of claim in list of operational creditors - role of Resolution Professional limited to collation of claims - final accounts and reconciliation between joint-venture partners - provision for contingency in CIRP claims - maintainability of applications filed before approval of resolution plan
Inclusion of claim in list of operational creditors - role of Resolution Professional limited to collation of claims - provision for contingency in CIRP claims - The Resolution Professional erred in rejecting the applicant's claim and was obliged to include any payable claim of the applicant in the list of operational creditors and provide for it under the resolution plan. - HELD THAT: - The Tribunal found that the applicant had filed Form B and produced the Joint Venture agreements and an extract of the corporate debtor's Annual Report acknowledging an outstanding balance. The RP, despite acting as a qualified Chartered Accountant and having recorded the liability in the corporate debtor's books while functioning as RP, refused to include the claim on the ground that crystallisation could occur only after finalisation of accounts. The Tribunal held that, given the ongoing nature of the project and absence of final accounts at the stage of invitation of claims or approval of the resolution plan, the RP should have provided for a contingency and not summarily rejected the claim. The RP's conduct amounted to adjudication rather than mere collation of claims and constituted a gross error of judgment. The Tribunal further observed that the applicant had pursued its remedies before the RP and the Adjudicating Authority in a timely manner and should not be rendered remediless by approval of the resolution plan. [Paras 4]
Directed that the RP include any claim payable to the applicant in the list of operational creditors and provide for the claim under the resolution plan.
Final accounts and reconciliation between joint-venture partners - The accounts between the corporate debtor and the Joint Venture must be drawn up and reconciled; the RP is directed to draw up final accounts and include any validated claim of the applicant accordingly. - HELD THAT: - Recognising that final accounts had not been finalised at the relevant stages, the Tribunal ordered the RP to draw up final accounts between the corporate debtor and the Joint Venture and to include any claim found payable to the applicant in the operational creditors' list and effect payment under the resolution plan. This direction contemplates verification and quantification through reconciliation of accounts between the parties rather than precluding the applicant from recovery because the resolution plan was approved. The Tribunal therefore remitted the matter to the RP for accounts finalisation and inclusion of the claim. [Paras 4]
RP directed to draw up final accounts between the corporate debtor and the Joint Venture, include any claim payable to the applicant in the list of operational creditors and make payments under the resolution plan.
Final Conclusion: The application is allowed in part: the Tribunal finds the RP's rejection of the applicant's claim to be unjustified, directs the RP to draw up and reconcile final accounts between the corporate debtor and the Joint Venture, include any validated claim of the applicant in the list of operational creditors and provide for payment under the resolution plan, and thus disposes of I.A. No. 1840/KB/2019.
Initiation of Corporate Insolvency Resolution Process under Section 9(5) of the Insolvency and Bankruptcy Code, 2016 - existence of operational debt and default established by demand notice and partial payment - appointment of Interim Resolution Professional and supersession of Board of Directors - moratorium and its prohibitions under Section 14 of the Insolvency and Bankruptcy Code, 2016 - continuation of essential supplies during moratorium under Section 14(2) and 14(2A) - duties and functions of the Interim Resolution Professional under the Code
Initiation of Corporate Insolvency Resolution Process under Section 9(5) of the Insolvency and Bankruptcy Code, 2016 - existence of operational debt and default established by demand notice and partial payment - Admission of the Section 9 petition and initiation of CIRP against the Corporate Debtor. - HELD THAT: - The Tribunal found that the Operational Creditor furnished invoices, a demand notice in Form-3 and bank statements showing a claimed operational debt. The Corporate Debtor made a partial payment after receipt of the demand notice but did not dispute the claim and failed to set aside the ex-parte status despite opportunities; this established default. Having regard to the material on record and conduct of the Corporate Debtor, the Tribunal concluded that the petition filed under Section 9 is required to be admitted and CIRP initiated in terms of Section 9(5) of the Code. [Paras 7, 8, 9, 10, 14]
The Section 9 petition is admitted and Corporate Insolvency Resolution Process against the Corporate Debtor is initiated.
Appointment of Interim Resolution Professional and supersession of Board of Directors - duties and functions of the Interim Resolution Professional under the Code - Appointment of the proposed Interim Resolution Professional (IRP) and consequential supersession of the Board of Directors. - HELD THAT: - The Operational Creditor proposed an IRP and filed the prescribed written consent in Form 2. The Tribunal appointed the proposed IRP to take forward the CIRP and directed him to perform statutory functions (including those under Sections 15, 17 and 18 of the Code) and to file his report before the Bench within 20 days. Consequent to initiation of CIRP, the powers of the Board of Directors of the Corporate Debtor stand superseded. [Paras 2, 10]
The proposed IRP is appointed; the Board of Directors is superseded and the IRP shall discharge statutory duties and file his report within 20 days.
Moratorium and its prohibitions under Section 14 of the Insolvency and Bankruptcy Code, 2016 - continuation of essential supplies during moratorium under Section 14(2) and 14(2A) - Imposition, scope and duration of the moratorium consequent to admission of the Section 9 petition. - HELD THAT: - On admission of the petition the statutory moratorium under Section 14(1) is applied, restraining institution or continuation of suits or proceedings, transfers or disposal of assets, enforcement of security and recovery of property occupied by the Corporate Debtor. The Tribunal recorded the non-termination principle for specified essential supplies under Section 14(2) and the preservation of supplies critical to safeguard the Corporate Debtor as a going concern under Section 14(2A). The moratorium shall continue from the date of the order until completion of the CIRP, subject to earlier cessation if a resolution plan is approved or liquidation ordered. [Paras 11, 12, 13, 14]
The moratorium under Section 14 is imposed with the stated prohibitions, limited exceptions for essential supplies, and duration as prescribed by the Code.
Final Conclusion: The Tribunal admitted the Section 9 petition and initiated CIRP against the Corporate Debtor, appointed the proposed IRP who shall assume statutory functions and file a report within 20 days, and ordered the moratorium to operate with the statutory exceptions and duration.
SVLDRS (Sabka Vishwas (Legacy Dispute Resolution) Scheme) - discharge certificate under Sub section (8) of Section 127 of the Finance Act, 2019 - immunity under Section 129 of the Finance Act, 2019 - tax dues as defined under Section 123 of the Finance Act, 2019 - transitional credit under Section 140 of the Central Goods and Services Tax Act, 2017 - adjudication under the Central Excise Act, 1944
SVLDRS (Sabka Vishwas (Legacy Dispute Resolution) Scheme) - discharge certificate under Sub section (8) of Section 127 of the Finance Act, 2019 - tax dues as defined under Section 123 of the Finance Act, 2019 - Obligation of the Designated Committee to issue a discharge certificate under Sub section (8) of Section 127 once declaration is accepted and the amount stated in SVLDRS 3 is paid within the stipulated time. - HELD THAT: - A conjoined reading of the Scheme shows that where a declarant makes a declaration with regard to tax dues, the Designated Committee issues SVLDRS 3 indicating the amount payable after relief and the declarant pays that amount within the stipulated period, Sub section (8) of Section 127 mandates issuance of a discharge certificate. The immunity granted by Section 129 applies to further claims of duty, interest or penalty, prosecution and reopening of proceedings in respect of the same subject matter and period. The Scheme does not empower the Designated Committee to refuse issuance of the discharge certificate on the basis of subsequent events, save where the certificate was procured by furnishing a material particular which is subsequently found to be false. Consequently the Designated Committee acted beyond its powers in refusing issuance of the discharge certificate on account of the petitioner seeking transition under the GST Act; the refusal letter is set aside and the matter remanded to the Designated Committee to consider issuance of the discharge certificate without prejudice to other adjudications. [Paras 9, 11, 12]
Designated Committee bound to consider and, subject to the Scheme's limited exception for false particulars, issue the discharge certificate where SVLDRS 3 is accepted and payment made; impugned refusal letter (24.11.2020) set aside and matter remanded for reconsideration.
Immunity under Section 129 of the Finance Act, 2019 - adjudication under the Central Excise Act, 1944 - Effect of payment under the Scheme on pending adjudication under the Central Excise Act in respect of the same subject matter and period. - HELD THAT: - Once the declarant pays the amount specified in SVLDRS 3 within the stipulated time, the immunity under Section 129 prevents any further demand of tax, interest or penalty, prosecution or reopening of other proceedings under the indirect tax enactment in respect of the same subject matter and period. Accordingly, continuation of adjudication under the Central Excise Act in respect of the identical subject matter was beyond jurisdiction; the impugned order in original dated 12.10.2020 is set aside. [Paras 9, 11, 12]
Adjudication under the Central Excise Act in respect of the same subject matter and period after payment under SVLDRS 3 was impermissible; impugned O O dated 12.10.2020 set aside.
Transitional credit under Section 140 of the Central Goods and Services Tax Act, 2017 - SVLDRS (Sabka Vishwas (Legacy Dispute Resolution) Scheme) - Whether acceptance under the SVLDRS Scheme and payment thereunder makes the disputed Cenvat credit eligible as transitional credit under Section 140 of the GST Act. - HELD THAT: - The Scheme grants immunity against further demands in relation to the declared subject matter and period but does not itself determine the question whether the disputed Cenvat credit attains legitimacy for the purposes of transition under Section 140 of the GST Act. That is a separate adjudicatory question arising from the GST Act. The court therefore declined to interfere with the show cause notice issued under Section 140 and left the question open for adjudication by the relevant authority after giving the petitioner opportunity to be heard. [Paras 10, 11]
Whether the declared Cenvat credit is eligible as transitional credit under Section 140 is left open for adjudication; the show cause notice under Section 140 is not interfered with.
Final Conclusion: The court set aside the order in original dated 12.10.2020 and the letter dated 24.11.2020; remitted the question of issuing the discharge certificate under Sub section (8) of Section 127 to the Designated Committee to be decided without prejudice to ongoing proceedings under the GST Act, and directed the respondents to proceed with adjudication under the GST Act (Section 140) after giving the petitioner an opportunity of hearing and dispose of the matter expeditiously and in accordance with law.
Manpower Supply Service - Independent contractor / job work - Privity of contract - Contract Labour (Regulation and Abolition) Act licence not decisive of service character - Service tax liability for periods prior to introduction of the negative list (pre-1.7.2012)
Manpower Supply Service - Independent contractor / job work - Privity of contract - Contract Labour (Regulation and Abolition) Act licence not decisive of service character - Whether the appellants' activities amount to Manpower Supply Service attracting service tax for the periods prior to 1.7.2012 - HELD THAT: - The Tribunal accepted the appellants' contention that they were independent contractors engaged to execute specified manufacturing/job work for TAFE and not contractors supplying manpower. The agreement clauses (notably clauses 1, 2, 3, 7, 11 and 12) show that the contractor alone had privity of contract with the company, was responsible for execution and defects in the work, and that the company did not control conditions of employment of the contractor's workers. The presence of a requirement in clause 14 to obtain a licence under the Contract Labour (Regulation and Abolition) Act was held not to convert the contract to a manpower-supply contract; compliance with labour laws or obtaining such licence while workers perform work within manufacturing premises does not, without more, change the character of the underlying contract. The Tribunal found no evidence that the contractual terms were not followed, that payments were for man-hours or per-person supply rather than piece-rate/job work, or any other material to rebut the contractual character. The decision in the appellants' earlier disposal (Final Order Nos. 40359 to 40367/2019 dated 19.2.2019) holding the activity not to be Manpower Supply Service was followed. Applying that reasoning, the demand of service tax, interest and penalties for the periods prior to introduction of the negative list could not be sustained and was set aside. [Paras 7, 8]
Demand for service tax (and consequential interest and penalties) under the category of Manpower Supply Service for the specified pre-1.7.2012 periods is set aside; appeals allowed.
Final Conclusion: The Tribunal followed its earlier finding that the appellants performed job work as independent contractors and not manpower supply; accordingly the impugned demands for service tax for the stated pre-1.7.2012 periods are set aside and the appeals are allowed with consequential relief if any.
Issues: Whether the refund claim under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) dated 14.3.2006 was barred by limitation under Section 11B of the Central Excise Act, 1944, and what constituted the relevant date for computing limitation in a refund claim relating to export of services.
Analysis: The refund application had to be examined in the context of export of services, where the claim could be made only after realization of export proceeds because the prescribed documents included a bank certificate evidencing such realization. Section 11B contemplates computation from the relevant date, but the definition of relevant date in that provision is framed with reference to Central Excise duty and does not directly address refund of service tax credit on export of services. The reasoning accepted that, for such claims, the relevant date was the date of realization of consideration. The rejection by the original authority was also found to be unsupported by adequate reasons or any proper computation showing how the claim was time-barred.
Conclusion: The refund claim was not barred by limitation, and the sanction of refund by the Commissioner (Appeals) was upheld. The revenue's challenge failed.
Limitation under Section 11B - relevant date for computing limitation - refund of CENVAT credit under Notification No. 5/2006-CE(NT) - refund claims for export of services - registration of premises not prerequisite for refund
Limitation under Section 11B - relevant date for computing limitation - refund of CENVAT credit under Notification No. 5/2006-CE(NT) - refund claims for export of services - Refund claims filed under Notification No. 5/2006-CE(NT) are not to be held time-barred without proper application of the relevant date under Section 11B; for export of services the relevant date is the date of realization of consideration. - HELD THAT: - Section 11B prescribes that the one-year limitation period must be computed from the 'relevant date' as defined in that section. Notification No.5/2006-CE(NT) and its Appendix require an application for refund of CENVAT credit in cases of export of services to be accompanied by a copy of the invoice and a bank certificate certifying realization of export proceeds, making it impossible to file a refund claim prior to realization. Consequently, for export of services the proper relevant date for computing the one-year period is the date of realization of consideration. The original authority's finding that the refund was time-barred was unsupported by any reasoned computation showing how the one-year period was applied; the contention that limitation must be computed from the first day of the relevant quarter is contrary to Section 11B which mandates computation from the relevant date. In view of these considerations, there was no basis to hold the refund claim barred by limitation and the Commissioner (Appeals) correctly sanctioned the refund. [Paras 6]
The claim is not time-barred when computed from the relevant date (realization of consideration for export of services); the Commissioner (Appeals) order sanctioning refund is sustained.
Registration of premises not prerequisite for refund - refund of CENVAT credit under Notification No. 5/2006-CE(NT) - The Tribunal did not disturb the earlier conclusion that registration of the assessee's premises is not a prerequisite for claiming refund under Rule 5/Notification No.5/2006-CE(NT). - HELD THAT: - The Tribunal had earlier followed the High Court of Madras decision holding that premises registration is not a precondition for claiming refund of credit under the CENVAT scheme. That aspect was not reopened in the present proceedings; the remand from the High Court related solely to the question of limitation under Section 11B, which the Tribunal has now addressed. There is therefore no interference with the earlier finding on registration as a precondition.
Earlier conclusion that registration of premises is not a prerequisite for refund under the cited notification stands; no change made to that aspect.
Final Conclusion: Revenue's appeal is dismissed; the Commissioner (Appeals) order sanctioning the refund is upheld as the refund claims are not proved to be time-barred when limitation is computed from the relevant date (realization of export proceeds) and the prerequisite of premises registration does not bar the refund.
Issues: Whether the secured creditor's right to enforce the immovable property created under an earlier security could be obstructed by the Excise Department's subsequent dues and confiscation claim.
Analysis: The security was created in 1985, much before the Excise Department's demand based on the confiscation order of 2006. The original date of creation of the security was held to be decisive. The Court held that the Department could not claim precedence over a prior secured liability, and that the respondent Bank, as secured creditor, was entitled to proceed against the property under the recovery mechanism invoked. It was further observed that any surplus remaining after satisfying the Bank's dues could be applied towards the Excise Department's dues and then, if anything still remained, to the debtor.
Conclusion: The claim of the secured creditor prevailed over the subsequent excise dues, and the Bank could not be restrained from exercising its rights against the immovable property.
Final Conclusion: The appeals failed and the Bank's enforcement rights over the secured asset were upheld; the connected special leave petition also stood dismissed.
Ratio Decidendi: A prior created security interest has priority over a later arising governmental recovery claim, and a subsequent crown debt cannot defeat the secured creditor's enforcement rights.
Priority of a pre-existing secured charge over subsequent revenue demands arising from confiscation - creation date of security governs priority between competing claims - realisation of secured assets and application of surplus to satisfy subsequent government dues
Priority of a pre-existing secured charge over subsequent revenue demands arising from confiscation - creation date of security governs priority between competing claims - Whether the respondent Bank, as a secured creditor whose security was created on 24.06.1985 (and whose debt was subsequently transferred), could be prevented from realising immovable property by reason of Excise Department demands and a confiscation order dated 25.02.2006. - HELD THAT: - The Court held that the determinative legal position turns on the original date of creation of the security (24.06.1985) and that the secured creditor's rights under that pre-existing charge cannot be defeated by revenue demands or a confiscation order that arose subsequently. The Excise Department's claim arising from the confiscation order dated 25.02.2006 is a later claim and does not have priority over the rights of the secured creditor created in 1985. The Court observed that on realisation of the secured assets the Bank is entitled to satisfy its debt; any surplus thereafter can be applied to satisfy the Excise dues and, if amounts still remain, the debtor would be entitled to them. Given this priority of the pre-existing security, the respondent Bank could not be prevented from exercising its rights as a secured creditor in respect of the immovable property.
Bank entitled to realise immovable property under its pre-existing security created on 24.06.1985; Excise dues arising from 25.02.2006 do not defeat the secured creditor's priority, and any surplus after satisfaction of the bank's claim may be applied to Excise dues.
Realisation of secured assets and application of surplus to satisfy subsequent government dues - Disposition of the Special Leave Petition (SLP) which was tagged with the civil appeals and involved similar facts. - HELD THAT: - The Court noted that the SLP was only tagged with the civil appeals and that the factual position was no stronger for the petitioner in the SLP, particularly because the alleged crown debt of the Excise Department arose after the respondent had purchased the property in an auction to realise debts. The Court condoned delay in filing the SLP and dismissed it, leaving the parties to bear their own costs.
SLP dismissed (delay condoned), parties to bear their own costs.
Final Conclusion: The appeals are dismissed; the secured creditor's rights under the charge created on 24.06.1985 prevail over subsequent Excise demands arising from the confiscation order of 25.02.2006, and on realisation any surplus may be applied to satisfy Excise dues; the tagged Special Leave Petition is also dismissed, parties to bear their own costs.
Inclusion of scrap in assessable value - valuation of job-worked goods - application of CAS-4 for determining cost of production - CENVAT credit on inputs supplied by principal - precedent weight of P.R. Rolling Mills and Cadbury decisions
Inclusion of scrap in assessable value - valuation of job-worked goods - application of CAS-4 for determining cost of production - precedent weight of P.R. Rolling Mills and Cadbury decisions - Whether the value of scrap arising during manufacture and retained by the job-worker must be included as additional consideration in the assessable value of finished goods cleared to the principal - HELD THAT: - The Tribunal examined whether scrap retained by the appellant as consideration for job charges ought to be added to the assessable value declared on clearance. It applied earlier authoritative decisions, notably P.R. Rolling Mills Pvt. Ltd. (as affirmed by the Supreme Court) and the decision in CCE, Pune v. Cadbury, holding that CAS-4 must be applied for determining the cost of production of captively consumed goods and that scrap arising during conversion need not be included in the assessable value when valuation has been determined in accordance with CAS-4 and the established precedents. The Tribunal had earlier set aside demands for an earlier period on the same reasoning and, following those precedents, concluded that the impugned demands for the listed periods could not be sustained.
Demand confirmed by the authorities was set aside and the appeals allowed, following the ratio of P.R. Rolling Mills and Cadbury and application of CAS-4.
Final Conclusion: The impugned orders confirming demands for the stated periods are set aside and the appeals are allowed, the Tribunal following earlier precedents that scrap retained by the job-worker need not be included in assessable value where valuation is determined in accordance with CAS-4.
Issues: Whether denial of cenvat credit was sustainable when the show cause notice was issued by invoking the extended period of limitation.
Analysis: The dispute related to credit availed during the relevant period before the amendment brought in by Notification No. 02/14-CE (N.T.) dated 20.01.2014. The record showed that similarly placed assessees had been allowed credit, while the Revenue had taken divergent positions and filed appeals against favourable orders. In such circumstances, the issue was not free from controversy, and the invocation of the extended period could not be sustained.
Conclusion: The denial of credit was held to be barred by limitation and could not be sustained against the assessee.
Final Conclusion: The impugned denial of credit was set aside and the appeals were allowed with consequential relief.
Ratio Decidendi: Where the Revenue itself maintains divergent views on a disputed issue and similarly placed assessees have been granted relief, invocation of the extended period of limitation is not justified.
Cenvat credit - extended period of limitation - divergent views - limitation bar to recovery - exemption under Notification No.01/10-CE dt.6.2.2010 - effect of Notification No.02/14-CE (N.T.) dt.20.1.2014
Cenvat credit - extended period of limitation - divergent views - limitation bar to recovery - Denial of cenvat credit on inputs availed by the appellants was barred by limitation because the extended period invoked by the Revenue was not applicable in view of divergent views being taken in similar cases. - HELD THAT: - The Tribunal noted that similarly placed assessees had been allowed cenvat credit and, although the Revenue had filed appeals against those favourable orders, the existence of such conflicting decisions amounted to divergent views. Where divergent views are taken by the Revenue in comparable matters, invocation of the extended period of limitation for issuance of show cause notices is not appropriate. As the impugned show cause notices in the present appeals were issued by invoking the extended period, the denial of credit is barred by limitation. The Tribunal therefore set aside the impugned orders without addressing the merits.
Impugned orders denying cenvat credit set aside as barred by limitation; appeals allowed with consequential relief, if any.
Final Conclusion: When the Revenue itself has divergent views on entitlement to credit in similarly placed cases, invocation of the extended period of limitation is inappropriate; accordingly, the denial of cenvat credit in the present appeals was held to be time-barred and the appeals were allowed.
Appellate remedy - Scope of judicial review under Article 226 - Jurisdictional bar to writ when efficacious alternative remedy exists - Adjudication of factual disputes by Appellate authority - Interpretation of the Central Sales Tax Act, 1956 - Condonation of delay by Appellate authority
Appellate remedy - Jurisdictional bar to writ when efficacious alternative remedy exists - Scope of judicial review under Article 226 - Whether the High Court should entertain writ petitions challenging revision of assessment where an appellate remedy exists, or direct the petitioner to prefer an appeal. - HELD THAT: - The Court held that where the statutory scheme provides an appellate remedy, the High Court should ordinarily refrain from exercising writ jurisdiction to decide disputed factual or mixed questions and should require exhaustion of the prescribed appellate remedy. Judicial review under Article 226 is confined to scrutiny of the decision-making process and not to substituting the Court's view on disputed facts; institutional competence and expertise of appellate/quasi-judicial authorities in taxation matters, particularly for examining accounts and business transactions, warrant leaving factual adjudication to those fora. Admission and prolonged continuance of writ petitions on isolated points, when multiple factual issues remain, may prejudice both the assessee and the Revenue; consequently, caution is required and the rule is to prefer an appeal rather than decide on merits in writ proceedings. [Paras 4, 5, 6, 7, 8]
Petitioner must prefer the appellate remedy; writ petitions are disposed of directing the petitioner to file an appeal within four weeks and comply with statutory requirements.
Adjudication of factual disputes by Appellate authority - Condonation of delay by Appellate authority - Disposition of the defects identified in internal audit and whether those defects must be adjudicated by the Appellate authority. - HELD THAT: - The Court observed that defects detected in the internal audit for the year 2019-20 require adjudication by the final fact-finding/quasi-judicial authority which is better equipped to examine original documents and accounting details. Rather than deciding such factual controversies in writ petitions, the Court directed that the petitioner be at liberty to prefer an appeal; if any delay exists, the Appellate authority is directed to condone the delay, admit the appeal, afford opportunity to the petitioner, and adjudicate the issues expeditiously. [Paras 4, 6, 9]
Matter remitted to the Appellate authority for adjudication of the defects; the Appellate authority shall condone delay if necessary, admit the appeal and dispose of it expeditiously after providing opportunity to the petitioner.
Final Conclusion: Writ petitions challenging the Assessing Authority's orders are dismissed leaving the petitioner free to file statutory appeals within four weeks; the Appellate authority is directed to condone delay, entertain and expeditiously decide the appeals, and the High Court confines its role to judicial review of process rather than adjudication of disputed factual matters.
Issues: Whether delay in filing the appeal could be condoned beyond the further period of 180 days prescribed under Section 62 of the Karnataka Value Added Tax Act, 2003.
Analysis: The appeal against the assessment order was filed beyond the initial 30-day period and also beyond the further 180 days during which the appellate authority was empowered to admit a delayed appeal on sufficient cause being shown. The statutory scheme of Section 62(3) exhaustively fixes the outer limit for condonation of delay and does not confer any power to extend limitation beyond that ceiling. Once the delay exceeded the maximum statutorily permissible period, neither the first appellate authority nor the Tribunal had jurisdiction to entertain the appeal. The conclusion was also supported by prior binding precedent holding that delay beyond 180 days is outside appellate jurisdiction.
Conclusion: Delay could not be condoned beyond 180 days, and the dismissal of the appeal on limitation was valid; the finding is in favour of the Revenue and against the assessee.
Final Conclusion: The appellate order was sustained, and the challenge failed because the statutory limit for condonation had already expired.
Ratio Decidendi: Where a taxing statute prescribes a fixed outer limit for condonation of delay in filing an appeal, the appellate authority cannot extend limitation beyond that statutory ceiling, and any appeal filed beyond that limit is not maintainable.
Condonation of delay under statutory limitation - finality of limitation period under Section 62(3) of the KVAT Act - rejection of appeal on ground of limitation without adjudication on merits
Finality of limitation period under Section 62(3) of the KVAT Act - condonation of delay under statutory limitation - Validity of dismissal of the appeal as barred by limitation where the appeal was filed beyond the 30 days plus 180 days permitted by Section 62 of the KVAT Act. - HELD THAT: - The Court examined Section 62(1)-(3) of the KVAT Act which prescribes a 30-day period for filing an appeal and permits the Assessing Authority to admit an appeal within a further period of 180 days if sufficient cause is shown. The undisputed facts show the appeal was filed after the expiry of 30 days plus the 180-day period. The statute contains no provision for condoning delay beyond the additional 180 days. In the absence of statutory power to extend limitation further, the appellate authorities and the Tribunal were correct in holding that the appeal could not be entertained. The Court relied on the consistent view in earlier decisions that condonation beyond 180 days is beyond the jurisdiction of the appellate authority and affirmed that principle as determinative of the matter. [Paras 4, 7]
Dismissal of the appeal on the ground of limitation upheld; delay beyond 30+180 days cannot be condoned under the KVAT Act.
Rejection of appeal on ground of limitation without adjudication on merits - condonation of delay under statutory limitation - Whether the Tribunal and the appellate authorities were legally justified in rejecting the appeal on the ground of limitation without considering the appeal on its merits. - HELD THAT: - Having determined that the appeal was barred by limitation and that the statute does not permit condonation beyond the additional 180 days, the Court held that the appellate authorities and the Tribunal were justified in deciding the matter on the preliminary point of limitation. Where an appeal is beyond the statutory period and no power exists to extend that period, consideration of merits is precluded; accordingly the authorities acted within jurisdiction in declining to adjudicate merits once limitation was established. [Paras 4, 7]
Tribunal and appellate authorities properly rejected the appeal on limitation and were not obliged to decide the appeal on merits.
Final Conclusion: The questions reserved were answered in favour of the revenue: an appeal filed after the 30-day period and beyond the additional 180 days cannot be condoned under Section 62 of the KVAT Act, and the appellate authorities and Tribunal were justified in dismissing the appeal as barred by limitation without deciding the merits.
TaxTMI 