TaxTMI Updates e-Newsletter
Aug 28,2024

Violation of principles of natural justice - Right to personal hearing - Setting aside and remand for fresh consideration - Remand subject to deposit/condition precedent - Opportunity to file reply/objection - Requirement to issue notice fixing personal hearing and decide on merits

Violation of principles of natural justice - Right to personal hearing - Impugned order set aside for having been passed without providing opportunity of personal hearing, thereby violating principles of natural justice. - HELD THAT: - The Court found that no opportunity of personal hearing was provided to the petitioner prior to passing of the impugned order. In view of the absence of a personal hearing and the consequent denial of an effective opportunity to file replies, the impugned order was held to be in breach of the principles of natural justice. The order was therefore set aside to enable the petitioner to establish the case on merits. [Paras 6]

Impugned order dated 28.03.2024 set aside.

Setting aside and remand for fresh consideration - Remand subject to deposit/condition precedent - Opportunity to file reply/objection - Requirement to issue notice fixing personal hearing and decide on merits - Matter remitted to respondent for fresh consideration on specified conditions and directions for further procedure. - HELD THAT: - Having set aside the impugned order for violation of natural justice, the Court remanded the matter to the respondent for fresh consideration. The remand is conditional upon the petitioner paying 10% of the disputed amount within four weeks; the setting aside takes effect from date of such payment. The petitioner is directed to file reply/objection with supporting documents within two weeks after payment. On receipt of the reply/objection, the respondent must issue a clear 14-day notice fixing the date for a personal hearing and thereafter decide the matter on merits and in accordance with law, after hearing the petitioner, expeditiously. [Paras 6]

Matter remitted to respondent for fresh consideration subject to payment of 10% of disputed amount and following the procedural steps prescribed by the Court.

Final Conclusion: Impugned order dated 28.03.2024 quashed for non-observance of natural justice; matter remitted to the respondent for fresh consideration on payment of 10% of the disputed amount, with directions to permit filing of reply, issue a 14-day notice fixing personal hearing and thereafter decide the matter on merits.

Writ jurisdiction under Article 226 - Exhaustion of alternative remedy in tax recovery matters - Application of self-imposed restraint by High Courts - Violation of principles of natural justice - Availability and efficacy of statutory appellate remedy

Writ jurisdiction under Article 226 - Exhaustion of alternative remedy in tax recovery matters - Application of self-imposed restraint by High Courts - Availability and efficacy of statutory appellate remedy - Whether the High Court should exercise writ jurisdiction in respect of the impugned demand order when an efficacious statutory appellate remedy is available - HELD THAT: - The Court applied the principle that the High Court will ordinarily not entertain a petition under Article 226 where an effective remedy is available, particularly with rigour in matters involving recovery of taxes and public dues. Reliance was placed on the Supreme Court's exposition that legislations for recovery constitute a code and that the High Court must observe self-imposed restraint. The impugned Order-In-Original indicates a specific statutory appellate forum (Commissioner (Appeals), Customs, CGST and Central Excise (NER), GST Bhawan) and therefore an efficacious alternative remedy exists. In these circumstances the High Court declined to exercise its writ jurisdiction over the tax recovery demand and refrained from entertaining the petition. [Paras 4, 5, 6, 7]

Writ petition not entertained since an efficacious statutory appellate remedy is available and the rule of self-imposed restraint applies with particular rigour in tax recovery matters.

Violation of principles of natural justice - Availability and efficacy of statutory appellate remedy - Whether the writ petition was maintainable on the ground of violation of principles of natural justice or other exceptions permitting exercise of writ jurisdiction despite alternative remedy - HELD THAT: - The Court examined whether any of the established exceptions (enforcement of fundamental rights, violation of natural justice, proceedings wholly without jurisdiction, challenge to vires of Act, or pure question of law) applied. The record shows the petitioner received the show-cause notice, did not file a reply, and did not avail opportunities of personal hearing communicated by notices. There was no documentary evidence of denial of hearing or other procedural infirmity. Accordingly, the Court found no violation of principles of natural justice or other exceptional circumstances to justify bypassing the statutory appellate remedy. The petitioner was, however, left free to raise all objections in the appellate forum and to place documentary evidence there. [Paras 2, 3, 8, 9, 10]

No violation of principles of natural justice or other exceptional grounds was made out; therefore the writ petition was not maintainable on those bases, and the petitioner may pursue the statutory appeal and place documents before the appellate authority.

Availability and efficacy of statutory appellate remedy - Whether dismissal of the writ petition would prejudice the petitioner's right to appeal or to raise objections before the appellate authority - HELD THAT: - The Court explicitly recorded that dismissal of the writ petition would not prejudice the petitioner if an appeal is filed. The petitioner was granted liberty to raise all objections permissible under law before the appellate authority and to produce documentary evidence at the appellate stage. [Paras 4, 11]

Dismissal without prejudice; petitioner is at liberty to file and prosecute the statutory appeal and to raise all permissible objections before the appellate forum.

Final Conclusion: Writ petition dismissed for non-entertainment because an efficacious statutory appellate remedy exists and no exceptional circumstance (including violation of natural justice) was shown; dismissal is without prejudice to the petitioner prosecuting the statutory appeal and raising all objections therein.

Transition of CENVAT credit to GST - second chance for filing FORM TRAN-1/TRAN-2 - interpretation of circular instruction 4.7 - remand for fresh consideration - inadmissibility of raising new grounds not contained in impugned order (Mohinder Singh Gill principle)

Interpretation of circular instruction 4.7 - transition of CENVAT credit to GST - Paragraph 4.7 of the circular applies to earlier rejected TRAN-1/TRAN-2 filings and does not bar re-filed TRAN-1/TRAN-2 applications where the earlier order of rejection arose under the CENVAT refund regime and not as a rejection of TRAN-1/TRAN-2. - HELD THAT: - The Court examined the wording of paragraph 4.7 and concluded that it addresses cases where a registered person had earlier filed FORM GST TRAN-1/TRAN-2 and that earlier filing was rejected; in such cases the circular directs appeal or other remedies rather than refiling under the special dispensation. Where, however, the prior adverse order was an order rejecting a refund claim under the CENVAT regime (and not an earlier TRAN-1/TRAN-2 rejection), paragraph 4.7 does not preclude the applicant from seeking transition of unutilized CENVAT credit by filing TRAN-1/TRAN-2 under the second-chance dispensation. The Court therefore construed the proviso narrowly and refused to treat it as an absolute bar to transition whenever there was any prior adverse order concerning the same credit under a different procedure. [Paras 6, 8]

Paragraph 4.7 does not operate to bar transition of credit where the earlier adverse order was under the CENVAT refund regime and not a rejection of TRAN-1/TRAN-2.

Remand for fresh consideration - second chance for filing FORM TRAN-1/TRAN-2 - The impugned order rejecting the petitioner's TRAN-1 filings was set aside and the matter was remanded to the Deputy Commissioner for fresh consideration in accordance with law and the circular. - HELD THAT: - Applying the interpretation of paragraph 4.7, the Court found it appropriate to quash the Deputy Commissioner's rejection dated 27.02.2023 and remand the TRAN-1/TRAN-2 declarations filed by the petitioner for fresh adjudication. The Deputy Commissioner was directed to give the petitioner adequate opportunity to present its case and to complete consideration and pass orders expeditiously within four months from receipt of the order. The remand contemplates consideration on merits in light of the correct construction of the circular and the transitional provisions permitting transition of CENVAT credit. [Paras 11, 12]

Impugned order dated 27.02.2023 is set aside and the matter remanded to the Deputy Commissioner for fresh disposal within four months after giving the petitioner opportunity to be heard.

Inadmissibility of raising new grounds not contained in impugned order (Mohinder Singh Gill principle) - Contentions not raised in or germane to the impugned order cannot be entertained by the Court at this stage. - HELD THAT: - The Court declined to consider the submission by the Government Pleader that the refund rejection itself barred any transition of the credit, because that contention was not the basis of the impugned order under challenge. Relying on the principle in Mohinder Singh Gill, the Court held that new contentions not reflected in the order under challenge cannot be permitted to be looked into in these proceedings. [Paras 9, 10]

The additional contention advanced on behalf of the respondent was not considered because it was not a ground contained in the impugned order.

Final Conclusion: Writ petition allowed; the Deputy Commissioner's rejection of the TRAN-1/TRAN-2 filings is set aside and the matter is remanded for fresh consideration in accordance with the Court's construction of paragraph 4.7 of the circular, with disposal directed within four months and after affording the petitioner opportunity to be heard.

Reconsideration in light of statutory amendment - deemed conclusion of proceedings under Section 128A(1)(b) - stay of demand pending fresh reasoned order - reconciliation of Electronic Credit Ledger with Form GST DRC-03 payment - liability determination under Section 73(9) of the CGST/WBGST Act

Liability determination under Section 73(9) of the CGST/WBGST Act - reconciliation of Electronic Credit Ledger with Form GST DRC-03 payment - Whether the demand orders passed under Section 73 for the specified tax periods require fresh consideration and computation in view of payments shown in Form GST DRC-03 and reconciliation with the Electronic Credit Ledger - HELD THAT: - The Court recorded that the petitioners have placed on record the Form GST DRC-03 showing payment and that prima facie the payments may correspond to the demands raised; however, a proper computation and reconciliation with the Electronic Credit Ledger is necessary. Taking into account the fact of payment and the impugned orders for the tax periods in question, the matter is remanded to respondent no.1 for reconsideration and for passing a fresh reasoned order after verifying reconciliation and computation of tax liability. [Paras 10, 11, 12]

Remanded to respondent no.1 for fresh reconsideration and a reasoned order; impugned orders and demands stayed until such fresh order is passed.

Reconsideration in light of statutory amendment - deemed conclusion of proceedings under Section 128A(1)(b) - Whether the insertion of Section 128A(1)(b) of the CGST Act and the GST Council recommendations affect interest/penalty liability and the finality of proceedings in respect of the impugned orders - HELD THAT: - The Court noted the subsequent amendment inserting Section 128A and the recommendations in the 53rd GST Council Meeting, and observed that since the petitioners have paid the tax claimed under the impugned orders, the effect of Section 128A(1)(b) (as explained to the Court) requires application to the facts of the present case. The Court directed respondent no.1 to reconsider the position in the light of the statutory amendment and the recorded payments and to pass a reasoned order addressing whether proceedings stand concluded or conditions apply under the amended provision. [Paras 7, 10, 11]

Respondent no.1 to reconsider and decide the impact of Section 128A(1)(b) and GST Council recommendations on interest/penalty and finality of proceedings; stay of existing demands to continue pending that order.

Final Conclusion: Writ petition disposed by remanding the matter to respondent no.1 to pass a fresh reasoned order after reconciling payments and considering the effect of the amendment (Section 128A(1)(b)) and GST Council recommendations; impugned orders/demands stayed until such fresh order is passed.

Principles of natural justice - opportunity of hearing - show cause notice - assessment proceedings - remand for fresh consideration - recording of reasons in assessment order

Principles of natural justice - opportunity of hearing - show cause notice - Validity of the impugned assessment/order dated 24.01.2024 in view of alleged violation of principles of natural justice - HELD THAT: - The Court examined whether the order confirming demand dated 24.01.2024 complied with natural justice where a show cause notice dated 26.12.2023 had granted 30 days to the petitioner to respond. The petitioner's restoration of registration by the appellate authority on 22.01.2024 occurred shortly before the impugned order of 24.01.2024, and the petitioner had sought time to access departmental portals and file detailed objections. The Court held that principles of natural justice require the affected person to be informed of the case against them, be furnished the material intended to be relied upon, and be given adequate time to gather and present material in response. Passing the assessment order before the expiry of the 30-day period and without giving the petitioner a realistic opportunity to access records and file objections amounted to a violation of these principles. The Court also recorded that correspondence and attendance on dates not specified in the show cause notice could not be treated as compliance with the opportunity of personal hearing stipulated in the notice. [Paras 12, 13, 14]

Impugned order dated 24.01.2024 is invalid for breach of principles of natural justice and is set aside.

Assessment proceedings - remand for fresh consideration - recording of reasons in assessment order - Consequent direction on further proceedings following setting aside of the impugned order - HELD THAT: - Having set aside the assessment/order for violation of natural justice, the Court permitted the 2nd respondent to undertake fresh assessment proceedings but mandated procedural safeguards. The Court directed that the 2nd respondent may proceed on the basis of the existing show cause notice dated 26.12.2023, only after granting the petitioner two weeks' time from the date of the order to file objections. Thereafter a personal hearing is to be afforded. The Court further required that any subsequent assessment and penalty order must set out reasons. These directions amount to a remand for fresh consideration subject to specified procedural protections rather than a final adjudication on the merits of the tax demand. [Paras 15]

Assessment proceedings set aside and remitted for fresh consideration with directions to grant two weeks to file objections, to hold a personal hearing, and to record reasons in any subsequent assessment.

Final Conclusion: Writ petition allowed; the impugned assessment/penalty order dated 24.01.2024 is set aside for violation of natural justice and the tax authority is permitted to proceed afresh on the show cause notice dated 26.12.2023 after giving the petitioner two weeks to file objections, granting a personal hearing, and recording reasons in any subsequent assessment.

Show cause notice requirements - personal hearing - natural justice - retrospective cancellation - prospective operation of order - withholding cancellation application pending assessment - wrongful availment of input tax credit

Withholding cancellation application pending assessment - Whether an application for cancellation of GST registration can be withheld on account of ongoing proceedings to assess GST liability - HELD THAT: - The Court held that an application for cancellation of GST registration cannot be withheld merely because proceedings for assessing GST liability are pending. Even if registration is cancelled, the taxpayer remains liable for statutory compliances and payment of dues for the pre-cancellation period; withholding the cancellation application on the ground of pending assessment is therefore impermissible. The Court observed that where the petitioner asserts discontinuance of business, cancellation is liable to be granted subject to verification of that assertion. [Paras 11, 12]

Application for cancellation of GST registration cannot be refused solely because assessment proceedings are pending; cancellation may be granted subject to verification.

Show cause notice requirements - personal hearing - natural justice - wrongful availment of input tax credit - Whether the impugned show cause notice satisfied the requirements of a notice enabling effective response and personal hearing - HELD THAT: - The Court found the impugned show cause notice cryptic and lacking particulars: it merely cited Rule 21(e) and alleged wrongful availment of ITC without identifying any transaction or specifics. Further, while it called for a personal hearing, no date or time was communicated. The purpose of a show cause notice is to enable the addressee to meet allegations; a notice that fails to furnish particulars and an effective opportunity to be heard breaches the principles of natural justice. Consequently the SCN did not meet the requisite standard. [Paras 13, 14, 15, 16]

Impugned show cause notice was defective for want of particulars and for failing to afford a meaningful personal hearing; it violated principles of natural justice.

Retrospective cancellation - prospective operation of order - natural justice - Whether the impugned cancellation order cancelling GST registration ab initio from 01.07.2017 was sustainable - HELD THAT: - The Court concluded that the cancellation order, insofar as it operated retrospectively from 01.07.2017, was passed without affording the petitioner an opportunity to contest retrospective cancellation and therefore was liable to be set aside. Having found procedural infirmity and the defective SCN, the Court directed that the cancellation order shall operate prospectively from 09.06.2023 (the date of the SCN). The Court clarified that this direction does not preclude initiation of fresh proceedings, including for retrospective cancellation, provided they are undertaken in accordance with law. [Paras 13, 16, 17, 18]

Retrospective cancellation from 01.07.2017 set aside; cancellation to operate prospectively from 09.06.2023, without prejudice to legally valid fresh proceedings.

Final Conclusion: The petition was disposed of by setting aside the retrospective cancellation; the defective show cause notice and denial of a meaningful personal hearing violated natural justice, the request for cancellation could not be withheld due to pending assessments, and the cancellation is ordered to operate prospectively from 09.06.2023 while preserving the authorities' right to initiate fresh proceedings in accordance with law.

Review under Order XLVII Rule 1 CPC - Mistake or error apparent on the face of the record - Discovery of new and important matter of evidence - Other sufficient reasons for review - Consent-based order and preclusive effect of parties' agreement - Statutory stay under Section 112(9) of the CGST/OGST Act in absence of a constituted Tribunal

Review under Order XLVII Rule 1 CPC - Mistake or error apparent on the face of the record - Consent-based order and preclusive effect of parties' agreement - Whether the writ order dated 30.04.2024 is amenable to review on the ground of mistake or error apparent on the face of the record where the order was passed with the agreement of parties - HELD THAT: - The Court examined the settled grounds for review under Order XLVII Rule 1 CPC and identified the three recognised categories: discovery of new evidence, mistake or error apparent on the face of the record, and other sufficient reasons. The impugned order expressly records that the issue was agreed by learned counsel for the parties and was disposed of in terms of the earlier Division Bench order in M/s. Maa Tarini Traders (supra). The petitioner's present contention- that the Court failed to consider certain facts and judgments material to the petitioner-was raised after the order was passed and there was no contemporaneous objection recorded when the order was pronounced. Given the expression of consent in the order and absence of any demonstrable, apparent error on the face of the record or newly discovered evidence that could not, with due diligence, have been earlier produced, the petitioner's plea falls outside the recognised grounds for review. The Court concluded that the petitioner has not established any mistake apparent on the face of the record or other legally permissible ground warranting review. [Paras 5, 6]

Review petition dismissed insofar as it seeks review on the ground of mistake or error apparent on the face of the record; no entitlement to review where order was passed by agreement of parties and no recognised ground for review is shown.

Statutory stay under Section 112(9) of the CGST/OGST Act in absence of a constituted Tribunal - Other sufficient reasons for review - Whether the petitioner has suffered prejudice warranting review given the directions in M/s. Maa Tarini Traders (supra) granting stay of recovery subject to deposit and liberty to file appeal once the Tribunal is constituted - HELD THAT: - The Court noted that in M/s. Maa Tarini Traders (supra) directions were issued to grant the statutory benefit of stay under Section 112(9) of the CGST/OGST Act, subject to verification of deposit equal to 20% of the remaining tax in dispute and with liberty to file the statutory appeal upon constitution of the GST Tribunal. The petitioner did not dispute that the impugned order (Annexure-9) is appealable before the GST Tribunal, which has not been made functional. Since the Division Bench's directions were given to afford protection to petitioners who cannot be deprived of statutory remedies due to the non-constitution of the Tribunal, the Court found that the petitioner has not demonstrated any prejudice arising from the impugned order that would constitute a sufficient reason for review. Reliance on an unrelated Bombay High Court order concerning a typographical correction did not supply a legal basis to disturb the order. In these circumstances the petitioner's invocation of 'other sufficient reasons' failed. [Paras 7, 8, 9]

No review on the basis of prejudice or 'other sufficient reasons' where the court's earlier directions afford protective relief pending constitution of the Tribunal; review petition dismissed on this ground as well.

Final Conclusion: The review petition is dismissed on the merits for failure to establish any ground recognised under Order XLVII Rule 1 CPC; the impugned order-passed with the parties' agreement and consistent with the directions in M/s. Maa Tarini Traders (supra) to protect litigants pending constitution of the GST Tribunal-does not merit review. No order as to costs.

Suspension from service - disciplinary proceedings - suspension pending investigation - tampering with evidence - preliminary enquiry into bogus GST refunds

Suspension from service - suspension pending investigation - tampering with evidence - preliminary enquiry into bogus GST refunds - disciplinary proceedings - Order of suspension dated 12.09.2023 challenging the suspension of the petitioner was upheld. - HELD THAT: - The petitioner, a State Tax Officer, was suspended on allegation that he issued registration and consequent refund to a dealer who was later found to be a fake exporter, forming part of a larger preliminary enquiry which revealed multiple bogus exporters and apparent lapses in verification and refund sanctions. The Government, after considering the Commissioner's report and connected records, accorded sanction for a detailed inquiry by the Vigilance and Anti-Corruption Directorate. Given the magnitude of the transactions, the departmental findings of prima facie lapse and the risk that reinstatement could permit tampering with material evidence, the court found no infirmity or illegality in the suspension order and declined to revoke it. The court exercised supervisory jurisdiction to require expedition of the departmental process by directing completion of disciplinary proceedings within a fixed period. [Paras 5]

Writ petition dismissed; suspension upheld while disciplinary proceedings are to be completed within six months.

Final Conclusion: The challenge to the suspension is dismissed for want of merit; respondents directed to complete the departmental/disciplinary inquiry against the petitioner within six months from receipt of this order; connected petition closed; no costs.

Economic offences - bail in economic offences - mastermind of GST fraud - issuance of bogus GST invoices - inadmissible/irregular input tax credit - prosecution under Section 132 of the CGST Act - applicability of administrative circular to arrest and prosecution - parity with co-accused - forgery affecting bail - cognizance and verified material

Bail in economic offences - cognizance and verified material - custodial detention - Whether the petitioner is entitled to grant of bail - HELD THAT: - Having considered the allegations in the complaint, the prosecution report and the cognizance order, the Court found verified material on record indicating the petitioner's involvement in large-scale issuance and facilitation of bogus GST invoices and the resultant loss to the exchequer. The Court observed that cognizance has been taken by the Special Court and noted the continued progress of investigation and prosecution. In view of the nature, gravity and scale of the alleged economic offences and the material placed before it, the Court concluded that the petitioner is not entitled to bail. [Paras 5, 7]

Bail application rejected.

Applicability of administrative circular to arrest and prosecution - precedent Ratnambar Kaushik - Whether the CBIC Circular and the decision in Ratnambar Kaushik required grant of bail or precluded arrest/prosecution in the present facts - HELD THAT: - The petitioner relied on the CBIC Circular and the Supreme Court decision in Ratnambar Kaushik to contend that arrest and prosecution were impermissible or bail should follow. The Court examined the submissions and distinguished the authorities on facts: it held that the Circular does not oust prosecution where material indicates massive fraud and continuing investigation, and that Ratnambar Kaushik was not applicable because, inter alia, there are allegations of forgery and a different factual matrix in the present case. [Paras 3, 5]

The CBIC Circular and the cited precedent are not applicable to grant bail in the present case.

Parity with co-accused - Whether parity with a co-accused who was granted bail required grant of bail to the petitioner - HELD THAT: - The Court considered the order granting bail to a co-accused and found that parity could not be accorded because the role attributed to the petitioner is materially different. The petitioner was alleged to be the mastermind responsible for creation and operation of multiple fictitious firms, involving forgery and extensive facilitation of bogus invoices, whereas the co-accused's role differed on the material on record. Accordingly, the parity contention was rejected. [Paras 5]

Parity with the co-accused was not available to the petitioner.

Mastermind of GST fraud - issuance of bogus GST invoices - inadmissible input tax credit leading to loss to exchequer - forgery affecting bail - Whether there is material to treat the petitioner as the alleged mastermind responsible for creation and operation of fictitious firms and related forgery - HELD THAT: - The prosecution dossier and statements recorded from persons at registered premises and purported proprietors/directors of the firms indicated that the firms carried no real business activity and that transactions were effected without knowledge of the nominal directors. The Court noted allegations that the petitioner managed ground-level operations, procured KYC details, opened offices and bank accounts, and used recruited persons to effect formalities, and that invoices were issued by fictitious suppliers resulting in wrongful availment and passing of input tax credit. Given this verified material and the nature of the alleged forgery, the Court treated the petitioner's role as central to the alleged scheme. [Paras 4, 5]

Material on record supports characterization of the petitioner as central to the alleged large-scale GST fraud; this informs the refusal of bail.

Final Conclusion: The High Court, after considering the complaint, prosecution report, cognizance order and verified material, concluded that the petitioner was not entitled to bail and accordingly rejected the bail application.

Applicability of tax deduction at source under Section 194H to discounts/commission - characterisation of distributor relationship as principal-agent or principal-principal - treatment of distributor discounts as commission for sale of SIM cards and recharge coupons - precedential weight of like decisions of High Courts in appellate taxation disputes -

HELD THAT:- The issue in this case is squarely covered by the decision of this Court in Bharti Cellular Limited [2024 (3) TMI 41 - SUPREME COURT]

In view of the aforesaid, the present appeals are allowed, and the impugned judgment(s) is set aside by holding that the parties will be bound by the decision (Supra).

Reassessment jurisdiction - reason to believe - failure to disclose fully and truly all material facts - scrutiny assessment - limitation for reassessment after four years

Scrutiny assessment - reassessment jurisdiction - Returns for AY-2013-14 had been subjected to scrutiny assessment - HELD THAT: - The recorded reasons for reopening wrongly asserted that the return had not been subjected to scrutiny. The material on record - notices issued during assessment, queries sent on securities transactions, replies by the assessee, attendance at hearings and the assessment order dated 11th March, 2016 - demonstrate that a full scrutiny assessment was conducted, including detailed examination of securities trades, ledger and bank statements, and computation of capital gains. The assessment resulted in a limited modification to returned income and consequent demand which was paid. Therefore the foundational premise for reopening that there had been no prior scrutiny is incorrect. [Paras 14, 15, 16]

It was held that the returns for AY-2013-14 were indeed subjected to scrutiny assessment and the assertion to the contrary is factually incorrect.

Failure to disclose fully and truly all material facts - limitation for reassessment after four years - reassessment jurisdiction - Reassessment after expiry of four years is not permissible unless escapement of income is due to failure by the assessee to disclose fully and truly all material facts, and that condition was not satisfied - HELD THAT: - Section 147 (as applicable on 31-03-2021) and its proviso require, for action after four years from the end of the relevant assessment year, a demonstration that income escaped assessment by reason of the assessee's failure to disclose material facts fully and truly. The court emphasised that the proviso is a jurisdictional precondition and cannot be supplanted by a broader administrative formulation of 'reason to believe'. The Revenue must record and disclose in the reasons which fact or material was not disclosed by the assessee and how that connects to the alleged escapement. Absent such a jurisdictional fact - namely, that the assessee was in possession of material facts and failed to disclose them - the statutory condition for reopening is not attracted. [Paras 18, 19, 23, 26, 27]

Held that the essential ingredient for reopening after four years - failure by the assessee to disclose material facts fully and truly - is missing, and therefore reassessment could not be validly initiated.

Reason to believe - failure to disclose fully and truly all material facts - Information about stock-broker client code modifications relied upon by Revenue did not establish failure by the assessee to disclose material facts or justify reopening - HELD THAT: - The Revenue's stated information - that a stock broker had modified client codes and that this could have generated fictitious profits/losses - was not shown in the reasons to be connected to any failure by the petitioner to disclose material facts. The record contains no particulars as to what the information was, when it was received, how it implicated the petitioner, or that the petitioner instructed any modification. Moreover, all transactions reflected in the petitioner's books, contract notes and returns were examined during the original scrutiny. Thus the mere receipt of investigative information, without a demonstration that the assessee possessed and failed to disclose material facts, cannot substitute for the statutory requirement; the Revenue cannot rely on a generalized 'reason to believe' to bypass the proviso to Section 147. [Paras 5, 21, 22, 24, 25]

Held that the client code modification information did not establish the requisite failure to disclose by the assessee and was insufficient to justify reopening the assessment.

Final Conclusion: Writ petition allowed; the notice dated 31-03-2021 under Section 148 and the consequential notices under Sections 143(2) and 142(1), and the order dated 14-02-2022 disposing of objections, are quashed on the ground that the statutory precondition for reassessment after four years - failure by the assessee to disclose fully and truly all material facts - is not satisfied, and the returns had in any event been subjected to scrutiny assessment.

Time-barred reopening under section 148 by limitation in Section 149(1)(b) - Notice under section 148 void ab initio - Assessment passed on a void notice is illegal and liable to be quashed - Illegality not cured by delay, laches or alleged acquiescence - Writ of certiorari under Article 226 to quash jurisdictionally invalid proceedings

Time-barred reopening under section 148 by limitation in Section 149(1)(b) - Notice under section 148 void ab initio - Assessment passed on a void notice is illegal and liable to be quashed - Validity of the notice dated 25 July 2022 issued under section 148 for Assessment Year 2013-14 and consequent assessment order dated 26 May 2023 - HELD THAT: - The Court held that for AY 2013-14 the six year limitation under Section 149(1)(b) expired on 31 March 2020 (extended to 31 March 2021 by notification arising out of the pandemic). The notice under section 148 dated 25 July 2022 was therefore issued after the prescribed limitation period had expired and was without jurisdiction. The Assessing Officer incorrectly applied the amended limitation regime as if it were applicable to AY 2013-14. Being issued without jurisdiction the section 148 notice was void ab initio and the assessment order passed on that basis (dated 26 May 2023) was consequently illegal and liable to be quashed. The Court applied the reasoning in the co ordinate Bench decision in New India Assurance Co. Ltd. and concluded that the reopening and reassessment could not be sustained. [Paras 5, 9, 10, 11]

Notice dated 25 July 2022 under section 148 and assessment order dated 26 May 2023 for AY 2013-14 quashed as void for being time barred.

Illegality not cured by delay, laches or alleged acquiescence - Writ of certiorari under Article 226 to quash jurisdictionally invalid proceedings - Whether the petition is barred by delay or laches and whether acquiescence to the assessment prevents relief - HELD THAT: - The Court rejected the Revenue's contention that the petition should be dismissed for delay because the assessment was earlier made and the petition was filed after about one year. It held that an order which is illegal and void ab initio cannot be validated by delay, laches or alleged acquiescence. The subsequent penalty orders (served in February 2024) constituted fresh cause of action and enforcement of a jurisdictionally invalid assessment could not be permitted. Accordingly, delay did not preclude issuance of writ relief under Article 226 to quash the void proceedings. [Paras 7, 8, 10]

Delay, laches or alleged acquiescence do not cure the illegality of a jurisdictionally void assessment; petition entertained and relief granted.

Final Conclusion: The petition is allowed in terms of prayer (a): the notice under section 148 dated 25 July 2022 for AY 2013-14 and the assessment order dated 26 May 2023 made thereon are quashed; rule made absolute in those terms.

Time-barred assessment - presumption as to date of order - faceless assessment - failure to consider representation - remand for fresh consideration

Time-barred assessment - presumption as to date of order - Impugned assessment dated 30.09.2021 is not time-barred merely because the order copy was emailed on 01.10.2021 and physically dispatched later. - HELD THAT: - The Court accepted the legal presumption that an order dated 30.09.2021 is to be treated as having been passed on that date. Although the copy was emailed on 01.10.2021 and physically dispatched thereafter, the material on record (including the e-filing extract and dispatch receipts) did not displace the presumption that the assessment was completed on 30.09.2021. On that basis, the assessment could not be categorised as time-barred under the limitation which expired on 30.09.2021. [Paras 19, 20]

Assessment dated 30.09.2021 not held to be time-barred.

Failure to consider representation - remand for fresh consideration - Assessment order set aside and matter remitted for fresh consideration because the petitioner's representation dated 29.09.2021 was not considered and the assessment was finalised hurriedly. - HELD THAT: - The Court found that the petitioner's explanation contained in the representation dated 29.09.2021 was not considered by the assessing officer. Although the order bore the date 30.09.2021 and was not treated as time-barred, the circumstances indicated that the assessment had been completed in haste. In the interest of fairness and to balance parties' rights, the Court exercised supervisory jurisdiction to set aside the impugned order and remit the matter to the respondents for reconsideration on merits. The respondents were directed to hear the petitioner before passing fresh orders and to complete the exercise within six months from receipt of the Court's order. [Paras 21, 23, 24]

Impugned assessment order set aside; matter remitted to respondents to decide on merits after hearing the petitioner within six months.

Final Conclusion: The writ petition is disposed of by setting aside the assessment order dated 30.09.2021 and remitting the matter to the respondents for fresh adjudication on merits after hearing the petitioner, to be completed within six months; no costs.

Reopening of assessment - reasons for reopening - disposal of objections to reasons - substitution of reasons after approval under section 151 - validity of reassessment proceedings initiated under section 148 - principles laid down in GKN Driveshafts regarding hearing on reopening

Reopening of assessment - disposal of objections to reasons - principles laid down in GKN Driveshafts regarding hearing on reopening - Legality of the reassessment where the assessee had raised objections to the reasons communicated but the Assessing Officer failed to dispose of those objections by a speaking order before concluding assessment. - HELD THAT: - The Court found that the Assessing Officer furnished reasons to the petitioner (by notice under Section 143(2) read with Section 147) to which the petitioner filed objections on 15 October 2021 which were not disposed of by a speaking order. Applying the binding principle in GKN Driveshafts, the AO was bound to furnish reasons within a reasonable time and to decide the objections by a speaking order before proceeding with reassessment. The failure to do so went to the root of the reassessment procedure and rendered the subsequent assessment proceedings vitiated. The Court observed that the assessment order was passed on the basis of reasons communicated to the assessee and without adjudication of the objections, and therefore the reassessment was illegal. [Paras 6, 10, 13]

Assessment proceedings under Section 148/147 and the final assessment order were quashed for failure to dispose of the assessee's objections to the reasons for reopening.

Reasons for reopening - substitution of reasons after approval under section 151 - validity of reassessment proceedings initiated under section 148 - Permissibility of the Revenue relying, after the assessment order, on different reasons placed before the Joint Commissioner for approval under Section 151 which were not communicated to the assessee and on which the assessee had no opportunity to object. - HELD THAT: - The Court rejected the Revenue's contention that fresh reasons (as placed before the Joint Commissioner in the Section 151 approval) could be treated as the correct reasons after the assessment had been concluded. It held that substituting reasons after the fact, without communicating those reasons to the assessee and affording an opportunity to file objections in the manner prescribed by law, is impermissible. The Court emphasised that the procedure under Section 148 (as applicable to the assessment year) and the sanctity of the opportunity to object cannot be circumvented by producing different reasons only at the stage of judicial proceedings or in a reply affidavit. Accordingly, sanctity cannot be attributed to such post hoc reasons. [Paras 5, 11]

The attempt to rely upon fresh reasons in the approval under Section 151, not communicated to the assessee and substituted after objections had been raised, was rejected and could not sustain the reassessment.

Final Conclusion: The petition was allowed: the reopening notice, the assessment order, the notice of demand and the penalty notice were quashed on the ground that the Assessing Officer failed to dispose of the assessee's objections to the reasons for reopening and impermissibly sought to substitute fresh reasons after the fact; the Revenue cannot rely on such substituted reasons.

Application of Rule 37BA - treatment of gross sale proceeds versus commission income - availability of TDS credit for commission agents - recognition of kaccha arahtia turnover as gross commission - binding relevance of CBDT Circular No.452 (17-3-1986) - precedential consistency of Tribunal decisions

Application of Rule 37BA - treatment of gross sale proceeds versus commission income - availability of TDS credit for commission agents - recognition of kaccha arahtia turnover as gross commission - binding relevance of CBDT Circular No.452 (17-3-1986) - precedential consistency of Tribunal decisions - Whether the assessee, a licensed commission agent (kaccha arahtia), is entitled to credit of the entire TDS deducted and whether Rule 37BA/CPC treatment of gross sale proceeds as the assessee's income was incorrect. - HELD THAT: - The Tribunal examined the CBDT Circular No.452 dated 17-3-1986, which specifies that for kaccha arahtias turnover comprises only the gross commission and does not include sales effected on behalf of principals. Applying that circular to the facts-that the assessee is a licensed commission agent in the Agricultural Market Committee Yard, Guntur-the Tribunal held that the assessee acted as an agent and its turnover for tax-credit purposes is the commission, not the gross sale proceeds. The Tribunal also followed its earlier decision in Yagneswari General Traders v. ITO on identical facts and, invoking consistency, set aside the revenue authorities' orders which had, by applying Rule 37BA, treated gross receipts as the assessee's income and denied full TDS credit. The Tribunal directed the Assessing Officer to grant credit for the entire amount of tax deducted at source in the assessee's case. [Paras 5, 6, 7]

Orders of the revenue authorities set aside; Assessing Officer directed to grant credit of the entire TDS deducted to the assessee.

Final Conclusion: Appeal allowed: the Tribunal, applying CBDT Circular No.452 and consistent Tribunal precedent, held that a kaccha arahtia/commission agent's turnover is the commission and not gross sale proceeds, and directed grant of full TDS credit for AY 2023-24.

Deduction under Section 54F - net consideration for Section 54F - deemed consideration under Section 50C - recomputation of long term capital gain - reassessment under Section 147/148

Deduction under Section 54F - net consideration for Section 54F - deemed consideration under Section 50C - Whether the amount invested for purpose of deduction under Section 54F is to be measured by the actual sale consideration received (net consideration) or by the deemed sale consideration adopted under Section 50C. - HELD THAT: - The Court examined Section 54F and its Explanation which defines "net consideration" as the full value of consideration received or accruing as a result of the transfer of the capital asset reduced by transfer-related expenditure. The statutory text of Section 54F contains no reference to the deemed sale consideration for stamp duty purposes under Section 50C. The Tribunal held that quantification of the exemption under Section 54F must be based on the actual sale consideration received or accruing to the assessee and the amount so invested in the new residential house, and not upon the deemed valuation adopted under Section 50C. Applying this principle, the Tribunal found the assessee's contention- that having invested his actual share of sale proceeds in construction of a house he is entitled to deduction under Section 54F to that extent-merits acceptance. [Paras 10, 11]

Deduction under Section 54F must be computed with reference to the actual "net consideration" received by the assessee and the amount thereof invested in the new asset; the deemed consideration under Section 50C does not govern the quantification under Section 54F.

Recomputation of long term capital gain - deduction under Section 54F - Whether the assessment should be reopened for recalculation of taxable LTCG after applying the correct basis for Section 54F deduction. - HELD THAT: - Although the Tribunal accepted the legal proposition that Section 54F is to be applied on actual net consideration, it recognised that the claim of deduction is subject to satisfaction of statutory conditions and factual verification. Consequently, the Tribunal directed the Assessing Officer to re-compute the long term capital gain and the taxable amount after reworking the Section 54F deduction in light of the finding that net consideration (actual sale consideration) is the relevant base. This mandate is for calculation and verification and does not amount to final quantification by the Tribunal on merits. [Paras 12]

Matter remitted to the Assessing Officer for re-computation of LTCG and adjustment of deduction under Section 54F in accordance with the Tribunal's interpretation and after verifying compliance with the statutory conditions.

Reassessment under Section 147/148 - Additional ground challenging the validity of reassessment proceedings as barred because the transfer had occurred in an earlier year was not pressed. - HELD THAT: - The assessee initially raised an additional ground contending that the transfer occurred in an earlier financial year, rendering the reassessment void. After oral argument, the assessee's representative sought liberty not to press this ground. The Tribunal recorded that the additional ground is dismissed as not pressed. [Paras 13]

Additional ground dismissed as not pressed.

Final Conclusion: Appeal allowed in part: the Tribunal held that Section 54F relief is to be computed with reference to the actual "net consideration" received and remitted the matter to the Assessing Officer to re-compute the long-term capital gain and the Section 54F deduction accordingly; the additional ground was dismissed as not pressed.

Penalty under section 271(1)(c) for concealment of particulars or for furnishing inaccurate particulars of income - requirement of a specific charge in the show cause notice under section 274 r.w.s. 271 - invalidity of penalty proceedings where the notice uses pro forma language without striking out inapplicable averments - precedential effect of jurisdictional High Court decision

Penalty under section 271(1)(c) for concealment of particulars or for furnishing inaccurate particulars of income - requirement of a specific charge in the show cause notice under section 274 r.w.s. 271 - invalidity of penalty proceedings where the notice uses pro forma language without striking out inapplicable averments - precedential effect of jurisdictional High Court decision - Validity of penalty levied under section 271(1)(c) where the penalty notice did not specify whether it was for concealment of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal noted that the AO issued a pro forma show cause notice under section 274 r.w.s. 271 without specifying the precise charge or striking out inapplicable words, and made no findings in the assessment order delineating whether the penalty was for concealment or for furnishing inaccurate particulars. In these circumstances the defect in framing the charge goes to the root of the penalty proceedings. The Tribunal followed the jurisdictional Madras High Court decision in Babuji Jacob v. ITO and the consistent view of the ITAT that a non specific penalty notice, which fails to state the precise cause of action (concealment versus inaccurate particulars) or to tailor the standard pro forma wording, renders the penalty unsustainable. Applying that precedent to the admitted facts (admission of additional income during survey and reassessment), the Tribunal confirmed the CIT(A)'s deletion of the penalty for the assessment years in question. [Paras 3, 5]

Penalty u/s 271(1)(c) deleted for the assessment years; Revenue's appeal dismissed.

Final Conclusion: The Tribunal confirmed the CIT(A)'s order deleting the penalty under section 271(1)(c) because the show cause notice failed to specify the precise charge (concealment or furnishing inaccurate particulars) and the matter is covered by the Madras High Court precedent; the Revenue's appeal is dismissed.

Furnishing inaccurate particulars of income - penalty under section 271(1)(c) - deduction under section 54EC - deduction under section 54F - partial allowance in quantum proceedings - re-computation of penalty - mistake apparent from record

Furnishing inaccurate particulars of income - penalty under section 271(1)(c) - deduction under section 54EC - Penalty in respect of the incorrect claim under section 54EC upheld. - HELD THAT: - The assessee admitted that the claim under section 54EC was incorrect and withdrew the claim by filing a revised statement of income, which constitutes furnishing inaccurate particulars. The Tribunal found that such withdrawal and admission amount to an intentional misstatement within the meaning of section 271(1)(c), and therefore the penalty imposed by the AO was rightly sustained. The Tribunal expressly upheld the penalty insofar as it relates to the incorrect deduction claimed under section 54EC. [Paras 7]

Penalty relating to the incorrect deduction under section 54EC is upheld.

Penalty under section 271(1)(c) - deduction under section 54F - partial allowance in quantum proceedings - re-computation of penalty - Penalty in respect of deduction under section 54F to be re-computed after allowing relief accorded in the quantum proceedings. - HELD THAT: - The Tribunal noted that the coordinate Bench in the quantum appeal granted relief by restricting the deduction under section 54F to a specified amount, demonstrating that the claim was not entirely devoid of merit. Because a portion of the addition disallowed in assessment was subsequently allowed in the quantum proceedings, it was impermissible to sustain penalty for that allowed portion. The Tribunal held that confirmation of penalty without considering the ITAT's quantum order was a mistake apparent on the record; consequently the AO is directed to re-compute the penalty, granting the relief allowed in the quantum proceedings and reducing the penalty accordingly. [Paras 7]

Penalty relating to the deduction under section 54F is to be re-computed by the AO after granting the relief allowed in the quantum proceedings; appeal partly allowed.

Final Conclusion: The appeal is partly allowed: penalty upheld insofar as it relates to the incorrect claim under section 54EC; penalty relating to section 54F is set aside to the extent of relief granted in the quantum proceedings and the AO directed to re-compute the penalty accordingly.

Revisionary power under Section 263 - Explanation 2 to Section 263 - deduction under Section 80P(2)(d) - scope of enquiry by the Assessing Officer - role of judicial precedents in exercise of revisionary power

Revisionary power under Section 263 - Explanation 2 to Section 263 - scope of enquiry by the Assessing Officer - deduction under Section 80P(2)(d) - role of judicial precedents in exercise of revisionary power - Validity of the Principal Commissioner's invocation of Section 263 to set aside the assessment order insofar as deduction under Section 80P(2)(d) in respect of interest from a co-operative bank was allowed - HELD THAT: - The Assessing Officer in the assessment proceedings had specifically enquired into the claim of deduction under Section 80P(2)(d), distinguished components of interest (disallowing interest from nationalised banks while allowing interest from the co-operative bank) and made additions where considered necessary. The PCIT invoked Explanation 2 to Section 263 to contend that the assessment order was passed without making adequate enquiry and set aside the assessment. The Tribunal examined the material and proceedings and found that enquiries were in fact undertaken by the AO and that there existed judicial decisions favourable to the assessee on the issue. In such circumstances a second opinion, or differing view, does not justify exercise of the revisionary jurisdiction under Section 263. Reliance on Explanation 2 was not justified where the AO had made substantive enquiries and where the question involved competing judicial precedents supporting the assessee's claim. Consequently the exercise of power under Section 263 was held to be unjustified and not sustainable.

Order under Section 263 setting aside the assessment insofar as deduction under Section 80P(2)(d) was allowed is set aside and the appeal is allowed.

Final Conclusion: The Tribunal held that the Principal Commissioner's invocation of Section 263 (including reliance on Explanation 2) was unjustified because the Assessing Officer had made adequate enquiries and there were authorities favourable to the assessee; the Section 263 order was set aside and the appeal allowed.

Condonation of delay - admissibility of appeal where advance tax not paid under section 249(4) - reassessment initiated on wrong information - addition treated as unexplained money under Section 69A - tax on deemed income under Section 115BBE

Condonation of delay - Delay of 89 days in filing the appeal was condoned and the appeal admitted for adjudication. - HELD THAT: - The Tribunal examined the affidavit explaining delay, noting that the assessee had pursued remedy by filing an application under section 154 which was dismissed and thereafter filed the present appeal. Having regard to the explanation and circumstances, the Tribunal found the reasons to be good and sufficient and exercised its discretion to condone the delay and admit the appeal for hearing. [Paras 2, 4]

Delay of 89 days condoned and appeal admitted.

Admissibility of appeal where advance tax not paid under section 249(4) - Invocation of section 249(4) by the CIT(A) to dismiss the assessee's appeal for non-payment of advance tax was erroneous where the assessee disputed the taxability of the amount added. - HELD THAT: - The Tribunal noted that the CIT(A) dismissed the appeal under section 249(4) on the ground that the assessee had not filed a return and had not paid advance tax. The assessee contested the addition in full, maintaining that without the addition she was not chargeable to tax and therefore had no obligation to pay advance tax. The Tribunal held that where the assessee challenges the chargeability of the income and contends there is no tax liability, invoking section 249(4) to dismiss the appeal was not appropriate. The Tribunal treated the submission on merits and considered the material placed on record rather than sustaining a dismissal on that procedural ground. [Paras 6, 9, 10]

CIT(A)'s dismissal under section 249(4) was erroneous where the assessee disputed the chargeability; appeal admitted and considered on merits.

Reassessment initiated on wrong information - addition treated as unexplained money under Section 69A - tax on deemed income under Section 115BBE - Addition of Rs. 14 lakhs made under Section 69A read with Section 115BBE was deleted because the reassessment was founded on incorrect information and the assessee produced the correct sale deed and source of funds. - HELD THAT: - The Tribunal examined the material relied upon by the Assessing Officer, namely information from the National e-Assessment Centre indicating a purchase for Rs. 45 lakhs dated 07/10/2017. The assessee produced the correct sale deed showing purchase on 06/10/2017 for Rs. 31 lakhs and evidence of the source of funds by way of a bank loan. The Tribunal found that the AO's addition was based on a wrong assumption of fact-the transaction for Rs. 45 lakhs did not involve the assessee-and that the assessee had satisfactorily explained the source of the payment. In view of these findings, the basis for the addition under Section 69A did not survive and the addition was deleted. [Paras 5, 10, 11]

Addition under Section 69A read with Section 115BBE deleted; appeal allowed.

Final Conclusion: The Tribunal condoned the delay, held that the CIT(A) erred in dismissing the appeal under section 249(4) where the assessee disputed taxability, and on merits deleted the addition made under Section 69A read with Section 115BBE as the reassessment was founded on incorrect information and the assessee furnished the correct sale deed and source of funds; appeal allowed.

Penalty under section 271(1)(c) for concealment of income - effect of appellate deletion of quantum addition on penalty - admission of additional evidence on appeal

Penalty under section 271(1)(c) for concealment of income - effect of appellate deletion of quantum addition on penalty - admission of additional evidence on appeal - Whether the penalty levied under section 271(1)(c) can be sustained after the appellate authority deleted the quantum addition. - HELD THAT: - The Tribunal noted that the Assessing Officer made an addition for unexplained cash deposits and imposed penalty under section 271(1)(c). On appeal, the appellate order dated 10.05.2024 admitted additional documentary evidence and, after evaluating the submissions, deleted the addition of Rs. 6,58,000 as the explanations and documents furnished on appeal were held to be acceptable. Having the quantum addition deleted on appeal, the Tribunal held that the penalty levied by the AO and earlier sustained by the CIT(A) cannot survive. The Tribunal therefore set aside the CIT(A) order insofar as it sustains the penalty and directed the Assessing Officer to delete the penalty in consequence of the appellate deletion of the addition. [Paras 7, 8]

Penalty under section 271(1)(c) set aside and directing the Assessing Officer to delete the penalty following deletion of the quantum addition on appeal.

Final Conclusion: The assessee's appeal is allowed: the Tribunal set aside the order sustaining the penalty and directed deletion of the penalty consequent to the appellate deletion of the addition.

Unexplained share capital/share premium under Section 68 - Identity, creditworthiness and genuineness of share subscription - Effect of compliance with notices under Section 133(6) and summons under Section 131 - Application of human probability and circumstantial evidence

Unexplained share capital/share premium under Section 68 - Identity, creditworthiness and genuineness of share subscription - Effect of compliance with notices under Section 133(6) and summons under Section 131 - Application of human probability and circumstantial evidence - Addition made under Section 68 in respect of share capital/share premium was deleted and the appeal was allowed. - HELD THAT: - The assessee issued equity shares to two group companies at face value with premium. The assessee furnished detailed evidence during assessment proceedings (names, addresses, PANs, audited accounts, bank statements, confirmation letters) and the AO issued notices under Section 133(6) to the subscribing companies which were complied with. Summons under Section 131 were issued and the director's statement admitting the share subscriptions and explaining utilization of funds was recorded and reproduced in the assessment order. The AO and the First Appellate Authority doubted the business or source without pointing to any defect in the documentary evidence or non-compliance; they relied on the theory of human probability and circumstantial inferences. The Tribunal found that where identity, creditworthiness and genuineness are established by contemporaneous documentary evidence and the subscribing parties comply with statutory notices/summons, invoking Section 68 merely on general suspicion or on human-probability reasoning is not sustainable. The Tribunal distinguished the decision relied upon by the Revenue on its facts and held that the three ingredients of Section 68 were proved on the record and that the addition under Section 68 was therefore improperly made. [Paras 8, 9]

The addition under Section 68 was deleted and the appeal was allowed.

Final Conclusion: The Tribunal set aside the orders of the AO and the Ld. CIT(A), held that the assessee had satisfactorily proved identity, creditworthiness and genuineness of the share subscriptions (including compliance with notices under Section 133(6) and summons under Section 131), and directed deletion of the addition made under Section 68 for AY 2014-15.

Addition under section 68 - Unsecured loans-identity, genuineness and creditworthiness - Section 69C-disallowance of interest as unexplained expenditure - Section 14A read with Rule 8D-disallowance in absence of exempt income - Prospective operation of Finance Act, 2022 amendment to section 14A

Addition under section 68 - Unsecured loans-identity, genuineness and creditworthiness - Section 69C-disallowance of interest as unexplained expenditure - Deletion of additions made on account of unsecured loans and disallowance of interest - HELD THAT: - The assessee, a builder-developer, produced documentary evidence before the CIT(A) establishing identity, PAN, address, ledger confirmations, bank extracts and ITR acknowledgements of the lenders. The AO had added certain unsecured loans under section 68 and disallowed interest under section 69C on the ground that documents were filed at the fag end of limitation and independent verification could not be completed; subsequently some rectifications were made under section 154. The CIT(A) sought a remand report but the jurisdictional AO failed to file it despite reminders. On appeal the Revenue did not produce any material to controvert the documentary evidence relied upon by the assessee. In these circumstances the Tribunal found no infirmity in the CIT(A)'s conclusion that the assessee discharged the onus to prove identity, genuineness and creditworthiness of the lenders and accordingly upheld deletion of additions under section 68 and deletion of the related disallowance under section 69C. [Paras 11, 12]

Addition under section 68 and disallowance under section 69C deleted; Revenue grounds on this issue dismissed.

Section 14A read with Rule 8D-disallowance in absence of exempt income - Prospective operation of Finance Act, 2022 amendment to section 14A - Validity of disallowance under section 14A read with Rule 8D where no exempt income has been received - HELD THAT: - The AO treated certain gains as exempt income and computed a Rule 8D-based disallowance, though the assessee furnished accounts and ledger showing the amount was net gain on sale of investments (capital gain) and there was no exempt income under section 10. The CIT(A) deleted the disallowance on the basis that in absence of any tax-free income, the corresponding expenditure cannot be disallowed. The Tribunal found the factual position uncontradicted by Revenue and followed judicial precedent holding section 14A does not apply if no exempt income is received or receivable. The Tribunal further noted that the Finance Act, 2022 amendment (inserting a non-obstante clause and explanation to make section 14A applicable even if no exempt income accrues) has prospective operation and therefore does not affect the present assessment year. Consequently the section 14A disallowance computed under Rule 8D was not sustainable and was rightly deleted. [Paras 16, 17, 18, 19, 20]

Disallowance under section 14A read with Rule 8D deleted; Revenue grounds on this issue dismissed.

Final Conclusion: Both Revenue appeals are dismissed: the additions on account of unsecured loans (section 68) and related interest disallowance (section 69C) stand deleted on proof of identity, genuineness and creditworthiness; the disallowance under section 14A read with Rule 8D is also deleted as no exempt income was received and the 2022 amendment is prospective.

Transfer pricing - Arm's Length Price - Most appropriate method - Cost based Transactional Net Margin Method (TNMM) - Comparable Uncontrolled Price (CUP) method - Aggregation of closely linked intra group services - Benefit test for intra group services - Working capital adjustment in TP analysis - Imputed interest on delayed receivables - Jurisdiction of Transfer Pricing Officer (scope limited to ALP determination)

Aggregation of closely linked intra group services - Cost based Transactional Net Margin Method (TNMM) - Comparable Uncontrolled Price (CUP) method - Benefit test for intra group services - Jurisdiction of Transfer Pricing Officer (scope limited to ALP determination) - Validity of TPO/DRP benchmarking management charges at 'Nil' under CUP method instead of accepting assessee's aggregate TNMM treatment of intra group services - HELD THAT: - The Tribunal held that the assessee had, on the materials placed, reasonably demonstrated rendition and receipt of a bundle of intra group low value, routine management services and had benchmarked all such interlinked services collectively using the cost based TNMM. The TPO erred in segregating the management charges and applying the CUP method to record the ALP as 'Nil' because no comparable uncontrolled transaction was identified as required for CUP, and CUP cannot be invoked merely on the Revenue's assertion of absence of benefit. Determination whether a service conferred commercial benefit in the sense of Section 37 is not within the TPO's remit under transfer pricing provisions, which are confined to determining whether the price is at arm's length. Precedents of the jurisdictional High Court and Tribunal support (i) permissibility of aggregating closely linked continuous transactions for TNMM and (ii) that CUP cannot be applied without comparable uncontrolled instances. The DRP's cryptic confirmation of the TPO's order without independent reasons was held to be arbitrary and required setting aside. On these grounds the Tribunal reinstated the TNMM benchmarking and quashed the TPO's adjustment in respect of management charges. [Paras 17, 20, 22, 23, 24]

Adjustment made by TPO/DRP in respect of management charges benchmarked at 'Nil' under CUP is quashed and the TNMM methodology adopted by the assessee is reinstated.

Imputed interest on delayed receivables - Working capital adjustment in TP analysis - Cost based Transactional Net Margin Method (TNMM) - Arm's Length Price - Legitimacy of TPO's addition by imputing interest on receivables realised beyond 60 days where combined TNMM and working capital adjustment were adopted - HELD THAT: - The Tribunal found that receivables arising from sales to AEs had been benchmarked as part of the assessee's aggregated TNMM analysis and that the DRP had directed allowance of working capital adjustment which takes into account debtors and creditors. Where, after working capital adjustment, the assessee's profit level indicator remains higher than comparables, imputation of a separate notional interest on overdue receivables is not warranted. The Tribunal relied on the principle that not every delayed receivable constitutes an independent international transaction requiring separate benchmarking and on relevant judicial authorities holding that working capital adjustment may subsume the effect of delayed receipts. Applying those principles to the facts, the Tribunal held there was no justification for separately benchmarking and adding imputed interest. [Paras 25, 26, 27]

Transfer pricing adjustment on account of imputed interest on delayed receivables is deleted and the issue is decided in favour of the assessee.

Final Conclusion: The appeal is allowed: the adjustment in respect of management charges is quashed and the assessee's TNMM benchmarking is reinstated; the imputed interest addition on delayed receivables is deleted.

Condonation of delay - Interference with High Court judgment - Dismissal of civil appeal - Finality of appellate review

Condonation of delay - Application for condonation of delay in filing the appeal - HELD THAT: - The Court considered the application for condonation of delay and recorded its satisfaction with the explanation furnished. The delay was condoned, permitting the matter to be heard on merits. [Paras 1]

Delay condoned.

Interference with High Court judgment - Dismissal of civil appeal - Finality of appellate review - Whether the Supreme Court should interfere with the judgment and order of the High Court in CUSAA No.58/2023 dated 20-11-2023 - HELD THAT: - After hearing counsel, the Court examined the impugned judgment and order of the High Court and found no grounds to disturb it. The Supreme Court declined to exercise its appellate jurisdiction to set aside or modify the High Court's decision, thereby affirming the High Court's conclusion. [Paras 3, 4]

The Civil Appeal is dismissed; the impugned High Court judgment and order is not interfered with.

Final Conclusion: The application for condonation of delay was allowed; on merits the Supreme Court declined to interfere with the impugned High Court judgment and dismissed the civil appeal.

Reasons to believe - Panchnama requirement - seizure memo - adjudication of seizure - provisional release under bank guarantee - expeditious decision - Article 226 - limitation on factual enquiry

Reasons to believe - Panchnama requirement - seizure memo - Whether omission of an express statement of the "reasons to believe" in the seizure memo vitiates the seizure. - HELD THAT: - The Court examined Section 110 and Clause 4 of the departmental circular dated 08.02.2017 which advises that the seizure memo/panchanama should clearly mention the reasons to believe that goods are liable for confiscation. Having regard to earlier decisions cited in the judgment, the Court held that where the seizure memo indicates the statutory provision(s) alleged to have been violated, that recital can suffice to communicate the "reasons to believe". The Court referred to a co-ordinate bench's approach in M.A. No. 528 of 2022 and to the discussion in Om Sai Tranding Company (as noted in the judgment), and concluded that mere absence of a separately worded narrative of reasons in the seizure memo does not automatically render the seizure invalid if the alleged violations are otherwise apparent from the memo and circumstances. The Court also observed that disputed factual questions (such as whether relevant documents were physically produced at the time of interception) cannot be resolved in writ jurisdiction under Article 226. [Paras 9, 11]

Omission of an express narrative of "reasons to believe" in the seizure memo did not vitiate the seizure where the memo and circumstances disclosed the statutory violations; the challenge to seizure on that ground fails.

Adjudication of seizure - provisional release under bank guarantee - expeditious decision - Whether the seized goods should be released or the matter remitted for adjudication and, if so, the timetable for such adjudication. - HELD THAT: - The petition was dismissed on merits because disputed factual issues remained for adjudication by the customs authority. The Court declined to decide factual controversies in writ jurisdiction and directed the petitioner to cooperate with the customs adjudicatory process. Simultaneously, the Court directed the customs authorities to provide ample opportunity to the petitioner and to expedite the pending adjudication, disposing of the matter within a reasonable period of six months. The order recognises provisional release subject to bank guarantee/security and leaves quantification and verification to the designated adjudicating forum. [Paras 12, 13]

Writ petition dismissed; matter remitted to customs authorities for adjudication, with a direction to decide pending proceedings within six months and to allow the petitioner adequate opportunity to cooperate.

Final Conclusion: Writ petition dismissed. The challenge to the seizure on the ground that the seizure memo did not recite "reasons to believe" fails; disputed factual issues must be determined by the customs adjudicating authority. The petitioner is directed to cooperate and the customs authorities are directed to decide the pending adjudication within six months, affording the petitioner adequate opportunity.

Entitlement to bail where value of confiscated goods is below statutory threshold - association of persons / body of individuals for aggregating value of contraband - relevance of custodial statements at the bail stage - parity with co-accused granted bail as a factor in bail adjudication - consideration of flight risk and likelihood of tampering with evidence in bail orders

Entitlement to bail where value of confiscated goods is below statutory threshold - consideration of severity of punishment and period of incarceration - Applicant entitled to be released on bail despite allegations under Section 135 of the Customs Act, 1962, having regard to the facts on record and absence of material showing risk of flight or tampering. - HELD THAT: - The Court found that on the material presently before it there is no sufficient evidence to treat the applicant as being part of an association whose aggregated confiscated value would exceed the threshold. The applicant has no criminal history, the prosecution did not establish that he is a flight risk or likely to tamper with evidence, and the contentions against him are yet to be tested at trial. Considering the nature of allegations, the severity of punishment if convicted, and the period of incarceration already undergone, the Court concluded that, without expressing any view on merits, the applicant should be released on bail subject to conditions. [Paras 11, 14, 16, 17]

Applicant to be released on bail on furnishing personal bond with two sureties and subject to specified conditions.

Association of persons / body of individuals for aggregating value of contraband - Question whether the applicant formed part of an association/body of persons with common object such that the confiscated values of all accused could be aggregated was not established at the bail stage and is to be gone into at trial. - HELD THAT: - The Court observed that prima facie the issue of whether the accused were 'working in tandem' requires evidence to be led at trial. Mere common district of origin or travelling on the same flight is insufficient to conclude that the accused constituted an association or body of persons with a common goal. There is no material on record at this stage to pierce the alleged arrangement; hence the contention that values should be aggregated to deny bail cannot be accepted at the bail hearing. [Paras 11]

Issue of association/body of persons left for trial; aggregation of values not accepted for denying bail at this stage.

Relevance of custodial statements at the bail stage - Custodial or in-custody statements relied upon by the prosecution have limited relevance at the bail stage and require testing at trial. - HELD THAT: - The Court noted that the prosecution placed reliance on statements said to have been made by the applicant and other co-accused while in custody. Such statements, taken in custody, cannot be given decisive weight at the bail stage and their probative value must be tested during trial. Accordingly, the presence of such statements on the record did not preclude grant of bail. [Paras 12]

Statements recorded in custody to be tested at trial and do not by themselves defeat the entitlement to bail.

Parity with co-accused granted bail as a factor in bail adjudication - Orders granting bail to co-accused are a relevant consideration and, in the facts of this case, weighed in favour of granting bail to the applicant. - HELD THAT: - The Court observed that several co-accused had already been enlarged on bail by earlier orders, copies of which were placed on record. While each bail application must be considered on its own facts, parity with co-accused who have been granted bail is a relevant factor. Having regard to those orders and the absence of distinctive material against the applicant, parity supported the conclusion to release the applicant on bail. [Paras 15]

Parity with co-accused granted bail considered and favours granting bail to the applicant.

Binding nature of coordinate bench decision in bail matters - Decision in Ram Chandar (coordinate bench) is not binding and is distinguishable on the facts; it does not preclude grant of bail in the present case. - HELD THAT: - The Court noted that the referred coordinate-bench decision does not lay down a binding precedent and that the facts and reasoning thereon are different. The earlier order was tentative on certain aspects and therefore does not mandate rejection of the present bail application. The Court declined to follow that decision as a controlling precedent for the instant application. [Paras 13]

Earlier coordinate-bench decision is not binding and does not preclude grant of bail in the present facts.

Final Conclusion: Bail application allowed; applicant Zareef Ahmad to be released on furnishing personal bond with two sureties and subject to enumerated conditions; breach of conditions to be ground for cancellation of bail.

Absolute confiscation of counterfeit goods - rejection of transaction value under Rule 12 and re-determination by residual method under Rule 9 of the Valuation Rules - confiscation under Section 111(l) and 111(m) of the Customs Act, 1962 - redemption fine - penalty under Section 112(a), Section 114A and Section 114AA

Absolute confiscation of counterfeit goods - Absolute confiscation of branded counterfeit goods abandoned by the importer sustained. - HELD THAT: - The appellant had expressly abandoned the branded goods, waived the show cause notice and personal hearing, and repeatedly disowned any ownership or order for those branded consignments. Right holders identified the goods as counterfeit. The Tribunal accepted the recording in the show cause notice and the Commissioner's conclusion that the goods were imported contrary to the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 and liable for confiscation under the Customs Act. Given the appellant's unequivocal relinquishment of title and failure to contest the proceedings, it was impermissible for him to reverse position and claim the goods; therefore absolute confiscation was upheld. [Paras 16, 18, 19]

Absolute confiscation of the counterfeit branded goods under Section 111(d) is upheld.

Rejection of transaction value under Rule 12 and re-determination by residual method under Rule 9 of the Valuation Rules - Rejection of the declared transaction value under Rule 12 and re-determination of value under Rule 9 upheld. - HELD THAT: - The goods actually imported differed in description, quantity and nature from those declared in the bill of entry, giving the proper officer reasonable doubt as to the truth and accuracy of the transaction value as required by Rule 12. The show cause notice recorded that valuation by Rules 4-8 was not feasible for lack of contemporaneous identical or similar values; a market survey was conducted and values arrived at using the residual method under Rule 9, applying abatements and component-wise valuation where necessary (e.g., valuing chattons plus metal). The appellant did not present contrary evidence or challenge the methodology before the Commissioner. The Tribunal found the procedure and the method of valuation to meet the standards of Rule 9 and therefore sustained the re-determined assessable value. [Paras 20, 21, 23, 24]

Rejection of transaction value under Rule 12 and re-determination of value under Rule 9 sustained.

Confiscation under Section 111(l) and 111(m) of the Customs Act, 1962 - redemption fine - Confiscation of non-branded/misdeclared goods under Section 111(l) and 111(m) upheld; redemption fine reduced substantially. - HELD THAT: - The Commissioner found mis-declaration of nature, quantity and valuation of the imported goods and held them liable for confiscation under Sections 111(l) and 111(m). The Tribunal agreed that confiscation was warranted given the mis-declaration and the need for re-determination of value. However, the redemption fine imposed by the Commissioner equal to the full value of the goods was held to be harsh. The Tribunal reduced the redemption fine for items at serial nos. 1-10 of Table 9 from the amount imposed in the impugned order to a lesser specified sum, and likewise reduced the redemption fine for serial no. 11, thereby moderating the financial consequence while leaving the confiscation finding intact. [Paras 11, 24, 25, 26]

Confiscation under Section 111(l) and 111(m) upheld; redemption fine reduced as specified by the Tribunal.

Penalty under Section 112(a), Section 114A and Section 114AA - Penalty under Section 114AA and Section 114A set aside; penalty under Section 112(a) reduced. - HELD THAT: - While there was evidence of mis-declaration necessitating re-determination of value, the order did not clearly establish the appellant's intention or knowledge to justify penalties under Section 114AA. The Tribunal noted that Section 114A provides for penalty and that an overlap exists if multiple penalties are imposed for the same act; accordingly, penalties under Sections 114A and 114AA were set aside. The Tribunal retained a reduced punitive measure under Section 112(a), fixing the penalty at a specified reduced amount to meet the ends of justice. [Paras 25, 26]

Penalties under Sections 114A and 114AA set aside; penalty under Section 112(a) reduced to the amount specified by the Tribunal.

Final Conclusion: The appeal is partly allowed: absolute confiscation of counterfeit branded goods and confiscation of mis-declared goods under Sections 111(l) and 111(m) are sustained; the re-determined customs duty is upheld; redemption fines imposed in the impugned order are substantially reduced; penalties under Sections 114A and 114AA are set aside and penalty under Section 112(a) is reduced.

Special Additional Duty of Customs (SAD) refund - Notification No. 102/2007-Cus. - refund mechanism - Chartered Accountant's certificate and reconciliation statement - Curability of minor discrepancies in invoice description - Requirement to discredit certification by incriminating evidence - Reliance on Board's Circular for documentary reconciliation

Special Additional Duty of Customs (SAD) refund - Chartered Accountant's certificate and reconciliation statement - Curability of minor discrepancies in invoice description - Requirement to discredit certification by incriminating evidence - Whether the refund claim for SAD can be rejected solely on account of minor mismatches in description and dates between Bills of Entry and sales invoices when a Chartered Accountant's certificate with reconciliation has been produced - HELD THAT: - The Tribunal held that where an importer produces a Chartered Accountant's certificate along with a reconciliation statement as envisaged by the Board's Circular, minor mismatches in description or clerical errors in dates do not vitiate the claim and are ordinarily curable. The decision to discard such a certificate must be supported by specific incriminating or reliable evidence and reasons for disbelieving the certificate must be clearly spelt out. In absence of material discrediting the CA certificate or an allegation of fraud or misrepresentation, the revenue cannot deny the refund on the basis of peripheral discrepancies. The reasoning is reinforced by precedents which recognise the object of Notification No. 102/2007-Cus. and the refund mechanism, and by the Madras High Court's view that non-mentioning of grade or minor description differences, when the CA certificate certifies correlation, do not justify rejection without material to disprove the certification. [Paras 5, 6, 8]

The impugned order rejecting the refund claim on the stated grounds is unsustainable and is set aside; the appeal is allowed with consequential relief as per law.

Final Conclusion: The Tribunal allowed the appeal, set aside the order rejecting the SAD refund claim, and directed grant of consequential relief, holding that a CA certificate with reconciliation cannot be discarded for minor descriptive mismatches absent incriminating evidence.

SARFAESI transmission by operation of law - overriding effect of statutory law over Articles of Association - notice by newspaper publication - estoppel for failure to challenge SARFAESI proceedings - power of NCLT to condone delay under Section 58 - condonation of delay without formal application

SARFAESI transmission by operation of law - Validity of transmission of shares and transfer of possession of the flat to Respondent No.1 under SARFAESI proceedings - HELD THAT: - The Tribunal held that Respondent No.1 acquired the share certificate and flat by operation of law pursuant to enforcement proceedings under the SARFAESI Act and the sale certificate issued by the Bank following court-competent SARFAESI proceedings. The transmission was not a voluntary transfer between parties but a transmission by operation of law arising from enforcement of security by the Bank, and therefore Respondent No.1's acquisition is valid. [Paras 7]

Respondent No.1 validly acquired the shares and the flat through SARFAESI transmission.

Overriding effect of statutory law over Articles of Association - Whether Articles of Association could prevent transmission effected under SARFAESI - HELD THAT: - The Tribunal held that the case involves transmission and not a transfer subject to pre-emptive rights in the Articles of Association. Statutory provisions under the SARFAESI Act have an overriding effect, and Articles of Association, being non-statutory, cannot override the operation of law effected by statutory enforcement proceedings. [Paras 9]

Articles of Association cannot obstruct transmission effected under SARFAESI; statutory law prevails.

Notice by newspaper publication - estoppel for failure to challenge SARFAESI proceedings - Effect of public notices and appellant's failure to challenge SARFAESI proceedings - HELD THAT: - The Tribunal noted the Bank issued public possession and auction notices in a widely circulating newspaper and thereafter took physical possession and conducted auction proceedings. The appellants had knowledge of the SARFAESI proceedings but did not intervene or challenge the enforcement action within limitation. The appellants subsequently initiated litigation and petitions but did not obtain relief, and therefore are estopped from denying Respondent No.1's rights acquired under the SARFAESI process. [Paras 10, 11, 13]

Publication of notices and failure to challenge SARFAESI proceedings preclude appellants from disputing Respondent No.1's acquired rights.

Power of NCLT to condone delay under Section 58 - condonation of delay without formal application - Validity of Ld. NCLT's condonation of delay in filing the petition absent a formal application - HELD THAT: - The Tribunal upheld the NCLT's condonation of delay, observing that the NCLT may exercise its powers under Section 58 of the Companies Act to condone delay. The court relied on precedents that Tribunal may condone delay without a formal application being filed and accepted that the protracted correspondence between the parties justified condonation in the circumstances. [Paras 14, 16, 17]

The condonation of delay by the NCLT was valid and requires no separate formal application.

Final Conclusion: The appeal is dismissed; the NCLT's order upholding Respondent No.1's transmission of shares and possession of the flat under SARFAESI and condoning the delay is affirmed; pending applications are closed.

Summary judgment under Order XIII-A - Action in rem and in personam - Arrest of vessel under Section 5(1)(a) and Section 5(2) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 - Beneficial ownership and lifting the corporate veil - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Requirement of trial/evidence to establish beneficial ownership for admiralty arrest

Summary judgment under Order XIII-A - Beneficial ownership and lifting the corporate veil - Requirement of trial/evidence to establish beneficial ownership for admiralty arrest - Whether summary judgment under Order XIII-A could be granted against Defendant No. 2 in respect of Supplies II and III without a full trial to establish that Defendant No. 2 was the real (beneficial) owner of Defendant No. 1 vessel. - HELD THAT: - The Court held that the Plaintiff proceeded in rem under Section 5(2) read with Section 5(1)(a) of the Admiralty Act by asserting that Defendant No. 2 was the beneficial owner of Defendant No. 1 vessel and by seeking enforcement of maritime claims arising from Supplies II and III against that res. However, where the Plaintiff seeks to look beyond the registered owner and to treat a different entity as the real owner (i.e., to establish beneficial ownership or lift the corporate veil), that factual and evidentiary contest cannot be resolved on an Order XIII-A summary application. The Court applied the principle that to arrest a vessel not in the name of the person primarily liable, the plaintiff must establish that the registered owner is not the real owner and that the beneficial owner is the true owner; such a determination requires evidence and a full trial. Consequently, summary judgment in respect of Supplies II and III against Defendant No. 2 must fail and those claims must proceed to trial for determination of beneficial ownership and related factual issues. [Paras 63, 64, 65, 66, 67]

Summary judgment is refused in respect of Supplies II and III; the Suit shall continue against Defendant No. 2 and the question of beneficial ownership / lifting the corporate veil must be determined after evidence at trial.

Action in rem and in personam - Arrest of vessel under Section 5(1)(a) and Section 5(2) of the Admiralty Act - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Whether the moratorium under Section 14 IBC bars the Plaintiff from proceeding in rem against Defendant No. 1 vessel to enforce maritime claims arising from Supplies II and III where Defendant No. 2 is the person liable in personam. - HELD THAT: - The Court followed Raj Shipping Agencies and related authorities to conclude that an action in rem against a ship (or its sale proceeds) is not equivalent to an action in personam against the owner as corporate debtor under the IBC. While an in personam liability on the owner (or person liable) is a prerequisite for bringing an admiralty claim, once such in personam liability exists the Plaintiff is entitled to proceed in rem independently of any moratorium that attaches to proceeding in personam under Section 14 IBC. The Defendant No. 2's reliance on Alchemist and the contention that the claim stood extinguished for failure to submit proof to the IRP and by acceptance of a resolution plan were rejected on the ground that the Plaintiff has an independent action in rem which survives notwithstanding the corporate insolvency process, subject however to the requirement of establishing ownership where necessary. [Paras 50, 51, 52, 53, 54]

Section 14 IBC does not bar the Plaintiff from proceeding in rem against Defendant No. 1 vessel to enforce maritime claims, and the contention that the claim stood extinguished by the CIRP is not accepted.

Arrest of vessel under Section 5(1)(a) and Section 5(2) of the Admiralty Act - Action in rem and in personam - Whether a vessel owned by a time charterer (as distinct from a demise charterer) can be arrested under Section 5(2) read with Section 5(1)(a) of the Admiralty Act to secure a maritime claim for which the time charterer is liable. - HELD THAT: - The Court interpreted Section 5 purposively and in light of the prior law and relevant international convention and case-law. Section 5(1) requires that the person who owned the vessel when the maritime claim arose be liable for the claim and be owner when the arrest is effected; Section 5(2) permits arrest of any other vessel subject to subsection (1). The Court held there is no textual exclusion of a vessel owned by a time charterer from arrest under Section 5(2) provided the requirements of Section 5(1) are satisfied (i.e., the time charterer is liable for the maritime claim and is owner of the vessel to be arrested when arrest is effected). Earlier authorities and the purposive construction of the statute support arrest of a vessel owned by a time charterer in appropriate cases. [Paras 55, 56, 57, 58, 59]

A vessel owned by a time charterer can be arrested under Section 5(2) read with Section 5(1)(a) of the Admiralty Act, provided the statutory conditions (liability and ownership at the relevant times) are satisfied.

Summary judgment under Order XIII-A - Action in rem and in personam - Whether summary judgment could be granted in favour of the Plaintiff against the sale proceeds of Defendant No. 1 vessel in respect of Supply I. - HELD THAT: - The Court found that Supply I (bunkers supplied to Defendant No. 1 vessel) gives rise to a maritime claim under Section 4(1)(h) of the Admiralty Act and that Defendant Nos. 3 and 4 admitted liability in correspondence (specifically an email by the managing director of Defendant No. 3 admitting monies payable). On that basis, the Court concluded there was no real prospect of successful defence to the claim as regards Supply I and that the documentary record sufficed for summary adjudication. The Court therefore granted summary judgment and a decree against the sale proceeds of the Defendant No. 1 vessel deposited with the Court, together with interest as specified in the decree. [Paras 68, 69, 70]

Summary judgment and decree granted in favour of the Plaintiff against the sale proceeds of Defendant No. 1 vessel in respect of Supply I; interim application disposed of and suit to continue on other counts as directed.

Beneficial ownership and lifting the corporate veil - Requirement of trial/evidence to establish beneficial ownership for admiralty arrest - Whether allegations and documentary indicia of beneficial ownership (Lloyd's report, corporate annual report, emails) sufficed to grant summary relief on beneficial ownership in an Order XIII-A application. - HELD THAT: - Although the Plaintiff relied upon Lloyd's intelligence, consolidated accounts, and email admissions to argue beneficial ownership, the Court held that such allegations entailing looking behind the registered owner and potentially lifting the corporate veil raise contested questions of fact. The appropriate forum to test such contentions is a full trial where evidence can be led and tested; a summary procedure under Order XIII-A is not the proper vehicle to determine disputed questions of beneficial ownership where the registered owner is different and ownership is contested. [Paras 42, 43, 44, 45, 66]

Documentary indicia of beneficial ownership do not suffice for summary determination of beneficial ownership; the question must be adjudicated after evidence at trial.

Final Conclusion: The Court dismissed the Plaintiff's summary judgment application insofar as it sought summary relief against Defendant No. 2 for Supplies II and III, holding that beneficial ownership and lifting the corporate veil require a full trial; it rejected the contention that Section 14 IBC barred in rem proceedings or extinguished the Plaintiff's claim; it held that a vessel owned by a time charterer can be arrested under Section 5(2) read with Section 5(1)(a) if statutory conditions are met; and it granted summary judgment in favour of the Plaintiff in respect of Supply I against the sale proceeds of Defendant No. 1 vessel.

Extinguishment of claims by approved Resolution Plan - binding effect of approved Resolution Plan under the Insolvency and Bankruptcy Code - clean slate theory - concept of 'claim' under the IBC as an inchoate right to payment - res judicata and jurisdictional objection under Section 16 of the Arbitration and Conciliation Act, 1996 - dismissal of counterclaims by interim award under Section 31(6) of the Arbitration and Conciliation Act, 1996

Res judicata and jurisdictional objection under Section 16 of the Arbitration and Conciliation Act, 1996 - Whether the earlier rejection of the respondent's Section 16 objection operated as res judicata so as to preclude the Arbitrator from passing the subsequent interim award dismissing the counter claim - HELD THAT: - The Court held that the prior order rejecting the Section 16 objection was rendered before approval of the Resolution Plan and was decided on the distinct legal basis of the moratorium under the IBC attendant on a CIRP. The subsequent interim award was passed after approval of the Resolution Plan, which altered the factual and legal matrix because the Plan's approval extinguished creditors' claims. Hence the earlier jurisdictional ruling did not finally adjudicate the later question arising on approval of the Resolution Plan and did not operate as res judicata to preclude independent consideration and a fresh decision by the Arbitrator. [Paras 37, 38]

The earlier rejection of the Section 16 objection does not operate as res judicata and did not prevent the Arbitrator from passing the impugned interim award.

Binding effect of approved Resolution Plan under the Insolvency and Bankruptcy Code - extinguishment of claims by approved Resolution Plan - concept of 'claim' under the IBC as an inchoate right to payment - clean slate theory - dismissal of counterclaims by interim award under Section 31(6) of the Arbitration and Conciliation Act, 1996 - Whether alleged future losses claimed by the petitioner in its counter claim could be dismissed at the outset on the ground that the Resolution Plan in respect of the claimant-company had been approved - HELD THAT: - The Court analysed the IBC scheme and the language of the approved Resolution Plan. On approval, a Resolution Plan is binding on creditors and extinguishes claims not part of the Plan. The IBC defines 'claim' as a right to payment whether or not reduced to judgment, and the resolution professional is required to receive and collate claims until the Plan is finalised. Accordingly, claims that have arisen before approval (including pre-CIRP and intra-CIRP claims and claims which, though prospective in result, had ripened as causes of action before Plan approval) fall within the ambit of the Plan and are liable to be extinguished. The petitioner, a financial creditor and member of the CoC, did not present its claims to the Resolution Professional; moreover the approved Plan expressly extinguished pending arbitration counterclaims. Therefore prospective or future losses pleaded in the counter claim, insofar as the cause of action had arisen before Plan approval, stood extinguished on approval and could be dismissed at the inception. The Arbitrator's dismissal of the counter claim on that basis was held to be legally tenable and not vitiated by patent illegality. [Paras 55, 56, 57, 58, 59]

The alleged future losses could be dismissed at the outset because the approved Resolution Plan extinguished the petitioner's claims; the Arbitrator was justified in expunging and dismissing the counter claim.

Final Conclusion: The challenge under Section 34 to the interim award dated April 3, 2024 is dismissed; the impugned interim award expunging and dismissing the petitioner's counter claim is affirmed and no interference is warranted.

Show cause notice - order under Section 218 appointing Investigating Authority - validity of Regulations laid before Parliament under Section 241 - jurisdictional vires of subordinate legislation - automatic suspension of Authorization for Assignment pending disciplinary proceedings - ad-interim suspension not punitive

Show cause notice - jurisdictional vires of subordinate legislation - Impugned show cause notices dated 26th October 2023 and 10th April 2024 are not vitiated by want of jurisdiction or other illegality. - HELD THAT: - The court accepted the settled principle that ordinarily challenge to a show cause notice is premature because the noticee has the opportunity to reply and the authority may drop the proceedings; nevertheless, interference is permissible where the notice is issued without jurisdiction or is wholly illegal. Applying this test, the court considered the statutory scheme in Chapter VI of the Code and the Regulations framed thereunder and found no jurisdictional infirmity in the issuance of the impugned notices. The court noted that the show cause notices were preceded by investigation reports and that the authority retained the power to consider the noticee's replies before passing any adverse order; accordingly, the notices themselves do not infringe any vested right warranting interference at this stage, absent a demonstrated lack of jurisdiction or other patent illegality. [Paras 8, 9, 15, 16]

No interference with the issuance of the show cause notices; they do not suffer from jurisdictional infirmity.

Order under Section 218 appointing Investigating Authority - Investigations leading to the show cause notices were undertaken pursuant to orders in writing under Section 218(1) of the Code. - HELD THAT: - The petitioner alleged absence of any written order appointing an Investigating Authority. The court examined the record and found office notings/orders appointing the named Deputy General Manager as Investigating Authority antecedent to both investigations; those records were produced and supplied under RTI. The court did not decide on the sufficiency of the prima facie material that led to those orders, but held that the procedural prerequisite of an order in writing under Section 218(1) was satisfied and therefore the investigatory reports could not be impugned on the ground that no such order existed. [Paras 11, 15]

Investigations were duly authorised by orders in writing under Section 218(1); the show cause notices based on those reports are not invalid for want of such orders.

Validity of Regulations laid before Parliament under Section 241 - jurisdictional vires of subordinate legislation - The Insolvency & Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 and the 2017 Regulations are valid subordinate legislation and do not travel beyond the powers conferred by the Code. - HELD THAT: - The court noted that the Regulations were framed under the powers conferred by Sections 196, 217-220 and 240 of the Code and had been laid before both Houses of Parliament as required by Section 241, with no objections having been raised. While acknowledging that subordinate legislation exceeding parent Act powers would be ultra vires, the court examined the scope of Chapter VI and the enabling clauses in Section 240 and found that the Regulations, including the model bye laws, are within the delegated legislative competence and thereby acquire statutory force. Consequently, the challenge that the Regulations exceeded the Code failed. [Paras 9, 10, 15]

The 2016 and 2017 Regulations are intra vires and have statutory force after compliance with Section 241.

Automatic suspension of Authorization for Assignment pending disciplinary proceedings - ad-interim suspension not punitive - Clause 23A of the Schedule to the 2016 Regulations and corresponding Clause 23A of the ICSI Institute bye laws, providing for suspension of Authorization for Assignment on initiation of disciplinary proceedings (as evidenced by issuance of a show cause notice), are valid; suspension of AFA in the petitioner's case is lawful. - HELD THAT: - Clause 23A prescribes that initiation of disciplinary proceedings (the issuance of a show cause notice, per the Explanation) results in suspension of the AFA. The court agreed with the reasoning of the Madras High Court that such suspension is an ad interim administrative measure rather than a punitive order and does not amount to denial of natural justice at the suspension stage. The court accepted the IBBI's assurance that suspension bars acceptance of new assignments but does not prevent completion of pending assignments. The court observed that prolonged suspension without inquiry could cause stigma, but that is a ground to insist on prompt completion of proceedings rather than to strike down the regulation. Applying these principles, the court upheld Clause 23A and the suspension of the petitioner's AFA. [Paras 12, 13, 14, 15]

Clause 23A (Regulations and Bye laws) is constitutionally valid and the suspension of the petitioner's AFA consequent to initiation of disciplinary proceedings is lawful.

Final Conclusion: The writ petition is dismissed. The challenged show cause notices stand upheld as not suffering from jurisdictional infirmity; investigatory orders under Section 218(1) existed; the 2016 and 2017 Regulations (and the model bye laws) are intra vires and have statutory force; Clause 23A and the consequent suspension of the petitioner's Authorization for Assignment are valid. All substantive merits of the disciplinary case are left open for adjudication.

Commercial wisdom of the Committee of Creditors - Section 12-A settlement/withdrawal under the Insolvency and Bankruptcy Code - Judicial review of Committee of Creditors' decision for arbitrariness under Section 60 - Binding effect of an approved resolution plan and its consequence on guarantees under Section 31

Commercial wisdom of the Committee of Creditors - Judicial review of Committee of Creditors' decision for arbitrariness under Section 60 - Decision of the CoC to reject the appellant's settlement proposal was not arbitrary and therefore not liable to be set aside. - HELD THAT: - The Tribunal examined the minutes of the 13th, 14th, 15th and 16th CoC meetings and the sequence of deliberations where the appellant's revised settlement proposal was placed alongside the resolution plans. The CoC invited the appellant to improve the offer, noted that acceptance of the settlement would require release of personal guarantees and compared the settlement's financial and liquidation-value implications with the resolution plan. The e-voting held on 08.01.2023 resulted in rejection of the appellant's proposal and approval of the resolution plan with 100% vote share. On these facts the Court concluded that the CoC's decision was the result of considered commercial deliberation and could not be characterised as arbitrary; Swiss Ribbons and related authorities permit judicial interference only where the CoC's rejection is arbitrary, which was not shown here. [Paras 11, 13, 14, 20]

CoC's rejection of the settlement proposal was well-considered and not arbitrary; it will not be set aside.

Section 12-A settlement/withdrawal under the Insolvency and Bankruptcy Code - Binding effect of an approved resolution plan and its consequence on guarantees under Section 31 - Whether the appellant could submit fresh settlement offers after approval of the resolution plan and expiry of the CIRP period. - HELD THAT: - The Tribunal noted that the appellant's settlement proposal had been considered and rejected by the CoC prior to approval of the successful resolution applicant's plan. After the CoC's approval (e-voting result declared 08.01.2023) and expiry of the CIRP period (28.01.2023), the appellant's subsequent offers (including the proposal dated 21.03.2023) were declined by the Bank. The Court held that post-approval and post-CIRP the appellant had no right to revive or repeatedly tender fresh settlement proposals that had already been deliberated and rejected; the effect of an approved resolution plan and the closure of the CIRP precluded reopening the settled process in the manner attempted by the appellant. [Paras 14, 21]

Appellant was not entitled to submit fresh settlement proposals after the resolution plan was approved and the CIRP period expired.

Judicial review of Committee of Creditors' decision for arbitrariness under Section 60 - Section 12-A settlement/withdrawal under the Insolvency and Bankruptcy Code - Whether the Adjudicating Authority erred in dismissing IA No.2594 of 2023 filed by the appellant. - HELD THAT: - The Tribunal reviewed the impugned order and the CoC proceedings, including prior directions of the Appellate Tribunal permitting the appellant to place a Section 12-A application before the CoC and the subsequent conduct of CoC meetings. Given that the CoC considered the appellant's proposal, gave opportunities to revise it, and rejected it by 100% votes, the Adjudicating Authority's reliance on the CoC's commercial wisdom and dismissal of IA No.2594 was held to be justified. Authorities acknowledging interference only in cases of arbitrary rejection (e.g., Swiss Ribbons) do not assist the appellant where the record demonstrates deliberation and reasoned rejection. [Paras 16, 20, 26]

No error in the Adjudicating Authority's rejection of IA No.2594; the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The CoC's considered rejection of the appellant's settlement proposal was not arbitrary; the appellant had no entitlement to renew settled offers after approval of the resolution plan and expiry of the CIRP, and the Adjudicating Authority did not err in dismissing IA No.2594 of 2023.

Time-limit for completion of pre-packaged insolvency resolution process - Directory versus mandatory nature of statutory timelines - Adjudicating Authority's jurisdiction to extend PPIRP period - Requirement to file application for termination under Section 54D(3) - Maximisation of assets and timely completion principle under the IBC

Time-limit for completion of pre-packaged insolvency resolution process - Requirement to file application for termination under Section 54D(3) - Directory versus mandatory nature of statutory timelines - Whether the statutory 120 day period for completion of PPIRP operates as an automatic termination on expiry or requires filing of an application for termination by the resolution professional. - HELD THAT: - The Court held that Section 54D(1) and (3) do not contemplate automatic termination of the PPIRP on expiry of 120 days; rather the statutory scheme provides for filing of an application by the resolution professional and an order of the Adjudicating Authority under Section 54N. The statutory timeline reflects the policy of timely resolution and maximisation of assets but does not strip the Adjudicating Authority of jurisdiction to consider termination or continuation. The Court applied the established principle that the use of words like "shall" is not, by itself, decisive of mandatory character and relied on comparative precedents where timelines in the IBC and regulations were held to be directory in appropriate circumstances. Accordingly, expiry of the 120 day period does not automatically terminate PPIRP; termination requires adjudicatory action upon an application as contemplated by the statute. [Paras 13, 15, 29]

The 120 day period is not an automatic terminus; termination occurs only upon the statutory procedure of filing and adjudication, and the timeline is not to be read as ousting judicial discretion to entertain continuation where appropriate.

Adjudicating Authority's jurisdiction to extend PPIRP period - Directory versus mandatory nature of statutory timelines - Maximisation of assets and timely completion principle under the IBC - Whether the Adjudicating Authority had jurisdiction to grant an extension of the PPIRP period and whether the Adjudicating Authority erred in rejecting the RP's application for a 60 day extension. - HELD THAT: - Drawing on the legislative purpose of Chapter III A to provide an efficient framework for MSMEs and on the Supreme Court's exposition that mandatory time limits may be read as directory in exceptional cases (so as not to produce arbitrary or disproportionate consequences), the Court held that the Adjudicating Authority retains jurisdiction to extend the PPIRP period on sufficient grounds. The Adjudicating Authority had noted that a revised base resolution plan was under consideration and that the CoC had passed a resolution authorising the RP to seek an extension. Given these facts and the enabling statutory scheme (including Section 54N's requirement of adjudicatory action), the Tribunal concluded that the Adjudicating Authority erred in rejecting the RP's application for extension. Applying the Court's discretion in the statutory scheme, the PPIRP was extended for 60 days. [Paras 21, 31, 32]

The Adjudicating Authority had jurisdiction to grant a limited extension; its rejection of the RP's application was erroneous, and the PPIRP was extended by 60 days.

Final Conclusion: The impugned order rejecting the RP's application for a 60 day extension of the PPIRP is set aside; the Tribunal allowed the application and extended the PPIRP for 60 days from the date of the order, parties to bear their own costs.

Refund of erroneously paid tax - limitation for refund under Section 11B of the Central Excise Act, 1944 - knowledge of mistake as starting point for limitation - double payment/dual deposit of service tax - passing-on doctrine - prohibition on illegal tax collection under Article 265

Limitation for refund under Section 11B of the Central Excise Act, 1944 - refund of erroneously paid tax - Whether the one year limitation prescribed by Section 11B, as made applicable to service tax, bars refund of an amount erroneously paid as service tax where the claimant had no liability to pay. - HELD THAT: - Section 11B prescribes filing of refund applications within one year from the relevant date. The Court examined whether that limitation applies mechanically to amounts wrongfully deposited as service tax by a person who had no liability. The Court observed that Section 11B was made applicable to service tax by Section 83 of the Finance Act, 1994, but that the statutory limitation cannot operate to permit the State to retain amounts collected erroneously. The Court distinguished the ratio in Mafatlal which applied the passing-on doctrine where excess duty had been included in the sale price and borne by consumers; in contrast, the present case involves dual payment where the appellant had not passed on the burden and the service provider had not sought refund. Applying Article 265's prohibition on illegal tax collection, the Court held that a refund claim of an erroneously paid amount cannot be defeated solely by reference to the lapse of one year from the date of deposit where other considerations of knowledge and dual payment are present. [Paras 10, 11, 12, 17, 18]

Section 11B's one year limitation does not operate to bar refund of the amount erroneously deposited as service tax in the circumstances of dual payment where the claimant had no liability and the amount was not passed on.

Knowledge of mistake as starting point for limitation - double payment/dual deposit of service tax - prohibition on illegal tax collection under Article 265 - Whether the period of limitation for claiming refund must be reckoned from the date of deposit or from the date on which the claimant acquired knowledge of the mistaken/dual deposit. - HELD THAT: - The Court held that limitation must be computed from the date of knowledge of the mistake and not mechanically from the date of deposit. The reasoning emphasises practical administrative realities within a government company where deposits may be made by different officers and the organisation may learn of the error only later. The appellant proved it became aware of the dual deposit on 30.08.2016 and applied within 30 days; procedural steps required by the department (returning the file to file in prescribed format) accounted for subsequent formal submission. The Court found that denying refund on the sole ground that one year elapsed from date of deposit would be erroneous and contrary to the obligation not to permit unlawful retention of public funds. [Paras 14, 16]

Limitation for refund runs from the date of knowledge of the mistaken dual deposit and not from the date of the original payment; the appellant's claim was therefore not time-barred.

Final Conclusion: Appeal allowed; respondents directed to refund the amount deposited twice by the appellant along with interest, the refund to be released within six months.

Limitation/time-bar of refund claim - continuation of prior refund claim - refund for mistake of law - taxability of construction of residential complex versus individual residential unit - unjust enrichment in refund claims - requirement to challenge self-assessment before claiming refund

Limitation/time-bar of refund claim - continuation of prior refund claim - Refund claim filed on 04.01.2023 is barred by limitation despite being a continuation of the January 2009 claim. - HELD THAT: - The Tribunal noted that the second refund application was filed more than five years after this Court's remand order and after the period prescribed under Section 11B for presentation of documents. The appellant did not produce evidence of any departmental adjudication or steps taken within that interval to preserve the claim, nor did it discharge the onus to supply documentary proof regarding availability of common facilities within the approved layout as directed on remand. In these circumstances the adjudicating authority was entitled to issue a show cause notice and to hold that the later claim was time-barred. [Paras 6]

The time-bar limitation on the refund claim is sustainable and the claim filed in January 2023 is barred.

Taxability of construction of residential complex versus individual residential unit - Findings that the appellant's works constitute taxable construction of residential complex services are sustainable. - HELD THAT: - The adjudicating authorities concluded that the appellant constructed residential flats at sites developed by the Rajasthan Housing Board and that the works fall within taxable construction of residential complex/services rather than isolated individual residential units. The appellant failed to produce evidence showing the houses were not part of any apartment/township or that the works lacked the requisite common facilities within an approved layout. In view of the material (or absence thereof) placed before the authorities, the Tribunal found no infirmity in the conclusion that the services rendered were taxable. [Paras 7]

The finding of taxability of the services rendered by the appellant is upheld.

Unjust enrichment in refund claims - Refund denial on the ground of unjust enrichment is justified for want of evidence that the tax burden was not passed on or that the amount had been refunded to service recipients. - HELD THAT: - The authorities found the work orders were inclusive of service tax and the appellant did not produce evidence that the amount collected was not passed on to service recipients or that it had been refunded to them. The appellant also did not show that the deposited amount had been refunded to recipients. Given the lack of proof that the appellant did not in fact retain the benefit, the commissioner (Appeals) rightly applied the unjust enrichment bar to the refund claim. [Paras 7, 9]

The rejection of the refund on the ground of unjust enrichment is sustainable.

Requirement to challenge self-assessment before claiming refund - refund for mistake of law - Claim for refund of amounts paid under mistake of law is unsustainable without challenge to the self-assessment as required by the Supreme Court's ruling in ITC v CCE. - HELD THAT: - The Tribunal applied the principle summarized from the Supreme Court in ITC v CCE that a self-assessed order is an assessment and must be challenged (for instance under the relevant appeal provision) before a refund under the statute becomes maintainable. The Court observed that assessment includes self-assessment and that refund under the relevant provision is not maintainable until the self-assessment is modified or challenged. As the appellant had not procured any modification or successful challenge to the assessment, the statutory requirement for maintaining the refund claim was not met, which precludes refund even where payment is asserted to have been made under a mistake of law. [Paras 8]

The statutory requirement to challenge self-assessment before claiming refund applies and bars the appellant's refund claim.

Final Conclusion: The Tribunal found no infirmity in the impugned orders: the January 2023 refund claim is time-barred, the services are taxable on the materials before the authorities, the refund is barred by unjust enrichment for lack of proof, and the requirement to challenge self-assessment prior to obtaining refund applies. The appeal is dismissed and the orders under challenge are upheld.

Finance Leasing/Hire Purchase - lending of money versus lease transaction - CENVAT Credit admissibility and verification - utilisation of CENVAT Credit for payment of service tax - penalty under Section 78 read with Rule 14/15 of CENVAT Credit Rules

Short/non-payment of service tax - method of calculation adopted by audit - Confirmation of demand of Rs.4,97,545/- for alleged short/non-payment of service tax remitted for fresh adjudication. - HELD THAT: - The appellant produced comparative figures and contended that, as per audited accounts, service tax was in excess of the liability and no short payment arose. The adjudicating authority recorded no finding on this contention in the impugned order. Because the Tribunal cannot determine the factual contention on the basis of the record before it, the matter is remanded to the adjudicating authority to examine the appellant's chart and give a clear finding on whether excess payment occurred and whether any shortfall exists. [Paras 9]

Remanded to the adjudicating authority for a clear finding on the appellant's claim of excess payment/no short payment.

Finance Leasing/Hire Purchase - lending of money versus lease transaction - Whether interest income classified as 'Finance Leasing/Hire Purchase' and thus exigible to service tax, or is interest on loan (exempt under Banking and Other Financial Services). - HELD THAT: - The Tribunal examined loan agreements and the statutory indicia of financial leasing: (a) lease of a specific asset; (b) lessor's ownership of that asset before lease; (c) lease payments covering full cost of the asset plus interest; and (d) lessee becoming or having the option to become owner at end of lease. The contracts in question were found to be loans for purchase of assets where the borrower immediately acquires ownership, the lender never owned or controlled the specific asset, the lender did not finance the full cost of the asset in all cases, and the relationship was Lender-Borrower rather than Lessor-Lessee. On these determinative facts the transactions lack the essential characteristics of financial leasing or hire purchase and are lending transactions; accordingly the demand confirmed as finance leasing/hire purchase is unsustainable. [Paras 9]

Demand of service tax of Rs.98,33,759/- confirmed as Finance Leasing/Hire Purchase is set aside.

CENVAT Credit admissibility and verification - utilisation of CENVAT Credit for payment of service tax - Disallowance of CENVAT Credit of Rs.48,18,851/- referred for verification, with directed repayment of the portion actually utilized. - HELD THAT: - Parts of the CENVAT disallowance involve (a) recorded credits for 2010-11 and 2011-12 which the appellant contends were not actually availed or shown in returns, and (b) credit relating to service tax charged by State Bank of India for the Food Credit Consortium for October 2011-March 2012. The Tribunal found that the adjudicating authority did not examine or make findings on the appellant's factual assertions that the larger recorded credits were not availed or carried forward, and that the remaining balance from the consortium credit was not carried forward. These matters require factual verification; accordingly they are remanded to the adjudicating authority for determination. Separately, the Tribunal found as a matter of record that the appellant utilized CENVAT credit of Rs.85,263/- from the consortium credit for payment of service tax and therefore is liable to repay that amount with interest. [Paras 10]

Issues of alleged irregular availment of CENVAT credit remanded for verification; appellant liable to repay Rs.85,263/- (utilised credit) with interest.

Penalty under Section 78 read with Rule 14/15 of CENVAT Credit Rules - Validity of penalty imposed on the appellant. - HELD THAT: - The Tribunal noted that the appellant regularly paid service tax as per books and invoked provisions do not apply: none of the preconditions for imposing penalty under the cited provisions were shown to exist. On this basis, and having examined the material, the Tribunal concluded that imposition of penalty was not warranted in the facts of the case. [Paras 11]

All penalties imposed in the impugned order are set aside.

Final Conclusion: The appeal is disposed as follows: the short-payment issue of Rs.4,97,545/- and the alleged irregular CENVAT credits (including credits recorded for 2010-11 and 2011-12 and the consortium credit balance) are remanded to the adjudicating authority for factual examination and fresh findings; the demand of Rs.98,33,759/- under Finance Leasing/Hire Purchase is set aside; the appellant must repay Rs.85,263/- (utilised CENVAT credit) with interest; and all penalties are set aside.

Excisability of goods - manufacturing activity - appeal to High Court under Section 35G where case involves substantial question of law (excluding excisability) - appeal to Supreme Court for determination of taxability or excisability - clarificatory effect of Section 35L(2) regarding taxability/excisability - jurisdictional bar on High Court for questions of excisability

Excisability of goods - appeal to Supreme Court for determination of taxability or excisability - clarificatory effect of Section 35L(2) regarding taxability/excisability - Appeal to the High Court is not maintainable because the matter concerns excisability/taxability of goods and lies to the Supreme Court. - HELD THAT: - A conjoint reading of Section 35G(1) and Section 35L (including the sub section (2) inserted by Finance (No.2) Act 2014) shows that orders of the Appellate Tribunal determining questions relating to the rate of duty or the value of goods for assessment, which for Chapter VI A purposes expressly include determination of taxability or excisability, are matters to be agitated before the Supreme Court. The earlier decisions in Shriram Refrigeration Industries were decided before insertion of Section 35L(2) and are therefore distinguishable. The co ordinate Bench decision in BCCI and the Full Bench view in Reliance Media Works treating Section 35L(2) as clarificatory support the conclusion that challenges to the Tribunal's finding on excisability cannot be entertained by the High Court. Applying these principles to the present appeal, which raises whether the respondent's activity amounts to manufacture for excise purposes, the Court finds the appeal falls within the category reserved for the Supreme Court and is not maintainable here. All substantive contentions are left open for adjudication by the appropriate forum. [Paras 9, 12]

Appeal returned as not maintainable before the High Court; appellant permitted to present the appeal to the Supreme Court.

Final Conclusion: The High Court returns the appeal as not maintainable because the dispute relates to excisability/taxability of goods falling within the appellate jurisdiction of the Supreme Court under the amended provisions; liberty granted to present the appeal before the Supreme Court and all substantive contentions are kept open.

Relief under SVLDR / Sabka Vishwas Scheme where only penalty is in dispute - penalty waiver consequent upon discharge of main noticee - declaration filing is procedural and not a condition for penalty relief - substantial right prevailing over procedural infractions - consequential relief on setting aside penalty

Relief under SVLDR / Sabka Vishwas Scheme where only penalty is in dispute - declaration filing is procedural and not a condition for penalty relief - Whether the penalty imposed on the appellants must be set aside where the main noticee has obtained discharge under the SVLDR/Sabka Vishwas Scheme and only penalty, not duty, remains in dispute. - HELD THAT: - The Tribunal noted that the main noticee, M/s. Ogun Steel Rolling Mills (P) Ltd., has obtained discharge under the SVLDR/Sabka Vishwas Scheme. Under the Scheme provision applicable to cases where only penalty is in dispute and the duty demand is nil, the relief entails waiver of the penalty. The Tribunal held that such relief is not made conditional upon the satisfaction of the Designated Committee and that filing of the declarant's form is a procedural option. Relying on earlier Tribunal decisions, the Bench observed that where the principal party has been granted immunity and relief from penalty under Section 124 of the Scheme, co-noticees who did not file declarations cannot be denied the same penalty-relief on the ground of non-filing, because the filing requirement is procedural and should not defeat a substantial right. Applying that principle to the facts, the Tribunal concluded that the penalties imposed on the appellants cannot be sustained and ought to be set aside, with consequential relief if any. [Paras 6, 7, 8]

Penalty imposed on the appellants set aside in view of discharge granted to the main noticee under the SVLDR/Sabka Vishwas Scheme; appeals allowed with consequential relief, if any.

Final Conclusion: The Tribunal allowed the appeals and set aside the penalties imposed on the appellants because the main noticee obtained discharge under the SVLDR/Sabka Vishwas Scheme and the requirement of filing a declaration by co-noticees was treated as procedural, not a bar to waiver of penalty.

Deemed exports - CT-1 certificate requirement - Form H as proof of export - Notification No.31/2007-condition for duty free DTA clearances by EOU - Rule 17(1) of Central Excise Rules, 2002-procedure for removals from EOU to DTA - Extended period of limitation - Penalty for procedural non compliance

Form H as proof of export - CT-1 certificate requirement - Deemed exports - Notification No.31/2007-condition for duty free DTA clearances by EOU - Whether non production of CT 1 certificates, when Form H and corroborative documents establish that goods cleared to DTA customers were exported, disentitles the EOU to the benefit of Notification No.31/2007 - HELD THAT: - The Tribunal found that the Department did not dispute that the hangers cleared to DTA customers were ultimately exported along with garments. Having regards to precedents where Sales Tax H Form / Form H or equivalent sales tax documentation was accepted as proof of export for supplies made to merchant exporters, the Tribunal held that Form H and other corroborative documents furnished by the appellant establish that the sales were in the course of export. The procedural requirement of producing CT 1 certificates, though prescribed by the notification and Rule 17(1), was a procedural condition and non production in the factual matrix of this case-where exports were otherwise proven-was not a ground to deny the substantive benefit of the notification. Reliance on the authority in Ramani Plastics and follow on decisions supported treating Form H as sufficient evidence of export and rejecting the Department's contention that the clearances must be treated as DTA sales merely for want of CT 1. [Paras 10, 11, 12]

Demand of duty on the ground of non production of CT 1 is set aside and the issue on merits is decided in favour of the appellant.

Extended period of limitation - Suppression with intent - Whether the extended period for issuance of show cause notices could be invoked in respect of the alleged non compliance with the procedural requirement of CT 1 - HELD THAT: - The Tribunal noted that the only irregularity was procedural non compliance; internal audits had been conducted earlier without objection; the appellant had made repeated representations about practical difficulties in obtaining CT 1 from domestic garment exporters; and subsequently the requirement was omitted by Notification No.20/2015. In these circumstances there was no positive act of suppression or intent to evade duty found on the record. Therefore the preconditions for invoking the extended period were not satisfied and the show cause notices were time barred to the extent they relied on extended limitation. [Paras 13]

Invocation of the extended period is not sustained; the limitation objection is decided in favour of the appellant.

Penalty for procedural non compliance - Whether penalties, including the penalty levied on the Managing Director, could be sustained for the procedural lapse of non production of CT 1 certificates - HELD THAT: - Having quashed the duty demand and having held that the non production of CT 1 was a procedural lapse where exports were otherwise established, the Tribunal held that the imposition of penalties could not be sustained. The penalty on the Managing Director was set aside for the same reasons recorded in relation to merits and limitation. [Paras 14]

Penalties, including the penalty on the Managing Director, are set aside.

Final Conclusion: The impugned orders confirming duty, interest and penalties (including on the Managing Director) for the periods July 2007 to February 2012 and March 2012 to January 2013 are set aside; the appeals are allowed with consequential relief.

Eligibility for exemption under Notification No. 06/2006-CE - compliance with conditions of exemption including project authority certificates and prior intimation - supplies pursuant to international competitive bidding - scope of Notification No. 21/2002 in relation to supplies under international competitive bidding - classification under Chapter Heading 8483 vis-a -vis Heading 98.01 - consequences for duty, interest and penalty where exemption is available

Eligibility for exemption under Notification No. 06/2006-CE - compliance with conditions of exemption including project authority certificates and prior intimation - supplies pursuant to international competitive bidding - Appellant fulfilled the conditions of Notification No. 06/2006-C.E. dated 01.03.2006 and was eligible to clear goods without payment of duty. - HELD THAT: - The Tribunal found that the appellant cleared 580 gear boxes/parts to various Mega Power Projects during the period in dispute by following the procedure of international competitive bidding and by furnishing prior intimations and certificates from the respective project authorities and competent officials. The records produced in respect of Raghunathpur, Mundra, Tuticorin, Nabingarh and Shree Singaji projects included project authority certificates, certificates from designated officers (including Joint Secretary level or above), certificates to sub-contractors and prior intimations to the Assistant/Deputy Commissioner. Where minor variations existed in certificates, additional evidence was furnished to establish supply to the certified Mega Power Projects. On this basis the Tribunal held that the appellant met the conditions prescribed under Notification No. 06/2006-CE and was thus entitled to the exemption claimed. [Paras 8, 9, 11]

Demand confirmed by the adjudicating authority by denying the exemption was set aside and the appellant held eligible for exemption under Notification No. 06/2006-CE.

Scope of Notification No. 21/2002 in relation to supplies under international competitive bidding - classification under Chapter Heading 8483 vis-a -vis Heading 98.01 - Notification No. 21/2002 covers goods supplied against international competitive bidding, and goods under Chapter Heading 8483 supplied by the appellant fell within that scope. - HELD THAT: - The adjudicating authority had contended that the appellant's goods did not fall under Heading 98.01 as mentioned in Notification No. 21/2002 and on that basis denied exemption. The Tribunal observed that Notification No. 21/2002 exempts all goods supplied pursuant to international competitive bidding and that the gear boxes classified under Chapter Heading 8483 were encompassed within the scope of that Notification when supplied under such bidding. Consequently, the appellant satisfied the condition relating to Notification No. 21/2002 and was entitled to the benefit of the exemption regime. [Paras 10]

The contention that the goods fall outside Notification No. 21/2002 was rejected and the goods were held covered by that Notification when supplied under international competitive bidding.

Consequences for duty, interest and penalty where exemption is available - Once the exemption claim was upheld, demand of duty, and consequentially interest and penalty, could not be sustained. - HELD THAT: - The Tribunal concluded that because the primary demand of central excise duty was unsustainable in view of the appellant's entitlement to the exemption, there was no basis to uphold the demand of interest or the penalty imposed by the adjudicating authority. The decision on exemption therefore axiomaticaly negated ancillary demands and punitive consequences. [Paras 11]

Interest and penalty demands were held not to arise once the duty demand was set aside.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's order confirming duty (and consequential interest and penalty), and held that the appellant was entitled to clear the specified goods without payment of duty under Notification No. 06/2006-CE read with Notification No. 21/2002 for supplies made pursuant to international competitive bidding during 01.08.2007 to 30.06.2012.

Adjustment of sanctioned refund against outstanding duty demand - Entitlement to refund and interest on delayed refund under Section 11BB - Enforcement of Supreme Court order under the Supreme Court (Decrees and Orders) Enforcement Order, 1954 - Jurisdiction and power of appellate tribunal to implement Supreme Court decree under Rule 41 of the CESTAT (Procedure) Rules, 1982 - Applicability of Board Circular on refund time-limits and consequent obligation to refund

Adjustment of sanctioned refund against outstanding duty demand - Entitlement to refund and interest on delayed refund under Section 11BB - Applicability of Board Circular on refund time-limits - Appellant entitled to refund of the amounts adjusted against an outstanding confirmed duty demand together with applicable interest for delayed refund; order of Commissioner (Appeals) effecting the adjustment set aside. - HELD THAT: - The Tribunal held that the prior confirmed demand became infructuous in view of the subsequent order of the Hon'ble Supreme Court quashing the demand. Consequently the adjustment of the sanctioned refund against that demand could not be sustained. The refund of the aggregate amount earlier adjusted is therefore payable and, in view of the Board Circular on refund time-limits, interest under Section 11BB is liable where the refund was not made within the prescribed period. The Tribunal noted that no decision had been taken by the Refund Sanctioning Authority on the Appellant's request dated 12.12.2023 and accordingly directed refund of the amounts together with applicable interest and set aside the Commissioner (Appeals) order that had upheld the adjustment. [Paras 3, 5]

Refund of the adjusted amount ordered with applicable interest; Commissioner (Appeals) order set aside.

Enforcement of Supreme Court order under the Supreme Court (Decrees and Orders) Enforcement Order, 1954 - Jurisdiction and power of appellate tribunal to implement Supreme Court decree under Rule 41 of the CESTAT (Procedure) Rules, 1982 - This Tribunal has the duty and jurisdiction to enforce the Supreme Court's order and to implement consequential reliefs arising from that order under the Enforcement Order, 1954 and Rule 41 of the CESTAT (Procedure) Rules, 1982. - HELD THAT: - Relying on Order 2(a) of the Supreme Court (Decrees and Orders) Enforcement Order, 1954, the Tribunal observed that a decree or order of the Supreme Court passed in exercise of its appellate jurisdiction is enforceable in accordance with the law relating to enforcement of decrees or orders of the forum from which the appeal was preferred. The Tribunal concluded that it is duty bound to give effect to the Supreme Court's decree and, invoking Rule 41 of the CESTAT (Procedure) Rules, 1982, exercised its power to implement the Supreme Court's order by directing refund and compliance with consequential reliefs. [Paras 3, 4]

Tribunal empowered and directed to enforce the Supreme Court order and to order compliance with consequential reliefs under Rule 41.

Final Conclusion: Appeal allowed. The adjustment of the sanctioned refund against the confirmed duty demand set aside; the aggregate amount adjusted is to be refunded with applicable interest and consequential reliefs pursuant to the Supreme Court's order shall be complied with within the period directed by the Tribunal.

Classification of goods by reference to tariff chapter and chapter/section notes - principal/sole use test for classification - corrigendum as amendment to show cause notice - onus on Revenue to prove misclassification - extended period of limitation for suppression of facts / mens rea - self-assessment regime and limits of Departmental scrutiny - interest liability on short payment of duty - penalty for intention to evade duty

Classification of goods by reference to tariff chapter and chapter/section notes - principal/sole use test for classification - onus on Revenue to prove misclassification - corrigendum as amendment to show cause notice - Classification of pantographs and its parts and validity of corrigendum to the SCN - HELD THAT: - The Tribunal accepted the appellant's reclassification of pantographs and its parts under CTH 86079990 (parts of railway rolling stock). It held that the Revenue failed to discharge the onus of proving that the items fall under CTH 8535, and found the impugned adjudicating order cryptic and non speaking on this issue. The Tribunal also examined the legal nature of a corrigendum and observed that where a corrigendum materially changes the content or grounds of an original SCN it operates as an amendment amounting to a fresh SCN; however, on merits Revenue had not established classification under the alternative heading. For these reasons the appellant's classification of pantographs under chapter 86 was not disturbed. [Paras 6, 11, 12]

Pantographs and its parts classified under CTH 86079990 as declared by the appellant; corrigendum could amount to an amendment but Revenue failed to establish the alternate classification.

Extended period of limitation for suppression of facts / mens rea - self-assessment regime and limits of Departmental scrutiny - Invocation of the extended period for demand of duty under Section 11A(4)(e) (suppression of facts / intent to evade) - HELD THAT: - The Tribunal examined the factual matrix and legal tests for invoking the extended period. It held that negligence or lack of bona fide does not automatically equate to mala fide or deliberate suppression required to invoke extended limitation. Reliance was placed on precedents construing 'suppression' strictly and on the proposition that mere self assessment or filing of returns honestly in the prescribed format cannot be equated with deliberate concealment. As Revenue did not make a positive finding of intentional evasion, the extended period could not be invoked and the demand must be confined to the normal period. [Paras 14, 18, 19]

Extended period not invokable; demand restricted to the normal period.

Interest liability on short payment of duty - Liability to pay interest on reworked duty demand - HELD THAT: - The Tribunal held that statutory liability to pay interest under the applicable provision arises when duty is short paid, irrespective of whether the short payment was intentional or inadvertent. Citing authority that interest is payable even for unintended short payment, the Tribunal directed that interest be paid on the duty as reworked and demanded for the normal period. [Paras 20]

Interest payable by the appellant on the duty reworked for the normal period.

Penalty for intention to evade duty - Imposition of penalty for alleged evasion of duty - HELD THAT: - Given that Revenue did not establish a blameworthy act with an intention to evade duty, the Tribunal found that the prerequisites for imposing penalty were not satisfied. The factual record did not support a finding of mala fide conduct required for penalty imposition under the relevant statutory provisions. [Paras 21]

Penalty set aside.

Final Conclusion: The appeal was partly allowed: the classification of pantographs and parts under CTH 86079990 declared by the appellant was upheld; Revenue's demand is confined to the normal period and interest is payable on the reworked duty; the penalty imposed is set aside; consequential reliefs, if any, to follow as per law.

Extended period of limitation - proviso to section 11A(1) - suppression of facts - mens rea requirement for invocation of extended limitation - self-assessment and departmental duty to scrutinize returns

Extended period of limitation - proviso to section 11A(1) - suppression of facts - mens rea requirement for invocation of extended limitation - self-assessment and departmental duty to scrutinize returns - Validity of invoking the extended period of limitation under the proviso to section 11A(1) in respect of demands for 2005-06 to 2008-09 - HELD THAT: - The Tribunal examined whether the extended five-year limitation under the proviso to section 11A(1) could be invoked. The show cause notice alleged that consumption of RAB in manufacture of exempted goods was brought to the department's notice only on 04.12.2009 and therefore that the appellant had suppressed facts. The Commissioner, however, recorded a finding of willful suppression and intent to evade duty without addressing the detailed replies of the appellant which explained that the classification and excisability of RAB were matters of bona fide dispute and that the department itself had been unsure and had earlier proposed different classifications. Reliance was placed on Supreme Court and Tribunal precedents establishing that 'suppression of facts' in the proviso must be deliberate with intent to evade duty (a mens rea element), and mere non-declaration, difference of opinion or errors in self-assessment do not suffice. The Tribunal noted authorities holding that where the department had means to scrutinize returns and seek information under the rules, mere emergence of an issue on audit does not establish intent to evade. Applying these principles, the Tribunal found that the Commissioner did not consider the appellant's replies or demonstrate the requisite deliberate suppression with intent to evade duty, and thus the extended period was not rightly invoked for the periods in question. [Paras 24, 40, 41, 42]

The invocation of the extended period of limitation under the proviso to section 11A(1) was not justified for 2005-06 to 2008-09; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The demand confirmed by the Commissioner was covered by the extended period of limitation which could not be invoked on the facts; the Commissioner's order dated 09.05.2019 is set aside and the appeal is allowed.

Arbitral tribunal's power to award interest under Section 31(7) - Pre-reference interest governed by substantive law and party autonomy - Contractual prohibition on claims for idle labour and related on-site expenses - Scope of judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 - Entitlement to compensation for blocked capital arising from delayed payment

Contractual prohibition on claims for idle labour and related on-site expenses - Scope of judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 - Validity of the award in respect of claim no. 3 for idle labour, machinery and on-site establishment - HELD THAT: - The Arbitrator awarded claim no. 3 by applying the Hudson formula and treating on-site establishment expenses as permissible. The District Judge under Section 34 upheld that view as not irrational. The High Court under Section 37 examined the contract's Special Terms and Conditions which expressly barred any claim for idle labour, additional establishment cost, hire charges of tools and plants, etc., during an extended period. The Court held that the Arbitrator failed to consider these contractual prohibitions and that the High Court correctly applied the contract to set aside the award on this head. As contract terms determine the parties' rights, substitution of the award was justified where the award was inconsistent with express contractual clauses; the High Court's conclusion was held to be correct and not to be interfered with. [Paras 7, 10]

Award of claim no. 3 is set aside; the High Court's setting aside of that claim is upheld.

Entitlement to compensation for blocked capital arising from delayed payment - Scope of judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 - Validity of the award in respect of claim no. 4 for interest on delayed payment of running account and escalation bills - HELD THAT: - The Arbitrator found the claimant entitled to interest on 'blocked capital' when payments due on running account bills exceeded Rs. 1 crore and awarded interest at 12% p.a.; the District Judge under Section 34 upheld this reasoning. The High Court set aside the award, reasoning that bills were paid soon after preparation and that essential questions (responsibility for non-preparation of bills, treatment as advance, notice under the Interest Act, amounts and periods) were not determined by the Arbitrator. This Court held that the High Court's factual inferences and critique of the Arbitrator's failure to address questions were not proper grounds for interference under Section 37 where the Arbitrator's reasoning was neither perverse nor against public policy. The Arbitrator's approach that the claimant should be placed in the same position as if the contract had been performed and award of interest for blocked capital was sustainable on the materials and law applied. [Paras 8, 10]

Award of claim no. 4 is restored; the High Court's setting aside of that claim is set aside.

Arbitral tribunal's power to award interest under Section 31(7) - Pre-reference interest governed by substantive law and party autonomy - Scope of judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 - Validity of the award in respect of claim no. 6 for pre-reference, pendente lite and post-award interest - HELD THAT: - The Arbitrator awarded pre-reference interest @12% from the date the cause of action arose to the award and post-award interest thereafter; the District Judge upheld this. The High Court modified the award by rejecting pre-reference interest on the view that the contract prohibited pre-reference interest. This Court reviewed the statutory scheme in Section 31(7), the settled jurisprudence distinguishing pre-reference interest (substantive) and pendente lite interest (procedural), and the principle of party autonomy which bars pre-reference interest where the agreement so provides. Here, the contract did not prohibit grant of pre-reference interest, and the Arbitrator acted within the domain conferred by Section 31(7). Consequently, the High Court had no reason to interfere with the grant of pre-reference interest. [Paras 9, 10]

Award of claim no. 6 is restored to include pre-reference interest as awarded by the Arbitrator.

Final Conclusion: The appeal is allowed in part: the High Court's setting aside of claim no. 3 is upheld, while its rejection of claim no. 4 and its modification rejecting pre-reference interest under claim no. 6 are set aside; the Arbitrator's awards on claims no. 4 and 6 (including pre-reference interest) are restored. Parties to bear their own costs.

Bond of accused and sureties - surety - excessive bail is no bail - modification/relaxation of bail conditions - requirement of local surety - fundamental right under Article 21

Bond of accused and sureties - surety - excessive bail is no bail - fundamental right under Article 21 - Whether personal bond and sureties furnished in relation to one FIR can be directed to enure to the benefit of other bail orders in multiple FIRs so as to relieve the petitioner from furnishing fresh sureties in each case - HELD THAT: - The Court noted that the petitioner had been enlarged on bail in 13 matters and that sureties had been furnished in two of them, but he remained in custody for want of sureties in the other matters. Section 441 CrPC contemplates execution of bonds and sufficient sureties conditioned for attendance, and Section 446 CrPC provides procedure when bonds are forfeited. The Court recognised that sureties are essential to secure attendance but observed that imposing excessive or onerous conditions can negate the object of bail and impinge Article 21 rights. Citing precedent that conditions impossible of compliance defeat release, and guided by the policy direction that courts may modify/relax bail conditions where bonds are not furnished within a time, the Court held that a proportionate and reasonable order balancing the need for presence and the petitioner's liberty was permissible. Applying these principles to the facts, the Court directed that in each of the States concerned (Uttar Pradesh, Rajasthan, Punjab and Uttarakhand) the petitioner should execute a personal bond for Rs. 50,000 and two sureties of Rs. 30,000 each, and that such bond and sureties shall hold good for all FIRs in the relevant State as specified in the chart, thereby modifying and superseding the earlier bail conditions to the extent stated. [Paras 24, 26, 28, 32, 33]

Permitted the personal bond of Rs. 50,000 and two sureties of Rs. 30,000 each (to be executed as directed) to enure to the benefit of all specified FIRs within each State (Uttar Pradesh, Rajasthan, Punjab and Uttarakhand), modifying and superseding inconsistent bail conditions.

Requirement of local surety - modification/relaxation of bail conditions - excessive bail is no bail - Whether the condition of furnishing a local surety could be dispensed with in the petitioner's case - HELD THAT: - The Court observed the practical difficulty faced by an accused in procuring local sureties, the potential for such a condition to render a bail order ineffective, and prior judicial observations against geographic discrimination in requiring sureties. In keeping with the need to balance enforcement of attendance with protection of liberty, the Court relieved the petitioner from the direction to produce a local surety and directed that the same set of sureties may stand as sureties across States as permitted by the order. [Paras 22, 23, 27, 28]

The direction to produce a local surety is dispensed with; the same set of sureties is permitted to stand for the petitioner across the States as specified.

Modification/relaxation of bail conditions - bond of accused and sureties - Limitation of the order to the FIRs set out in the petition and exclusion of subsequent or other FIRs not in the chart - HELD THAT: - The Court made clear that its directions apply only to the FIRs listed in the chart (Para 4) and expressly disclaimed dealing with certain subsequently registered FIRs and other distinct FIRs identified in the proceedings. The petitioner was left free to pursue independent remedies in respect of those other matters. [Paras 14, 32]

Directions confined to the specific FIRs enumerated in the chart; other FIRs (including those specifically mentioned) remain unaffected and may be pursued independently.

Final Conclusion: Writ petition allowed; bail conditions in respect of the specified FIRs are modified so that, in each of the States of Uttar Pradesh, Rajasthan, Punjab and Uttarakhand, the petitioner shall execute a personal bond for Rs. 50,000 and two sureties of Rs. 30,000 each which shall enure to the benefit of all the FIRs in the respective State as directed, the requirement of a local surety being dispensed with; the order does not affect other FIRs not included in the chart.

Abetment of suicide - intentionally aiding - test for discharge under Section 227 CrPC - acceptance of investigative materials as bona fide at discharge stage - nexus between alleged acts and consequence - ingredients of offence of cheating requiring delivery of property

Abetment of suicide - intentionally aiding - test for discharge under Section 227 CrPC - acceptance of investigative materials as bona fide at discharge stage - nexus between alleged acts and consequence - Whether the materials collected during investigation disclose commission of an offence under Section 306 IPC so as to justify proceedings against the applicant - HELD THAT: - The Court examined the statements, panchnamas, digital seizures and emails relied upon by the prosecution and found they established an intimate personal and business relationship and subsequent discord between the deceased and the applicant. The trial Judge had doubted the genuineness of certain emails and treated that as a triable question; however the High Court reiterated the settled principle that documents collected during investigation must be treated as bona fide for the purpose of considering discharge under Section 227 CrPC. On reading the emails and other material the Court observed the deceased had expressed affection and had asked that the applicant not be blamed for his action. The Court held that mere breakup of relationship, disputes over business or emotional upset are insufficient to constitute intentionally aiding suicide under Section 107 IPC; there must be a clear nexus between the accused's acts and the deceased's decision to end his life. The materials, viewed in the light of the ingredients of Section 306 read with Section 107 IPC, did not disclose the necessary causal or intentional link required for abetment of suicide and thus were insufficient to require the applicant to face trial. [Paras 53, 54, 55, 56, 57]

Proceedings under Section 306 IPC cannot be sustained; applicant discharged

Ingredients of offence of cheating requiring delivery of property - test for discharge under Section 227 CrPC - Whether the allegations disclose commission of an offence under Section 420 IPC (cheating) - HELD THAT: - The Court considered the prosecution's plea that the applicant induced the deceased to join her business and thereby cheated him. It observed that to constitute an offence under Section 420 IPC there must be delivery of property in pursuance of the cheating. The material on record did not establish delivery in the requisite sense; further, the first informant's supplementary statements and submissions did not supply the missing legal nexus. The Court found these allegations insufficient to make out the offence of cheating as contemplated by Section 420 IPC. [Paras 51, 52, 53, 57]

Allegations do not constitute an offence under Section 420 IPC; applicant discharged

Final Conclusion: Revision allowed; the order of the Additional Sessions Judge dated 10/04/2015 is set aside and the applicant is discharged of the offences under Sections 306 and 420 of the Indian Penal Code.