TaxTMI Updates e-Newsletter
Aug 29,2020

Detention of goods pending GST adjudication - documentary requirements for movement of goods - release of detained goods on bank guarantee - adjudication under Section 130 of the GST Act

Detention of goods pending GST adjudication - documentary requirements for movement of goods - Validity of detention of the consignment by the tax authorities. - HELD THAT: - The Court examined Ext.P7 notice and the respondents' objection which was founded on alleged defects in the documents accompanying the transportation of construction equipments. On that material the Court held that the detention by the first respondent could not be characterised as unjustified. The finding rests on the assessment of whether the documentation reflected the transaction underlying the consignment and the notice issued by the authority.

Detention by the first respondent is not unjustified.

Release of detained goods on bank guarantee - adjudication under Section 130 of the GST Act - Terms of conditional release of the goods and the vehicle and direction as to further proceedings. - HELD THAT: - While upholding the propriety of detention, the Court directed conditional release of the goods and vehicle upon the petitioner furnishing a bank guarantee for the amount specified in Ext.P7 notice. The Court further directed that the respondents transmit the records to the adjudicating authority for adjudication under Section 130 of the GST Act, thereby leaving the substantive determination of liability and related issues to that authority. The order contemplates immediate clearance on production of the bank guarantee and preservation of the adjudicatory process before the competent authority.

Goods and vehicle to be released on petitioner furnishing a bank guarantee; adjudication to be carried out by the adjudicating authority under Section 130 of the GST Act.

Final Conclusion: Writ petition disposed by directing conditional release of the detained consignment on furnishing of a bank guarantee and remitting the matter to the adjudicating authority for adjudication under Section 130 of the GST Act, the detention itself being held not unjustified.

Valid rejection of an incomplete tender - disclosure of tax component in e-tender - composite levy under GST and its effect on bid completeness - requirement of recent test reports and sample submission in technical tender evaluation - post-tender modification of warranty/guarantee and allegation of favouritism

Disclosure of tax component in e-tender - composite levy under GST and its effect on bid completeness - valid rejection of an incomplete tender - Whether the petitioner's tender was rightly rejected for leaving the GST/tax columns blank and thereby rendering the bid incomplete - HELD THAT: - The Court accepted the respondents' finding that the petitioner left columns relating to GST percentage and tax amount blank in the Bill of Quantity, which prevented the procuring authority from assessing the actual cost of his bid. Although the petitioner produced a post-facto statement for payment of self-assessed tax, that document was filed after the tender process and was dated much later; there is no material to show the petitioner was a composition dealer as on the date of submission of the tender. Given that the tender conditions required disclosure of the tax component, the omission rendered the bid incomplete and justified its rejection by the Grama Panchayat Procurement Committee. The Court found no illegality or arbitrariness in the respondents' decision. [Paras 11]

Rejection of the petitioner's tender on account of non-disclosure of the tax component was justified.

Requirement of recent test reports and sample submission in technical tender evaluation - valid rejection of an incomplete tender - Whether the petitioner's bid could be rejected for not uploading a recent test report and for not supplying samples as required by the tender - HELD THAT: - The Court noted the respondents' contention that the petitioner did not upload the requisite test report or supply samples as mandated. Although the petitioner relied on an uploaded test report dated 2017, the procuring authority was entitled to require recent test reports to ensure suitability and compliance. Uploading a three year old test report would not serve the purpose of the tender condition. On this ground as well, the rejection of the petitioner's bid was held to be justified. [Paras 12]

Rejection of the petitioner's bid for lack of recent test report and samples was justified.

Post-tender modification of warranty/guarantee and allegation of favouritism - validity of negotiations after tender finalisation - Whether reduction of warranty from three years to two years in the final agreement established favouritism and vitiated the tender award - HELD THAT: - The Court recorded the 5th respondent's explanation that after finalisation of the tender the procuring authority required a two year guarantee instead of three years. The Court held that respondents 1 and 2's decision to accept a two year guarantee following finalisation and negotiations did not, by itself, furnish a basis to presume favouritism or arbitrariness in the award. Absent other evidence of mala fide conduct, the modification of the warranty period did not invalidate the award. [Paras 13]

Reduction of the warranty period to two years post-finalisation does not, without more, establish favouritism or vitiate the award.

Final Conclusion: The writ petition is dismissed. The Court found no illegality or arbitrariness in the rejection of the petitioner's tender for non-disclosure of tax components and for lack of a recent test report/samples, and held that the post-finalisation reduction of the warranty period did not prove favouritism.

Assessment under Section 62(1) - Withdrawal of assessment on filing return within 30 days under Section 62(2) - Invalidity of recovery notices for non compliance with Section 62(2) - Re adjudication after opportunity of hearing

Withdrawal of assessment on filing return within 30 days under Section 62(2) - Invalidity of recovery notices for non compliance with Section 62(2) - Whether assessment orders and consequent recovery notices could be sustained where the assessee filed returns within thirty days as contemplated by Section 62(2). - HELD THAT: - The Court found that Section 62(2) requires that where an assessing officer issues an assessment under Section 62(1) for failure to file returns, those assessment orders are required to be withdrawn if the assessee files the returns within thirty days of receipt of the assessment order. The petitioner filed the returns within the statutory thirty day period as evidenced by the record. In those circumstances there was no occasion for issuance or continued enforcement of the recovery notices and the revenue's action in issuing the recovery notices without adhering to the consequence provided by Section 62(2) was erroneous.

Impugned recovery notices set aside; writ petition allowed insofar as the notices are concerned.

Re adjudication after opportunity of hearing - Assessment under Section 62(1) - Whether the assessment orders (Ext.P4 series) should be finally sustained or require fresh consideration by the assessing authority. - HELD THAT: - Although the recovery notices were set aside for non compliance with Section 62(2), the Court did not finally adjudicate the sustainability of the underlying assessment orders. The matter was directed to be revisited by the 4th respondent: the authority is to examine the returns filed (Exts.P6 and P7), afford the petitioner an opportunity of hearing in accordance with law, and then decide on the sustainability of Ext.P4. This directs re adjudication rather than a decision on merits by the Court.

Matter remitted to the 4th respondent to reconsider Ext.P4 after hearing the petitioner and examining the returns.

Final Conclusion: Writ petition allowed to the extent that recovery notices issued in exercise of assessments under Section 62(1) are set aside because the petitioner filed returns within thirty days under Section 62(2); the assessing authority is directed to re examine the assessment orders after affording an opportunity of hearing to the petitioner and take a fresh decision on their sustainability.

Transitional input tax credit - rectification of TRAN-1/TRAN-2 - procedure for correction via GST Network and ITGRC - natural justice / audi alteram partem - judicial review under Article 226

Transitional input tax credit - rectification of TRAN-1/TRAN-2 - judicial review under Article 226 - Authority to consider and decide the petitioner's request for rectification/revision of TRAN returns claiming transitional input tax credit and the scope of the court's intervention. - HELD THAT: - The court declined to determine the substantive entitlement to the transitional input tax credit or to adjudicate whether the mistake in filing under SGST instead of CGST was bona fide or intentional. Exercising judicial review under Article 226, the court held that it is not the forum to decide the merits of the tax claim where statutory procedures for correction and appellate or remedial channels exist. The petitioners had already filed a rectification/revision request and the court directed that the competent authority and the prescribed administrative mechanism (including transmission to the GST Network and ITGRC where applicable) shall consider that request. The court required the respondents to process the petitioner's request in accordance with the circulars and the procedure invoked and to apply principles of natural justice in so doing. The court therefore remitted the matter to the administrative machinery for decision without expressing any view on the ultimate correctness of the transitional credit claim. [Paras 7]

The petitioners' rectification/revision request shall be considered afresh by the respondents through the prescribed GST Network / ITGRC procedure, with application of natural justice; the court will not decide the substantive entitlement under Article 226.

Natural justice / audi alteram partem - procedure for correction via GST Network and ITGRC - Whether the show cause notice dated 28.01.2020 may be acted upon immediately pending consideration of the rectification request and whether principles of audi alteram partem were complied with. - HELD THAT: - The court observed that the departmental practice in comparable matters involved issuing a show-cause only after giving an opportunity to explain, and that where a rectification request had been filed the administrative procedure mandated consideration through the GST Network and ITGRC. Noting the petitioners' contention that no opportunity was afforded before issuance of the demand, the court directed that operation of the specific show cause notice be kept in abeyance until the respondents decide the rectification/revision request. The respondents were not precluded, however, from affording an opportunity of hearing or from otherwise complying with natural justice by seeking a reply as done in other matters. The petitioners were also permitted to advance all legal pleas before the authority considering the request. [Paras 11]

Operation of the show cause notice is stayed (kept in abeyance) pending the administrative consideration of the rectification/revision request, subject to respondents affording opportunity and following the prescribed procedure.

Final Conclusion: Writ petitions disposed by remitting the rectification/revision requests to the respondents for fresh consideration through the GST Network/ITGRC in accordance with the prescribed procedure and principles of natural justice within six months; meanwhile the operation of the challenged show cause notice is kept in abeyance, and petitioners may raise all legal pleas before the authority.

Capital gains - transfer (extinguishment of rights / compulsory acquisition) - vesting of property - date of accrual of income - compulsory acquisition under the Land Acquisition Act, 1894 - notification under Section 4 of the Land Acquisition Act, 1894 - urgency acquisition under Section 17 of the Land Acquisition Act, 1894 - award under Section 11 and taking possession under Section 16 - right to receive compensation and interest thereon

Capital gains - transfer (extinguishment of rights / compulsory acquisition) - vesting of property - notification under Section 4 of the Land Acquisition Act, 1894 - award under Section 11 and taking possession under Section 16 - date of accrual of income - urgency acquisition under Section 17 of the Land Acquisition Act, 1894 - right to receive compensation and interest thereon - Whether the transfer of the acquired land, for purposes of Section 45 of the Income-tax Act, 1961, was complete on 15.05.1968 (date of notification) or on 29.09.1970 (date of award), and consequently in which previous year the capital gains accrued. - HELD THAT: - The Court applied the statutory scheme of the Land Acquisition Act, 1894 and the Income-tax Act, 1961, emphasizing that vesting of acquired land in the Government (and thus completion of transfer for capital gains) follows the processes prescribed by the Land Acquisition Act. Publication of a preliminary notification under Section 4 does not itself vest title; vesting occurs under Section 16 after the Collector's award or under Section 17 only in the specific urgency circumstances and then only after the period prescribed by that section has elapsed. Authorities were examined which hold that possession taken before the statutory stage is to be related to the award or the relevant Section 17 date and that mere accrual of a right to compensation (and interest) upon dispossession is distinct from completion of transfer for capital gains. Applying these principles to the facts, the Court found no invocation of Section 17 and no governmental direction to take possession earlier; the College's occupation after lease expiry was that of a tenant at sufferance and did not divest the owner of title. Consequently, even if physical possession existed prior to the award, the transfer for capital gains purposes completed only on the date of the award, 29.09.1970, and not on the notification date, 15.05.1968. The Court therefore upheld assessment of capital gains with reference to the date of award and rejected the appellant's contention that interest/solatium or the right to compensation led to earlier accrual of capital gains. [Paras 36, 39, 41]

Transfer for capital gains purposes completed on 29.09.1970 (date of award); capital gains correctly charged with reference to that date.

Capital gains - transfer (extinguishment of rights / compulsory acquisition) - vesting of property - urgency acquisition under Section 17 of the Land Acquisition Act, 1894 - precedent / finality of Tribunal orders - Whether the unappealed ITAT decision in a separate appeal (assessment year 1975-1976) precluded the Revenue from taking the present stand in relation to assessment year 1971-1972. - HELD THAT: - The Court examined factual and legal distinctions between the two matters. The ITAT decision for AY 1975-1976 rested on a finding that the acquisition fell under Section 17 (urgency) with an identifiable date of possession; that factual matrix differed from the present case where Section 17 was not invoked and possession did not vest the Government before the award. The Court held that the decisions were not sufficiently similar to bind the Revenue, that the Revenue had just cause to challenge the position in the present case, and that the ITAT itself found the point of possession in the present proceeding to be unresolved and referred the question to the High Court. Consequently, finality of the other ITAT order did not preclude the Revenue from contesting taxability in the present matter. [Paras 44, 45]

The earlier final ITAT decision for AY 1975-1976 did not preclude the Revenue from contesting the taxability for AY 1971-1972; the facts and legal basis were distinguishable and Revenue was not estopped.

Final Conclusion: The appeal is dismissed. On the facts and law the transfer of the land for purposes of Section 45 accrued on the date of the award, 29.09.1970, and capital gains were rightly assessed in relation to the previous year relevant to AY 1971-1972; the separate ITAT decision in respect of AY 1975-1976 did not preclude the Revenue from taking a different stand in the present case.

Penalty under Section 271(1)(c) - Concealment of income - Furnishing inaccurate particulars of income - Validity of show cause notice under Section 274 - Bonafide/inadvertent omission and voluntary disclosure - Requirement of AO's satisfaction and reasoned penalty order

Validity of show cause notice under Section 274 - Penalty under Section 271(1)(c) - Validity of the show cause notice dated 12.03.2015 and the competence to initiate penalty proceedings under Section 271(1)(c). - HELD THAT: - The Court examined the contention that the notice was defective because it used the word 'or' without specifying which limb of Section 271(1)(c) was attracted and that such defect vitiated all consequent proceedings. The Court held that the objection was raised for the first time before the High Court and that whether a defect in wording causes jurisdictional prejudice is a mixed question of fact and law which ought to have been taken at the earliest opportunity. The assessee had, by its reply to the show cause notice, shown that it understood the notice to relate to concealment or furnishing of inaccurate particulars, and the authorities below had concurrently examined and rejected the assessee's explanations on facts. Reliance on precedent where notice defects were fatal was distinguished on the basis of factual prejudice not being shown. Consequently the Court concluded that the assessee was precluded from raising the contention belatedly and that no jurisdictional nullity in the notice was established. [Paras 8, 9, 10, 15]

The notice dated 12.03.2015 was not vitiated so as to invalidate the penalty proceedings; the contention of defect in the notice is rejected and cannot be raised belatedly.

Concealment of income - Furnishing inaccurate particulars of income - Bonafide/inadvertent omission and voluntary disclosure - Requirement of AO's satisfaction and reasoned penalty order - Whether penalty under Section 271(1)(c) was leviable having regard to the assessee's claimed bona fide/inadvertent omission and subsequent disclosure. - HELD THAT: - The Court reviewed the facts: the return filed showed 'Nil' under capital gains; notices under Section 143(2) and 142(1) elicited no disclosure; the assessee, after receipt of information through AIR and during assessment proceedings, admitted omission and furnished computation but did not file a revised return; explanations of inadvertence and reliance on annual report (not filed with tax authorities) were considered. The Court held that the conduct - delayed disclosure, absence of revised return, and material signed by the company's officers and CA showing 'Nil' - supported the view that the omission was not bonafide. The Assessing Officer's penalty order was examined and found to be reasoned, having considered the assessee's submissions and relevant precedents; the Court noted that voluntary disclosure does not automatically exonerate from penalty. The Court also rejected the submission that poor financial condition or return being a loss absolved the assessee, observing settled law that assessed loss does not preclude levy of penalty where concealment is proved. [Paras 4, 12, 13, 14, 16]

Penalty under Section 271(1)(c) was rightly imposed; the assessee's plea of bona fide/inadvertent omission and voluntary disclosure is rejected and the reasoned penalty order is sustained.

Final Conclusion: The High Court dismissed the tax case appeal, answering the substantial questions of law against the assessee: the show cause notice was not rendered invalid by the alleged defect and the imposition of penalty under Section 271(1)(c) was upheld on the facts and reasoning recorded by the authorities.

Prima facie case - financial stringency - balance of convenience - stay of demand - CBDT guidelines on stay - discretion of Assessing Officer - speaking order

Stay of demand - prima facie case - financial stringency - balance of convenience - speaking order - discretion of Assessing Officer - Validity of non-speaking orders rejecting applications for stay of demand and the required legal parameters for adjudication of stay petitions. - HELD THAT: - The impugned orders rejecting stay applications were non-speaking and did not apply the established tripartite test - existence of a prima facie case, financial stringency (including irreparable injury/undue hardship) and balance of convenience - which are indispensable in adjudicating stay petitions. Circulars and Office Memoranda issued by the CBDT provide illustrative guidance on factors and customary conditions (including security or payment) but do not supplant the core requirement that the authority apply its discretion after considering the three factors and communicate a reasoned decision. Assessing Officers retain discretion to vary conditions (including the quantum to be paid) based on the material before them, but any order under section 220(6) or allied provisions must be a speaking order addressing relevant factors and may impose appropriate conditions while explaining the basis for them. [Paras 4, 12]

Impugned non-speaking orders rejecting stay were set aside and the authorities directed to hear and decide stay applications afresh applying the trinity of prima facie case, financial stringency and balance of convenience, and to record reasons in a speaking order; the CBDT instructions are to be treated as guiding norms that do not override these requirements.

CBDT guidelines on stay - stay of demand - Effect of CBDT Office Memoranda (including Instruction No.1914 and subsequent OMs) prescribing standard payment percentages and their application by departmental authorities. - HELD THAT: - The Court noted the sequence of CBDT instructions which, by OM dated 31.07.2017, prescribe a standard rate of 20% of disputed demand where matters are contested before the first appellate authority, and earlier modifications prescribing 15%. These Circulars serve as departmental guidelines intended to streamline practice; they afford the assessing authority discretion to increase or decrease the quantum to be remitted based on the tri-fold factors. Consequently, while the departmental instruction indicating a standard rate is material and must be considered, it cannot substitute for or override the requirement that the authority apply its mind to the specific circumstances and record reasons when fixing any condition for stay. [Paras 11, 12]

CBDT circulars are guiding norms that inform but do not displace the statutory exercise of discretion; authorities must consider them while applying the tripartite test and record reasons if they vary from the standard prescription.

Stay of demand - Interim relief and procedural directions pending fresh adjudication of stay applications. - HELD THAT: - Given the identified deficiencies in the impugned orders, the Court directed that fresh orders be passed after a hearing. The administrative respondent is required to hear the petitioners (virtually or physically as convenient) and decide the stay applications afresh within a stipulated time-frame. Meanwhile, recovery proceedings are to be kept in abeyance until such fresh decision is taken. [Paras 6]

Authorities directed to pass fresh speaking orders after hearing the petitioners within six weeks; recovery proceedings stayed in the interim.

Final Conclusion: Impugned non-speaking orders rejecting stay applications were quashed; departmental authorities are directed to reconsider stay petitions afresh, after hearing and applying the established trinity of prima facie case, financial stringency and balance of convenience while having regard to CBDT guidelines; fresh speaking orders to be passed within six weeks and recovery proceedings kept in abeyance until then.

Tax Deduction at Source (TDS) under Section 194N - Deemed assessee in default under Section 201 - Principles of natural justice-reasonable opportunity - Business correspondent exemption under proviso to Section 194N - Computation of threshold with reference to the previous year - Non-retrospective operation of taxing provision - Proviso to Section 201(1) - protection where recipient has declared income and paid tax

Principles of natural justice-reasonable opportunity - Impugned orders were vitiated for inadequate opportunity and rushed enquiry, rendering writ jurisdiction appropriate despite existence of appellate remedy. - HELD THAT: - The Court held that mere issuance of show cause notices and reliance on survey-stage interactions did not constitute fair compliance with the principles of natural justice where the noticees were given only a few days to prepare their defence. Granting an opportunity must include reasonable time to prepare; perfunctory hearings held on the same or next day after show cause notices amounted to hurried proceedings that vitiated the orders and justified entertaining writ petitions notwithstanding the availability of statutory appeal under Section 246A. [Paras 11, 12]

Maintainability objection on account of non-exhaustion of statutory remedy rejected because the impugned orders breached principles of natural justice.

Tax Deduction at Source (TDS) under Section 194N - Computation of threshold with reference to the previous year - Non-retrospective operation of taxing provision - Threshold for triggering Section 194N is to be computed with reference to the previous year 01.04.2019 to 31.03.2020 (assessment year 2020-2021), but actual TDS liability arises only for cash withdrawals made on or after 01.09.2019 when the provision came into effect. - HELD THAT: - The Court observed that 'previous year' as defined in the Act corresponds to the financial year immediately preceding the assessment year; hence for AY 2020-2021 the period 01.04.2019-31.03.2020 is relevant for aggregating withdrawals to test the One Crore threshold. However, the Finance Act introduced Section 194N effective 01.09.2019, and any liability to deduct TDS would apply only to withdrawals made from that effective date. Counting transactions from 01.04.2019 for threshold computation does not amount to retrospective levy because actual deduction/levy applies only to amounts withdrawn post 01.09.2019. [Paras 15, 20]

Threshold aggregation includes withdrawals from 01.04.2019 to 31.03.2020 for AY 2020-2021, but TDS is leviable only on withdrawals occurring on or after 01.09.2019.

Business correspondent exemption under proviso to Section 194N - Cash disbursements by Primary Co-operative Societies of the State distributed Pongal gift, effected as part of the Banks' distribution via member Societies acting as business correspondents, fall within the proviso exemption to Section 194N and must be segregated from other withdrawals. - HELD THAT: - Having regard to the State Government's scheme and the role of the petitioner Banks and their member Societies, the Court concluded that the portion of transactions relating to distribution of the Pongal cash gift constituted services performed by Primary Co operative Societies as business correspondents under the RBI framework and thus are covered by the proviso exempting business correspondents from Section 194N. The Assessing Officers failed to take this relevant material into account; a quasi judicial order that omits consideration of such relevant facts is liable to be quashed. [Paras 14]

Pongal cash gift disbursements via member Societies qualify for exemption under the proviso to Section 194N and must be excluded from computation.

Deemed assessee in default under Section 201 - Proviso to Section 201(1) - protection where recipient has declared income and paid tax - If recipients (account holders) can demonstrate that amounts withdrawn did not constitute income at their hands and have filed returns/payments as required by the proviso to Section 201(1), further proceedings against the deductor can be dropped; otherwise deductors may be treated as assessees in default. - HELD THAT: - The Court recognized that Section 201 contains a proviso protecting a person from being deemed an assessee in default where the payee has furnished return, included the sum in income, and paid tax thereon with prescribed certification. It accepted that a deductor cannot unilaterally decide non taxability of payee amounts but, during enquiry, the deductor may place materials to bring the case within the proviso and if satisfied the Assessing Officer must drop proceedings. Accordingly, Assessing Officers must permit production of annual returns and other evidence to establish that withdrawn sums were not income of the member Societies. [Paras 16, 19, 21]

Assessing Officers must consider evidence that recipients did not have taxable income; if proviso conditions of Section 201(1) are met, proceedings against the deductor shall be dropped.

Remand for fresh enquiry with directions - Impugned orders quashed and matters remitted for fresh consideration with direction to issue fresh hearing notices, exclude Pongal cash gift from computation, and permit petitioners to adduce evidence regarding non income status of other withdrawals. - HELD THAT: - Because Assessing Officers proceeded hastily and failed to consider relevant aspects (including business correspondent exemption and evidence of non income), the Court interfered and remitted the cases. The Assessing Officers are directed to issue fresh notices, allow production of returns and other material, exclude the Pongal cash gift distribution from the aggregate for Section 194N, and proceed in accordance with law to determine whether amounts represent income of the recipients and whether liability of the deductor subsists. [Paras 22]

Impugned orders quashed; matters remitted for fresh enquiry with specific directions to exclude Pongal disbursements and admit evidence on taxability of other withdrawals.

Final Conclusion: Writ petitions allowed: impugned orders under Section 201 were quashed for failure to afford reasonable opportunity and for omission to segregate exempt business correspondent disbursements; Assessing Officers directed to issue fresh notices, exclude Pongal cash gift transactions from computation under Section 194N, and re adjudicate after permitting production of evidence regarding the taxability of other withdrawals, with further proceedings to follow law.

Refund of tax paid under coercion - manual refund procedure under TRACES / CPC(TDS) - nullification of demand and freezing of challan - direction to decide representation within reasonable time - court refraining from adjudicating merits

Manual refund procedure under TRACES / CPC(TDS) - nullification of demand and freezing of challan - refund of tax paid under coercion - Authority in the Income Tax Department to consider and decide the petitioner's claim for refund and, if appropriate, to issue a manual refund after verification - HELD THAT: - The Court declined to decide the merits of the petitioner's claim that the amount was paid under coercion, but recorded communications indicating that a manual refund may be issued by the TDS Assessing Officer after due verification and procedure and that the CPC(TDS)/TRACES office may be informed so that the challan can be frozen or the demand nullified. The petitioner was granted liberty to approach the competent authority in the Income Tax Department with all supporting documents for redressal. The Court left the question of substantive entitlement to refund to the administrative process in accordance with law and applicable circulars. [Paras 5, 6, 7]

Petitioner may approach the competent Income Tax authority for a decision on the refund claim and the authority may consider issuance of manual refund after due verification and, if appropriate, take steps to nullify the demand or freeze the challan.

Direction to decide representation within reasonable time - court refraining from adjudicating merits - Time-bound direction to the competent authority and the Court's refusal to adjudicate merits at this stage - HELD THAT: - The Court expressly declined to enter into the merits of the dispute and limited its role to granting procedural relief: it directed that, if the petitioner files the application with the competent authority, that authority should endeavour to take a decision within a reasonable time, preferably within 12 weeks from receipt of a copy of the order. The Court emphasised that no observations have been made on the merits. [Paras 7]

Competent authority to endeavour to decide the petitioner's application within a reasonable time, preferably within 12 weeks; the Court has not adjudicated the merits.

Final Conclusion: Writ petition disposed of by granting liberty to the petitioner to approach the competent Income Tax authority for consideration of the refund claim; the authority is directed to endeavour to decide the application within a reasonable time (preferably 12 weeks), and the Court has not examined the merits of the claim.

Validity of reassessment under Section 147 - reopening of assessment - reason to believe - change of opinion - audit objection as basis for reassessment - disposal of objections before completion of reassessment - remand for fresh consideration - adjudication on merits

Validity of reassessment under Section 147 - reason to believe - change of opinion - Validity of the reopening of assessment under Section 147 was not adjudicated by the Tribunal and required fresh consideration. - HELD THAT: - The High Court found that the Tribunal did not render any specific finding on whether the Assessing Officer had recorded reasons or possessed a bona fide reason to believe that income had escaped assessment. The court observed that mere audit objections could not, without more, justify reopening and that the Assessing Officer had not explained the belief leading to issuance of notice under Section 148. Because these determinative questions were not answered, the matter was remitted for fresh adjudication of the validity of reopening and whether the reassessment amounted to a change of opinion in the absence of fresh tangible material. [Paras 8, 9, 10]

Order of the Tribunal set aside and the question of validity of reopening remitted to the Tribunal for fresh consideration and adjudication on merits.

Audit objection as basis for reassessment - disposal of objections before completion of reassessment - Whether audit objections or non-disposal of the assessee's objections were a valid basis for completing reassessment was not dealt with and required fresh examination. - HELD THAT: - The Court recorded that the assessee had specifically alleged that the reopening was based on audit objections and that objections filed (by letter dated 27.06.2015) were not disposed of before passing reassessment. The Tribunal failed to consider these contentions. Given the Tribunal's omission, the High Court directed that the Tribunal (on remand) must examine whether the audit objection could constitute a valid foundation for reopening and whether the Assessing Officer complied with the requirement to dispose of the assessee's objections prior to finalizing reassessment. [Paras 6, 9, 10]

Remitted to the Tribunal to determine on the merits whether audit objections or non-disposal of the assessee's objections justified reopening and reassessment.

Adjudication on merits - remand for fresh consideration - Merits of the additions (including entries said to relate to the firm and claimed existence of books of account) were not finally decided and were to be reopened for fresh adjudication. - HELD THAT: - The High Court noted that factual questions-such as whether the assessee produced books of account, and whether certain entries related to the partnership firm (assessed separately) rather than to the individual-were not considered by the Tribunal. The Tribunal had remitted the matter to the Commissioner (Appeals) to adjudicate on merits, but the High Court found the Tribunal's order inadequate in not addressing the validity of reassessment itself. Consequently, the Court restored the appeal to the Tribunal and allowed the assessee to raise all factual and legal contentions for decision on merits. [Paras 4, 6, 7, 9, 10]

Matter remitted for fresh consideration on merits of the additions and related factual contentions; the assessee may raise all factual and legal arguments before the Tribunal.

Final Conclusion: The appeal is allowed; the Income Tax Appellate Tribunal's order dated 22.06.2018 is set aside and the matter is restored to the Tribunal for fresh hearing and decision on the merits (including validity of reopening, justificatory material, disposal of objections and the additions), leaving the substantial questions of law open.

Exemption under section 54F - Ownership of more than one residential house as bar to section 54F - Long-term capital gains - Indexed cost of acquisition - Fair market value as on 01.04.1981 for capital gains - Succession/inheritance and cost to previous owner - Capital Gains Account Scheme - Cost Inflation Index / Indexation

Exemption under section 54F - Ownership of more than one residential house as bar to section 54F - Whether the assessee was entitled to deduction under section 54F on sale of her share of the property - HELD THAT: - The Tribunal examined the basis on which the CIT(A) and AO denied exemption under section 54F - namely that the assessee owned more than one residential house other than the new asset. The reopening assessment for AY 2011-12 accepted by the assessee established that two of the properties earlier returned as 'house property' were in fact leases of vacant land and the receipts were rent for land, not rent for buildings. Consequently the factual foundation for holding that the assessee owned more than one residential house did not survive. On this factual basis the Tribunal held that the statutory bar in section 54F was not attracted and directed that deduction under section 54F be allowed. [Paras 20]

Deduction under section 54F allowed; assessee did not own more than one residential house other than the new asset on date of transfer.

Fair market value as on 01.04.1981 for capital gains - Indexed cost of acquisition - Whether the fair market value as on 01.04.1981 should be accepted at Rs.150 per sq.ft. for computing indexed cost of acquisition - HELD THAT: - The Tribunal noted that the assessee's claim of FMV as on 01.04.1981 was supported by a report of a registered valuer and that the guideline value of Rs.100 per sq.ft. stated by the Sub-Registrar did not preclude acceptance of a higher FMV where supported. Relying on precedent that market value may exceed guideline value, and considering the valuation report and facts of the case, the Tribunal found the assessee's FMV estimate of Rs.150 per sq.ft. on 01.04.1981 to be reasonable and directed its acceptance for computation of capital gains. [Paras 21]

FMV as on 01.04.1981 accepted at Rs.150 per sq.ft. for computing indexed cost of acquisition.

Indexed cost of acquisition - Succession/inheritance and cost to previous owner - Cost Inflation Index / Indexation - Whether indexation benefit should be allowed from 01.04.1981 for the assessee's share - HELD THAT: - The Tribunal applied the principle in section 55(2)(b)(ii) that where a capital asset becomes the property of the assessee by succession, cost to the previous owner or FMV as on 01.04.1981 (if the previous owner acquired before that date) is to be taken for computation. The property was acquired by the predecessor prior to 01.04.1981 and the assessee opted to adopt FMV as on 01.04.1981; neither the assessee nor her mother had purchase cost of their shares. Accordingly the Tribunal held the assessee entitled to indexation from 01.04.1981 in respect of her half share and directed recomputation of long term capital gains. [Paras 22]

Indexation allowed from 01.04.1981 for computation of indexed cost of acquisition and recomputation of long-term capital gains directed.

Final Conclusion: The appeal is partly allowed: deduction under section 54F is permitted, the FMV as on 01.04.1981 at Rs.150 per sq.ft. is accepted, and indexation from 01.04.1981 is allowed; the Assessing Officer is directed to recompute long-term capital gains accordingly.

Arm's length principle - transfer pricing adjustment - working capital adjustment - outstanding receivables as separate international transaction - imputation of interest on inter company receivables - rate of depreciation on computer software - disallowance under section 14A read with Rule 8D - disallowance under section 40(a)(ia) - deduction under section 10A/10B - allowability of referral pay under section 37(1)

Outstanding receivables as separate international transaction - working capital adjustment - imputation of interest on inter company receivables - arm's length principle - Deletion of transfer pricing addition made by treating delayed recovery of receivables as a separate international transaction and imputing interest. - HELD THAT: - The Tribunal found that the assessee had already been granted a working capital adjustment while determining the ALP of the international transaction for provision of services; outstanding receivables form part of the assessee's working capital and therefore should not be benchmarked separately as an independent international transaction. The decision was held to be squarely covered by the decision of the Delhi High Court in Principal Commissioner Of Income Tax v. Kusum Healthcare Pvt. Ltd., and consequently the addition computed as interest on delayed receivables was deleted. [Paras 16]

Addition of Rs. 355,309 on account of imputed interest on delayed receivables is deleted.

Rate of depreciation on computer software - Allowability of depreciation at 60% on the voice recording software license claimed by the assessee. - HELD THAT: - The Tribunal followed the coordinate bench decision in the assessee's own case for AY 2010 11 which considered identical software and, relying on that reasoning and the absence of any distinguishing precedent urged by revenue, directed the AO to allow depreciation at 60% on the software license. [Paras 21]

Differential depreciation disallowance is deleted and depreciation at 60% is allowed for the software.

Disallowance under section 14A read with Rule 8D - Deletion of disallowance computed under section 14A read with Rule 8D in respect of exempt dividend income. - HELD THAT: - The AO did not record the necessary satisfaction after examination of the assessee's books of account as required under section 14A(2) before invoking Rule 8D. On perusal of the assessment order the Tribunal found absence of any recorded satisfaction or identification of specific expenditures attributable to earning exempt income; consequently the Rule 8D based disallowance could not be sustained. The Tribunal also directed deletion of the addition for computation of book profit under section 115JB for the same reasons. [Paras 25, 26]

Disallowance under section 14A read with Rule 8D of Rs. 1,252,630 is deleted (also deleted for computation under section 115JB).

Disallowance under section 40(a)(ia) - Deletion of disallowance under section 40(a)(ia) for payments on which TDS was deducted at 1% instead of 2%. - HELD THAT: - Facts showed tax was deducted (albeit at a lower rate). The Tribunal held there was no failure to deduct tax; the AO's disallowance under section 40(a)(ia) could not be sustained where tax was in fact deducted, and the matter was decided following relevant precedent cited in favour of the assessee. [Paras 32]

Disallowance under section 40(a)(ia) is deleted.

Deduction under section 10A/10B - Allowability of deduction under section 10A/10B in respect of income from sale of scrap. - HELD THAT: - The Tribunal followed the coordinate bench decision in the assessee's own case holding that receipts from sale of scrap are part and parcel of the eligible unit's activity and bear a proximate relationship with the business of the undertaking; the profit of the business must be computed and the deduction under section 10B granted proportionately to export turnover. Accordingly, the DRP direction to allow the deduction was upheld and the AO's appeal dismissed on this point. [Paras 37]

DRP direction to allow deduction under section 10A/10B for sale of scrap is sustained; AO's ground on this issue is dismissed.

Depreciation on goodwill - Allowability of depreciation claimed on goodwill acquired under asset purchase agreement. - HELD THAT: - The Tribunal followed the coordinate bench decision in the assessee's own case for the earlier year, which relied on higher judicial authority to permit depreciation on goodwill recognised on the purchase of a going concern. In view of the earlier binding decision in the assessee's favour, the Tribunal dismissed the revenue's appeal on this point. [Paras 41]

Disallowance of depreciation on goodwill is deleted; AO's appeal on this ground is dismissed.

Allowability of referral pay under section 37(1) - Deletion of disallowance of employee referral payments as business expenditure allowable under section 37(1). - HELD THAT: - The DRP recorded that referral payments were made to existing employees when new employees were hired on their reference and that supporting details were placed on record; the AO failed to bring material to justify disallowance. The Tribunal found the expenditure was incurred wholly and exclusively for business purposes and upheld the DRP direction deleting the disallowance. [Paras 44]

Disallowance of referral pay is deleted; AO's ground on this issue is dismissed.

Final Conclusion: For AY 2011-12 the assessee's appeal is partly allowed (notably deletion of imputed interest on receivables, deletion of disallowances under section 14A and section 40(a)(ia), allowance of software depreciation at 60%, and allowance of referral pay; deduction under section 10A/10B for scrap upheld), and the assessing officer's appeal is dismissed.

Mandatory e-filing of appeals - technical failure of e filing portal as ground for manual filing - maintainability of appeal filed manually when electronic filing was non-functional - restoration and tagging of appeals for adjudication on merits - requirement of reasoned order and opportunity to be heard

Mandatory e-filing of appeals - technical failure of e filing portal as ground for manual filing - maintainability of appeal filed manually when electronic filing was non-functional - Whether the First Appellate Authority was justified in dismissing the assessee's appeal in limine for not filing electronically when the e filing portal was not operational. - HELD THAT: - The Tribunal examined the statutory scheme introduced from 1 March 2016 requiring electronic filing of appeals and the CBDT Circular acknowledging that the EVC functionality became operational only from 12.05.2016 for individuals and from 19.05.2016 for other persons. On the material before it the assessee had filed a manual appeal on 29.04.2016 because the e portal was not functioning. The Tribunal found that the First Appellate Authority dismissed the appeal solely because it was not filed electronically despite the undisputed fact that the electronic verification facility was not available to the assessee on the date of manual filing. The Tribunal held that in these circumstances dismissal for non e filing could not be justified where the inability to e file was due to the portal's non functioning and where later electronic filing remained pending before the CIT(A). [Paras 5]

The dismissal in limine for non e filing was not justified and is set aside.

Restoration and tagging of appeals for adjudication on merits - requirement of reasoned order and opportunity to be heard - What consequential relief should follow where an appeal was dismissed in limine for non e filing despite portal malfunction. - HELD THAT: - Having concluded that the dismissal was improper, the Tribunal directed restoration of the assessee's appeal to the file of the CIT(A). It further directed that the manually filed appeal and the subsequently e filed appeal (dated 10.05.2017) be tagged together and treated as a single appeal. The Tribunal required the First Appellate Authority to consider the combined appeal on merits and to pass a reasoned order after affording the assessee proper opportunity to present its case. [Paras 6]

Appeal restored and directed to be tagged with the later e filed appeal and decided on merits after giving opportunity to the assessee.

Final Conclusion: The Tribunal set aside the dismissal in limine for non e filing (filed when the e portal was non functional), restored the appeal, directed that it be tagged with the subsequently e filed appeal and remitted the matter to the CIT(A) for hearing and passing a reasoned order on merits; appeal allowed for statistical purposes.

Deduction under section 54F - Proviso (ii) to section 54F regarding purchase of another residential house within one year - Ownership determined by payment of consideration - Effect of finality of co-ordinate authority's order on ownership finding

Deduction under section 54F - Proviso (ii) to section 54F regarding purchase of another residential house within one year - Effect of finality of co-ordinate authority's order on ownership finding - Allowability of deduction under section 54F to the assessee where properties were purchased in joint names but one residential property was held to be fully owned by the wife and another residential property was held to be fully owned by the assessee in a co-ordinate order which attained finality. - HELD THAT: - The Tribunal examined the CIT(A)'s finding in paragraph 5.2 and the co-ordinate CIT(A) order in the wife's case which attained finality for AY 2013-14. The co-ordinate order found the Chennai property to be commercial, the property at 180 NGEF Quarters to be entirely owned and funded by the wife, and the property at 183 Binnamangala II Stage to be entirely owned by the husband. Since the wife's CIT(A) order has become final (revenue's appeal dismissed for low tax effect), those ownership findings operate against the revenue. The proviso (ii) to section 54F is triggered only where the assessee purchases another residential house within one year of the transfer; mere inclusion of a name in the purchase deed does not ipso facto amount to a purchase by that person. The determinative fact is payment of consideration: if one party pays the entire consideration and demonstrates sufficient own funds, the purchase is by that party notwithstanding joint titling. Applying these principles, the Tribunal accepted the factual conclusion that the second residential property was purchased and funded by the wife and not by the assessee, and therefore proviso (ii) is not attracted to deny deduction to the assessee. Consequently, the disallowance by the AO and its confirmation by the CIT(A) were deleted and the claim under section 54F was allowed. [Paras 5, 6, 7]

Assessee's claim for deduction under section 54F allowed; disallowance by AO and confirmation by CIT(A) deleted.

Final Conclusion: The Tribunal allowed the appeal, holding that the proviso (ii) to section 54F was not attracted because (i) the co-ordinate CIT(A) order, now final, establishes that the relevant residential property was wholly owned and funded by the wife, and (ii) mere joint titling without payment of consideration by the assessee does not constitute a purchase by him; accordingly the deduction under section 54F was granted to the assessee.

Exemption under section 11 of the Income-tax Act, 1961 - proviso to section 2(15) - general public utility and commercial activity - principle of mutuality - application of sections 13(1), 13(2) and 13(3)(b) - beneficiary arising from member contributions - binding precedents in assessee's own case

Exemption under section 11 of the Income-tax Act, 1961 - binding precedents in assessee's own case - Claim of exemption under section 11 for the assessment year 2014-2015 - HELD THAT: - The Tribunal held that the assessee is entitled to exemption under section 11 for AY 2014-2015. The conclusion was reached by consistently following earlier decisions in the assessee's own case, including orders of the Tribunal and the Delhi High Court for preceding assessment years, which had held that the assessee's activities are charitable and eligible for section 11 benefits. No contrary material was produced by the Revenue to distinguish the facts of the present year from those earlier binding precedents relied upon by the CIT(A) and the Tribunal.

Claim of exemption under section 11 for AY 2014-2015 allowed; revenue appeal dismissed on this ground.

Proviso to section 2(15) - general public utility and commercial activity - Whether the proviso to section 2(15) renders the assessee's receipts commercial and disentitles it to charitable status - HELD THAT: - The Tribunal, following earlier appellate and High Court decisions in the assessee's own case, held that the activities of the chamber do not fall within the category contemplated by the proviso to section 2(15) so as to convert them into trade or business for the purpose of denying charitable status. The authorities had examined the nature of the services and receipts and found none of the activities to be of the character envisaged by the proviso; the present appeal raised no material distinguishing the current year from those precedents.

Proviso to section 2(15) held not attracted; receipts not treated as commercial for denial of exemption.

Principle of mutuality - application of sections 13(1), 13(2) and 13(3)(b) - beneficiary arising from member contributions - Whether sections 13(1)/13(2) are attracted because certain members contributed amounts exceeding the threshold and thereby became beneficiaries - HELD THAT: - The Tribunal agreed with the CIT(A) that the Assessing Officer had not placed any material on record to demonstrate that benefits were transferred to specific members such that sections 13(1)/13(2) would apply. The assessee's activities were held to be for promotion and protection of trade and industry at large, not confined to conferring material benefits upon contributing members. Consequently, the contention that mutuality is inapplicable because members contributing over the threshold became beneficiaries was rejected for want of supporting evidence and in view of earlier decisions in the assessee's case.

Sections 13(1)/13(2) not attracted; principle of mutuality does not result in denial of exemption on the facts before the authorities.

Final Conclusion: The departmental appeal is dismissed; the assessee is entitled to exemption under section 11 for AY 2014-2015, the proviso to section 2(15) and the provisions of sections 13(1)/13(2)/13(3)(b) were held not to apply on the facts, and the order of the CIT(A) is upheld following binding precedents in the assessee's own case.

Service of notice under section 148 - belated return filed in response to notice under section 148 - mandatory issuance of notice under section 143(2) where return is filed - assessment framed under section 144/147 invalid for want of jurisdictional notice - affixture as mode of service and last known address

Service of notice under section 148 - affixture as mode of service and last known address - Validity of service of the notice under section 148 where notice was affixed at the old address and the Department's records showed the new address - HELD THAT: - The Tribunal examined the material on record including the intimation under section 143(1) dated 7/3/2014 and the snapshot of MCA records, which established that the Department's database reflected the assessee's new address prior to issuance of the notice dated 30/3/2015. The claimed service by affixture at the old address could not be treated as valid service because the Department had the new address on its records and the email address to which the Revenue claims to have sent the notice did not match the email ID shown in the MCA snapshot. The order sheet did not record any contemporaneous entry regarding issuance or service of the notice on 30/3/2015, and there was no material to show that affixture was resorted to for reasons authorised by Order V, Rule 17 CPC (such as inability to trace the assessee or refusal to accept service). On these findings the Tribunal held that the notice under section 148 was not properly served and the reliance on the decision cited by Revenue was inapplicable to the facts of the case. [Paras 13, 14, 15, 16, 17]

Notice under section 148 was not validly served; proceedings founded on that service are unsustainable.

Belated return filed in response to notice under section 148 - mandatory issuance of notice under section 143(2) where return is filed - assessment framed under section 144/147 invalid for want of jurisdictional notice - Whether the assessing officer could complete reassessment under section 144/147 without issuing a notice under section 143(2) when the assessee filed a belated return in response to the section 148 notice - HELD THAT: - The Tribunal accepted the assessee's contention that a return dated 4/12/2015 was filed in response to the section 148 notice and that the assessing officer, having taken cognisance of that return in the assessment order, was required to issue a notice under section 143(2) before proceeding to frame an assessment under section 143(3) or section 144. The Tribunal relied on binding decisions and consistent judicial pronouncements that wherever a return filed by the assessee is not accepted at its face, the AO must issue a notice under section 143(2) to provide the assessee an opportunity to produce material; failure to do so renders the subsequent assessment invalid. The Revenue's contention that the belated return was invalid because filed after the 30-day period specified in the section 148 notice was not reflected in the assessment order as a basis for rejecting the return, and therefore could not justify bypassing the jurisdictional requirement of issuing notice under section 143(2). [Paras 20, 21, 22, 23, 24]

Assessment completed under sections 147/144 without issuing notice under section 143(2) is invalid where a return filed in response to section 148 has been taken on record.

Final Conclusion: Both the service defect in issuing the notice under section 148 and the failure to issue the mandatory notice under section 143(2) where a return was filed rendered the reassessment order dated 28/3/2016 under sections 147/144 unsustainable; the appeal is allowed and the assessment order is quashed.

Education cess as business expenditure - deductibility under section 37 - non-applicability of section 40(a)(ii) to cess - entertainment of fresh claim during assessment/appellate proceedings - precedent reliance on judicial decisions and administrative circular

Education cess as business expenditure - deductibility under section 37 - non-applicability of section 40(a)(ii) to cess - Claim for deduction of education cess incurred during the year was allowable as business expenditure and not hit by the disallowance envisaged in section 40(a)(ii). - HELD THAT: - The Tribunal examined whether education cess paid along with income-tax is deductible as an expenditure under the general provision governing allowable business expenses and whether such cess falls within the ambit of disallowance under the provision which seeks to disallow certain taxes. Following the decision of the Rajasthan High Court in CIT, Kota v. Chambal Fertilizers and Chemicals Ltd., and in view of the Board's Circular which omitted the word 'cess' from the relevant clause, the Tribunal held that education cess is not a tax within the statutory disallowance and therefore is capable of being treated as an allowable business expense. The Tribunal noted that identical question had been decided in the assessee's own earlier appeals for other assessment years in favour of the assessee and, respectfully following those precedents, directed that the education cess claimed be allowed as expenditure. The Tribunal also recognised that a rightful claim made during assessment proceedings cannot be denied where it is otherwise allowable under law and may be entertained at the appellate stage in accordance with settled principles and earlier decisions relied upon by the assessee. [Paras 7, 8]

The claim for education cess of the assessee is allowed as an expenditure.

Entertainment of fresh claim during assessment/appellate proceedings - precedent reliance on judicial decisions and administrative circular - Fresh claim of deduction made during assessment proceedings was entertained and allowed on appeal by applying settled precedent. - HELD THAT: - The Tribunal observed that the assessee had raised a fresh claim of deduction during the assessment proceedings. While acknowledging contentions that fresh claims cannot be made at that stage, the Tribunal accepted that where a claim is legally tenable it can be entertained at the appellate stage. The Tribunal relied on its own earlier decisions in the assessee's cases and relevant judicial and administrative pronouncements to conclude that the claim should be allowed. [Paras 5, 7, 8]

The fresh claim made during assessment proceedings is entertained on appeal and allowed.

Final Conclusion: The Tribunal allowed the appeal, directing that the education cess of the amount claimed for Assessment Year 2016-17 be treated as an allowable business expenditure; the fresh claim made during assessment proceedings was entertained and upheld following precedents and the administrative circular.

Requirement of incriminating material to disturb completed assessments - addition under section 68 in search triggered assessments - assessment under section 153A and scope to assess/reassess total income - admissibility of fresh evidence under Rule 46A of the Income Tax Rules

Requirement of incriminating material to disturb completed assessments - addition under section 68 in search triggered assessments - assessment under section 153A and scope to assess/reassess total income - Deletion of addition made by AO of Rs. 2,02,59,880/- on account of unexplained sundry creditors introduced in the year. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that, in respect of completed (unabated) assessments, additions to income on the basis of a search under the scheme of section 153A can be sustained only if there is incriminating material seized or other credible post search material connecting the alleged entry to undisclosed income. While section 153A empowers the AO to assess or reassess the total income for the six years, the court noted the divergence of authorities and accepted the view that completed assessments cannot be tampered with arbitrarily in absence of seized incriminating material or other credible information demonstrating escapement of income. On the facts the AO made the addition under section 68 without referring to any seized material or other credible information and relied on surmise; the Tribunal therefore declined to interfere with the CIT(A)'s deletion of the addition. [Paras 9]

Addition under section 68 deleted; ground no.1 dismissed and CIT(A)'s order upheld.

Admissibility of fresh evidence under Rule 46A of the Income Tax Rules - Challenge to CIT(A)'s admission/rejection of additional grounds/evidence under Rule 46A during appeal proceedings. - HELD THAT: - The Tribunal examined the CIT(A)'s treatment of two additional grounds filed by the assessee in appeal: one factual (details of purchases) and one legal (interest under sections 234A/234B). The CIT(A) rejected the factual ground as it would require further investigation (and thus was not admitted) but admitted the legal ground since it arose from the assessment order. On this basis there was no breach of Rule 46A because no additional evidence was in fact admitted contrary to the rule and the legal ground admitted did not amount to fresh evidence. Consequently the Revenue's ground alleging contravention of Rule 46A was dismissed. [Paras 11]

Ground no.2 dismissed; no violation of Rule 46A in the CIT(A)'s treatment of additional grounds.

Requirement of incriminating material to disturb completed assessments - assessment under section 153A and scope to assess/reassess total income - Deletion of addition of Rs. 2,55,96,663/- disallowing amounts claimed as purchases and payments for plots, land & buildings and related expenses. - HELD THAT: - Applying the same legal principle as in the creditors issue, the Tribunal accepted the CIT(A)'s finding that the AO had not relied upon any incriminating material seized in the search or any other credible post search material to justify disturbing the completed assessment. The assessee had produced ledger and P&L disclosures and the AO proceeded to disallow the amounts without reference to seized material or other credible information, relying on conjecture. In absence of incriminating material to tamper with the unabated assessment, the addition could not be sustained. [Paras 17]

Addition disallowing purchases and related expenses deleted; ground no.3 dismissed and CIT(A)'s order upheld.

Final Conclusion: All four Revenue appeals for AYs 2009-10 to 2012-13 are dismissed. The Tribunal upholds the CIT(A)'s deletions and findings that, where completed assessments are sought to be disturbed under the search assessment scheme, additions must rest on incriminating/seized material or other credible post search information and cannot be made on surmise; no procedural irregularity under Rule 46A was found.

Limitation for rectification under section 254(2) - power of the Tribunal to condone delay in filing miscellaneous application - rectification of mistake apparent from the record - recall of order as consequence of rectification

Limitation for rectification under section 254(2) - power of the Tribunal to condone delay in filing miscellaneous application - Miscellaneous application filed beyond the period prescribed by section 254(2) is not maintainable and the Tribunal has no jurisdiction to condone the delay. - HELD THAT: - The Tribunal found that section 254(2) prescribes a six month limitation (from the end of the month in which the order was passed) for rectification of mistakes apparent from the record as substituted by the Finance Act, 2016 w.e.f. 01.06.2016. Where the application is filed after expiry of that statutory period there is no provision in the Income tax Act to condone the delay. The Tribunal applied its consistent view and relied on earlier coordinate decisions and High Court and Tribunal precedents showing that the absence of a statutory power to condone delay precludes the Tribunal from entertaining belated miscellaneous applications under section 254(2). Consequently, a miscellaneous application filed beyond the prescribed period is barred by limitation and not maintainable. [Paras 5, 8]

Miscellaneous application dismissed as barred by limitation and not maintainable.

Rectification of mistake apparent from the record - recall of order as consequence of rectification - Assessee's contention that the impugned order was not received is rejected; the order was pronounced in open court, dispatched and uploaded, and therefore the delay in filing the miscellaneous application cannot be excused on non receipt. - HELD THAT: - On the material on record the Tribunal recorded that the order was pronounced in open court on the date of hearing, was dispatched by the Registry to the address given in Form No. 36 by registered AD and was uploaded on the Tribunal's website. Nothing was placed on record to show the dispatched order was returned undelivered. In these circumstances the plea that the assessee did not receive the order and hence could not file the miscellaneous application within time was not accepted. [Paras 5]

Assessee's non receipt plea rejected; delay not excused.

Final Conclusion: The miscellaneous application was dismissed as barred by limitation under section 254(2); the Tribunal has no power to condone delay in filing such rectification applications and the assessee's plea of non receipt of the order was rejected.

Power of the Central Government under Section 3 of the FTDR Act to prohibit, restrict or regulate imports - distinction between general power under Section 3 and special safeguard power under Section 9A - validity of notifications published in the Official Gazette - effect and scope of a licensing/quota notification: meaning of "total quantity" - authority of DGFT to specify procedures and dispense with or dilute "actual user" condition - incorporation and invocability of international treaty obligations (GATT-1994) in domestic law

Power of the Central Government under Section 3 of the FTDR Act to prohibit, restrict or regulate imports - validity of notifications published in the Official Gazette - Impugned notifications dated 29th March 2019 issued under the name of the Central Government are intra vires Section 3 of the FTDR Act and valid. - HELD THAT: - The Court held that the challenged notifications were issued by the Central Government and published in the Official Gazette; the DGFT only performed the ministerial act of publication. Article 77 and the Government of India (Transaction of Business) Rules permit executive action in the name of the President/Ministers, and the Director General of Foreign Trade functions as an ex officio officer and agent of the Central Government. There was no impermissible delegation in issuing the notifications and no contravention of Section 3(2) or Section 6(3) was made out. Consequently, the notifications amending import policy conditions are intra vires and validly issued under Section 3(2) of the FTDR Act. [Paras 15, 36, 43]

Notifications and trade notices issued in the name of the Central Government are valid under Section 3 of the FTDR Act; challenge on delegated authority fails.

Effect and scope of a licensing/quota notification: meaning of "total quantity" - "Total quantity" specified in the notifications denotes the aggregate/import quota for the commodity and cannot be construed as a per licence entitlement. - HELD THAT: - The Court rejected the importers' contention that the stated quota (e.g. 1/1.5 lakh MT) should be read as a per licence entitlement. The notifications expressly use the phrase "total quantity" and, read in context, the expression cannot reasonably bear the meaning urged by the importers. Accepting the per licence interpretation would defeat the object of imposing a quota and could allow total imports to exceed domestic consumption. The Court therefore construed the phrase to mean the aggregate quantity permitted under the notification. [Paras 17]

The contention that the quota was per licence is rejected; "total quantity" means the aggregate import quota.

Authority of DGFT to specify procedures and dispense with or dilute "actual user" condition - validity of Trade Notices specifying modalities for licences - DGFT trade notices prescribing procedural modalities and specifying that licences would be issued to millers/refiners are within the regulatory framework of the EXIM Policy and do not unlawfully supersede the notifications. - HELD THAT: - Paragraphs 2.04, 2.08 and 2.10 of the EXIM Policy permit DGFT to specify procedures by public notice for implementing the FTDR Act and EXIM policy, and paragraph 2.10 contemplates that imports requiring authorisation are subject to the "actual user" condition unless DGFT dispenses with it. The DGFT, by specifying that licences would be issued to millers/refiners, merely clarified that the "actual user" (industrial user) condition applies; it did not impose an unauthorized qualification nor did it supersede the Central Government's notifications. The importers, being traders, had not applied as "actual users" and have not shown a violation of the EXIM Policy's actual user requirement. [Paras 18, 19]

Trade Notices issued by DGFT laying down procedures and conferring/licensing modalities are permissible under the EXIM Policy and do not invalidate the notifications.

Distinction between general power under Section 3 and special safeguard power under Section 9A - incorporation and invocability of international treaty obligations (GATT-1994) in domestic law - Section 9A is a special safeguard provision but does not oust or curtail the Central Government's broader power under Section 3(2); quantitative restrictions may validly be imposed under Section 3 independent of the Section 9A procedure. - HELD THAT: - The Court analysed the relationship between Section 3 and Section 9A and concluded that Section 9A implements the Article XIX escape/safeguard concept of GATT-1994 by providing a procedure for imposition of safeguards after enquiry and investigation. However, Section 9A's enactment does not mean that the Central Government lacks the power under Section 3(2) to prohibit, restrict or regulate imports by order in other contexts. Section 9A is an enactment of a specific regime for safeguards but does not impliedly repeal or exhaust the general authority conferred by Section 3(2); thus the principle lex specialis derogat legi generali is not applicable to negate Section 3 in this case. The Court also noted that Article XI of GATT-1994 has not been enacted as part of domestic law by "act of transformation", and international treaty obligations cannot be invoked in domestic courts unless so incorporated. [Paras 32, 39, 41, 42, 44]

Section 9A does not preclude the Central Government from exercising its independent power under Section 3(2) to impose quantitative restrictions; challenges based solely on non invocation of Section 9A fail.

Final Conclusion: The Writ Petitions challenging the notifications dated 29th March 2019 and the related DGFT trade notice are dismissed. The notifications and trade notices are held intra vires and validly issued by the Central Government under the FTDR Act; imports made relying on interim High Court orders are contrary to the notifications and shall be dealt with under the Customs Act. The Court did not decide statutory appeals against suspension/termination of IECs and made no pronouncement on international obligations beyond their interpretative relevance to domestic law.

Writ against show cause notice - Prematurity of writ petition - Jurisdiction to issue show cause notice - Judicial restraint under Article 226 - Obligation to adjudicate show cause notice after reply

Writ against show cause notice - Prematurity of writ petition - Judicial restraint under Article 226 - Writ petition seeking to prohibit or quash a show cause notice is premature and not maintainable at this stage. - HELD THAT: - The High Court declined to entertain the petition challenging the issuance of a show cause notice, holding that objections to jurisdiction and to the merits of the notice are matters to be raised before the statutory authority and do not ordinarily justify exercise of writ jurisdiction at the notice stage. The court relied on established precedents emphasizing that Article 226 powers should be exercised where authorities act contrary to law or in total violation of principles of natural justice, and that writs against mere show cause notices are normally inappropriate. The court therefore refrained from expressing any opinion on merits and treated the petition as premature. [Paras 6, 7, 8, 9, 10]

Petition dismissed as premature; writ will not be entertained against the show cause notice at this stage.

Jurisdiction to issue show cause notice - Respondents possessed power and jurisdiction to issue the impugned show cause notice. - HELD THAT: - The court rejected the petitioner's contention of lack of jurisdiction, observing that the respondents have the authority to issue the show cause notice in respect of alleged breaches of the Foreign Trade Policy and improper availing of benefits under the relevant scheme. Objections to jurisdiction were held to be appropriate for consideration by the issuing authority and did not warrant pre emptive interference by the High Court. [Paras 3]

Challenge to jurisdiction repelled; respondents held to have competence to issue the notice.

Obligation to adjudicate show cause notice after reply - The show cause notice is to be replied to by the petitioner and adjudicated by the concerned authorities in accordance with law. - HELD THAT: - The court expressly declined to decide the merits and directed that the petitioner file a reply to the show cause notice. The concerned authorities were directed to adjudicate the matter in accordance with applicable laws, rules and policies after affording adequate opportunity of hearing. The court noted that if any adverse order is passed, the petitioner would have appropriate remedies. [Paras 5, 9]

Petitioner to reply to the notice; authorities to adjudicate the notice on merits in accordance with law.

Final Conclusion: Writ petition dismissed as premature; court finds respondents had jurisdiction to issue the show cause notice, declines to express on merits, directs petitioner to reply and the authorities to adjudicate the notice in accordance with law after hearing; interim applications disposed of.

Provisional release of seized goods - provisional release under Section 110-A of the Customs Act, 1962 - deposit of demanded duty under protest - consistency in exercise of discretion for provisional release - direction to decide within fixed timeline

Provisional release of seized goods - deposit of demanded duty under protest - consistency in exercise of discretion for provisional release - Petitioner entitled to seek provisional release of seized high-end wrist watches subject to payment of the balance demanded duty under protest and in parity with orders passed in similar cases. - HELD THAT: - The Court noted that high-end wrist watches were seized on 29.10.2012 and that the petitioner has shown readiness to deposit the remaining duty amount mentioned in the show-cause notice, without prejudice to his contentions in the adjudication process. The petitioner relied on earlier orders in which respondent authorities had granted provisional release of similar wrist watches to other persons. In light of the petitioner's willingness to deposit the balance duty under protest and the consistent practice reflected by earlier orders, the Court directed that the petitioner be permitted to apply for provisional release and that such application be considered in accordance with law. The Court's direction applies subject to the respondents' adjudicatory rights and does not decide the merits of the underlying show-cause notice. [Paras 6, 8, 9]

Petitioner may seek provisional release of the seized goods on depositing the balance duty as offered; entitlement to provisional consideration is recognised subject to adjudication.

Provisional release under Section 110-A of the Customs Act, 1962 - direction to decide within fixed timeline - Respondent No.1 directed to decide the petitioner's provisional release application under Section 110-A of the Customs Act, 1962 within a stipulated timeframe. - HELD THAT: - The Court recorded the respondents' position that a fresh application for provisional release could be filed and decided. Having noted the petitioner's readiness to deposit the balance duty and the existence of prior orders releasing similar goods, the Court ordered the petitioner to prefer the provisional release application within one week and directed respondent No.1 to decide the application under Section 110-A within two weeks of receipt. The direction mandates expeditious adjudication of the provisional release request but leaves the decision on merits to the statutory authority in accordance with law. [Paras 10, 11]

Petitioner to file application within one week; respondent No.1 to decide the provisional release application under Section 110-A within two weeks of receipt.

Final Conclusion: Writ petition disposed by directing the petitioner to file an application for provisional release and directing respondent No.1 to decide that application under Section 110-A of the Customs Act, 1962 within the timelines specified, leaving adjudication on merits to the authority.

Customs Valuation Rules - sequential application of Rules 3, 5 to 8 - Deductive value - Inclusion of subsidiary's marketing and promotional expenses in assessable value - Related persons / mutuality of interest - Extended period of limitation - suppression and provisional assessment

Customs Valuation Rules - sequential application of Rules 3, 5 to 8 - Deductive value - Whether the valuation of clearances from the EOU to DTA was correctly determined and whether the authorities applied the correct sequential method under the Customs Valuation Rules - HELD THAT: - The Tribunal found that the impugned orders accepted the costing method adopted by the appellant but were silent on why valuation under Rule 7/8 was appropriate and why the preceding Rules (in particular Rules 3 to 6) were not applicable. The orders did not explain rejection of the declared value nor apply the sequential method mandated by Rule 3. Citing the Supreme Court direction in Morarjee Brembana, factual aspects material to the applicability of Rules 5 and 6 must be examined with opportunity to place evidence. In these circumstances the Tribunal concluded that the proper course is to remit the matter to the Commissioner for fresh consideration of the correct method of valuation under the Rules, with findings on why any particular Rule is or is not applicable. [Paras 10, 11, 12]

Impugned valuation findings set aside and matter remitted to the Commissioner for fresh adjudication applying the sequential provisions of the Customs Valuation Rules.

Related persons / mutuality of interest - Inclusion of subsidiary's marketing and promotional expenses in assessable value - Whether the appellant and its subsidiary are related in a manner that the subsidiary's marketing/advertising expenses are includible in the appellant's assessable value - HELD THAT: - The Tribunal observed that the revenue relied on loans, consolidated accounts and alleged common management to find mutuality of interest and inclusion of subsidiary expenses. The impugned orders did not adequately consider the appellant's submissions on corporate separateness, statutory requirement for consolidated financial statements, or authorities holding that mere advances or consolidated accounting do not automatically render entities 'related' for valuation purposes. Given the factual nature of relatedness and the absence of reasoned findings in the orders, the Tribunal held that the issue requires fresh, reasoned consideration by the Commissioner after examining the pleaded facts, balance sheets and legal authorities relied upon by the parties. [Paras 14, 15, 16]

Findings on relatedness and on whether subsidiary-incurred marketing expenses are includible in assessable value are set aside and remitted for fresh adjudication by the Commissioner.

Extended period of limitation - suppression and provisional assessment - Whether the extended period of limitation was invocable in relation to the assessments challenged, having regard to provisional assessments and the appellants' disclosure - HELD THAT: - The Tribunal noted the appellant's plea that provisional assessments were made and finalized on the basis of information and calculations provided to the assessing authority, including the treatment of indirect marketing expenses. The impugned orders did not address in detail how provisional assessment was finalized or whether there was suppression warranting extended period; in some appeals the demand for extended period had been dropped. Given these unaddressed factual and legal contentions, the Tribunal directed that the Commissioner should revisit the question of applicability of extended period, taking into account the record of provisional assessment, the appellant's disclosures and relevant authorities. [Paras 13]

Invocation of extended period not sustained by the impugned orders; issue remanded to the Commissioner for determination after considering provisional assessment and disclosures.

Final Conclusion: All impugned orders are set aside and the matters remitted to the Commissioner of Customs for fresh, reasoned adjudication on valuation, relatedness/mutuality and applicability of extended period; the Commissioner is directed to consider the appellant's submissions, the accounts and authorities and pass orders within four months.

Writ of Mandamus - Disqualification of directors under Section 164(2)(a) of the Companies Act, 2013 - Representation to Registrar of Companies and requirement of a reasoned order - Interim relief pending consideration of representation

Disqualification of directors under Section 164(2)(a) of the Companies Act, 2013 - Representation to Registrar of Companies and requirement of a reasoned order - Petitioners' entitlement to be removed from the list of disqualified directors and to have their DIN and DSC restored was not finally adjudicated and was remitted to the Registrar of Companies for fresh consideration. - HELD THAT: - The Court found that the petition does not contain material establishing a legal right entitling the petitioners to a writ of mandamus to set aside their disqualification or to restore DIN and DSC. Rather than decide the substantive entitlement on merits, the Court directed the petitioners to make a representation to the Registrar of Companies, Guwahati. The Registrar is required to afford a hearing to the petitioners and pass a detailed reasoned order on their entitlement to continue with the DIN and DSC and on exclusion from the list of disqualified directors. The Registrar must dispose of the representation by a reasoned order within 15 days of receipt of the application. The direction constitutes a remand for fresh consideration with a mandate to provide hearing and reasoned conclusions. [Paras 11]

Matter remitted to the Registrar of Companies for fresh consideration; Registrar to hear petitioners and pass a reasoned order within 15 days of representation.

Writ of Mandamus - Interim relief pending consideration of representation - Interim relief in respect of unfreezing the petitioners' DIN and DSC pending filing and disposal of representation. - HELD THAT: - As interim measure, the Court ordered that until the expiry of 7 days from the date of the order the respondent authorities shall unfreeze the petitioners' DIN and DSC to enable them to submit the representation. If the petitioners file the representation within 7 days, the unfreezing shall continue until the Registrar passes the reasoned order as directed. If no representation is filed within 7 days, the interim unfreezing is withdrawn and the Registrar is free to take action under law. This interim direction is procedural and temporal, tailored to enable the administrative process ordered by the Court. [Paras 11]

DIN and DSC unfrozen for 7 days to permit filing of representation; if representation is filed, unfreezing continues until Registrar's reasoned order; if not filed, unfreezing withdrawn and Registrar may act.

Final Conclusion: Writ petition disposed of by remitting the question of entitlement to removal from the disqualified directors' list and restoration of DIN/DSC to the Registrar of Companies for hearing and a reasoned order within 15 days; limited interim relief granted to unfreeze DIN/DSC for 7 days to enable filing of the representation, extendable until disposal if representation is filed.

Territorial jurisdiction of NCLT Benches - Notification under section 419(1) of the Companies Act, 2013 - Operationalization of newly constituted Bench - Infructuousness of appeal - Allocation of jurisdiction by subsequent notification

Territorial jurisdiction of NCLT Benches - Notification under section 419(1) of the Companies Act, 2013 - Operationalization of newly constituted Bench - Whether, after the Notification dated 8th March, 2019, the NCLT Ahmedabad Bench retained jurisdiction over matters arising from the State of Madhya Pradesh. - HELD THAT: - The Tribunal examined the sequence of government notifications: S.O.1935(E) dated 1st June, 2016 (which initially assigned Madhya Pradesh to Ahmedabad Bench), S.O.1216(E) dated 8th March, 2019 (which constituted Indore Bench and omitted Madhya Pradesh from Ahmedabad's territorial list), and S.O.484(E) dated 31st January, 2020 (which, in pursuance of the NCLAT's order of 8th January, 2020, notified that jurisdiction of State of Madhya Pradesh would be exercised by Ahmedabad Bench until the Indore Bench is operationalized and a subsequent notification is issued). In light of the latest notification of 31st January, 2020, the factual and legal foundation of the appellants' challenge to Ahmedabad's jurisdiction (based on the 8th March, 2019 notification) no longer subsists. The Tribunal noted that the High Court of Madhya Pradesh has considered and dismissed a writ challenging the 31st January, 2020 notification, and that appellants remain free to pursue available remedies. Consequently, the Tribunal held that Ahmedabad Bench will exercise jurisdiction over Madhya Pradesh matters until the Indore Bench is operationalized by a further notification of the Central Government. [Paras 5, 7, 12, 19]

The challenge to Ahmedabad Bench's jurisdiction based on the 8th March, 2019 notification is rendered moot by the 31st January, 2020 notification; Ahmedabad Bench shall exercise jurisdiction over Madhya Pradesh matters until Indore Bench is operationalized.

Infructuousness of appeal - Allocation of jurisdiction by subsequent notification - Whether the appeals and the stay of proceedings before NCLT Ahmedabad should be continued or vacated in view of the subsequent notification. - HELD THAT: - The Tribunal recorded that its interim order of 20th August, 2019 had stayed proceedings before the Ahmedabad Bench pending resolution of jurisdictional questions. Following the Central Government's notification of 31st January, 2020 vesting temporary jurisdiction in Ahmedabad until Indore is operational, and having regard to the High Court's dismissal of a writ challenging that notification, the Tribunal found no reason to keep the appeals pending or maintain the stay. The Tribunal observed that continuation of the appeals and the stay would adversely affect other proceedings before the Ahmedabad Bench and would not be in public interest. While appellants may pursue other legal remedies, the factual basis for suspending Ahmedabad proceedings no longer exists. [Paras 13, 16, 17, 19, 20]

The appeals have become infructuous and are disposed of; the interim stay of proceedings before NCLT Ahmedabad is no longer required.

Final Conclusion: The Tribunal disposed of the three appeals as infructuous in view of the Central Government notification dated 31st January, 2020 which provides that Ahmedabad Bench shall exercise jurisdiction over the State of Madhya Pradesh until the Indore Bench is operationalized; no costs.

Oppression and mismanagement jurisdiction under Sections 241-242 - interim powers under Section 242(4) - modification of ex parte interim order - appointment of Special Officer to chair EOGM - applicability of Section 169 to removal of director - consent order under Section 421(2)

Interim powers under Section 242(4) - appointment of Special Officer to chair EOGM - modification of ex parte interim order - Validity of NCLT's order appointing a Special Officer to chair a fresh EOGM and modification of its earlier ex parte interim order. - HELD THAT: - The Tribunal held that NCLT possessed power under Section 242(4) to pass interim directions for regulating the conduct of the company's affairs and to frame just and equitable terms. Having regard to changed circumstances-primarily that more than two years had elapsed and the respondents alleged the appellant was using the earlier ex parte order to frustrate company decisions-the NCLT was entitled to modify its earlier order and direct convening of a fresh EOGM under the chairmanship of a Special Officer. The NCLT recorded that neither party objected to an EOGM being held under a Tribunal-appointed chair and thus the impugned order was a reasoned exercise of the Tribunal's interim jurisdiction to restore effective corporate functioning.

Impugned order upholding appointment of Special Officer and modification of the earlier interim order is valid; no interference warranted.

Applicability of Section 169 to removal of director - Whether the procedure for removal of a director under Section 169 could be applied to the family (closely held) company and whether objection to a removal resolution is tenable. - HELD THAT: - The Tribunal found that the objection to application of Section 169 on the ground that the company is a family company was untenable. NCLT observed that Section 169 governs removal of directors and the power of the company to remove a director cannot be excluded merely because the company is closely held or family-run. The NCLT specifically held that the respondent's contention that no resolution removing the director should be permitted lacked merit in view of the statutory power under Section 169.

Section 169 is applicable to the respondent company; objection to removal resolution on the ground of family-company character rejected.

Modification of ex parte interim order - consent order under Section 421(2) - Whether the impugned order contradicted the earlier ex parte order of 14.3.2017 or was otherwise unsustainable (including the contention that it was a consent order rendering appeal not maintainable under Section 421(2)). - HELD THAT: - The Tribunal examined both orders and concluded there was no material inconsistency. The earlier ex parte order restrained giving effect to any EOGM resolution without the Tribunal's permission because the notice then in issue lacked an explanatory statement; the impugned order permits a fresh EOGM to be convened with proper notices and under a Special Officer given the changed circumstances. The NCLT's direction was also supported by the parties' acceptance that an EOGM under a Tribunal-appointed chair could be held. The appellant's submission that the impugned order destroyed minority rights or rendered the petition infructuous was not accepted. The respondents' reliance on the impugned order being a consent order under Section 421(2) was noted but did not persuade the Tribunal to set aside the order.

No contradiction or illegality in modifying the earlier order; plea of non-maintainability based on consent order not upheld; appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal, holding that NCLT validly exercised its interim powers under Section 242(4) to modify the earlier ex parte order, appoint a Special Officer to chair a fresh EOGM with proper notices, and that Section 169 applies to the respondent company; no illegality or contradiction was found in the impugned order.

Maintainability of compensation claim under Section 53N - cause of action arising from findings of CCI or Appellate Tribunal - doctrine of merger and effect of final Supreme Court judgment on subsistence of earlier orders - limitation and laches where statute is silent - single compensation application against multiple enterprises where cause of action is common - curable defect in filing fee and registry's power to permit payment of deficit fee

Maintainability of compensation claim under Section 53N - cause of action arising from findings of CCI or Appellate Tribunal - Whether the Compensation Application under Section 53N is maintainable where the CCI and COMPAT orders were subject to appeal and finality was attained by the Supreme Court judgment - HELD THAT: - The Tribunal held that Section 53N contemplates compensation claims that arise from findings of the Competition Commission of India or the Appellate Tribunal. Where the CCI and COMPAT had rendered findings of contravention which ultimately attained finality by the Supreme Court judgment dated 08.05.2017, the cause of action for a compensation claim is regarded as having crystallised on final determination. The Compensation Application filed on 11.07.2019 was within a reasonable period from the Supreme Court judgment and therefore was maintainable under Section 53N. The plea that Section 53N permits claims only from a subsisting CCI or COMPAT order and not from a final Supreme Court order was rejected. [Paras 64, 66, 70, 71, 76]

Compensation Application is maintainable; cause of action is properly viewed as arising from the CCI/COMPAT findings which attained finality by the Supreme Court judgment.

Limitation and laches where statute is silent - reasonable period for money claims - Whether the Compensation Application is barred by limitation or laches given that Section 53N prescribes no specific time limit - HELD THAT: - The Tribunal applied the principle that where no statutory time limit exists the doctrine of laches and a reasonable-time standard apply. Considering that the COMPAT order was under appeal to the Supreme Court and finality was achieved only on 08.05.2017, the Tribunal held that the limitation/ reasonable period for instituting the compensation claim began from the final Supreme Court decision. The Application filed on 11.07.2019 was within two years and two months of that judgment and therefore within a reasonable period (less than three years). Consequently the plea of laches and time-bar was repelled. [Paras 62, 70, 71, 76, 77]

Compensation claim is not time-barred; no laches attached to the Applicant for filing within a reasonable period after final determination by the Supreme Court.

Single compensation application against multiple enterprises where cause of action is common - scope of Section 53N to permit recovery from any enterprise - Whether a single Compensation Application against multiple enterprises is maintainable under Section 53N - HELD THAT: - The Tribunal examined Section 53N and the facts of the lis, noting that the cause of action arose from common orders of the CCI, COMPAT and the Supreme Court relating to related tenders and the same alleged cartel conduct. Given that the litigation and the findings were common and interconnected, filing a single compensation application against the three enterprises was not fatal. The Tribunal therefore held that the single application is maintainable in law. [Paras 72, 73, 76]

Single Compensation Application against multiple enterprises is maintainable where the cause of action is common and interconnected.

Curable defect in filing fee and registry's power to permit payment of deficit fee - Rule 4 fee provisions and registry procedure to cure fee deficiency - How to deal with alleged shortfall in filing fee paid for the Compensation Application - HELD THAT: - Noting Rule 4 of the Competition Appellate Tribunal Rules, 2009 and that the Applicant (a public body) had paid a single fee instead of separate fees claimed to be payable per respondent, the Tribunal held that deficit in court/filing fee is a curable defect. It directed the Registry to scrutinise the fee payment and, if a deficit is found, to issue an Office Memorandum requiring the Applicant to pay the deficiency within 14 days; the Applicant may amend the application if necessary within one week after payment. Rejection at the threshold for fee deficit was held inappropriate without affording opportunity to cure. [Paras 74, 75]

Registry to examine fee payment; if deficit found Applicant to be permitted to pay the shortfall within 14 days and to amend application as needed.

Procedural listing for hearing on merits - Whether the Compensation Application should be listed for hearing on merits and whether interim reliefs or stays affect maintainability - HELD THAT: - Having found the application maintainable and not time-barred, and after addressing fee-defect procedure, the Tribunal directed the Registry to list the Compensation Application for hearing on merits in the usual course. The Tribunal also allowed the Applicant's I.A. 40 of 2019 seeking exemption to file the original circular subject to filing certified copies within 10 days and directed filing of certified copy of the Supreme Court judgment within the same period. [Paras 75, 78, 79]

Application to be listed for hearing on merits; I.A.40/2019 allowed subject to filing certified documents within 10 days.

Final Conclusion: The Tribunal held the Compensation Application under Section 53N to be maintainable: the cause of action was viewed as crystallising on final determination by the Supreme Court (08.05.2017), the claim filed on 11.07.2019 is within a reasonable period and not barred by laches, a single application against multiple enterprises was permissible given the common cause of action, and any deficit in filing fee is curable by permitting the Applicant to pay the shortfall within 14 days; the matter is to be listed for hearing on merits and certain certified documents directed to be filed within 10 days.

Limitation under Article 137 of the Limitation Act - acknowledgement of liability under Section 18 of the Limitation Act - date of default as date of account classification as NPA - effect of one-time settlement proposal and part-payment on limitation

Limitation under Article 137 of the Limitation Act - Whether Article 137 of the Limitation Act applies to an application under Section 7 of the Insolvency and Bankruptcy Code. - HELD THAT: - The Tribunal applied the settled law of the Supreme Court that Article 137 of the Limitation Act governs applications under Sections 7, 9 or 10 of the I&B Code. Relying on precedents, the Tribunal held that the limitation period for a Section 7 application is to be computed in accordance with Article 137 from the date of default as prescribed by law for IBC proceedings. [Paras 17, 18, 25]

Article 137 of the Limitation Act applies to applications under Section 7 of the I&B Code.

Date of default as date of account classification as NPA - Whether the date of default for computing limitation for Section 7 proceedings is the date on which the account was classified as NPA. - HELD THAT: - The Tribunal followed the principle that, for the purpose of initiating proceedings under the Code, the date of default is the date when the account has been classified as NPA. In the present case the account was classified as NPA on 29th January 2013, and therefore default commenced from that date for computation under Article 137. [Paras 24, 25]

The date of default is the date of classification of the account as NPA (29th January 2013).

Acknowledgement of liability under Section 18 of the Limitation Act - effect of one-time settlement proposal and part-payment on limitation - Whether the letters of acknowledgement (13th April 2015 and 1st June 2016), including the one-time settlement proposal and part-payment, renewed the period of limitation so as to make the Section 7 application filed on 29th September 2018 maintainable. - HELD THAT: - Applying Section 18 of the Limitation Act and the authorities cited, the Tribunal held that an acknowledgment in writing, made before the expiry of the prescribed period, renews the limitation period from the date of such acknowledgment. The record showed a written acknowledgement dated 13th April 2015 and a subsequent written letter with a one-time settlement offer dated 1st June 2016. Those writings were treated as acknowledgements within the meaning of Section 18, thereby triggering fresh limitation periods. Consequently, a fresh three-year period calculated from 1st June 2016 covered the filing of the Section 7 petition on 29th September 2018. [Paras 22, 23, 25, 26, 27]

The acknowledgements in writing (including the OTS letter dated 1st June 2016) operated under Section 18 to start a fresh period of limitation, and the Section 7 application filed on 29th September 2018 was within that period.

Effect of one-time settlement proposal and part-payment on limitation - Whether any other proceedings (SARFAESI, DRT proceedings, writ petition) or events apart from Section 18 acknowledgements affected limitation. - HELD THAT: - The Tribunal reiterated that continuation of other proceedings or filing of suits does not, by itself, extend or revive limitation for a Section 7 petition; limitation can be extended only in the manners provided by the Limitation Act, e.g., by an acknowledgment under Section 18. The Tribunal therefore declined to treat other proceedings as extending limitation absent an applicable statutory basis. [Paras 22, 23]

Other proceedings (SARFAESI, DRT, writ) do not revive or extend limitation unless an acknowledgement under Section 18 operates to do so.

Final Conclusion: The Tribunal held that Article 137 applies to Section 7 applications, the date of default is the NPA classification date (29th January 2013), the Corporate Debtor's written acknowledgements (including the OTS letter dated 1st June 2016) renewed the limitation period under Section 18, and therefore the Section 7 petition filed on 29th September 2018 was within limitation; the appeal was dismissed.

Project-specific corporate insolvency resolution process - rights of allottees as financial creditors - Reverse Corporate Insolvency Resolution Process - priority of project assets over external secured creditors for allottee relief - interim control of funds and cooperation of promoter as outsider financial creditor

Project-specific corporate insolvency resolution process - Corporate insolvency resolution proceedings against a real estate company are confined to the particular project for which the petition is filed and do not extend to other separate projects of the same company. - HELD THAT: - The Tribunal held that where a real estate company has distinct projects with separate approved plans, owners and financiers, the CIRP for one project must be limited to the assets and creditors of that particular project. The objective is to maximise the value of assets of the Corporate Debtor limited to the subject project and to balance the stakeholders (allottees, financial institutions and operational creditors) of that project; assets of other projects cannot be clubbed or appropriated under the CIRP of the impugned project. This approach recognises project-specificity in real estate insolvencies and prevents cross-subsidisation or aggregation of unrelated project assets for maximisation purposes. [Paras 21, 22]

CIRP against a real estate corporate debtor shall proceed on a project basis confined to the project for which insolvency proceedings have been initiated.

Rights of allottees as financial creditors - priority of project assets over external secured creditors for allottee relief - Allottees (homebuyers) are financial creditors whose interests in the project assets must be recognised and, in the project-specific CIRP, preference cannot be given to external secured creditors by transferring project assets (flats) to them in derogation of allottee rights. - HELD THAT: - Following the Supreme Court's recognition that allottees are financial creditors and noting that RERA remedies are additional, the Tribunal emphasised that the infrastructure constituting the project is the asset of the Corporate Debtor and must be maximised for the benefit of the stakeholders of that project. Secured financial institutions/banks cannot be given project assets (flats/apartments) by preference over allottees; allottees, as (unsecured) financial creditors of that project, have a right in relation to those assets and the CIRP must accommodate that right while balancing other creditors. The Tribunal recognised practical difficulties faced by allottees (who lack expertise to assess viability) but nonetheless protected their entitlement in the project context. [Paras 5, 7, 10, 11]

Project assets should be utilised to protect allottee interests and external secured creditors cannot be preferred by appropriating project flats in the project-specific CIRP.

Reverse Corporate Insolvency Resolution Process - interim control of funds and cooperation of promoter as outsider financial creditor - Where a promoter agrees to invest from outside as an outsider financial creditor and the allottees consent, a 'Reverse Corporate Insolvency Resolution Process' may be followed to complete the project during CIRP without waiting for a third party resolution applicant. - HELD THAT: - Relying on earlier observations and experimentation in Flat Buyers Association Winter Hills 77, the Tribunal accepted that, in infrastructure projects nearing completion, the CIRP may be deviated from its normal course if (i) the promoter offers to invest external funds as a financial creditor (not as promoter), (ii) the allottees (financial creditors) agree to the proposal by requisite voting, and (iii) such cooperation would ensure completion of the project and protect allottee interests. The Tribunal recorded that the IRP conducted voting of allottees which resulted in overwhelming assent, and noted past instances where promoter/outsider funding enabled completion and allotment during CIRP. Exercising inherent powers, the Tribunal authorised such reverse process to preserve stakeholder interests and expedite completion. [Paras 12, 13, 15, 20]

A reverse CIRP is permissible where a promoter, acting as an outsider financial creditor with the consent of allottees, funds completion of the project during CIRP.

Interim control of funds and cooperation of promoter as outsider financial creditor - Specific directions were issued governing the promoter's infusion of funds, deposit and utilisation of such funds, timelines for completion, refund mechanism to allottees, payment to financial institutions and the consequences of promoter non compliance. - HELD THAT: - The Tribunal directed that (i) the promoter shall disburse funds from outside as a lender (financial creditor) and deposit such funds and monies received from allottees into the Corporate Debtor's bank account; (ii) utilisation of funds shall be only by company cheque countersigned by the Interim Resolution Professional and strictly for project completion; (iii) fixed timelines were set for completion of flats, internal fittings and common areas, and for payment/registration obligations of allottees; (iv) a schedule for refund to allottees electing refund was fixed with interest terms; (v) dues to financial institutions and operational creditors were to be paid within prescribed timeframes; (vi) upon completion and certificate by the IRP/RP and approval of the Adjudicating Authority, the CIRP would be closed and unsold flats handed to the promoter; and (vii) failure by the promoter to comply would allow the Adjudicating Authority to proceed with the ordinary CIRP. The directions balance protection of allottee interests with safeguards on the use of funds during CIRP. [Paras 20]

Promoter to fund project as outsider financial creditor subject to deposit and escrow-like controls, fixed completion and refund timelines, and consequence of reversion to ordinary CIRP on non compliance.

Final Conclusion: The appeal is disposed of by permitting a project specific reverse CIRP: the promoter is directed to infuse external funds as a lender and cooperate with the IRP under prescribed controls and timelines to complete the project and effect refunds/dues; if the promoter fails to comply the Adjudicating Authority will complete the insolvency process.

Eligibility of Resolution Professional - conflict arising from employment with creditor - appointment of Resolution Professional by NCLT under Insolvency and Bankruptcy Code, 2016 - preservation of professional integrity on replacement - non-precedential character of the impugned order

Eligibility of Resolution Professional - conflict arising from employment with creditor - The NCLAT's conclusion that a person who remained in the service of State Bank of India and is receiving pension is thereby disqualified from being a Resolution Professional is not correct on the prima facie materials before this Court. - HELD THAT: - The Supreme Court recorded that, on the materials placed before it, the approach adopted by the NCLAT - treating continuance in the service of SBI and receipt of pension as disqualifying the person from being a Resolution Professional - was not correct. The Court expressed only a prima facie view on the correctness of that approach rather than a final adjudication on all merits. The observation reflects that employment with, or pension from, a financial institution does not ipso facto establish disqualification in the circumstances presented to this Court.

The NCLAT's reasoning that such service and pension disqualify the person as Resolution Professional is not accepted on a prima facie basis.

Appointment of Resolution Professional by NCLT under Insolvency and Bankruptcy Code, 2016 - preservation of professional integrity on replacement - non-precedential character of the impugned order - Pursuant to the parties' consent, the matter of appointment of a new Resolution Professional is to be remitted to the NCLT for fresh appointment in accordance with the Insolvency and Bankruptcy Code, 2016; the replacement shall not be treated as reflecting adversely upon the integrity of the outgoing Resolution Professional, and the impugned order shall not be treated as a precedent. - HELD THAT: - Both parties agreed to the appointment of a new Resolution Professional. In view of that consensus and the Court's prima facie view regarding NCLAT's approach, the Supreme Court directed the NCLT to appoint a new Resolution Professional forthwith within one week, strictly in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016. The Court expressly recorded that the change of Resolution Professional should not be construed as an adverse reflection on the integrity of the replaced professional. Because the impugned order did not reflect the correct approach, the Court clarified that it should not be followed as precedent.

The matter is remitted to the NCLT to appoint a new Resolution Professional within one week in accordance with the IBC; the replacement must not be treated as adverse to the outgoing professional and the impugned order is non-precedential.

Final Conclusion: The civil appeal is disposed of by directing the NCLT to appoint a new Resolution Professional within one week in accordance with the Insolvency and Bankruptcy Code, 2016; the Court recorded a prima facie finding that the NCLAT's disqualification approach was incorrect, clarified that the replacement should not impugn the integrity of the outgoing Resolution Professional, and held that the impugned order shall not be treated as a precedent.

Manpower recruitment and supply agency services - reverse charge mechanism - characterisation of service based on contract deliverable - measure of payment not determinative of nature of service - penalties under Section 76, 77 and 78 - invocation of Section 80 to set aside penalties

Manpower recruitment and supply agency services - reverse charge mechanism - characterisation of service based on contract deliverable - measure of payment not determinative of nature of service - Whether amounts paid by the appellant to its foreign subsidiaries for delivery of software services during the stated periods are exigible to service tax under the head manpower recruitment and supply agency services under reverse charge - HELD THAT: - The appellate tribunal examined the service performance agreements between the appellant and its foreign subsidiaries and found that the contracts obligated the subsidiaries to deliver software services (including client support, error resolution and delivery of releases) as per work orders. The subsidiaries, being separate legal entities, were paid for rendering those outsourced software services. The tribunal held that billing on the basis of man hours or man days is only a measure of price and does not convert the nature of the transaction into a manpower supply service. The determinative test is the contractual deliverable, not the mode of computation of charges. Applying this principle to the identical agreements, the tribunal concluded that the payments were for delivery of software services and not for recruitment or supply of manpower; consequently the demands under the head manpower recruitment and supply agency service under reverse charge were unsustainable and were set aside along with interest.

Demands of service tax under manpower recruitment and supply agency services for the periods 19.04.2006 to 31.03.2009 and 01.04.2009 to 31.03.2010 are set aside.

Penalties under Section 76, 77 and 78 - invocation of Section 80 to set aside penalties - Whether penalties imposed on the appellant under Sections 76, 77 and 78 should be sustained when the underlying demands for manpower supply service were set aside - HELD THAT: - Since the tribunal set aside the demands that formed the basis for imposing penalties, it held that the penalties under Sections 76, 77 and 78 could not be sustained. The tribunal expressly invoked Section 80 of the Finance Act, 1994 to set aside all penalties imposed in the impugned order because the foundational tax demands were quashed.

All penalties imposed under Sections 76, 77 and 78 in the impugned order are set aside by invoking Section 80.

Final Conclusion: The appeal is allowed: service tax demands under the head manpower recruitment and supply agency services for the two specified periods, together with interest, are set aside; all penalties under Sections 76, 77 and 78 are quashed under Section 80. Other demands paid by the appellant and not contested remain unaffected.

Service of summons on corporate bodies and societies under Section 63 Cr.P.C. - Appointment of representative by a corporation for inquiry or trial under Section 305 Cr.P.C. - Court's power to determine whether a person appearing is a representative of the corporation - Non-compellability of a retired partner to represent the firm in criminal proceedings - Court's inability to nominate or compel a particular person to represent a corporate accused

Non-compellability of a retired partner to represent the firm in criminal proceedings - Court's power to determine whether a person appearing is a representative of the corporation - Whether the petitioner, having retired from the partnership in 1994, could be compelled to represent the accused firm and whether absence of a personal representative vitiates the prosecution. - HELD THAT: - The Court accepted that a corporation or firm, when accused, must be represented by a person appointed by the corporate body itself and that the right to choose such representative rests with the corporation. The petitioner's retirement in 1994 was material: he had retired before initiation of prosecution in 1997 and therefore could not be compelled to represent the firm. The Court relied on the principle that the judicial power is limited to determining whether a person who appears is or is not a representative; it cannot direct that a particular person (including a retired partner) must act as representative. Consequently, the mere absence of the petitioner's personal representation does not render the prosecution impermissible provided the firm is given opportunity to appoint or produce a representative in the manner prescribed by law. [Paras 5, 12]

The petitioner cannot be compelled to represent the firm having retired prior to initiation of prosecution; the prosecution is not vitiated for want of his personal representation.

Service of summons on corporate bodies and societies under Section 63 Cr.P.C. - Appointment of representative by a corporation for inquiry or trial under Section 305 Cr.P.C. - Court's inability to nominate or compel a particular person to represent a corporate accused - What steps the trial Court must take to secure representation of the accused firm and to proceed with trial. - HELD THAT: - The Court held that summons should be issued to the corporate accused in the manner prescribed by Section 63 Cr.P.C. so that the firm may nominate its representative under Section 305 Cr.P.C. If the firm, through its present principal officer, is served and appoints a representative, the requirements of the Code in respect of presence, reading or explanation to the accused are satisfied through that representative. If deceit or evasion is detected in receipt or compliance with summons, the trial Court is empowered to take coercive measures. Given the prolonged pendency of the trial since 1997, the Court directed the trial Court to issue summons to the present principal officer of the firm and to proceed accordingly, with a direction to complete trial preferably within six months from resumption of normal court functioning. [Paras 12, 13]

Trial Court to serve summons on the firm as per Section 63 Cr.P.C., proceed under Section 305 Cr.P.C. upon appointment or appearance of a representative, take coercive steps if there is evasion, and endeavour to complete the trial within the specified timeframe.

Final Conclusion: Criminal Original Petition dismissed. The High Court directed the trial Court to issue summons to the accused firm in the manner prescribed by law, permit the firm to appoint or produce a representative under the Code, take coercive steps if summons are evaded, and to endeavour to complete the trial within six months of resumption of normal court functioning.

Penalty under Rule 26 of Central Excise Rules, 2002 - quantification of statutory interest under Section 11B - option to pay reduced penalty under proviso to Section 11AC - liability of supporting manufacturers under CT-1 scheme - remand for de novo adjudication

Penalty under Rule 26 of Central Excise Rules, 2002 - liability of supporting manufacturers under CT-1 scheme - remand for de novo adjudication - Whether the imposition of penalty under Rule 26 on the appellant supporting manufacturers should be sustained or requires fresh adjudication. - HELD THAT: - The Tribunal observed that the core demand against the merchant exporter M/s. Salasar Steel has been remitted by the High Court for limited purposes and that the appellants are supporting manufacturers who supplied goods against pre-authenticated CT-1 certificates. Taking note of the High Court direction and the rival contentions (including precedents relied upon by the appellants and Revenue), the Tribunal did not decide the substantive correctness of the penalty on merits. Instead, it allowed the appeals by remanding the question of imposition of penalty under Rule 26 to the adjudicating authority for a de novo determination after disposal of the proceedings in the case of M/s. Salasar Steel. The adjudicating authority is directed to dispose of these matters along with the Salasar Steel proceedings if still pending, to afford the appellants opportunity of hearing and to permit filing of additional submissions/evidence as may be necessary. [Paras 8]

Appeals allowed by way of remand for de novo adjudication of penalty under Rule 26, to be disposed along with the Salasar Steel matter with opportunity to the appellants to be heard and to file additional submissions/evidence.

Quantification of statutory interest under Section 11B - option to pay reduced penalty under proviso to Section 11AC - Scope of the High Court's direction in respect of M/s. Salasar Steel relating to interest and option for reduced penalty. - HELD THAT: - The Tribunal recorded the operative order of the High Court which held that the adjudicating authority failed to quantify statutory interest and to give the petitioner the option to pay reduced penalty. The High Court remitted the matter to the adjudicating authority to quantify interest payable under Section 11B and to give the petitioner the option to be considered for reduced penalty under the proviso to Section 11AC, directing fresh order after hearing within sixty days of receipt/production of certified copy. The Tribunal noted that the High Court did not interfere with the demand of duty confirmed against M/s. Salasar Steel and that the remand is limited to quantification of interest and consideration of the option for reduced penalty. [Paras 3, 4]

High Court remitted to the adjudicating authority the quantification of interest under Section 11B and the question of giving option for reduced penalty under proviso to Section 11AC; the Tribunal recorded this remand and proceeded to remand the supporting manufacturers' penalty matters for adjudication in consequence.

Final Conclusion: The appeals by the supporting manufacturers are allowed by way of remand: the imposition of penalty under Rule 26 is to be reconsidered de novo by the adjudicating authority after disposal of the Salasar Steel proceedings; M/s. Salasar Steel's matter stands remitted to quantify interest under Section 11B and to consider the option for reduced penalty under the proviso to Section 11AC as directed by the High Court.

CENVAT credit eligibility on inputs supplied free of cost - Definition of input under the CENVAT Credit Rules - Accessory qualifying as input - Packing/repacking and bundling (combi-pack) amounting to manufacture - Inclusion of accessory value in assessable value / MRP for credit entitlement - Precedential value of Tribunal decision in Kodak India Ltd on accessories and credit

CENVAT credit eligibility on inputs supplied free of cost - Accessory qualifying as input - Packing/repacking and bundling (combi-pack) amounting to manufacture - Inclusion of accessory value in assessable value / MRP for credit entitlement - Availment of CENVAT credit on Kodak branded film rolls supplied free of cost and bundled with cameras manufactured by the appellant is admissible. - HELD THAT: - The Tribunal held that film rolls bundled and cleared with the camera constitute 'accessories' to the camera and therefore fall within the definition of 'input' under the CENVAT Credit Rules as applicable for the period. The panel applied the Tribunal's earlier decision in Kodak India Ltd, which treated film rolls supplied with cameras as permissible inputs, and rejected the learned Commissioner's distinction that credit under the erstwhile rules depended only on inclusion of cost in assessable value. The court reasoned that once an item is an accessory, it is an input eligible for credit; where the camera and film are clubbed in a combi-pack, the MRP/assessable value of the final product necessarily includes the value of the film roll, satisfying the condition for credit. The Gujarat High Court precedent on bought-out goods cleared in a combo-pack reaching marketability by repacking/relabeling was held to be squarely applicable, reinforcing that the packing operation can amount to manufacture and justify claiming credit on the bought-out accessory. [Paras 8, 9, 10, 11, 12]

Impugned orders denying CENVAT credit on the film rolls set aside; demand of duty, interest and penalty quashed and appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that film rolls supplied free by Kodak and bundled with cameras manufactured by the appellant are accessories qualifying as inputs for CENVAT credit; the denial of credit and consequential demand, interest and penalty were set aside.

Principles of natural justice - personal hearing - remand for fresh consideration - bar of limitation - assessment under the Telangana VAT Act, 2005 - show cause notice

Principles of natural justice - personal hearing - show cause notice - assessment under the Telangana VAT Act, 2005 - Assessment set aside for breach of principles of natural justice by denying opportunity of personal hearing and adequate time to file objections during the Covid-19 lockdown. - HELD THAT: - Court found that the show cause notice was issued during the nationwide lockdown and that restrictions would have inhibited the petitioner from securing its Sales Tax Consultant, accessing documents and preparing written objections between issuance of the notice and June 2020. The petitioner had requested adjournment and personal hearing but was not provided one. In these circumstances the Court concluded there was a violation of the principles of natural justice and that the assessment could not stand. For these reasons the impugned assessment order was quashed and the matter remitted for fresh consideration with directions to afford opportunity to file objections and to grant a personal hearing. [Paras 13, 14]

Impugned assessment order dated 13-07-2020 set aside and matter remitted for fresh consideration; petitioner granted four weeks to file objections and to be given a personal hearing.

Bar of limitation - remand for fresh consideration - assessment under the Telangana VAT Act, 2005 - Whether the plea of limitation and other contentions are to be considered on remand by the assessing authority. - HELD THAT: - The Court did not decide the limitation question on merits. It recognised that the petitioner had argued that the assessment was time-barred under the pre-amendment limitation period and noted the statutory amendment extending assessment time but did not apply it to the facts. Instead, the Court expressly permitted the petitioner to raise all contentions, including the plea of bar of limitation, before the assessing authority and directed the 1st respondent to consider those contentions and pass a reasoned order in accordance with law. [Paras 10, 14]

Limitation and all other contentions remitted to the 1st respondent for fresh consideration and decision on merits while passing a reasoned order.

Final Conclusion: Writ petition allowed; impugned assessment for tax period 2014-15 set aside for breach of natural justice; matter remitted to the assessing authority to consider objections (including limitation) afresh after granting personal hearing; petitioner given four weeks to file objections.

Pre-deposit requirement for admission of appeal - proviso (2) to Section 31(1) - mandatory deposit of specified percentage of disputed tax - no statutory option of adjustment in lieu of pre-deposit - availability of alternative remedy by statutory appeal and maintainability of writ - limitation for filing first appeal and effect of omission of proviso (1) by Act 26 of 2017 - garnishee / lien under statutory demand proceedings

Pre-deposit requirement for admission of appeal - proviso (2) to Section 31(1) - mandatory deposit of specified percentage of disputed tax - no statutory option of adjustment in lieu of pre-deposit - Validity of rejection of appeal for failure to deposit the prescribed 12.5% pre-deposit and whether previously made 50% pre-deposit before Tribunal could be treated as satisfying the proviso(2) requirement. - HELD THAT: - The Court found that proviso (2) to Section 31(1) of the Act mandates payment of 12.5% of the disputed tax for admission of the appeal and does not permit an option of "adjustment" in lieu of such deposit. The earlier 50% pre-deposit made before the Tribunal had been taken into account by the Assessing Authority when passing the reassessment order and the tax liability was correspondingly reduced; it therefore could not be treated as satisfying the separate statutory obligation to deposit 12.5% at the time of filing the subsequent appeal under Section 31(1). The petitioner did not make any pre-deposit when filing the appeal to the appellate authority and failed to produce proof of payment when required. On these grounds the appellate authority was justified in refusing to admit the appeal, and the writ challenging that rejection failed. [Paras 23, 24, 25, 28, 30]

Appeal rejection for non-deposit of 12.5% sustained; WP.No.12015 of 2020 dismissed.

Availability of alternative remedy by statutory appeal and maintainability of writ - limitation for filing first appeal and effect of omission of proviso (1) by Act 26 of 2017 - garnishee / lien under statutory demand proceedings - Whether the writ petition challenging the penalty order and the garnishee directions can be entertained when the petitioner did not avail the statutory appeal remedy within the prescribed time. - HELD THAT: - The Court held that the petitioner had a statutory remedy by way of appeal under Section 31(1) against the penalty order and chose not to invoke it within the available time. Even if the challenge to the omission of proviso (1) to Section 31(1) were to succeed in another proceeding, the petitioner had not filed any appeal within 60 days of the penalty order and therefore any relief in the writ would be inappropriate. The petitioner's failure to file the statutory appeal precluded relief under Article 226, and the writ petition seeking suspension of the garnishee order and setting aside of the penalty was not maintainable. [Paras 38, 39, 40, 41]

WP.No.12009 of 2020 dismissed for non-availment of statutory appeal remedy; writ not entertained.

Limitation for filing first appeal and effect of omission of proviso (1) by Act 26 of 2017 - Validity of Act 26 of 2017 omitting proviso (1) to Section 31(1) - left open for separate adjudication. - HELD THAT: - The Court expressly declined to adjudicate the validity of the omission of proviso (1) by Act 26 of 2017 in these petitions, observing that the question remains open and should be decided in an appropriate separate proceeding. The dismissal of the writs was on grounds of non-deposit/non-availment of statutory appeal and limitation; the constitutional challenge to Act 26 of 2017 was not decided on the merits here. [Paras 41]

Validity of omission left open for separate proceedings; not decided in these petitions.

Final Conclusion: Both writ petitions were dismissed: WP.No.12015 of 2020 for failure to make the mandatory 12.5% pre-deposit required by proviso (2) to Section 31(1), and WP.No.12009 of 2020 for non-availment of the statutory appeal remedy within the prescribed period; the constitutional challenge to omission of proviso (1) by Act 26 of 2017 was left open for adjudication in a separate proceeding.

Assessing Officer's duty to apply independent mind - Prohibition on adopting Enforcement Wing/ISIC proposals without independent consideration - Validity and effect of departmental circular empowering deviation from Enforcement/ISIC proposals - Remand for fresh adjudication with opportunity to file objections and personal hearing

Assessing Officer's duty to apply independent mind - Prohibition on adopting Enforcement Wing/ISIC proposals without independent consideration - Assessments or proceedings founded solely on Audit Reports/Inspection Proposals of the Enforcement Wing/ISIC without independent application of mind by the Assessing Officer are liable to be set aside. - HELD THAT: - The Court held that the Assessing Officer, being a quasi-judicial authority, must independently consider and decide upon proposals received from the Enforcement Wing/ISIC and cannot simply adopt those proposals. The judgment relies on the established precedent of this Court that an assessing authority cannot be guided solely by higher officials' proposals and must apply its own mind before finalising assessment. Proceedings which proceed only on the basis of Enforcement/ISIC proposals, without independent adjudication by the Assessing Officer, do not satisfy this requirement and are therefore unsustainable. [Paras 2, 3, 5]

Impugned proceedings founded solely on Enforcement Wing/ISIC proposals were set aside and remanded for fresh decision by the Assessing Officer after independent consideration.

Validity and effect of departmental circular empowering deviation from Enforcement/ISIC proposals - Remand for fresh adjudication with opportunity to file objections and personal hearing - Circular No.3 dated 18.01.2019 empowering Assessing Officers to deviate from Enforcement/ISIC proposals without seeking approval is operative and proceedings premised on unexamined proposals are remanded for fresh consideration in light of that Circular. - HELD THAT: - The Court noted that Circular No.3 expressly authorises Assessing Authorities to depart, wholly or partly, from proposals of the Enforcement Wing/ISIC where those proposals are not in conformity with law or established judicial principles, provided reasons are recorded. In consequence, the matters which proceeded on the basis of such proposals were set aside and remanded to the Assessing Officers to deal afresh. The Assessees were granted liberty to file objections with supporting documents within 30 days of receipt of this order; on receipt, Assessing Officers must afford opportunity of personal hearing (including by video conferencing if necessary) and endeavour to conclude assessment within 12 weeks. If objections are not filed within 30 days, the Assessing Officer may proceed after that period. [Paras 4, 5, 6]

Proceedings premised on Enforcement/ISIC proposals remanded to Assessing Officers to act independently in accordance with Circular No.3/18.01.2019, with specified timelines and opportunity for objections and hearing.

Final Conclusion: All writ petitions allowed: assessments or notices based solely on Enforcement Wing/ISIC proposals set aside and remanded for fresh adjudication by the Assessing Officer who must independently apply his mind in accordance with Circular No.3 dated 18.01.2019; assessees may file objections within 30 days and the Assessing Officer shall afford hearing and endeavour to complete proceedings within 12 weeks.

Sanction for prosecution - competency of sanctioning authority - continuation of repealed Act's notifications by saving clause - prima facie materials for criminal prosecution - scope of inherent jurisdiction under Section 482 Cr.P.C. - abuse of process of court

Sanction for prosecution - competency of sanctioning authority - continuation of repealed Act's notifications by saving clause - Validity of the prosecution sanction issued by the officer who held additional charge of the post of Commissioner (CT). - HELD THAT: - The High Court accepted the respondent's showing that Government orders and notifications designate certain posts (Deputy Commissioner as Commissioner (CT)) and empower officers of specified rank to accord prosecution sanction. It was held that the notifications issued under the repealed statute continue insofar as not inconsistent with the PVAT Act by virtue of the saving clause, and that the officer who held full additional charge of the Commissioner (CT) was authorised to discharge the duties of that office during the period in question. On these bases the Court found the sanction issued for prosecution by the officer holding additional charge to be valid in law and not vitiated by subsequent administrative or service proceedings concerning regular appointment. [Paras 7, 8, 11]

The sanction for prosecution issued by the officer holding additional charge of Commissioner (CT) is valid and competent.

Prima facie materials for criminal prosecution - scope of inherent jurisdiction under Section 482 Cr.P.C. - abuse of process of court - Whether the complaint discloses prima facie materials to proceed and whether the High Court should quash the proceedings under Section 482 Cr.P.C. - HELD THAT: - Relying on the complaint, final reports and recent Supreme Court authorities, the High Court observed that it is not the function of a court in Section 482 proceedings to try disputed questions of fact or assess the evidence in detail. The Court found prima facie allegations against the petitioner based on cross-verification of sales and returns, assessments and recovery efforts, and concluded that the proper forum to test the defence and competency issues is the trial. Having considered the material, and noting earlier dismissal of the discharge petition and the confirmation in revision, the Court characterised the present petition as an abuse of process and held that quashing is not warranted at this stage. The petitioner was, however, left free to raise grounds before the trial Court and the trial was directed to be completed within six months. [Paras 6, 8, 11]

There are prima facie materials to proceed; the Section 482 petition to quash is dismissed as an abuse of process and the trial may proceed.

Final Conclusion: The Criminal Original Petition under Section 482 Cr.P.C. is dismissed: the prosecution sanction is valid and there are prima facie materials to proceed; the petitioner may raise all grounds at trial, which the trial Court is directed to conclude within six months.

REP licences as 'goods' - taxability of sale of REP licence - marketability and innate value as test for goods - effect of Sunrise decision on Vikas Sales Corporation - claim of exemption on sale of REP licence

REP licences as 'goods' - taxability of sale of REP licence - marketability and innate value as test for goods - effect of Sunrise decision on Vikas Sales Corporation - The sale of REP licences is taxable as sale of 'goods' and the assessee's claim of exemption on sale of REP licence is not maintainable. - HELD THAT: - The High Court applied the binding exposition in Yasha Overseas v. Commissioner of Sales Tax [2008] 17 VST 182 (SC), which reaffirmed the earlier decision in Vikas Sales Corporation that REP licences possess intrinsic value, are freely bought and sold in a market and therefore fall within the definition of 'goods'. The court accepted the Supreme Court's analysis that the Constitution Bench decision in Sunrise did not disturb Vikas insofar as REP licences are concerned; Sunrise's observations on transferable actionable claims do not negate the finding that REP licences are market commodities by reason of their innate value and ready market. On that legal foundation the petitioner's exemption claim based on the contention that REP licences are not 'goods' was rejected. [Paras 5]

Petition dismissed; the exemption claim in respect of sale of REP licence denied.

Final Conclusion: Having followed the Supreme Court's ruling that REP licences constitute 'goods' and their sale is taxable, the writ petition is dismissed and there shall be no order as to costs.

Deeming provision under Section 5(3) of the Central Sales Tax Act - Inextricable link test for penultimate sale/purchase - "Same goods" theory - Burden on the assessee to establish nexus between local purchase and export - Remand for fresh adjudication where factual link is not established

Deeming provision under Section 5(3) of the Central Sales Tax Act - "Same goods" theory - Inextricable link test for penultimate sale/purchase - Burden on the assessee to establish nexus between local purchase and export - Whether the purchases of raw hides and skins by the assessee were entitled to exemption under Section 5(3) of the Central Sales Tax Act when the exported goods were leather garments (or dressed hides and skins). - HELD THAT: - Section 5(3) creates a legal fiction deeming the last sale or purchase preceding export to be in the course of export provided that such last sale or purchase took place after, and for the purpose of, complying with the agreement or order for export. The exemption requires not only a temporal proximity but an inextricable or integrated link between the penultimate local sale/purchase and the export transaction. While the Constitution Bench in State of Karnataka v. Azad Coach Builders recognized that the "same goods" test may be inapplicable where the penultimate sale is inextricably linked to the export, that decision was fact-specific and did not abolish the "same goods" theory for all cases. The burden lies on the assessee to prove by evidence the pre existing export order and the direct, immediate nexus between the local purchase of raw hides and the eventual export of leather garments or dressed hides and skins. In the present case the authorities below (including the Tribunal) did not have on record the requisite details - pre existing export orders, contractual specifications, or evidentiary chain linking the purchases to the export - and therefore the finding that the purchases were exempt under Section 5(3) was not sustainable without further factual inquiry. [Paras 13, 18, 20, 21, 22]

The Tribunal's allowance of exemption under Section 5(3) cannot be sustained on the record; entitlement to exemption depends on proof of an inextricable link and compliance with the conditions of Section 5(3).

"Same goods" theory - Inextricable link test for penultimate sale/purchase - Whether the Constitution Bench decision in Azad Coach Builders has entirely displaced the "same goods" requirement under Section 5(3). - HELD THAT: - The Constitution Bench held that where the penultimate sale is inextricably linked with the export, the strict "same goods" test need not be applied. However, that departure was grounded on the particular facts showing an inseparable contractual and commercial nexus. The court here held that Azad Coach Builders does not universally abolish the "same goods" doctrine; instead, it clarified that exemption may be available despite change in form when the requisite inextricable link and contractual/transactional nexus are established. Absent such nexus, the plain language of Section 5(3) and earlier authorities preserving the "same goods" concept remain applicable. [Paras 16, 18, 21]

Azad Coach Builders does not operate as a blanket repeal of the "same goods" theory; exemption without identity of goods is available only when the inextricable link test is satisfied on facts.

Remand for fresh adjudication - Burden on the assessee to establish nexus between local purchase and export - What is the appropriate remedy where the record does not disclose the factual link required by Section 5(3)? - HELD THAT: - Because the authorities below did not examine or record the factual matrix (pre existing export orders, contractual specifications, or evidence linking the local purchases to the export), the court found that the matter required fresh consideration. The proper course is to remit the case to the assessing officer to permit the assessee to lead evidence and for the officer to re decide the claim in accordance with law and the standards articulated by the Supreme Court, including the inextricable link test and compliance with Section 5(3)'s conditions. [Paras 22, 23, 24]

Writ petitions allowed; matters remitted to the Assessing Officer for fresh adjudication after affording the assessee opportunity to lead evidence and for decision in accordance with law within six months.

Final Conclusion: The Tribunal's order allowing exemption on purchases of raw hides and skins is set aside. The question whether Section 5(3) exemption applies depends on proof of an inextricable link between the local purchase and the export; Azad Coach Builders does not abolish the "same goods" principle as a general rule. The matter is remanded to the Assessing Officer for fresh determination in accordance with law after permitting the assessee to lead evidence, to be completed within six months.

Compounding of offence under Section 138 of the Negotiable Instruments Act - Scope of Section 147 of the Negotiable Instruments Act - Exercise of power under Section 482 Cr.P.C. and Article 226 of the Constitution to quash conviction upon compromise - Acceptance of out-of-court settlement without prior court permission - Court's satisfaction as to genuineness of compromise

Compounding of offence under Section 138 of the Negotiable Instruments Act - Exercise of power under Section 482 Cr.P.C. and Article 226 of the Constitution to quash conviction upon compromise - Court's satisfaction as to genuineness of compromise - Quashment of conviction under Section 138 NI Act on the basis of an out-of-court settlement confirmed by the complainant and accepted by the Court. - HELD THAT: - The Court found that a written settlement between the parties had been produced on record and the complainant filed a sworn affidavit confirming receipt of consideration and consenting to quashment of the order. Having regard to the material on record and the coordinate bench's reasoning that parties are at liberty to compound offences under Section 147 of the NI Act and that the High Court may, in appropriate cases, invoke its powers under Section 482 Cr.P.C. read with Article 226 to secure ends of justice, this Court accepted the genuineness of the compromise. The Court noted that when the complainant, without coercion, confirms the compromise and requests quashment, there is nothing substantial to oppose, and the exercise of jurisdiction to quash conviction in such circumstances is warranted to give effect to the settlement and to mitigate hardships of the parties. [Paras 6, 7, 8]

The conviction and order dated 7.12.2019 in Criminal Case No.10779 of 2016 are quashed and set aside pursuant to the genuine out-of-court settlement confirmed by the complainant; rule made absolute.

Scope of Section 147 of the Negotiable Instruments Act - Acceptance of out-of-court settlement without prior court permission - Whether prior court permission is a condition precedent for compounding offences under Section 138 NI Act; and the effect of Section 147 on compounding at any stage. - HELD THAT: - Relying on the coordinate bench's exposition, the Court observed that Section 147 of the NI Act makes offences under Chapter XVII compoundable and does not impose a statutory obligation to obtain prior judicial permission before entering into compromise. The legislative history and objects of amendments were noted to show an intent to make such offences amenable to compounding to achieve expeditious resolution. Consequently, parties may compound matters under Section 138 NI Act at any stage, and the High Court may, where appropriate and satisfied as to genuineness, permit quashment of conviction under its inherent jurisdiction. [Paras 7]

Prior permission is not a statutory prerequisite for compounding offences under Section 138 NI Act; Section 147 permits compromise and the Court may accept an out-of-court settlement and quash proceedings where satisfied of genuineness.

Final Conclusion: The petition under Section 482 Cr.P.C. is allowed; the order of conviction dated 7.12.2019 in Criminal Case No.10779 of 2016 is quashed and set aside in view of the genuine settlement confirmed by the complainant, and the Registry is directed to communicate the order to the trial court.

Section 138 of the Negotiable Instruments Act - presumption of consideration under Section 139 of the Negotiable Instruments Act - onus on accused to rebut statutory presumption - insufficiency of hire purchase defence to rebut presumption - sentence modification on humanitarian grounds - release of realised amount to complainant under Section 357(1) Cr.P.C.

Section 138 of the Negotiable Instruments Act - presumption of consideration under Section 139 of the Negotiable Instruments Act - onus on accused to rebut statutory presumption - insufficiency of hire purchase defence to rebut presumption - Whether the conviction under Section 138 N.I. Act could be sustained where the accused relied on a hire purchase transaction as defence. - HELD THAT: - The trial and appellate courts found, and this Court agrees, that the complainant proved issuance and dishonour of Ext.P1 cheque and timely service of the demand notice. Proof of issuance of the cheque invoked the statutory presumption of consideration under Section 139 (and Section 118A) of the N.I. Act, thereby shifting the onus to the accused to rebut that presumption. The accused relied on a hire purchase arrangement and produced witnesses and documents, but failed to raise a probable defence or establish facts sufficient to create reasonable doubt about the existence of the debt or liability. The Court held that mere proof of a hire purchase transaction was not adequate to discharge the onus cast by the statutory presumption and that the presumption mandated by Section 138/139 remained unrebutted. [Paras 5, 6]

Concurrent conviction under Section 138 N.I. Act is affirmed as the accused failed to rebut the statutory presumption of consideration.

Sentence modification on humanitarian grounds - consideration of age and infirmity in sentencing - release of realised amount to complainant under Section 357(1) Cr.P.C. - Whether the sentence imposed should be altered in view of the accused's advanced age, bedridden condition and absence of property. - HELD THAT: - Although conviction was maintained, the Court took into account the report that the accused was elderly, bedridden and possessed no property within the local jurisdiction. The Court observed that these facts, while not a ground for acquittal, were relevant to the mode of sentence. Exercising revisionary power, the Court modified the sentence imposed by the courts below: the substantive punishment of imprisonment was replaced by a fine, with a reduced default simple imprisonment period, and directions were given for release of any amounts realised to the complainant under Section 357(1) Cr.P.C., including amounts deposited earlier pursuant to interim orders. [Paras 7]

Sentence modified to payment of fine with a reduced default simple imprisonment term; realised deposits to be released to the complainant in accordance with law.

Final Conclusion: Concurrent conviction under Section 138 N.I. Act is confirmed as the accused failed to rebut the statutory presumption of consideration; sentence is reduced on humanitarian grounds to a fine with a shortened default simple imprisonment term and directions issued for release of realised amounts to the complainant under Section 357(1) Cr.P.C.

Prospective operation of Section 143A - retrospective applicability of Section 148 in appellate proceedings - interim compensation and deposit pending appeal - discretion of appellate court under Section 148(1) to fix minimum deposit - liberty to file fresh application under appellate provision - direction for expeditious disposal within fixed time-frame

Prospective operation of Section 143A - interim compensation and deposit pending appeal - Application of Section 143A to notices dated prior to its insertion - HELD THAT: - The Court accepted the respondent's contention, based on the precedent in G.J. RAJA Versus TEJRAJ SURANA , that Section 143A, having been inserted with effect from 01.09.2018, is to be held prospective and confined to offences committed after its introduction. The notice in the present matter was dated 16.01.2016, and therefore the petitioner cannot seek relief under Section 143A in respect of that notice. Consequently, the petition cannot succeed on the ground that interim compensation be released under Section 143A for the earlier notice.

Section 143A does not apply retrospectively to the notice dated 16.01.2016; relief under Section 143A is not available in this petition.

Retrospective applicability of Section 148 in appellate proceedings - discretion of appellate court under Section 148(1) to fix minimum deposit - liberty to file fresh application under appellate provision - direction for expeditious disposal within fixed time-frame - Availability and treatment of an application under Section 148 and consequent procedural direction - HELD THAT: - The Court noted that the Supreme Court in the decision referred to in the earlier paragraph adverted to Surinder Singh Deswal and Ors. vs. Virender Gandhi , holding that Section 148, which pertains to appellate proceedings, is retrospectively applicable. The Court observed that the petition before it had relied only on Section 143A and did not include an application under Section 148. In view of the retrospective applicability of Section 148 and the absence of any Section 148 application on record, the petitioner was permitted to withdraw the petition and given liberty to seek appropriate relief by filing a fresh application under Section 148(1). The Court expressly declined to express any view on the merits of such an application and directed that, if filed, the Appellate Court shall decide it within 45 days of receipt.

Petition dismissed as withdrawn with liberty to file an application under Section 148; the Appellate Court directed to dispose of any such application within 45 days.

Final Conclusion: The petition was dismissed as withdrawn: Section 143A was held prospective and inapplicable to the 2016 notice, while the petitioner was granted liberty to file a fresh application under Section 148 (held to be retrospectively applicable by higher precedent) and the Appellate Court directed to decide any such application within 45 days.