TaxTMI Updates e-Newsletter
Aug 30,2023

Service of assessment orders - reckoning limitation - service through web portal under Section 169(1)(d) of the Central Goods and Services Tax Act, 2017 - service by registered post with acknowledgment due (RPAD) - limitation for filing appeal - reliance on precedent regarding service and limitation

Service of assessment orders - service by registered post with acknowledgment due (RPAD) - reckoning limitation - limitation for filing appeal - Petitions challenging assessment orders (except W.P.No.21081 of 2023) are not maintainable as the appeals were filed beyond the period of limitation where the assessee had received the orders by RPAD. - HELD THAT: - The court noted that, on the material on record, the petitioner had received the assessment orders by RPAD in all matters except W.P.No.21081 of 2023. Where service by RPAD is proved, reckoning of limitation runs from such service and the appeals filed beyond the statutory period cannot be entertained. The High Court applied the principle in the referred Supreme Court decision and found no merit in the writ petitions which were time-barred in view of service by RPAD.

All writ petitions except W.P.No.21081 of 2023 are dismissed as the appeals were filed beyond the period of limitation in cases where orders were received by RPAD.

Service through web portal under Section 169(1)(d) of the Central Goods and Services Tax Act, 2017 - reckoning limitation - The question whether service of assessment orders through the departmental web portal suffices for reckoning limitation is left open for consideration in W.P.No.21081 of 2023. - HELD THAT: - The court observed that the sufficiency of web-portal communication under the specified provision for the purpose of computing limitation was not decided in the present batch and requires separate adjudication. Consequently, the issue is to be determined in W.P.No.21081 of 2023 where service by RPAD was not established.

The question of whether service via web portal is sufficient for reckoning limitation is reserved for determination in W.P.No.21081 of 2023.

Final Conclusion: All writ petitions except W.P.No.21081 of 2023 are dismissed as time-barred because the assessment orders were received by the petitioner through RPAD; the distinct question of whether departmental web-portal communication suffices for reckoning limitation is retained for decision in W.P.No.21081 of 2023.

Interim protection made absolute - protection from arrest - obligation to produce relevant documents - compliance with earlier court directions - making earlier order absolute subject to conditions

Interim protection made absolute - making earlier order absolute subject to conditions - compliance with earlier court directions - The interim protection granted to the appellants from 26th October, 2021 is to be made absolute subject to compliance with the directions contained in the order dated 17th July, 2023. - HELD THAT: - The Court noted that the appellants have been under protection since 26th October, 2021 and there was no allegation of misuse of the liberty granted. Having considered the matter and the submissions, the Court held that the earlier interim order should be confirmed. The confirmation is expressly made conditional upon observance of the directions previously issued by the Court in its order dated 17th July, 2023, thereby converting the interim protection into an absolute order only so long as those directions are complied with.

Order dated 26th October, 2021 is made absolute, subject to compliance with the directions in the order dated 17th July, 2023.

Obligation to produce relevant documents - compliance with earlier court directions - The appellants are bound to produce the relevant documents in their custody in compliance with the summons and the Court's directions. - HELD THAT: - Respondents submitted that the appellants have not been producing documents pursuant to the summons. The Court recorded that the appellants are obliged to produce the relevant documents in their custody and that failure to do so would be inconsistent with the protection granted. The obligation to produce documents forms part of the compliance required under the earlier directions.

Appellants must produce the relevant documents in their custody in accordance with the summons and the directions of the Court.

Final Conclusion: The appeals are allowed; the interim protection granted to the appellants from 26th October, 2021 is made absolute subject to compliance with the directions in the order dated 17th July, 2023, and the appellants are directed to produce the relevant documents in their custody.

Refund of Input Tax Credit - denial of refund in respect of invoices issued by a non-existent supplier - separability of claims where irregularity is confined to a single supplier - processing of refund with interest

Refund of Input Tax Credit - separability of claims where irregularity is confined to a single supplier - Refund of ITC claimed in respect of supplies from suppliers other than M/s Siddhi Impex could not be denied merely because one supplier was found to be non-existent. - HELD THAT: - The petitioner's claim related to ITC on exports for the period November 2020 to March 2021. The Adjudicating Authority rejected the entire refund application on the ground that one supplier, M/s Siddhi Impex, was found to be non-existent following physical verification. The petitioner did not challenge the rejection insofar as it related to the two invoices of Siddhi Impex and has deposited the corresponding amount. There was no allegation or adverse finding against the other suppliers whose invoice details were furnished and whose supplies were not questioned. The Court held that where irregularity is established only in respect of a particular supplier, there is no reason to deny refund in respect of ITC attributable to other suppliers whose transactions remain unimpugned. The determinative reasoning is that a finding of non-existence of one supplier does not justify wholesale denial of the refund claim for other suppliers in the absence of specific adverse findings against them. [Paras 14, 15, 16]

The impugned orders are set aside insofar as they denied refund of ITC attributable to suppliers other than M/s Siddhi Impex; refund in that portion is allowed.

Processing of refund with interest - refund of Input Tax Credit - Direction to the Adjudicating Authority to process the petitioner's refund claim for the uncontroverted portion, with interest, expeditiously. - HELD THAT: - Having allowed the refund claim to the extent of ITC not connected to the non-existent supplier, the Court directed the Adjudicating Authority to process the petitioner's application dated 21.05.2021 in respect of the quantified sum, along with interest, in accordance with law. The Court provided a timeline, preferring completion within four weeks, thereby converting the declaratory relief into a mandatory administrative step to be carried out by the authority without reopening or revisiting the uncontroverted transactions. [Paras 17, 18]

The Adjudicating Authority is directed to process the refund claim for the allowed portion and pay interest thereon as per law, expeditiously and preferably within four weeks.

Final Conclusion: The petition is allowed; the impugned orders are set aside insofar as they denied refund of ITC relating to suppliers other than M/s Siddhi Impex, and the Adjudicating Authority is directed to process the allowed refund with interest in accordance with law within the stipulated period.

Summary order. Notice taken for respondents; matter listed after four weeks for filing counter and for final disposal; respondents directed to maintain status quo as on date till the next date of hearing.

Supply of warehoused goods before clearance for home consumption - Schedule III of the CGST Act, 2017 - Meaning of "warehoused goods" as per the Customs Act, 1962 - Free Trade Warehousing Zone (FTWZ) governed by the SEZ Act, 2005 is not a warehouse licensed under the Customs Act, 1962 - Rescission and applicability of IGST Circular No. 3/1/2018

Supply of warehoused goods before clearance for home consumption - Schedule III of the CGST Act, 2017 - Meaning of "warehoused goods" as per the Customs Act, 1962 - Free Trade Warehousing Zone (FTWZ) governed by the SEZ Act, 2005 is not a warehouse licensed under the Customs Act, 1962 - Transfer of title of goods or multiple transfers within the FTWZ will be covered by Schedule III of the CGST Act, 2017 or not. - HELD THAT: - Paragraph 8(a) of Schedule III treats supply of warehoused goods to any person before clearance for home consumption as neither a supply of goods nor a supply of services, and Explanation 2 imports the meaning of "warehoused goods" from the Customs Act, 1962. The Customs Act defines a 'warehouse' by reference to licences granted under Sections 57, 58 and 58A. FTWZs operate under the Special Economic Zones Act, 2005 and the SEZ Rules, and although customs officials supervise certain activities within FTWZs, the approval, licensing and administrative control of FTWZs are governed by the SEZ Act and not by the Customs Act. Consequently, goods lying in an FTWZ are not deposited in a 'warehouse' as defined in the Customs Act and thus the transactions in the FTWZ described by the applicant do not fall within paragraph 8(a) of Schedule III. The Authority therefore concluded that transfers of title within the FTWZ are not covered by the exemption in Schedule III which is specific to warehoused goods in warehouses licensed under the Customs Act, 1962. [Paras 7]

Transfers of title of goods by the applicant to customers or multiple transfers within the FTWZ are not covered under Schedule III of the CGST Act, 2017 read with the CGST Amendment Act, 2018.

Rescission and applicability of IGST Circular No. 3/1/2018 - Insertion of paragraph 8(a) in Schedule III - Whether IGST Circular No. 3/1/2018 dated 25.05.2018 applies to the applicant's FTWZ transactions. - HELD THAT: - Circular No. 03/01/2018 clarifying IGST on supplies of goods deposited in customs bonded warehouses was rendered otiose by the amendment to Schedule III which inserted paragraph 8(a). The earlier Circular was rescinded by Circular No. 04/01/2019 in view of the statutory amendment providing that supply of warehoused goods before clearance for home consumption shall be neither a supply of goods nor services. Moreover, the Circular addressed customs bonded warehouses and not FTWZs which are governed by the SEZ Act. On these bases the Authority held the earlier Circular is not applicable to the present factual situation. [Paras 7]

IGST Circular No. 3/1/2018 is not applicable to the present factual situation; it was rescinded in view of the amendment inserting paragraph 8(a) in Schedule III.

Final Conclusion: The Authority ruled that transfers of title and multiple transfers within an FTWZ do not fall within Schedule III(8)(a) of the CGST Act, 2017 because FTWZs are not warehouses licensed under the Customs Act, 1962, and that IGST Circular No. 3/1/2018 is not applicable to the applicant's FTWZ transactions as it was rescinded following the statutory amendment.

Exemption to water supplied other than treated or sold in sealed containers - incidental charges included in value of supply - pure agent exclusion from value of supply - maintenance and infrastructure services as supply - works contract treated as supply of services - lease of land treated as supply of services and exemption for long-term lease premium - binding effect of advance ruling

Exemption to water supplied other than treated or sold in sealed containers - incidental charges included in value of supply - Supply of raw water and its incidental charges are liable to tax under GST - HELD THAT: - The Authority examined Entry No.99 of Notification No.02/2017-CT(Rate) dt. 28.06.2017 and held that raw/untreated water supplied via pipelines falls within the exempt description (water other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container) and is therefore exempt from GST. Consequentially, incidental charges such as interest for delayed payment, penalty for delayed payment and reconnection charges-being amounts related to the exempt principal supply-are also not liable to tax, in line with the Department's clarification in Circular No.178/10/2022 dated 03.08.2022. [Paras 7, 8]

Supply of raw water and its incidental charges are not liable to be taxed under the prevailing GST Laws.

Pure agent exclusion from value of supply - maintenance and infrastructure services as supply - Maintenance charges for usage of common facilities are liable to tax under GST - HELD THAT: - The Authority applied Rule 33 (definition and conditions of a 'pure agent') and found the applicant did not furnish documentary evidence (such as a contractual agreement or separate invoicing) to establish that it acted as a pure agent for the allottees. Consequently, the maintenance charges cannot be treated as pure reimbursements excluded from the value of supply. Further, the activity of collecting maintenance charges involves transfer of goods and/or provision of services against consideration and thus falls within the scope of 'supply' under Section 7 read with Section 2(17), attracting GST @18% under the notified SAC. [Paras 7, 8]

Maintenance charges for usage of common facilities are liable to be taxed under the prevailing GST Laws.

Pure agent exclusion from value of supply - works contract treated as supply of services - maintenance and infrastructure services as supply - Participatory Infrastructure Development Scheme (PIDP) charges are liable to tax under GST - HELD THAT: - The Authority found that the applicant failed to establish entitlement to treat PIDP cost-recoveries as mere reimbursements under the 'pure agent' rule because no supporting agreement or invoicing was produced. The infrastructure works undertaken (upgradation of roads, drains, street-lights etc.) may involve transfer of property in goods and/or services and therefore constitute a supply under Section 7 read with Schedule II. Such activities are taxable and attract GST under the applicable Group/Heading for support/works services. [Paras 7, 8]

Participatory Infrastructure Development Scheme (PIDP) charges are liable to be taxed under the prevailing GST Laws.

Lease of land treated as supply of services and exemption for long-term lease premium - incidental charges included in value of supply - Interest collected towards delayed payment for Upfront lease premium and Differential lease premium are not liable to tax under GST - HELD THAT: - The Authority noted that one-time upfront amounts for long-term leases (thirty years or more) provided by State Government Industrial Development Corporations are exempt under Entry No.41 of Notification No.12/2017-CT(Rate) dt. 28.06.2017. Where the principal receipt (lease premium) is exempt, incidental amounts such as interest on delayed payment that are attributable to that exempt principal supply are not taxable, consistent with the Departmental circular referred to in the order. [Paras 7, 8]

Interest collected towards delayed payment for Upfront lease premium and Differential lease premium are not liable to be taxed under the prevailing GST Laws.

Incidental charges included in value of supply - exemption to water supplied other than treated or sold in sealed containers - maintenance and infrastructure services as supply - Taxability of interest for delayed payment depends on taxability of the principal supply: not taxable for raw water, taxable for maintenance and PIDP charges - HELD THAT: - The Authority applied Section 15(2) to treat interest/late fee/penalty as part of the value of the principal supply. It ruled that interest related to the exempt supply of raw water is not taxable. Conversely, interest/penalty connected with maintenance charges and PIDP-both held taxable as principal supplies-will form part of the value and be taxable accordingly. [Paras 7, 8]

Interest for delayed payment relating to supply of raw water is not taxable; interest for delayed payment relating to maintenance charges and PIDP charges is taxable.

Lease of land treated as supply of services and exemption for long-term lease premium - incidental charges included in value of supply - Penalty for delay in execution of the project and delay in execution of lease deed are not liable to tax under GST - HELD THAT: - The Authority observed that the upfront lease fee (premium) collected for long-term leases is exempt under Entry No.41 of Notification No.12/2017-CT(Rate). Penalties levied in relation to that exempt principal supply are included in the value of the supply under Section 15(2) but, since the principal supply is exempt, such penalties are consequentially not liable to GST. [Paras 7, 8]

Penalty for delay in execution of the project and delay in execution of lease deed are not liable to be taxed under the prevailing GST Laws.

Final Conclusion: The Authority held that (i) supply of raw water and incidental charges are exempt from GST; (ii) maintenance charges and PIDP charges are taxable; (iii) interest on delayed payment of lease premiums and penalties relating to lease execution are not taxable as they relate to exempt long-term lease premiums; and (iv) interest/penalties are taxable only when they relate to taxable principal supplies.

Composite supply liable to tax - disposal of business assets under Clause 4 of Schedule II - sale of land not being supply under clause 5 of Schedule III - HSN classification of wind turbine as 8412 80 30

Composite supply liable to tax - disposal of business assets under Clause 4 of Schedule II - Supply of used/running Wind Turbine Generator (WTG)/Wind Mill with accessories is a supply of goods and taxable as a composite supply. - HELD THAT: - The Authority found that the proposed transaction involves disposal of a business asset and therefore falls within Clause 4 of Schedule II of the CGST Act, 2017; consequently the activity is a supply of goods. The unit of wind mill offered as such along with parts and accessories constitutes a composite supply, and entry 201A of Notification No. 01/2017 Central Tax (Rate) as amended by Notification No. 08/2021 applies, fixing the applicable rate from 01.10.2021. The reasoning rejects any characterization that would treat the transfer otherwise and applies the amended entry to the composite supply of the wind mill and its accessories. [Paras 6, 8]

Supply of used WTG/Wind Mill with accessories is a composite supply of goods and taxable at 6% CGST and 6% TNGST (total 12%) in terms of entry 201A as amended.

HSN classification of wind turbine as 8412 80 30 - Eight digit HSN code for Wind Turbine Generator (WTG)/Wind Mill is 8412 80 30. - HELD THAT: - On the question of commodity classification, the Authority specified the HSN code corresponding to wind turbines under the relevant tariff description as recorded in the ruling, identifying the wind turbine or engine entry appropriate for the goods being supplied. [Paras 8]

HSN code for WTG/Wind Mill is 8412 80 30.

Sale of land not being supply under clause 5 of Schedule III - Sale of the land on which the wind mill is embedded is not liable to GST. - HELD THAT: - The Authority noted the applicant's intention to transfer the land by registered sale deed and observed the prevailing practice that windmills embedded in land are not treated as immovable property for stamp purposes. Under GST law, sale of land is neither a supply of goods nor a supply of services by virtue of clause 5 of Schedule III of the CGST Act, 2017, and therefore such transfer of land is outside the scope of GST. [Paras 7, 8]

Sale of the land on which the wind mill is embedded is not liable to GST.

Final Conclusion: The Authority ruled that (i) sale of the used Wind Turbine Generator with accessories is a composite taxable supply at 6% CGST and 6% TNGST under the amended entry, (ii) the HSN code is 8412 80 30, and (iii) sale of the land on which the wind mill is embedded is not subject to GST under Schedule III.

Admissibility of application under the first proviso to Section 98(2) of the Act - pending proceedings / investigation under the Act - investigation and summons issued under Section 70 - advance ruling under Chapter XVII - binding nature of advance rulings - voidness of ruling obtained by fraud or suppression of material facts

Admissibility of application under the first proviso to Section 98(2) of the Act - pending proceedings / investigation under the Act - investigation and summons issued under Section 70 - advance ruling under Chapter XVII - Advance ruling application rejected as inadmissible under the first proviso to Section 98(2) because proceedings/investigation by DGGI were pending at the time of filing. - HELD THAT: - The Authority held that Chapter XVII is a benevolent provision but the first proviso to Section 98(2) bars admission where the question raised is already pending in any proceedings in the case of the applicant. The DGGI communicated that an investigation had been initiated and summons had been issued and a statement recorded prior to filing of the online application. The applicant's contention that 'proceedings' should not include inquiry/summons was examined and rejected for the present context: the proviso is to be read to cover proceedings under the Act, including investigations commenced under Section 70. The Authority therefore concluded that the questions raised in the application were already the subject of pending proceedings when the application was filed and, accordingly, the application is liable to be rejected under the first proviso to Section 98(2). [Paras 7, 8]

Application for advance ruling is rejected as inadmissible under the first proviso to Section 98(2) because the questions were the subject of pending investigation by DGGI at the time of filing.

Final Conclusion: The Authority refused to admit the advance ruling application and rejected it for the reason that the questions raised were already the subject of pending proceedings/investigation by the DGGI when the application was filed, rendering the application inadmissible under the first proviso to Section 98(2).

Admissibility of advance ruling - first proviso to Section 98(2) of the CGST Act (bar on applications where the question is pending or decided in any proceedings) - investigation under Section 67/70 treated as proceedings for the purpose of admission - binding nature of advance ruling and voidability for fraud or suppression

Admissibility of advance ruling - first proviso to Section 98(2) of the CGST Act (bar on applications where the question is pending or decided in any proceedings) - investigation under Section 67/70 treated as proceedings for the purpose of admission - Whether the advance ruling application filed by the Tamil Nadu Nurses and Midwives Council was admissible in view of pending proceedings/investigation against the applicant. - HELD THAT: - The Authority examined the application under Section 98(2) and the first proviso which precludes admission where the question raised is already pending or decided in any proceedings in the case of the applicant. The record from DGGI showed an Incident Report and statements of the Registrar, evidencing that an investigation under the Act (summons and information collection under Section 70 and inspection under Section 67) was ongoing prior to filing of the advance ruling application. The applicant's contention that 'proceedings' should be read narrowly to mean only adjudication under Sections 73/74 was rejected. The Authority held that the term 'proceedings' in the first proviso must be read in its comprehensive statutory context and includes investigations/surveys and related actions under the Act; therefore, questions that are the subject of an existing investigation are barred from admission as advance ruling matters. On the material before it, the Authority found that proceedings in relation to the questions raised were pending on the date the online application was filed and accordingly the application fell within the bar prescribed by the first proviso to Section 98(2). [Paras 6, 8, 9]

Application rejected as not admissible under the first proviso to Section 98(2) because the questions raised were already the subject of pending proceedings/investigation.

Final Conclusion: The Authority rejected the advance ruling application of the Tamil Nadu Nurses and Midwives Council as inadmissible under the first proviso to Section 98(2) of the Act since the questions raised were already the subject of pending proceedings/investigation at the time of filing.

Assessment u/s 153A - unexplained investment - ITAT confirming the order passed by CIT(A) deleting the additions - As confirmed by HC [2022 (7) TMI 1095 - DELHI HIGH COURT] that both the CIT (A) as well as ITAT have given concurrent findings of fact that no incriminating materials had been seized during search.

HELD THAT:- UPON hearing the counsel the Court made the following

Time to file spare copy is extended by a period of two weeks from today

If the spare copy is not filed, the Special Leave Petition shall stand dismissed for non-prosecution without further reference to the Court.

Reopening of assessment u/s 147 - assessee has claimed deduction on account of notional foreign exchange loss - change of opinion - as per HC [2022 (4) TMI 624 - BOMBAY HIGH COURT] reopening of assessment by the impugned notice is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings - delay filling SLP

HELD THAT:- There is an inordinate delay of 382 days in filing this special leave petition which has not been satisfactorily explained.

Even on merits, we do not find any good ground and reason to interfere with the impugned judgment. Accordingly, the special leave petition is dismissed on the ground of delay and on merits.

Pending application(s), if any, also stand disposed of.

Reopening of assessment - notice for reopening under Section 148 - reasons for reopening - personal hearing - speaking order - remand for fresh consideration - show cause notice under Section 144

Reopening of assessment - reasons for reopening - personal hearing - speaking order - Validity of the impugned assessment order dated 30.03.2022 in view of the procedure followed in reopening the assessment and conduct of hearings - HELD THAT: - The Court found the impugned assessment order unsustainable because the petitioner had specifically requested the reasons for reopening and a personal hearing, but the reasons were furnished only after the objection to reopening had been disposed and very close to the statutory timeline for completion. The reasons communicated did not clarify whether the disputed amount was credited to the petitioner or to the company. Despite the petitioner's request for personal hearing in response to the reopening notice and after furnishing a bank certificate contesting account ownership, the respondents proceeded to pass a speaking order without affording the requested hearing. For these procedural deficiencies the order was set aside. The Court directed that the matter be remitted for fresh consideration and that before passing any fresh order the petitioner must be given an opportunity to be heard and to file any reply or additional representation within a limited time. [Paras 10, 11, 12]

Impugned order set aside; matter remitted for passing a fresh speaking order after hearing the petitioner and permitting filing of further representations.

Final Conclusion: Writ petition allowed; impugned assessment order dated 30.03.2022 set aside and the case remitted to the respondents to pass a speaking order within 45 days after affording the petitioner a hearing and an opportunity to file any further reply within 15 days.

Attachment of bank account - protection of pension from attachment - lifting of attachment limited to exempt funds - embargo on withdrawal of non-pension deposits - direction to bank to allow only pension withdrawals - remand to Appellate Commissioner for expeditious disposal

Protection of pension from attachment - Pension credited to the petitioner is not liable to attachment and the attachment must be lifted insofar as it affects the pension. - HELD THAT: - The Court accepted the legal principle that pension amounts of a senior citizen/pensioner cannot be subjected to attachment under the recovery measures challenged in the writ petition. Applying that principle to the facts, the Court directed the respondent to lift the order of attachment to the extent it affects the petitioner's pension payments and to communicate the same to the bank so that only pension credits may be withdrawn by the petitioner. The determinative finding is recorded in the order granting relief limited to pension funds. [Paras 11, 12, 13]

Attachment shall be lifted insofar as it relates to the petitioner's pension; respondent to permit withdrawal of pension credits and inform the bank.

Attachment of bank account - lifting of attachment limited to exempt funds - embargo on withdrawal of non-pension deposits - The attachment is not to be wholly vacated; an embargo is to remain on withdrawal of other non-pension amounts standing to the credit of the attached accounts. - HELD THAT: - While the Court ordered lifting of attachment in respect of pension, it refused to lift the attachment in respect of other amounts standing to the credit of the petitioner's accounts, having regard to the respondent's contention about other receipts into those accounts. The Court therefore carved out an exception permitting only pension withdrawals and expressly maintained prohibition on withdrawing other deposits until further order. The bank is to be notified of this limited relief. [Paras 10, 12, 13]

Embargo to continue on withdrawal of non-pension amounts; only pension credits may be withdrawn.

Remand to Appellate Commissioner for expeditious disposal - Matters remitted to the Appellate Commissioner are to be disposed of expeditiously within a specified period. - HELD THAT: - The Court noted that certain appeals had been remitted to the Appellate Commissioner and directed that those remanded matters be disposed of as expeditiously as possible, preferably within three months from receipt of a copy of the order. This is a supervisory direction to ensure timely finalisation of the proceedings remitted by the Tribunal and recorded as part of the relief granted in the writ petition. [Paras 8, 14]

Appellate Commissioner to dispose of the remanded appeals preferably within three months from receipt of this order.

Final Conclusion: Writ petition allowed in part: attachment on the petitioner's bank accounts is lifted only to the extent of permitting withdrawal of pension credits; embargo remains on other deposits; respondent to inform the bank accordingly; appeals remitted to the Appellate Commissioner to be disposed of expeditiously (preferably within three months).

Section 68 - unexplained share application money/unexplained cash credit - Onus of proof as to identity, creditworthiness and genuineness of shareholders/transactions - Accommodation entries - Doctrine of fraud - Natural justice in cases of fraud

Section 68 - unexplained share application money/unexplained cash credit - Onus of proof as to identity, creditworthiness and genuineness of shareholders/transactions - Accommodation entries - Doctrine of fraud - Natural justice in cases of fraud - Validity of the addition made under Section 68 of the Act in respect of share application money of Rs.1,90,00,000/- and correctness of the CIT(A)'s deletion thereof. - HELD THAT: - The Assessing Officer, relying on information from DDIT(Investigation)-II that the assessee was a beneficiary of accommodation entries promoted and controlled by specified persons, made an addition treating the share application money as unexplained. On appeal the CIT(A) accepted documentary evidence (share application form, allotment letters, bank statements, Form 2, board resolution and related confirmations) as discharging the initial onus placed on the assessee. The Tribunal examined the materials and concluded that the documents relied upon by the CIT(A) did not establish the identity, genuineness and creditworthiness of the purported shareholders or the transactions. The assessment record contained material indicating the assessee's connection with known accommodation-entry providers and a modus operandi; the CIT(A) failed to probe or address creditworthiness and genuineness in the light of that material. Given these circumstances the Tribunal held that the CIT(A)'s deletion was perfunctory and unsupported by evidence. The Tribunal further held that the doctrine of fraud was attracted on the facts, and having so held treated principles of natural justice as inapplicable for defeating the assessment, thereby restoring the assessment order. [Paras 9, 10]

The deletion by the CIT(A) was set aside; the addition under Section 68 is restored and the Revenue's appeal is allowed.

Final Conclusion: The Tribunal allowed the Revenue's appeal, holding that the assessee had not discharged the onus to prove identity, genuineness and creditworthiness of the share application money, that the CIT(A)'s deletion was unsupported, and that the doctrine of fraud applied; the assessment order for AY 2010-11 is restored.

Assessment against non-existent entity - amalgamation and cessation of transferor - jurisdictional notice issued in name of amalgamating company - estoppel by participation in proceedings

Assessment against non-existent entity - amalgamation and cessation of transferor - jurisdictional notice issued in name of amalgamating company - Validity of the assessment framed against the transferor company (Anirudh Overseas Pvt. Ltd.) after its merger into the assessee (Archit Securities Pvt. Ltd.) for AY 2006-07 - HELD THAT: - It was recorded that the transferor company ceased to exist pursuant to a court-sanctioned scheme of amalgamation and that the Assessing Officer had been informed of the merger by letter dated 28.06.2011 (filed 27.07.2011). Despite this, the AO proceeded to complete assessment on 28.02.2014 in the name of the transferor company. The Tribunal held that an assessment completed in the name of a non-existent entity is unsustainable. The High Court examined the factual matrix against the principles discussed in the authorities relied upon by the parties, noted that the facts in the present matter fit those in the line of cases where assessments on non-existent amalgamating companies were quashed, and accepted the Tribunal's conclusion that jurisdiction could not properly be exercised against an entity which had ceased to exist. The court therefore found no merit in the revenue's contention and agreed with the Tribunal's annulment of the assessment dated 28.02.2014 insofar as it was framed in the name of the non-existent transferor company. [Paras 5, 6, 7]

Assessment framed against Anirudh Overseas Pvt. Ltd. for AY 2006-07 is unsustainable and cannot be maintained.

Final Conclusion: The High Court agreed with the Tribunal that the assessment dated 28.02.2014, having been framed in the name of a transferor company which had ceased to exist on account of an approved amalgamation, could not be sustained; no substantial question of law arises and the appeals are closed.

Reopening under Section 148 read with Section 147 - proviso to Section 147(1) - failure to truly and fully disclose material facts - reopening of assessment - change of opinion - audit objections and duty to disclose

Reopening under Section 148 read with Section 147 - proviso to Section 147(1) - failure to truly and fully disclose material facts - change of opinion - reopening of assessment - Validity of the notice issued under Section 148 for Assessment Year 2013-14 and whether there was failure to truly and fully disclose material facts permitting reopening beyond four years. - HELD THAT: - The Court found that more than four years had elapsed since the end of Assessment Year 2013-14, so the proviso to Section 147(1) applied and reopening was permissible only if there had been a failure by the assessee to truly and fully disclose material facts. During original assessment the Assessing Officer had raised specific queries regarding eligibility under Section 80IA and Form 10CCB, and the assessee had replied and produced approvals from the Ministry of Commerce and Industry; those queries and replies were before the A.O. and were necessarily considered in completing the assessment even though the assessment order did not transcribe the discussion. The reasons recorded for reopening relied on an alleged incorrect date in Form 10CCB and an ineligible claim of deduction, but the record showed that (a) identical objections had earlier been raised for AY 2006-07 and proceedings in that year were dropped after the Revenue chose not to pursue them, and (b) the present reassessment was instigated by audit objections which the A.O. failed to disclose in the reasons to believe. The Court held that the present case amounted to a mere change of opinion by the A.O. from conclusions reached during the assessment proceedings, and that change of opinion does not constitute omission of material facts justifying reopening. Further, the A.O. was under a duty to disclose the audit objections that prompted reassessment; suppression of that fact in the reasons to believe was material. For these reasons the statutory condition for reopening beyond four years was not satisfied. [Paras 6, 7, 8, 9, 10]

Notice dated 31st March 2021 under Section 148 and the order rejecting objections are quashed and set aside.

Final Conclusion: Reopening of assessment for Assessment Year 2013-14 was not justified as there was no failure to truly and fully disclose material facts; the notice under Section 148 and the order rejecting objections are quashed and the petition is disposed.

Remand by tribunal for fresh examination and personal hearing - time limit for completion of assessment under Section 153(3) - proviso to Section 153(3) substituting twelve months for nine months w.e.f. 1.4.2019 - Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - extension/relaxation of limitation - abatement of proceedings on account of expiry of limitation

Remand by tribunal for fresh examination and personal hearing - remit for fresh order after giving adequate opportunity - Validity of the notice dated 26.02.2020 calling the petitioner for personal hearing pursuant to the ITAT remand. - HELD THAT: - The ITAT had remitted the matter to the Assessing Officer for fresh examination and directed that the assessee be given adequate opportunity if any material likely to be used against him. The High Court found that the impugned notice fixed a personal hearing for 05.03.2020 pursuant to that remand. The hearing did not take place because of the outbreak of the COVID-19 pandemic. The challenge to the notice as such was held to be without merit, and the writ petition challenging the hearing notice was disposed of with liberty to the petitioner to press representations regarding limitation and abatement. The Court therefore did not quash the remand or the power of the AO to proceed, but recorded that the petitioner may seek appropriate relief on the ground of limitation. [Paras 14, 15, 16, 17]

Challenge to the notice dated 26.02.2020 is without merit and is dismissed; petitioner may make representations regarding limitation/abatement.

Time limit for completion of assessment under Section 153(3) - proviso to Section 153(3) substituting twelve months for nine months w.e.f. 1.4.2019 - Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - extension/relaxation of limitation - abatement of proceedings on account of expiry of limitation - Procedure to be followed on the petitioner's contention that the reassessment proceedings have abated as time-barred under Section 153(3) read with the proviso and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. - HELD THAT: - The petitioner contended that limitation for passing the fresh assessment order had expired (claiming effect from legislative relaxations during the pandemic) and that proceedings had abated. The Court did not adjudicate the limitation point on merits. Instead, noting the petitioner's representations (including a representation dated 28.06.2023), the Court granted liberty and directed the first respondent to consider the petitioner's representation and pass a preliminary order on the question of limitation/abatement within six weeks from receipt of the order. The Court further directed that if the preliminary issue of limitation is decided against the petitioner, the AO shall proceed to pass orders on merits in terms of the ITAT order after affording hearing to the petitioner. [Paras 16, 17, 18, 19]

Preliminary issue of limitation/abatement is remitted to the assessing authority for decision within six weeks; if decided against the petitioner, the AO shall thereafter pass orders on merits in accordance with the ITAT remand after hearing the petitioner.

Final Conclusion: Writ petition challenging the hearing notice is disposed of. The petitioner may press the representation dated 28.06.2023; the assessing authority is directed to decide the preliminary question of limitation/abatement within six weeks of receipt of this order, and if the limitation issue is decided against the petitioner, to proceed to pass fresh orders on merits in accordance with the ITAT's remand after granting hearing.

Escapement of income - Notice under Section 148 - Order under Section 148A(d) - Jurisdiction to reopen assessment - Material to establish escapement - Return of income

Escapement of income - Notice under Section 148 - Material to establish escapement - Return of income - Validity of the impugned order under Section 148A(d) and sufficiency of material to issue notice under Section 148 for Assessment Year 2016-17 - HELD THAT: - The petitioner had filed a belated return declaring receipt of sale consideration of Rs. 31,80,200 by cheque pursuant to a Sale Deed dated 22.06.2015. The department relied upon bank records indicating deposits aggregating to the information value of Rs. 65,02,546 for FY 2015-16 relevant to AY 2016-17. The respondent issued a notice under Section 148A(b) and thereafter passed an order under Section 148A(d) recording satisfaction that income chargeable to tax in the form of assets (bank deposits and other credits) exceeding the statutory threshold had escaped assessment and that the case was fit for issuance of notice under Section 148. The High Court considered the petitioner's reply and the bank entries produced by the petitioner on 16.03.2023. The Court accepted that the material on record (sale deed, return, and bank account entries) showed not only the cheque receipt but additional deposits, and concluded that there was adequate material upon which the respondent could form the requisite satisfaction to initiate proceedings under Section 148. On that basis, the Court found no grounds to interfere with the impugned order or the initiation of reassessment proceedings. [Paras 3, 10, 11, 12]

The impugned order under Section 148A(d) and the initiation of proceedings by issuance of notice under Section 148 for AY 2016-17 are valid; the writ petition is dismissed.

Final Conclusion: Writ petition dismissed; the Court found sufficient material to record satisfaction of escapement and to issue notice under Section 148 for Assessment Year 2016-17, and declined to interfere with the reassessment proceedings.

Treatment of stamp valuation authority value under section 50C - third proviso to section 50C - 110% threshold - comparative relevance of government approved valuer's valuation

Treatment of stamp valuation authority value under section 50C - third proviso to section 50C - 110% threshold - comparative relevance of government approved valuer's valuation - Addition under section 50C made on account of difference between stamp valuation authority value and government approved valuer's value was deleted where the stamp valuation did not exceed 110% of sale consideration - HELD THAT: - The Tribunal examined the addition of a sum representing the difference between the value adopted by the Stamp Valuation Authority and the value furnished by a Government approved valuer. The third proviso to section 50C provides that if the value assessed by the Stamp Valuation Authority does not exceed 110% of the consideration received, the consideration received shall be deemed to be the full value for the purposes of section 48. The Tribunal found that the difference between the two values was less than 10%, and therefore fell within the 110% threshold of the third proviso. Relying on the Coordinate Bench decision in Sandeep Kumar Poddar v. ITO [2023] 151 taxmann.com 18 (Kolkata Trib.) which dealt with a similar factual and legal question, the Tribunal set aside the CIT(A)'s affirmation of the addition and directed the Assessing Officer to delete the addition made under section 50C. [Paras 4, 5]

Addition of Rs. 5,52,757/- under section 50C deleted and appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that where the Stamp Valuation Authority's value does not exceed 110% of the consideration, the third proviso to section 50C applies and the addition under section 50C must be deleted.

Dismissal of stay application for non-prosecution - unexplained cash deposits treated as unexplained money under section 69A read with section 115BBE - disallowance under section 40A(3) for cash payments - exception under Rule 6DD of the Income Tax Rules

Dismissal of stay application for non-prosecution - Stay application dismissed for want of prosecution. - HELD THAT: - The assessee's representative did not advance any arguments when the stay application was taken up, which the Tribunal treated as lack of interest in prosecuting the matter. In consequence the stay application was dismissed as devoid of merits. [Paras 2]

Stay application dismissed.

Unexplained cash deposits treated as unexplained money under section 69A read with section 115BBE - disallowance under section 40A(3) for cash payments - exception under Rule 6DD of the Income Tax Rules - Additions made by the AO and confirmed by NFAC-(a) cash deposits during demonetisation treated as unexplained money; and (b) disallowance under section 40A(3)-were upheld for lack of corroborative evidence from the assessee. - HELD THAT: - The AO found, on verification of books and available data, substantial deposits in Specified Bank Notes during the demonetisation period which the assessee could not satisfactorily explain as sale proceeds; the NFAC noted absence of details of customers and concluded that the closing cash balance as on 08/11/2016 was insufficient to cover the SBN deposits, thereby affirming the addition under the provisions treating such deposits as unexplained money. Separately, the AO recorded specific findings and reproduced date-wise cash payments showing contravention of section 40A(3); the assessee failed to produce documentary evidence before the NFAC or the Tribunal to demonstrate applicability of the exception in Rule 6DD, and merely reiterated earlier submissions. In view of the absence of corroborative material, there was no infirmity in confirming both additions. [Paras 4, 5, 6]

Additions confirmed; grounds of appeal dismissed.

Final Conclusion: The Tribunal dismissed the stay application for non-prosecution and upheld the assessing officer's additions-confirmation by NFAC of unexplained SBN deposits treated as unexplained income and confirmation of disallowance under section 40A(3) for cash payments-since the assessee failed to produce requisite corroborative evidence or invoke successfully the Rule 6DD exception; the appeal is dismissed.

Agricultural income - income from other sources - business income - primary onus of proof on the assessee - reliance on sales invoices, ledger entries and bank records - treatment of nursery activities as agricultural activity

Agricultural income - income from other sources - reliance on sales invoices, ledger entries and bank records - primary onus of proof on the assessee - Addition of Rs. 2,60,305 and Rs. 18,625 treated as income from other sources was disallowed. - HELD THAT: - The Tribunal examined the documentary evidence produced by the assessee, including sales bills, party ledgers reflected in the books of account and bank statements showing routing of receipts. Though information under Section 133(6) was not furnished by the buyers, the Assessing Officer's reliance on that non-response to classify the receipts as income from other sources was not justified where the assessee produced supporting invoices and ledger entries. The shortfall of Rs. 18,625 in one ledger was explained as delayed booking of assessee's bills and reconciled from the documents. On the material before it the Tribunal found the transactions genuine and held the additions unsustainable. [Paras 7]

Additions of Rs. 2,60,305 and Rs. 18,625 treated as income from other sources are deleted; ground no.1 is allowed.

Agricultural income - business income - treatment of nursery activities as agricultural activity - reliance on sales invoices, ledger entries and bank records - Addition of Rs. 8,90,040 treated as business income was disallowed. - HELD THAT: - The Tribunal analysed the nature of the assessee's activities and the documentary record. The assessee was engaged in nursery operations comprising growing and sale of flower, vegetable plants and lawns. The Tribunal found these to be agricultural in nature and not commercial business operations warranting classification as business income. The assessee's production of sales bills, bank transaction details and books of account supported the claim that the receipts arose from agricultural/nursery activity rather than a separate business, rendering the Assessing Officer's percentage-based estimation unjustified. [Paras 7]

Addition of Rs. 8,90,040 as business income is deleted; grounds nos.2 and 3 are allowed.

Agricultural income - agricultural expenses - treatment of nursery activities as agricultural activity - Assessment of agricultural income at a reduced figure by the Assessing Officer was set aside and the agricultural income as declared by the assessee was accepted. - HELD THAT: - The Tribunal noted that the assessee produced sales bills for all parties, including the party relied upon by the Assessing Officer, and that the Assessing Officer did not contend that the receipts were of a commercial business character. In absence of any dispute about the agricultural nature of receipts and having accepted the supporting documentation, the Tribunal found no basis to substitute the assessee's agricultural income figure and held the Assessing Officer's adjustment of agricultural expenses and consequent reduction of agricultural income to be unsustainable. [Paras 7]

Assessee's agricultural income as declared is accepted and ground no.4 is allowed.

Final Conclusion: The appeal is allowed; the additions treating certain receipts as income from other sources and as business income are deleted and the agricultural income and related expenses declared by the assessee are accepted.

Non-service of notice under section 143(2) of the Income-tax Act - Validity of reassessment completed under section 147/143(3) - Inapplicability of section 292BB to earlier assessment years - Invalidation of reassessment order for want of jurisdiction

Non-service of notice under section 143(2) of the Income-tax Act - Validity of reassessment completed under section 147/143(3) - Inapplicability of section 292BB to earlier assessment years - Reassessment completed under section 147/143(3) for AY 2007-08 is invalid because notice under section 143(2) was not served and section 292BB does not cure the defect for that assessment year. - HELD THAT: - The Tribunal accepted the factual finding recorded by the CIT(A) that the notice under section 143(2) of the Act was not served on the assessee. Reliance on the statutory deeming/curative effect embodied in section 292BB was rejected because the Special Bench decision in Kuber Tobacco Products Pvt. Ltd. establishes that section 292BB is applicable only from AY 2008-09 onwards and thus cannot be invoked for AY 2007-08. In view of the established principle (as followed in Alpine Electronics Asia Pte Ltd v. DCIT) that non-service of a section 143(2) notice renders the assessment order invalid, the reassessment order passed under section 147/143(3) was quashed as bad in law and without jurisdiction. The Tribunal therefore allowed the ground raising non-service of the section 143(2) notice and set aside the reassessment. [Paras 5, 6]

Ground No. 1 allowed; reassessment order under section 147/143(3) for AY 2007-08 quashed as invalid for non-service of notice under section 143(2) and because section 292BB is not applicable to that year.

Final Conclusion: The assessee's appeal is allowed; the reassessment order for AY 2007-08 under sections 147/143(3) is quashed on account of non-service of the section 143(2) notice and the inapplicability of section 292BB to the assessment year in question.

Allowability of expenditure not claimed in return - claim of deduction for payment made under protest - application of Section 43B(a) to payments not legally obligatory - entertainment of fresh claims by appellate authority - effect of departmental adjudication on income tax allowability

Entertainment of fresh claims by appellate authority - allowability of expenditure not claimed in return - Permissibility and consequence of raising a fresh claim for customs duty before the appellate authority when it was not claimed in the return - HELD THAT: - The Tribunal recorded that the Ld. CIT(A) had allowed the assessee to raise the fresh claim before him and therefore grounds seeking permission to make the claim (Grounds 2 and 3) became infructuous. There being no challenge to the CIT(A)'s procedural admission of the claim, the Tribunal dismissed those grounds as having no real purpose in view of the appellate admission. [Paras 6]

Grounds 2 and 3 dismissed as infructuous since the CIT(A) permitted the fresh claim to be raised before the appellate forum.

Application of Section 43B(a) to payments not legally obligatory - claim of deduction for payment made under protest - effect of departmental adjudication on income tax allowability - Whether the claim for customs duty paid under protest could be allowed as a deduction under Section 43B(a) when a Customs authority subsequently held that the duty was not leviable - HELD THAT: - The Tribunal upheld the Ld. CIT(A)'s conclusion that, in light of the Deputy Commissioner of Customs' order finding that the additional duty was not leviable, the assessee was not legally obliged to pay the duty and would likely seek refund. The CIT(A) found the payment to be an "unknown liability" not constituting a contractual or statutory obligation crystallized for the year, and therefore not falling strictly within the permissible payments under Section 43B(a). The Tribunal found no infirmity in that reasoning and declined to interfere, accepting that the nature of the payment and the departmental adjudication precluded allowance of the deduction in the year of payment. [Paras 7]

Assessee's claim for customs duty paid under protest denied; the CIT(A)'s disallowance under Section 43B(a) upheld.

Final Conclusion: The appeal is dismissed: delay in filing condoned; Grounds 2 and 3 are infructuous and dismissed; on merits the disallowance of the customs duty paid under protest by the CIT(A) under Section 43B(a) is upheld in view of the Customs authority's finding that the duty was not leviable.

Long term capital gain - short term capital gain - indexation of cost of acquisition and improvement - bifurcation of sale consideration between land and building - consistency in treatment among co-owners - assessment under section 143(3) read with section 144C(13) of the Income Tax Act, 1961

Long term capital gain - indexation of cost of acquisition and improvement - consistency in treatment among co-owners - Whether the assessee is entitled to treatment of the capital gain as long term and to indexation on cost of acquisition and improvement, having regard to acceptance of identical claim in the hands of the co-owner - HELD THAT: - The Tribunal accepted that the co-owner (Sh. Harsh Bansal) had been allowed long term capital gain treatment with indexation by the Assessing Officer and held that identical treatment must be accorded to the assessee (Pradeep Bansal). The Tribunal relied on the principle of consistency in treatment among co-owners and observed that the Assessing Officer had thereafter examined the evidences and accepted the cost of acquisition and cost of improvement. Applying those findings, and having regard to precedents relied upon below, the Tribunal directed the AO to allow indexation on cost of acquisition and cost of improvement while computing long term capital gain in the assessee's hands as was done in the case of the co-owner. The Tribunal expressly rejected the DRP's conclusion that indexation was not allowable merely because the constructed floors came into existence and were sold within the same financial year, insofar as the land had been held since 1979 and the co-owner had been granted long term treatment. [Paras 6, 11]

Allowed the assessee's claim for long term capital gain treatment and directed the AO to allow indexation on cost of acquisition and cost of improvement as allowed in the co-owner's case.

Bifurcation of sale consideration between land and building - short term capital gain - Whether, alternatively, the sales consideration should be bifurcated and gains computed separately as long term in respect of land and short term in respect of building, and the tax consequence of such bifurcation - HELD THAT: - The Tribunal considered the assessee's alternative submission that gains attributable to land (held since 1979) and to the newly constructed building should be computed separately, treating land as long term and building as short term. It noted authorities accepting the principle of segregation of gains between land and building and analysed the assessee's computation (statement of computation and the basis of bifurcation of sale consideration). On that exercise the Tribunal found that even if bifurcation were adopted, no additional tax liability would arise for the assessee. Consequently, while recognising that gains attributable to land and building may be treated separately (land long term; building short term), the ultimate tax consequence did not operate against the assessee. The Tribunal therefore directed allowance of indexation in computing long term capital gain and proceeded to permit the relief prayed for. [Paras 12]

Accepted the alternative bifurcation in principle and found that, on the facts and computation before it, no additional tax arose; directed the AO to allow indexation in computing the long term component.

Final Conclusion: The appeal is allowed: the Tribunal directed the Assessing Officer to allow indexation on cost of acquisition and cost of improvement while computing long term capital gain in the assessee's hands (as allowed in the co-owner's case); the alternative contention of bifurcation between land (long term) and building (short term) was accepted in principle and found not to increase tax liability on the facts, and the assessment was to be computed accordingly.

Customs valuation and re-determination under Rule 4 of the Customs Valuation Rules, 1988 read with Section 14 of the Customs Act, 1962 - Admissibility of statements recorded by customs officers and documents recovered in course of business under Section 138B of the Customs Act and Section 32 of the Indian Evidence Act - Corroboration of extra judicial statements and electronic records recovered from a party's computer - Penalty for short levy or non levy by reason of collusion or willful mis statement under Section 114A of the Customs Act, 1962 and its effect on penalties under Sections 112/114 - Confiscation of goods and redemption fine

Customs valuation and re-determination under Rule 4 of the Customs Valuation Rules, 1988 read with Section 14 of the Customs Act, 1962 - Redetermination of assessable value of the imported MDF consignments and upholding of differential duty. - HELD THAT: - The Tribunal accepted the Commissioner's finding that undervaluation allegation was not founded on the laboratory grade test report but on documentary and electronic evidence uncovered during investigation. Documents and an email recovered from the supplier's office and computer indicated higher contractual prices than declared in the Bills of Entry and were corroborated by statements of the proprietor and other importers. On that basis the Commissioner's re-determination of value for the 15 bills of entry under Rule 4 read with Section 14 was sustained and the differential duty demand under the proviso to Section 28(1) was upheld. [Paras 6, 8]

Value re-determination at Rs.1,61,16,901/- [CIF] for the 15 bills of entry and the differential duty demand upheld.

Admissibility of statements recorded by customs officers and documents recovered in course of business under Section 138B of the Customs Act and Section 32 of the Indian Evidence Act - Corroboration of extra judicial statements and electronic records recovered from a party's computer - Admissibility and evidentiary weight of the statement of Shri Sathyanarayana and the email/documents recovered from his computer despite his unavailability for cross examination. - HELD THAT: - The Tribunal applied the provisions recognising statements made before customs officers and statements/documents of persons who are dead or cannot be found when made in the course of business. It was held that Sathyanarayana, as Country Manager of the supplier, had made and maintained records in the ordinary course of business; the email and computer recovered documents were corroborated by admissions and later statements of the proprietor and by other importers who accepted the documents. The Tribunal relied on precedent that statements recorded under the Customs Act are admissible and not affected by Section 25 of the Evidence Act or Article 20(3). Given corroboration by independent material, the absence of cross examination of Sathyanarayana did not render the material inadmissible. [Paras 7, 8]

Statements and electronic documents recovered from Sathyanarayana's computer were admissible and authentic; they could be relied upon for valuation and duty assessment.

Corroboration of a retracted statement and its evidentiary value - Whether the proprietor's retracted statement could be used in adjudication. - HELD THAT: - Although an earlier statement by the proprietor was retracted, he later gave a statement after being called pursuant to a High Court direction in which he confirmed having seen the documents and the mahazar prepared at the supplier's office and stated he was convinced by them. The Tribunal treated the retraction as an afterthought and held that subsequent confirmation and corroboration by documentary evidence and admission by other importers established the proprietor's statements as reliable for adjudicatory purposes. [Paras 4, 9, 10]

The proprietor's retracted statement was corroborated and could be relied upon; the retraction did not vitiate the evidentiary value of his subsequent admissions.

Penalty for short levy or non levy by reason of collusion or willful mis statement under Section 114A of the Customs Act, 1962 - Effect of Section 114A proviso on penalties under Sections 112 and 114 - Imposition and extent of penalty under Section 114A and interaction with penalties under Section 112. - HELD THAT: - Having found suppression of true value and collusion/willful mis statement proved by the unearthed invoices and corroborative material, the Tribunal applied Section 114A which makes the person liable to pay penalty equal to the duty or interest determined. The Tribunal noted the statutory scheme leaves no discretionary reduction in such cases except as provided by law. As a consequence of the proviso to Section 114A, once penalty under Section 114A is imposed, penalties under Sections 112 or 114 cannot be levied; accordingly the penalty under Section 114A was upheld and the Section 112(a) penalty imposed by the Commissioner was set aside. [Paras 10, 11]

Penalty under Section 114A upheld; penalty under Section 112(a) set aside pursuant to the proviso to Section 114A.

Confiscation of goods and redemption fine - Confiscation of the imported goods and the redemption fine imposed. - HELD THAT: - On the material establishing under invoicing and suppression of facts, the Tribunal sustained confiscation of the goods in all 15 bills of entry. The Tribunal accepted established precedent endorsing a 10% redemption fine as reasonable and therefore upheld the redemption fine at that rate. [Paras 11]

Confiscation of goods upheld and redemption fine of 10% of value upheld.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Commissioner's re determination of value and differential duty for the 15 bills of entry, admitted and relied upon the supplier's computer recovered documents and related statements as admissible and corroborated, sustained confiscation and the redemption fine, upheld penalty under Section 114A while setting aside the penalty under Section 112(a), and disposed of the appeal accordingly.

Maintainability of petition under Sections 241 and 242 - right to apply under Section 244 - requirement to establish title as member before invoking oppression and mismanagement remedies - rectification of register of members as prerequisite to seeking relief under Sections 241-242

Maintainability of petition under Sections 241 and 242 - right to apply under Section 244 - requirement to establish title as member before invoking oppression and mismanagement remedies - Whether the Company Petition under Sections 59, 241 and 242 was maintainable when the petitioner did not hold the requisite shareholding at the time of filing and his title to membership was in dispute - HELD THAT: - The Tribunal examined Section 244 and the contention that the petitioner's shareholding had been reduced below the statutory threshold by allegedly illegal transfers. The NCLT held that where a petitioner's title to membership is disputed and rectification of the register of members is required to clothe the petitioner with membership rights, it is improper to permit the petitioner to proceed with a petition for oppression and mismanagement until the title dispute is resolved. The Appellate Tribunal applied those principles, noting that the issue of the petitioner's membership must be decided first and affirmed the NCLT's conclusion that the petition was not maintainable. The Tribunal considered the appellant's submissions invoking precedents to the contrary but concluded that, on the facts and having regard to Section 244, the NCLT's approach was correct and did not call for interference. [Paras 17, 18, 19]

Petition not maintainable; appellant must first establish his title as a member before seeking relief under Sections 241-242.

Final Conclusion: The impugned NCLT order dated 03.05.2021 is affirmed; the appeal is dismissed and the petition was held not maintainable for want of established membership under Section 244.

Financial debt under Section 5(8) of the IBC, 2016 - Operational debt under Section 5(21) of the IBC, 2016 - Del Credere agent liability - Commercial effect of a borrowing - Maintainability of Section 7 application

Operational debt under Section 5(21) of the IBC, 2016 - Del Credere agent liability - Whether the claim arising from supplies of goods effected by the principal on the agent's recommendation constitutes an operational debt and not a financial debt. - HELD THAT: - On construction of the Del Credere Agency Agreement and the surrounding facts, the Tribunal found that the default arose from supply of PVC Suspension Resin by the Principal to the Corporate Debtor on the Agent's recommendation. Clause 15 of the agreement permits the Agent to initiate recovery proceedings only in the name and on behalf of the Principal and envisages the Principal executing a specific power of attorney; the Agent did not disburse money to the Corporate Debtor. The Scheme and definitions of the Code treat defaults in relation to supply of goods as operational debt. Given that the claim relates to amounts payable for supply of goods and the contractual arragements show receivables/invoicing in the Principal's name with collection arrangements, the claim is an operational debt and not a financial debt having the commercial effect of a borrowing. [Paras 33, 36, 56, 57, 60]

The Tribunal held that the claim is an operational debt arising from supply of goods and not a financial debt.

Financial debt under Section 5(8) of the IBC, 2016 - Commercial effect of a borrowing - Whether the Appellant's receipts/payments and invoices convert the claimed dues into a financial debt having the commercial effect of borrowing. - HELD THAT: - The Tribunal examined the invoices, debit notes and the Del Credere Agency Agreement and observed that no amount was disbursed by the Appellant to the Corporate Debtor; the Appellant collected/was to collect amounts for and on behalf of the Principal. Although interest clauses appear in invoices, the contractual structure and Clause 15 indicate recovery in the Principal's name and do not convert the transaction into a borrowing by the Corporate Debtor from the Appellant. Applying the statutory scheme and purpose of Section 5(8), the Tribunal concluded that the ingredients of a financial debt-disbursement against consideration for time value of money or transactions having the commercial effect of borrowing-were not made out on the record. [Paras 29, 31, 34, 56, 60]

The Tribunal held that the payments/invoices did not convert the claimed dues into a financial debt with the commercial effect of borrowing.

Maintainability of Section 7 application - Operational debt under Section 5(21) of the IBC, 2016 - Whether the Section 7 application filed by the Appellant is maintainable. - HELD THAT: - Having concluded that the claim is an operational debt (and not a financial debt), the Tribunal held that an application under Section 7 (for initiation of CIRP by a financial creditor) is ex facie not maintainable. The Tribunal also noted that the statutory remedy for recovery of operational debt is provided under Section 9 and that the Appellant had not issued a demand notice in terms of Section 8(1). In view of the classification of the debt and the statutory scheme, the admission of a Section 7 petition was rightly declined by the Adjudicating Authority. [Paras 60, 61, 62, 63]

The Tribunal affirmed that the Section 7 application is not maintainable because the claim is an operational debt, and consequently dismissed the appeal.

Final Conclusion: The Tribunal dismissed the appeal, affirming the Adjudicating Authority's conclusion that the claim arises from supply of goods and is an operational debt (not a financial debt), and that the Section 7 petition was therefore not maintainable; no costs.

Operational debt - date of default and effect of Section 10A suspension - guarantor / confirming party liability under settlement agreement - enforceability of unstamped or insufficiently stamped instruments

Operational debt - date of default and effect of Section 10A suspension - Whether defaults under the settlement agreement constitute an operational debt and whether the date of default falls within the suspended period under Section 10A thus barring initiation of CIRP. - HELD THAT: - The Tribunal accepted that the main petition was founded on alleged default pursuant to the tripartite settlement dated 16.07.2020 and that the first instalment fell due on 01.08.2020. It held that defaults of instalments under the settlement agreement do not retain the character of 'operational debt' for the purposes of Section 9, and further found that the actual date of default (01.08.2020) falls within the suspended period from 25.03.2020 to 24.03.2021 under the first proviso to Section 10A read with the notification S.O.4638(E) dated 22.12.2020. The Tribunal therefore concluded that the petition could not be entertained for defaults occurring during the suspended period and that the date of default alleged in Part IV of the petition was incorrect and appears to have been misstated to avoid Section 10A. The Tribunal relied on earlier decisions treating settlement-instalment defaults as outside the definition of operational debt and applied the statutory suspension to dismiss the petition. [Paras 42, 43, 44, 46, 47]

Defaults under the settlement instalment do not qualify as operational debt for a Section 9 petition, and the actual date of default (01.08.2020) falls within the Section 10A suspension period, rendering the petition barred.

Guarantor / confirming party liability under settlement agreement - Whether the corporate debtor, described as 'confirming party' in the settlement, is liable as guarantor so as to be a proper respondent in the Section 9 petition. - HELD THAT: - The Tribunal noted that the settlement agreement described the corporate debtor as a 'confirming party' and that the corporate debtor had specifically guaranteed payment if the second party defaulted. However, the Tribunal's ultimate assessment proceeded on the basis that the petition filed against the guarantor was founded on the settlement agreement. While liability as guarantor was recognised in the settlement's terms, the Tribunal found that the nature of the default (an instalment under the settlement) and the timing of the default (within the suspended period) were determinative and precluded admission of the Section 9 petition against the guarantor. [Paras 32, 42, 43]

Although the corporate debtor was described as a confirming party/guarantor in the settlement, the petition against it could not be entertained because the default was an instalment under the settlement and the actual date of default fell within the statutory suspension period.

Enforceability of unstamped or insufficiently stamped instruments - Whether the power of attorney, sales contracts and the settlement agreement produced by the appellant were valid and enforceable in view of non-compliance with Indian stamping and registration requirements. - HELD THAT: - The Tribunal examined the stamping and presentation of the documents relied upon by the appellant. It observed that the power of attorney was executed abroad and, although stamp paper was purchased in India and prefixed, the document did not satisfy the requirements of the Indian Stamp Act and related rules; accordingly the power of attorney was held invalid and unenforceable. The sales contracts and the settlement agreement were found to be on unstamped paper; Section 34 of the Kerala Stamp Act and the principles governing impounding and validation of unstamped/insufficiently stamped instruments led the Tribunal to conclude that those documents could not be pressed into service. The Tribunal therefore held that non-compliance with stamping and related formalities rendered the documents unenforceable in law. [Paras 37, 38, 39, 40, 41]

The power of attorney and the agreements, being unstamped or not compliant with stamping requirements, are invalid/unenforceable and could not be relied upon to sustain the petition.

Final Conclusion: The Tribunal found no material irregularity or patent illegality in the impugned order dismissing the Section 9 petition: the petition was barred because the relevant default under the settlement fell within the Section 10A suspension period, defaults of settlement instalments do not constitute operational debt for Section 9 purposes, and several documents relied upon were unenforceable for non-compliance with stamping requirements; the appeal is dismissed.

Liquidation estate - Security interest - Registered sale deed as requirement for transfer of ownership - Possession in permissive capacity - Doctrine of part performance (Section 53A, Transfer of Property Act) - Power of liquidator to form estate and admit claims - Exclusion of assets from liquidation only where charged to secured creditor

Security interest - Liquidation estate - Exclusion of assets from liquidation only where charged to secured creditor - Whether the Schedule B property is to be excluded from the liquidation estate on the ground that the appellants have an interest in it - HELD THAT: - The Tribunal found that no registered sale deed was executed in favour of the appellants and therefore no security interest was created in their favour within the meaning of the I&B Code. The Tribunal reiterated that only assets charged as security interest can be left outside the liquidation estate, and that the liquidator must form the estate including all assets over which the corporate debtor has ownership rights. On the admitted facts the ownership of the subject property rested with the corporate debtor and the units were not charged to the appellants; accordingly the property could not be carved out of the liquidation estate. [Paras 33, 34, 36, 37]

The Schedule B property is not excluded from the liquidation estate; no security interest in favour of the appellants exists.

Registered sale deed as requirement for transfer of ownership - Possession in permissive capacity - Doctrine of part performance (Section 53A, Transfer of Property Act) - Whether the appellants acquired ownership or a right to compel execution/registration of the sale deed from the liquidator despite non-registration - HELD THAT: - The Tribunal accepted the respondent's submission that an agreement to sell and mere possession do not confer title and that transfer of immovable property requires a registered instrument. The appellants' possession was held to be permissive (given for interior works) and not indicative of ownership. Although the appellants relied on the doctrine of part performance, the Tribunal concluded on the admitted facts that no registered conveyance existed and therefore the appellants were not entitled to the relief of directing the liquidator to execute and register the sale deed or to retain the property outside the liquidation process. [Paras 35, 38, 39, 40]

Appellants did not acquire ownership; they are not entitled to a direction to the liquidator to execute or register the sale deed or to retain the property outside liquidation.

Power of liquidator to form estate and admit claims - Admission of claims and custody of assets - Whether the liquidator acted correctly in admitting the appellants' claim and directing handover of control/custody of the subject property - HELD THAT: - The Tribunal noted that the appellants had submitted claims which were admitted by the liquidator and that the liquidator is obliged to include assets in the liquidation estate and preserve them. The admitted claim for unfinished works and the liquidator's enquiries about possession supported the liquidator's treatment of the property as corporate debtor's asset and his directions regarding control and custody were consistent with the Code and Regulations. [Paras 25, 26, 27]

The liquidator acted within his powers in admitting the appellants' claim and treating the property as part of the liquidation estate subject to custody and preservation.

Final Conclusion: The appeal is dismissed. The adjudicating authority's order denying exclusion of the Schedule B property from the liquidation estate and refusing the appellants' prayers for execution/registration of sale deed and related reliefs is upheld; no security interest or transfer of ownership in favour of the appellants was shown and the liquidator's actions were consistent with the Code.

Commercial wisdom of the Committee of Creditors - material irregularity in the corporate insolvency resolution process - publication of Form G and procedural compliance under CIRP Regulations - scope of judicial scrutiny by Adjudicating Authority under Section 31 limited to requirements of Section 30(2) - maximization of value of assets as overarching objective of the IBC - directory versus mandatory character of procedural requirements in IBC

Publication of Form G and procedural compliance under CIRP Regulations - material irregularity in the corporate insolvency resolution process - directory versus mandatory character of procedural requirements in IBC - Non-publication of Form G and related procedural deviations did not constitute a material irregularity warranting setting aside the CoC's decision in the facts of the present case. - HELD THAT: - The Tribunal found that Form G had been published on multiple occasions earlier, prospective resolution applicants and the promoter had been given repeated and ample opportunities to submit viable proposals, and the CoC had in fact resolved to liquidate after unsatisfactory or absent offers. Thereafter a resolution plan was received which the Resolution Professional placed before the CoC only after informing the CoC and obtaining directions from the Adjudicating Authority while the liquidation application was pending. Applying the principle that procedural irregularities under CIRP Regulations are to be read in the context of the Code's object of time bound resolution and maximization of asset value, the Tribunal held that the narrow procedural lapse of non-publication in the specific circumstances did not vitiate the entire process or cause prejudice to stakeholders. The Tribunal relied on the settled approach that technical non compliance with CIRP Rules may be disregarded where the process has reached an advanced stage, there is transparency in placing the plan before the CoC and Adjudicating Authority, and the outcome furthers the IBC mandate, and therefore no material irregularity under Section 61(3)(ii) was made out. [Paras 27, 28]

Allegation of material irregularity based on non-publication of Form G rejected; the procedural lapse did not undermine integrity of the resolution process in the given facts.

Commercial wisdom of the Committee of Creditors - scope of judicial scrutiny by Adjudicating Authority under Section 31 limited to requirements of Section 30(2) - maximization of value of assets as overarching objective of the IBC - Adjudicating Authority did not err in approving the resolution plan; its limited role is to satisfy itself about compliance with Section 30(2) and not to substitute its judgment for the CoC's commercial decision. - HELD THAT: - The Tribunal reiterated that the decision to accept a resolution plan is essentially a business decision of the CoC and the Adjudicating Authority's scrutiny under Section 31 is confined to whether the plan meets the conditions of Section 30(2). Where the CoC, after deliberation, approves a plan (here by 100% voting share) having considered feasibility and viability, the commercial wisdom of the CoC is entitled to primacy and judicial interference is permissible only on the limited statutory grounds. Given that the CoC had considered the plan in multiple meetings, the Resolution Professional had apprised the Adjudicating Authority and sought its directions, and the plan offered value materially above liquidation value, the Tribunal held that the Adjudicating Authority rightly approved the plan and did not exceed its jurisdiction. [Paras 30, 31, 34]

Approval by the Adjudicating Authority upheld; no interference with CoC's commercial decision as the statutory requirements under Section 30(2) and the limited scope of Section 31 review were satisfied.

Final Conclusion: Both appeals are dismissed; the impugned orders of the Adjudicating Authority keeping the liquidation application in abeyance and approving the resolution plan are upheld as the alleged procedural lapse did not amount to material irregularity and the Adjudicating Authority acted within the limited scope of its review under the IBC.

Priority of PUFE (avoidance) applications vis-a -vis approval of a resolution plan - Resolution plan approval by the Adjudicating Authority - Eligibility under Section 29A (ineligibility of persons connected with avoidance/PUFE transactions) - Concurrent adjudication of PUFE applications and resolution plan approval - Obligation under an approved resolution plan to pursue pending avoidance (PUFE) applications

Priority of PUFE (avoidance) applications vis-a -vis approval of a resolution plan - Resolution plan approval by the Adjudicating Authority - Adjudicating Authority erred in directing that PUFE (avoidance) applications be decided first and adjourning the resolution plan approval application pending that decision. - HELD THAT: - The Tribunal recognised that Section 26 of the Code provides that filing of avoidance applications shall not affect the proceedings of the corporate insolvency resolution process and that the legislative intent is that avoidance proceedings should not stall CIRP. The Committee of Creditors had approved the resolution plan and reiterated its request that the plan approval application be considered. The Adjudicating Authority's reason for deferring the plan - that a finding on PUFE might jeopardise the project - did not justify postponing consideration of the plan where the plan approval application has been pending since 09.11.2021 and the CoC had directed its consideration. The Tribunal held that there is no statutory bar to the Adjudicating Authority considering the plan approval application notwithstanding pending PUFE applications and that the Adjudicating Authority erred in observing the plan must be deferred until PUFE applications are decided.

Impugned order insofar as it deferred the plan approval to await decision on PUFE applications is set aside and the Adjudicating Authority is directed to proceed to decide the resolution plan application without awaiting PUFE decisions.

Concurrent adjudication of PUFE applications and resolution plan approval - Priority of PUFE (avoidance) applications vis-a -vis approval of a resolution plan - Adjudicating Authority may, but need not, hear and decide the plan approval application and PUFE applications simultaneously; it is permissible to consider both together. - HELD THAT: - The Tribunal observed that the Adjudicating Authority is well within its jurisdiction to consider the plan approval and PUFE applications together. Where objections of ineligibility or consequences of PUFE findings exist, the Adjudicating Authority can address them while deciding the plan; there is no impediment to simultaneous adjudication. To allay concerns that a successful plan approval might frustrate prosecution of PUFE matters, interested parties (including the RP or intervener) may seek appropriate leave from the Adjudicating Authority to prosecute PUFE applications if required.

Adjudicating Authority is permitted to hear and decide the resolution plan and the PUFE (avoidance) applications concurrently and should endeavour to decide the matters at an early date.

Eligibility under Section 29A (ineligibility of persons connected with avoidance/PUFE transactions) - Resolution plan approval by the Adjudicating Authority - Question of the resolution applicant's eligibility, including objections under Section 29A arising from alleged preferential, undervalued or fraudulent transactions, must be considered by the Adjudicating Authority while deciding the plan approval application. - HELD THAT: - The Tribunal noted the submissions of the intervener that a finding on PUFE could render the appellant ineligible under the eligibility regime (Section 29A). It held that the Adjudicating Authority, when considering plan approval, must examine any raised objections as to the resolution applicant's eligibility. There is no requirement to decide PUFE applications prior to considering eligibility; eligibility can be adjudicated in the course of the plan approval proceedings and the Adjudicating Authority can take appropriate steps to ensure PUFE issues are addressed.

Adjudicating Authority shall decide the plan approval application and shall also consider and decide any challenge to the resolution applicant's eligibility raised by stakeholders.

Obligation under an approved resolution plan to pursue pending avoidance (PUFE) applications - The approved resolution plan contemplates that the successful resolution applicant would pursue the pending avoidance (PUFE) applications, but if the plan is decided in favour of the applicant it remains open for the Resolution Professional to seek leave to prosecute those PUFE applications instead of the SRA. - HELD THAT: - The Tribunal noted Clause 9.16 of the approved plan which states that amounts realized from transaction applications will be distributed to creditors and that the resolution applicant undertakes to pursue all avoidance applications. The Tribunal recorded that this is a term of the CoC-approved plan. Simultaneously, the Tribunal left open the procedural option that, following plan approval, the RP may apply to the Adjudicating Authority for liberty to prosecute PUFE applications in place of the SRA, having regard to the facts of the case.

Plan terms requiring the SRA to pursue PUFE applications are recognised; however, the RP may seek permission from the Adjudicating Authority to prosecute those PUFE applications instead of the SRA.

Final Conclusion: The Adjudicating Authority's order directing PUFE applications to be decided first and deferring consideration of the resolution plan is set aside. The Adjudicating Authority is directed to proceed to decide the resolution plan application (I.A. No. 5385 of 2021) and to consider the resolution applicant's eligibility, and may hear and decide the plan and PUFE applications (including the listed I.A. matters) concurrently; the RP may, if appropriate, seek leave to prosecute PUFE applications in place of the SRA, and the Adjudicating Authority should endeavour to decide the matters at the earliest.

Constitutional validity of the Prevention of Money-Laundering Act, 2002 - protection against double jeopardy under Article 20(2) of the Constitution - money laundering as an independent offence distinct from scheduled offences - temporal applicability of scheduled offences - continuing offence principle for proceeds of crime - inapplicability of Section 235 Cr.P.C. to prosecution under distinct statutory offences

Constitutional validity of the Prevention of Money-Laundering Act, 2002 - Validity of challenge to PMLA provisions raised by the petitioners - HELD THAT: - The challenge to the constitutional validity of provisions of the PMLA was held to be foreclosed by the binding decision of the Supreme Court in Vijay Madanlal Choudhary v. Union of India, 2022 SCC Online SC 929. The High Court declined to re-open or re-examine the constitutional validity of the statute in view of the Supreme Court's authoritative pronouncement. [Paras 10]

The constitutional challenge to the PMLA is rejected as settled by the Supreme Court.

Protection against double jeopardy under Article 20(2) of the Constitution - money laundering as an independent offence distinct from scheduled offences - Whether proceedings under the PMLA amount to double jeopardy given parallel trial under ULA(P) Act - HELD THAT: - Article 20(2) protects against prosecution and punishment for the same offence more than once. The Court applied the principle that offences under the ULA(P) Act are distinct from the offence of money laundering under Section 3 of the PMLA. Relying on the Supreme Court's exposition that money laundering is an independent offence concerning processes or activities connected with proceeds of crime, the Court held that prosecution under the PMLA does not amount to prosecution for the same offence as that pending under the ULA(P) Act. Consequently, Article 20(2) is not attracted. [Paras 11, 12, 13, 14, 15]

Proceedings under the PMLA do not amount to double jeopardy in presence of separate charges under ULA(P) Act.

Inapplicability of Section 235 Cr.P.C. to prosecution under distinct statutory offences - Applicability of Section 235 Cr.P.C. (trial for more than one offence) to the facts of the case - HELD THAT: - Section 235 Cr.P.C. concerns framing of charge and trial for a series of acts connected to the same transaction. The Court found that Section 235 Cr.P.C. has no application where offences under distinct statutes (here, ULA(P) Act and PMLA) are involved and where the PMLA offence is independent in character. [Paras 16]

Section 235 Cr.P.C. does not apply to bar prosecution under the PMLA in the present facts.

Temporal applicability of scheduled offences - continuing offence principle for proceeds of crime - Whether money laundering prosecution under the PMLA can proceed where the predicate offence predated inclusion in the Schedule - HELD THAT: - Adopting the Supreme Court's reasoning, the Court held that the offence of money laundering concerns processes or activities in relation to proceeds of crime and may be a continuing offence. Liability under the PMLA depends on the date on which a person indulges in the process or activity connected with proceeds of crime, not on the date of commission of the predicate offence. Thus, even if the predicate offence occurred before its notification as a scheduled offence, prosecution for continuing dealings with proceeds of crime after notification is maintainable. Additionally, since Section 121 A RPC (in pari materia with IPC) was a scheduled offence prior to the 2009 amendment, prosecution under the PMLA is sustainable on that ground as well. [Paras 17, 18, 19, 20]

PMLA prosecution is maintainable notwithstanding that the predicate criminal activity predated its inclusion in the Schedule, where dealings with proceeds continued thereafter; moreover, Section 121 A provided independent basis as it was already a scheduled offence.

Final Conclusion: Petitions dismissed. The challenges to PMLA provisions and to initiation of proceedings under the PMLA on grounds of unconstitutionality, double jeopardy, temporal non applicability, and in reliance on Section 235 Cr.P.C. were rejected; interim orders, if any, are vacated.

Exemption under Notification No.8/2002-Central Excise - brand name or trade name - use with intention of indicating a connection - fortuitous or coincidental use of a brand name - test for denial of exemption (same/similar mark + intention to indicate connection) - quashing of show cause notice and setting aside appellate order

Exemption under Notification No.8/2002-Central Excise - brand name or trade name - test for denial of exemption (same/similar mark + intention to indicate connection) - fortuitous or coincidental use of a brand name - entitlement of the appellant to exemption under Notification No.8/2002-Central Excise despite manufacture and sale of goods bearing the brand name 'SUNCA'. - HELD THAT: - The Court applied the established test from earlier precedents which requires the Department to prove that (1) the goods use the same or a similar brand name; (2) such name was used with the intention of indicating a connection between the assessee's goods and those of another person; and (3) the use of the brand name would, on fair appraisal, indicate such connection. On the facts found and the materials before the Court, the brand name 'SUNCA' was shown to be registered to a third party (M/s. Sun Fat (Holding) Co. Ltd.), but there was no material establishing any business connection between that third party and the appellant, nor any evidence that the appellant used the brand name with the requisite intention to indicate a connection. The Court further noted that the Revenue itself changed its case before the Tribunal, abandoning the earlier contention that the mark derived from moulds imported from M/s. Mikura Impex. In these circumstances the use of the mark by the appellant was held to be fortuitous and not intended to indicate a connection with the third party. Applying the legal test, the Court concluded that the appellant was entitled to the benefit of the exemption under the Notification.

The appellant is entitled to exemption under Notification No.8/2002-Central Excise because the Department failed to establish that the use of the 'SUNCA' brand name was with an intention to indicate a connection with another person; the use was fortuitous.

Quashing of show cause notice and setting aside appellate order - restoration of Appellate Commissioner's order - validity of the show cause notices and correctness of CESTAT's denial of exemption and consequential orders. - HELD THAT: - The Court found that the show cause notices were issued on an erroneous premise and that the Revenue altered its line of argument before the CESTAT, relying on a third-party registration which did not establish the necessary connection or intention. In view of the foregoing conclusion that the appellant was entitled to exemption, the CESTAT's order denying exemption was held to be in error. Consequently, the show cause notices were quashed, the CESTAT order was set aside, and the order of the Appellate Commissioner (which had allowed exemption in respect of certain goods) was restored.

Show cause notices quashed; CESTAT order set aside; Appellate Commissioner's order restored; appeals allowed.

Final Conclusion: The appeals are allowed: the Court held that the Department failed to prove use of the 'SUNCA' mark with an intention to indicate connection with another person, the use was fortuitous, the show cause notices were issued on an erroneous premise, the CESTAT's denial of exemption was set aside and the order of the Appellate Commissioner restored.

Remission of duty - Conditions of exemption under notification - EOU duty free imports and indigenous procurement - Unavoidable accident / act of God - Duty payable when conditions violated - Rule 21 of the Central Excise Rules - Section 23 of the Customs Act - Explanation to Rule 6 - deemed use for intended purpose

Remission of duty - Conditions of exemption under notification - EOU duty free imports and indigenous procurement - Whether Customs duty/ duty forgone on imported capital goods destroyed in a factory fire is exigible where the capital goods had been installed and used for several years prior to destruction - HELD THAT: - The Tribunal found on the admitted record that the imported capital goods were procured between 2002 and 2007 and were installed and put to use in the EOU for a period ranging from about three to ten years prior to the fire. The Notification imposes a condition that duty becomes exigible only if capital goods are not installed or used within one year of import. That factual requirement was not present here. Reliance on precedents (including Laxai Avanti Live Sciences and Sami Labs) establishes that where goods have been put to intended use and are subsequently destroyed by an unavoidable accident or act of God, remission under the statutory scheme and Rules (including Rule 21 / Section 23 framework) is available and the department cannot demand duty on the ground that conditions were not fulfilled. The Tribunal therefore held that the Department could not sustain demands of Customs duty in respect of the imported capital goods destroyed in the fire.

Demand of Customs duty on the imported capital goods destroyed in the fire is not sustainable; remission is allowable.

Remission of duty - Explanation to Rule 6 - deemed use for intended purpose - Unavoidable accident / act of God - Whether Central Excise duty on indigenously procured inputs/raw materials destroyed in the factory fire is exigible despite those inputs being at various stages of production (work in progress) - HELD THAT: - The Tribunal accepted the factual finding that raw materials and intermediate goods were in the production premises and had been issued for production when the fire occurred. The Explanation to Rule 6 (which clarifies deemed use in certain loss/destruction scenarios) does not reasonably operate to deny remission where materials in the production premises are destroyed by unavoidable accident. Authorities cited (Sami Labs and others) recognise that Rule 21 of the Central Excise Rules and the principle underlying Section 23 permit remission where performance of the condition is rendered impossible without fault of the assessee. Demanding duty on indigenously procured inputs destroyed by an unavoidable accident would be contrary to these principles. Accordingly, the confirmed demands in respect of such inputs could not be sustained.

Demand of Central Excise duty on indigenously procured raw materials / work in progress destroyed in the fire is not sustainable; remission is allowable.

Final Conclusion: The Tribunal set aside the impugned orders insofar as they rejected remission and confirmed demands for duty on imported capital goods and indigenously procured inputs destroyed in the fire, holding that those goods had been used for the intended purpose and that remission is available where destruction resulted from an unavoidable accident; appeals are allowed with consequential reliefs as per law.

Summary order. Delay condoned; no ground found to interfere with the impugned judgment/order; special leave petition dismissed; pending applications, if any, disposed of.

Presumption under Section 118 and 139 of the Negotiable Instruments Act - rebuttable presumption and standard of proof of preponderance of probabilities - liability of drawer for a signed blank cheque filled by the payee - proof of legally enforceable debt for offence under Section 138 of the Negotiable Instruments Act - scope of interference in revision under Section 397 of the Code of Criminal Procedure in respect of concurrent findings - appellate scrutiny of sentence and non-interference with discretionary sentencing unless perverse

Presumption under Section 118 and 139 of the Negotiable Instruments Act - liability of drawer for a signed blank cheque filled by the payee - rebuttable presumption and standard of proof of preponderance of probabilities - Whether the presumption arising under Sections 118(a) and 139 of the Negotiable Instruments Act was rightly drawn and whether the accused rebutted that presumption. - HELD THAT: - The Court accepted that the signatures on the cheques were admitted and applied the settled principle that admission of signature attracts the presumptions under Sections 118(a) and 139. Reliance was placed on authoritative precedent that a signed blank cheque voluntarily handed over to a payee may be filled by the payee and would not, by that fact alone, invalidate the cheque; the onus lies on the drawer to raise a probable defence on the preponderance of probabilities. The trial court and the appellate court recorded specific findings that the defence explanation (that the cheques were handed over only as security to enable the complainant to obtain loans) was not supported by evidence: the accused did not seek return of the cheques after dishonour, did not stop payment, did not lodge complaint about misuse, did not examine the alleged creditors said to have received the cheques as justification, and produced no material to show his own financial capacity. In that factual matrix the Courts below correctly held that the accused failed to rebut the statutory presumption and that the complainant had satisfied the requirements of Section 138. [Paras 16, 17, 19, 23]

Presumption under Sections 118(a) and 139 was rightly drawn; the accused failed to rebut it on the preponderance of probabilities and conviction under Section 138 was sustainable.

Proof of legally enforceable debt for offence under Section 138 of the Negotiable Instruments Act - rebuttable presumption and standard of proof of preponderance of probabilities - Whether the complainant proved the existence and source of the loans alleged to have been advanced to the accused and thereby established a legally enforceable debt. - HELD THAT: - The Courts below accepted the complainant's oral testimony together with authenticated copies of income tax returns and balance sheets filed in evidence which, inter alia, reflected disclosure of loans advanced to the accused and a sale of jewellery used to finance the second loan. The trial court dealt with the non availability of some authenticated returns from the department by noting the department's inability to produce voluminous records and placed reliance on the authenticated returns that were produced (including computation for AY 2008 09 showing sale of jewellery and balance sheet entries disclosing the loan). The appellate court found no reason to upset these findings. The accused's contentions about non examination of certain witnesses and inconsistencies were considered and rejected as insufficient to render the complainant's case improbable in comparison with the documentary and oral evidence relied upon. [Paras 20, 21, 22]

The complainant established the factum and sources of the loans to the requisite standard; the finding of legally enforceable debt was upheld.

Scope of interference in revision under Section 397 of the Code of Criminal Procedure in respect of concurrent findings - appellate scrutiny of sentence and non-interference with discretionary sentencing unless perverse - Whether this revision court should interfere with the concurrent findings of conviction and the sentence imposed by the trial court and affirmed on appeal. - HELD THAT: - The Court confined its role in a revision under Section 397 Cr.P.C. to assessing the correctness, legality or propriety of concurrent findings and found no illegality or perversity in the reasons recorded by the trial court or the appellate court. The appellate court's detailed consideration of aggravating and mitigating circumstances and its view that the substantive sentence was not excessive (indeed was on the lower side) was endorsed. There was no basis shown for reducing or setting aside the sentence or for disturbing the conviction. [Paras 8, 13, 24, 25, 33]

No interference with the concurrent conviction and sentence; the revision petition is dismissed and the sentence and payment directions are to be complied with.

Final Conclusion: The revision petition is dismissed. The Courts below correctly applied the statutory presumptions under Sections 118(a) and 139 NI Act, the complainant's evidence and authenticated tax records adequately established the loans and source thereof, the accused failed to rebut the presumption on preponderance of probabilities, and there is no ground to interfere with the conviction under Section 138 or with the sentence affirmed on appeal; the petitioner is directed to pay the balance fine/compensation and surrender as ordered.

Maintainability of prosecution under Section 138 of Negotiable Instruments Act - meaning of 'business of money lending' and 'loan' under the Bombay Money Lenders Act - prohibition on suit for money lenders without licence under section 10 of Bombay Money Lenders Act - presumption under section 139 of the Negotiable Instruments Act - conviction and sentencing alternatives under Section 138 of Negotiable Instruments Act

Meaning of 'business of money lending' and 'loan' under the Bombay Money Lenders Act - prohibition on suit for money lenders without licence under section 10 of Bombay Money Lenders Act - maintainability of prosecution under Section 138 of Negotiable Instruments Act - presumption under section 139 of the Negotiable Instruments Act - Whether the complainant was carrying on the business of money lending without a licence so as to render prosecution under Section 138 of the Negotiable Instruments Act not maintainable - HELD THAT: - The High Court examined the trial Court's conclusion that documents (Exhibits 25-29 and others) established the complainant as a money lender and thereby barred the prosecution. The Court analysed the statutory definitions in the Bombay Money Lenders Act distinguishing the 'business of money lending' from a singular advance or advances by way of loan. A 'loan' advanced on the basis of a negotiable instrument (post dated cheque in this case) falls within the meaning of 'loan' but does not necessarily amount to carrying on the business of money lending. The Court noted that section 10 of the Bombay Money Lenders Act bars passing a money decree in a suit by an unlicensed moneylender, but that prohibition pertains to suit/decree and does not ipso facto oust prosecution under Section 138 unless the underlying debt is not a legally recoverable debt or liability. Applying the presumption under Section 139 (admission of issuance of cheque) and on the evidence before it - the receipt (Exhibit 17), the cheques, dishonour, service of notice and the accused's unsubstantiated plea of repayment - the Court held the trial Court erred in non suiting the complainant solely on the basis of the documents relied on by the accused. The materials did not establish that the advances constituted the business of money lending such that the debt would be non recoverable as a matter of law. [Paras 11, 12, 13, 14, 15]

Trial Court's finding that the complainant was carrying on the business of money lending without licence and consequent acquittal was erroneous; prosecution under Section 138 was maintainable and the ingredients of the offence were proved.

Presumption under section 139 of the Negotiable Instruments Act - maintainability of prosecution under Section 138 of Negotiable Instruments Act - conviction and sentencing alternatives under Section 138 of Negotiable Instruments Act - Whether the accused was guilty of the offence under Section 138 and what sentence was appropriate - HELD THAT: - On the evidence accepted by the Court - issuance and dishonour of the cheque, service of statutory notice and failure to substantiate alleged repayment - the necessary ingredients of Section 138 were found to be proved. The Court, exercising its appellate power, set aside the acquittal, convicted the accused for the offence under Section 138 and considered sentencing. Taking into account the facts and period of pendency, the Court declined to impose imprisonment but imposed a monetary sentence in the statutory alternative. The order directs payment of a fine amounting to twice the cheque value, provides for distribution of the deposited amount between the complainant and the government, and prescribes an alternative simple imprisonment of one month in case of default in payment within the stipulated period. [Paras 15]

Accused convicted under Section 138; directed to pay fine equivalent to twice the cheque amount with specified appropriation and subject to alternate simple imprisonment of one month on default.

Final Conclusion: Appeal allowed; the High Court set aside the trial Court's acquittal, held that prosecution under Section 138 was maintainable as the advances were not shown to be the business of money lending without licence, convicted the accused and imposed a fine in lieu of imprisonment with a limited alternative period of simple imprisonment on default.