TaxTMI Updates e-Newsletter
Sep 07,2020

Provisional release of detained goods on deposit and bond - extension of limitation for filing appeal - appealability of orders under GST enforcement provisions - deposit as condition for provisional release pending appeal

Provisional release of detained goods on deposit and bond - deposit as condition for provisional release pending appeal - Authority directed provisional release of the detained goods/materials on specified financial and security conditions without adjudicating the correctness of the underlying demand. - HELD THAT: - The court did not adjudicate the substantive legality of the seizure or the tax and penalty demands. Observing that the orders impugned are appealable and by analogy to an earlier order in Chandimata Iron, the court granted interim relief permitting provisional release of the goods upon the petitioner depositing 25% of the disputed tax and penalty and furnishing a bond securing the remainder of the demand. The release was ordered to be effected by the detaining authority within three days of deposit and execution of the bond. The direction preserves the respondents' rights to pursue the tax and penalty claim and is made expressly subject to the outcome of any appeal.

Detained goods to be released on deposit of 25% of the disputed tax and penalty and on furnishing a bond securing the balance; release to be effected within three days of compliance, subject to the result of appeal.

Extension of limitation for filing appeal - appealability of orders under GST enforcement provisions - Court extended the time for filing an appeal against the impugned orders by a limited period and declined to decide the merits in writ jurisdiction. - HELD THAT: - The court noted that the orders challenged are appealable and, rather than deciding the substantive dispute in writ proceedings, facilitated the appellate remedy by permitting the petitioner to file an appeal. Recognising that limitation had in the petitioner's case already expired, the court granted an extension: if the appeal is filed within 15 days from the date of this order, the limitation period shall be treated as extended for that 15-day period. This direction enables the petitioner to invoke the appellate process while the provisional release conditions secure the State's revenue interest.

Petitioner permitted to file appeal within 15 days; the period of limitation is extended to cover those 15 days.

Final Conclusion: Writ petition disposed of by granting interim relief: detained goods ordered released on deposit of 25% of the disputed tax and penalty and on furnishing a bond for the balance; release to follow within three days of compliance; petitioner permitted to file appeal within 15 days with the limitation extended accordingly; substantive questions reserved to the appellate forum.

Reimbursement of differential tax due to change from Value Added Tax to Goods and Services Tax - revised guidelines relating to works contract under GST - administrative representation and reconsideration in light of executive guidelines - interim protection from coercive action pending administrative decision

Reimbursement of differential tax due to change from Value Added Tax to Goods and Services Tax - revised guidelines relating to works contract under GST - administrative representation and reconsideration in light of executive guidelines - Direction to seek administrative adjudication under the revised Government of Odisha guidelines dated 10.12.2018 instead of deciding the claim on merits in the writ petition - HELD THAT: - The petitioner challenged non-reimbursement of additional tax liability arising from the change in tax regime from VAT to GST for works contracts. The Court noted that the State has issued revised guidelines dated 10.12.2018 laying down a procedure to determine the GST-inclusive value for balance work, including calculation steps, requirement of supplementary agreement and reimbursement where the revised value exceeds the original agreement value. In view of these revised executive guidelines and the pendency of similar batch matters, the Court directed the petitioner to file a comprehensive representation before the appropriate authority within four weeks, and required the authority to consider and dispose of the representation expeditiously and in the light of the revised guidelines. The Court did not adjudicate the substantive entitlement on merits but entrusted fresh administrative consideration in accordance with the prescribed procedure. [Paras 5, 7, 8, 9, 11]

Petitioner to file representation within four weeks; authority to decide expeditiously having regard to the revised guidelines dated 10.12.2018; substantive claim left open for administrative decision and further challenge if aggrieved.

Interim protection from coercive action pending administrative decision - Grant of temporary protection against coercive action until a specified date - HELD THAT: - The Court granted interim relief preventing coercive action being taken against the petitioner until 21.10.2020 to enable the petitioner to pursue the representation directed by the Court and to allow the authority time to consider it under the revised guidelines. This protection is prospective and time-bound, and does not determine the merits of the underlying reimbursement claim. [Paras 10]

No coercive action shall be taken against the petitioner until 21.10.2020.

Final Conclusion: Writ petition disposed by directing the petitioner to make a representation to the appropriate authority within four weeks; the authority to consider and dispose of it expeditiously in accordance with the Finance Department's revised guidelines dated 10.12.2018; interim protection from coercive action granted until 21.10.2020; substantive entitlement left open for administrative decision and further challenge if aggrieved.

Alternative remedy under Section 107 of the U.P. Goods and Services Tax Act, 2017 - challenge to order passed under Section 129 as assessment/determination of tax liability and penalty - competence of Appellate Authority to entertain appeal and stay/review of demand

Alternative remedy under Section 107 of the U.P. Goods and Services Tax Act, 2017 - Maintainability of writ petition where an appeal under Section 107 is available - HELD THAT: - The High Court declined to adjudicate the substantive objections to the impugned order on merits because an efficacious statutory remedy by way of appeal under Section 107 is available to the petitioner. The court observed that the legislative scheme embodied in Section 107 contemplates consideration of objections and provides procedures for appeals, stay applications and adjudication by the Appellate Authority, and thus supplies an alternative forum for raising the contentions urged before the Court. On that basis the petition was dismissed on the ground of availability of the alternative remedy.

Writ petition dismissed on the ground of alternative remedy; petitioner directed to pursue remedies under Section 107.

Challenge to order passed under Section 129 as assessment/determination of tax liability and penalty - scope of proceedings under Section 129 - Status of the impugned order insofar as it assesses tax liability and imposes penalty and the forum for its challenge - HELD THAT: - The court noted that the pith and substance of the impugned order passed under Section 129 is in the nature of an order assessing tax liability and determining penalty. The court did not decide the merits of the contention that tax liability cannot be fixed in Section 129 proceedings; instead, it held that such objections fall within the ambit of issues which the statutory appeal under Section 107 can consider. Consequently, the correctness or legality of the impugned determination was left to be examined by the Appellate Authority in the appeal.

Substantive allegations of excess of jurisdiction or illegality in the Section 129 order were not adjudicated; such objections are to be raised and decided in appeal under Section 107.

Competence of Appellate Authority to entertain appeal and stay/review of demand - Procedure and directions concerning the appellate remedy, stay applications and treatment of delay in filing the appeal - HELD THAT: - The court directed that the petitioner is at liberty to raise all objections before the Appellate Authority. It observed that, if the revenue presses recovery with urgency, the petitioner may apply to the Appellate Authority for appropriate relief and that the Appellate Authority should decide any such application expeditiously and in accordance with law. Pursuant to the petitioner's undertaking, the court directed that if the petitioner files an appeal within two weeks together with a copy of the order, the Appellate Authority shall decide the appeal and any stay application on merits without going into the question of delay.

Appellate Authority directed to hear and decide the appeal and any stay application expeditiously and on merits; delay in filing to be ignored if appeal filed within two weeks with a copy of this order.

Final Conclusion: The writ petition is dismissed on the ground of alternative remedy; the petitioner may file an appeal under Section 107 and raise all objections there, and the Appellate Authority is directed to expeditiously decide the appeal and any stay application, treating a timely appeal filed within two weeks (with a copy of this order) without strictness on delay.

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - expiry of provisional attachment after one year under Section 83(2) - revocation of cancellation of registration - direction to competent authority to reconsider and pass fresh order - protection of revenue interest

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - expiry of provisional attachment after one year under Section 83(2) - Validity and continued effect of the provisional attachment order dated 06.09.2019 - HELD THAT: - The court observed that Section 83(2) provides that every provisional attachment shall cease to have effect after the expiry of one year from the date of the order made under sub section (1). The provisional attachment dated 06.09.2019 therefore 'outlived its life' after the one year period specified in Section 83(2). Although the bank account remained attached and the department has a pending dispute regarding tax liability for the period prior to 06.09.2019, the statutory limitation on the duration of provisional attachment is determinative of its continued effect. The court noted that the petitioner has been unable to operate the business account since the provisional attachment, and that no continuing legal basis was available to sustain an attachment beyond the one year period prescribed by Section 83(2).

Provisional attachment dated 06.09.2019 has ceased to have effect after one year and cannot be sustained beyond the period prescribed by Section 83(2).

Revocation of cancellation of registration - direction to competent authority to reconsider and pass fresh order - protection of revenue interest - Relief and further procedure to be followed by the revenue in view of revocation of cancellation and the expiry of provisional attachment - HELD THAT: - The court recorded that the Office of the Principal Commissioner had revoked the cancellation of the petitioner's registration by order dated 24.12.2019, but the bank account remained provisionally attached. Observing that the respondents had failed to provide instructions in a timely manner, the court emphasised the revenue's duty to act efficiently and avoid harassment of the assessee. Rather than deciding the tax dispute on merits, the court directed the competent authority to consider the petitioner's grievances afresh and to pass a fresh order in accordance with law, taking into account the statutory limitation in Section 83(2) and the revocation of cancellation. The direction requires the revenue to reassess the continued necessity and legality of any attachment and to act consistently with the interest of revenue and applicable statutory provisions.

Competent authority directed to consider the petitioner's grievances and pass a fresh order in accordance with law, keeping in mind Section 83(2) and the revocation of cancellation of registration.

Final Conclusion: Writ petition disposed of with direction to the competent authority to reconsider the matter and pass a fresh order in accordance with law, having regard to the one year limit on provisional attachment under Section 83(2) and the revocation of the cancellation of the petitioner's registration.

Summary order. Notice issued to the Union of India; petition seeking refund of outstanding IGST adjourned for two weeks and listed on 22nd September, 2020; CM Application 20611/2020 allowed subject to all just exceptions.

Input Tax Credit - transition of input tax credit under Section 140 - Form GST TRAN-1 - GST portal technical glitch affecting filing - IT grievance redressal mechanism

Input Tax Credit - Form GST TRAN-1 - GST portal technical glitch affecting filing - IT grievance redressal mechanism - Direction to petitioner to file a fresh application with the Nodal Officer and direction to the Nodal Officer to consider and redress the grievance regarding inability to file Form GST TRAN-1 on account of portal inaccessibility. - HELD THAT: - The Court declined to adjudicate the merits of the petitioner's claim to Input Tax Credit or any entitlement under the transitional provision for pre-GST credit, and instead issued procedural directions. The petitioner was directed to move a fresh application to the respondent No.5-the Additional Commissioner (CGST), Nodal Officer IT Grievance Redressal Mechanism, attaching a copy of the order within three weeks. The Nodal Officer, who is the appropriate authority to address portal-related grievances, was directed to examine all grievances of the petitioner and take necessary steps to redress them within four weeks of receipt of the fresh application. The order records that the GST portal is managed by the Goods and Services Tax Network (GSTN) and that technical glitches prevented access to TRAN-1, but the Court did not decide entitlement to the claimed credit and limited its relief to directing administrative redressal by the designated authority.

Petitioner to file fresh application within three weeks; Nodal Officer to consider and redress grievances within four weeks; writ petition disposed of subject to these directions.

Final Conclusion: Writ petition disposed of by directing the petitioner to approach the designated Nodal Officer with a fresh application and directing the Nodal Officer to examine and redress the petitioner's grievances concerning filing of Form GST TRAN-1 (relating to credit upto 30.06.2017) within specified timeframes; merits of the ITC claim not decided.

Filing of tax returns - acceptance of returns by revenue - remedy where e filing system fails - direction to amend system

Filing of tax returns - acceptance of returns by revenue - remedy where e filing system fails - Returns filed by the petitioner electronically must be accepted by the revenue and, if the e filing system prevents acceptance, the petitioner is entitled to manual filing which must be taken on record. - HELD THAT: - The Court recorded that filing a return is a positive act by the assessee which requires corresponding acceptance by the revenue. Where the petitioner exercised the liberty granted by the Court to file returns and pay taxes but the returns were not accepted due to the respondents' e filing system, the respondents cannot rely on a system failure to defeat the petitioner's statutory act of filing. The Court directed that if the returns are not accepted online, the petitioner shall be allowed to file them manually and such manually filed returns shall be taken on record by the respondents. The determinative reasoning is that procedural or technical impediments in an e filing system cannot nullify the substantive act of filing returns or the relief previously granted by the Court. [Paras 2, 3]

Petitioner entitled to have returns accepted; if e filing fails, manual filing must be permitted and taken on record.

Direction to amend system - Respondents directed to make suitable amendments to the e filing system and given a limited time to comply. - HELD THAT: - The Court observed that the e filing system is created by human agency and can be amended to enable acceptance of returns. In view of the respondents' conduct and the non acceptance of returns, the Court granted two weeks for the respondents to make necessary changes to the system and to accept the returns filed by the petitioner. The order is procedural and intended to secure compliance with the Court's earlier liberty granted to the petitioner by ensuring the system functions to reflect the substantive filing of returns. [Paras 4]

Respondents directed to amend the e filing system and accept the petitioner's returns within two weeks.

Time to file reply - Respondents granted two weeks' time to file their reply in the petition. - HELD THAT: - Although the Court noted dissatisfaction with the respondents' conduct in not earlier seeking modification of the order dated 8 February 2019, it nevertheless allowed a short period for the respondents to file their reply. The grant of time is conditional on the respondents making the system amendments and accepting the returns in the interim as directed by the Court. [Paras 1, 5]

Two weeks' time granted to respondents to file their reply, with the matter stood over for that period.

Final Conclusion: The Court directed respondents to accept the petitioner's returns (allowing manual filing if online acceptance fails), ordered respondents to amend the e filing system within two weeks, and granted respondents two weeks to file their reply; matter stood over for two weeks.

Opportunity of hearing - quashing of administrative order for violation of natural justice - confiscation of goods and conveyance - remand for fresh hearing - provisional release under Section 67(6) of the GST Act, 2017 - consideration of relevant precedent while deciding afresh

Opportunity of hearing - quashing of administrative order for violation of natural justice - confiscation of goods and conveyance - Validity of the final order in Form GST MOV-11 dated 27.08.2020 where the writ applicant was not afforded an opportunity of hearing before confiscation of goods and conveyance was ordered. - HELD THAT: - The Court found on the admitted pleadings that the writ applicant received Form GST MOV-10 notifying a hearing, informed the authority that litigation had been initiated in the High Court and that the scheduled hearing was adjourned; notwithstanding this, the final order in Form GST MOV-11 was passed during the pendency of the writ petition without giving the writ applicant any opportunity of hearing. In those circumstances the impugned order constitutes a final confiscation order passed without affording the affected party an opportunity to be heard. The absence of hearing vitiates the order and requires quashing rather than adjudication on merits, as the Court has not proceeded to examine the substantive merits of the confiscation.

The impugned order in Form GST MOV-11 dated 27.08.2020 is quashed and set aside for want of opportunity of hearing.

Remand for fresh hearing - provisional release under Section 67(6) of the GST Act, 2017 - consideration of relevant precedent while deciding afresh - Appropriate remedy and further course on quashing the confiscation order. - HELD THAT: - The Court remitted the matter to respondent No.3 with a direction to issue a fresh notice of hearing to the writ applicant and to afford an opportunity to make submissions on why the goods and conveyance are not liable to confiscation under Section 130 of the GST Act, 2017. The Court directed that if, for any good reason, the respondent delays the hearing then the respondent shall consider the writ applicant's plea for provisional release of the goods and conveyance under Section 67(6). While deciding the matter afresh the respondent is to keep in mind this Court's earlier decision in Synergy Fertichem Pvt. Ltd. vs. State of Gujarat (Special Civil Application No.4730 of 2019 and allied petitions, decided on 23.12.2019). The Court expressly refrained from adjudicating the merits of the confiscation on this writ petition.

Matter remitted to respondent No.3 for fresh hearing; respondent to consider provisional release under Section 67(6) if hearing is delayed and to have regard to the cited precedent when deciding afresh.

Final Conclusion: Writ petition allowed: the final confiscation order in Form GST MOV-11 dated 27.08.2020 is quashed and set aside for want of opportunity of hearing; matter is remitted for fresh hearing with directions to consider provisional release under Section 67(6) if delayed and to have regard to the Court's earlier decision in Synergy Fertichem.

Principles of natural justice - right to effective opportunity of hearing - personal hearing notice - quasi-judicial assessment procedure - remand for fresh consideration

Principles of natural justice - right to effective opportunity of hearing - personal hearing notice - Whether the assessments passed on the same day as a personal hearing notice (issued the previous day) violated the principles of natural justice by denying an effective opportunity of hearing to the petitioner. - HELD THAT: - The Court found that a personal hearing notice issued on 13.02.2020 listing a hearing on 14.02.2020, followed by finalization of assessments on the same day, did not afford the petitioner an effective and realistic opportunity to be heard. Reliance was placed on the view in S. Velu Palandar v. Deputy Commercial Tax Officer that when a quasi-judicial authority fixes a date for hearing, fairness requires that the authority wait until the end of the working day so that the opportunity afforded is real and not merely notional. Administrative convenience may permit an outer time-limit, but equity and justice demand a reasonable and effective chance to make submissions by the end of the working day. Applying that principle, the Court concluded that the assessments finalized on the same day of the listed hearing militated against natural justice and could not stand. [Paras 3, 5]

Impugned assessment orders set aside for breach of natural justice and remanded for fresh hearing.

Remand for fresh consideration - quasi-judicial assessment procedure - Procedure to be followed on remand after setting aside the assessment orders. - HELD THAT: - Having set aside the assessments for failure to afford effective hearing, the Court directed that fresh notice be issued to enable the petitioner to appear and make submissions. The Assessing Authority was directed to pass orders afresh in accordance with law within eight weeks from the date of first hearing after such notice. The remand is for fresh consideration of the matters which were the subject of the original assessment, to be decided on merits following a proper opportunity to be heard. [Paras 5]

Assessments remanded; fresh hearing to be granted and fresh orders to be passed within eight weeks from first hearing.

Final Conclusion: The assessments dated 14.02.2020 for the periods 2017-18 to 2019-20 are set aside for denial of effective hearing; fresh notice shall be issued and the Assessing Authority shall pass orders within eight weeks from the date of first hearing in accordance with law.

Anticipatory bail - setting aside bail order - protection from coercive action - notice before coercive action - interim relief in view of COVID-19 restrictions

Anticipatory bail - setting aside bail order - protection from coercive action - notice before coercive action - interim relief in view of COVID-19 restrictions - Impugned order granting anticipatory bail dated 13.08.2020 was liable to be set aside, subject to a requirement of prior notice before any coercive action. - HELD THAT: - The Court noted that the respondent had sought interim protection earlier in view of COVID-19 restrictions and that fresh process could be issued after the interim period. Counsel for the respondent conceded that filing anticipatory bail in the circumstances was erroneous but sought protection against immediate coercive measures; he agreed that the impugned bail order could be set aside provided that the petitioner give prior notice before taking coercive action. Having regard to these concessions and the peculiar circumstances, the Court set aside the impugned order dated 13.08.2020 and directed that if the petitioner or its officers propose to take any coercive action against the respondent, they shall serve one week's prior notice. The petition was allowed with those directions. [Paras 6, 7, 8]

Impugned anticipatory bail order set aside; petitioner directed to serve one week's prior notice before taking any coercive action against the respondent; petition allowed accordingly.

Final Conclusion: The petition succeeds: the High Court set aside the Sessions Judge's order granting anticipatory bail and directed that the Directorate General of GST Intelligence (or its officers) must give one week's prior notice before initiating any coercive action against the respondent.

Reopening of assessment under Section 147 - deemed transfer under Section 2(47) - windfall gain - income from other sources

Reopening of assessment under Section 147 - deemed transfer under Section 2(47) - Validity of reopening and consequent assessment insofar as the advance of Rs. 9 Crores was not a ground for reopening - HELD THAT: - The reasons recorded for reopening the assessment referred to applying Section 2(47) of the Act and alleged failure to admit capital gains; they did not make the advance of Rs. 9 Crores the subject-matter of the reopening. The Assessing Officer ultimately accepted that Section 2(47) could not be applied, yet proceeded to tax the advance under a different head. The Court held that reopening which did not encompass the advance renders the assessment order a nullity. The Tribunal's order was examined but, even on merits, the AO's reliance on subsequent events (including acts in 2015-16) to characterize the 2006-07 receipt as a taxable matter for AY 2007-08 was impermissible. [Paras 7, 8]

Reopening was not directed at the Rs. 9 Crores advance and the assessment insofar as it taxed that advance is a nullity; the Tribunal's order does not call for interference on this ground.

Windfall gain - income from other sources - Whether the sum of Rs. 9 Crores constituted a windfall gain taxable under the head 'income from other sources' - HELD THAT: - A 'windfall' denotes an unanticipated benefit arising from circumstances outside the recipient's control. On the facts the Rs. 9 Crores was paid as an advance under the MOU/JDA, was to be appropriated against the assessee's revenue share, the assessee treated it as a liability, granted possession and created mortgage and the power of attorney and agreements remained in force during the relevant period. The Assessing Officer relied on events occurring much later to treat the amount as a windfall and proceeded to tax it under 'income from other sources' without first establishing that it did not fall under any of the heads A-E in Section 14. The finding that the amount was a windfall and hence taxable under that head was perverse and unsustainable. [Paras 8, 9]

The Rs. 9 Crores cannot be treated as a windfall gain taxable as 'income from other sources'; the AO's conclusion is incorrect and the Tribunal's concurrence with the CIT(A) stands.

Final Conclusion: The appeal is dismissed. The substantial question of law is answered against the revenue: the assessment insofar as it taxed the Rs. 9 Crores advance is invalid, and the amount does not qualify as a windfall gain taxable under 'income from other sources'.

Violation of principles of natural justice - condonation of delay in statutory appeal - statutory appeal to be adjudicated on merits - stay application against assessment demand - provisional attachment of bank accounts - interim prohibition on further recovery proceedings

Violation of principles of natural justice - condonation of delay in statutory appeal - statutory appeal to be adjudicated on merits - Challenge to the assessment order for AY 2017-18 alleging violation of principles of natural justice and the question of condoning delay in filing the statutory appeal. - HELD THAT: - The petition assailed the assessment dated 30.12.2019 for AY 2017-18 primarily on the ground of breach of natural justice. A statutory appeal had been filed by the petitioner before the first appellate authority with a delay of three days, attributed to a miscalculation of the limitation period. Having considered the short duration of the delay and the explanation furnished, the court found the delay liable to be condoned. The court directed the Registry of the first appellate authority to take the appeal on file and to decide the additions on merits, thereby leaving the substantive questions raised in the appeal for adjudication by the first appellate authority. [Paras 3, 4]

Delay in filing the statutory appeal of three days is condoned; the appeal shall be taken on file and considered on merits; writ petition disposed and petitioner permitted to pursue the statutory appeal.

Stay application against assessment demand - provisional attachment of bank accounts - interim prohibition on further recovery proceedings - Prayer for restraint on recovery proceedings pending disposal of the stay application and the legality/consequence of existing bank attachments. - HELD THAT: - The petitioner sought a direction restraining the respondent from initiating recovery action pursuant to the assessment order until the stay application then pending was decided. The court noted that, despite pendency of the stay application, the petitioner's bank accounts had been attached and amounts appropriated. The court directed the first respondent to consider and dispose of the stay application dated 18.03.2020 within six weeks from the date of uploading of the order after hearing the petitioner (by video conference or physically as convenient). Meanwhile the existing attachments were ordered to continue, but the respondent was restrained from initiating any further recovery proceedings until the stay application was disposed of. [Paras 7, 8]

Respondent to decide the stay application within six weeks; existing bank attachments to continue, but no further recovery proceedings to be initiated until disposal of the stay application.

Final Conclusion: Writ petitions disposed: the short delay in filing the statutory appeal against the assessment for AY 2017-18 is condoned and the appeal is to be admitted and decided on merits; the respondent is directed to decide the pending stay application within six weeks, existing bank attachments may continue but no further recovery proceedings shall be taken till the stay application is disposed of; no costs.

Interim direction for deposit to secure appeal - exercise of judicial discretion in interim relief - comparative reliance on precedent where facts differ - deduction under Section 80P after ascertainment of business income

Interim direction for deposit to secure appeal - exercise of judicial discretion in interim relief - comparative reliance on precedent where facts differ - The challenge to the Single Judge's interim order directing payment of 20% of the demand. - HELD THAT: - The Division Bench examined whether the Annexure A judgment relied on by the appellant was comparable. Annexure A concerned a cooperative bank's refusal to disclose depositors and a concession at first appeal, circumstances materially different from the present case where adjustments in accounts and the question of claiming deduction under Section 80P were under scrutiny. The Tribunal had directed ascertainment of business income and allowance of the deduction under Section 80P, not the disclosure-of-depositors factual matrix in Annexure A. Given the factual and legal distinctions, the reliance on Annexure A was rejected. The Court treated the Single Judge's direction for 20% deposit as an exercise of discretion and observed that appellate interference is unwarranted absent arbitrariness or illegality. Finding no arbitrariness in the order, the Bench declined to set it aside but exercised its discretion to modify the payment schedule, permitting staged compliance by reducing the immediate burden on the appellant.

Writ appeal rejected in limine; the Single Judge's order directing deposit is upheld in principle but modified to permit payment of 10% by 30.09.2020 and a further 10% by 30.11.2020.

Deduction under Section 80P after ascertainment of business income - Whether the present controversy was analogous to a case involving disclosure of depositors and consequent inclusion of deposits as income. - HELD THAT: - The Court found that the present dispute related to account adjustments-transfer of provisions and reserves to the profit and loss account-and the Assessing Officer's disallowance of the deduction under Section 80P. The Tribunal's direction was limited to ascertaining business income and then allowing the deduction under Section 80P. Because the core issue here was the propriety of accounting adjustments and entitlement to deduction under Section 80P, the factual and legal matrix differed from the disclosure issue in Annexure A, and the Annexure A precedent could not be treated as guiding.

Annexure A held inapplicable; the matter concerning deduction under Section 80P stands on its own factual and legal footing and is not a basis to disturb the interim deposit direction.

Final Conclusion: The writ appeal is rejected in limine. The Single Judge's interim direction for deposit is not set aside for lack of arbitrariness, but the Court modifies the schedule: the appellant is permitted to pay 10% of the demand by 30.09.2020 and a further 10% by 30.11.2020.

Non-speaking order - Guidelines for Staying Demand - speaking order requirement under section 220(6) - quashing of orders for failure to deal with grounds - direction to re-decide application in accordance with law

Non-speaking order - Guidelines for Staying Demand - speaking order requirement under section 220(6) - quashing of orders for failure to deal with grounds - Both impugned orders were non-speaking and thereby contrary to the Departmental Guidelines requiring a speaking decision on applications under section 220(6). - HELD THAT: - The court examined the impugned orders and the applicable Instruction No.1914 and its Clause (C)(v) which mandates that the Assessing Officer consider relevant factors and communicate a decision in the form of a speaking order. The orders dated 23-1-2020 and 18-3-2020 did not deal with the grounds urged in the petitioner's application and are thus non-speaking. Failure to furnish reasons or address the applicant's contentions amounted to violation of the Guidelines and rendered the orders unsustainable. In consequence, the court set aside those orders and found that a fresh decision must be rendered in accordance with law and the applicable Guidelines. [Paras 3, 4, 5]

Impugned orders quashed for being non-speaking; petition allowed on this ground.

Direction to re-decide application in accordance with law - speaking order requirement under section 220(6) - The matter was remitted to the Assessing Authority for fresh consideration of the application under section 220(6) in accordance with law and the Guidelines. - HELD THAT: - Having quashed the non-speaking orders, the court directed the Assessing Authority to pass a fresh order that addresses the grounds raised by the petitioner and complies with Clause (C)(v) of the Guidelines. The fresh decision is to be taken within fifteen days from communication of this order by email by either party, ensuring consideration of the observations made by the court and adherence to the speaking order requirement. [Paras 5]

Assessing Authority directed to reconsider and pass a fresh speaking order within 15 days in accordance with law and the applicable Guidelines.

Final Conclusion: The petition is allowed: both impugned orders are quashed for being non-speaking and the Assessing Authority is directed to decide the application under section 220(6) afresh, in accordance with the Departmental Guidelines and law, within fifteen days of communication.

Rectification under Section 154 of the Income-tax Act - directions to dispose of pending rectification petitions - interim restraint on giving effect to an order sought to be rectified - judicial review of assessment orders where no direct challenge is mounted - mandamus to adjudicate statutory claims

Rectification under Section 154 of the Income-tax Act - directions to dispose of pending rectification petitions - interim restraint on giving effect to an order sought to be rectified - Direction to the Income Tax Department to dispose of the petitions filed under Section 154 and interim protection against giving effect to the impugned orders until rectification is concluded. - HELD THAT: - The petitioner had filed petitions under Section 154 seeking rectification of orders confirmed by the Assessing Officer, but had not independently challenged those assessment orders by way of writ. The Court declined to quash the assessment orders in the absence of a direct challenge, observing that a mandamus to quash would be inappropriate where the petitioner itself had not sought that relief. Nonetheless, the Court granted the substantive relief sought in the writ petition by directing the respondent to take up and decide the petitions filed under Section 154 in the light of the Court's earlier order dated 27.07.2020 in the cited batch. The directed disposal is to be completed within twelve weeks from receipt of a copy of the order. Pending disposal of the rectification petitions, the respondent is restrained from giving effect to the order which the petitioner seeks to have rectified. [Paras 3]

Petitioner permitted; respondent directed to decide the Section 154 petitions within twelve weeks and restrained from giving effect to the order sought to be rectified until rectification proceedings conclude.

Final Conclusion: Writ petition allowed to the extent of directing disposal of the rectification petitions within twelve weeks and granting interim restraint; the Court declined to quash the assessment orders where no direct challenge was mounted.

Charitable purpose - advancement of general public utility - proviso to section 2(15) - exemption under sections 11 and 12 - dominant activity test - incidental commercial receipts

Proviso to section 2(15) - incidental commercial receipts - exemption under sections 11 and 12 - Whether the assessee trust's receipts from exhibitions attract the first proviso to section 2(15) and consequently disentitle the trust from exemption under sections 11 and 12 of the Act. - HELD THAT: - The Tribunal examined whether receipts from exhibitions constituted activities in the nature of trade, commerce or business so as to attract the first proviso to section 2(15). The Assessing Officer found a surplus from exhibitions and treated subscription receipts as indicative of commercial activity (paras.5.1-5.4). The Revenue failed to produce any evidence before the Tribunal to show that subscriptions were in fact charged or that the exhibitions were conducted with a prior object of profit; the Department did not demonstrate any verification or enquiry to substantiate the AO's factual conclusions (paras.9.2-9.3). The Tribunal held that mere generation of surplus in one year does not convert an entity with charitable objects into a business enterprise where the dominant object remains one of public utility and the activity (exhibitions) furthers an object in the memorandum (clause (vii)) by imparting technical knowledge, awareness and benefits to a wide section of the public. Reliance was placed on precedents where similar exhibitions, seminars and fairs held in furtherance of the institution's objects were not treated as commercial activities covered by the proviso to section 2(15) (para.10). On the facts and absence of evidence of commercial intent or systematic profiteering, the Tribunal concluded the proviso did not apply and directed grant of exemption under sections 11 and 12 (paras.9, 10-12). [Paras 5, 9, 10, 12, 13]

The proviso to section 2(15) does not apply to the exhibition receipts on these facts; the Assessing Officer's withdrawal of exemption was incorrect and the assessee is entitled to exemption under sections 11 and 12 for AYs 2011-12 and 2012-13.

Charitable purpose - advancement of general public utility - dominant activity test - Whether the assessee is a charitable trust whose dominant activity advances an object of general public utility. - HELD THAT: - The Tribunal considered the objects of the trust (including clause (vii) to improve technical and general knowledge through exhibitions, lectures and seminars) and on the material on record found that the exhibitions conveyed public benefits such as awareness on city development, pollution control and legal assistance, reaching out to a wide section of society (paras.7, 9.3, 12). The First Appellate Authority's observation that no expenditure was incurred for the labour class in the relevant year did not, without more, establish that the trust's dominant character had ceased to be charitable (para.6). Consistent with the dominant activity test applied in precedents, incidental receipts or a surplus in a single year do not alter the charitable character when activities are undertaken to further the trust's objects for public utility. On this basis the Tribunal held the assessee is a charitable trust and its activities are in furtherance of general public utility (paras.9.1-9.3, 12). [Paras 6, 7, 9, 12]

The assessee is a charitable trust advancing objects of general public utility; its dominant activity is charitable and not commercial, and its character as a charitable trust is not negated by the single-year surplus.

Final Conclusion: Both appeals for AY 2011-12 and AY 2012-13 are allowed: the Tribunal set aside the orders denying exemption, held that the proviso to section 2(15) did not apply on the facts, and directed the Assessing Officer to grant exemption under sections 11 and 12 to the assessee.

Carry forward and set off of unabsorbed depreciation under section 32(2) of the Income-tax Act - rectification under section 154 of the Income-tax Act - availability of brought forward losses for set off - precedential effect of High Court decision on interpretation of section 32(2)

Carry forward and set off of unabsorbed depreciation under section 32(2) of the Income-tax Act - rectification under section 154 of the Income-tax Act - precedential effect of High Court decision on interpretation of section 32(2) - Validity of rectification under section 154 disallowing set off of unabsorbed depreciation pertaining to A.Ys. 1997-98 and 1998-99 against income of A.Y. 2008-09. - HELD THAT: - The Tribunal held that proceedings under section 154 cannot be used to overturn a debatable legal position. The unabsorbed depreciation claimed by the assessee relating to A.Ys. 1997-98 and 1998-99 was governed by the interpretation of section 32(2) as applied to amounts available as on 01-04-2002. The Tribunal relied on the decisions of the Hon'ble Gujarat High Court (as noted in the order) which held that such unabsorbed depreciation is to be dealt with in accordance with the provisions of section 32(2) as amended by the Finance Act, 2001, resulting in a decision favourable to the assessee. Given that binding High Court authority decided the identical issue in favour of the assessee, the rectification under section 154 disallowing the said set off could not be sustained. [Paras 3]

Rectification insofar as it disallowed the set off of unabsorbed depreciation pertaining to A.Ys. 1997-98 and 1998-99 against A.Y. 2008-09 is not sustainable and is set aside.

Availability of brought forward losses for set off - rectification under section 154 of the Income-tax Act - Validity of rectification under section 154 disallowing set off of brought forward losses claimed by the assessee in the original assessment for A.Y. 2008-09. - HELD THAT: - The AO found, and the finding was not contested before the CIT(A) or the Tribunal, that there were no brought forward losses available for set off against the income of A.Y. 2008-09. The assessee did not controvert this factual position and the assessee's representative conceded the Revenue's stand. On this uncontroverted factual basis, the Tribunal upheld the rectification made under section 154 which disallowed the wrongly claimed set off of brought forward losses. [Paras 4]

Rectification under section 154 disallowing the set off of brought forward losses for A.Y. 2008-09 is sustained.

Final Conclusion: The appeal is partly allowed: the rectification under section 154 disallowing set off of unabsorbed depreciation relating to A.Ys. 1997-98 and 1998-99 is quashed, whereas the rectification disallowing the incorrectly claimed set off of brought forward losses for A.Y. 2008-09 is upheld.

Revisionary jurisdiction under section 263 of the Income Tax Act - nexus between loan and capital asset for capitalization of interest - assessing officer's failure to apply mind and absence of reasons/evidence - reopened assessment and conclusion after reassessment - order erroneous and prejudicial to the revenue where claim accepted without enquiry

Revisionary jurisdiction under section 263 of the Income Tax Act - nexus between loan and capital asset for capitalization of interest - assessing officer's failure to apply mind and absence of reasons/evidence - Whether the order under section 263 sustaining revision of the assessment is justified where the Assessing Officer accepted capitalization of interest without enquiry or recorded reasons proving nexus between loan and property, in reassessment finalized under section 143(3) r.w.s.147/148. - HELD THAT: - The Tribunal examined the assessment order finalized after reassessment and the revision order passed by the Principal Commissioner. The notice under revision pointed out absence of tangible material on record to establish nexus between the loan taken and the specific immovable property, whereas the AO accepted the assessee's claim to capitalize interest and treat it as cost of the capital asset without conducting independent verification or recording reasons in the assessment order. The Bench held that an opinion taken by the AO must be supported by factual enquiry and reasons shown in the order; mere acceptance without inquiry amounts to failure to apply mind. Reliance placed in the impugned order on precedents was noted by the Tribunal, and the Tribunal referred to the Supreme Court's statements in Rampyari Devi Sarogi vs. CIT and Tara Devi Aggarwal v. CIT that where the AO accepts a contention without any enquiry or evidence the order is erroneous and prejudicial to revenue. The Tribunal also noted Malabar Industrial Co. Ltd. Vs. CIT where exercise of revisionary jurisdiction was upheld when the AO failed to apply his mind. Applying these principles to the facts, the Tribunal found that the AO had not recorded any reasoning or evidence to show nexus or that any independent verification was done; consequently no bona fide view was formed by the AO on this specific issue. In that factual backdrop, the Principal Commissioner's exercise of jurisdiction under section 263 to revise the assessment was sustainable. [Paras 8, 9, 11]

Order under section 263 upholding revision of the assessment is justified and the appeals are dismissed.

Final Conclusion: The Tribunal upholds the Principal Commissioner's order passed under section 263, concluding that the Assessing Officer had accepted capitalization of interest without independent enquiry or recorded reasons establishing nexus with the property; both appeals are dismissed.

Cancellation of registration under section 12AA(3) of the Income Tax Act - Genuineness of activities and carrying out objects of the trust - Charitable purpose including education under section 2(15) of the Income Tax Act - Requirement of reasonable opportunity before cancellation of registration - Reliance on criminal allegations, FIR and chargesheet as material for tax-registration cancellation

Cancellation of registration under section 12AA(3) of the Income Tax Act - Genuineness of activities and carrying out objects of the trust - Charitable purpose including education under section 2(15) of the Income Tax Act - Reliance on criminal allegations, FIR and chargesheet as material for tax-registration cancellation - Requirement of reasonable opportunity before cancellation of registration - Legal validity of the Pr. CIT's order cancelling the assessee's registration under section 12AA(3) with retrospective effect since inception, principally on the basis of alleged bribery/CBI proceedings and alleged infrastructural deficiencies. - HELD THAT: - The Tribunal examined whether the Pr. CIT was justified in cancelling registration since inception on the sole or predominant basis of criminal allegations and an appraisal report. The record shows that initial deficiencies identified in the first MCI inspection were found to have been rectified on subsequent inspections; a fact-finding committee constituted by the Ministry of Health concluded that the MCI Executive Committee's recommendation to renew admissions for the fourth batch was justified and that existing facilities were adequate for undergraduate teaching. The Board of Governors of MCI granted renewal subject to usual conditions. The Pr. CIT's order relied largely on an appraisal report and on allegations arising from an FIR/CBI action; however the Tribunal noted absence of any continuing prosecution against the named public servant and a High Court order which had stayed proceedings until sanction, and the revenue's own statement that no prosecution was pending. The Tribunal found no material on record to establish that the trust's activities were not genuine or not being carried out in accordance with its objects; clause (ii) of para 4 of the trust deed (prohibiting activities promoting violence, political favouritism etc.) was not breached, and education falls within "charitable purpose" under section 2(15). The Tribunal also observed that the Pr. CIT did not identify or apply the statutory conditions for cancellation under section 12AA(3) nor confront the assessee with the appraisal material before treating it as determinative. In these circumstances the cancellation since inception was held legally unsustainable and revoked. The Tribunal nevertheless clarified that its order does not affect proceedings under other laws and the revenue is at liberty to revive proceedings before the Tribunal if prosecution against the public servant is re-instituted. [Paras 42, 43, 44, 45, 46]

The order of the Pr. CIT dated 27.10.2017 cancelling the registration of the assessee since inception under section 12AA(3) is legally invalid and is revoked; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, revoked the Pr. CIT's order cancelling registration since inception under section 12AA(3), held that the assessee's activities fall within charitable purpose (including education) and that cancellation based on the impugned allegations and appraisal material was unsustainable; revenue may seek to revive proceedings if prosecution is re instituted.

Deduction under section 80IB(10) - eligibility for claim - Followed prior ITAT decision in assessee's own case

Deduction under section 80IB(10) - eligibility for claim - Followed prior ITAT decision in assessee's own case - Allowability of deduction claimed under section 80IB(10) for AY 2015-16 where Assessing Officer denied claim on the ground that the matter was sub-judice. - HELD THAT: - The Tribunal examined the Assessing Officer's denial of the claim on the basis that the issue was sub-judice and noted that the CIT(A) had allowed the claim by following an earlier ITAT Hyderabad Bench decision in the assessee's own case on an identical issue. Having considered the rival submissions and the material on record, the Tribunal found that the CIT(A) correctly applied the earlier Tribunal decision and that the appellate authority's order was fair and reasonable. The Tribunal therefore saw no ground to interfere with the CIT(A)'s acceptance of the deduction for the assessment year in question, and dismissed the Revenue's contentions which sought to treat the date of first approval as determinative of completion time for denial of the deduction. [Paras 7, 8]

CIT(A)'s allowance of deduction under section 80IB(10) for AY 2015-16 upheld; revenue's grounds dismissed and appeal dismissed.

Final Conclusion: The Tribunal dismissed the revenue appeal and upheld the CIT(A)'s order allowing the assessee's claim of deduction under section 80IB(10) for AY 2015-16 by following the prior ITAT decision in the assessee's own case.

Reopening of assessment under section 147/148 - first proviso to section 147 - failure to disclose fully and truly all material facts - fresh or tangible material - change of opinion - burden on assessing officer to show non-disclosure or to exercise due diligence - Explanation 1 to section 147 and its reconciliation with proviso - requirement of a live link between reasons and material for formation of belief

Reopening of assessment under section 147/148 - first proviso to section 147 - failure to disclose fully and truly all material facts - fresh or tangible material - change of opinion - burden on assessing officer to show non-disclosure or to exercise due diligence - Validity of reassessment notice issued after four years by invoking the first proviso to section 147 in the absence of any fresh tangible material or specific non-disclosure by the assessee - HELD THAT: - The Tribunal examined the reasons recorded for reopening and found that the Assessing Officer relied solely upon information available in the original assessment records (the P&L and its schedules) and did not point to any new material that emerged after completion of the assessment. The Tribunal applied the first proviso to section 147 and the settled authorities which require either fresh/tangible material or a specific failure to disclose fully and truly all material facts to justify reopening beyond four years. It held that mere examination of the assessment records and drawing an adverse inference from material that was already available cannot constitute a failure of disclosure by the assessee. The Tribunal further observed that reopening on the basis of a mere change of opinion by the AO, without a live link between any new material and the formation of belief, is impermissible. Reliance was placed on established precedents reconciling Explanation 1 with the proviso and underscoring the onus on the AO to demonstrate tangible material and due application of mind in recorded reasons. Given the absence of particulars identifying what material was allegedly withheld and the lack of any new tangible material, the reopening was held to be without jurisdiction. [Paras 12, 13, 16, 23, 24]

Reopening of the assessment by issue of notice under section 148 was quashed as bad in law and the reassessment proceedings were held invalid.

Final Conclusion: The Tribunal quashed the reassessment proceedings for A.Y. 2008-09 for want of jurisdiction under the first proviso to section 147, finding no fresh tangible material nor any failure by the assessee to disclose fully and truly all material facts; consequently the appeal is allowed and the merits of the disallowance were not adjudicated.

Deduction under section 80IB(10) for housing projects including proceeds from sale of car parking, preferential location charges and height escalation charges - Integral part doctrine - when ancillary receipts form part of project revenue for deduction purposes - Allowability of compensation paid for eviction as business expenditure and applicability of TDS obligations

Deduction under section 80IB(10) for housing projects including proceeds from sale of car parking, preferential location charges and height escalation charges - Integral part doctrine - when ancillary receipts form part of project revenue for deduction purposes - Profit attributable to sale of car parking spaces, preferential location charges (PLC) and height escalation charges (HEC) forms part of the housing project revenue and is eligible for deduction under section 80IB(10). - HELD THAT: - The Tribunal examined whether receipts from car parking, PLC and HEC are distinct from the residential units such that they fall outside the scope of deduction under section 80IB(10). Noting that the assessee's project was an eligible housing project and that car parking spaces were sold only to purchasers of residential units and were required by local municipal law and commercial practice, the Tribunal treated such receipts as integral to the housing project. The Assessing Officer's objection that inclusion of car parking would breach the 1500 sq. ft. threshold was rejected because the receipts derive from the same source - the eligible housing project. The Tribunal also followed coordinate decisions of the Mumbai and Kolkata Benches and relevant High Court guidance holding that stilt/parking and related premiums are part and parcel of project realisations and thus fall within the ambit of deduction available to an eligible housing project under section 80IB(10). On this basis the CIT(A)'s allowance of the claim was sustained and the revenue's disallowance restored to the assessee was reversed. [Paras 9, 10]

The deduction claimed under section 80IB(10) in respect of profits from sale of car parking spaces, PLC and HEC is allowable as part of the eligible housing project; grounds 1 and 2 of the revenue's appeal are dismissed.

Allowability of compensation paid for eviction as business expenditure; applicability of TDS obligations - The payment of compensation to occupants to vacate premises for completion of the housing project is an allowable business expenditure and the addition for disallowance under section 37(1) read with section 40(a)(ia) is not sustainable where no specific TDS obligation is shown to arise. - HELD THAT: - The Assessing Officer disallowed the Rs. 28 lakhs compensation paid to occupants on the ground that reasons for payment and quantum were not justified and that TDS was not deducted. The Tribunal found that the assessee produced the agreement evidencing the payments, that the payments were made through banking channels, and that the payments were commercially expedient - necessary to obtain vacant possession so the housing project could be completed. The Bench observed that no specific provision in Chapter XVII-B was shown to impose an obligation to deduct tax at source in the facts of the case. Given the commercial necessity and supporting documentation, the payment was held to be an allowable deduction and the CIT(A)'s deletion of the addition was upheld. [Paras 12, 13, 14]

The addition of Rs. 28 lakhs is deleted; the compensation is allowable as business expenditure and the ground of the revenue is dismissed.

Final Conclusion: The revenue's appeal is dismissed in entirety: (i) receipts from sale of car parking spaces, preferential location charges and height escalation charges are held to form part of the eligible housing project and qualify for deduction under section 80IB(10); and (ii) the addition relating to compensation paid for eviction is deleted as an allowable business expense with no sustainable TDS-based disallowance.

Service of notice under section 143(2) and jurisdiction of assessing officer - Section 292BB - deeming of valid service where assessee participates - Addition on account of unexplained sundry creditors and applicability of additions where purchases and sales accepted - Verification and reconciliation of ledger balances by assessee - Treatment of carried forward liabilities and advances for preceding financial year

Service of notice under section 143(2) and jurisdiction of assessing officer - Section 292BB - deeming of valid service where assessee participates - Validity of issuance/service of notice under section 143(2) and consequent jurisdiction of ITO who completed the assessment - HELD THAT: - The Tribunal examined record including dispatch particulars and order-sheet entries and held that the notice fixing the case for hearing on 13.10.2014 was generated on 04.09.2014, dispatched (Dispatch No.6181 dated 12.09.2014) and not returned unserved. The assessee participated in the proceedings and did not raise objection to service or jurisdiction before the AO or CIT(A). Relying on the Supreme Court elucidation of Section 292BB, the Tribunal observed that Section 292BB operates where a notice emanates from the department and seeks to cure infirmities in service; it does not cure complete absence of notice. Here the record showed issuance by the department and active participation by the assessee, so the assessee cannot now challenge service or jurisdiction for the first time before the Tribunal. The additional grounds challenging notice/service and jurisdiction were therefore dismissed. [Paras 11]

Objection to service of notice under section 143(2) and to jurisdiction of the AO dismissed; notice held to have emanated from the department and Section 292BB applies.

Addition on account of unexplained sundry creditors and applicability of additions where purchases and sales accepted - Verification and reconciliation of ledger balances by assessee - Sustainability of addition made by AO of closing sundry creditors to income - HELD THAT: - The AO doubted genuineness of sundry creditors and added their aggregate balance to income. The Tribunal noted that the assessee's accounts recorded purchases, cost of raw materials consumed, closing stocks and sales which the AO accepted. The Tribunal followed coordinate bench authority holding that where purchases and sales are accepted and books show consistent trading entries, closing credit balances cannot be treated as unexplained cash credits or be added merely because some creditors did not respond to enquiries; burden to establish cessation or other requisites for additions was not discharged by revenue. Applying that reasoning to the facts, the Tribunal found the AO's one-sided conclusion untenable and deleted the addition of sundry creditors. [Paras 12]

Addition on account of unexplained sundry creditors deleted.

Treatment of carried forward liabilities and advances for preceding financial year - Whether entire amount shown as 'advances from parties' is liable to be added to income - HELD THAT: - The balance-sheet note showed advances from parties of which a substantial amount was an opening balance carried forward from the preceding year. The assessee contended that only a small incremental amount represented fresh advances in the year under appeal. The Tribunal accepted that Rs.25,50,000 related to the earlier financial year and could not be taxed in the year under scrutiny; only the incremental amount of approximately Rs.3,00,000 was attributable to the year under appeal and sustained. [Paras 13]

Assessee relieved of Rs.25,50,000 carried forward; addition of approximately Rs.3,00,000 upheld.

Opportunity of being heard and procedural fairness - Claim that assessee was denied natural justice and reasonable opportunity - HELD THAT: - On review of the assessment order and material placed on record by revenue, the Tribunal found that the assessee had been given ample opportunity to substantiate its claims during assessment and appellate proceedings. There was no merit in the contention that the assessee was denied opportunity of being heard. [Paras 14]

Ground alleging denial of natural justice dismissed.

Final Conclusion: Appeal partly allowed: challenges to notice/service and jurisdiction rejected; addition of sundry creditors deleted; advance from parties partly allowed by deleting the carried forward portion and sustaining only the incremental advance; plea of denial of opportunity dismissed.

Recording of reasons before issuing notice under section 148(2) - validity of notice under section 148 - jurisdictional prerequisite for reopening under section 147/148 - reassessment void ab initio - date of issue of notice vs. date of dispatch/receipt

Recording of reasons before issuing notice under section 148(2) - validity of notice under section 148 - jurisdictional prerequisite for reopening under section 147/148 - date of issue of notice vs. date of dispatch/receipt - reassessment void ab initio - Whether the notice issued under section 148 was invalid because the reasons for reopening were recorded after the date of issue of the notice, rendering the reassessment void for AY 2009-10. - HELD THAT: - The Tribunal and the lower appellate authority found on the record that the notice bears the date 21/08/2013 whereas the reasons for reopening were recorded on 27/08/2013. The statutory mandate in section 148(2) requires the Assessing Officer to record reasons before issuing any notice under the section; this requirement relates to the date of issue of the notice and is not satisfied by subsequent dispatch or service. The remand report confirmed only one notice on file and handwriting analysis indicated the notice dated 21/08/2013; documentary comparison (including the AO's own order under section 154 and the assessee's reply) supported that date. Reliance was placed on the settled principle that validity of reassessment must be judged by reference to the notice for reassessment and, if the notice is invalid, the proceedings and order are void ab initio. Applying that principle (as in Y. Narayana Chetty and Kurban Hussain Mithiborwala and consistent tribunal and High Court precedents), the notice in the present facts was held to have been issued before the recording of reasons and therefore invalid; consequent proceedings and assessment were without jurisdiction and liable to be quashed. The question of dispatch/receipt dates (30/08/2013) was held not to cure the jurisdictional defect because section 148(2) speaks to recording reasons before issuing the notice, and the recorded date on the notice itself cannot precede the reasons. [Paras 5, 6, 7]

Notice under section 148 dated 21/08/2013 held invalid as issued prior to recording of reasons on 27/08/2013; reassessment and assessment order for AY 2009-10 quashed as without jurisdiction.

Final Conclusion: Revenue's appeal is dismissed; the order quashing the reassessment for Assessment Year 2009-10 for non-compliance with the mandatory requirement of recording reasons before issuing the section 148 notice is upheld.

Charging of fee under section 234E via intimation under section 200A - prospective operation of statutory amendment - machinery provision versus charging provision - power of Assessing Officer to compute fees while processing TDS statements

Charging of fee under section 234E via intimation under section 200A - power of Assessing Officer to compute fees while processing TDS statements - Intimation issued under section 200A for computing and levying fee under section 234E in respect of periods prior to 01.06.2015 is not maintainable. - HELD THAT: - The Tribunal held that section 234E, introduced by the Finance Act, 2012, created the liability to pay fee for late furnishing of TDS/TCS statements but the mechanism empowering the Assessing Officer to compute and make adjustment of such fee while processing statements was introduced only by insertion of clause (c) in section 200A(1) by the Finance Act, 2015 w.e.f. 01.06.2015. In the absence of that enabling provision prior to 01.06.2015, an intimation under section 200A charging fee under section 234E for defaults occurring before that date exceeded the Assessing Officer's statutory authority. Applying precedents including the Karnataka High Court decision in Fatheraj Singhvi and consistent Tribunal decisions, the Tribunal deleted demands raised by intimation under section 200A that sought to levy section 234E fees for periods prior to 01.06.2015, even where the TDS statements were processed or intimations issued after 01.06.2015. [Paras 16, 18]

Intimations under section 200A charging fee under section 234E for periods prior to 01.06.2015 are invalid and the demands deleted.

Prospective operation of statutory amendment - machinery provision versus charging provision - Insertion of clause (c) to section 200A(1) w.e.f. 01.06.2015 is prospective and not clarificatory or retrospective; it confers an enabling mechanism and cannot be applied to processing of TDS returns for periods prior to 01.06.2015. - HELD THAT: - The Tribunal analysed the legislative history and the Memorandum to the Finance Bill, 2015 and applied the established presumption against retrospectivity. The amendment to section 200A(1) was introduced to provide a procedural mechanism for computation of fees already made chargeable by section 234E; it did not itself create the substantive liability. Because the Legislature explicitly made the amendment effective from 01.06.2015 and recognized that prior to that date the Assessing Officer lacked the power to determine fees while processing statements, the insertion must be read as prospective. The Tribunal accordingly rejected the view that the amendment was merely clarificatory or retrospective and held that applying it to periods prior to its effective date would be impermissible. [Paras 14, 15, 17]

The amendment to section 200A(1) effective 01.06.2015 operates prospectively and does not authorize computation/levy of section 234E fees for periods before that date.

Machinery provision versus charging provision - Where TDS returns/statements relate to periods prior to 01.06.2015, processing of those statements after 01.06.2015 does not validate a demand under section 234E issued by intimation under section 200A for the earlier period. - HELD THAT: - The Tribunal emphasised the distinction between the substantive charging provision (section 234E) and the machinery for assessment/processing (section 200A). Even if a belated TDS statement is submitted or processed after 01.06.2015, that processing cannot retrospectively supply the statutory authority to charge fees for defaults that occurred before the enabling clause was inserted. The Tribunal followed judicial precedents of various High Courts and Benches of the Tribunal to hold that such post-amendment processing does not cure the lack of power to levy the fee for pre-amendment periods. [Paras 10, 16, 18]

Processing or issuance of intimation after 01.06.2015 does not confer authority to levy section 234E fees for defaults occurring before 01.06.2015; such demands are unsustainable.

Final Conclusion: All appeals are allowed: intimation/orders charging late filing fee under section 234E via section 200A for periods prior to 01.06.2015 are invalid and the demands are deleted; the amendment to section 200A(1) w.e.f. 01.06.2015 is prospective and cannot be applied retrospectively.

Power of remand by Commissioner (Appeals) - effect of setting aside an order - seizure and confiscation under the Customs Act - binding nature of appellate orders and judicial discipline - pendency of departmental appeal before CESTAT and effect on compliance

Power of remand by Commissioner (Appeals) - interpretation of section 128-A(3) - Commissioner (Appeals) retains power to set aside and, in appropriate cases, remand the matter to the original authority despite the 2001 amendment to section 128-A(3). - HELD THAT: - Prior to the 2001 amendment a specific clause permitted remand in limited situations. The amended sub-section confines the Commissioner (Appeals) to passing such order as he thinks just and proper, confirming, modifying or annulling the order. The expressions 'modifying' and 'annulling' must be given a broad meaning in order to make appellate jurisdiction effective and meaningful; that broad meaning includes setting aside the impugned order and, in appropriate cases, remanding the matter for fresh decision to remove lacunae, cure procedural defects or secure compliance with directions of the appellate authority. The omission in the 2001 amendment removed the earlier limitations on remand rather than divesting the appellate authority of an inherent power to remit for fresh adjudication where necessary. The court accepted precedents to the same effect and rejected the respondents' contention that remand power was extinguished by the amendment. [Paras 24, 25, 26]

Power to remand is inherent in the appellate jurisdiction of the Commissioner (Appeals) and continued post the 2001 amendment; the respondents' objection on this ground is rejected.

Effect of setting aside an order - seizure and confiscation under the Customs Act - Article 300A - deprivation of property without authority - Setting aside the order-in-original by the appellate authority rendered the confiscation ineffective; in absence of a subsisting order of seizure or confiscation the continued custody of goods by the Department is without lawful authority. - HELD THAT: - When an appellate authority sets aside an order-in-original, the order so set aside loses its effectiveness and becomes inoperative. Confiscation ordered in the order-in-original therefore ceased to subsist once the appellate order set aside that order. Seizure under section 110 is the precursor to confiscation; if the confiscation order is set aside there remains no lawful basis for continuing custody on that ground. Continued retention of the goods without any subsisting seizure or confiscation order is therefore unlawful and may amount to deprivation of property without authority in violation of Article 300A. [Paras 31]

The order of confiscation ceased to operate on being set aside; respondents cannot lawfully continue to hold the goods on that basis.

Binding nature of appellate orders and judicial discipline - pendency of departmental appeal before CESTAT and effect on compliance - Pendency of an appeal by the Department before CESTAT does not absolve the subordinate original authority from complying with an appellate order, particularly where the appellate order has remitted the matter for fresh action and the appellate order remains in operation; undue delay by the Department in filing appeal or in taking steps does not justify non-compliance. - HELD THAT: - Orders of a higher appellate authority are binding on subordinate authorities and must be complied with unless their operation has been stayed by a competent forum. The mere fact that the Department later sought review and filed an appeal before the CESTAT cannot be a licence for the original authority to sit over the appellate directions. The record showed inordinate and unexplained delay by the Department in submitting the appellate order to the Committee and in filing the appeal; the appeal filed subsequently had not been admitted and no stay had been granted. Given that the appellate order remitted the matter to the original authority to draw fresh samples, obtain testing and pass a fresh order within a stipulated time, the original authority's failure to act (despite testing having proved conformity) undermined administrative and judicial discipline and was unjustified. [Paras 28, 29, 30, 32, 33]

Pendency of the Department's appeal before CESTAT did not justify non-compliance with the appellate directions; the respondents' failure to act was unjustified and actionable.

Final Conclusion: Writ petition allowed: appellate order setting aside the order-in-original and remanding the matter was binding; remand power of Commissioner (Appeals) is upheld; confiscation ceased on being set aside and continued detention without authority was unlawful. Respondents directed to release the imported goods forthwith; petition allowed without costs.

Jurisdiction to entertain petition arising from arrest - forum conveniens in criminal and customs proceedings - exercise of discretionary jurisdiction to decline forum - remand to judicial custody - allegation of misdeclaration and confiscation under the Customs Act

Jurisdiction to entertain petition arising from arrest - forum conveniens in criminal and customs proceedings - exercise of discretionary jurisdiction to decline forum - Whether the Delhi High Court should entertain the petition impugning the arrest memo when remand and proceedings have been initiated before courts in Mumbai. - HELD THAT: - The court noted that the petitioner was arrested pursuant to an arrest memo and thereafter produced before the learned CMM, Mumbai, which remanded the petitioner to judicial custody. Having regard to the fact that the customs authorities have commenced proceedings and the learned CMM, Mumbai has passed an order remanding the petitioner, the court held that even assuming it had jurisdiction, it would not be apposite to exercise it in the present circumstances. The petition was therefore not entertained so that the petitioner may seek remedies before the courts in Mumbai; the court expressly reserved all rights and contentions of the petitioner. [Paras 7]

Petition disposed of without adjudicating the merits; petitioner directed to avail remedies before the concerned courts at Mumbai and rights reserved.

Remand to judicial custody - allegation of misdeclaration and confiscation under the Customs Act - Whether any interim direction should be given in respect of the petitioner's custody or bail application. - HELD THAT: - The court recorded that the petitioner would be filing an application for bail before the concerned court in Mumbai and directed that any such application, if filed, would be considered as expeditiously as possible. This was an administrative direction to the appropriate forum rather than an adjudication on the merits of bail or custody. [Paras 8]

If a bail application is filed before the concerned court, it shall be considered expeditiously.

Final Conclusion: The petition challenging the arrest memo is disposed of without deciding the merits; the petitioner is permitted to pursue remedies before the courts in Mumbai (where remand proceedings have been initiated) and any bail application filed there shall be considered expeditiously; all rights and contentions are reserved.

Stay of auction - interim relief - notice to respondents - ground rent/demurrage payment - benefit of Central Board of Indirect Taxes and Customs guidance

Stay of auction - interim relief - ground rent/demurrage payment - benefit of Central Board of Indirect Taxes and Customs guidance - Interim stay of the auction scheduled for 31st August, 2020 of the subject consignment of goods imported by the petitioner. - HELD THAT: - The petition challenges a letter dated 18th August, 2020 and seeks to prohibit respondents from auctioning the petitioner's consignment scheduled on 31st August, 2020. The petitioner asserts that nine of the twenty-seven imported containers belong to it and duties with interest have been paid in respect of those nine containers. The petitioner relied on an earlier communication of respondent no.1 dated 6th July, 2020 which had directed respondent no.2 to postpone the auction for at least sixty days upon recording the importer's intention to clear the goods; it is alleged that that direction was later withdrawn and the auction expedited without notice. The petitioner undertook that ground rent/demurrage shall be paid to respondent no.2 after determination and that it would be given the benefit of the CBIC letter dated 23rd April, 2020. On these representations, and after service of notices, the Court granted interim relief by staying the scheduled auction until further orders.

Auction of the subject consignment scheduled on 31st August, 2020 is stayed until further orders; notices issued to respondents and the petition listed returnable on 14th September, 2020.

Final Conclusion: Interim order staying the auction of the petitioner's consignment fixed for 31st August, 2020 granted; notices issued to respondents and matter listed for further consideration on 14th September, 2020, with the petitioner undertaking payment of ground rent/demurrage after determination and entitlement to CBIC guidance.

Confiscation under Section 111 - confiscation of currency under Section 121 - burden under Section 123 - documentary evidence versus oral evidence - provisional release and redemption fine - penalty for abetment under Section 112 - composite penalty

Confiscation under Section 111 - burden under Section 123 - documentary evidence versus oral evidence - Whether confiscation of the seized gold and silver was legally maintainable. - HELD THAT: - The Tribunal found that the appellant produced seller's invoices, supplier's ledger and statements admitting sale to the appellant, and that the Department's investigation at the seller's end corroborated those documents. The assaying of samples did not establish foreign origin; purity values were not conclusive of illicit import. The Adjudicating Authority based confiscation largely on assumptions and circumstantial inferences (including alleged packet markings) while ignoring unrebutted documentary and oral admissions by the buyer and seller. On these facts the appellant discharged the statutory burden under Section 123 and documentary proof prevailed over the contrary oral conjectures relied upon by the authorities. Consequently confiscation under Section 111 was held not maintainable. [Paras 12]

Confiscation of gold and silver set aside; appellant held to have discharged the burden under Section 123.

Confiscation of currency under Section 121 - documentary evidence versus oral evidence - Whether confiscation of Indian and Nepali currency recovered from the premises was legally maintainable. - HELD THAT: - The Tribunal observed absence of any evidence that the seized currencies were sale proceeds of smuggled goods. The appellant's explanations as to the source of Indian and Nepali currency were unrebuffed and the Department produced no buyer-seller or other material to connect the currencies to smuggling. In these circumstances confiscation under Section 121 could not be sustained. [Paras 12]

Confiscation of Indian and Nepali currencies set aside.

Provisional release and redemption fine - documentary evidence versus oral evidence - Whether redemption fine payable/appropriation of the security deposited at provisional release could be sustained. - HELD THAT: - The goods and currencies were provisionally released after the Joint Commissioner verified the documents and accepted the genuineness of ownership subject to bond and security. As confiscation itself was held not maintainable, the Tribunal held that redemption fine was not required and the amount deposited as security which had been appropriated cannot be legitimately retained in consequence of an invalid confiscation. [Paras 5, 12]

Redemption fine not required; appropriation of deposited security set aside in view of invalid confiscation.

Penalty for abetment under Section 112 - composite penalty - confiscation under Section 111 - Whether imposition of penalties (including composite penalty and penalty on Appellant No.2 for abetment) was sustainable. - HELD THAT: - Because the Tribunal set aside the confiscation on the basis that illegal importation was not established and that documentary evidence and seller's admissions were unrebutted, the foundational finding for imposing penalties failed. There was no evidence of abetment by Appellant No.2 and the penalties were also imposed in a composite manner without legally tenable findings. In absence of proved illegal importation or abetment, penal consequences could not be sustained. [Paras 12]

All penalties set aside, including the penalty on Appellant No.2 and composite penalties.

Payment of customs duty - confiscation under Section 111 - Whether demand for Customs duty on the seized gold/silver was maintainable. - HELD THAT: - The Tribunal held that since confiscation was not maintainable and illegal importation was not established, there was no basis to require payment of Customs duty on the gold and silver. The question of duty did not arise where lawful acquisition was demonstrated and confiscation was set aside. [Paras 12]

Demand for Customs duty on the gold and silver does not arise and is not maintainable.

Final Conclusion: The impugned order of confiscation, appropriation of security as redemption fine, imposition of penalties (including on Appellant No.2) and any demand for customs duty are set aside; both appeals are allowed with consequential relief as per law.

Maintainability of appeal under Section 9C(1) of the Customs Tariff Act, 1975 - new shipper review under Rule 22 of the Customs Tariff (Anti dumping) Rules, 1995 - binding effect of a negative final finding of the Designated Authority - provisional assessment and retrospective levy under the proviso to Rule 22(2)

Maintainability of appeal under Section 9C(1) of the Customs Tariff Act, 1975 - binding effect of a negative final finding of the Designated Authority - new shipper review under Rule 22 of the Customs Tariff (Anti dumping) Rules, 1995 - Whether appeals under Section 9C(1) are maintainable where the Designated Authority's final findings in a New Shipper Review refuse to grant individual dumping margins and the Central Government has not issued a notification imposing definitive duty. - HELD THAT: - The Tribunal held that where the Designated Authority gives a negative final finding refusing to determine an individual dumping margin in a New Shipper Review, that negative final finding is final and binding and constitutes an "order of determination" for the purposes of Section 9C(1). The Delhi High Court's decision in Jindal Poly Film Ltd. was followed: a negative determination does not require further action by the Central Government and is not a mere recommendation, whereas a positive recommendation for imposition of duty remains subject to Central Government decision. The proviso to Rule 22(2) permitting provisional assessment and retrospective levy applies only if the review results in a determination of dumping and a decision to levy duty retrospectively, which did not occur here because no individual dumping margin was recommended. Consequently, absence of a subsequent Central Government notification imposing retrospective duty does not render an appeal against the Designated Authority's negative final findings non maintainable. For these reasons the preliminary objection to maintainability was rejected and the appeals were directed to be heard on merits. [Paras 22, 24, 25, 27]

Preliminary objection overruled; appeals under Section 9C(1) are maintainable against the Designated Authority's negative final findings refusing individual dumping margins.

Final Conclusion: The Tribunal rejected the challenge to maintainability and held that the appellants may file appeals under Section 9C(1) against the Designated Authority's final findings refusing individual dumping margins; the appeals were ordered to be heard on merits.

Disqualification of directors under the Companies Act - Proviso to Section 167(1)(a) - non retrospective application - Retrospective operation of statutory amendment - Companies Fresh Start Scheme, 2020 - entitlement to avail scheme despite prior disqualification - Reactivation of Director Identification Number (DIN) and Digital Signature Certificate (DSC) - Judicial discretion in exercising writ jurisdiction where fresh cause of action arises

Proviso to Section 167(1)(a) - non retrospective application - Disqualification of directors under the Companies Act - Retrospective operation of statutory amendment - Whether the proviso to Section 167(1)(a) of the Companies Act, 2013 operates retrospectively so as to demit office of directors who incurred disqualification under Section 164(2) prior to 07.05.2018, and whether the petitioners' disqualification must be set aside. - HELD THAT: - The Court followed the reasoning in Mukut Pathak, holding that the proviso to Section 167(1)(a), being a punitive amendment affecting directors' rights and obligations, cannot be applied retrospectively unless the amending statute expressly so provides or necessary implication requires it. The proviso introduced by the Companies Amendment Act, 2018 effective 07.05.2018 therefore cannot be read to operate in respect of disqualifications incurred before that date. Applying that principle to the petitioners, who were disqualified prior to 07.05.2018, the Court concluded that the statutory amendment cannot be used to vacate their offices retrospectively. The Court also noted authorities following the same ratio and distinguished earlier Division Bench orders declining relief on delay where the present factual matrix - namely the subsequent launch of the Companies Fresh Start Scheme, 2020 - was not considered. [Paras 7, 16]

The disqualification of the petitioners as directors is set aside insofar as it is based on retrospective application of the proviso to Section 167(1)(a); the judgment in Mukut Pathak is applied.

Companies Fresh Start Scheme, 2020 - entitlement to avail scheme despite prior disqualification - Reactivation of Director Identification Number (DIN) and Digital Signature Certificate (DSC) - Judicial discretion in exercising writ jurisdiction where fresh cause of action arises - Whether the petitioners are entitled to reactivation of their DINs and DSCs to enable the active company to avail the Companies Fresh Start Scheme, 2020, and whether delay in approaching the court is fatal in the circumstances. - HELD THAT: - The Court observed that the CFSS 2020, notified on 30.03.2020, creates a fresh and continuing cause of action by permitting defaulting active companies to file belated documents with immunity and normal fees, thereby rendering the question of delay inappropos where directors of an active company are impeded from availing the Scheme due to deactivated DINs/DSCs. Given that the Scheme was not in force when earlier petitions were decided and that its object is to give a fresh start to companies and their directors, the petitioners were entitled to relief to make the Scheme effective for the active company. In consequence, and in light of the non retrospective application of the proviso, the Court directed reactivation of the petitioners' DINs and DSCs within three working days. [Paras 11, 13, 16]

DINs and DSCs of the petitioners to be reactivated within three working days so as to enable the active company to avail CFSS 2020; the petition is allowed on these terms.

Final Conclusion: The writ petition is allowed: the proviso to Section 167(1)(a) cannot be applied retrospectively to disqualify the petitioners in respect of disqualifications incurred before 07.05.2018, and their DINs and DSCs are directed to be reactivated within three working days to enable the active company to avail the Companies Fresh Start Scheme, 2020; all pending applications are disposed of.

Indoor management rule - validity of acts of a director despite defects in internal procedure - use of old or out of state stamp papers not vitiating a document prima facie - prima facie entitlement to interim injunction - balance of convenience and irreparable injury - suo motu impleading of parties and suspension of transfers pending suit

Indoor management rule - validity of acts of a director despite defects in internal procedure - Whether the appellants were prima facie entitled to treat the 2nd respondent's execution of the agreements of sale as binding on the company despite reliance on a board resolution (Ex. R9) relied upon by respondents - HELD THAT: - The Court held that persons dealing with a company in good faith are not obliged to investigate internal irregularities of corporate management and are protected by the indoor management rule. The admitted fact that the 2nd respondent was Managing Director on 21.11.2016 and his admission of execution of Ex. P1 prima facie entitled the appellants to assume he acted within his authority. The respondents' reliance on Ex. R9 to contend absence of authority raised a triable issue of internal management which could not, prima facie, defeat the appellants' claim for interim relief. [Paras 95, 96, 97, 98, 114]

Appellants were prima facie entitled to treat the agreements executed by the 2nd respondent as binding on the company; Ex. R9 did not, at the interlocutory stage, negate that prima facie entitlement.

Use of old or out of state stamp papers not vitiating a document prima facie - Whether the agreements of sale executed on stamp papers purchased in 2014 in the erstwhile State of Andhra Pradesh and the effect of demonetisation rendered Ex. P1 invalid so as to deny interim relief - HELD THAT: - Relying on precedent, the Court held that the Indian Stamp Act does not prescribe an 'expiry' for stamp papers and use of older stamp papers or those purchased in another State does not, prima facie, invalidate an instrument. Such defects are slight, curable (Section 37/read with applicable rules) and at best form a circumstance to be tested at trial. The fact of demonetisation did not, prima facie, negate the admitted receipt of advances by the 2nd respondent. [Paras 105, 106, 107, 111, 112]

The use of 2014 Andhra Pradesh stamp papers and contended demonetisation related objections did not, prima facie, render Ex. P1 invalid and could not justify refusal of interim relief.

Prima facie entitlement to interim injunction - balance of convenience and irreparable injury - Whether the appellants had made out a prima facie case and shown balance of convenience and risk of irreparable injury to justify grant (or continuation) of interim injunctions restraining alienation of the suit properties - HELD THAT: - Considering the admitted execution of Ex. P1 by the then Managing Director, recitals of payment, the limited nature of the respondents' preliminary defences, and the curable nature of stamp related objections, the Court found that the appellants had established a prima facie case. Further, the Court found that allowing alienation pending trial would cause irreparable injury and that the balance of convenience lay in favour of protecting the appellants' interest. [Paras 95, 110, 112, 116]

The appellants had made out a prima facie case and shown balance of convenience and risk of irreparable injury; interim injunctions in their favour were justified.

Collusive transfer and suspension of transfers pending suit - suo motu impleading of parties and suspension of transfers pending suit - Whether subsequent registered transfers executed by respondents after dismissal of the interim applications were bona fide and whether such transfers should be restrained pending disposal of the suits - HELD THAT: - The Court observed that the sale deeds executed on 16.04.2020 and 08.05.2020 in favour of close relatives/concerns of respondents 3 and 4, shortly after the trial Court's order and before expiry of the appeal period, prima facie appeared collusive and intended to render the appeals infructuous. Exercising inherent powers, the Court impleaded the purchasers as necessary parties and held that the transfers were to be suspended pending trial. The Court restrained all respondents, including the impleaded parties, from alienating the subject properties. [Paras 46, 117, 118, 119, 120]

The subsequent transfers were prima facie collusive and are suspended pending disposal of the suits; the purchasers were impleaded and all respondents restrained from alienating the suit properties.

Final Conclusion: The appeals are allowed: the impugned orders of 16.03.2020 vacating interim injunctions are set aside; the appellants are entitled prima facie to protection under the agreements executed by the Managing Director; stamp related and internal management objections are not sufficient at interlocutory stage to deny relief; the post judgment transfers to related persons are suspended pending trial, those purchasers are impleaded, and respondents are restrained from alienating the suit properties; costs awarded to the appellants.

Civil court not to have jurisdiction - Jurisdiction of Company Law Tribunal - Issuance of duplicate share certificate - Registrar's power to enquire under Companies Act provisions - Refusal of registration and rectification of register of members - Transfer of pending company proceedings to the Tribunal

Civil court not to have jurisdiction - Jurisdiction of Company Law Tribunal - Issuance of duplicate share certificate - Whether the civil court has jurisdiction to try the suit concerning alleged loss of share certificates and competing claims of title after enactment and notification of the Companies Act, 2013 provisions and constitution of the Company Law Tribunal. - HELD THAT: - The court examined the statutory scheme of the Companies Act and prior decisions dealing with issuance of duplicate share certificates and related disputes. The jurisdictional bar in Section 430 of the Companies Act, 2013 removes the competence of civil courts to entertain suits or proceedings in respect of matters which the Tribunal or Appellate Tribunal is empowered to determine. The subject-matter complained of - loss of share certificates, alleged transfer and competing title, and related registration/rectification issues - falls within the ambit of company law provisions (including the provisions corresponding to Section 84 of the earlier Act and Section 46 of the 2013 Act, and Sections 58-59 regarding refusal of registration and rectification of the register). The court relied on the principle that the Registrar/Tribunal has power to enquire and decide such matters and on precedents holding that such disputes are company matters to be decided by the appropriate company authority or Tribunal rather than by ordinary civil courts. Applying these principles to the facts, the High Court concluded that the dispute between the parties is a company matter and not a civil dispute maintainable before the trial civil court. [Paras 19, 20]

The civil court lacked jurisdiction to try the suit; the dispute must be adjudicated by the Company Law Tribunal.

Transfer of pending company proceedings to the Tribunal - Registrar's power to enquire under Companies Act provisions - Procedural consequence and relief: disposition of the plaint and directions for further proceedings before the competent company forum. - HELD THAT: - Having found the matter to be within the exclusive competence of the company adjudicatory machinery, the court set aside the trial court's order which had retained the suit. Pursuant to the statutory scheme and the Court's jurisdictional finding, the plaint was ordered to be returned for presentation before the Company Law Tribunal. The Court directed expedition in adjudication by imposing a timeline for the Tribunal to decide the matter and imposed a status quo in respect of the disputed shares until the Tribunal's decision. The Court framed time-bound directions to prevent inordinate delay, reflecting the pendency of the dispute for a prolonged period. [Paras 21, 22, 24]

The trial court's order is set aside; the plaint is to be returned for presentation before the Company Law Tribunal within two months, the Tribunal to decide the matter within six months, and status quo as to the disputed shares is to be maintained in the interim.

Final Conclusion: The High Court held that the dispute over issuance/possession of share certificates and competing title is a company matter falling within the exclusive domain of the Company Law Tribunal under the Companies Act, 2013; the civil court's order retaining the suit was set aside, the plaint is to be presented before the Tribunal, the Tribunal was directed to decide the matter within six months, and interim status quo in respect of the disputed shares was ordered.

Exemption from filing notarized affidavits - dispensed filing of certified/typed/legible annexures - binding deponent to contents of affidavit - petition disposed on precedent - followed earlier judgment

Exemption from filing notarized affidavits - dispensed filing of certified/typed/legible annexures - binding deponent to contents of affidavit - Application for exemption from filing duly notarised affidavits and certified/typed/legible copies of annexures - HELD THAT: - The Court permitted the petitioners to be exempted from filing duly notarised affidavits and certified/typed/legible copies of the annexures, subject to the condition that the deponent of the affidavit is bound to the contents of the application. The application for exemption was allowed and disposed of accordingly.

Exemption granted and application disposed of on the condition that the deponent is bound by the affidavit's contents.

Petition disposed on precedent - followed earlier judgment - Disposition of the writ petition by reference to an earlier decision of the Court - HELD THAT: - The petitioners' counsel submitted that the petition is covered by this Court's earlier judgment dated 04.11.2019 in W.P.(C) 9088/2018 (Mukut Pathak and ors v. Union of India & Anr.). Having recorded that statement of counsel, the Court disposed of the present petition in terms of the said earlier judgment without further elaboration.

Writ petition disposed of in terms of the Court's judgment dated 04.11.2019 in W.P.(C) 9088/2018.

Final Conclusion: The Court granted exemption from notarised and certified annexure filing (subject to the deponent being bound by the affidavit) and disposed of the writ petition by following and applying this Court's earlier judgment dated 04.11.2019 in W.P.(C) 9088/2018.

Disqualification of directors under Section 164 of Companies Act - publication of list of disqualified directors - delay and laches - condonation of delay - judicial review-discretion to refuse relief for unexplained delay

Delay and laches - condonation of delay - judicial review-discretion to refuse relief for unexplained delay - Maintainability of petitions seeking quashing of inclusion in the list of disqualified directors and restoration of DIN/Digital Signatures in view of an unexplained delay of almost three years in approaching the Court. - HELD THAT: - The petitioners sought writ relief to quash the publication of their names in the List of disqualified Directors and to restore their DINs and digital signatures, though the List had been uploaded in September 2017 and the period of disqualification ran from 01.11.2016 to 31.10.2021. The petitioners offered no explanation in the petition for approaching the Court after almost three years and merely asserted ignorance of the publication. The Court held that ignorance is not a sufficient ground to condone such delay. Judicial review is discretionary, and the Court may decline to exercise its jurisdiction where a party seeks relief after prolonged inaction without an adequate explanation. Applying these principles, the Court found no merit in condoning the delay and declined to exercise its discretionary jurisdiction to entertain the petitions. [Paras 4, 5, 6]

Petitions dismissed on grounds of inordinate and unexplained delay; relief refused and pending applications dismissed.

Final Conclusion: The petitions seeking quashing of the publication of the petitioners' names in the List of disqualified Directors and restoration of their DINs/digital signatures were dismissed due to inordinate and unexplained delay in approaching the Court; the Court declined to exercise judicial review.

Commercial wisdom of Committee of Creditors - limited judicial review of resolution plan - viability and feasibility of a resolution plan - confidentiality of liquidation value and benefit test for leakage - invitation for expression of interest under Regulation 36A of the IBBI Regulations - restoration of adjudicating authority's order

Commercial wisdom of Committee of Creditors - viability and feasibility of a resolution plan - limited judicial review of resolution plan - Interference by the Appellate Tribunal with CoC's approval of the Resolution Plan on grounds of viability and feasibility - HELD THAT: - The Court held that the question of viability and feasibility of a resolution plan is primarily a matter of the commercial wisdom of the Committee of Creditors and amenable only to the limited judicial review circumscribed by Sections 30(2), 31 and 61(3) of the Code as explained in K. Sashidhar and Essar Steel. The record showed that the Resolution Professional, the CoC and the Successful Resolution Applicant had all taken note of the contingency regarding the ethanol plant and machinery and had nevertheless consciously approved the plan. There was no contention that material factors relevant to viability and feasibility were withheld from the CoC. Consequently, NCLAT's interference on the ground of viability and feasibility was unjustified and unsustainable. [Paras 12, 13, 16, 17]

NCLAT's interference with the approval of the Resolution Plan on the ground of viability and feasibility is set aside.

Confidentiality of liquidation value and benefit test for leakage - Whether there was breach of confidentiality in respect of the liquidation value and collusion between the Resolution Professional and the Successful Resolution Applicant - HELD THAT: - The Court found that the mere coincidence of the liquidation value in the SRA's plan and the Resolution Professional's estimate, together with a typographical discrepancy in dates, did not establish breach or collusion. The Resolution Professional produced contemporaneous email correspondence showing enquiries on 07.02.2019 and the SRA's explanation that an independent agency provided the value; NCLAT wrongly rejected that material on procedural grounds. Moreover, the commercial benefit test was applied: the total payout in the approved plan exceeded the liquidation value substantially, and no demonstrable benefit had accrued to the SRA from any supposed leakage. On these facts, the finding of breach of confidentiality was legally and factually untenable. [Paras 33, 35, 36, 38, 39]

The finding of breach of confidentiality and collusion is rejected.

Viability and feasibility of a resolution plan - ownership/possession dispute over assets and its effect on the plan - Whether dispute over ownership/possession of the ethanol plant and machinery vitiated the Resolution Plan - HELD THAT: - The Court recorded that the existence of a collateral dispute over the ethanol plant had been known to the SRA, the Resolution Professional and the CoC, and that the SRA's plan did not rely upon guaranteed availability of that plant to succeed. The SRA indicated alternative capacity, provision for capex and steps to acquire the plant; the point had been considered by the CoC. In these circumstances, the Court held that the ownership/possession dispute did not render the plan unviable or infeasible. [Paras 13, 14, 15, 16, 40]

The challenge to the Resolution Plan based on the ethanol plant/ machinery dispute is rejected.

Invitation for expression of interest under Regulation 36A of the IBBI Regulations - Validity of the advertisement/invitation for expression of interest issued by the Resolution Professional on 30.03.2018 - HELD THAT: - The Court examined the applicable text of Regulation 36A as it stood at the relevant time. The second CoC meeting on 27.03.2018 approved the invitation when the unamended Regulation 36A (in force between 06.02.2018 and 04.07.2018) applied; the later amendment (effective 04.07.2018) that mandated publication in newspapers was not applicable retrospectively. Further, the Promoter/Director who later objected had attended the meeting where the draft invitation was approved and raised no objection. If NCLAT considered the invitation vitiated, it should have granted reliefs commensurate with that finding (such as directing a fresh advertisement); instead it granted only limited remand. Given these facts, NCLAT's conclusion on Regulation 36A was erroneous. [Paras 41, 42, 43, 45, 46]

NCLAT's finding that the invitation was defective under Regulation 36A is unsustainable.

Restoration of adjudicating authority's order - Whether the impugned order of NCLAT remanding the matter should be sustained - HELD THAT: - Having found that the principal grounds on which NCLAT upset the NCLT's approval were legally and factually untenable, and noting that NCLAT granted only a limited remand without appropriate consequential reliefs even where it recorded material irregularities, the Court concluded that the NCLAT order must be set aside. The consequences of the other findings would have required broader reliefs which were not sought in appeal; moreover the appellants challenged the NCLAT order. In view of the errors identified, the Supreme Court restored the NCLT order approving the Resolution Plan. [Paras 18, 19, 25, 47]

The impugned order of NCLAT is set aside and the NCLT order dated 01.08.2019 is restored.

Final Conclusion: Civil Appeals allowed. The Supreme Court set aside the NCLAT order dated 02.06.2020 and restored the NCLT, Mumbai Bench order dated 01.08.2019 approving the Resolution Plan; no order as to costs.

Summary order. Appellant directed to deposit the ad-valorem court fee within four weeks; Registry to verify compliance and proceed accordingly.

Summary order. Petition permitted to be withdrawn and stands disposed of as withdrawn; interlocutory application, if any, also disposed of.

Re-assessment under the KVAT Act by issuance of show-cause notice under Section 25(1) read with Section 25AA - Right to be heard and opportunity of personal hearing before completion of assessment - Adjournment/extension for filing reply due to COVID-19 restrictions - Consideration of remission of tax by a third party as ground for dropping proceedings

Re-assessment under the KVAT Act by issuance of show-cause notice under Section 25(1) read with Section 25AA - Adjournment/extension for filing reply due to COVID-19 restrictions - Ext.P2 (show-cause notice proposing re-assessment) was not quashed; petitioner permitted time to reply with supporting documents. - HELD THAT: - The writ petition challenging Ext.P2, which invokes provisions for assessment to the best of judgment, was considered but not interfered with at this stage because Ext.P2 is only a show-cause notice. Having regard to the petitioner's pleaded difficulty in obtaining documents from Southern Railway caused by COVID-19 restrictions, the Court granted a limited extension to enable the petitioner to procure and file the necessary documents and a reply. The relief is procedural and confined to permitting the petitioner to respond to the notice within a specified time rather than an adjudication on the merits of re-assessment. [Paras 4]

Petitioner permitted to submit a reply to Ext.P2 with supporting documents within three months from the date of the order.

Right to be heard and opportunity of personal hearing before completion of assessment - If the petitioner files the reply within the permitted period, the first respondent must consider the petitioner's contentions and afford an opportunity of personal hearing before deciding the matter. - HELD THAT: - The Court directed that upon receipt of the petitioner's reply within the three-month period, the assessing authority is required to consider the contentions raised and decide the proceedings after granting the petitioner an opportunity for personal hearing. This direction ensures the petitioner's right to be heard is respected before any final assessment is completed. [Paras 4]

First respondent to consider the petitioner's contentions and decide the matter after giving an opportunity of personal hearing if a reply is submitted within the stipulated period.

Consideration of remission of tax by a third party as ground for dropping proceedings - Assessing authority may, in the meantime, consider dropping the proceedings if it finds that the Railway has already remitted the tax in dispute, provided such dropping is permissible and in accordance with law. - HELD THAT: - The Court permitted the first respondent to examine whether the tax in dispute has already been remitted by the Railway and, if so, to consider discontinuing the re-assessment proceedings. This leave to consider dropping the proceedings is conditional upon the assessing authority's finding and must be exercised in accordance with legal permissibility and applicable law. [Paras 4]

First respondent may consider dropping the proceedings in the event the Railway has remitted the tax, if permissible and in accordance with law.

Final Conclusion: Writ petition disposed of by granting the petitioner three months to file a reply with supporting documents; upon receipt, the assessing authority to consider the contentions, afford personal hearing, and decide the matter, and may, if lawfully permissible, drop the proceedings if the tax has already been remitted by the Railway.

Bail - admissibility of retracted disclosure statements - corroboration requirement for self-incriminating statements - reasonable grounds to believe for acquittal - conditions of bail - trial court to decide uninfluenced by prima facie observations - Narcotic Drugs and Psychotropic Substances Act, 1985

Bail - reasonable grounds to believe for acquittal - conditions of bail - Grant of bail to the petitioner in proceedings under the NDPS Act. - HELD THAT: - The Court found that the prosecution's case rests largely on disclosure statements which have been retracted and are, in any event, weak evidence usable only for corroboration. Independent material relied upon by the NCB (bank deposit entries and CDRs) do not establish nexus between the petitioner and the alleged cash deposits or the alleged purchase and payment for the recovered contraband; relevant deposit slips have not been collected and other alleged suppliers remain untraced or unarranged as accused. There is no medical evidence to establish that the petitioner is a drug addict, contrary to the prosecution's theory that addiction motivated trafficking. Considering the weakness of the prosecution case and the absence of any other criminal involvement by the petitioner, the Court concluded there are reasonable grounds to believe the petitioner may be acquitted and that he is not likely to commit a similar offence if released. The petitioner was released on bail subject to furnishing bond and specified reporting and non-contact conditions set out by the Court. [Paras 19, 20, 21, 22, 23]

Petition allowed; petitioner released on bail on furnishing bond and one surety, subject to enumerated conditions.

Admissibility of retracted disclosure statements - corroboration requirement for self-incriminating statements - Treatment and evidentiary weight of the disclosure statements made by the petitioner and co-accused. - HELD THAT: - The Court noted that the question of admissibility of retracted confessional or disclosure statements is pending before a Larger Bench of the Supreme Court and reiterated the settled principle that such self-incriminating statements, even if admissible, are weak evidence and require corroboration. In this case the statements of Rafik and the petitioner have been retracted and the purported corroborative material produced by the prosecution (bank entries and CDRs) do not sufficiently corroborate the disclosures because deposits have not been identified as made by the petitioner and supporting documentary evidence (deposit slips) has not been collected. Accordingly, the disclosure statements cannot be treated as strong or conclusive proof of guilt for the purposes of denying bail. [Paras 13, 14, 15, 19]

Retracted disclosure statements are weak and, given absence of adequate corroboration, cannot by themselves sustain the prosecution's case for purposes of refusing bail.

Trial court to decide uninfluenced by prima facie observations - Directive to the trial court regarding the effect of the High Court's prima facie observations. - HELD THAT: - The Court expressly clarified that the observations made in the bail order are prima facie and solely for the purpose of considering bail. It directed that the Trial Court shall consider the complaint and evaluate the evidence on its merits uninfluenced by the High Court's observations or findings recorded for bail purposes. [Paras 24]

Trial Court to proceed to decide the complaint and evidence on merits, uninfluenced by the High Court's prima facie observations in the bail order.

Final Conclusion: The petition for bail is allowed. The petitioner is directed to be released on bail on furnishing the prescribed bond and one surety, subject to specified reporting and non-contact conditions. The observations in the order are prima facie for bail purposes only and the Trial Court is directed to decide the complaint and evidence on merits without being influenced by those observations.