TaxTMI Updates e-Newsletter
Sep 11,2020

Detention of goods for non-production of e-way bill - valid e-way bill requirement under GST Rules - release of detained goods on furnishing bank guarantee

Detention of goods for non-production of e-way bill - valid e-way bill requirement under GST Rules - Detention of the consignment was justified because the transportation was not covered by a valid e-way bill. - HELD THAT: - The Court examined the factual finding that the goods in question were transported without a valid e-way bill as required under the GST regime. Having regard to that lack of statutory compliance, the detention effected by the respondent was held not to be unjustified. The Court recorded counsel's offer that the petitioner would furnish a bank guarantee and treated that as a basis for conditional relief. [Paras 2]

Detention sustained as justified in view of absence of a valid e-way bill; however, conditional relief granted subject to compliance with security requirement.

Release of detained goods on furnishing bank guarantee - Direction to release the goods and vehicle on the petitioner furnishing a bank guarantee for the amount demanded in the detention order. - HELD THAT: - In exercise of its equitable jurisdiction, the Court directed that upon the petitioner furnishing a bank guarantee for the amount specified in the detention order, the 3rd respondent shall release the detained goods and the vehicle. The Government Pleader was directed to communicate the order to the detaining authority to enable immediate clearance once the condition is complied with. [Paras 2]

Goods and vehicle to be released on petitioner furnishing the bank guarantee and upon communication of the order to the detaining authority.

Final Conclusion: Writ petition disposed: detention upheld as justified for lack of a valid e-way bill, but goods and vehicle ordered to be released upon petitioner furnishing a bank guarantee for the amount demanded and compliance with the Court's direction.

Input Tax Credit - Form GST TRAN-1 - pre-GST credit under Section 140 of the CGST Act, 2017 - GST portal technical glitch - IT grievance redressal mechanism - nodal officer's duty to consider grievances - time-bound mandamus for fresh application and disposal

Form GST TRAN-1 - GST portal technical glitch - IT grievance redressal mechanism - nodal officer's duty to consider grievances - time-bound mandamus for fresh application and disposal - Petitioner's inability to file Form GST TRAN-1 due to alleged portal inaccessibility was not adjudicated on merits; the grievance was remitted to the designated nodal officer for fresh consideration and redressal within specified timelines. - HELD THAT: - The Court declined to enter upon the merits of the petitioner's claim to Input Tax Credit or the substantive entitlement under the pre-GST credit mechanism. Instead, having noted the petitioner's allegation of inability to access the GST portal and prior approaches to the IT grievance mechanism, the Court directed a procedural course: the petitioner must file a fresh application to the respondent No.5 (Additional Commissioner, CGST, Nodal Officer, IT Grievance Redressal Mechanism) with a copy of the order within three weeks. The respondent No.5 is obliged to examine all grievances raised by the petitioner and take necessary steps to redress them within four weeks of receipt of that application, and to inform the petitioner of the decision. The order constitutes a time-bound remand for fresh consideration by the appropriate administrative authority rather than a final adjudication on entitlement to the claimed Input Tax Credit.

Petition remitted for fresh, time-bound consideration by the nodal officer; directions issued for filing of fresh application within three weeks and disposal by respondent No.5 within four weeks thereafter, with intimation to the petitioner.

Final Conclusion: Writ petition disposed of by directing the petitioner to file a fresh application with respondent No.5 within three weeks and directing respondent No.5 to consider and redress the petitioner's grievances within four weeks of receipt, with due intimation to the petitioner; no decision on the merits of the claimed Input Tax Credit.

Cancellation of GST registration - Writ of certiorari - Arbitrariness in administrative order - Failure to apply mind - Remand for fresh consideration - Alternative remedy under Section 30 of the Central Goods and Services Tax Act, 2017

Cancellation of GST registration - Arbitrariness in administrative order - Failure to apply mind - Remand for fresh consideration - The impugned order cancelling the petitioner's GST registration was arbitrary and self-contradictory and therefore liable to be set aside with liberty to pass a fresh order. - HELD THAT: - The cancellation order dated 14.04.2020 simultaneously records a reference to the petitioner's reply dated 25.02.2020 to the show cause notice and yet attributes cancellation to non-submission of any reply and non-attendance at the personal hearing. This internal contradiction demonstrates absence of application of mind and arbitrariness in the decision-making process. In view of that defect the order cannot be sustained; the High Court set aside the impugned order and remitted the matter to the concerned authority to pass a fresh decision in accordance with law.

Impugned order of cancellation set aside; respondent no.2 permitted to pass fresh order in accordance with law.

Writ of certiorari - Alternative remedy under Section 30 of the Central Goods and Services Tax Act, 2017 - Availability of an alternative statutory remedy under Section 30 of the CGST Act did not preclude exercise of writ jurisdiction in the facts of the case. - HELD THAT: - Although respondent counsel raised a preliminary objection that the petitioner had an alternative remedy under the CGST statute, the petition challenged an order that was per se illegal and arbitrary on its face. The Court entertained the writ jurisdiction and, on the admitted defect in the impugned order, allowed the petition and remanded for fresh consideration rather than relegating the petitioner to the statutory remedy as a bar to relief.

Writ petition entertained despite existence of statutory alternative; petition allowed on merits and matter remanded.

Final Conclusion: The High Court set aside the cancellation order of 14.04.2020 as internally contradictory and arbitrary, allowed the writ of certiorari, and remitted the matter to the appropriate authority for fresh decision in accordance with law; no costs awarded.

Services by way of renting of residential dwelling for use as residence - residential dwelling - for use as residence - exemption under Entry No. 13 of Notification No. 09/2017-IT (Rate) - advance ruling time limit under Section 98(6) - manual filing under Rule 107A and transitional filing on common portal - irregularity in procedure versus jurisdictional invalidity - locus of applicant as part of a group of lessors

Services by way of renting of residential dwelling for use as residence - residential dwelling - for use as residence - exemption under Entry No. 13 of Notification No. 09/2017-IT (Rate) - Renting/leasing of the impugned property by the lessors is not exempt under Entry No.13 of Notification No.09/2017-IT (Rate). - HELD THAT: - The impugned property was constructed and sanctioned as a hostel building and, on the common understanding of terms, is an establishment providing sociable/institutional accommodation rather than a 'residential dwelling' treated as a home. The explanatory notes to the classification indicate that rental services in respect of residential properties are distinct from accommodation services provided by hotels, motels, hostels etc. Even assuming the property to be a residential dwelling, the exemption applies only where the recipient uses the dwelling 'for use as residence'. Here the lessee (M/s DTwelve Spaces Pvt. Ltd.) is using the leased premises to conduct a business of providing paying guest accommodation to students; the recipient is not using the premises as its own residence. On both counts - (i) the building's character as a hostel rather than a residential dwelling and (ii) the lessee's use for operating a paying guest business rather than using the dwelling as residence - the renting activity is outside Entry No.13 and taxable under GST. [Paras 11, 12, 13]

The renting/leasing is not eligible for exemption under Sl. No.13 of Notification No.09/2017-IT (Rate).

Manual filing under Rule 107A and transitional filing on common portal - The date of manual filing is the operative date of application for advance ruling in the circumstances of this case; online filing date cannot be treated as the date of application where transitional/manual filing was applicable. - HELD THAT: - Rules 104 and 106 require filing on the common portal but Rule 107A (inserted by notification) and Circular No.25/25/2017 clarified that until the advance ruling module is available, manual filing in the prescribed form is permissible and the fee is to be paid online. Given the unavailability of the requisite forms on the portal and statutory transitional provisions, the Authority correctly treated the manual submission date as the date of filing. [Paras 14]

The manual filing date is correctly adopted as the date of application.

Advance ruling time limit under Section 98(6) - irregularity in procedure versus jurisdictional invalidity - Delay by the AAR in pronouncing the advance ruling beyond ninety days does not render the ruling null and void; it is an irregularity remediable by appeal. - HELD THAT: - Section 98(6) prescribes a ninety day period to pronounce an advance ruling. Non compliance with that timeline in the present case constitutes procedural irregularity. An order passed by a competent authority within jurisdiction, though delayed, is not deprived of efficacy by a collateral or incidental attack; the appropriate remedy is to challenge the order in a duly constituted appellate forum. Only orders passed without jurisdiction would be void ab initio. [Paras 15]

The belated pronouncement does not invalidate the AAR's ruling; it remains subject to challenge by appeal, but is not null and void for delay.

Locus of applicant as part of a group of lessors - The AAR's observation that the applicant in his individual capacity was not effecting the supply was beyond the question before it and is expunged; the applicant acted as part of a group of lessors. - HELD THAT: - The transaction before the Authority was the collective lease by five co owners to the lessee. The applicant applied in his capacity as one of the lessors forming part of that group. The impugned AAR's paragraph suggesting the individual applicant did not effect supply is extraneous to the ruling sought and is accordingly expunged. The substantive question remained whether the lessors' leasing was exempt under Entry No.13, which has been addressed on its merits. [Paras 16]

The AAR's extraneous observation in Para 8(b) is expunged; the applicant is part of the group of lessors and the collective lease was adjudicated on merits.

Final Conclusion: The Appellate Authority for Advance Ruling dismissed the appeal and upheld AAR Karnataka's Advance Ruling No. KAR/ADRG 17/2020 dated 23-03-2020: the leased premises are not covered by the exemption in Entry No.13 of Notification No.09/2017-IT (Rate), the manual filing date was correctly adopted, the delay in pronouncing the ruling does not render it void, and an extraneous observation regarding the applicant's individual supply was expunged.

Admissibility of advance ruling application - first proviso to Section 98(2) of the CGST Act, 2017 - pending or decided in any proceedings under this Act - interpretation of scope of proviso as not confined to a particular officer - inadmissibility consequent to prior investigation/summons

Admissibility of advance ruling application - first proviso to Section 98(2) of the CGST Act, 2017 - pending or decided in any proceedings under this Act - inadmissibility consequent to prior investigation/summons - Application for advance ruling held inadmissible under the first proviso to Section 98(2) of the CGST Act, 2017. - HELD THAT: - The Authority examined the mandatory conditions in the first proviso to Section 98(2): (i) whether the question raised is pending or decided in any proceedings; (ii) whether it is pending or decided in the case of the applicant; and (iii) whether such proceedings are under the provisions of the Act. The proviso does not require that the earlier proceedings be before a particular or jurisdictional officer; it only requires that the question be pending or decided under the Act. In the present case, the Directorate of GST Intelligence had initiated an investigation into the classification of 'flavoured milk' prior to filing of the application, summons had been issued and statements recorded, and a pre-deposit had been made. Those facts satisfied the three conditions of the proviso. Consequently the application was not maintainable and had to be rejected as inadmissible under the first proviso to Section 98(2). [Paras 5, 6]

Application rejected as inadmissible under the first proviso to Section 98(2) of the CGST Act, 2017.

Final Conclusion: The Authority dismissed the applicant's request for an advance ruling as inadmissible because the question on classification of 'flavoured milk' was already the subject of investigation/proceedings under the Act initiated prior to the filing of the application.

Input tax credit - leasing, renting or hiring of motor vehicles having approved seating capacity of more than thirteen persons - Schedule III - services by an employee to the employer not a supply - restriction of ITC to extent of cost borne by the employer - exemption for transport by non-air-conditioned contract carriage

Input tax credit - leasing, renting or hiring of motor vehicles having approved seating capacity of more than thirteen persons - Whether the applicant is entitled to avail ITC of GST charged on hiring of non AC buses having seating capacity of more than thirteen persons for transportation of employees. - HELD THAT: - The Authority examined Sections 16 and 17(5) of the CGST Act and the amendment effected by the Central Goods and Services Tax (Amendment) Act, 2018 which became effective on 01.02.2019. Prior to the amendment ITC on motor vehicles used for transportation of passengers was generally disallowed. The amendment carved out an exception permitting ITC in respect of leasing, renting or hiring of motor vehicles used for transportation of persons where the vehicle has an approved seating capacity of more than thirteen persons (including driver). The applicant has represented that the buses used have approved seating capacity of more than thirteen persons and the jurisdictional officer concurs. Consequently the applicant is eligible to claim ITC only from the date the amendment took effect. The Authority clarified that if hired vehicles do not meet the seating capacity requirement, ITC would not be available. [Paras 5]

ITC is available to the applicant in respect of hiring of such buses, but only with effect from 01.02.2019.

Schedule III - services by an employee to the employer not a supply - exemption for transport by non-air-conditioned contract carriage - Whether GST is leviable on the nominal amounts recovered by the applicant from employees for use of the employee bus transportation facility. - HELD THAT: - The Authority found that the applicant is not supplying transportation services to its employees but is a recipient of services provided by an external transporter; the amounts recovered from employees arise from the employer employee relationship. Schedule III of the CGST Act treats services by an employee to the employer in the course of or in relation to his employment as neither a supply of goods nor a supply of services. The exemption under Notification No. 12/2017 CT (Rate) applies only where a supply is taxable in the first place; it does not convert employer recoveries into a taxable outward supply by the applicant. On this basis GST is not applicable on the nominal recoveries from employees in the facts of this case. [Paras 5]

GST is not applicable on the nominal amounts recovered by the applicant from its employees for the employee bus transportation facility.

Restriction of ITC to extent of cost borne by the employer - Whether, if ITC is available, it must be restricted to the extent of cost borne by the applicant (employer) after accounting for amounts recovered from employees. - HELD THAT: - Both the applicant and the jurisdictional officer relied on pre GST jurisprudence (Bombay High Court in CCE Nagpur v. Ultratech Cements Ltd.) to the effect that where employees bear part of the cost, the credit attributable to that portion is not admissible to the employer. The Authority endorsed this position and, in the facts before it, answered that where ITC is allowable, it should be restricted to the extent of the cost borne by the applicant after accounting for recoveries from employees. [Paras 5]

If ITC is available, it is to be restricted to the extent of cost borne by the applicant (employer).

Final Conclusion: The Authority ruled that (i) ITC on hiring of non AC buses with approved seating capacity of more than thirteen persons is available to the applicant, but only from 01.02.2019 onward; (ii) GST is not leviable on the nominal amounts recovered from employees for the employee bus facility; and (iii) where ITC is available it must be restricted to the portion of cost actually borne by the employer.

Refund of unutilized input tax credit on account of inverted duty structure - availability of statutory remedy under Section 107 - judicial restraint where efficacious alternative remedy exists - non-speaking/cryptic order and failure to afford opportunity of hearing - examination of applicability of Central Board of Indirect Taxes and Customs Circular dated 04.09.2018

Availability of statutory remedy under Section 107 - judicial restraint where efficacious alternative remedy exists - Writ petition not maintainable in view of the availability of an efficacious statutory remedy under Section 107 of the Act. - HELD THAT: - The Court accepted the opposite party's submission that the petitioner has a specific statutory appellate remedy under Section 107 which can be invoked to challenge the impugned order. Given the existence of that remedy, the High Court declined to exercise writ jurisdiction at this stage and observed that the grounds relied upon by the petitioner can be ventilated before the appellate forum in the statutory proceedings. The Court therefore refrained from interfering with the impugned order in exercise of extraordinary jurisdiction. [Paras 6]

Writ petition not entertained; petitioner granted liberty to prefer appeal under Section 107.

Non-speaking/cryptic order and failure to afford opportunity of hearing - examination of applicability of Central Board of Indirect Taxes and Customs Circular dated 04.09.2018 - Direction to the appropriate appellate authority to consider the appeal and examine applicability of the CBIC Circular dated 04.09.2018 within a stipulated time-frame. - HELD THAT: - Although the High Court did not set aside the impugned order on merits, it observed the petitioner's grievance that the order was cryptic and passed without affording opportunity of hearing. Instead of adjudicating those contentions itself, the Court granted the petitioner liberty to file an appeal under Section 107 and directed that if the appeal is filed within 15 days with a copy of this order, the appellate authority shall decide it in accordance with law within three months. The appellate authority is to examine the applicability of the Central Board's Circular dated 04.09.2018 while adjudicating the matter. [Paras 7]

If appeal is filed within 15 days with a copy of this order, the appellate authority shall decide it within three months, examining the CBIC Circular dated 04.09.2018.

Final Conclusion: The writ petition was not entertained because an efficacious statutory remedy under Section 107 exists; the petitioner was granted liberty to prefer an appeal within 15 days and, if so filed, the appellate authority is directed to decide the appeal within three months after examining the applicability of the CBIC Circular dated 04.09.2018.

Disallowance of freight charges as business expenditure under section 37(1) of the Income-tax Act - reassessment under section 153A - interference in completed assessments only on the basis of incriminating material unearthed during search - bearing of evidentiary burden by assessee to prove genuineness of claimed expenses where no incriminating material exists

Disallowance of freight charges as business expenditure under section 37(1) of the Income-tax Act - reassessment under section 153A - interference in completed assessments only on the basis of incriminating material unearthed during search - Whether the disallowance of freight charges in the assessments framed under section 153A r.w.s. 143(3) is sustainable in the absence of any incriminating material unearthed during search. - HELD THAT: - The Tribunal examined the validity of additions of freight charges where assessments were framed under section 153A r.w.s. 143(3). Reliance was placed on the principle that completed assessments can be reopened under section 153A only when there is incriminating material discovered in the course of search or requisition of documents which relates to the assessment years sought to be reopened. The Tribunal noted that the Assessing Officer disallowed the freight claims because the assessee failed to produce bills and vouchers, but there was no finding of any incriminating material in respect of those freight charges discovered during the search. The decision in Kabul Chawla and the subsequent reasoning in Meeta Gutgutia were applied to hold that, absent incriminating material specific to the years in question, the invocation of section 153A to make such additions is not justified. The Tribunal also noted that on identical facts a co-ordinate Bench had deleted similar additions for another assessment year of the assessee, and, following the cited authorities and the facts on record, concluded that the disallowances could not be sustained.

Both additions disallowing freight charges for AYs 2008-2009 and 2010-2011 are set aside and deleted.

Final Conclusion: The appeals are allowed; the disallowances of freight charges made in assessments framed under section 153A r.w.s. 143(3) are deleted because there was no incriminating material unearthed during the search to justify interference with the completed assessments.

Disallowance under section 36(1)(iii) of the Act - interest-free advances - availability of interest-free funds - business expediency - natural justice - opportunity of being heard - remand for fresh consideration

Disallowance under section 36(1)(iii) of the Act - availability of interest-free funds - interest-free advances - remand for fresh consideration - Whether the disallowance of interest of Rs. 11,49,085/- under section 36(1)(iii) should be sustained or requires fresh adjudication. - HELD THAT: - The Tribunal noted that the Assessing Officer disallowed interest on the basis that interest-free advances were made to related concerns while the assessee had borrowed funds on which interest was paid. The assessee raised before the Tribunal for the first time the contention that the advances were made out of the assessee's own interest-free funds and placed reliance on the balance sheet showing substantial paid-up capital and reserves. The Tribunal accepted that if an assessee establishes that interest-free advances were made out of interest-free own funds, no disallowance under section 36(1)(iii) is called for, but observed that the question of availability of interest-free funds is a fact-specific issue requiring verification year-wise and could not be decided merely by following earlier orders. Because the availability of such funds and the use of funds were not examined by the Assessing Officer and the contention was not raised below, the Tribunal considered it appropriate in the interest of natural justice to remit the matter to the Assessing Officer for fresh consideration after affording the assessee an opportunity to produce evidence and be heard. [Paras 6]

Issue remanded to the file of the Assessing Officer for fresh decision on availability and utilisation of interest-free funds after affording the assessee adequate opportunity of being heard.

Natural justice - opportunity of being heard - business expediency - Whether the proceedings before the CIT(A) and assessment complied with natural justice and whether the assessee had previously placed on record evidence of business purpose for the advances. - HELD THAT: - The Tribunal recorded that the assessee did not appear before the CIT(A) and had not produced documentary evidence before the Assessing Officer to substantiate that the advances were used for business purposes. The CIT(A) accordingly upheld the disallowance in the absence of material placed on record. Given that the new contention regarding availability of interest-free funds was raised only before the Tribunal and not earlier, the Tribunal found it appropriate to remit the matter to enable the Assessing Officer to consider both the factual claim of utilisation for business purposes and the claim of availability of interest-free funds after giving the assessee a proper opportunity to be heard. [Paras 2, 6]

Proceedings remitted for fresh adjudication with direction to afford the assessee adequate opportunity to place documentary evidence and be heard; grounds allowed for statistical purposes.

Final Conclusion: The Tribunal did not decide the merits of the disallowance under section 36(1)(iii); instead, observing that the contention about availability of interest-free own funds was raised for the first time before it and that the Assessing Officer had not examined the factual matrix, the Tribunal remitted the issue to the Assessing Officer for fresh decision after affording the assessee an opportunity of being heard and allowed the appeal for statistical purposes.

Tax deduction at source under section 194C and 194A - reimbursement of expenses - opportunity of being heard - remand for fresh consideration in the interest of justice - application of Tribunal precedents on identical issues

Tax deduction at source under section 194C and 194A - reimbursement of expenses - Whether the payments characterised by the AO as contract payments and interest, which attracted TDS, are in fact reimbursements not liable to deduction of tax at source. - HELD THAT: - The Tribunal found that the CIT(A) disposed of the appeal on the basis of written submissions without affording the assessee a further opportunity of personal hearing. Given the contention that the payments were reimbursements and the assessee's reliance on prior favourable decisions of this Tribunal on identical facts, the Tribunal considered that the question whether the expenditure in question attracts TDS required fresh examination by the CIT(A). Accordingly, the Tribunal did not decide the substantive question on merits but remitted the matter to the CIT(A) to examine, after giving the assessee sufficient opportunity, whether the transportation and security charges are reimbursements not chargeable to TDS under the provisions invoked by the AO, and whether interest paid was exempt from deduction having regard to the assessee's production of Form 15G. [Paras 6]

Remitted to the CIT(A) for fresh consideration and decision on merits after affording the assessee sufficient opportunity to be heard.

Application of Tribunal precedents on identical issues - remand for fresh consideration in the interest of justice - Whether the CIT(A) should examine and apply the Tribunal's earlier decision relied upon by the assessee in adjudicating the appeal. - HELD THAT: - The Tribunal noted the assessee's specific submission that this Tribunal had earlier decided identical issues in its favour and that the CIT(A) had allowed appeals for related assessment years. In view of the CIT(A)'s disposal of the appeal without a personal hearing and the existence of argued identical precedents, the Tribunal directed the CIT(A) to consider whether the present case is covered by those precedents and to decide the appeal on merits after giving the assessee an opportunity to place its case before the authority. [Paras 6]

Directed remand to the CIT(A) to examine applicability of the Tribunal's earlier decision and decide the appeal on merits after hearing the assessee.

Final Conclusion: The appeal is allowed for statistical purposes and the matter is remitted to the CIT(A) to examine, after affording the assessee a further opportunity of hearing, whether the impugned payments are reimbursements not liable to TDS and whether the Tribunal's earlier decision relied upon by the assessee applies; the CIT(A) is to decide the appeal on merits.

Deemed consideration under section 50C - proviso to section 50C - value to be adopted as on date of agreement of sale where agreement predates sale deed - relevance and evidentiary weight of unregistered sale agreement supported by cheque payments - duty of Assessing Officer to verify agreement and cross-examine prospective purchaser before adopting stamp duty value as on sale deed

Deemed consideration under section 50C - proviso to section 50C - value to be adopted as on date of agreement of sale where agreement predates sale deed - relevance and evidentiary weight of unregistered sale agreement supported by cheque payments - Whether the stamp duty value for computation of deemed consideration under section 50C should be adopted as on the date of the sale agreement (executed 07-04-2003) instead of the date of the registered sale deed (05-03-2007) where registration was delayed for reasons beyond the assessee's control and the agreement is supported by payments by cheque. - HELD THAT: - The Tribunal found that an unregistered agreement dated 07-04-2003 for sale of the property was placed on record and neither the Assessing Officer nor the Commissioner (Appeals) doubted its genuineness. The assessee produced evidence of advance payments made by cheque on specified dates and a writ before the High Court showing that registration was impeded by statutory restrictions which were later vacated. The AO assessed capital gains by adopting the stamp duty (SRO) value as on the date of the sale deed without verifying the contents of the agreement or making any cross-verification with the prospective purchaser. The Tribunal relied on the proviso to section 50C (as interpreted by the coordinate bench) which permits adoption of stamp duty value as on the date of execution of the agreement to sale where the agreement predates the sale deed and registration was delayed for reasons beyond the assessee's control. Applying that principle on the identical facts, and noting that payments were made by cheque (supporting genuineness), the Tribunal held that the case falls squarely within the proviso and that the SRO value as on the date of the agreement should be adopted for computing deemed consideration under section 50C. The Tribunal therefore set aside the orders below and remitted the matter to the AO for the limited purpose of verifying the SRO value as on the date of the sale agreement, directing the AO to afford the assessee an opportunity before passing orders. [Paras 6, 7]

The Tribunal allowed the appeal, held that the stamp duty value for section 50C must be adopted as on the date of the agreement of sale (07-04-2003) and remitted the matter to the AO for limited verification of the SRO value as on that date, with opportunity to the assessee.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, held that the proviso to section 50C entitles the assessee to have the SRO value computed as on the date of the sale agreement executed on 07-04-2003, and remitted the matter to the AO for limited verification of that value with opportunity to the assessee.

Protective adjustment - business restructuring - arm's length price - mutual agreement procedure (MAP) resolution - remand for fresh consideration

Protective adjustment - business restructuring - mutual agreement procedure (MAP) resolution - remand for fresh consideration - Whether the protective addition made to the assessee's income for AY 2013-14 on account of alleged business restructuring should stand or requires fresh adjudication in view of a subsequently executed MAP resolution and related DRP order. - HELD THAT: - The Tribunal found that the TPO/DRP had made a substantive adjustment for the business restructuring in AY 2010-11 and, because those proceedings were then sub judice, a protective adjustment was made in AY 2013-14. A MAP resolution dated 29 January 2018 and a later DRP order in the assessee's own case for AY 2014-15 (dated 7 August 2018) were rendered after the AO/TPO/DRP orders under challenge. Given that the MAP resolution post-dates the impugned orders and that similar protective additions in other assessment years were subsequently revisited in light of the MAP/DRP outcomes, the Tribunal considered it appropriate not to decide the substantive correctness of the protective adjustment on the papers before it. Instead the Tribunal directed that the issue be restored to the file of the AO/TPO to be decided afresh on facts and law after giving the assessee an opportunity of being heard and taking into account the MAP resolution dated 29 January 2018 and the DRP order dated 7 August 2018. [Paras 11, 12]

Issue restored to the AO/TPO for fresh decision in the light of the MAP resolution dated 29-01-2018 and the DRP order dated 07-08-2018; appellant's grounds allowed for statistical purposes.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and remitted the question of the protective addition in AY 2013-14 to the file of the AO/TPO for fresh adjudication in light of the MAP resolution dated 29 January 2018 and the DRP order dated 7 August 2018, after affording the assessee an opportunity of being heard.

Validity of reopening of assessment where reasons are recorded - Assessee's right to bifurcate composite receipts into rent and services and to enter separate agreements - Revenue's power limited to probing genuineness and correctness of quantum, not to dictate form of contracts - Allowability of statutory deduction under section 24(a) for income from house property - Allowability of business expenses relating to services and hire of equipment - Deletion of penalty under section 271(1)(c) consequent to reversal of additions

Validity of reopening of assessment where reasons are recorded - Reopening of assessment under section 147 upheld. - HELD THAT: - The Assessing Officer recorded reasons on the basis that income chargeable to tax had escaped assessment due to incorrect treatment of receipts; the reassessment notice under section 148 and consequent proceedings under section 147 were therefore justified. Although on merits the Commissioner (Appeals) reached a different conclusion treating the receipts as business income, that does not invalidate the reopening which was correctly initiated on recorded reasons. [Paras 11]

Reopening under section 147/148 held valid and beyond challenge.

Assessee's right to bifurcate composite receipts into rent and services and to enter separate agreements - Revenue's power limited to probing genuineness and correctness of quantum, not to dictate form of contracts - Assessee entitled to arrange its business by bifurcating receipts and entering separate agreements for letting out premises and for services/hiring of equipment. - HELD THAT: - The Tribunal held that while equipment may be inseparable from the building, the Revenue cannot compel the assessee to supply services or hire equipment together with letting of property. It is within the commercial prerogative of the parties to provide services or hire equipment separately and to fix separate consideration. The Revenue's role is confined to examining genuineness and correctness of declared income and expenditure, and it cannot prevent the assessee from organizing its business in a legally permissible manner. [Paras 12, 13]

Assessee's bifurcation of receipts and separate charging for rent and services/hire accepted as permissible; Revenue cannot forbid such arrangements.

Allowability of statutory deduction under section 24(a) for income from house property - Allowability of business expenses relating to services and hire of equipment - Deletion of penalty under section 271(1)(c) - Statutory deduction under section 24(a) and interest in respect of house property to be allowed; business expenses in respect of services and hire to be permitted; penalty deleted. - HELD THAT: - Having accepted the permissibility of bifurcation and that the assessee may charge separately for services and hire, the Tribunal directed the Assessing Officer to allow statutory deductions under section 24(a) and the interest attributable to the house property, and to permit business expenses related to services and hire. In view of the finding on quantum/additions, the penalty levied under section 271(1)(c) does not survive and is deleted. [Paras 13, 14]

Directed AO to allow section 24(a) deduction and interest, allow business expenses relating to services/hire, and delete the penalty under section 271(1)(c).

Final Conclusion: Appeal allowed: reassessment was valid but the assessee is entitled to bifurcate receipts and claim business expenses for services and hire and statutory deductions for house property; Assessing Officer directed to allow section 24(a) deduction and interest and to delete the penalty.

Transfer Pricing adjustment on AMP expenses - International transaction - Bright Line Test (BLT) invalidity - DEMPE functions - Revenue v. capital expenditure - infrastructure development payment - Expense deductible under section 37(1) - Interest income - nexus with business; remand for verification - Set-off of brought forward unabsorbed depreciation - applicability of amended section 32(2)

Transfer Pricing adjustment on AMP expenses - International transaction - Bright Line Test (BLT) invalidity - DEMPE functions - Deletion of Transfer Pricing adjustment made in respect of Advertisement, Marketing and Promotional (AMP) expenditure. - HELD THAT: - The Tribunal deleted the TP adjustment on AMP expenditure, following coordinate-bench decisions in the assessee's own case for earlier years. The TPO/TPO/DRP failed to demonstrate any express arrangement or agreement between the assessee and its Associated Enterprise (AE) obliging the assessee to incur AMP for promotion of the AE's brand; mere inference was insufficient to bring the AMP payments within the statutory definition of international transaction. The Tribunal further held that benchmarking the AMP by applying the Bright Line Test (BLT) was not a valid method, and the technical collaboration agreement relied upon did not evidence an express obligation to promote the AE's brand or support the TPO's conclusion that DEMPE-related benefits flowed to the AE. Facts being pari materia with earlier allowed decisions, the TP adjustment was set aside. [Paras 4]

TP adjustment on AMP expenses deleted.

Revenue v. capital expenditure - infrastructure development payment - Expense deductible under section 37(1) - Test of enduring benefit - Payment towards infrastructure development to the developer treated as revenue expenditure and allowable in entirety under section 37(1). - HELD THAT: - On construction of the infrastructure development agreement, the payment was not for acquisition of any asset by the assessee but for provision of common infrastructure owned by the developer; the assessee did not obtain ownership or comparable rights in the facilities. The payment merely enabled the assessee to conduct its business more efficiently. The Tribunal applied established precedents that enduring benefit alone does not convert an expenditure into capital in the absence of acquisition of an asset or addition to the profit-making apparatus. The DRP's characterization of the payment as an upfront lease charge was held to be beyond the scope of the agreement and unsupported by material on record. Consequently the expenditure was held revenue in nature and allowable in the year incurred. [Paras 6]

Infrastructure development payment treated as revenue expenditure and allowed as deduction under section 37(1) in the year of payment.

Interest income - nexus with business; remand for verification - Issue of classification of interest income (business income v. income from other sources) restored to the Assessing Officer for verification. - HELD THAT: - The Tribunal observed that identical issues in earlier years had been restored to the AO for detailed verification of the factual matrix, including the nature and tenure of bank deposits and the existence and quantum of 'credit float' arising from payment and receipt cycles. Facts being pari materia, the Tribunal directed remand to the AO to examine the nexus of the interest income with the assessee's business and to decide the matter afresh after verification. [Paras 7]

Matter restored to the Assessing Officer for factual verification and fresh adjudication.

Set-off of brought forward unabsorbed depreciation - applicability of amended section 32(2) - Direction to allow set-off of brought forward unabsorbed depreciation pertaining to earlier assessment year. - HELD THAT: - Following the Tribunal's earlier decision in the assessee's own case and relevant High Court decisions, the Tribunal held that the amended provision of section 32(2) permits carry forward and set-off of unabsorbed depreciation without the earlier eight-year limitation. The facts being identical to the coordinate-bench decision which allowed the set-off, the Tribunal directed the Assessing Officer to permit the claimed set-off. [Paras 8]

Set-off of brought forward unabsorbed depreciation allowed; Assessing Officer directed to give effect.

Final Conclusion: The appeal is partly allowed: the Transfer Pricing adjustment on AMP expenditure is deleted; the infrastructure development payment is held to be revenue in nature and allowed as deduction under section 37(1); the interest income issue is remanded to the Assessing Officer for factual verification; and the set-off of brought forward unabsorbed depreciation is directed to be allowed.

Reopening of assessment under section 147/148 - borrowed satisfaction / reliance on third party material - reason to believe - requirement of application of mind - presumptive evidentiary value of material seized from third parties - competence to proceed under section 153C as against section 147 - inadmissibility of uncorroborated confessions made during search

Reopening of assessment under section 147/148 - reason to believe - requirement of application of mind - borrowed satisfaction / reliance on third party material - inadmissibility of uncorroborated confessions made during search - Validity of reopening of assessment under section 147 r.w.s. 148 on the basis of material borrowed from search proceedings in other persons and withdrawn statements recorded under section 132(4). - HELD THAT: - The Tribunal found that the Assessing Officer issued notice under section 148 after dropping proceedings under section 153A and acted primarily on information and material produced by investigation wings and on material/record from searches in other persons' cases without independent verification or application of mind to materials available in the assessee's own record. The reasons recorded merely reproduced material from assessment orders of related family members/third parties and therefore amounted to 'borrowed satisfaction'. The Tribunal applied settled principles that formation of a 'reason to believe' is a jurisdictional requirement which must rest on a prudent application of mind to the material available prior to reopening; suspicion or unverified third party material cannot suffice. The Tribunal also noted the CBDT guidance that confessions or s.132(4) statements, especially if later retracted, are not to be relied upon unless corroborated by incriminating material found in the course of search in the assessee's case. On these grounds the Tribunal concluded that the AO lacked jurisdiction to reopen the assessments and set aside the reassessment order. [Paras 14, 16, 17, 18, 19]

Reopening under section 147/148 was invalid and the assessment order dated 29/12/2016 is quashed insofar as it rests on borrowed satisfaction and unverified third party material.

Competence to proceed under section 153C as against section 147 - presumptive evidentiary value of material seized from third parties - Whether material found in searches of third parties could be the basis for direct reassessment under section 147/148 instead of following the procedure under section 153C. - HELD THAT: - The Tribunal held that where incriminating material pertaining to the assessee is discovered in searches of third parties, the correct statutory procedure is to proceed under section 153C (read with section 153A) and not to indirectly effectuate assessment by invoking section 147/148 based on material seized from others. The Tribunal relied on precedents and coordinated bench reasoning that what cannot be done directly (i.e., proceed under the scheme of section 153C) cannot be done indirectly by treating third party seized material as a basis for section 147 reassessment. Because the AO did not invoke section 153C and instead relied on reproduction of other orders and third party records, the reassessment was held to be without jurisdiction. [Paras 17, 18]

Where material relates to the assessee but is seized from third parties, the AO should have invoked section 153C; initiation of proceedings under section 147/148 in such circumstances was unjustified and the reassessment is invalid.

Final Conclusion: The Tribunal allowed the appeals, quashed the reassessment order dated 29/12/2016 for A.Y. 2011-12 and applied the same reasoning mutatis mutandis to A.Y. 2012-13 and 2013-14, holding that the reopening under section 147/148 was invalid as it rested on borrowed satisfaction and third party material without independent application of mind and that the proper procedure where third party seized material is involved is under section 153C.

Eligibility of imports under duty-free import authorisation (DFIA) scheme - classification and entitlement under exemption notification for imported inputs - acceptance of licensing authority's clarifications and expert technical opinions in customs adjudication - probative value of statements recorded under section 108 of the Customs Act, 1962 - transferability of DFIA licences and scope of the 'actual user' condition

Classification and entitlement under exemption notification for imported inputs - eligibility of imports under duty-free import authorisation (DFIA) scheme - Sweet whey powder imported against DFIA licences is not to be excluded as a leavening agent merely because it is commonly used as a food supplement; eligibility under the exemption notification cannot be denied on that basis. - HELD THAT: - The Tribunal accepted that 'sweet whey powder' is a remnant of milk and, despite common commercial use as a food supplement, can serve as a leavening agent in the baking industry. The adjudicating authority's categorical exclusion of sweet whey powder from permissible leavening agents, based mainly on commercial prevalence and statements recorded during investigation, was unsupported. Given the technical literature and multiple expert opinions before the authority and the Tribunal, the conclusion that the product could not be a permissible leavening agent lacked good authority. The Tribunal therefore held that the declared classification and entitlement under the notification should not have been rejected on the ground that the product is used primarily as a supplement. [Paras 7, 10, 11, 12]

The claim of entitlement for import of sweet whey powder as a leavening agent under the DFIA-linked exemption cannot be denied merely on the basis of its commercial use as a supplement; the impugned finding to the contrary is unsustainable.

Acceptance of licensing authority's clarifications and expert technical opinions in customs adjudication - probative value of statements recorded under section 108 of the Customs Act, 1962 - Clarifications from the licence-issuing authority and technical expert opinions could not be disregarded in favour of admission statements recorded under section 108 or for lack of a sample; such statements lacked unquestioned validity and did not outweigh documentary and expert material. - HELD THAT: - The Tribunal observed that the Director General of Foreign Trade's clarification and minutes, together with multiple expert opinions and technical literature, supported the permissibility of whey powder as a leavening agent. The adjudicating authority's preference for isolated statements recorded under section 108 and for a single expert view (based on absence of a sample) was found to be misplaced. The Tribunal emphasised that statements taken by investigating officers are not to be accorded unquestioned validity where a body of technical evidence and licence-authority clarifications exist, and that absence of a contemporaneous sample, when customs had the prerogative to draw one, was not a sufficient ground to discard expert opinions. [Paras 8, 9, 11, 12]

The adjudicating authority erred in rejecting the licensing authority's clarifications and the available expert opinions in favour of reliance on section 108 statements and the absence of a sample; those materials should have carried weight in assessing entitlement.

Transferability of DFIA licences and scope of the 'actual user' condition - eligibility of imports under duty-free import authorisation (DFIA) scheme - A transferee of a DFIA licence endorsed post-export is not, by virtue of transfer alone, subject to an 'actual user' condition unless such a condition is expressly imposed in the policy or notification; transferability does not automatically revive an actual-user requirement. - HELD THAT: - The Tribunal noted that the DFIA licences in question were transferable pursuant to the Foreign Trade Policy and there was no allegation that the endorsements were procured unlawfully. The 'actual user' prescription in the Policy and the corresponding notification was not shown to extend to transferees where transfer is permitted. The Tribunal also observed that there was no credible evidence that the appellants were aware of or complicit in any differing composition of the exported product; the original licence-holder had fulfilled the export obligation. On this basis, the Revenue's contention that import by a non-actual user rendered the import ineligible was not established. [Paras 4, 13, 14]

Transfer of DFIA licences endorsed post-export did not, in itself, render the transferee ineligible under an 'actual user' condition; the impugned finding of ineligibility on this ground was unsupportable.

Final Conclusion: For the reasons stated, the Tribunal found the impugned adjudication unsustainable: sweet whey powder could be a permissible leavening agent, the licensing authority's clarifications and expert opinions could not be disregarded in favour of section 108 statements or absence of sample, and transferability of DFIA licences did not automatically attract an 'actual user' bar. Consequently, the impugned order was set aside and the appeals allowed.

Mandatory pre-deposit under Section 129E of the Customs Act, 1962 - dismissal of appeal for non-compliance with pre-deposit requirement - power to dispense with deposit on grounds of undue hardship - right to adjudication on merits upon compliance with pre-deposit

Mandatory pre-deposit under Section 129E of the Customs Act, 1962 - dismissal of appeal for non-compliance with pre-deposit requirement - The appellate authority was justified in dismissing the appeal for non-compliance with the mandatory pre-deposit requirement under Section 129E of the Customs Act, 1962. - HELD THAT: - The Court examined Section 129E which requires deposit of the duty and interest demanded or penalty levied pending an appeal where the goods are not under customs control or where a penalty is imposed. The appellate authority dismissed the petitioner's appeal on the ground that the mandatory pre-deposit, as required by the provision, was not made. Having considered the statutory mandate and the facts before it, the Court held that non-compliance with the pre-deposit condition furnished a valid ground for dismissal of the appeal. The Court noted that the appellate forum is empowered, by proviso, to dispense with such deposit only where it is satisfied that deposit would cause undue hardship and may impose conditions to safeguard revenue; no such dispensation was recorded in the present case.

Appeal rightly dismissed for failure to comply with the mandatory pre-deposit requirement under Section 129E.

Right to adjudication on merits upon compliance with pre-deposit - power to dispense with deposit on grounds of undue hardship - Procedure to be followed if the petitioner makes the mandatory pre-deposit within the period directed by the Court. - HELD THAT: - While upholding the dismissal for non-compliance, the Court granted a conditional direction: if the petitioner makes the mandatory pre-deposit within thirty days from the date of the order, the appellate authority is required to admit and decide the appeal on merits in accordance with law. This direction acknowledges the appellate authority's obligation to consider applications for dispensing with deposit where undue hardship is shown, but provides the petitioner an opportunity to regularise the appeal by effecting the statutory deposit so that the merits can be addressed.

If the petitioner deposits the required amount within thirty days, the appellate authority shall decide the appeal on merits in accordance with law.

Final Conclusion: Writ petition dismissed; the appellate authority's order dismissing the appeal for non-compliance with the mandatory pre-deposit is upheld, subject to the petitioner making the statutory pre-deposit within thirty days, whereupon the appellate authority shall decide the appeal on merits.

Compounding of offences - maintainability of appeal against a compounding order - crystallization of demand of redemption fine - remand for fresh consideration by compounding authority

Maintainability of appeal against a compounding order - compounding of offences - Whether an appeal could be entertained against an order rejecting an application for compounding of offences. - HELD THAT: - The Court applied the principle laid down by a coordinate Bench in Girish B. Mishra to hold that an order declining compounding is an order passed under the revenue statute and falls within the scope of an adjudicatory order. The compounding authority exercises a discretionary adjudicatory power in deciding an application for compounding; such a decision decides the lis of a party and is not a mere administrative act. Consequently, an appeal against such an order to the Appellate Tribunal is maintainable. The Court relied on the earlier coordinate-bench decision dismissing a related Tax Appeal and took notice of the common Tribunal order in the connected appeals, treating the principle as applicable to the present matter and obviating the need for fresh determination of that question of law. [Paras 3, 4]

An appeal against a compounding authority's order refusing compounding is maintainable before the Tribunal; the principle in Girish B. Mishra is applicable.

Crystallization of demand of redemption fine - remand for fresh consideration by compounding authority - Whether there was a crystallized demand of redemption fine such as would justify rejection of compounding applications for non-payment. - HELD THAT: - The Tribunal found, on examination of the show-cause notices and the original adjudication order, that there was no clear proposal in the notices nor any direction in the order-in-original that imposed a redemption fine specific to each noticee; accordingly there was no crystallized demand of redemption fine against the appellants. The Tribunal relied on this Court's earlier observations in Shivam Development Trust and related decisions to conclude that the department could not recover such a fine in the absence of a specific proposal or direction. On that basis the Tribunal set aside the rejection of the compounding applications insofar as it was predicated on non-payment of a redemption fine, and directed reconsideration by the Chief Commissioner/Competent Authority within a stipulated period. [Paras 5, 6, 7]

There was no crystallized demand of redemption fine against the noticees; rejection of compounding applications for non-payment of such a fine was not legally sustainable and the matter was remanded for reconsideration.

Final Conclusion: The Tax Appeal by the Revenue is dismissed; the Tribunal's conclusions that (a) appeals against compounding orders fall within the appellate jurisdiction as adjudicatory orders and (b) there was no crystallized demand of redemption fine warranting rejection of compounding applications are accepted, and the matter is remitted for reconsideration by the competent authority as directed by the Tribunal.

Review within three months from date of communication - date of communication - time-bar - dispatch versus communication - Section 129D(3) of the Customs Act, 1962 - review period computed from communication

Review within three months from date of communication - date of communication - Section 129D(3) of the Customs Act, 1962 - review period computed from communication - The Review Order dated 10.06.2019 was within the three month period prescribed by law when measured from the date of communication recorded as 11.03.2019. - HELD THAT: - The Tribunal observed that the Order in Original was passed on 23.01.2019 but signed on 04.02.2019 and the record bears a date of receipt/communication of 11.03.2019. The First Appellate Authority treated dispatch date as determinative and held the review time barred. However, under the statutory provision the relevant temporal benchmark is the date of communication of the Order in Original. If communication occurred on 11.03.2019, the Review Order dated 10.06.2019 falls within the three month period mandated by Section 129D(3). The Tribunal therefore held that the First Appellate Authority erred in not treating the date of communication as the operative date for computing the review period. [Paras 6]

The Review Order dated 10.06.2019 is within time when computed from the recorded date of communication (11.03.2019) and was not time barred.

Dispatch versus communication - time bar - The Revenue's explanation for the delayed dispatch/communication was found unsatisfactory and rejected; the appeal filed by the Revenue was dismissed as devoid of merits. - HELD THAT: - The Tribunal noted that the Revenue, being a party to the litigation, failed to satisfactorily explain the apparent delay between signing (04.02.2019), dispatch (12.02.2019), and the recorded date of communication (11.03.2019), despite both Adjudicating and Reviewing Authorities being located in the same premises. The absence of supporting office records or a coherent explanation created suspicion and the explanation placed on record was rejected. Consequently, the Tribunal found no merit in the Revenue's contentions and dismissed the appeal. The cross objection filed by the assessee was also disposed of. [Paras 4, 5, 7, 8, 9]

The Revenue's justification for the delay in dispatch/communication is unacceptable; the appeal is dismissed as devoid of merits and the assessee's cross objection is disposed of.

Final Conclusion: The Tribunal held that the Review Order of 10.06.2019 was within the three month statutory period when computed from the date of communication (11.03.2019), rejected the Revenue's unsatisfactory explanation for dispatch/communication delays, and dismissed the Revenue's appeal as lacking merit; the assessee's cross objection was disposed of.

Restoration of company name under section 252(3) of the Companies Act, 2013 - striking off from the Register of Companies and dissolution under removal procedure - failure to file statutory financial statements and annual returns - opportunity to rectify defaults as a ground for restoration - conditional restoration subject to payment of costs and filing of pending returns - automatic vacatur of restoration order for non-compliance - Registrar of Companies to communicate for defreezing bank accounts upon restoration

Restoration of company name under section 252(3) of the Companies Act, 2013 - opportunity to rectify defaults as a ground for restoration - Restoration of the company's name to the Register of Companies was allowable. - HELD THAT: - The Bench examined the ROC report, the audited financial statements placed on record and other documents and observed that the company had revenues from operations, tangible fixed assets and current assets in its books of account. On that basis the Tribunal found it just and equitable to permit restoration so that the company may rectify defaults and continue business. The petition under section 252(3) was therefore allowed. [Paras 10, 11]

The petition for restoration is allowed and the company's name is directed to be restored to the Register of Companies.

Conditional restoration subject to payment of costs and filing of pending returns - automatic vacatur of restoration order for non-compliance - Restoration is subject to specific conditions including payment of costs and filing of pending statutory documents within a stipulated period, failing which the order will stand vacated. - HELD THAT: - The Tribunal imposed conditions for restoration: payment into the specified public fund as costs and filing of all pending financial statements and annual returns with applicable fees and late fees within thirty days of receipt of the order. The Bench made non-compliance with these conditions self-executing by providing that the order will automatically stand vacated if the company fails to comply within the time stipulated.

Restoration is subject to payment of costs into the designated fund and filing of all pending financial statements and annual returns within thirty days; failure to comply will automatically vacate the restoration.

Registrar of Companies to communicate for defreezing bank accounts upon restoration - On compliance with the restoration conditions, the Registrar of Companies shall communicate with bank authorities to defreeze the company's accounts. - HELD THAT: - The Tribunal directed that upon restoration of the company's name after satisfaction of the imposed conditions, the ROC shall issue appropriate communications to banking authorities for defreezing the accounts of the company, thereby restoring practical operational status post-restoration.

ROC to communicate with banks to defreeze accounts upon the company's compliance and restoration.

Final Conclusion: The Company Petition for restoration of Elegant Ventures Private Limited is allowed; restoration is ordered subject to payment of prescribed costs into the designated public fund and filing of all pending financial statements and annual returns with applicable fees and late fees within thirty days, failing which the order will stand vacated, and upon compliance the ROC shall communicate with banks to defreeze the company's accounts.

Restoration of company name under Section 252 of the Companies Act, 2013 - just and equitable test for restoration - failure to file annual returns not an absolute bar to restoration - opportunity to take remedial measures before dissolution - filing of outstanding statutory documents and payment of prescribed fees - publication in Official Gazette and newspaper and consequential registry formalities - payment of costs for revival

Restoration of company name under Section 252 of the Companies Act, 2013 - just and equitable test for restoration - failure to file annual returns not an absolute bar to restoration - opportunity to take remedial measures before dissolution - Whether the appellant company's name should be restored to the Register of Companies - HELD THAT: - The Tribunal examined the statutory power to restore a struck-off company under Section 252 and applied the "just and equitable" standard. Although the company had failed to file annual returns and balance sheets in time, the appellant produced audited financial statements, income-tax filings for several years, and evidence of movable and immovable assets which established that the company is a living entity. The Tribunal held that striking off, without affording effective remedial opportunity or where the company shows tangible assets and intent to comply, would be disproportionate; therefore mere non-filing does not automatically preclude restoration. Applying these considerations to the facts and balancing interests of the company, shareholders and creditors, the Tribunal directed restoration of the company's name. [Paras 8, 9, 10, 11]

The appellant company's name is to be restored on the Register of Companies and its status treated as if it had not been struck off.

Filing of outstanding statutory documents and payment of prescribed fees - payment of costs for revival - publication in Official Gazette and newspaper and consequential registry formalities - What conditions and consequential directions should accompany restoration of the company's name - HELD THAT: - The Tribunal imposed conditional directions as a part of restoration. The appellant is required to file all outstanding statutory documents and pay prescribed fees/additional fees/fines within thirty days of restoration. Restoration is made subject to payment of specified costs for revival through the designated online mode. The appellant must deliver a certified copy of the order to the Registrar for publication in the Official Gazette; the Registrar is to verify and publish the approved draft notice in a leading district newspaper and effect registry formalities, including change of company status and DIN restoration, after the appellant complies with the conditions. [Paras 12, 13, 14, 15, 16]

Restoration is subject to filing of outstanding statutory documents with prescribed fees, payment of the directed costs, delivery of certified copy of the order for Gazette publication, and compliance with directions for newspaper notice and registry formalities.

Final Conclusion: The Tribunal allowed the appeal, directed restoration of the company's name as if it had not been struck off, and imposed conditional obligations on the appellant to file outstanding statutory documents, pay prescribed fees and costs, and comply with Gazette and newspaper publication and related registry formalities.

Scheme of Arrangement and Amalgamation - dispensing with statutory meetings of shareholders and preferential shareholders - notice to regulatory authorities under section 230(5) of the Companies Act, 2013 - appointment of an accountant to assist the Official Liquidator - service of notice on secured and unsecured creditors and right to submit representations - filing of compliance report in lieu of affidavit of service

Dispensing with statutory meetings of shareholders and preferential shareholders - Meetings of the equity shareholders of all Applicant Companies and the sole preferential shareholder of Applicant No.2 were dispensed with. - HELD THAT: - The Tribunal recorded that all equity shareholders of Applicant Nos.1 to 4 had executed consent affidavits in favour of the Scheme and that the sole preferential shareholder of Applicant No.2 had similarly consented. In view of those unanimous consents, the Tribunal dispensed with holding the statutory meetings of the equity shareholders and the meeting of the preferential shareholder, treating the affidavits in lieu of convened meetings. [Paras 11, 13]

Statutory shareholder and preferential-shareholder meetings are dispensed with on account of the filed consent affidavits.

Notice to regulatory authorities under section 230(5) of the Companies Act, 2013 - The Applicant Companies were directed to serve statutory notices on the Regional Director, Registrar of Companies and the Income Tax Authority as part of the process under section 230(5). - HELD THAT: - The Tribunal ordered service of the application and copy of the Scheme on the Regional Director (Western Region), Registrar of Companies, Maharashtra and the Income Tax Authority having jurisdiction over the respective applicants, pursuant to the statutory requirement in section 230(5) and Rule 8. The Tribunal specified that if no response is received within thirty days, it will be presumed the authorities have no objection to the Scheme. [Paras 18]

Applicants to serve notices on specified regulatory authorities and absence of response within 30 days will be treated as no objection.

Appointment of an accountant to assist the Official Liquidator - Official Liquidator's scrutiny and report - The Tribunal appointed an accountant to assist the Official Liquidator in scrutinising the books of certain Applicant Companies and directed submission of the Official Liquidator's report or representation. - HELD THAT: - In relation to Applicant Nos.1, 2 and 3, the Tribunal directed service of the Scheme on the Official Liquidator, High Court, Bombay and appointed a named firm of chartered accountants to assist the Official Liquidator in scrutinising the accounts and preparing a report or representation. The Tribunal provided that absence of a response from the Official Liquidator within thirty days will be treated as no objection, and directed that the Official Liquidator shall submit its report/representation to the Tribunal. [Paras 18]

Chartered accountants appointed to assist the Official Liquidator; Official Liquidator to submit report/representation and non-response within 30 days will be deemed no objection.

Service of notice on secured and unsecured creditors and right to submit representations - The Applicant Companies were directed to serve notice of the application and Scheme on all secured and unsecured creditors and to permit creditors to submit representations within thirty days. - HELD THAT: - Given the existence of secured and multiple unsecured creditors across the Applicant Companies, the Tribunal ordered service of notice by post, courier, hand delivery or registered email to the last known addresses of such creditors. The Tribunal provided a thirty-day period from receipt of notice for creditors to submit any representations to the Tribunal and placed responsibility on the Applicant Companies to ensure effective notice to creditors so they may take informed decisions. [Paras 14, 15, 18]

Applicants to serve creditors with notice and allow 30 days for submission of representations; applicants bear responsibility for effecting notice.

Filing of compliance report in lieu of affidavit of service - The Applicant Companies were directed to file a compliance report with the Registry instead of the customary affidavit of service, in view of prevailing lockdown constraints. - HELD THAT: - Recognising difficulties occasioned by the lockdown, the Tribunal permitted the Applicant Companies to file a compliance report with the Registry demonstrating service of notice on the regulatory authorities and the creditors, in lieu of the usual affidavit of service, thereby validating alternative proof of service under the circumstances. [Paras 18]

Applicants to file compliance report with the Registry in lieu of affidavit of service.

Final Conclusion: The Tribunal admitted the Scheme for further statutory processing: it dispensed with shareholder and preferential-shareholder meetings on the basis of filed consents; directed service of notices on specified authorities, the Official Liquidator and creditors with prescribed timelines for response; appointed accountants to assist the Official Liquidator and required the Applicants to file a compliance report in lieu of affidavits of service.

Sanction of scheme of amalgamation - Binding effect of sanction on shareholders, creditors and employees - Appointed Date and its effect - Compliance with statutory requirements and undertakings - Report of the Regional Director and response to observations - Filing and stamping formalities consequent to sanction

Sanction of scheme of amalgamation - Binding effect of sanction on shareholders, creditors and employees - Appointed Date and its effect - Sanction of the Scheme of Amalgamation between Ram Ratna Electricals Limited and R R Kabel Limited, with the Appointed Date fixed as 1 April 2019, and its binding effect. - HELD THAT: - The Tribunal, having considered the petition filed under Sections 230 to 232 of the Companies Act, 2013, the material on record and the absence of any opposing objector, concluded that the Scheme is fair and reasonable, not violative of law and not contrary to public policy. The Board resolution approving the Scheme and the fixation of the Appointed Date as 1 April 2019 were noted. The Court accepted the petitioner's undertaking to comply with statutory requirements under the Act and the Rules. On these grounds the petition was made absolute and the Scheme sanctioned; the sanction is declared binding on the petitioner companies and all concerned including their respective shareholders, secured creditors, unsecured creditors/trade creditors and employees. [Paras 1, 3, 6, 9, 10]

The Scheme is sanctioned with the Appointed Date fixed as 1 April 2019 and is binding on the companies and all concerned.

Report of the Regional Director and response to observations - Compliance with statutory requirements and undertakings - Consideration of the Regional Director's report and acceptance of the petitioner's clarifications and undertakings. - HELD THAT: - The Regional Director (Western Region) filed a report containing observations. The petitioner furnished responses, clarifications and undertakings addressing the matters recorded in the report (including accounting entries in compliance with applicable Accounting Standards and confirmation regarding the Appointed Date and compliance with MCA circular). The Tribunal examined these responses and accepted the undertakings, recording that save and except as noted the Scheme was not prejudicial to shareholders and the public. The petitioner's undertaking to comply with statutory requirements was also accepted. [Paras 7, 8]

The observations of the Regional Director are addressed by the petitioner's undertakings, which are accepted by the Tribunal.

Filing and stamping formalities consequent to sanction - Procedural directions following sanction - Directions to give effect to the sanctioned Scheme, including filing of certified copy with Registrar of Companies, lodging for stamp adjudication, publication and consequential statutory steps. - HELD THAT: - Upon sanctioning the Scheme, the Tribunal directed issuance of certified copies of the order and ordered the petitioner to file the order and Scheme with the Registrar of Companies electronically in E Form INC 28 within 30 days of receipt of the certified copy. The petitioner was also directed to lodge authenticated copies with the Superintendent of Stamps for adjudication within 60 days, to make requisite newspaper publications in the same newspapers previously used, and to take all consequential and statutory steps under the Act. The Tribunal left liberty for any interested person to apply for further directions if necessary. [Paras 10]

The petitioner must comply with the prescribed filing, stamping, publication and consequential statutory formalities specified by the Tribunal.

Final Conclusion: The Company Petition C.P. (CAA) 961/MB-I/2020 is allowed; the Scheme of Amalgamation between Ram Ratna Electricals Limited and R R Kabel Limited is sanctioned with Appointed Date 1 April 2019, the Regional Director's observations are addressed and accepted by undertakings, and the petitioner is directed to complete the prescribed filing, stamping, publication and other statutory formalities.

Interim relief - Urgency in grant of interim orders - Requirement of prima facie case for interim relief - Conversion of executive director to non-executive director - Pending identical application as bar to grant of interim relief

Interim relief - Urgency in grant of interim orders - Requirement of prima facie case for interim relief - Conversion of executive director to non-executive director - Pending identical application as bar to grant of interim relief - Application for interim directions for payment of alleged unpaid remuneration by the company dismissed for want of urgency and prima facie case. - HELD THAT: - The Tribunal declined to grant interim relief for payment of alleged unpaid remuneration. The application, though presented as urgent due to COVID-19 hardship, relates to long-pending disputes which include a prior change in the applicant's status at an EoGM (from Executive Director to Non Executive Director) attended by the applicant and which was challenged by him. An identical earlier interlocutory application on the same relief is pending; in those circumstances the bench found no urgency to pass interim orders. Further, on a prima facie appraisal the applicant failed to establish that he continued to work for the company in a capacity attracting remuneration, and the material on record did not justify an interim direction for payment. The Tribunal therefore considered it inappropriate to keep or grant the petition for further interim consideration.

The unnumbered I.A. of 2020 in CP(IB) No. 119/KB/2017 is dismissed with no orders as to costs; registry to serve the order by email.

Final Conclusion: The application for urgent interim relief for arrears of remuneration was refused: no interim direction was issued because urgency was not established, an identical earlier application was pending, and prima facie material did not justify payment.

Restoration of company name - striking off of company by Registrar for non-filing of statutory returns - appeal under section 252(1) when struck off by Registrar - application under section 252(3) filed but treated as appeal under section 252(1) - protection of legitimate interest of revenue - continuation and enforceability of liabilities of directors and officers of dissolved company - publication and statutory compliance as condition of restoration

Appeal under section 252(1) when struck off by Registrar - application under section 252(3) filed but treated as appeal under section 252(1) - Application filed under section 252(3) is not maintainable where the company was struck off by the Registrar for failure to file statutory returns; the appeal is to be treated under section 252(1). - HELD THAT: - The Tribunal examined the statutory framework distinguishing removals at the behest of promoters (section 252(3)) and removals effected by the Registrar for non-filing of returns (section 252(1)). The company had been struck off by the Registrar for continuous non-filing of statutory returns. Noting the settled principle that quoting a wrong provision will not necessarily disentitle a party to relief, the Tribunal accordingly treated the application as proceeding under section 252(1) and proceeded to consider restoration on that basis. [Paras 12, 13]

Application treated and adjudicated under section 252(1) of the Companies Act, 2013.

Restoration of company name - striking off of company by Registrar for non-filing of statutory returns - protection of legitimate interest of revenue - publication and statutory compliance as condition of restoration - Name of M/s. Crucial Consulting Pvt. Ltd. is to be restored to the Register of Companies to protect public interest and the legitimate interest of the revenue, subject to conditions. - HELD THAT: - The Tribunal found that the company had been struck off for non-filing of returns but restoration was warranted to protect the legitimate interest of the revenue and to permit the Income Tax Department to proceed. The Registrar of Companies indicated no objection to restoration in light of Ministry circulars. In exercise of its powers under section 252(1), the Tribunal allowed the appeal and directed restoration, conditioning revival on publication of notice in two leading local newspapers and the Official Gazette in the form approved by the ROC, at the cost of the appellant, and directing the company to comply with the Companies Act and other statutory requirements. [Paras 14, 15, 16, 17]

Name of the company restored in the Register of Companies subject to publication in two newspapers and the Official Gazette and compliance with statutory requirements.

Protection of legitimate interest of revenue - exemption of period consumed for initiation of proceedings - Time consumed in disposal of the application before the Tribunal is to be exempted for the purpose of initiation of Income Tax and legal proceedings against the assessee company. - HELD THAT: - To ensure that revival does not prejudice the revenue, the Tribunal directed that the time consumed from filing of the appeal until its disposal be excluded for purposes of any limitation or initiation of Income Tax or other legal proceedings against the company, thereby preserving the department's ability to proceed. [Paras 18]

Time consumed in disposal of the application is exempted for the purpose of initiation of Income Tax and legal proceedings.

Final Conclusion: The Tribunal treated the application as an appeal under section 252(1), allowed the appeal and directed restoration of the company's name on the Register subject to publication and statutory compliance, and exempted the period consumed in the proceedings for the purpose of initiating Income Tax and other legal actions.

Urgent hearing by videoconference - initiation of corporate insolvency resolution process by a financial creditor - failure to file counter and delay affecting creditors' interests - ministry communication as guidance not binding but of persuasive value - allegation of suppression of documents and mala fide intent

Urgent hearing by videoconference - initiation of corporate insolvency resolution process by a financial creditor - failure to file counter and delay affecting creditors' interests - Application for urgent hearing of the Company Petition through videoconference was allowed and the main petition was directed to be listed for regular hearing. - HELD THAT: - The Tribunal noted that the Company Petition under Section 7 was filed on 20.12.2019 and listed from 23.01.2020; despite multiple listings the Corporate Debtor had not filed its counter. The applicant applied for urgent hearing in view of large outstanding dues and a communication dated 24.04.2020 from the Ministry identifying large pending insolvency cases for urgent handling. The Tribunal rejected the respondent's plea that COVID-19 prevented access to documents, observing the petition and voluminous documents were filed prior to the lockdown and several earlier hearing dates. Having regard to the erosion of asset value and restoration of near-normal functioning following relaxation of lockdown, the Tribunal exercised its discretion to permit urgent handling by virtual means and posted the main petition for hearing on 01.07.2020. [Paras 7, 8, 9, 10]

IA for urgent hearing is allowed; main Company Petition posted for regular hearing on 01.07.2020.

Ministry communication as guidance not binding but of persuasive value - allegation of suppression of documents and mala fide intent - Contentions that the Ministry communication is binding on the Tribunal and that the applicant suppressed documents or acted with mala fide intent were rejected. - HELD THAT: - The Tribunal agreed that it is an independent statutory forum and not strictly bound by administrative communications; however, it held that the Ministry's communication cannot be ignored given the potential systemic impact of large defaults. The Tribunal found no substance in the respondent's allegation of suppression of documents or mala fides, noting that relevant documents had been filed well before lockdown and that the respondent had opportunities in earlier listings to file its counter. Consequently, the respondent's objections did not justify denial of urgent hearing. [Paras 8, 9]

The respondent's objections regarding the legal effect of the Ministry communication and allegations of suppression/mala fide are rejected.

Final Conclusion: The Tribunal allowed the application for urgent hearing by videoconference, rejected the respondent's objections (including claims of document suppression and that the Ministry communication was binding), and posted the main Company Petition for hearing on 01.07.2020.

Power of liquidator to sell assets by private contract subject to conditions - mode of sale under Regulation 33 permitting private sale in specified circumstances - requirement of consent of secured creditors holding security interest - prohibition on private sale to related parties and duty to guard against collusion - distribution of proceeds under Section 53 priority waterfall - liquidator's duty to deduct liquidation and insolvency resolution costs before distribution

Power of liquidator to sell assets by private contract subject to conditions - mode of sale under Regulation 33 permitting private sale in specified circumstances - requirement of consent of secured creditors holding security interest - prohibition on private sale to related parties and duty to guard against collusion - Permission to sell the factory structure and sheds of the Corporate Debtor by private contract to R.C. Plasto Tanks and Pipes Private Limited for Rs.15,00,00,000/- was allowed. - HELD THAT: - The Tribunal examined the statutory framework under Regulation 33 of the Liquidation Process Regulations and Section 35 of the Code which vest the liquidator with power to sell assets by public auction or private contract subject to conditions and prior permission of the Adjudicating Authority. The Bench noted that Regulation 33 permits private sale in specified circumstances and that the liquidator must avoid sales to related parties or where collusion is suspected. Here the liquidator obtained consents from the secured creditors holding security interests over the assets proposed for sale; the three secured creditors together constitute 100% of the secured creditors in whose favour security interest was created. On this factual foundation and having regard to the valuation evidence and the practical inseparability of the structure from the land, the Tribunal considered the request for permission and exercised its discretion to permit the private treaty sale. The Tribunal also recorded the statutory safeguards concerning prohibition on sale to related parties and the liquidator's duty to be alert to collusion under Regulation 33(3). [Paras 12]

Sale by private treaty to R.C. Plasto Tanks and Pipes Private Limited for Rs.15,00,00,000/- permitted and the liquidator authorised to effect the sale.

Distribution of proceeds under Section 53 priority waterfall - liquidator's duty to deduct liquidation and insolvency resolution costs before distribution - Proceeds of the sale are to be distributed in accordance with Section 53 of the Insolvency and Bankruptcy Code, 2016; specific directions for distribution were not given pending quantification of costs and dues. - HELD THAT: - The Tribunal reiterated that Section 53 prescribes the order and manner of distribution of liquidation proceeds and that the liquidator must act in accordance with that statutory priority, including deduction of insolvency resolution process costs and liquidation costs under Section 53(1)(a). The Bench observed that the liquidator must ascertain amounts payable to workmen and other classes before distribution. Because the liquidator had not placed on record the necessary details-particularly amounts payable to labourers and the computation of costs-the Tribunal declined to give specific distribution directions at this stage and required the liquidator to arrive at the distributable amount after making statutory deductions and to file an application with full details, preferably after serving security interest holders over the asset. [Paras 13, 16]

Distribution to be made as per Section 53; directions for distribution withheld pending the liquidator's filing of detailed quantification of costs and dues.

Final Conclusion: MA is partially allowed: the Tribunal permits the private treaty sale of the Corporate Debtor's factory structure and sheds to the identified purchaser for the stated consideration, while directing that distribution of sale proceeds must follow Section 53 of the Code and requiring the liquidator to file detailed quantification of costs and dues before specific distribution directions are given.

Jurisdiction of the Adjudicating Authority under section 60(5) of the Insolvency and Bankruptcy Code - protection of sale of corporate debtor as a going concern and maximisation of value under the IBC - enforcement of security by a financial creditor under SARFAESI Act vis-a -vis liquidation proceedings - liability of a guarantor co-extensive with the principal debtor - restraint on coercive steps that would diminish the value of the corporate debtor

Jurisdiction of the Adjudicating Authority under section 60(5) of the Insolvency and Bankruptcy Code - Maintainability of the application under the IBC invoking the Tribunal's jurisdiction under section 60(5). - HELD THAT: - The Application raised questions that directly impact the liquidation sale of the corporate debtor as a going concern, including priorities and questions of law or fact arising out of the liquidation process. Those matters fall within the scope of jurisdiction conferred by section 60(5)(c) of the Code. Having regard to the admitted facts and the nature of the relief sought (which could affect the going-concern sale), the Adjudicating Authority held that the Application is maintainable under the Code. [Paras 10]

Application is maintainable under section 60(5) of the IBC.

Protection of sale of corporate debtor as a going concern and maximisation of value under the IBC - enforcement of security by a financial creditor under SARFAESI Act vis-a -vis liquidation proceedings - restraint on coercive steps that would diminish the value of the corporate debtor - Whether the financial creditor may proceed under SARFAESI to take coercive steps against properties of guarantor subsidiaries when such steps would likely diminish the value of the corporate debtor and affect the going-concern sale. - HELD THAT: - While it is settled that a financial creditor may enforce guarantees and that guarantor liability is co-extensive with the principal debtor, those rights are not unfettered where the creditor's exercise of remedies would adversely affect the objectives of the Code. The Tribunal applied the Code's primary objective of promoting resolution and maximisation of asset value (as reflected in Swiss Ribbons and relevant NCLAT authorities) and held that enforcement action by the financial creditor is permissible so long as it does not diminish the value of the corporate debtor. Where coercive steps (such as sale of assets mortgaged by subsidiaries) would likely reduce the value of the corporate debtor - thereby prejudicing a going-concern sale being conducted in liquidation - the Adjudicating Authority may restrain such steps to protect the liquidation sale process and maximise value for stakeholders. [Paras 14, 17, 18]

Respondent No.1 Bank is directed not to take any coercive steps, including sale of properties mortgaged by the applicant companies, until completion of the liquidation proceedings of the corporate debtor.

Final Conclusion: The Application is held maintainable under section 60(5) of the IBC; accordingly, the Tribunal restrained the financial creditor from taking coercive steps (including sale of properties mortgaged by the guarantor subsidiaries) that would diminish the value of the corporate debtor until completion of the liquidation proceedings, and disposed of IA No. 335/2020 on that basis.

Approval of resolution plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - relegation to NCLT by Supreme Court - exclusion of time for long-stop date calculation - listing and consolidation of applications for joint hearing - delinking of applications for separate hearing

Relegation to NCLT by Supreme Court - approval of resolution plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - Direction to act upon the Supreme Court order by permitting filing and consideration of an application under Section 30(6) and to list the same for hearing - HELD THAT: - The Tribunal recorded the Supreme Court's order remitting the matter to the NCLT for consideration after a fresh resolution passed by the Committee of Creditors. In compliance, the Resolution Professional was permitted to file an application under Section 30(6) of the IBC seeking approval of the resolution plan, and the registry was directed to scrutinize the proposed application and, if found in order, list it for hearing on 16.06.2020. The Tribunal's direction implements the Supreme Court's instruction to consider the IA afresh and to proceed expeditiously.

Resolution Professional permitted to file IA under Section 30(6); registry to scrutinize and list the IA on 16.06.2020 if in order.

Listing and consolidation of applications for joint hearing - Consolidation and listing of specified pending CAs/IAs to be heard along with the proposed Section 30(6) application - HELD THAT: - The Tribunal directed that CA No. 293/2018 and IA Nos. 7/2020 and 62/2020, whose pleadings were complete, be heard together with the proposed IA seeking approval of the resolution plan and listed those matters for 16.06.2020. The Resolution Professional was directed to communicate this order to all counsels and parties to facilitate joint hearing, ensuring that matters that are interconnected with the proposed approval application are addressed together.

CA No. 293/2018 and IA Nos. 7/2020 and 62/2020 listed to be heard with the proposed Section 30(6) IA on 16.06.2020; Resolution Professional to inform parties.

Delinking of applications for separate hearing - Delinking and separate listing of other specified applications - HELD THAT: - The Tribunal accepted the Resolution Professional's submission that CA No. 297/2018, CA No. 119/2019 and CA No. 67/2020 could be delinked from the proposed Section 30(6) application. Consequently, these applications were directed to be listed separately on 30.06.2020, thereby treating them as matters not requiring consolidation with the approval application.

CA No. 297/2018, 119/2019 and 67/2020 delinked and listed for hearing on 30.06.2020.

Final Conclusion: Pursuant to the Supreme Court's remand, the Tribunal authorised the Resolution Professional to file an application under Section 30(6) for approval of the resolution plan, directed scrutiny and listing of that IA on 16.06.2020, ordered consolidation of specified pending CAs/IAs to be heard with that IA on 16.06.2020, and delinked other listed applications for separate hearing on 30.06.2020.

Appointment of a Resolution Professional upon filing of an application under section 95 read with section 97(3) - Proceedings against a personal guarantor during pendency of corporate insolvency resolution process under section 60(2) - Interim moratorium triggered by filing of application under section 95 and its effect - Effect of approval of a corporate resolution plan on the liability of a personal guarantor

Appointment of a Resolution Professional upon filing of an application under section 95 read with section 97(3) - Proceedings against a personal guarantor during pendency of corporate insolvency resolution process under section 60(2) - Effect of approval of a corporate resolution plan on the liability of a personal guarantor - Whether the Adjudicating Authority is obliged to direct nomination/appointment of a Resolution Professional under section 97(3) on filing of an application under section 95 and whether such direction must be deferred because resolution plans of the corporate debtors are pending or would discharge the guarantor's liability. - HELD THAT: - The Tribunal held that filing of an application under section 95 enjoins the Adjudicating Authority to direct the Board to nominate a Resolution Professional within seven days; the word 'shall' in section 97(3) admits no discretionary delay. The contention that the Authority should await outcome of pending resolution plans of the corporate debtors was rejected. Section 60(2) permits simultaneous initiation of proceedings against a personal guarantor while a corporate insolvency resolution process is pending, and the law does not require that proceedings against the guarantor await completion of the corporate process. Reliance on precedents and on the possibility that a corporate resolution plan might fully discharge the corporate debt does not relieve the Authority of its statutory duty to proceed upon a validly filed application. While the Tribunal noted jurisprudence that may favour synchronization or temporary abeyance in some cases, those considerations do not override the mandatory direction under section 97(3). The argument that appointment would be premature because the Resolution Professional could not yet report was considered and rejected as not furnishing a basis to withhold the statutory direction. The Tribunal therefore exercised its power to appoint a Resolution Professional from the panel shared by the Board under Rule 8 of the relevant rules and directed steps for his communication and further action. [Paras 11, 13, 14, 17]

Direction under section 97(3) issued and a Resolution Professional appointed; proceedings against the personal guarantor may be prosecuted notwithstanding pendency of corporate resolution plans.

Interim moratorium triggered by filing of application under section 95 and its effect - Whether additional orders restraining enforcement by third party foreign creditors were required in view of the interim moratorium arising on filing of the petitions. - HELD THAT: - The Tribunal observed that on filing of the petitions under section 95 the interim moratorium under section 96 had already come into force. Consequently, no further or separate order in the nature of restraint (as sought in prayer (b) of the applications) was necessary or appropriate. In view of the statutory moratorium having taken effect upon filing, the Tribunal refused the additional reliefs seeking express restraint on third party enforcement actions. [Paras 17]

Prayer for separate interim restraint refused as unnecessary; interim moratorium arising on filing remains operative.

Final Conclusion: The applications were allowed in part: the Tribunal directed appointment of a Resolution Professional from the IBBI/Board panel in terms of section 97(3)/(4) and relevant rules, and refused the additional prayer for separate interim restraint; no costs were awarded.

Maintainability of writ under Article 226 to challenge order of original adjudicating authority - criteria for entertaining writ where statutory appeal is time-barred (Full Bench test in Panoli Intermediates) - exemption for services to SEZ units subject to Form A-1/A-2 authorization and procedural conditions - extended period of limitation invoked for suppression of facts under proviso to Section 73(1) of the Finance Act, 1994 - liability for service tax on manpower recruitment and supply agency services - interest on unpaid service tax under Section 75 and penalty for evasion under Section 78 - obligation to file ST-3 returns and consequences of non-filing

Maintainability of writ under Article 226 to challenge order of original adjudicating authority - criteria for entertaining writ where statutory appeal is time-barred (Full Bench test in Panoli Intermediates) - Writ petition under Article 226 challenging the order-in-original is not maintainable as the case does not satisfy the Full Bench criteria for interference with an original adjudicating order. - HELD THAT: - The Court applied the Full Bench test in Panoli Intermediates that a petition under Article 226 may be entertained against an original adjudicating order only if the authority acted without jurisdiction, in excess of jurisdiction, or in flagrant disregard of law or principles of natural justice resulting in gross failure of justice. On the facts, the adjudicating authority did not exceed jurisdiction nor act in flagrant disregard of law; the procedural steps and material relied upon by the authority were examined and the petitioner's illness and delay did not displace the statutory remedy. The discretionary nature of writ jurisdiction was emphasized and, on the record, the petition did not invoke the exceptional circumstances needed to supplant the statutory appeal remedy. [Paras 14]

Writ petition dismissed as not maintainable under Article 226.

Liability for service tax on manpower recruitment and supply agency services - obligation to file ST-3 returns and consequences of non-filing - The adjudicating authority correctly held that the petitioner provided taxable manpower recruitment and supply services and was liable to pay service tax for the period under investigation. - HELD THAT: - The adjudicating authority relied on the petitioner's statement and Form 26AS where receipts from manpower services were reflected. The petitioner admitted issuing bills and collecting service tax for some clients and not filing ST-3 returns or depositing tax. In absence of party-wise invoices or ledgers, the authority reasonably relied on Form 26AS to determine taxable receipts and found the services fell within the definition of manpower recruitment/supply services; accordingly the demand was sustained. The Court found no error in treating the amounts as taxable on the material relied upon by the authority. [Paras 9, 10, 17]

Demand for service tax confirmed against the petitioner for the assessed period.

Exemption for services to SEZ units subject to Form A-1/A-2 authorization and procedural conditions - burden on person claiming exemption to produce authorization - The petitioner's claim of exemption for services to SEZ clients was rejected for failure to produce the prescribed authorization (Form A-2) and comply with the procedural requirements for ab initio exemption or refund. - HELD THAT: - The Court accepted the adjudicating authority's finding that exemption under the applicable notification is conditional and governed by the procedure requiring a Form A-1 declaration by the SEZ unit/developer and issuance of authorization in Form A-2 to the service provider. The assessee could not produce any Form A-2 or other documentary proof showing that the services supplied were authorised and used exclusively for SEZ authorised operations; hence the claim of exemption could not be accepted. The principle that a claimant of exemption must fulfil mandatory procedural conditions was applied. [Paras 17]

Claim of SEZ exemption rejected for non-production of required authorization and non-compliance with procedure.

Extended period of limitation invoked for suppression of facts under proviso to Section 73(1) of the Finance Act, 1994 - interest on unpaid service tax under Section 75 and penalty for evasion under Section 78 - Extended period of limitation was rightly invoked and interest and penalties were rightly imposed in view of deliberate suppression and non-filing of returns; consequent interest and penalties were upheld. - HELD THAT: - The adjudicating authority found the petitioner had not filed returns, had concealed material facts, and thus suppressed income with intent to evade tax; on that basis the proviso to Section 73(1) (extended period) was invoked. Liability to pay interest under the statutory provision for delayed payment was also recorded. Penalties under the provisions for willful contravention and non-production of information were imposed, and the authority applied the statutory scheme including the provisos for reduction of penalty on payment within stipulated time. The High Court found these findings supported by the record and accepted the authority's application of law on limitation, interest and penalty. [Paras 17, 18]

Invocation of extended limitation, and imposition of interest and penalties, affirmed.

Final Conclusion: The writ petition is dismissed. The adjudicating authority's demand for service tax, interest and penalties for the period under investigation is upheld; notice is discharged and there is no order as to costs.

Eligibility for CENVAT credit - input service - exempted service - single composite service (ULIP) - Rule 6(1) of the CENVAT Credit Rules - disallowance where input service is used in exempted services - reverse charge mechanism - penalty for wrongful availment

Eligibility for CENVAT credit - input service - exempted service - single composite service (ULIP) - Rule 6(1) of the CENVAT Credit Rules - disallowance where input service is used in exempted services - reverse charge mechanism - Whether appellant is entitled to avail CENVAT credit of service tax paid on commission to insurance agents for ULIP policies where part of the premium (investment portion) was not leviable to service tax - HELD THAT: - The Tribunal held that the appellant renders a single insurance service in respect of ULIP policies and that the mere allocation of the premium between a risk coverage component (taxable) and an investment component (not leviable) does not convert the transaction into two separate services or render any part an "exempted service" within the meaning of the Credit Rules. Applying the definitions, the Tribunal observed that an "exempted service" covers a taxable service which is wholly exempt or cases involving distinct multiple services where one is exempt; neither circumstance exists here because tax is paid on the risk coverage portion and the policy is a single composite contract. Consequently, Rule 6(1) (which disallows credit where input services are used in providing exempted services) is not attracted. The services of insurance agents were used in providing the output (insurance) service and therefore constitute eligible "input service" under the Credit Rules; service tax paid thereon under the reverse charge mechanism is admissible as CENVAT credit. The Tribunal also relied on the reasoning in a previous bench decision which treated the investment-related portion as not constituting a separate identifiable exempt service. As the legal foundation for the demand, interest and penalty rested on disallowance of credit under Rule 6, and that disallowance was unsustainable, the impugned demand together with interest and penalty was set aside. [Paras 10, 11, 13, 14]

Full CENVAT credit of service tax paid on commissions to insurance agents was held admissible; the demand, interest and penalty were set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that ULIP constitutes a single insurance service and that CENVAT credit of service tax paid on agents' commission is admissible; the impugned demand, interest and penalty were set aside.

Limitation under Section 11B of the Central Excise Act, 1944 - treatment of service tax paid as a deposit under Rule 6(3) of the Service Tax Rules, 1994 - non-applicability of service levy where service is provided to self

Limitation under Section 11B of the Central Excise Act, 1944 - Whether the appellant's refund claim is barred by limitation under Section 11B of the Central Excise Act, 1944. - HELD THAT: - The Tribunal examined the factual matrix and the orders of the lower authorities and found that the sole controversy was limitation. However, on the legal question raised, the Tribunal held that where the alleged service could not be provided because the service provider and service recipient had amalgamated into a single entity (such that the transaction would have been a service to the self), the payment of consideration including service tax lost its character as tax and became a deposit. Given that characterisation, the one-year limitation prescribed under Section 11B for refund of tax was not attracted. The Tribunal therefore rejected the applicability of Section 11B to the present claim and concluded that the claim could not be denied on limitation grounds. [Paras 5, 6, 8]

The refund claim is not barred by limitation under Section 11B because the amount paid ceased to be service tax and became a deposit when no service was, or could be, provided due to amalgamation.

Treatment of service tax paid as a deposit under Rule 6(3) of the Service Tax Rules, 1994 - credit adjustment in ST-3 return - Whether Rule 6(3) of the Service Tax Rules, 1994 governs the appellant's entitlement and permits adjustment/credit in respect of the advance paid for a service that was not provided following amalgamation. - HELD THAT: - The Tribunal construed Rule 6(3) as addressing situations where an assessee has issued an invoice or received payment for a service that is not provided wholly or partially. In such cases the Rule permits the assessee to take credit of the excess service tax paid, treating it as an item distinct from tax (a deposit) which may be adjusted by refund, credit note or set-off. The Tribunal noted that the ST-3 return itself accommodates such credit without temporal limitation, enabling adjustment against tax liability. As there was no allegation of unjust enrichment by the Revenue and the service could not be rendered after amalgamation (service to self), the Tribunal held that Rule 6(3) applies and that the payment should be treated under that rule rather than under Section 11B. [Paras 7, 8, 9]

Rule 6(3) governs the situation and permits credit/adjustment of the amount paid for a service not provided; the amount is to be treated as a deposit and not as subject to Section 11B refund limitation.

Final Conclusion: The orders rejecting the refund were set aside; the Tribunal allowed the appeal holding that the advance paid (including service tax) became a deposit when the service could not be provided due to amalgamation and is governed by Rule 6(3) (allowing credit/adjustment), not by the one-year limitation under Section 11B, and the appellant is entitled to consequential relief as per law.

Judicial review of appellate authority's order - Maintainability of writ petition challenging assessment and levy of tax - Delay and laches in seeking writ relief - Interference with assessment on merits by writ jurisdiction - Challenge to reversal/restoration of penalty before appellate fora not a ground for writ interference

Judicial review of appellate authority's order - Maintainability of writ petition challenging assessment and levy of tax - Interference with assessment on merits by writ jurisdiction - High Court's intervention in the Appellate Deputy Commissioner's order confirming assessment and levy of tax. - HELD THAT: - The Court declined to interfere with the first Appellate Authority's order dated 06.04.2017 which confirmed the assessment and levy of tax. The petitioner's challenge to the confirmation of tax was examined and found not to warrant exercise of writ jurisdiction. The Court emphasised that there was no acceptable explanation for the three-year delay in filing the writ petition and that delay and the absence of a substantive justification weighed against interference. Having considered the material and the submissions, the Court concluded that interference with the impugned order confirming assessment was not justified. [Paras 6, 7]

Writ petition dismissed insofar as it challenges the confirmation of assessment and levy of tax by the first Appellate Authority; no interference with that part of the impugned order.

Challenge to reversal/restoration of penalty before appellate fora not a ground for writ interference - Delay and laches in seeking writ relief - Whether the pendency of the revenue's appeal to the Sales Tax Appellate Tribunal against cancellation of penalty justified filing or continuation of the writ petition. - HELD THAT: - The Court recorded that the revenue had challenged the cancellation of penalty before the Sales Tax Appellate Tribunal and that by order dated 22.01.2020 the penalty had been restored. The petitioner informed the Court of an intention to challenge the STAT order separately by Tax Case (Revision). The Court held that the fact of the revenue challenging the cancellation of penalty before the STAT, and the restoration of penalty by that Tribunal, did not constitute a ground to interfere with the impugned appellate order confirming assessment. Thus pendency or outcome of proceedings before the STAT did not validate the writ petition or displace the bar arising from delay. [Paras 4, 5, 7]

The challenge to the STAT proceedings concerning penalty did not furnish a basis for entertaining or sustaining the writ petition; the writ petition stood dismissed.

Final Conclusion: The writ petition challenging the Appellate Deputy Commissioner's order confirming assessment and levy of tax is dismissed for lack of justification to interfere and on account of inordinate delay; the fact that the revenue contested cancellation of penalty before the STAT does not constitute a ground for writ relief, and connected petitions are closed with no costs.

Stay against recovery proceedings - furnishing of bond as condition for stay - acceptance of belated bond - no prejudice to the revenue - continuation of stay pending disposal of appeal - direction for expeditious disposal of appeal

Furnishing of bond as condition for stay - acceptance of belated bond - no prejudice to the revenue - Whether the respondents must accept a bond furnished by the petitioner after the time stipulated in the Tribunal's stay order and treat it as compliance with that stay condition. - HELD THAT: - The Tribunal granted a stay against recovery proceedings conditioned on the petitioner furnishing a simple bond within a specified period. The petitioner did not furnish the bond within that time, apparently due to the pandemic, but subsequently tendered Ext.P7 bond before the authority. The authority refused to accept the bond solely because it was offered after the stipulated time. The High Court found no prejudice to the revenue from accepting the belated bond and, on that basis, directed the respondents to accept Ext.P7 and to treat it as compliance with the Tribunal's stay order. The Court thus remedied the procedural lapse by validating the late security where acceptance does not harm the revenue interest.

Respondents directed to accept Ext.P7 bond and treat it as compliance with the Tribunal's stay order.

Stay against recovery proceedings - continuation of stay pending disposal of appeal - Whether the stay granted by the Tribunal continues to operate in favour of the petitioner upon acceptance of the bond. - HELD THAT: - Having directed acceptance of the belated bond as compliance with the stay condition, the Court held that the stay contained in the Tribunal's order shall continue to operate in favour of the petitioner pending disposal of the appeal. The continuation of the stay is conditional upon the petitioner furnishing the bond and producing the writ petition and this judgment before the Tribunal as directed.

On furnishing the bond and producing the requisite documents, the Tribunal's stay shall continue to operate in favour of the petitioner until the appeal is finally disposed and communicated.

Direction for expeditious disposal of appeal - Whether the Tribunal should be directed to dispose of the pending appeal expeditiously. - HELD THAT: - The appeal had been pending since 2019. In the interest of timely adjudication and given that the stay is to continue until final orders are passed, the High Court directed the Tribunal to hear the petitioner and dispose of the appeal within six months from receipt of a copy of the judgment. The Court mandated communication of the Tribunal's orders to the petitioner and required the petitioner to place a copy of the writ petition and this judgment before the Tribunal for further action.

3rd respondent Tribunal directed to dispose of the appeal within six months after receipt of a copy of this judgment.

Final Conclusion: Writ petition allowed to the limited extent of directing respondents to accept the belated bond (Ext.P7) as compliance with the Tribunal's stay order; on furnishing the bond and producing copies of the writ petition and this judgment before the Tribunal, the stay shall continue to operate pending disposal of the appeal; the Tribunal is directed to hear the petitioner and decide the appeal within six months from receipt of this judgment.

Entitlement to bail despite procedural defects in NDPS prosecution - Applicability of Section 37 of the NDPS Act - Charges under Section 22(b) and Section 25 excluded from the rigour of Section 37 - Trial court's framing of charges and its effect on applicability of Section 37

Entitlement to bail despite procedural defects in NDPS prosecution - Procedural defects or irregularities in investigation under the NDPS Act do not, by themselves, entitle an accused to bail. - HELD THAT: - The Court reaffirmed that settled principles require that alleged procedural non-compliances in investigation under the NDPS Act are not automatically fatal so as to attract grant of bail. Such questions of legality and compliance of the statutory search and seizure procedure are matters for the trial court to adjudicate in the course of trial; a finding on those issues at the bail stage would pre-judge the trial. The Court therefore declined to entertain a contention that procedural irregularities alone justify bail in an NDPS prosecution and observed that the trial court should decide the legality and validity of the alleged non-compliance of procedural provisions when the evidence is led. [Paras 21, 23]

Procedural non-compliance raised by the accused does not automatically entitle him to bail; trial court to decide legality of procedure during trial.

Applicability of Section 37 of the NDPS Act - Charges under Section 22(b) and Section 25 excluded from the rigour of Section 37 - Trial court's framing of charges and its effect on applicability of Section 37 - An accused charged only under Section 22(b) and Section 25 of the NDPS Act does not attract the special non-bailable rigour of Section 37 and bail applications in such cases fall to be considered under Chapter XXXIII of the CrPC. - HELD THAT: - The Court examined the language and legislative scheme of Section 37 and concluded that its twin restrictions apply specifically to offences under Section 19, Section 24, Section 27A and offences involving commercial quantity. The Legislature's omission of Section 22(b) and Section 25 from Section 37 was held deliberate and discernible from the statutory text and the differing prescribed punishments, and the court must give effect to that clear legislative choice. Where the trial court, after considering materials, framed charges under Sections 22(b) and 25 against the accused and the State did not challenge that framing or seek addition of Section 27A, the bail application was to be decided in accordance with ordinary CrPC bail principles rather than the enhanced restrictions of Section 37. [Paras 26, 27, 28, 29]

Charges framed under Sections 22(b) and 25 do not attract Section 37; bail to be considered under Chapter XXXIII CrPC.

Grant of bail in exercise of High Court's discretionary power - In the facts of the present case, the accused was entitled to bail on conditions under CrPC given custodial period, limited trial progress and changed circumstances. - HELD THAT: - Having held that Section 37 did not apply to the charges framed against the accused, the Court considered the relevant facts: the accused had been in custody for about one year and six months, trial progress was stalled by the pandemic after four prosecution witnesses were examined, and there was no immediate prospect of completing the trial. Noting change of circumstances since the earlier bail application and that there was no imminent risk of tampering with evidence, the Court exercised its discretion to grant bail on terms and conditions (bond and sureties and restrictions on movement and attempt to influence evidence), leaving the trial to proceed on merits. [Paras 30, 31, 32, 33]

Accused released on bail subject to bond, sureties and conditions; trial to proceed and observations not to prejudice merits.

Final Conclusion: The High Court held that procedural irregularities in NDPS investigations do not automatically justify bail, that Section 37's stringent non-bailable regime does not apply to an accused charged only under Sections 22(b) and 25, and, on the facts and changed circumstances (custody period and stalled trial), directed release of the accused on bail under CrPC on specified conditions.