TaxTMI Updates e-Newsletter
Sep 18,2021

Interim stay of assessment order under the CGST Act - protection against initiation of recovery proceedings under CGST recovery provisions - obligation to file affidavit on alleged concealment of facts

Interim stay of assessment order under the CGST Act - protection against initiation of recovery proceedings under CGST recovery provisions - Interim relief in the form of stay of the order dated 12th February, 2021 passed under Section 73 of the CGST Act and attendant protection pending adjudication of the writ petition. - HELD THAT: - The Court considered the petition seeking suspension of the operation of the impugned show cause notice and the consequential order dated 12th February, 2021. Having recorded the submissions of learned counsel and issued notice, the Court granted interim relief by staying the operation of the said order passed under the CGST assessment provisions. The stay preserves the petitioner's position pending final adjudication and thereby temporarily precludes the operation of the assessment order; the order does not record a final determination on the merits of the assessments or on any entitlement to long-term protection against recovery beyond the interim period.

Stay of the order dated 12th February, 2021 passed under Section 73 of the CGST Act until further orders.

Obligation to file affidavit on alleged concealment of facts - Direction to the GNCTD to file an affidavit addressing the allegation of concealment of facts. - HELD THAT: - The Court recorded an allegation of concealment of facts made against the petitioner and directed Respondent (GNCTD) to file an affidavit dealing with that contention within four weeks. The petitioner was permitted to file a rejoinder affidavit, if any, before the next date of hearing. This procedural direction is intended to place the factual contentions on record for the Court's consideration during the pendency of the writ petition.

GNCTD to file an affidavit within four weeks on the alleged concealment of facts; rejoinder, if any, to be filed before the next hearing.

Final Conclusion: Notice issued; interim stay granted of the order dated 12th February, 2021 passed under Section 73 of the CGST Act until further orders; GNCTD directed to file an affidavit on alleged concealment of facts and rejoinder permitted before the next date of hearing.

Seizure and release of goods under Section 67(6) of the Delhi GST Act - order of prohibition - assignment of functions by approval on the file by the Commissioner - interim direction for adjudicatory hearing and reasoned order

Seizure and release of goods under Section 67(6) of the Delhi GST Act - interim direction for adjudicatory hearing and reasoned order - Petitioner to file application under Section 67(6) and respondent to hear and decide the application by a reasoned order within the stipulated time without being influenced by prior order dated 8th September, 2021. - HELD THAT: - The court recorded that no application under Section 67(6) had been filed by the petitioner at the time of perusal. Learned counsel for the petitioner assured that the application would be filed during the course of the day. In light of that assurance the court directed that, upon filing, the authorised representative of the petitioner be heard on 17th September, 2021 and that the respondent shall decide the application by way of a reasoned order in accordance with law on or before 22nd September, 2021. The court further clarified that the respondent must decide the application on its merits and shall not be influenced by the earlier order dated 8th September, 2021.

Direction issued to file the Section 67(6) application; respondent directed to hear on 17th September, 2021 and decide by 22nd September, 2021 by a reasoned order, uninfluenced by the earlier order.

Exemption from filing requirement (CM APPL. 31652/2021) - Application for exemption from filing (CM APPL. 31652/2021) disposed of. - HELD THAT: - The court allowed the miscellaneous application for exemption and recorded that the application stands disposed of. No substantive legal reasoning on the merits of exemption was recorded in the order.

CM APPL. 31652/2021 disposed of.

Final Conclusion: Interim directions were issued requiring the petitioner to file an application under Section 67(6) and mandating the respondent to hear and decide that application by a reasoned order within specified dates without being influenced by the earlier order; the miscellaneous exemption application was disposed of.

Amendment of TRAN-1 - rectification of inadvertent error in TRAN-1 - filing of corrected TRAN-1 and TRAN-2 - claim of transitional input tax credit - exemption application (CM APPL. 30986/2021)

Exemption application (CM APPL. 30986/2021) - Application for exemption (CM APPL. 30986/2021) was allowed and disposed of. - HELD THAT: - The Court considered the interlocutory application seeking exemption and formally allowed the same, recording the disposal of CM APPL. 30986/2021. No substantive adjudication on the main petition's merits is recorded in this order in relation to the exemption application.

Exemption application allowed and disposed of.

Amendment of TRAN-1 - rectification of inadvertent error in TRAN-1 - filing of corrected TRAN-1 and TRAN-2 - claim of transitional input tax credit - Petition seeking amendment/correction of TRAN-1 and permission to file corrected TRAN-1 with TRAN-2 to carry forward transitional ITC was admitted and issued notice; respondents permitted to file counter-affidavits. - HELD THAT: - Petitioner alleged an inadvertent error in filling TRAN-1 (showing available stock in wrong column) and sought permission to correct TRAN-1 and to file TRAN-2 so as to carry forward the transitional input tax credit for supplies made during July, 2017 to December, 2017. The Court issued notice on the writ petition, granted respondents four weeks to file counter-affidavits and permitted rejoinders before the next date of hearing. The petition remains pending for adjudication on merits and factual verification; the Court has not finally adjudicated the substantive relief sought.

Notice issued; respondents directed to file counter-affidavits within four weeks and rejoinders, if any, to be filed before the next hearing listed on 18th March, 2022.

Final Conclusion: The interim exemption application was allowed and disposed of. The substantive writ petition seeking correction of TRAN-1 and permission to file corrected TRAN-1 and TRAN-2 to carry forward transitional ITC for the period July, 2017 to December, 2017 remains pending; notice has been issued and respondents directed to file affidavits, matter listed for further hearing on 18th March, 2022.

Quashing for non-application of mind - permitting filing of revised FORM GST TRAN-1 under Rule 120 A - submission of revised returns electronically and manually - decision on merits after fresh filing - technical glitches in GSTN portal and relief

Quashing for non-application of mind - technical glitches in GSTN portal and relief - Impugned order dated 12.06.2020 disapproving the TRAN 1 claim - HELD THAT: - The order communicated by respondent No.5, reflecting the ITGRC Committee's decision that the TRAN 1 claims were not approved, does not set out any reasons for disapproval. The absence of stated reasons indicates non application of mind. An administrative order which simply records disapproval without articulating grounds cannot be sustained. In these circumstances the Court interfered with the impugned communication as lacking independent reasoning. [Paras 11, 12]

Impugned order dated 12.06.2020 quashed and set aside for want of reasons and non application of mind.

Permitting filing of revised FORM GST TRAN-1 under Rule 120 A - submission of revised returns electronically and manually - decision on merits after fresh filing - Right of the petitioner to file a revised FORM GST TRAN 1 and the procedure for disposal of the revised claim - HELD THAT: - The petitioner had earlier attempted to upload TRAN 1 but faced portal glitches and subsequently succeeded in an upload that merely replicated the earlier attempted filing. The petitioner sought to file a revised TRAN 1 under Rule 120 A but was prevented from doing so on the ground that a second revision is impermissible. Given the factual matrix of technical failure and the absence of reasons in the disapproval, the Court authorised the petitioner to tender the revised TRAN 1 both online and manually within a limited period. The Court directed respondent No.4 to decide the revised submission in accordance with the prescribed procedure, relying on precedents permitting manual submission where portal issues prevented proper electronic filing. [Paras 13]

Petitioner permitted to submit the revised FORM GST TRAN 1 online and manually within two weeks; respondent No.4 to decide the revised form in accordance with the prescribed procedure.

Final Conclusion: The petition is partly allowed: the impugned order of 12.06.2020 is quashed for non application of mind, and the petitioner is permitted to file the revised FORM GST TRAN 1 (electronically and manually) within two weeks, the authorities being directed to decide the fresh filing in accordance with law.

Permissible duration of blocking of electronic credit ledger under Rule 86-A(3) of the C.G.S.T. Rules, 2017 - writ of certiorari/mandamus for unblocking electronic credit ledger - direction to decide pending representation expeditiously - right to claim damages for unlawful blocking of electronic credit ledger

Permissible duration of blocking of electronic credit ledger under Rule 86-A(3) of the C.G.S.T. Rules, 2017 - direction to decide pending representation expeditiously - Petition disposed by directing respondent Nos. 2 and 4 to decide the petitioner's representation dated 15/02/2021 by 15/09/2021 in light of Rule 86-A(3) of the C.G.S.T. Rules, 2017. - HELD THAT: - The Court noted that the petitioner's electronic credit ledger has been blocked since 17/01/2020 and that Rule 86-A(3) prescribes a maximum period of one year for such blocking. Respondent counsel, though yet to file an affidavit, undertook to decide the petitioner's representation dated 15/02/2021 expeditiously. In view of these circumstances the Court disposed of the petition by directing respondent Nos. 2 and 4 to decide the pending representation on or before 15/09/2021 having regard to the limitation in Rule 86-A(3). The Court expressly declined to express any view on the merits of the claim that the ledger remained blocked beyond the permissible period and confined itself to ordering fresh consideration of the representation within the stipulated time. [Paras 3, 5]

Respondent Nos. 2 and 4 directed to decide the petitioner's representation dated 15/02/2021 by 15/09/2021 in light of Rule 86-A(3) of the C.G.S.T. Rules, 2017.

Writ of certiorari/mandamus for unblocking electronic credit ledger - right to claim damages for unlawful blocking of electronic credit ledger - The petitioner is permitted to retain the remedy of claiming damages for alleged illegal blocking of the electronic credit ledger beyond one year; no adjudication on merits of such claim was made. - HELD THAT: - While disposing the petition by directing decision of the representation, the Court left open the petitioner's right to seek damages against respondent Nos. 1 to 4 for the alleged unlawful prolongation of the ledger blocking beyond the one-year period. The Court specifically refrained from expressing any opinion on the merits of a damages claim or on entitlement to writ relief, thereby preserving the petitioner's substantive remedies for future adjudication. [Paras 4, 5]

Petitioner permitted to pursue a claim for damages; Court has not expressed any view on merits of such claim.

Final Conclusion: Petition disposed with a direction that respondent Nos. 2 and 4 decide the petitioner's representation dated 15/02/2021 by 15/09/2021 in light of Rule 86-A(3) of the C.G.S.T. Rules, 2017; the petitioner's remedy to claim damages for alleged unlawful blocking is left open and no view is expressed on the merits.

Validity of notice under Section 148 issued without compliance with Section 148A - Extension of pre-amendment operation of Section 148 by executive notification - Delegated conditional legislation under the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - Saving of pre-amendment reassessment procedure pending commencement of amended provisions

Validity of notice under Section 148 issued without compliance with Section 148A - Saving of pre-amendment reassessment procedure pending commencement of amended provisions - The notices dated 25.06.2021 and 09.06.2021 under Section 148 for the specified assessment years are valid despite non compliance with Section 148A. - HELD THAT: - The Court examined whether issuance of notices under Section 148 after 01.04.2021 (the date from which Section 148A was to operate) was barred by the newly inserted procedural requirements. It held that the Finance Act, 2021 inserted Section 148A with fresh obligations, but the Central Government, exercising powers conferred by the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, issued notifications which extended the time for completion of actions under the Income tax Act and clarified that for issuance of notices under Section 148 the provisions as they stood on 31.03.2021 would apply. In that statutory and factual context (pandemic related lockdown and delegated power to specify operative dates), the pre amendment regime for issuing notices under Section 148 was insulated and saved until 30.06.2021. Applying those notifications to the present facts, the notices dated 25.06.2021 and 09.06.2021 fall within the extended period when the pre amendment Section 148 continued to govern reassessment notices, and therefore their issuance without prior compliance with Section 148A was not invalid. [Paras 5, 6, 8, 9, 10]

No interference warranted; the notices are saved by the notifications extending the pre amendment operation of Section 148 and are valid.

Delegated conditional legislation under the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - Extension of time-limits by executive notification - The executive notifications issued under the delegated power are a valid exercise of conditional legislation and legitimately deferred the operation of Section 148A. - HELD THAT: - The Court considered the legislative scheme under the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 which empowered the Central Government to specify dates for applicability of provisions affected by pandemic related disruption. The notifications of 31.03.2021 and 27.04.2021 were held to be an exercise of that delegated power to extend time limits and preserve the pre amendment reassessment mechanism. The Court reasoned that such conditional delegation was made for administrative flexibility in exceptional circumstances, did not amount to abdication of legislative power, and did not alter the essential features or policy of the Finance Act, 2021. Consequently, the deferment of Section 148A and the saving of Section 148 until 30.06.2021 were valid. [Paras 5, 6, 7, 8, 9]

The notifications are valid exercises of delegated power and lawfully extended the pre amendment operation of Section 148.

Final Conclusion: The petition is dismissed; the reassessment notices dated 25.06.2021 and 09.06.2021 for AY 2014-15, 2015-16 and 2016-17 are valid because the executive notifications lawfully preserved the pre amendment operation of Section 148 until 30.06.2021.

Power to grant stay of recovery under Section 220(6) of the Income-tax Act - pre-deposit of 20% of the disputed tax demand as condition for stay - adjustment of refunds against outstanding tax demand under Section 245 - office memorandum dated 29th February, 2016 read with office memorandum dated 25th August/31st July, 2017 on stay and pre-deposit - requirement to record reasons where payment in excess of 20% is demanded (paragraph 4(B) of the Office Memorandum) - rectification application under Section 154 of the Income-tax Act

Pre-deposit of 20% of the disputed tax demand as condition for stay - power to grant stay of recovery under Section 220(6) of the Income-tax Act - adjustment of refunds against outstanding tax demand under Section 245 - requirement to record reasons where payment in excess of 20% is demanded (paragraph 4(B) of the Office Memorandum) - Entitlement to refund of amounts adjusted in excess of 20% of disputed tax demands where refunds were appropriated without following the prescribed procedure and without reasons for demanding payment in excess of 20%. - HELD THAT: - The Court applied the mandate of this High Court in Eko India Financial Services Pvt Ltd (supra) and the Office Memoranda which prescribe that normally stay of recovery shall be granted on payment of 20% of the disputed demand and that any demand for payment in excess of 20% must be supported by reasons showing applicability of paragraph 4(B). The Court found that the Department adjusted refunds against outstanding demands without giving notice or a pre-decisional opportunity as required by the procedure under Section 245, and without recording particularised reasons justifying recovery in excess of 20%. In those circumstances the adjustments made in excess of 20% were not in conformity with the prescribed procedure and the Office Memoranda, and the excess amounts must be refunded to the petitioner upon verification of the petitioner's factual assertions. [Paras 9]

Respondent directed to verify the facts and, if found true, refund the amounts adjusted in excess of 20% of the disputed tax demands for the Assessment Years 2016-17 and 2017-18 within eight weeks.

Rectification application under Section 154 of the Income-tax Act - Obligation of the respondent to dispose of the petitioner's rectification application dated 10th July, 2020 in respect of the assessment order for Assessment Year 2016-17 within a specified time. - HELD THAT: - Separately from the refund direction, the Court observed that the petitioner had filed an application for rectification under Section 154 which remained pending. In the interest of finality and to complete statutory process, the Court required the Revenue to decide that rectification application on merits within the same eight-week timeline specified for refund verification and disbursement. [Paras 10]

Respondent directed to dispose of the rectification application dated 10th July, 2020 for Assessment Year 2016-17 within eight weeks.

Final Conclusion: Writ petitions disposed: respondent to verify petitioner's claims and, if found correct, refund amounts adjusted in excess of 20% of the disputed tax demands for AYs 2016-17 and 2017-18 within eight weeks, and to dispose of the petitioner's Section 154 rectification application for AY 2016-17 within eight weeks.

Restoration of appeal - delay in filing - removal of office objections - adequacy of explanation for delay - diligence of counsel and departmental officers - duty to prosecute appeal

Restoration of appeal - delay in filing - adequacy of explanation for delay - Application for restoration of appeal dismissed for want of sufficient explanation for inordinate delay of 1419 days. - HELD THAT: - The Court recorded that the appeal had been directed on 28th August, 2014 to remove office objections within four weeks and was dismissed on 16th March, 2016 for non-removal. There was an admitted delay of 1419 days in seeking restoration. The further affidavit filed by the applicant devoted limited paragraphs to the Court's directions and offered only speculative explanations-possible changes in standing counsel, communication gaps between counsel and assessing officer, and lack of awareness by a new officer-without affidavits or contemporaneous evidence to substantiate these contentions. The incumbent assessing officer did not file an affidavit, and no affidavit was produced from the standing counsel who represented the department when the directions were issued and when the dismissal order was passed. The Court also noted that the department was actively participating before the Tribunal on related issues during 2012-2019, making it improbable that no enquiries were made about the High Court appeal's status. On these findings the explanation for the protracted delay was held to be inadequate and restoration was refused. [Paras 3, 4, 6, 7, 8]

Application for restoration is dismissed.

Final Conclusion: The application for restoration of the appeal was refused because the applicant failed to provide a satisfactory, evidenced explanation for the inordinate delay and non-removal of office objections, and the Court declined to exercise its discretion in favour of restoration.

Reason to believe - reopening of assessment - proviso to Section 147 - disclosure of true and full material facts - Section 148 notice - Explanation 1 and 2 to Section 147 - deemed accruing - prima facie material for reopening - scope of judicial review under Article 226 in reassessment matters

Reason to believe - prima facie material for reopening - reopening of assessment - Validity of reopening assessment for assessment year 2007-08 on the basis of reasons furnished (non-deduction of tax on Business Development Commission) and whether a prima facie case exists to invoke Section 147/148 - HELD THAT: - The Court held that Section 147 permits reopening where the Assessing Officer has a "reason to believe" that income chargeable to tax has escaped assessment and that this belief must be based on information, materials or evidence sufficient to form a sensible belief. The proviso, explanations and the wide scope of Section 147 allow the AO to reassess where new material or material reasonably culled from produced documents indicates escapement. The High Court's supervisory jurisdiction at the initiation stage is limited: interference is permissible only if there is no jurisdiction or no prima facie material to justify reopening. Where the reasons supplied indicate non-deduction of tax on business development commission payable to a non-resident and reliance upon Section 9/related provisions, the Court found that the Revenue had identified a sensible reason to believe and that the sufficiency of reasons involves disputed facts which must be adjudicated in assessment proceedings rather than on writ. Consequently the initiation of reassessment could not be quashed at the threshold. [Paras 23, 30, 33, 37, 38]

Reopening under Section 147/notice under Section 148 in respect of assessment year 2007-08 is not interfered with at the initiation stage as the Revenue has a prima facie reason to believe (non-deduction of tax on business development commission) warranting reassessment.

Proviso to Section 147 - disclosure of true and full material facts - Section 148 notice - Whether omission of the literal phrase "true and full disclosure" in the reasons or notice vitiates the reopening beyond four years - HELD THAT: - The Court held that mere non-quotation of the exact words "true and full disclosure" in the reasons or notice does not by itself vitiate the proceedings. What must be tested is whether the factual ingredient - failure to disclose truly and fully all material facts - is established so as to satisfy the proviso; that factual enquiry, and sufficiency of reasons, ordinarily requires adjudication in assessment proceedings. The High Court's role is to examine whether there is prima facie material or jurisdictional infirmity, not to re-decide merits on a writ petition. [Paras 5, 6, 11, 26]

Omission of the specific phrase in the notice does not invalidate reopening; the question is whether there is material to found a reasonable belief of non-disclosure, which is a matter for assessment proceedings.

Reopening of assessment - Explanation 1 and 2 to Section 147 - deemed accruing - Whether prior adjudication of the same facts in the original assessment or on appeal (alleged change of opinion) precludes reopening under Section 147 - HELD THAT: - The Court explained that prior consideration of materials in the original assessment or even findings on appeal do not ipso facto bar reopening. Explanation 1 contemplates that production of books or evidence before the AO may still lead to discovery of material evidence with due diligence; Explanation 2 lists deemed cases of escapement. Thus if the AO can reasonably cull out new material or information from existing records or otherwise identify escapement of income, reopening is permissible. Change of opinion alone is not sufficient to quash reassessment, but if reopening is vitiated by absence of any prima facie material, the High Court may intervene. [Paras 24, 28, 30]

Prior adjudication or appellate findings do not automatically preclude reassessment; reopening is permissible where fresh or reasonably discoverable material supports a reason to believe.

Scope of judicial review under Article 226 in reassessment matters - CBDT circulars and judicial precedents as guidance - Extent to which CBDT circulars, precedents and factual comparisons may be relied upon in a writ petition to challenge reopening - HELD THAT: - The Court recognised that CBDT circulars and judicial decisions are relevant guidance but emphasised that they must be applied to the particular facts of the case; circulars are not a substitute for assessment of factual materials. The High Court should be cautious in interfering at initiation stage; it is not the forum to re-adjudicate disputed factual or technical matters that require detailed scrutiny by the tax authorities. Where the Revenue adduces prima facie material to form a reason to believe, questions of conformity with circulars or applicability of precedents to facts require consideration in the reassessment process. [Paras 13, 14, 34, 36]

CBDT circulars and precedents guide but do not bar reopening where prima facie material exists; High Court should avoid re deciding factual/technical disputes on writ.

Final Conclusion: The High Court dismissed the writ petition and declined to quash the reassessment proceedings initiated for assessment year 2007-08, holding that the Revenue had a prima facie reason to believe (notably non-deduction of tax on business development commission) sufficient to invoke Sections 147/148; omission of the literal words "true and full disclosure" did not vitiate the notice, and prior adjudication or reliance on circulars/precedents did not, by themselves, preclude reassessment; the assessee remains at liberty to contest the merits in the assessment proceedings.

Land development expenses claimed as business expenditure - disallowance under Section 40A(3) - requirement of incriminating material for initiation of proceedings under Section 153A - addition on account of escapement of sales - remand for fresh consideration

Land development expenses claimed as business expenditure - Validity of disallowance of land development expenses across assessment years - HELD THAT: - The Court examined the Tribunal's concurrence with the CIT(A)'s factual appreciation that the assessee had produced vouchers and that the books of account had not been rejected. The CIT(A) found vouchers sufficiently corroborative despite some deficiencies (for example, absence of addresses) and noted a reasonable net profit rate, and the Tribunal re appreciated and affirmed those factual findings. The High Court found no substantial question of law and declined to interfere with the concurrent factual conclusions allowing the claimed land development expenses. [Paras 23, 24]

Appeals by the Revenue in respect of land development expenses are dismissed; no substantial question of law arises.

Disallowance under Section 40A(3) - Disallowance under Section 40A(3) for assessment year 2007-08 - HELD THAT: - The Court considered the CIT(A)'s finding that cash payments were recorded in registered sale deeds and endorsed by the Sub Registrar and that the genuineness of the sales was not doubted; the Tribunal concurred. On this factual basis the High Court found no substantial question of law in the Revenue's challenge to the deletion of the disallowance under Section 40A(3) for AY 2007 08. [Paras 28]

TCA.Nos.570 and 571 of 2015 are dismissed; no substantial question of law arises in respect of AY 2007-08.

Disallowance under Section 40A(3) - remand for fresh consideration - Disallowance under Section 40A(3) for assessment year 2008-09 (scope of remand) - HELD THAT: - The Court reviewed the orders of the Assessing Officer, the CIT(A) and the Tribunal regarding cash payments to multiple vendors for land purchases. Finding that the Tribunal's characterisation of the CIT(A)'s order as 'cryptic' and of the AO's order as 'without application of mind' was incorrect, the High Court held that the assessee had failed to furnish adequate details but declined to non suit the assessee. The Court remitted the specific portion of the disallowance (in respect of payments aggregate as identified in the record) to the Assessing Officer for fresh consideration with opportunity of personal hearing to the authorised representative, directing re examination in accordance with law. [Paras 34, 35, 37]

TCA.Nos.228 of 2014 and 792 of 2019 are allowed to the extent the matter is remitted to the Assessing Officer for fresh consideration; the relevant substantial questions of law are left open.

Requirement of incriminating material for initiation of proceedings under Section 153A - Whether initiation of proceedings under Section 153A requires incriminating material found during search - HELD THAT: - The Court noted that this question is under consideration before the Supreme Court in several matters but examined whether relief in the present cases was granted solely because no incriminating material was found. The High Court found that in the cases before it the CIT(A) and, on re appreciation, the Tribunal granted relief on merits and factual examination rather than purely on absence of incriminating material. As the dispute turned on factual matrices and concurrent factual findings, the High Court held there was no substantial question of law warranting interference. [Paras 48, 49]

TCA.Nos.792, 991, 994 and 995 of 2019 are dismissed insofar as they raise the incriminating material issue; no substantial question of law arises.

Addition on account of escapement of sales - Deletion of addition alleged to arise from escapement of sales (receipts treated as advances) - HELD THAT: - The Court examined the CIT(A)'s detailed factual assessment which deleted the additions and the Tribunal's affirmance. The High Court found no substantial question of law in the Revenue's challenge to the deletion in respect of receipts from specified land transactions classified as advances rather than sales. [Paras 51]

TCA.No.792 of 2019 is dismissed on this issue; no substantial question of law arises.

Final Conclusion: The High Court dismissed the Revenue's appeals in respect of land development expenses, the disallowance under Section 40A(3) for AY 2007 08, the questions on the requirement of incriminating material for initiation of proceedings under Section 153A (as raised for the relevant years), and the addition for escapement of sales; however, the disallowance under Section 40A(3) for AY 2008 09 has been remitted to the Assessing Officer for fresh consideration with a hearing, and the substantial questions of law arising from that remand have been left open.

Deduction under Section 36(1)(va) - Prima facie adjustment under Section 143(1)(a)(iv) - Payment before due date of filing return of income - Effect of explanation to Section 36(1)(va) and amendment to Section 43B by Finance Act, 2021

Deduction under Section 36(1)(va) - Payment before due date of filing return of income - Whether employees' contribution to PF/ESI, though deposited after statutory due dates but before filing the return under Section 139(1), can be disallowed under Section 36(1)(va) and Section 43B when adjusted at the time of processing under Section 143(1). - HELD THAT: - The Tribunal found that the employees' contribution to ESI and PF collected by the assessee was deposited before the due date for filing the return under Section 139(1). Following the consistent decisions of the Rajasthan High Court and this Bench's earlier decisions, amounts of employees' contribution paid after the statutory due date but before filing of the return cannot be disallowed under Section 43B read with Section 36(1)(va). The Tribunal observed that where such payment is made prior to filing the return, the disallowance effected by computerized processing under Section 143(1) is not sustainable and must be deleted. The Tribunal accordingly directed deletion of the adjustment made by CPC in the intimation under Section 143(1). [Paras 5, 6, 7]

Addition/adjustment of Rs. 21,15,855/- made in the Section 143(1) intimation for delayed deposit of employees' contribution to ESI/PF is deleted as the contributions were paid before the due date of filing the return and therefore cannot be disallowed under Section 43B read with Section 36(1)(va).

Effect of explanation to Section 36(1)(va) and amendment to Section 43B by Finance Act, 2021 - Whether the amendment (and explanation) introduced by the Finance Act, 2021 applies to the assessment year 2019-20. - HELD THAT: - The Tribunal noted that the Finance Act, 2021 added an explanation to Section 36(1)(va) and made changes to Section 43B but observed the Memorandum to the Finance Bill expressly states that these amendments take effect from 1 April 2021 and apply to assessment year 2021-22 and subsequent years. Consequently, the Tribunal held that the 2021 amendments cannot be applied to the impugned assessment year 2019-20. [Paras 6]

The Finance Act, 2021 amendment/effect is prospective from 1 April 2021 and does not apply to AY 2019-20; therefore the amendment does not support the disallowance in the present case.

Final Conclusion: The appeal is allowed: the adjustment of Rs. 21,15,855/- made in the intimation under Section 143(1) for non deposit of employees' contribution to PF/ESI is deleted because the contributions were deposited before filing of the return for AY 2019-20; the Finance Act, 2021 amendment does not apply to the impugned year.

Disallowance under section 36(1)(va) - admission of additional evidence - tax audit report as evidence - remand for verification of actual date of deposit - formatting error in uploaded data (dd/mm/yy v. mm/dd/yy)

Admission of additional evidence - tax audit report as evidence - Admissibility of additional evidence (manual tax audit report and challans) filed by the assessee. - HELD THAT: - The Tribunal examined the assessee's application to admit additional evidence showing the actual dates of deposit of employees' contributions to ESI/PF. The assessee explained that the manual tax audit report records dates in "dd/mm/yy" format while the data uploaded on the Department's IT system was captured in "mm/dd/yy" format, producing an apparent delay. On comparison the Tribunal found the non-date particulars (period/month and amounts) identical in both records and accepted that the discrepancy in dates arose from the differing formats. In the interest of substantial justice and to enable verification of the factual claim that deposits were made within the due dates, the Tribunal admitted the additional evidence. [Paras 10, 11]

Additional evidence admitted and placed on record; matter remanded to AO for limited verification in light of the admitted evidence.

Remand for verification of actual date of deposit - disallowance under section 36(1)(va) - formatting error in uploaded data (dd/mm/yy v. mm/dd/yy) - Whether the addition made under section 36(1)(va) on account of alleged delayed payment of employees' contribution should stand or be deleted after verification of actual deposit dates. - HELD THAT: - The Tribunal found merit in the assessee's contention that the dates showing delayed deposit resulted from a formatting error in the data uploaded to the IT system. Because the manual tax audit report and the uploaded data otherwise matched, the Tribunal directed that the Assessing Officer verify the actual date of deposit of ESI/PF contributions against the admitted challans and the manual audit report. The remand is limited to verification of the dates; if the AO, on verification, finds the payments were made within the statutory due dates as claimed, the AO is directed to delete the addition made under section 36(1)(va). The Tribunal declined to examine the other contentions as they had become infructuous in view of this limited remand. [Paras 10, 11, 12]

Case remitted to the AO for limited verification of actual deposit dates; if verification confirms timely payment, the addition under section 36(1)(va) shall be deleted; other contentions left unadjudicated as infructuous.

Final Conclusion: Additional evidence (manual tax audit report and challans) admitted; appeal disposed by remanding to the Assessing Officer for limited verification of actual ESI/PF deposit dates arising from a formatting discrepancy in the uploaded data, with a direction to delete the disallowance under section 36(1)(va) if payments are found to have been made within the due dates.

Revision under section 263 - Section 56(2)(vii)(b)(ii) - taxability of difference between stamp duty value and consideration - First proviso to Section 56(2)(vii)(b) - Application date of amended provision - prospective operation - Allotment letter as constituting agreement - date of agreement vs date of registration - Change of opinion / substitution of opinion

Revision under section 263 - Change of opinion / substitution of opinion - Validity of the Pr. CIT's exercise of revisionary powers under section 263 in setting aside the assessment for A.Y. 2015-16 - HELD THAT: - The Tribunal examined whether the assessing officer's order accepting the return dated 21.12.2017 was "erroneous and prejudicial to the interest of the revenue" so as to warrant exercise of jurisdiction under section 263. The Pr. CIT concluded that the AO erred in not invoking Section 56(2)(vii)(b) and therefore set aside the assessment. The Tribunal found that the Pr. CIT, having finally adjudicated the applicability of Section 56(2)(vii)(b)(ii) himself, left little for the AO to examine; however on merits the Tribunal concluded that the Pr. CIT's conclusion was incorrect because the amended provision could not be applied on the facts. As the revisional order was based on an incorrect application of law to the facts, the order under section 263 was quashed. The Tribunal further observed that where the AO has taken a possible view after examination (as was the case here, including issuance of notices and consideration of documents), substitution of opinion is impermissible; accordingly once the Tribunal held the provision inapplicable, the basis for invoking section 263 failed and the revisional order could not be sustained. [Paras 6, 8, 9, 10]

The Pr. CIT's order under section 263 quashing the assessment is quashed; the section 263 revision was not maintainable on the facts and law of the case.

Section 56(2)(vii)(b)(ii) - taxability of difference between stamp duty value and consideration - First proviso to Section 56(2)(vii)(b) - Application date of amended provision - prospective operation - Allotment letter as constituting agreement - date of agreement vs date of registration - Whether Section 56(2)(vii)(b)(ii) applied to the assessee's purchase for A.Y. 2015-16 and whether the first proviso was available - HELD THAT: - The Tribunal analysed facts showing that the assessee applied for the flat in 2006, received an allotment letter executed by the parties (signed by the assessee on 11.11.2009), and had paid substantial part of the consideration prior to 2009. On these facts the Tribunal held that the parties had entered into a binding agreement in A.Y. 2010-11 and substantial obligations were discharged well before registration in 2014. The Finance Act, 2013 introduced clause (ii) to Section 56(2)(vii)(b) to cover inadequate consideration but that amendment was made applicable from A.Y. 2014-15 onwards and did not operate retrospectively to affect transactions effectively completed earlier. Applying these principles and relying on precedents recognising an allotment letter/booking advance as creating transferable rights, the Tribunal concluded that the amended clause could not be invoked merely because registration occurred later; consequently Section 56(2)(vii)(b)(ii) was not applicable on the facts and there was no requirement to deny any proviso benefit. For these reasons the foundation for the addition based on the difference between stamp duty value and consideration did not survive. [Paras 7, 8]

Section 56(2)(vii)(b)(ii) is not attracted on the facts; the transaction was effectively completed earlier and the amended provision could not be applied to bring the alleged difference to tax for A.Y. 2015-16.

Final Conclusion: The appeal is allowed: the order passed by the Pr. CIT under section 263 for A.Y. 2015-16 is quashed because the revisional exercise was founded on an erroneous application of Section 56(2)(vii)(b)(ii) which the Tribunal held inapplicable on the facts (agreement by allotment letter and substantial payment prior thereto); consequential grounds became infructuous.

Bogus purchases - allowability of profit element on bogus purchases - enhancement of additions on appeal - disallowance under section 40A(3) of the Act - practical difficulty/unavoidable circumstances for cash payments - restoration of assessment order

Bogus purchases - allowability of profit element on bogus purchases - enhancement of additions on appeal - restoration of assessment order - Whether the appellate enhancement of the addition to 100% of alleged bogus purchases could be sustained. - HELD THAT: - The Tribunal found that the CIT(A) enhanced the addition from 12.5% (applied by the AO) to 100% solely on the ground that the assessee failed to prove genuineness and consumption of purchases. It relied on coordinate-bench precedents holding that even where purchases are held bogus, the entire purchases cannot be brought to tax and only the profit element may be taxed. Applying that principle to the facts of the assessee's case, the Tribunal concluded that the CIT(A) was not justified in increasing the addition to 100% and that the assessment order (where 12.5% was applied) should be restored. [Paras 6, 7]

CIT(A)'s enhancement to 100% set aside and assessment order restored (ground allowed).

Disallowance under section 40A(3) of the Act - practical difficulty/unavoidable circumstances for cash payments - Whether payments in cash exceeding Rs. 20,000/- to suppliers/transporters could be disallowed under section 40A(3) where the assessee relied on practical difficulties and the nature of its business. - HELD THAT: - The Tribunal examined the nature of the assessee's business (waterproofing and labour job work) and accepted that sand suppliers/transporters brought loaded trucks to site and usually required cash payment, many lacking fixed place of business or PAN. It noted that only three payments exceeded the statutory limit and that the assessee explained reasonable causes, business emergencies, and practical difficulties for cash payments. The Tribunal rejected the CIT(A)'s requirement that identities of agents and suppliers be established in all such cases and found merit in the assessee's explanation, directing deletion of the disallowance. [Paras 11, 12]

Disallowance under section 40A(3) deleted and AO directed to give effect (ground allowed).

Final Conclusion: The appeal is partly allowed: the CIT(A)'s enhancement of the bogus-purchases addition to 100% is set aside and the assessment order (12.5% addition) is restored; the disallowance under section 40A(3) is deleted and the AO is directed to give effect.

Addition under Section 69A - addition under Section 69C - CBDT Instruction No.1916 - allowance of minimum jewellery - treatment of confirmations and third party affidavits in search proceedings - valuation of jewellery by government approved valuer

Addition under Section 69A - CBDT Instruction No.1916 - allowance of minimum jewellery - treatment of confirmations and third party affidavits in search proceedings - Whether the addition made on account of unexplained jewellery (gold and diamond) could be sustained in the assessee's hands - HELD THAT: - The Tribunal examined the material recorded during the search, including: statements under section 132(4) attributing certain jewellery to non resident family members; affidavits and confirmations filed by those non resident family members; purchase bills and bank payments for jewellery; and valuation reports by government approved valuers. The Tribunal noted the family net worth and the existence of documentary evidence of purchases and payments, and observed that Instruction No.1916 (allowing a minimum quantum of jewellery for family members not filing wealth tax returns) had been applied by the lower authority only partly. Having considered the overall facts, the documentary material produced and the family chart, the Tribunal concluded that the additions sustained by the CIT(A) were not justified and that, in the factual matrix of this case, the confirmations and documentary evidence together with the CBDT instruction and the family's financial strength warranted deletion of the addition. The Tribunal therefore set aside the CIT(A)'s order on this issue and directed deletion of the jewellery addition. [Paras 8]

Addition on account of unexplained jewellery sustained by the authorities set aside and directed to be deleted.

Addition under Section 69C - burden of proof in respect of cash expenditure in search proceedings - Whether the addition of unexplained cash expenditure made for renovation (treated under Section 69C) was sustainable - HELD THAT: - The Tribunal analysed the cash withdrawals, opening cash balances and the ledger entries produced by the assessee to trace available cash for the renovation work. It found that withdrawals and opening balances provided available cash nearly covering the expenditure and that subsequent withdrawals after the cited excel sheet date also contributed to meet the shortfall. The Tribunal disagreed with the CIT(A)'s conclusion that the explanation was merely general and unsupported, holding that the factual materials on record (cash book, bank statements and ledger entries) were sufficient to establish the source of payments. On this basis the Tribunal concluded that the unexplained expenditure addition was not justified and directed deletion of the addition made under Section 69C. [Paras 12]

Addition of unexplained cash expenditure upheld by lower authorities set aside and directed to be deleted.

Final Conclusion: The appeals for A.Y. 2016-17 are allowed: the Tribunal set aside the additions sustained by the authorities in respect of unexplained jewellery and unexplained cash expenditure and directed the Assessing Officer to delete those additions.

Deduction under section 80-IA - allocation of expenses and books of account - ERP / SAP accounting as compliance with requirement of separate books - Form 10CCB certification of allocation - Rule of consistency in recurring statutory claims - Characterisation of licence fee - capital versus revenue - Application of precedent - Bharti Hexacom

Deduction under section 80-IA - allocation of expenses and books of account - ERP / SAP accounting as compliance with requirement of separate books - Form 10CCB certification of allocation - Rule of consistency in recurring statutory claims - Allowability of deduction under section 80-IA where assessee maintained ERP-based accounting without physically separate books and apportioned common expenses between eligible and non-eligible units. - HELD THAT: - Tribunal found that the assessee's ERP-based accounting with distinct codes for expense heads satisfies the requirement of separate accounting for eligible and non-eligible units, following earlier decisions recognizing ERP/SAP systems as adequate. The allocation of expenses was examined and shown to be on actual or reasonable bases (actual attribution, revenue ratio, head-count, AMC revenue etc.), and certified by the statutory auditor in Form No.10CCB. The Assessing Officer's blanket insistence on allocation solely by revenue ratio was rejected as unreasonable where many items were directly attributable or allocated on other rational bases. The Tribunal also relied on consistency: the initial assessment year (2007-08) accepted the claim and subsequent years (including 2011-12 onwards) were allowed, so the deduction could not be disturbed in the years under appeal absent a prior disturbance. The amount described as 'other income' had not been claimed as eligible under section 80-IA and therefore required no reallocation. On these grounds the Assessing Officer's disallowance was set aside and the deduction was directed to be allowed as claimed. [Paras 15, 16, 17, 18, 19]

Assessee's claim of deduction under section 80-IA allowed as claimed for the years in dispute; AO's disallowance on account of alleged lack of separate books and improper apportionment quashed.

Characterisation of licence fee - capital versus revenue - Application of precedent - Bharti Hexacom - Whether licence fee paid to Department of Telecommunication is capital in nature and liable to be disallowed, or to be treated following the Delhi High Court decision in Bharti Hexacom. - HELD THAT: - The CIT(A) directed the Assessing Officer to verify the capital element of the licence fee in light of the Delhi High Court decision in Bharti Hexacom. The Assessing Officer, pursuant to that direction, deleted the addition by order dated 08.03.2015 under section 250 read with section 143(3), following the High Court precedent. The Tribunal found no merit in the Revenue's appeal challenging that deletion where the AO had given effect to the controlling judicial decision. [Paras 21, 22, 23, 25]

Revenue's appeal against deletion of licence fee addition dismissed; addition deleted in accordance with Bharti Hexacom and AO's follow-up order.

Final Conclusion: Tribunal allowed the assessee's appeals in part by directing allowance of the section 80-IA deduction as claimed for A.Y. 2008-09 and 2009-10 (quashing AO's disallowance based on ERP accounting and allocations), and dismissed the Revenue's appeals challenging deletion of the licence-fee addition after application of the Delhi High Court precedent in Bharti Hexacom.

Deduction of interest on borrowed capital for house property under section 24(b) of the Income Tax Act, 1961 - Allocation of interest expense between income from house property and income from other sources - Admission and enhancement of claim before first appellate authority - Unexplained cash credits and addition under section 68 of the Income Tax Act, 1961

Deduction of interest on borrowed capital for house property under section 24(b) of the Income Tax Act, 1961 - Allocation of interest expense between income from house property and income from other sources - Entitlement to deduction of interest paid on a housing loan and its allocation between income from house property and income from other sources. - HELD THAT: - The records establish that the assessee took a housing loan and utilized portions of it for (a) construction of the second floor and related expenses, (b) repayment of an earlier construction loan, and (c) advancing funds to third parties from which interest receipts were earned. Total interest paid during the year amounted to Rs. 5,06,678/-, of which the Tribunal found on the material before it that Rs. 2,31,973/- related to the quantum of loan utilised for construction and therefore is deductible under the provision applicable to interest on borrowed capital for house property. The remaining interest of Rs. 2,74,705/- pertained to the portion of the loan used for making advances which generated interest receipts; that portion of interest expense is allowable against the interest income offered under the head Income from Other Sources. The Tribunal accepted the assessee's allocation and evidence of utilization and applied the principle that interest expense must be matched with the purpose for which the loan funds were applied, allowing deduction to the extent the loan financed construction and permitting offset of interest expense against taxable interest income where loan funds were used to earn that income.

Interest of Rs. 2,31,973/- allowed against income from house property and interest of Rs. 2,74,705/- allowed against interest income under Income from Other Sources; total interest of Rs. 5,06,678/- admitted in the respective heads as allocated.

Unexplained cash credits and addition under section 68 of the Income Tax Act, 1961 - Validity of addition of Rs. 40,000 as unexplained cash credit. - HELD THAT: - The assessee produced a cash flow statement / cash book for FY 2008-09 showing opening cash balance, cash withdrawals from bank, cash rent receipts and expenditures up to the date of deposit such that available cash on hand as on the date of deposit was Rs. 74,886/-. This evidence reasonably explained the source of the Rs. 40,000 deposit in bank. On that basis the Tribunal concluded the addition was not sustainable because the cash deposit was traceable to cash in hand and withdrawals reflected in the books, and the assessee had furnished contemporaneous records sufficient to dispel the presumption of unexplained credit.

Addition of Rs. 40,000 on account of unexplained cash deposit deleted.

Final Conclusion: The assessee's appeal is allowed: the Tribunal sustained the allocation and allowance of the entire interest paid by permitting Rs. 2,31,973/- as deduction under the head Income from House Property and Rs. 2,74,705/- against taxable interest income, and deleted the addition of Rs. 40,000 as unexplained cash credit.

Levy of penalty under section 271(1)(c) for concealment - Estimated additions on account of bogus purchases - Assessment based on estimation and quantum proceedings - Reduction of addition by declared gross profit

Levy of penalty under section 271(1)(c) for concealment - Estimated additions on account of bogus purchases - Reduction of addition by declared gross profit - Deletion of penalty imposed under section 271(1)(c) for A.Y.2009-10 in respect of estimated addition on account of bogus purchases. - HELD THAT: - The addition in respect of purchases from certain parties for A.Y.2009-10 was made on an estimated basis. The Tribunal in quantum proceedings restricted the disallowance to 12.5% of the bogus purchases reduced by the gross profit already declared by the assessee. The assessee had declared an overall gross profit of 29.70% for the year, which exceeds the percentage estimated by the Tribunal; consequently, when the Tribunal's percentage is applied after taking into account the gross profit declared, no meaningful addition survives that could attract a concealment penalty. On this basis the Tribunal found the imposition of penalty under section 271(1)(c) not sustainable and directed deletion.

Penalty under section 271(1)(c) deleted for A.Y.2009-10.

Levy of penalty under section 271(1)(c) for concealment - Estimated additions on account of bogus purchases - Reduction of addition by declared gross profit - Deletion of penalty imposed under section 271(1)(c) for A.Y.2011-12 in respect of estimated addition on account of bogus purchases. - HELD THAT: - For A.Y.2011-12 the Tribunal's approach in the quantum proceedings similarly prescribed an estimated percentage to be added in respect of bogus purchases, to be reduced by gross profit declared by the assessee. The assessee's declared gross profit for the year was 28.3%, which is substantially higher than the percentage directed by the Tribunal to be treated as addition. Therefore, after accounting for the declared gross profit, no effective addition remains that would justify a concealment penalty. The Tribunal accordingly held that penalty under section 271(1)(c) was not warranted and ordered its deletion.

Penalty under section 271(1)(c) deleted for A.Y.2011-12.

Final Conclusion: Both appeals are allowed and the penalties under section 271(1)(c) imposed for A.Y.2009-10 and A.Y.2011-12 in respect of estimated additions on account of bogus purchases are deleted.

Disallowance of expenditure - royalty treated as capital expenditure - non-deduction of tax at source (TDS) on payments to non-residents - income accruing or arising in India - fees for technical services (FTS) and Explanation 2 to Section 9(1)(vii) - business connection / permanent establishment - reliance on binding precedents of co-ordinate Bench and High Court

Royalty treated as capital expenditure - disallowance of expenditure - reliance on binding precedents of co-ordinate Bench and High Court - Deletion of addition made by treating royalty payments as capital expenditure was upheld. - HELD THAT: - The Tribunal held that the royalty payments were made for use of a trademark and related drawings, were incurred wholly and exclusively for business, were bona fide and supported by agreements and evidence of payment and TDS, and that there was no basis to treat them as capital expenditure. The Tribunal applied and followed its earlier decisions in the assessee's own case and the decision of the Hon'ble Delhi High Court upholding the ITAT for Assessment Year 2008-09, which found the ITAT's interpretation of the agreement plausible and not perverse. In view of these precedents and the factual findings on genuineness and purpose of payment, the CIT(A)'s deletion of the addition was sustained. [Paras 5]

Order of the CIT(A) deleting the addition on account of royalty was upheld and the Department's ground was dismissed.

Non-deduction of tax at source (TDS) on payments to non-residents - income accruing or arising in India - fees for technical services (FTS) and Explanation 2 to Section 9(1)(vii) - business connection / permanent establishment - reliance on binding precedents of co-ordinate Bench and High Court - Deletion of disallowance for non-deduction of TDS on commission paid to foreign agents was upheld. - HELD THAT: - The Tribunal found the facts to be that the payments were made to non-resident agents for services rendered outside India, in foreign currency, with no permanent establishment or business connection in India and no evidence that such recipients had income chargeable to tax in India. Consequently, section 9(1)(i) could not be invoked as no income was found to accrue or arise in India. The Assessing Officer's characterization of the payments as FTS under section 9(1)(vii)(b) read with Explanation 2 was rejected because there was no material that managerial, technical or consultancy services were rendered by the non-residents; the payments were commissions for securing overseas orders. The Tribunal relied on its own co-ordinate Bench decision in the assessee's case (A.Y. 2012-13) and binding decisions of the Hon'ble Delhi High Court (including Maruti Suzuki and Eon Technology) and relevant CBDT circulars to hold that no TDS was required and that disallowance under section 40(a)(ia) was not tenable. [Paras 5]

Order of the CIT(A) deleting the disallowance for non-deduction of TDS on commission to foreign agents was upheld and the Department's ground was dismissed.

Final Conclusion: Both departmental appeals for Assessment Years 2011-12 and 2013-14 are dismissed; the CIT(A)'s deletions of the additions for royalty treated as capital expenditure and for non-deduction of TDS on commission paid to foreign agents are sustained following the Tribunal's earlier decisions and relevant High Court authority.

Taxability of interest on temporary investments - escrow account / inextricably linked receipts - capitalisation of incidental income - set off against capital work in progress - allowability of interest on delayed payment of TDS as business expenditure

Taxability of interest on temporary investments - escrow account / inextricably linked receipts - set off against capital work in progress - Interest earned on temporary investments made out of funds held under escrow: whether taxable under the head 'Income from Other Sources' or to be treated as reducing capital work in progress / inextricably linked to project - HELD THAT: - The parties disputed whether interest earned on investments of surplus funds subject to an escrow/mandate is taxable as income from other sources or is inextricably linked to the project and eligible to be adjusted against capital work in progress. The assessee relied on Supreme Court and High Court decisions (including Bokaro Steel, Shree Rama Multi Tech and others) to contend that where funds are compulsorily invested under mandate and income is incidental to the purpose, the interest is not taxable but should be set off against capital cost. The Revenue relied on precedents (including Tuticorin Alkali and coordinate bench decisions) favouring taxation as income from other sources where funds were treated as surplus and freely utilizable. On perusal of the escrow documentation (paper book pp. 8-14) and rival authorities, the Tribunal observed that the factual matrix required further examination whether the receipts were indeed compulsorily invested and the proceeds were inextricably linked to the project. The Tribunal found substance in the Revenue's reliance on prior decisions but, given the specific escrow stipulations on record, directed remand to the Assessing Officer to examine the matter in light of pages 8-14 of the paper book and the parties' agreements; the issue was treated as allowed for statistical purposes pending such verification. [Paras 11]

Issue remitted to the Assessing Officer for fresh examination of escrow/mandate terms; treated as allowed for statistical purposes.

Allowability of interest on delayed payment of TDS as business expenditure - compensatory v. penal nature of statutory interest - Whether interest paid on delayed deposit of TDS and income-tax is allowable as business expenditure under section 37 - HELD THAT: - The Assessing Officer disallowed the claimed interest and tax payments, treating them as not allowable under section 37. The CIT(A) confirmed the disallowance observing that interest for non-remittance of TDS is penal/compensatory in nature and not an allowable business expenditure. The Tribunal considered precedents on both sides and followed coordinate bench authority (including the Jaipur/Mumbai/ITAT decisions relied upon by Revenue) holding that interest paid for default in statutory remittance of TDS and direct tax is not allowable under section 37(1). Applying those authorities to the facts, the Tribunal upheld the disallowance of the claimed amounts and dismissed the ground of the assessee. [Paras 15]

Disallowance of interest on delayed TDS and income-tax confirmed; claim not allowable under section 37 and ground dismissed.

Final Conclusion: Appeals partly allowed. The question of taxability of interest on investments made from escrowed funds is remitted to the Assessing Officer for verification of the escrow/mandate terms (paper book pp. 8-14) and is treated as allowed for statistical purposes; the disallowance of interest paid on delayed TDS/income-tax is upheld and the related grounds are dismissed (AY 2013-14).

Applicability and binding nature of advance ruling under Section 28J of the Customs Act - Scope of advance ruling limited to the applicant, the subject-matter of the application and the Principal Commissioner/Commissioner - Exemption from Special Additional Duty under Notification No.45/2005-Customs - Stock transfer versus sale and burden of proof under Section 6A of the Central Sales Tax Act - Necessity of factual adjudication despite an advance ruling - Validity of departmental circular clarifying SAD exemption for SEZ/FTWZ to DTA stock transfers

Applicability and binding nature of advance ruling under Section 28J of the Customs Act - Scope of advance ruling limited to the applicant, the subject-matter of the application and the Principal Commissioner/Commissioner - Advance Ruling is not binding on all Customs Authorities nationwide and its binding scope is confined as laid down in Section 28J. - HELD THAT: - The Court examined Section 28J and held that an advance ruling pronounced under Section 28I is binding only on (a) the applicant who sought it, (b) in respect of matters referred to in Section 28H(2), and (c) on the Principal Commissioner/Commissioner of Customs and customs authorities subordinate to him, in respect of the applicant. Findings in an advance ruling that fall outside the scope of matters enlisted in Section 28H(2) or which are rendered on the factual scenario projected by the applicant do not acquire the binding reach contemplated by Section 28J. Principles declared by the Advance Ruling Authority may have persuasive value but cannot be treated as universally binding on other Authorities across different States or under different local tax laws; those Authorities must apply their mind to facts and law in each case. The Court therefore rejected the contention that an advance ruling operates as a nationwide binding precedent irrespective of the limited statutory scope in Section 28J. [Paras 19, 20, 21, 22, 30]

Advance Ruling is confined in its applicability to the applicant, the subject-matter under Section 28H(2) and the Principal Commissioner/Commissioner and subordinate authorities in respect of that applicant; it is not binding nationwide.

Necessity of factual adjudication despite an advance ruling - Stock transfer versus sale and burden of proof under Section 6A of the Central Sales Tax Act - An advance ruling premised on the facts as projected does not foreclose adjudication; factual verification is required to determine whether a transaction is a stock transfer (not sale) and whether exemption conditions are met. - HELD THAT: - The Court noted that the Advance Ruling relied upon was rendered on the facts as projected by the applicant and expressly left open the scope for the Revenue to decide otherwise if, on adjudication, the claim of stock transfer is not factually supportable. Section 6A of the Central Sales Tax Act places the burden regarding transfer of goods claimed otherwise than by way of sale. Consequently, even where an advance ruling indicates a favourable view on the projected facts, the competent adjudicating authority must independently examine the factual matrix and applicable local tax law (which may differ between States) before allowing exemption. The Advance Ruling Authority's own clarifications confined its ruling to the specific factual scenario and signalled that adjudication on facts is indispensable. [Paras 26, 27, 28, 29]

Adjudication on the facts is necessary; an advance ruling based on projected facts does not preclude the Revenue from reaching a contrary conclusion upon factual enquiry.

Validity of departmental circular clarifying SAD exemption for SEZ/FTWZ to DTA stock transfers - Exemption from Special Additional Duty under Notification No.45/2005-Customs - The circular dated 30.12.2013 and the consequential order dated 03.02.2014, which clarified that SAD exemption under Notification No.45/2005 is not available for stock transfers from SEZ/FTWZ to DTA for self-consumption unless conditions are met, are not found to be illegal and require adjudication of facts for application of the Notification. - HELD THAT: - The Court considered the departmental clarification that SAD exemption under Notification No.45/2005 would not apply to goods routed through SEZ/FTWZ into DTA for self-consumption as stock transfers unless the conditions of the Notification and state tax law implications are satisfied. The circular was held not to be in conflict with Notification No.45/2005, since the Notification itself disclaims exemption where goods sold in DTA are exempted by State law. The Court observed that the circular sought to avoid indiscriminate application of the Notification and emphasised that entitlement to exemption must be determined after adjudication of the relevant facts and local tax law. Given that adjudication of multiple pending Bills of Entry remained to be undertaken, the Court found no infirmity in the impugned circular and order and directed the competent authorities to adjudicate the claims in accordance with law. [Paras 31, 32, 33]

The circular and consequential order are valid; entitlement to SAD exemption under Notification No.45/2005 requires adjudication of facts and local tax law and cannot be denied or granted without such adjudication.

Final Conclusion: The writ petition challenging the circular dated 30.12.2013 and the consequential order dated 03.02.2014 is dismissed. The Court held that advance rulings are statutorily confined in scope under Section 28J, do not bind all customs authorities nationwide, and that factual adjudication is required to determine entitlement to SAD exemption under Notification No.45/2005; competent authorities are directed to proceed with adjudication in accordance with law.

Compulsory registration under Bureau of Indian Standards - Prohibition on import and confiscation under the Customs Act (Section 111) - Redemption of confiscated goods under Section 125 - Penalty under Section 112(a) and Section 117 of the Customs Act - Hazardous & Other Wastes (Management and Transboundary Movement) Rules - definition and treatment of 'waste' - Customs Valuation Rules - revaluation under Rule 9 - Strict interpretation of fiscal and penal statutes - BIS Act, 2016 - statutory power to regulate imports

Compulsory registration under Bureau of Indian Standards - Prohibition on import and confiscation under the Customs Act (Section 111) - Strict interpretation of fiscal and penal statutes - Validity and applicability of CRO 2012 (and MeitY circulars/letters) as a basis to prohibit import of Multi Function Devices (MFDs) and confiscate the goods under Section 111. - HELD THAT: - The Tribunal held that CRO 2012 was issued under the BIS Act, 1986 and BIS Rules, 1987 which did not provide for regulation of imports; clause (3) of CRO 2012 therefore went beyond the scope of the parent Act and Rules in imposing import controls. Further, the Schedule to CRO 2012 expressly covered only 'printers and plotters' and did not include MFDs. Executive communications (circulars and D.O. letters) issued by MeitY could not be read as law to enlarge the scope of the CRO 2012. Given that customs confiscation under Section 111 is penal/fiscal in nature and must be strictly construed, prohibition of import could not be sustained on the basis of those letters/circulars or by a strained reading of the CRO 2012. Consequently confiscation under Section 111(d) on the ground of prohibition by CRO 2012/circulars was unsustainable. [Paras 21, 22, 23, 24, 35]

CRO 2012 (as applied) and MeitY letters/circulars do not validly prohibit import of the impugned MFDs; confiscation under Section 111 on that ground is set aside.

Hazardous & Other Wastes (Management and Transboundary Movement) Rules - definition and treatment of 'waste' - Redemption of confiscated goods under Section 125 - Whether the imported used MFDs were 'waste' or 'other waste' attracting re export/destruction under the Hazardous Waste Rules and thereby precluding redemption for home consumption. - HELD THAT: - The Rules define 'waste' and 'other wastes' and list used MFDs in Schedule III as an entry, but an item must qualify as 'waste' within the meaning of the Rules to attract the mandatory re export/destruction provisions. The Chartered Engineer's examination established that the imported MFDs had residual life and further use; their value was enhanced by Customs' valuation. Goods with further use do not qualify as 'waste' under Rule 3(38). Rule 15(2) obliges re export or disposal only in case of illegal import of hazardous/other waste; where the goods are not 'waste', Rule 15(2) does not apply. Therefore the Hazardous Waste Rules did not mandate re export or destruction of these imported MFDs, and redemption for home consumption under Section 125 was permissible. [Paras 28, 29, 30, 31, 35]

The imported MFDs are not 'waste' for the purposes of the Hazardous Waste Rules; the provisions requiring re export/destruction do not apply and redemption for home consumption was correctly allowed.

Customs Valuation Rules - revaluation under Rule 9 - Correctness of the revaluation of the goods by Customs pursuant to the Chartered Engineer's certificate under the Customs Valuation Rules. - HELD THAT: - It was not disputed that the goods were second hand and were examined on first check appraisal; the Chartered Engineer verified residual life and appraised value. Both sides did not contest the valuation and Customs recalculated duty under the Valuation Rules accordingly. In the absence of challenge to the valuation findings, there was no scope for interference by the Tribunal. [Paras 25, 35]

Customs' revaluation of the imported goods is not interfered with and duties are to be paid as determined.

Penalty under Section 117 of the Customs Act - Section 49 - storage of imported goods in warehouse pending clearance - Validity of penalty imposed under Section 117 for alleged contravention of Section 49 (storage under Section 49 without extension). - HELD THAT: - Section 49 is an enabling provision permitting an Assistant/Deputy Commissioner to allow storage of imported goods in specified circumstances and allowing the Principal Commissioner/Commissioner to extend storage; it does not impose any prohibition or positive duty on the importer such that failure would constitute an act punishable as a 'contravention'. A contravention requires breach of a legal prohibition or duty. As Section 49 creates only a permissive regime, non compliance with its procedural expectation does not amount to a contravention attracting Section 117 penalty. The Commissioner (Appeals) therefore correctly set aside the Section 117 penalty. [Paras 32, 33, 35]

Penalty under Section 117 for alleged contravention of Section 49 is not sustainable and is set aside.

Penalty under Section 112(a) of the Customs Act - Redemption of confiscated goods under Section 125 - Correctness of reduction of penalty under Section 112(a) by Commissioner (Appeals) and permissibility of redemption under Section 125. - HELD THAT: - The Commissioner (Appeals) reduced the penalty under Section 112(a), a decision the Tribunal found fair and reasonable on the facts. As to redemption, Section 125 permits the adjudicating authority to allow redemption in lieu of confiscation and there is no bar in the statute to permitting redemption of otherwise prohibited goods; the authority may impose a fine not exceeding market price less duty, and allow redemption for home consumption. Given that the confiscation based on prohibition was set aside for the reasons stated and that Section 125 allows redemption generally, allowance of redemption for home consumption was proper. [Paras 30, 31, 34, 35]

Reduction of Section 112(a) penalty is proper; redemption under Section 125 and clearance for home consumption are upheld.

Final Conclusion: Following the Tribunal's earlier precedent in Final Order No.41931 41971/2021, the Revenue's appeals are dismissed and the impugned orders of the Commissioner (Appeals) are upheld: CRO 2012 (as applied) and MeitY letters cannot validly prohibit the import of the impugned MFDs; the goods are not 'waste' under the Hazardous Waste Rules; Customs' valuation stands; Section 117 penalty is set aside and reduction of Section 112(a) penalty and redemption for home consumption are sustained. If not already released, the goods are to be cleared for home consumption within 10 days upon payment of duties and dues; stay applications are disposed of.

Non-retroactivity of regulatory provisions - temporal applicability of superseding regulations - invalidity of show cause notice for acts prior to commencement of regulation - vitiation of adjudication proceedings where statutory provision does not apply to cause of action - delay in adjudication and prejudice

Non-retroactivity of regulatory provisions - temporal applicability of superseding regulations - invalidity of show cause notice for acts prior to commencement of regulation - Whether the provisions of the Customs House Agents Licensing Regulations, 2004 could be applied to alleged acts and omissions occurring in 2003 and, consequently, whether the Show Cause Notice issued under CHALR, 2004 was sustainable. - HELD THAT: - The Tribunal examined the Notification and Preamble to CHALR, 2004 which expressly superseded CHALR, 1984 "except as respect things done or omitted to be done before such supersession". The shipping bills relied on in the Show Cause Notice are dated in 2003, i.e., prior to the 2004 Regulations coming into force. Although the Show Cause Notice invoked provisions of CHALR, 2004 (Regulation 13(a), (d), (e) and Regulation 19(8)), acts and omissions that occurred before the commencement of CHALR, 2004 cannot be retroactively brought within the scope of those Regulations. The Tribunal held that charges framed solely under CHALR, 2004 could not be sustained in respect of transactions of 2003, that the Show Cause Notice was therefore not sustainable in law, and that the consequent adjudication proceedings were vitiated. [Paras 17, 18, 19]

The Tribunal set aside the impugned order because CHALR, 2004 does not apply to the alleged 2003 transactions and the Show Cause Notice and consequent order under CHALR, 2004 are unsustainable.

Delay in adjudication and prejudice - Whether the delay in issuance of the Show Cause Notice and in concluding adjudication affected the legitimacy of the proceedings. - HELD THAT: - The Tribunal noted the chronology: the exports occurred in 2003, the Show Cause Notice was issued on 7.8.2006, personal hearings took place in 2007 and 2008, and the revocation order was passed in 2011, reflecting a protracted adjudicatory timeline exceeding four-and-a-half years after the last personal hearing. While the primary ground for setting aside the impugned order was the inapplicability of CHALR, 2004 to 2003 acts, the Tribunal additionally observed the substantial delay in adjudication as a material circumstance bearing on the proceedings. [Paras 20, 21]

The Tribunal recorded the delay in adjudication and treated it as an additional material factor, and allowed the appeal with consequential reliefs.

Final Conclusion: The appeal was allowed and the impugned order revoking the CHA licence and forfeiting the security deposit was set aside because CHALR, 2004 could not be applied to transactions of 2003 and, additionally, the adjudication was marked by substantial delay; consequential reliefs, if any, follow.

Scheme of Arrangement - dispensing with meetings of shareholders and creditors - consent affidavits and majority in value of unsecured creditors - service of statutory authorities under Section 230(5) and Rule 8 - Form No. CAA.3 disclosures - compliance with Section 29A of the IBC - sanctioning of first motion petition

Dispensing with meetings of shareholders and creditors - consent affidavits and majority in value of unsecured creditors - Whether meetings of shareholders, secured creditors and unsecured creditors of the applicant companies could be dispensed with and the consequences thereof. - HELD THAT: - The Tribunal considered the affidavits of consent filed by all shareholders of each applicant company, auditor certificates evidencing numbers/status of secured and unsecured creditors, and the fact that secured creditors were NIL in certain companies while the remaining unsecured creditors had given consent constituting 100% or majority by value where applicable. On that basis the Tribunal concluded that the statutory requirement for holding meetings could be waived and the meetings of shareholders, secured and unsecured creditors were dispensed with. [Paras 28]

Meetings of shareholders, secured creditors and unsecured creditors of the applicant companies were dispensed with in view of the filed consents and auditor certificates.

Service of statutory authorities under Section 230(5) and Rule 8 - Form No. CAA.3 disclosures - The procedural directions for notice and opportunity to statutory authorities and regulators pursuant to Section 230(5) and Rule 8, and the form and period for responses. - HELD THAT: - The Tribunal directed the applicant companies to issue notice in Form No. CAA.3 with the disclosures required under the Rules to the specified Regional Directors, Registrars of Companies, Official Liquidators, Income Tax Authorities and other sectoral regulators. The notices are to inform those authorities that representations, if any, must be made within 30 days of receipt, failing which it will be presumed they have no objections. Notices are to be sent by registered post/speed post/courier/hand delivery as prescribed by the Rules. [Paras 29, 30]

Applicant companies to serve Form No. CAA.3 notices with required disclosures on the listed authorities and regulators, allowing 30 days for representations.

Compliance with Section 29A of the IBC - Requirement to file affidavits regarding ineligibility under Section 29A of the Insolvency and Bankruptcy Code. - HELD THAT: - Relying on the Supreme Court precedent, the Tribunal directed each applicant company to file an affidavit within 15 days confirming that it is not ineligible under Section 29A of the IBC, thereby ensuring that parties implementing the scheme are not barred under the insolvency law. [Paras 31]

Applicant companies to file affidavits within 15 days stating they are not ineligible under Section 29A of the IBC.

Sanctioning of first motion petition - Whether the first motion petition (application for sanction of the composite scheme) should be allowed and the consequent procedural steps. - HELD THAT: - Having accepted the evidentiary material-board resolutions approving the scheme, valuation report by an IBBI registered valuer, auditor certificates regarding creditors and shareholders, and affidavits of shareholders and creditors-the Tribunal held that the company application deserved allowance as a first motion. The allowance was made subject to the directions for notice, filing of statutory affidavits and compliance reporting. [Paras 29, 32]

First motion petition allowed in terms of the prayer clause and disposed of subject to the directed procedural compliances.

Compliance reporting - Filing of compliance report with the Registry in respect of the directions issued by the Tribunal. - HELD THAT: - The Tribunal directed the applicant companies to file a compliance report with the Registry detailing fulfillment of the directions contained in the order, thereby enabling the Tribunal to track execution of the procedural requirements prior to any subsequent motion. [Paras 32]

Applicant companies to file a compliance report with the Registry regarding the directions in the order.

Final Conclusion: The Tribunal allowed the joint first motion application for sanction of the Composite Scheme of Arrangement in principle, dispensed with the statutory meetings on the basis of filed consents and auditor certificates, and directed the applicants to serve prescribed notices (Form CAA.3) on statutory authorities and regulators with a 30 day period for representations, to file affidavits within 15 days confirming non ineligibility under Section 29A of the IBC, and to submit a compliance report to the Registry.

Winding up for fraudulent conduct - default in filing financial statements or annual returns for five consecutive financial years - sanction of the Central Government to prosecute winding up petition by Registrar - appointment of Official Liquidator as Liquidator - restraint on disposal of assets pending winding up

Winding up for fraudulent conduct - The affairs of the company were conducted in a fraudulent manner and persons concerned in its formation or management were guilty of fraud, misfeasance or misconduct, warranting winding up under the Companies Act. - HELD THAT: - The Tribunal, on the material before it and the submissions of the Petitioner, recorded specific findings that the affairs of the company had been carried on fraudulently and that the promoters/directors were guilty of misfeasance and misconduct. The Tribunal noted the report of the S.F.I.O. regarding related companies, the failure of the company to respond to statutory intimation, absence of any appearance despite notices (including by publication), and the returned postal service attempts. On these factual findings the Tribunal concluded that it was proper in the interest of justice to wind up the company under the provisions relied upon. [Paras 17, 18]

The Tribunal held that the affairs were conducted fraudulently and persons concerned were guilty of fraud/misfeasance, and that winding up on this ground is proper.

Default in filing financial statements or annual returns for five consecutive financial years - The company had defaulted in filing its financial statements and annual returns for immediately preceding five or more consecutive financial years, justifying winding up under the Companies Act. - HELD THAT: - The Tribunal recorded that the company's Master Data showed non-filing of balance sheets and annual returns for the period commencing on and from 31st March, 2013, and noted the company had not filed Income Tax returns after 31st March, 2012 and was not functioning for more than five subsequent financial years. These factual findings established the statutory default under the relevant clause and supported winding up. [Paras 17, 18]

The Tribunal held that the statutory default in filing for five consecutive years was established and warranted winding up.

Sanction of the Central Government to prosecute winding up petition by Registrar - The Petitioner had obtained prior sanction of the Central Government to file the winding up petition and the petition was within the Tribunal's jurisdiction and limitation. - HELD THAT: - The Tribunal noted the annexed sanction (Annexure-E) from the Central Government and the petitioner's declarations regarding jurisdiction (location of registered office) and limitation. The availability of prior sanction was recorded as satisfying the statutory prerequisite for the Registrar to pursue the petition. [Paras 1, 3, 17]

The Tribunal accepted that the requisite Central Government sanction was obtained and that the petition was within jurisdiction and limitation.

Appointment of Official Liquidator as Liquidator - restraint on disposal of assets pending winding up - Appointment of the Official Liquidator as Liquidator with directions to take possession of assets and books, imposition of restraint on disposal of assets, directions on costs and reporting timeline were appropriate reliefs to effectuate winding up. - HELD THAT: - Having concluded that winding up was proper, the Tribunal appointed the Official Liquidator attached to the Hon'ble High Court, Guwahati as Liquidator and directed immediate possession of assets and books. The Tribunal directed quarterly progress reports from the quarter ending June 2021 and aimed completion of winding up within one year. It also restrained the company from disposing of assets and directed that costs and incidentals be paid from company proceeds, with a direction that winding up costs must not increase for delay. [Paras 19]

The Tribunal appointed the Official Liquidator with possession and reporting directions, restrained disposal of assets, and directed costs to be met from company assets.

Final Conclusion: The Tribunal allowed the Registrar's petition and ordered winding up of Saradha Build Creation Pvt. Ltd. under the Companies Act on the dual grounds of fraudulent conduct and statutory default in filing for five consecutive years; the Official Liquidator was appointed, the company restrained from disposing assets, and costs were directed to be paid from the company's assets.

Power to call for documents under Rule 43 of the NCLT Rules - Affidavit by Senior Authorised Official - Direction for personal appearance of senior officials - Notice to third parties for production of records - Liberty to negotiate and settle pending proceedings

Power to call for documents under Rule 43 of the NCLT Rules - Affidavit by Senior Authorised Official - Tribunal called for specific information and documents in the form of affidavits from the parties and banks under Rule 43 to enable disposal on merits. - HELD THAT: - The Bench observed that the matter, pending for over ten years, requires documents and clarifications to be filed to enable final adjudication. It directed that the ICICI Bank and Standard Chartered Bank shall file clarifications by way of affidavit enclosing documents exchanged relating to the specified 30 lacs shares, and that the Respondent Company shall file, by affidavit, all documents/letters exchanged with Standard Chartered Bank, CDR, Consortium Lenders and the OTS settlement pertaining only to those shares. The call for these documents is made under Rule 43 of the NCLT Rules to enable the Bench to pass an appropriate order on the petition. [Paras 6, 7, 9]

Required affidavits and enclosed documents to be filed by the banks and the Respondent Company by the date directed to facilitate disposal on merits.

Direction for personal appearance of senior officials - Notice to third parties for production of records - Tribunal directed appearance of senior officials conversant with the 30 lacs shares and directed registry to issue notice to the banks for their replies and appearances. - HELD THAT: - To clarify points necessary for disposal, the Bench required that senior officials of ICICI Bank and Standard Chartered Bank conversant with the transactions relating to the 30 lacs shares be present at the next hearing along with their counsels. The Petitioner and Respondent were ordered to intimate the banks of this direction and to furnish their addresses to the Registry, which was directed to issue notices immediately by speed post and email where available. These directions are procedural steps aimed at ensuring the attendance of persons able to verify and explain the documents called for. [Paras 7, 8]

Senior officials of the two banks to appear at the next hearing; Registry to issue notices to the banks for filing of affidavits and appearances.

Liberty to negotiate and settle pending proceedings - Parties were granted liberty to negotiate and settle the dispute prior to final hearing, and the matter was listed for final hearing on the specified date. - HELD THAT: - Recognising the gap between the amounts claimed and offered, the Bench permitted the Petitioner and the Respondent Company (and their directors or senior officials conversant with the matter) to discuss, negotiate and attempt settlement. The Bench nonetheless fixed a final hearing date and directed listing of the matter along with all interlocutory applications, indicating the intention to conclude the proceedings on merit if no settlement is reached. [Paras 4, 10, 11]

Parties given liberty to negotiate; matter listed for final hearing with all IAs on the date directed.

Final Conclusion: Bench directed production of specified affidavits and documents under Rule 43, ordered attendance of senior bank officials and issuance of notices to the banks, granted parties liberty to negotiate, and listed the matter for final hearing to enable disposal on merits.

Mutual Settlement Agreement - implementation of settlement terms - release of collateral and personal guarantees - grant of time for negotiation with the bank - MSME unit considerations - CGTMSE guarantee cover

Grant of time for negotiation with the bank - implementation of settlement terms - MSME unit considerations - Prayer of the respondent for time to negotiate with the bank to implement the terms of the Mutual Settlement Agreement was allowed. - HELD THAT: - The Tribunal considered the respondent's explanation that he has taken control of the company and has been making monthly payments towards the bank liability but is unable to liquidate the entire outstanding loan at once. The Tribunal noted the company is an MSME unit, that the bank holds collateral (fixed deposit and land) and personal guarantees, and that full discharge of the bank dues is necessary for release of those securities. In view of these facts and the difficulty in arranging immediate funds, the Tribunal accepted the respondent's request for time to discuss with the bank and to work towards implementation of the mutually agreed settlement. The order granting time was directed as an interim measure to facilitate negotiation and resolution rather than a final adjudication on repayment or release of securities. [Paras 6, 7, 8, 9]

Fifteen days' time granted to the respondent to negotiate/discuss with the bank for implementation of the settlement and release of securities.

CGTMSE guarantee cover - release of collateral and personal guarantees - implementation of settlement terms - Parties were permitted liberty to negotiate with each other and with the bank in the light of the CGTMSE guarantee cover available to the MSME unit. - HELD THAT: - The Tribunal expressly allowed both parties the freedom to negotiate among themselves and with the concerned bank, expressly referencing the possibility of utilizing the CGTMSE guarantee cover applicable to MSME units as a means to resolve issues concerning release of fixed deposits, land and personal guarantees. This direction was adjunct to the grant of time and intended to facilitate practical resolution within the interim period. [Paras 10]

Both parties at liberty to negotiate with each other and with the bank, taking into account CGTMSE guarantee cover; matter listed on the specified date.

Final Conclusion: The Tribunal, noting partial compliance with the Mutual Settlement Agreement and the respondent's difficulty in immediately liquidating bank dues, granted fifteen days for negotiation with the bank and permitted both parties to negotiate (including in light of CGTMSE guarantee cover) for resolution; the matter is listed for further hearing on the specified date.

Exclusion of time from CIRP timeline - interim orders restraining coercive action - effect of interim judicial orders on CIRP timelines - impact of COVID-19 lockdown on CIRP - approval of Committee of Creditors for timeline adjustment - completion of CIRP within extended timeline

Exclusion of time from CIRP timeline - interim orders restraining coercive action - approval of Committee of Creditors for timeline adjustment - Exclusion of 55 days from the CIRP timeline was allowed. - HELD THAT: - The Tribunal considered the IRP's application under Section 12 read with Section 60(5) of the IBC seeking exclusion of 55 days from the CIRP timeline on account of writ petitions and interim orders passed by the High Court restraining coercive action, an appeal before the NCLAT and intermittent lockdowns due to the COVID-19 pandemic. The IRP had proceeded with statutorily required steps where not stayed, and the Committee of Creditors approved seeking the exclusion. The Tribunal found the reasons for exclusion - namely the effect of interim judicial orders and pandemic-related restrictions - to be satisfactory and accordingly allowed exclusion of 55 days from the CIRP timeline. [Paras 22, 23]

Exclusion of 55 days from the timeline of the CIRP is allowed.

Completion of CIRP within extended timeline - impact of COVID-19 lockdown on CIRP - Direction to the IRP/RP to complete the CIRP within 180 days after allowing the exclusion. - HELD THAT: - Having allowed the exclusion, the Tribunal directed the IRP/RP to ensure completion of the CIRP within 180 days and to endeavour to find a viable resolution plan for the stressed assets without further loss of time. The direction underscores the Tribunal's expectation of diligent and prompt conduct of the resolution process notwithstanding the admitted disruptions. [Paras 24]

IRP/RP directed to complete CIRP within 180 days and to pursue a viable resolution plan without further delay.

Final Conclusion: The Tribunal allowed exclusion of 55 days from the CIRP timeline for the reasons stated and directed the IRP/RP to complete the corporate insolvency resolution process within 180 days, pursuing a viable resolution plan without further loss of time.

Existence of pre-existing dispute - running account - rejection of Section 9 petition under the Insolvency and Bankruptcy Code for pre-existing dispute - demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - contractual stipulation making payment contingent on realisation of insurance claim

Existence of pre-existing dispute - running account - demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - contractual stipulation making payment contingent on realisation of insurance claim - Whether the Company Application under Section 9 is maintainable in view of a pre-existing dispute and the parties' running account and contract terms. - HELD THAT: - The Tribunal found on the material before it that a work order dated 19.04.2017 governed the parties' relationship and contained a condition that payment could be adjusted pending realisation of the Corporate Debtor's claim from its insurer. A consignment dispatched on 21.06.2017 was rejected by the consignee and a FIR was lodged on 05.07.2017; the Corporate Debtor issued a notice under the Carriers Act on 21.07.2017 claiming loss for the rejected consignment. The Operational Creditor had, however, raised multiple bills and the Corporate Debtor made consolidated payments to the Operational Creditor after some of those bills, demonstrating a running account. The Operational Creditor itself admitted that a dispute existed between the parties (albeit asserted to relate to different transactions). Taken together-(i) the contractual clause making payment contingent on insurance realisation, (ii) the rejection of the consignment and subsequent criminal and civil steps by the Corporate Debtor, (iii) the existence of counter-notice/claim prior to the demand, and (iv) evidence of consolidated payments-the Tribunal concluded that a plausible dispute existed well before issuance of the demand notice relied upon by the Operational Creditor. Under the Code, an application under Section 9 is liable to be rejected where a pre-existing dispute is established on the record and is not a spurious or frivolous plea. Applying that principle, the Tribunal held the present petition to be not maintainable.

The Section 9 application is rejected on the ground that a pre-existing dispute (involving the rejected consignment, insurance claim and counter-demand) and the running account between the parties existed prior to the demand notice.

Final Conclusion: The petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 is dismissed for non maintainability because a bona fide dispute and running account between the parties, together with a contractual condition tying payment to insurance realisation, existed prior to the demand notice; the application is rejected without costs.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - initiation of corporate insolvency resolution process (CIRP) - moratorium during CIRP - role and duty of interim resolution professional/resolution professional to examine claims - forum for raising disputed claims during CIRP - resolution professional/committee of creditors - preliminary enquiry under Section 340 CrPC for alleged forged documents in insolvency pleadings

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - moratorium during CIRP - initiation of corporate insolvency resolution process (CIRP) - Whether the Tribunal should entertain the petition invoking Section 340 CrPC and related penal provisions to probe alleged forgery in documents relied upon in an already admitted Section 7 application and ongoing CIRP - HELD THAT: - The Tribunal recorded that the Financial Creditor's Section 7 application in CP(IB)/7/2021 was admitted on 7.4.2021 and CIRP was commenced with appointment of an IRP, placing the Corporate Debtor under moratorium. Given the admitted petition and the statutory scheme, the Tribunal held there was no need to entertain the present prayer for criminal enquiry before this forum. The IRP, acting under provisions of the Code, is obliged to scrutinise claims and documents submitted by creditors, and the corporate insolvency process, including the IRP/RP and CoC mechanisms, is the appropriate forum for contesting disputed claims. The petitioner (suspended director) was therefore directed to raise any disputes regarding the Term Loan III with the RP/CoC in accordance with the IBC rather than seek initiation of Section 340 CrPC proceedings before the Tribunal. [Paras 13, 14, 15]

Petition seeking directions for preliminary criminal enquiry and related reliefs rejected; petitioner permitted to pursue disputed claim with the RP/CoC under the IBC.

Role and duty of interim resolution professional/resolution professional to examine claims - forum for raising disputed claims during CIRP - resolution professional/committee of creditors - Whether the petitioner may be permitted to pursue alleged documental forgery and disputed claim before the IRP/RP and CoC during the CIRP - HELD THAT: - The Tribunal emphasised that the IRP/RP is duty bound to examine documents and claims submitted by creditors before admitting them in the CIRP. It observed that the petitioner had not disputed other limits except Term Loan III and that prior proceedings had resulted in special officer appointment and subsequent handover of company documents to the IRP. Consequently, the Tribunal left the petitioner at liberty to take up any issues or disputes concerning the Term Loan with the RP/CoC in accordance with the provisions of the IBC, rather than seeking intervention by the Tribunal for criminal investigation. [Paras 10, 11, 12, 14]

Petitioner permitted to raise disputes relating to the contested term loan with the RP/CoC; IRP/RP to examine claims as per statutory duties.

Final Conclusion: The application under Section 340 CrPC and related penal provisions seeking directions and criminal enquiry was dismissed; the admitted Section 7 CIRP remains in force with moratorium and IRP in place, and the petitioner is directed to pursue contested claim(s) concerning Term Loan III before the IRP/RP and the Committee of Creditors in accordance with the IBC.

Admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Operational debt and established default - Demand notice under Section 8 and absence of dispute - Service and limitation for initiation of Corporate Insolvency Resolution Process - Appointment of Interim Resolution Professional for CIRP - Operational Creditor's interim deposit for IRP expenses - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016

Admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Operational debt and established default - Application under Section 9 was admitted on the basis that the applicant proved an unpaid operational debt and default by the corporate debtor. - HELD THAT: - The Tribunal found that the applicant entered into a services agreement with the corporate debtor and raised invoices for services rendered which were acknowledged. The claimed outstanding operational debt remained unpaid and was supported by the invoices, the bounced cheque on presentation and the Form V particulars. The corporate debtor did not contest the claim or appear, and the application was therefore found to be complete and the default established. On these facts the Tribunal admitted the Section 9 application under Section 9(5) of the Code. [Paras 6, 14]

Section 9 application admitted and default held established.

Demand notice under Section 8 and absence of dispute - Service and limitation for initiation of Corporate Insolvency Resolution Process - The Section 8 demand notice was validly issued and served, no notice of dispute was received, and the application was within limitation. - HELD THAT: - The Tribunal recorded that the applicant issued a demand notice in the prescribed Form 3 under Section 8, served it at the registered office and by email with proof of delivery. The applicant also filed the affidavit under Section 9(3)(b) affirming that no notice of dispute had been received. The date of last invoice was noted and the application was filed within the limitation period. In light of valid service, absence of dispute and timely filing, the statutory pre-conditions for initiation under Section 9 were satisfied. [Paras 7, 8, 11, 12]

Demand notice held validly served, no dispute established, and the application not time-barred.

Appointment of Interim Resolution Professional for CIRP - An Interim Resolution Professional was appointed subject to conditions of consent and disclosures. - HELD THAT: - As the applicant had not proposed an IRP, the Tribunal appointed Mr. Prateek Kathuria as Interim Resolution Professional, subject to the condition that no disciplinary proceedings be pending against him and that he file the required consent and disclosures in the prescribed Form within one week. The appointment was made to enable the Corporate Insolvency Resolution Process to be carried forward in accordance with the Code and regulations. [Paras 15]

IRP appointed subject to filing of consent and requisite disclosures.

Operational Creditor's interim deposit for IRP expenses - Operational Creditor directed to deposit an interim amount with the IRP to meet CIRP expenses, subject to adjustment by the Committee of Creditors. - HELD THAT: - The Tribunal directed the operational creditor to deposit a sum with the Interim Resolution Professional to enable him to perform statutory functions and meet initial expenses pursuant to the Regulations. The deposit was ordered to be made within one week and was to be subject to adjustment by the Committee of Creditors as accounted for by the IRP. [Paras 16]

Operational creditor directed to deposit the interim amount with the IRP; amount subject to adjustment by the Committee of Creditors.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - On admission, the statutory moratorium under Section 14 was declared to apply in relation to the corporate debtor. - HELD THAT: - As a consequence of admitting the Section 9 application, the Tribunal ordered the moratorium contemplated by Section 14(1) to follow, thereby prohibiting the actions set out in the provisos, and observed that the provisions of Sections 14(2) to 14(4) will operate during the moratorium period. This declaration followed admission and is in terms of the Code. [Paras 17]

Statutory moratorium under Section 14 declared on admission of the application.

Final Conclusion: The Tribunal admitted the Section 9 application after finding that the applicant proved an unpaid operational debt and default, validly issued and served the Section 8 notice with no dispute raised, and filed within limitation; an Interim Resolution Professional was appointed (subject to consent and disclosures), the operational creditor was directed to deposit interim funds for IRP expenses, and the statutory moratorium under Section 14 was declared to apply.

Distribution of liquidation proceeds - deduction of insolvency resolution process costs and liquidation costs before distribution - fees of the liquidator to be deducted proportionately from proceeds payable to each class - calculation of liquidator's fees on basis of realization - non applicability of retrospectively amended regulation to earlier commenced liquidation - exclusion of period of bona fide dispute for computation of time based fee slab - realization by secured creditor under section 52 and liability for subsequent liquidation costs

Distribution of liquidation proceeds - deduction of insolvency resolution process costs and liquidation costs before distribution - fees of the liquidator to be deducted proportionately from proceeds payable to each class - calculation of liquidator's fees on basis of realization - Whether the liquidator's fees and liquidation costs must be calculated and deducted on the basis of realization or on the basis of admitted claim. - HELD THAT: - Section 53 mandates that insolvency resolution process costs and liquidation costs be paid in full before distribution and that the fees payable to the liquidator shall be deducted proportionately from the proceeds payable to each class of recipients. Regulation 42 requires deduction of such costs before distribution. Applying these provisions to the facts, the Tribunal held that the liquidator's fees are to be calculated proportionately on the basis of amount realized from liquidation, not on the basis of admitted claims. The respondents who sold their securities did not object to the liquidator's calculation; the contention raised by Respondent No.1 did not displace the statutory scheme which prioritises deduction from realizations.

Liquidator's fees to be calculated and deducted proportionately from realized proceeds.

Non applicability of retrospectively amended regulation to earlier commenced liquidation - contributions to liquidation costs - Whether Regulation 2A (IBBI (Liquidation Process) Regulations, 2016, as amended on 25.07.2019) obliges financial creditors who were CoC members to contribute to liquidation costs in the present liquidation. - HELD THAT: - Regulation 2A, which requires certain financial institutions to contribute the excess of liquidation costs over liquid assets in proportion to financial debts, came into force on 25.07.2019. The liquidation in this matter commenced on 25.09.2018. The Tribunal held that the amended regulation does not apply to liquidation processes that commenced before its date of effect. Further, in the present case realizations were sufficient to cover liquidation costs, so the contention that Regulation 2A should be invoked lacks merit.

Regulation 2A is not applicable to this liquidation and does not impose contribution liability on the financial creditor in this case.

Exclusion of period of bona fide dispute for computation of time based fee slab - calculation of liquidator's fees on basis of realization - Whether the period of dispute between the liquidator and a secured creditor should be excluded when calculating the time dependent slab for liquidator's fees. - HELD THAT: - The liquidator identified circumstances and delays attributable to disputes with Respondent No.1 and sought exclusion of that period when determining the applicable fee slab. Having examined the material and the liquidator's conduct, the Tribunal found that the liquidator had established bona fides for the delay and therefore excluded the period of dispute for the purpose of applying the time based fee slab under the relevant regulations.

Period of bona fide dispute between liquidator and secured creditor excluded for computation of fee slab and related fee calculation.

Realization by secured creditor under section 52 and liability for subsequent liquidation costs - priority payment of liquidation costs from realized funds - Whether a secured creditor who has realized its security under section 52 is liable to bear liquidation costs incurred after the date of its realization, or whether such costs should be borne otherwise. - HELD THAT: - Respondent No.3 (a secured creditor) objected to bearing liquidation costs incurred after realizing its security. Given the particular facts and the delay attributable to disputes with another secured creditor, the Tribunal took a pragmatic course: it directed that liquidation costs be met as a priority from funds realised in the liquidation. The order addresses the peculiar situation in this case and ensures liquidation costs are discharged from realizations before further distribution, rather than exempting a realized secured creditor from any contribution as a matter of general principle.

Liquidation costs to be met as a priority from funds realised in liquidation.

Final Conclusion: The applications are disposed of with directions that (a) liquidator's fees and liquidation costs be deducted proportionately from realized proceeds; (b) Regulation 2A (amendment dated 25.07.2019) does not apply to this liquidation; (c) the bona fide period of dispute between the liquidator and a secured creditor is excluded for computing the applicable fee slab; and (d) liquidation costs shall be met as a priority from funds realised in the liquidation. CA/135/2019 and IA/3570 of 2020 stand disposed of accordingly.

Liquidation under Chapter III of the Insolvency & Bankruptcy Code, 2016 - appointment of the Resolution Professional as Liquidator - eligibility of the Resolution Professional to act as Liquidator - cessation of moratorium under Section 14 and commencement of moratorium under Section 33(5) - discharge of officers, employees and workmen on liquidation - public announcement in terms of the IBBI (Liquidation Process) Regulations, 2016 - duty to communicate liquidation order to Registrar of Companies and IBBI

Liquidation under Chapter III of the Insolvency & Bankruptcy Code, 2016 - Corporate debtor Mohan Motor Distributors Private Limited ordered to be liquidated under Chapter III of the Insolvency & Bankruptcy Code, 2016. - HELD THAT: - The Adjudicating Authority admitted the Section 9 petition and, after expiry of the extended CIRP period and failure to receive any resolution plan despite expressions of interest and deposit of EMDs, the CoC with majority voting resolved for liquidation. The Resolution Professional also reported non-submission of any viable resolution plan and the corporate debtor was found not to be a going concern with no employees and accumulated losses. In view of these facts and absence of alternative, the Tribunal invoked the Code and ordered liquidation in accordance with Chapter III. [Paras 2, 4, 8, 9, 10]

Application allowed and the corporate debtor is ordered to be liquidated as laid down in Chapter III of the Code.

Appointment of the Resolution Professional as Liquidator - eligibility of the Resolution Professional to act as Liquidator - Mr. Kamal Agarwal, the Resolution Professional, appointed as Liquidator of the corporate debtor. - HELD THAT: - In terms of the Liquidation Process Regulations read with the Code, the Resolution Professional who conducted the CIRP is eligible to be appointed as Liquidator when an order for liquidation is passed. The RP had submitted consent and produced the requisite certificates supporting his eligibility to act as Liquidator. Accordingly, the Tribunal appointed him as Liquidator and directed him to perform duties of liquidation. [Paras 3, 5, 6, 10]

Shri Kamal Agarwal appointed as Liquidator and directed to proceed with liquidation.

Cessation of moratorium under Section 14 and commencement of moratorium under Section 33(5) - The moratorium under Section 14 shall cease and a fresh moratorium under Section 33(5) shall commence upon liquidation order. - HELD THAT: - The Tribunal recorded that upon passing of the liquidation order the earlier moratorium enacted during CIRP ceases and the statutory moratorium applicable on liquidation under the Code takes effect. This follows the transition from CIRP to liquidation as provided by the Code and was stated as part of the liquidation directions. [Paras 10]

Order of moratorium under Section 14 ceases and moratorium under Section 33(5) commences.

Discharge of officers, employees and workmen on liquidation - The liquidation order is deemed to be a notice of discharge to officers, employees and workmen of the corporate debtor, except where business continues as a going concern. - HELD THAT: - The Tribunal declared that the liquidation order serves as statutory notice of discharge under the Code to the corporate debtor's personnel, subject to the exception for cases where the business is continued as a going concern. This direction was included to give effect to the statutory consequences of liquidation. [Paras 10]

Order deemed to be notice of discharge to officers, employees and workmen, except where business is continued as a going concern.

Public announcement in terms of the IBBI (Liquidation Process) Regulations, 2016 - Liquidator directed to issue public announcement in terms of Regulation 12 of the IBBI (Liquidation Process) Regulations, 2016. - HELD THAT: - Consistent with the statutory liquidation process, the Tribunal directed the appointed Liquidator to make the mandatory public announcement to invite claims and inform stakeholders, thereby commencing the formal liquidation procedures under the Regulations. [Paras 6, 10]

Liquidator to issue public announcement as required by Regulation 12 of the Liquidation Process Regulations.

Duty to communicate liquidation order to Registrar of Companies and IBBI - Registry directed to communicate the liquidation order to the Registrar of Companies, West Bengal and the Insolvency and Bankruptcy Board of India. - HELD THAT: - To ensure statutory and regulatory authorities are informed and appropriate records are updated, the Tribunal ordered the Registry to transmit a copy of the liquidation order to the ROC and the IBBI. This facilitates compliance and administrative actions consequent to liquidation. [Paras 10]

Registry to send copy of the order to the Registrar of Companies, West Bengal and the IBBI.

Final Conclusion: The Tribunal allowed the application and ordered liquidation of Mohan Motor Distributors Private Limited under Chapter III of the Insolvency & Bankruptcy Code, 2016; appointed the Resolution Professional as Liquidator (who had given consent and produced requisite certificates); directed issuance of the public announcement and commencement of the liquidation moratorium, deemed discharge of personnel (subject to the going-concern exception), and directed communication of the order to the Registrar of Companies and IBBI.

Enlargement of time for completion of CIRP - formation of opinion under regulation 35A of the CIRP Regulations - duty of the Resolution Professional to take custody and control of assets and business records - remedy against non-cooperation of personnel under section 19(2) - exercise of discretion sparingly in extending CIRP where resolution is not imminent

Enlargement of time for completion of CIRP - formation of opinion under regulation 35A of the CIRP Regulations - exercise of discretion sparingly in extending CIRP where resolution is not imminent - Application under section 60(5) seeking exclusion of period from commencement of CIRP until availability of books of accounts and details was dismissed. - HELD THAT: - The Tribunal held that seeking exclusion of time for an indeterminate period until the Corporate Debtor provides books of accounts is not an appropriate course. The Code and CIRP Regulations prescribe the procedure for formation of opinion and the RP must form an independent opinion under regulation 35A; the Committee of Creditors cannot direct the RP whether to form such an opinion. Discretion to enlarge the CIRP period must be exercised sparingly and typically where a resolution is imminent; the applicant did not show proximity to resolution (the final list of prospective applicants was only issued on 17.05.2021). On these grounds the prayer for exclusion for an uncertain period was found incomplete and unsustainable and therefore rejected. [Paras 6, 11, 12, 13, 14]

IA/529/KB/2021 dismissed as misconceived and devoid of merit.

Duty of the Resolution Professional to take custody and control of assets and business records - remedy against non-cooperation of personnel under section 19(2) - The RP failed to discharge proactive duties and did not diligently pursue the remedy under section 19(2) despite filing an application. - HELD THAT: - The Tribunal found the RP's conduct deficient: the RP only contacted the suspended board by email and speed post and did not demonstrate proactive steps to take custody and control of assets and records as required under the Code. Filing an application under section 19(2) does not absolve the RP of the obligation to pursue it diligently; the RP must show continued effort to obtain cooperation and, failing that, seek appropriate relief. The record showed lack of diligence and seriousness in discharging statutory duties. [Paras 7, 8, 9, 10]

RP's performance found wanting; failure to take requisite proactive steps and to pursue the section 19(2) application diligently.

Exercise of discretion sparingly in extending CIRP where resolution is not imminent - Registry directed to send a copy of the order to the Insolvency and Bankruptcy Board of India for examination of the RP's actions. - HELD THAT: - Having found the RP's application without merit and his conduct deficient, the Tribunal directed the Registry to forward the order to the IBBI for examination and for issuing appropriate directions to insolvency professionals if necessary, signalling supervisory attention to the RP's conduct. [Paras 15]

Order to send copy to IBBI for examination and possible directions to insolvency professionals.

Final Conclusion: The application for exclusion of time was rejected and IA/529/KB/2021 dismissed; the RP's lack of proactive discharge of duties and failure to diligently pursue the remedy under section 19(2) was noted, and the Registry was directed to forward the order to the IBBI for examination and appropriate action.

Premature judicial intervention - Mandamus for acceptance of SVLDRS payments - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Consideration of representation on merits - COVID-19 impact on business as ground for relief

Premature judicial intervention - Mandamus for acceptance of SVLDRS payments - Writ petition seeking mandamus to compel respondents to accept belated payments under the SVLDRS was premature in the absence of any prior representation to the respondents. - HELD THAT: - The petition was filed asking for issuance of writ of mandamus directing respondents to accept belated payments under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Court noted that no representation had been made to the respondents before approaching the writ court and that the sole ground relied on was the COVID-19 pandemic's impact on the petitioner's business. In these circumstances the court treated the petition as premature and unsuitable for immediate judicial intervention without exhaustion of the administrative remedy of making a representation to the respondents. [Paras 3, 6]

Writ petition dismissed as premature; petitioner must first make a representation to the respondents before seeking mandamus.

Consideration of representation on merits - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Respondents are at liberty to consider any representation submitted by the petitioner on its merits and in accordance with law; the court has not expressed any view on the merits. - HELD THAT: - The Court expressly preserved the petitioner's right to submit a representation and directed that if such a representation is made the respondents may consider it on its own merits and in accordance with law uninfluenced by the present order. The order clarifies that it neither impels nor inhibits the respondents and that no adjudication on the substantive merits of acceptance of payments under the SVLDRS has been undertaken by the Court. [Paras 6]

Petitioner's right to make a representation is preserved; respondents may consider it on merits; court refrained from expressing any view on merits.

Final Conclusion: The writ petition was disposed of as closed on the ground of prematurity without adjudication on merits; petitioner may make a representation which respondents are free to consider on its merits in accordance with law; no order as to costs.

Short-term accommodation services - business support services - infrastructural support services - manpower recruitment and supply agency service - reconciliation of ST-3 returns with balance sheet - CENVAT credit reconciliation and admissibility

Short-term accommodation services - business support services - infrastructural support services - Demand of service tax under Business Support Services on transit/guest house income confirmed for the period May 2006 to September 2010 is unsustainable. - HELD THAT: - The Tribunal accepted the appellant's submission that provision of housing on short-term basis falls within the statutory entry for short-term accommodation services, which became taxable w.e.f. May 1, 2011, and that this new entry was not a carve out from the earlier business support services entry. Reliance on the principle in Indian National Shipowners' Association (as applied by the Tribunal in subsequent decisions) establishes that the introduction of a new taxable entry presumes absence of earlier coverage and cannot be treated as retrospectively subsumed under an existing entry. Further, the statutory Explanation to infrastructural support services contemplates office type facilities (office utilities, reception, secretarial services, internet/telecom, pantry and security) and does not encompass accommodation/guest house services. Applying these legal principles, accommodation income cannot be classified as BSS prior to May 1, 2011 and the Commissioner was not justified in confirming the demand under BSS for the period in question. [Paras 12, 15, 16]

Demand under Business Support Services on transit house income set aside for the relevant period; accommodation services fall under short-term accommodation entry taxable only from May 1, 2011.

Manpower recruitment and supply agency service - Demand of service tax on account of alleged supply of manpower to group companies is not sustainable. - HELD THAT: - On the facts the Tribunal found that the appellant merely deputed its own employees to group companies while salaries and statutory contributions were handled as described and that the appellant was not an agency 'engaged in providing' recruitment or supply of manpower as contemplated by the statutory definition. The Tribunal relied on established decisions holding that unless the essential elements of a manpower recruitment or supply service are present (an agency engaged in recruitment/supply of manpower to others), taxability under that entry does not arise. [Paras 26]

Demand under manpower recruitment/supply agency service set aside.

Reconciliation of ST-3 returns with balance sheet - Demand confirmed solely on the ground of difference between ST-3 returns and balance sheet is not sustained where the assessee has offered an explanation supported by documents which the adjudicating authority did not examine. - HELD THAT: - The appellant explained that the variance arose from reporting on a cum-tax basis in ST-3 returns while service tax was paid on a different (correct) value, and placed supporting documents before the Adjudicating Authority. The Commissioner confirmed the demand without specifying the taxable category or engaging with the appellant's explanation and documentary evidence. The Tribunal held that the explanation required examination and that, in absence of specification of the taxable service and proper appraisal of the documents, the confirmed demand cannot be sustained. [Paras 30]

Demand founded on the difference between ST-3 and balance sheet set aside for want of proper examination and specification.

CENVAT credit reconciliation and admissibility - Confirmation of CENVAT credit demand for April 2006 and April 2008 remanded for fresh consideration. - HELD THAT: - The Commissioner rejected the appellant's claim of closing credit balances shown in ledger on the ground that the submitted ledgers were unauthenticated computer printouts and that there was no Chartered Accountant certificate. The appellant, however, had filed supporting documents including Chartered Accountant certificates. The Tribunal found that these documents were not examined and directed that the matter be re examined by the Commissioner with consideration of the documents and CA certificates lodged in the appeal records. [Paras 34]

Matter remanded to the Commissioner for re-examination of CENVAT credit claims for the specified months after considering the appellant's documents and CA certificates.

Final Conclusion: The appeal is allowed in part: demands confirmed under Business Support Services (transit house income), manpower supply and the discrepancy between ST-3 and balance sheet are set aside; the CENVAT credit disallowance for April 2006 and April 2008 is remanded to the Commissioner for fresh consideration in light of the appellant's documentary evidence.

Appeal time begins from date of receipt of the order - limitation for filing appeal under section 85(3) of the Finance Act - statutory power to condone delay is circumscribed by proviso - presumption of service insufficient without cogent evidence

Appeal time begins from date of receipt of the order - limitation for filing appeal under section 85(3) of the Finance Act - Whether the appeal filed on August 05, 2011 was within the period of limitation prescribed by section 85(3) of the Finance Act, having regard to the date the order was received by the appellant. - HELD THAT: - The Court held that the three-month limitation period prescribed by section 85(3) of the Finance Act commences from the date a copy of the adjudicating authority's order is actually received by the appellant. In the present case the appellant received the order dated January 23, 2009 only on July 05, 2011; consequently the appeal presented on August 05, 2011 fell within the initial three-month period. The decision in Singh Enterprises regarding the limited scope for condoning delay under a corresponding provision does not alter the rule that the statutory limitation runs from actual receipt of the order. [Paras 15, 16, 17]

The appeal filed on August 05, 2011 was within the time prescribed by section 85(3) because the order was actually received by the appellant on July 05, 2011.

Presumption of service insufficient without cogent evidence - statutory power to condone delay is circumscribed by proviso - Whether the Commissioner (Appeals) was justified in inferring from departmental correspondence that the order had been served in 2009 and thereby rejecting the appellant's contention of later receipt. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) drew an impermissible presumption of service from a letter dated February 10, 2009 in which the Superintendent requested local delivery after a speed post return marked 'unclaimed'. The communication did not record any acknowledgment of actual receipt by the appellant and therefore did not constitute cogent evidence of service capable of defeating the appellant's statutory right to present an appeal within the prescribed period. Absent proof of service, a statutory limitation cannot be defeated by inference. Consequently the Commissioner (Appeals) erred in dismissing the appeal as time-barred on that basis. [Paras 10, 11, 15]

The presumption that the order was served in 2009 based on the departmental request was unsustained; cogent evidence of service was lacking and the Commissioner (Appeals) erred in treating the appeal as time-barred.

Final Conclusion: The impugned order dismissing the appeal as time-barred is set aside; the appeal was within time and the matter is remitted to the Commissioner (Appeals) to be heard on merits, with a direction to decide the appeal expeditiously.

Business Auxiliary Service - promotion and marketing of finished product versus promotion of raw material - transfer of possession as sale under Section 2(h) of the Central Excise Act, 1944 - binding effect of tribunal/bench precedents on identical factual/legal issue

Business Auxiliary Service - promotion and marketing of finished product versus promotion of raw material - binding effect of tribunal/bench precedents on identical factual/legal issue - Whether the appellant's promotional and marketing activities amounted to providing Business Auxiliary Service to the concentrate supplier and therefore attracted service tax. - HELD THAT: - The Tribunal examined earlier decisions of this Bench and other Benches which held that promotional activities undertaken by the bottler for the finished beverage do not constitute promotion of the concentrate supplier's goods and therefore do not fall within the taxable category of Business Auxiliary Service. The Tribunal applied those precedents (as summarised in Kandhari Beverages Pvt. Ltd.) and rejected the revenue's contention that support payments/credit notes received from the concentrate supplier convert the bottler's promotional activity into a service rendered to the supplier. The Tribunal also relied on reasoning in the precedents that treating every increase in finished-product promotion as promotion of input suppliers would lead to an illogical and overbroad application of the taxable category. Having regard to the consistent view taken in the cited decisions, the Tribunal held that no service-tax demand could be sustained. [Paras 6, 7]

Impugned orders demanding service tax on the ground that the appellant provided Business Auxiliary Service to the concentrate supplier are set aside and the appeals are allowed with consequential relief.

Transfer of possession as sale under Section 2(h) of the Central Excise Act, 1944 - promotion and marketing of finished product versus promotion of raw material - Whether the nature of the transaction in which concentrate is transferred to the bottler affects characterization of the bottler's promotional activities as services to the concentrate supplier. - HELD THAT: - The Tribunal, following prior bench decisions, noted that where the concentrate is transferred for consideration and possession passes, the transaction amounts to a sale within the meaning of the Central Excise Act; restrictions on use imposed by contract do not convert a sale into a mere 'transfer to use'. Even accepting sale of concentrate, the Tribunal held that promotional activities of the bottler directed at the finished product cannot be equated to promotional services for the input supplier so as to render such activities taxable as Business Auxiliary Service. The Tribunal declined the revenue's attempt to extend authorities to treat the bottler's advertising/promotional expenditure as promotion of the concentrate supplier. [Paras 6, 7]

The characterization of the concentrate transaction as a sale does not warrant treating the appellant's promotional activities as taxable services provided to the concentrate supplier; demands are unsustainable.

Final Conclusion: Relying on earlier Tribunal decisions (as reflected in Kandhari Beverages Pvt. Ltd. and related precedents), the appeals are allowed: the demands for service tax on the appellant's promotional/marketing activities as Business Auxiliary Service are set aside and the impugned orders are quashed with consequential relief, if any.

Natural justice - opportunity to be heard - confrontation of expert report - service of adverse material - remand for fresh adjudication

Natural justice - service of adverse material - confrontation of expert report - Adjudicating authority breached the principles of natural justice by relying on the CRCL report without affording the petitioner a reasonable opportunity to confront and object to that report. - HELD THAT: - The Court found on the pleadings that the CRCL test report was first confronted to the petitioner on 20.10.2020. The adjudication order dated 28.10.2020 refers at length to the CRCL reports dated 03.06.2020/13.07.2020 but contains no discussion of the petitioner's objection filed on 26.10.2020. The revenue's counter-affidavit did not specify an earlier date of service, thereby admitting the petitioner's averment. In these circumstances the petitioner was not given adequate time or an opportunity to meet the adverse material and the objection filed was not considered by the adjudicating authority. The failure to supply the complete test report within time and to consider the petitioner's submissions amounted to a violation of the audi alteram partem principle.

Finding of breach of natural justice and setting aside of the adjudication order insofar as it relied on the CRCL report without affording proper opportunity to the petitioner.

Remand for fresh adjudication - opportunity to be heard - service of adverse material - Whether the matter should be remitted for fresh adjudication and the manner in which the remand should be conducted. - HELD THAT: - Given the finding that the petitioner had not been afforded adequate opportunity and that the objection to the CRCL report had not been considered, the Court held that remand to the adjudicating authority was appropriate. The Court directed that the adjudicating authority shall serve a complete hard copy of the CRCL test report on the petitioner within one week, allow two weeks from service for the petitioner to file detailed reply/objection, and thereafter fix a hearing and pass a fresh order strictly in accordance with law after affording due opportunity of hearing. The Court declined the revenue's submission that the petition be relegated to alternate remedies because the defect lay in denial of a fair opportunity in the previous adjudication.

Order set aside and matter remitted for fresh adjudication with specific directions for service of the test report, time for filing objections, hearing and fresh decision.

Final Conclusion: Writ petition allowed; adjudication order dated 28.10.2020 set aside for violation of natural justice. Matter remitted to the adjudicating authority to pass a fresh order after serving the complete CRCL test report within one week, permitting two weeks for the petitioner to file detailed objections, and affording a hearing before deciding the matter afresh.

Availment of Cenvat credit on inputs cleared after payment of excise duty on finished goods - Inputs versus finished goods in context of Rule 2(k) of the Cenvat Credit Rules, 2004 - Legitimacy of post-clearance disallowance of credit where duty on final product has been paid - Belting system - composite nature of components (belts and pulleys) as inputs to manufacture

Availment of Cenvat credit on inputs cleared after payment of excise duty on finished goods - Inputs versus finished goods in context of Rule 2(k) of the Cenvat Credit Rules, 2004 - Whether the department could deny Cenvat credit availed on V-belts and pulleys after the assessee had cleared the finished goods on payment of excise duty and on the ground that those items were finished goods and not inputs used in manufacture. - HELD THAT: - The Tribunal found that the appellant had cleared the final products (belts and accessories comprising pulleys and V-belts) after discharging central excise duty and that the department could not, thereafter, disallow the Cenvat credit by asserting that there was no process of manufacture or that the goods were merely traded. The authority observed that where duty on the finished product has been paid, a subsequent objection to the availment of credit on inputs is impermissible and would amount to double taxation. The Tribunal relied on the view of the Hon'ble High Court of Bombay in CCE Pune Vs Ajinkya Enterprises that availment of credit on inputs cannot be faulted when duty on finished products has been paid, and applied the rulings in CCE Vs Vishal Precision Steel Tubes and Strips Pvt. Ltd. - 2017 (3) TMI 1287-KARNATAKA HIGH COURT and Ruchi Soya Industries Ltd. Vs CGST & CE Chennai Outer - 2015 (5) TMI 134-CESTAT CHENNAI which followed the same legal position. The Tribunal therefore held that the show cause demand confirming denial of credit was unsustainable where duty on the final product had been discharged and the inputs (pulleys and belts forming a belting system) had been treated as part of manufacture and removed on payment of duty. [Paras 5, 6, 7]

Demand cannot be sustained; impugned order set aside and appeal allowed with consequential relief as per law.

Final Conclusion: The appeal is allowed: where the assessee cleared the finished products after payment of excise duty, the department's subsequent denial of Cenvat credit on the V-belts and pulleys held to be unsustainable and the impugned order is set aside with consequential relief.

Taxability of by-products and wastes - non-excisability of agricultural residues and manufacturing wastes (bagasse, pressmud) - definition of manufacturer under Section 2(f) of the Central Excise Act, 1944 - reversal of CENVAT credit on exempted goods under Rule 6 of the CENVAT Credit Rules, 2004 - validity and enforceability of executive circulars in presence of binding judicial precedent

Non-excisability of agricultural residues and manufacturing wastes (bagasse, pressmud) - reversal of CENVAT credit on exempted goods under Rule 6 of the CENVAT Credit Rules, 2004 - validity and enforceability of executive circulars in presence of binding judicial precedent - Whether CENVAT credit was required to be reversed under Rule 6 for clearance of pressmud (a manufacturing waste) and whether the Board's Circular treating such wastes as exempted goods is enforceable. - HELD THAT: - The Tribunal applied the binding pronouncement of the Hon'ble Supreme Court that bagasse and similar residues are not manufactured products but are agricultural waste/residue and therefore do not fall within the definition of a manufacturer under Section 2(f) of the Central Excise Act, 1944. In consequence there is no manufacture attracting central excise duty on such waste products; Rule 6 of the CENVAT Credit Rules, 2004, which mandates reversal of credit in relation to exempted goods, has no application where there is no excisable manufacture. The Tribunal further observed that the executive instruction in the Board's Circular dated 25.04.2016 (para 4.2), insofar as it directs treating non-excisable by-products/wastes as exempted goods for purposes of credit reversal, cannot be enforced against the clear judicial precedent; accordingly the demand for reversal of credit qua clearance of pressmud was unsustainable.

The requirement to reverse CENVAT credit under Rule 6 in respect of pressmud was held not to arise and the Circular provision attempting to treat such wastes as exempted goods for credit reversal was held unenforceable; the appeal was allowed.

Final Conclusion: The appeal is allowed and the orders directing reversal of CENVAT credit in respect of clearance of pressmud are set aside; the Board's executive instruction treating such non-excisable wastes as exempted goods for the purpose of Rule 6 cannot be enforced in view of the Supreme Court's precedent that such residues are not manufactured goods.

Offence under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - dishonour of cheque for insufficiency of funds - legal notice requirement in cheque dishonour cases - concurrent findings of fact - criminal revision jurisdiction

Offence under Section 138 of the Negotiable Instruments Act - dishonour of cheque for insufficiency of funds - legal notice requirement in cheque dishonour cases - The conviction under Section 138 of the Negotiable Instruments Act was sustainable on the evidence produced and procedural prerequisites for prosecution were satisfied. - HELD THAT: - The Court found that the complainant identified the cheque and the petitioner's signature (Exhibit-1), the bank return memos evidencing dishonour (Exhibits-2, 2/1, 2/2), deposit slips (Exhibits-3, 3/1, 3/2) and service of legal notice (Exhibits-4 to 7). Witness evidence, including corroboration by the complainant's son and independent witnesses, supported the claim that the cheque was presented and dishonoured for insufficiency of funds. The trial court and the appellate court examined these materials and recorded findings that the essential ingredients of an offence under Section 138 were established and that the statutory notice was sent and not complied with. Having reviewed the lower courts' appreciation of evidence, this Court found no reason to disturb those findings. [Paras 11, 13]

Conviction under Section 138 was held to be sustainable and was not interfered with.

Presumption under Section 139 of the Negotiable Instruments Act - concurrent findings of fact - The statutory presumption under Section 139 in favour of the cheque-holder was not rebutted and was rightly applied by the courts below. - HELD THAT: - The courts below applied Section 139, which creates a presumption that a cheque was issued for discharge of a debt or liability. The petitioner asserted that the cheque was issued only as a guarantee and not in discharge of liability, but the lower courts found that the defence did not successfully displace the statutory presumption. This Court noted that the evidentiary material and witness testimony did not rebut the presumption and that the appellate court had recorded concurrent findings to that effect. [Paras 14]

Presumption under Section 139 stood unrebutted and supported the conviction under Section 138.

Concurrent findings of fact - criminal revision jurisdiction - No illegality or perversity in the concurrent findings of the trial and appellate courts justified interference in the criminal revision petition. - HELD THAT: - The High Court examined the impugned judgments and the lower court records and concluded that both courts had properly appreciated evidence, applied the relevant statutory presumption, and reached concurrent findings on the essential elements of the offence. In the absence of any demonstrable illegality or perversity in the reasoning or conclusions of the courts below, the revision jurisdiction did not warrant upsetting those findings. [Paras 15]

Criminal revision petition dismissed; no interference with concurrent findings.

Final Conclusion: The criminal revision is dismissed; interim relief, if any, is vacated, the petitioner's bail bond is cancelled and the record is directed to be returned to the trial court.