TaxTMI Updates e-Newsletter
Sep 23,2021

Classification of goods under HSN 2201 - scope of exemption entry for "water" (SI. No. 99 of Notification No. 02/2017) - exclusion of "purified" water from exemption - coverage of "waters" and taxable entry (SI. No. 24 of Schedule III of Notification No. 01/2017) - purposive interpretation and noscitur a sociis in construing tariff entries - applicability of GST rate on treated/purified water supplied for industrial use

Scope of exemption entry for "water" (SI. No. 99 of Notification No. 02/2017) - exclusion of "purified" water from exemption - classification of goods under HSN 2201 - Treated water obtained from the STP is not eligible for exemption under SI. No. 99 of Notification No. 02/2017. - HELD THAT: - The Authority examined the nature of the product supplied by the applicant and the text of Sr. No. 99. The entry grants exemption to "water" but expressly excludes categories such as "purified" water. The STP output is produced by processes (screening, grit removal, nutrient removal, aeration, MBR, RO, degassing, pH adjustment, disinfection) that remove contaminants and alter the properties of sewage to make it fit for industrial use. On the applicant's own submissions and the tested parameters, the output is purified/treated sewage water and not simple/natural water. The language of the exemption entry and the legislative scheme indicate that water which has been subjected to purification/treatment is outside the exemption. Therefore the impugned supply does not fall within Sr. No. 99 and cannot claim the NIL rate under that notification. [Paras 5]

Treated water from the STP is not covered by the exemption at Sr. No. 99 and is not exempt from GST.

Coverage of "waters" and taxable entry (SI. No. 24 of Schedule III of Notification No. 01/2017) - applicability of GST rate on treated/purified water supplied for industrial use - classification of goods under HSN 2201 - Treated water obtained from the STP is taxable under Sr. No. 24 of Schedule III of Notification No. 01/2017 and attracts GST at the prescribed rate. - HELD THAT: - Having held that the product is purified/treated water, the Authority considered Sr. No. 24 which applies to "Waters, including natural or artificial mineral waters and aerated waters..." and forms part of the taxable entries under HSN 2201. The statutory entries read together demonstrate that waters excluded from the exemption are brought within the taxable classification. The processes applied by the applicant transform sewage into purified water used for industrial purposes; it is not supplied as drinking water for public purposes nor in sealed containers as covered by other specific entries. Consequently, the treated/purified water falls within the chargeable entry and is taxable under the Schedule as provided. [Paras 5]

Treated water from the STP is covered by Sr. No. 24 (HSN 2201) and is taxable at the rate specified therein.

Final Conclusion: The Authority ruled that the sewage-derived treated water supplied by the applicant is purified/treated water not eligible for the exemption in Sr. No. 99 of Notification No. 02/2017, and accordingly is classifiable under HSN 2201 as covered by Sr. No. 24 of Schedule III of Notification No. 01/2017 and is taxable under the GST rates prescribed therein.

Supply of services between related persons or distinct persons - value of supply between related or distinct persons - second proviso to Rule 28 - invoice value deemed to be open market value where recipient is eligible for full input tax credit - Rule 30 - valuation based on cost (110% of cost of provision of services) - Rule 31 - residual method for valuation of supply of services - admissibility of input tax credit subject to the provisions of Sections 16 and 17

Supply of services between related persons or distinct persons - Entry 2 of Schedule I - Entry 1 of Schedule III - Whether managerial and leadership services provided by the Registered/Corporate Office to its group companies/site offices constitute a taxable supply of service under the GST law - HELD THAT: - The Authority examined the applicant's contention that services rendered to group companies and site offices are not supplies because they are services by an employee to employer under Entry 1 of Schedule III. It held that the site offices and group companies are separately registered distinct persons and related persons respectively under Section 25 and therefore cannot be treated as employees of the applicant for the purpose of Schedule III. Entry 2 of Schedule I treats supplies between related or distinct persons in the course or furtherance of business as supply even if without consideration. Judicial decisions relied upon by the applicant were considered but found not to be applicable to alter the statutory scheme under the CGST/MGST Acts. The Authority therefore concluded that the managerial and leadership services supplied to branches and group companies fall within the compass of taxable supply under Section 7 read with Schedule I. [Paras 5]

The services are taxable and answered in the affirmative.

Value of supply between related or distinct persons - taxability of lumpsum consideration - Whether the lumpsum amounts charged by the Registered/Corporate Office on its group companies are liable to GST - HELD THAT: - Having held that the activities constitute supply, the Authority treated the lumpsum charges as consideration for supply made to distinct/related persons and therefore taxable. The valuation question was considered separately, but the legal consequence that the lumpsum receipts are subject to GST follows from the finding that a supply has been made under Section 7 and Schedule I. [Paras 5]

The lumpsum amounts charged are liable to GST and answered in the affirmative.

Second proviso to Rule 28 - invoice value deemed to be open market value where recipient is eligible for full input tax credit - Rule 28 - valuation between related/distinct persons - Whether the applicant can continue to charge lumpsum amounts and treat the invoice value as the open market value under the second proviso to Rule 28 where most recipients are eligible for full ITC - HELD THAT: - The Authority analysed Chapter IV (Rules 27-35) and Rule 28 in particular. It noted that where recipients are eligible for full input tax credit the second proviso to Rule 28 deems the invoice value to be the open market value. The applicant's practice of issuing invoices with lump sum values to group units that are, in most cases, eligible for full ITC therefore falls within the second proviso to Rule 28 and is permissible for those transactions. The Authority accepted that in cases where recipients are not eligible for full ITC the proviso would not apply and other valuation provisions would become relevant. [Paras 5]

The applicant may continue to charge lumpsum amounts and treat the invoice value as open market value under the second proviso to Rule 28 for recipients eligible for full ITC; answered in the affirmative.

Rule 31 - residual method for valuation of supply of services - proportional apportionment based on expenses and turnover - Whether the applicant can adopt valuation under Rule 31 by apportioning total expenses proportionately based on turnover of distinct and related persons - HELD THAT: - Since the Authority held that valuation under Rule 28 (second proviso) is available for transactions where recipients have full ITC, it declined to decide the applicant's alternative question on adopting Rule 31 for valuation. The question was therefore not adjudicated on merits because the primary valuation route under Rule 28 applies to most transactions; the matter remains open where Rule 28's proviso does not apply. [Paras 5]

Not answered in view of the Authority's finding on applicability of Rule 28.

Rule 30 - valuation based on cost (110% of cost of provision of services) - allocation of related expenses and addition of ten percent - Whether the applicant can adopt valuation under Rule 30 by allocating related expenses and adding ten percent (i.e., 110% of cost) - HELD THAT: - The Authority observed that Rule 30 provides valuation on the basis of cost where preceding rules do not determine the value. However, because the Authority accepted applicability of Rule 28's second proviso for most transactions, it did not take up the applicant's specific alternative question on Rule 30 for decision. The question is therefore left unanswered for cases where Rule 28 does not apply. [Paras 3, 5]

Not answered in view of the Authority's finding on applicability of Rule 28.

Scope of advance ruling under Section 97 - permissible subject-matter - procedural suggestions vs. determination of value - Whether the Authority can suggest an alternative workable method of valuation (procedural guidance) considering the nature of the industry - HELD THAT: - The Authority held that Section 97 permits advance rulings on determination of time and value of supply, but the applicant's sixth question sought procedural suggestions rather than a determination of value. That request falls outside the permissible scope of the advance ruling provisions and hence the question was not answered. [Paras 5]

Not answered as it falls outside the scope of matters on which an advance ruling may be sought.

Admissibility of input tax credit subject to the provisions of Sections 16 and 17 - ruling applicant vs. recipient-specific questions - Whether input tax credit of GST paid by the applicant is admissible to each distinct and related person where their supplies are taxable - HELD THAT: - The Authority observed that questions regarding entitlement to input tax credit are matters for the recipients of supply and must be raised by them; such recipient-specific claims fall outside the scope of the applicant's advance ruling. Consequently the Authority declined to answer the question on admissibility of ITC to recipients. [Paras 5]

Not answered because the question is outside the Authority's jurisdiction to decide on behalf of recipients.

Final Conclusion: The Authority held that managerial and leadership services supplied by the registered/corporate office to its branch offices and group companies constitute taxable supplies and the lumpsum charges are liable to GST. For transactions where recipients are eligible for full input tax credit, the invoice value may be treated as the open market value under the second proviso to Rule 28. Questions on alternative valuation methods (Rules 30 and 31), procedural suggestions, and recipient-specific input tax credit entitlement were not answered.

Appeal to appellate authority under Section 107 of the Tripura State Goods and Services Tax Act, 2017 - condonation of delay - suspension/exclusion of limitation period on account of COVID-19 by orders of the Supreme Court - exercise of powers under Article 142 of the Constitution

Appeal to appellate authority under Section 107 of the Tripura State Goods and Services Tax Act, 2017 - condonation of delay - suspension/exclusion of limitation period on account of COVID-19 by orders of the Supreme Court - Whether appeals filed by the petitioners during the period 15.03.2020 to 14.03.2021 were time-barred such that the appellate authority correctly dismissed them for delay. - HELD THAT: - The court held that Section 107(1) permits appeals within three months with a further extension of one month under Section 107(4), but the effect of the Supreme Court's orders suspending and excluding the period from 15.03.2020 to 14.03.2021 for computation of limitation must be given effect. The assessing order (03.06.2020) and the filing of the appeal (03.11.2020) both fell within the exclusion period declared by the Supreme Court; consequently no delay existed for limitation purposes. The appellate authority therefore lacked a basis to treat the appeals as time-barred in view of the nationally-applicable suspension/exclusion of limitation arising from the COVID-19 situation and the Supreme Court directions (including the order treating the period 15.03.2020-14.03.2021 as excluded and providing availability of the remaining limitation thereafter). Applying that ruling, the impugned orders dismissing the appeals on the ground of delay were quashed and the appeals were directed to be heard on merits. [Paras 3, 4, 5, 6]

Impugned orders rejecting the appeals for delay quashed; appeals to be examined and disposed of on merits.

Final Conclusion: The writ petitions are allowed to the extent of quashing the appellate orders which dismissed the appeals as barred by limitation; the appeals filed during the COVID-19 exclusion period shall be admitted and decided on merits in accordance with law.

Detention and confiscation under GST - Power to detain goods in transit - Assessment by assessing officer - Prior permission of the Court before passing Form GST MOV 11 - Interim restraint on coercive action - Issuance of notice to concerned parties

Interim restraint on coercive action - Detention and confiscation under GST - Whether further coercive action pursuant to the detention and proposed confiscation may be carried out pending adjudication before this Court. - HELD THAT: - The Court granted interim protection by restraining any further coercive action in the matter pending the returnable date. The factual note in the order records that verification at interception did not disclose contraventions attracting immediate confiscation in respect of the petitioner's vehicle and goods, and that no notice has been issued so far to the other enterprise referred to in proceedings. In view of these circumstances the Court directed that there shall be no further coercive steps while the petition is pending, thereby preserving the petitioner's position until the matter is adjudicated.

Further coercive action is stayed pending the next date; no coercive steps shall be taken in the interim.

Prior permission of the Court before passing Form GST MOV 11 - Assessment by assessing officer - Whether the authority may pass Form GST MOV 11 (confiscation order) or take final confiscation steps without prior permission of the Court during the pendency of the petition. - HELD THAT: - Although the detention and proposed confiscation proceedings are in place, the Court specifically directed that the order in Form GST MOV 11 shall not be passed without its prior permission. The rationale recorded indicates concern that the intercepting officer may have exercised functions akin to an assessing officer without the matter being placed before the assessing officer, and therefore final confiscation steps are restrained absent the Court's leave.

Form GST MOV 11 shall not be passed without prior permission of this Court.

Issuance of notice to concerned parties - Power to detain goods in transit - Whether the revenue authorities are precluded from issuing notices to other persons or entities said to be involved in the alleged breach. - HELD THAT: - The Court observed that the officer is not precluded from issuing notices to those referred to as having breached the provisions. Thus, while coercive action against the petitioner is stayed and final confiscation steps are restrained without the Court's permission, the authority retains the power to issue notices to other parties for investigation or adjudication.

Issuance of notices to other concerned persons is permitted notwithstanding the interim stay on coercive action.

Interim procedural directions - Procedural directions as to service and listing of the petition. - HELD THAT: - The Court directed that notice be issued returnable on the specified date and expressly permitted direct service. It recorded the petition for hearing on that date and restrained the passing of specified confiscation orders until then.

Notice issued returnable on the listed date; direct service permitted.

Final Conclusion: Interim protection granted: further coercive action stayed and Form GST MOV 11 shall not be passed without the Court's prior permission; authorities remain free to issue notices to other concerned persons; petition listed on the specified returnable date with leave for direct service.

Detention, seizure and release of goods and conveyances in transit - Confiscation of goods or conveyances and levy of penalty - Bond and security for release of seized goods - Right to opportunity of being heard before confiscation - Legislative competence under Article 246A for goods and services tax - Reasonable classification under Article 14 - Reasonable restrictions on trade under Article 19(1)(g) - Deprivation of property by authority of law under Article 300A - Alternative efficacious remedy under appellate provision

Legislative competence under Article 246A for goods and services tax - Reasonable classification under Article 14 - Reasonable restrictions on trade under Article 19(1)(g) - Deprivation of property by authority of law under Article 300A - Validity of the challenged provisions of the CGST Act/SGST Act (Section 129 and Rule 140) vis-a -vis Articles 14, 19(1)(g) and 300A and legislative competence under Article 246A. - HELD THAT: - The Court held that the Parliament and State legislatures possess power to legislate on GST matters within the scope of Article 246A, which applies to supplies of goods and services. The object and purpose of the CGST and corresponding SGST enactments is to provide for levy and collection of tax on such supplies. Classification effected by the statute in the subject matter under challenge is based on intelligible differentia and bears a rational nexus to the object of the enactments; accordingly it satisfies the test of reasonable classification under Article 14. Restrictions imposed by the impugned provisions on carrying on business are regulatory and fall within the reasonable restrictions permissible under Article 19(1)(g). Deprivation of property by operation of the statutory scheme is by authority of law and within legislative competence under Article 300A. The petitioner failed to show that the provisions are arbitrary, unreasonable or violative of Articles 14, 19(1)(g) or 300A, and the presumption of constitutionality stands unrebutted. [Paras 36, 38, 39, 41]

The constitutional challenge to Section 129 of the CGST/SGST Act and Rule 140 of the CGST Rules is rejected; the provisions are not shown to be arbitrary or violative of Articles 14, 19(1)(g) or 300A and fall within legislative competence under Article 246A.

Confiscation of goods or conveyances and levy of penalty - Bond and security for release of seized goods - Right to opportunity of being heard before confiscation - Alternative efficacious remedy under appellate provision - Validity of the confiscation orders dated 23.04.2021 (Form GST MOV-11) and entitlement to release of detained goods and vehicles. - HELD THAT: - Section 130 permits confiscation and imposes a requirement that no order for confiscation or imposition of penalty shall be issued without giving the person an opportunity of being heard. The Court found that the respondent-department did not demonstrate that such an opportunity was afforded to the petitioner prior to passing the MOV-11 orders dated 23.04.2021. In view of the statutory mandate that audi alteram partem be complied with before confiscation, the confiscation orders were held to be not passed in accordance with law. The Court directed that the impugned MOV-11 orders be quashed and set aside and ordered release of vehicles and goods detained since 31.03.2021 upon execution of a bond in FORM GST INS-04 and furnishing of a bank guarantee equivalent to applicable tax, interest and penalty; the release is made subject to the final outcome of confiscation proceedings and the respondents are at liberty to proceed after giving opportunity of hearing. The Court noted the statutory appellate remedy under Section 107 but exercised writ jurisdiction to set aside the confiscation orders for failure to comply with the statutory requirement of hearing. [Paras 47, 49, 53, 54]

The confiscation orders dated 23.04.2021 are quashed for want of opportunity of hearing; vehicles and goods are to be released on execution of bond and bank guarantee as prescribed, subject to the final outcome of confiscation proceedings and after giving the petitioner an opportunity of being heard.

Final Conclusion: Writ petitions allowed in part: constitutional challenge to the provisions is dismissed, but the confiscation orders dated 23.04.2021 (Form GST MOV-11) are quashed for failure to afford the petitioner an opportunity of hearing; detained vehicles and goods to be released on bond and bank guarantee as directed, without prejudice to further lawful proceedings after hearing.

Bail in non-bailable offence under the CGST Act - offence under Section 132(1)(b) and Section 132(1)(i) of the CGST Act - authorization to arrest under Section 69 of the CGST Act - statement recorded under Section 70 of the CGST Act - inadmissibility of confessional statements recorded in police custody - gravity of accusation and risk of tampering with evidence

Bail in non-bailable offence under the CGST Act - offence under Section 132(1)(b) and Section 132(1)(i) of the CGST Act - statement recorded under Section 70 of the CGST Act - authorization to arrest under Section 69 of the CGST Act - gravity of accusation and risk of tampering with evidence - Application for enlargement on bail in proceedings under Section 132 of the CGST Act rejected. - HELD THAT: - The court considered the limited scope appropriate on a bail application and refrained from a full merits inquiry, but examined material placed before it. The prosecution case, as reflected in the investigation, included recovery of incriminating documents and electronic data from the applicant's premises, bank and KYC details linked to multiple non-existent firms, and a recorded statement under Section 70 in which the applicant is said to have admitted creating numerous fake firms and issuing invoices to enable wrongful availment of input tax credit. The offence involves alleged GST evasion of substantial magnitude and is cognizable and non-bailable under the CGST statute. The authority for arrest under Section 69 had been exercised by the competent Commissioner. Having regard to the gravity of the accusations, the documentary and electronic material retrieved, the prosecution contention that the applicant was the mastermind behind the creation and management of multiple bogus firms, and the risk that the applicant if released might tamper with evidence or otherwise frustrate the investigation, the court concluded that this was not a fit case for grant of bail. The court noted the applicant's contentions, including arguments on admissibility of confessional statements and denial of involvement, but did not accept those contentions as sufficient to outweigh the prosecution material for the limited purpose of bail.

Bail application refused; applicant not enlarged on bail.

Final Conclusion: The High Court, after considering the prosecution material and the seriousness of the alleged GST fraud and the risk to the investigatory process, declined to grant bail to the applicant and dismissed the bail application.

Application of section 41(1) for cessation or remission of liabilities - disallowance under section 40A(3) for cash payments and exceptions under Rule 6DD - requirement of speaking order and opportunity to rebut evidence - remand for fresh consideration with corroborative evidence

Application of section 41(1) for cessation or remission of liabilities - requirement of year-specific accrual of benefit on cessation - onus on assessee to establish year of write-off with corroborative evidence - Validity of addition made by AO under section 41(1) by treating long-outstanding sundry creditors as having ceased and accruing benefit in the assessment year 2013-14. - HELD THAT: - The Tribunal noted that the AO relied on replies to notices under section 133(6), some of which stated that parties had no outstanding balance and some parties could not be found at the given addresses. The assessee, however, asserted that write-offs occurred in a later financial year and contended that cessation, if any, did not occur in the year under appeal. The Tribunal held that an addition under section 41(1) can only be sustained in the year in which the remission or cessation of liability actually took place and consequent benefit accrued to the assessee. The Tribunal further found that the CIT(A) had endorsed the AO's conclusion without rendering a speaking order addressing the assessee's documentary explanations and without ascertaining the precise financial year of cessation on the basis of corroborative evidence. For these reasons the Tribunal concluded that the matter requires fresh consideration by the CIT(A), who must examine the documentary evidence, determine the year of any write-off or cessation and explain the basis of any conclusion reached, after affording the assessee an opportunity of hearing. [Paras 10]

Remanded to the CIT(A) to decide afresh by a speaking order after considering and adjudicating upon the documentary evidence and determining the year in which any cessation or write-off occurred.

Disallowance under section 40A(3) for cash payments and exceptions under Rule 6DD - requirement of examination of documentary proof and factual rebuttal - Sustainability of disallowance under section 40A(3) in respect of cash payments for purchase of hide and skin. - HELD THAT: - The AO disallowed certain cash payments under section 40A(3) after the assessee failed to produce documentary evidence during assessment proceedings. The CIT(A) confirmed the disallowance but did not deal with the assessee's submissions in a speaking manner. The Tribunal observed that the question whether payments fall within exceptions (including those under Rule 6DD) or are otherwise justified requires consideration of the documentary evidence filed and any further evidence the assessee may produce. Given the absence of a reasoned disposal of the assessee's evidence by the CIT(A), the Tribunal directed that the issue be reconsidered afresh by the CIT(A), with an opportunity to the assessee to produce and have adjudicated the relevant proof. [Paras 10]

Remanded to the CIT(A) to examine afresh, in a speaking order, the documentary evidence regarding the cash payments and applicability of Rule 6DD/exceptions, after giving the assessee adequate opportunity to be heard.

Final Conclusion: The appeal is allowed for statistical purposes and both contested additions - the addition under section 41(1) and the disallowance under section 40A(3) - are remitted to the CIT(A) for fresh decision by way of speaking orders after consideration of the documentary evidence and after affording the assessee an opportunity of hearing.

Addition under section 68 - burden to prove identity, creditworthiness and genuineness of shareholders - deletion of addition on proof of confirmations, bank statements and balance sheets - disallowance under section 40(a)(ia) for non-deduction of tax at source - requirement of verification of payments and applicability of TDS provisions - classification of income as agricultural income - Section 50C - cost inflation indexation - long term capital gain - taxation of difference between circle rate and sale consideration of stock-in-trade

Section 50C - cost inflation indexation - long term capital gain - Remand to Assessing Officer for fresh adjudication whether sale of shop G-6 (fixed asset) merits benefit of cost inflation index and taxation as long term capital gain in view of application of Section 50C and facts on record. - HELD THAT: - The Tribunal observed that the Assessing Officer applied Section 50C and made an addition without the CIT(A) explaining why indexation benefit should be denied. The assessee asserted the property was in assets (not stock) and that the transaction involved a related buyer; genuineness was not doubted. Because the CIT(A) did not resolve the question why indexation should be refused and material requires verification, the Tribunal remanded the issue to the AO for fresh adjudication, directing opportunity of hearing and decision afresh as per law. [Paras 9]

Issue remanded to the Assessing Officer for proper adjudication and fresh decision on entitlement to cost inflation index and characterization as long term capital gain.

Taxation of difference between circle rate and sale consideration of stock-in-trade - Section 50C - Remand to Assessing Officer for fresh adjudication on additions made for sales from unsold stock shown below circle rates (taxation of difference between circle rate and sale value). - HELD THAT: - The Tribunal noted the department relied on circle rates to make additions for sales from stock-in-trade, but the CIT(A) deleted such additions relying on tribunal precedents and the absence, in the assessment year, of a statutory power to tax the difference (Section 44CA inserted later). The Tribunal observed that the CIT(A) did not address the indexation issue raised elsewhere and that the matter requires verification; accordingly, the issue is remanded to the AO for fresh adjudication with opportunity to the assessee. [Paras 15]

Issue remanded to the Assessing Officer for fresh adjudication and decision as per law.

Addition under section 68 - burden to prove identity, creditworthiness and genuineness of shareholders - deletion of addition - Sustaining CIT(A)'s deletion of addition made under section 68 in respect of share capital/share premium of the two investor companies. - HELD THAT: - The Tribunal reviewed the material: share application forms, bank statements showing payments through Axis Bank, balance-sheets and ITR acknowledgements of the investor companies, certificates of incorporation and addresses. The CIT(A) found that the AO relied on investigation reports without personal verification and failed to consider the substantial capital, reserves and investments proving creditworthiness. The Tribunal agreed that the assessee discharged the burden to establish identity, creditworthiness and genuineness and that the CIT(A)'s deletion, consistent with earlier Tribunal findings in related group matters and the precedents cited, did not call for interference. [Paras 12]

Addition under section 68 deleted; Revenue's ground on this issue dismissed.

Disallowance under section 40(a)(ia) for non-deduction of tax at source - requirement of verification of payments and applicability of TDS provisions - Upholding CIT(A)'s deletion of large disallowance purportedly for non-deduction of TDS on land development/work contract payments. - HELD THAT: - The Tribunal noted that the payments related to daily labour wages recorded in acquaintance sheets and aggregated in accounts; individual payments were below TDS thresholds. The AO failed to establish any payments exceeding statutory limits or to verify vouchers adequately; his estimates were inconsistent. The CIT(A) examined vouchers, remand report and submissions and found no violation of Section 194C that would attract disallowance under Section 40(a)(ia). The Tribunal found no reason to interfere with the detailed factual conclusion of the CIT(A). [Paras 18]

Deletion of the disallowance under section 40(a)(ia) is upheld; Revenue's ground dismissed.

Classification of income as agricultural income - Upholding CIT(A)'s finding that the income of Rs. 4,15,250/- is agricultural income and not income from 'Other Sources'. - HELD THAT: - The Tribunal recorded that the assessee produced Khasra/Khatauni, bills for seeds, diesel and electricity, tractor usage and sale vouchers for produce. The CIT(A) considered the remand report and documents and concluded the activity on the land constituted agricultural operations; hence the income was agricultural. The Department did not point to any factual defect in that conclusion. The Tribunal saw no reason to disturb the factual and legal conclusion reached by the CIT(A). [Paras 21]

Assessment of the amount as agricultural income is affirmed; Revenue's ground dismissed.

Final Conclusion: The Tribunal partly allows the Revenue appeal for statistical purpose: issues concerning application of Section 50C, indexation benefit and taxation of sales from stock-in-trade are remanded to the Assessing Officer for fresh adjudication; the deletions by the CIT(A) of additions under section 68 and under section 40(a)(ia), and the classification of the sum as agricultural income, are upheld and the corresponding grounds of the Revenue are dismissed.

Capital gains on transfer of land in a joint development agreement - Determination of transferred land area versus retained built up share - Cost of improvement and deduction under Section 48 - Treatment of development charges and premium FSI as project related improvement cost - Unexplained cash deposits and res ipsa of withdrawals as source under Section 69 - Acceptability of earlier bank withdrawals as source for later bank deposits

Capital gains on transfer of land in a joint development agreement - Determination of transferred land area versus retained built up share - Computation of capital gains limited to the proportion of land actually transferred to the developer under the Joint Development Agreement. - HELD THAT: - The assessee, a co owner, under the JDA was entitled to 1/3rd of the constructed area (with car parking) and the promoters to 2/3rd. The Tribunal accepted the CIT(A)'s finding that the landowners retained the equivalent of their 1/3rd built up share and transferred only 2/3rd of the co owned land to the developer. Consequently, the AO was incorrect in treating the entire land area of the assessee as transferred. Capital gains must therefore be computed only on the 2/3rd portion of the area actually transferred, applying the SRO rate adopted by the AO to that proportionate area and thereafter allowing the usual deductions for indexed cost of acquisition, etc. [Paras 4]

Appeal of the revenue dismissed; capital gains computed on 2/3rd of the assessee's landholding as held by the CIT(A) and affirmed.

Cost of improvement and deduction under Section 48 - Treatment of development charges and premium FSI as project related improvement cost - Allowability of pro rata development charges and additional premium FSI as cost of improvement deductible in computing capital gains. - HELD THAT: - The Tribunal agreed with the CIT(A) that the development charges and premium FSI paid by the landowners were intrinsically related to the project and constituted improvement of the capital asset. Although the JDA allocated FSI charges between parties, due to delay the landowners paid the entire charges and thereby transferred the bundle of rights (including additional FSI) to the developer. The Tribunal held that such expenditure falls within the concept of cost of improvement and is deductible in computing capital gains under Section 48; accordingly the pro rata amount allowed by the CIT(A) is to be permitted. [Paras 5]

Revenue appeal dismissed; the CIT(A)'s allowance of the pro rata development charges as cost of improvement is upheld.

Unexplained cash deposits and res ipsa of withdrawals as source under Section 69 - Acceptability of earlier bank withdrawals as source for later bank deposits - Deletion of addition under Section 69 in respect of cash deposit of Rs. 3,50,000 for A.Y.2013-14 and acceptance of withdrawals as the source. - HELD THAT: - The assessee produced bank withdrawal details showing that the cash deposited originated from earlier withdrawals. The AO disbelieved the explanation because the assessee made subsequent withdrawals, relying on a decision distinguishable on facts. The Tribunal followed its precedent (Mandava Ravi Kumar) and held that subsequent small withdrawals do not automatically negate the explanation that the deposit was from earlier withdrawals withdrawn and held as cash. On the facts, the department failed to show that the cash was spent or invested; therefore the addition under Section 69 was deleted. [Paras 9]

Assessee's appeal allowed; addition of Rs. 3,50,000 deleted.

Unexplained cash deposits and res ipsa of withdrawals as source under Section 69 - Acceptability of earlier bank withdrawals as source for later bank deposits - Deletion of addition under Section 69 in respect of cash deposits totalling Rs. 25,00,000 for A.Y.2014-15 and acceptance of withdrawals as the source. - HELD THAT: - For AY 2014 15 the assessee had withdrawn the cash in a single transaction and later deposited it in bank. The AO offered no evidence that the withdrawn cash was expended for other purposes. The Tribunal found the factual matrix distinguishable from the decision relied upon by the AO and, following Tribunal precedent, accepted the assessee's explanation that the deposits were out of earlier withdrawals kept for meeting unforeseen expenses. Accordingly, the addition under Section 69 was held unsustainable and deleted. [Paras 12]

Assessee's appeal allowed; additions in respect of the cash deposits for A.Y.2014 15 deleted.

Final Conclusion: The Tribunal dismissed the revenue's appeal and upheld the CIT(A)'s computation of capital gains on the 2/3rd portion of the co owned land and the allowance of pro rata development and premium FSI charges as cost of improvement under Section 48; further, the Tribunal allowed the assessee's appeals for A.Y.2013 14 and A.Y.2014 15 by deleting the additions made under Section 69 in respect of the cash deposits.

Depreciation on trademark - Genuineness of assignment of intellectual property - Assessing Officer cannot question commercial necessity of business expenditure - Branding and advertisement expenditure deductible as revenue expenditure

Depreciation on trademark - Genuineness of assignment of intellectual property - Whether the disallowance of depreciation claimed on the trademark was sustainable on the basis that the assignment agreement was invalid or the transaction was not genuine. - HELD THAT: - The Tribunal followed its earlier decisions in the assessee's own case and held that the reasons assigned by the Assessing Officer for doubting the genuineness of the assignment - namely that the agreement was on a post dated stamp paper, signatures of the same person in multiple capacities, and questioning the necessity of the purchase - were not tenable. There is no legal requirement that an agreement to purchase a trademark be on a particular dated stamp paper and the post dating of stamp paper is immaterial to the substance of the transaction. The Assessing Officer had not shown that the substance of the transaction was different, and the payee had disclosed the income, negating any motive of tax evasion. Further, it is settled law that Revenue cannot substitute its commercial judgment for that of the taxpayer and cannot question the necessity of entering into business transactions; intangible assets such as trademarks qualify for depreciation at prescribed rates. Applying these principles and following the Tribunal's earlier orders in the assessee's own case for earlier years, the disallowance was set aside and the claim for depreciation allowed. [Paras 5]

Disallowance of depreciation on the trademark was held unsustainable; the claim for depreciation is allowed following the Tribunal's earlier decisions.

Branding and advertisement expenditure deductible as revenue expenditure - Assessing Officer cannot question commercial necessity of business expenditure - Whether the disallowance of advertisement expenditure and professional charges (payments to brand ambassadors and branding expenses) was justified. - HELD THAT: - The Tribunal, following its earlier orders in the assessee's own case, held that branding and advertisement expenditures incurred for promotion of the business are revenue in nature and deductible. The Assessing Officer is not entitled to question the commercial necessity of such expenditure; necessity and commercial expediency are matters for the assessee's business judgment. Having regard to the competitive market conditions explained by the assessee and the settled legal principle that Revenue cannot dictate how the assessee should conduct its business, the disallowance of the claimed advertisement and professional expenditures could not be sustained. Accordingly, the orders of the lower authorities were set aside and the claim was directed to be allowed. [Paras 6]

Disallowance of advertisement expenditure and professional charges set aside; deduction directed to be allowed following Tribunal precedents.

Final Conclusion: Appeal allowed. The Tribunal set aside the disallowances: depreciation on the trademark and the claimed advertisement and professional expenditures are to be allowed in accordance with the Tribunal's prior decisions in the assessee's own case; the Assessing Officer to give effect to this decision.

Deduction under section 54F - reinvestment in multiple residential properties - interpretation of the word 'a residential house' prior to amendment - prospective effect of amendment w.e.f. A.Y.2015-16 - followance of binding jurisdictional precedents - computation of fair market value for cost of acquisition - recomputation of capital gains based on adopted FMV

Deduction under section 54F - reinvestment in multiple residential properties - interpretation of the word 'a residential house' prior to amendment - prospective effect of amendment w.e.f. A.Y.2015-16 - followance of binding jurisdictional precedents - Whether the assessee was entitled to claim deduction under section 54F for investment in more than one residential property in A.Y. 2008-09 - HELD THAT: - Tribunal examined the revenue challenge to the CIT(A)'s direction to allow the assessee's claim under section 54F for reinvestment in two residential properties purchased in the relevant time-frame. The Tribunal relied on and reproduced reasoning from its earlier decision in the case of Smt. B. Vathsala and the jurisprudence of the Jurisdictional High Court (including Tilokchand & Sons) which held that, prior to the amendment made by the Finance (No.2) Act, 2014 (operative from A.Y.2015-16), the expression 'a residential house' in Sections 54/54F could be interpreted to include plural residential units and that the legislative amendment inserting the word 'one' was prospective. The Tribunal held that the Revenue had not placed any higher court decision overruling the Jurisdictional High Court's view; consequently the CIT(A)'s allowance of deduction under section 54F for investment in both residential properties was in accordance with binding precedent and correctly applied to A.Y.2008-09. [Paras 5]

Ground raised by the Revenue dismissed; deduction under section 54F allowed for reinvestment in both residential properties for A.Y.2008-09.

Computation of fair market value for cost of acquisition - recomputation of capital gains based on adopted FMV - Fixing the fair market value (FMV) of the pre-1981 acquisition for recomputation of long-term capital gains - HELD THAT: - The assessee contested the Assessing Officer's adoption of FMV as on 01.04.1981 and the CIT(A)'s confirmation thereof. The Tribunal found the assessee's estimate unsupported by documentary evidence and the Assessing Officer's figure of Rs.30,000 per ground to be unrealistically low for a prime city locality (T. Nagar). To meet the ends of natural justice and on the material before it, the Tribunal fixed the FMV at Rs.45,000 per ground as on 01.04.1981, calculated the corresponding share for the assessee, and directed the Assessing Officer to adopt that value and recompute the capital gains accordingly. The relief was allowed for statistical purposes and limited to recomputation in accordance with the adopted FMV. [Paras 6]

Assessee's ground allowed for statistical purposes; FMV fixed at Rs.45,000 per ground as on 01.04.1981 and AO directed to recompute capital gains accordingly.

Final Conclusion: Revenue's appeal dismissed; assessee's appeal allowed for statistical purposes by directing recomputation of capital gains adopting the FMV fixed by the Tribunal, and the deduction under section 54F was sustained for reinvestment in the two residential properties for A.Y.2008-09.

Revised computation of income - revised return of income - power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return - power of the Appellate Authority / Tribunal to consider fresh points or revised claims - distinction between powers of assessing authority and appellate forum - precedent value of Goetze India Ltd. in relation to assessing authority's powers

Revised computation of income - revised return of income - distinction between powers of assessing authority and appellate forum - precedent value of Goetze India Ltd. in relation to assessing authority's powers - Whether the Commissioner (Appeals) was justified in directing the Assessing Officer to accept the revised income reflected in the assessee's revised computation filed during assessment proceedings despite no revised return having been filed. - HELD THAT: - The Tribunal examined the correctness of the CIT(A)'s direction in light of the prohibition on acceptance of fresh claims by an Assessing Officer except through filing of a revised return. The Bench relied on the statement in Goetze India Ltd. that the limitation identified by the Supreme Court concerns the power of the assessing authority to entertain a claim for deduction otherwise than by filing a revised return, and that that decision does not impinge upon the powers of the appellate Tribunal. The jurisdictional High Court decision in Smt. Raj Rani Gulati was noted as taking the same position. Applying these precedents, the Tribunal held that the embargo in Goetze operates against the Assessing Officer and does not preclude an appellate authority from considering and directing acceptance of a revised computation where appropriate. Having considered these authorities and the facts that the assessee had submitted a revised computation during assessment proceedings to rectify mistakes in the belated return, the Tribunal found no merit in the Department's contention that the revised computation could be acted upon only if accompanied by a formal revised return, and affirmed the CIT(A)'s direction to the Assessing Officer to take the income as per the revised computation. [Paras 8, 9, 10, 11, 12]

Ground no.1 of the Revenue is rejected; the CIT(A) was justified in directing the Assessing Officer to accept the revised income as per the revised computation filed during assessment proceedings.

Final Conclusion: The Revenue's appeal in ITA No.331/LKW/2016 is dismissed; all grounds raised by the Revenue are rejected and the assessment stands on the basis of the revised computation accepted by the appellate authority.

Allowability of interest expense - set-off of interest expense against interest income - capital expenditure versus revenue expenditure - implementation of Tribunal's directions

Allowability of interest expense - set-off of interest expense against interest income - capital expenditure versus revenue expenditure - Whether the interest payment of the assessee of Rs. 5,65,706 claimed u/s. 57(iii) is allowable and can be set off against interest income arising from the same transaction for Assessment Year 2014-15 - HELD THAT: - The Assessing Officer treated the interest payment as capital in nature and disallowed it, an addition of Rs. 5,65,706 being made. The Commissioner (Appeals) sustained the disallowance. The Tribunal noted that on similar facts for A.Y. 2012-13 the matter had earlier been remitted to the file of the Assessing Officer and that, pursuant to the Tribunal's directions, the Assessing Officer has subsequently framed an assessment under section 254 accepting the assessee's contention and allowing the set-off of the expenditure against the interest income. The Revenue did not dispute that the Assessing Officer had given effect to the Tribunal's directions and allowed the claim. In view of the Assessing Officer's acceptance in accordance with the Tribunal's earlier order and considering the facts as placed before it, the Tribunal found the addition unsustainable and directed deletion of the impugned addition. [Paras 9]

The impugned addition of Rs. 5,65,706 is deleted and the appeal is allowed; the Assessing Officer is directed to give effect to the deletion.

Final Conclusion: Appeal allowed; the Tribunal directed deletion of the addition and gave effect to the Assessing Officer's acceptance of set-off following the Tribunal's earlier directions.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of revenue - standard for exercise of revisional power - verification and inquiry by the Assessing Officer - allowability of business expenses under section 37

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of revenue - verification and inquiry by the Assessing Officer - allowability of business expenses under section 37 - Validity of the Pr. Commissioner's order under section 263 annulling the assessment for A.Y. 2015-16 - HELD THAT: - The Tribunal found that the Assessing Officer had called for and recorded explanations, examined documentary material and obtained submissions on China tax, commission payments, salaries and promotional/gift expenses; the assessee had placed invoices, agreements, appointment letters, TDS certificates, FIRCs and other supporting documents on record and the AO had disallowed 40% of Diwali expenses in the assessment order. The Pr. CIT's conclusion that the assessment was 'erroneous' for want of necessary enquiries was held to be misplaced because the record showed that requisite enquiries and verification had been made. The Commissioner had not produced any independent material to demonstrate prejudice to revenue or falsity in the assessee's submissions; nor was there any requirement that the AO scrutinise minutiae such as exact distribution of promotional items to establish business purpose where supporting evidence and explanations were on record. In the absence of cogent material showing lack of enquiry or any real prejudice to revenue, the conditions for invoking section 263 were not satisfied and the revisional order was therefore unjustified. [Paras 9, 10, 11]

The order under section 263 cancelling the assessment for A.Y. 2015-16 was quashed and the assessee's appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the Pr. Commissioner's revision under section 263 was unwarranted for A.Y. 2015-16 because the AO had made appropriate enquiries and no material was produced to show that the assessment was erroneous and prejudicial to the revenue.

Carry forward and set off of losses - change in shareholding - voting power - beneficially held - merger akin to transfer on death - group reorganisation / intra-group transfer

Voting power - beneficially held - change in shareholding - merger akin to transfer on death - carry forward and set off of losses - Whether the prohibition in section 79 applies so as to deny carry forward and set off of brought forward business losses in AY 2014-15. - HELD THAT: - The Tribunal upheld the conclusion of the CIT(A) that section 79 is concerned with change in voting power and persons who beneficially held shares, not merely formal share certificates. On the facts, Tata Realty and Infrastructure Ltd. (TRIL) beneficially held more than 51% of the voting power in the assessee both in the years in which losses were incurred (Assessment Years 2012-13 and 2013-14) - through direct holding and indirect holding via TRIL Highway Projects Ltd. (THPL) - and in the year of set off (assessment year 2014-15) after THPL was merged into TRIL. The merger resulted in transfer of shares within the same group and the same beneficial persons/management retained control; the Tribunal accepted the view that such a transfer by merger is akin to transfer on account of death for the purposes of section 79 and does not attract the prohibition. Reliance placed on earlier decisions treating intra group reorganisation where beneficial voting control remains unchanged as outside the ambit of section 79 was found apposite. The Revenue's reliance on Yum Restaurants (distinguishable on facts because of inter-jurisdictional restructuring and absence of continuing beneficial arrangement) was rejected. Applying these principles, the Tribunal held that there was no change in effective control or voting power that would invoke section 79. [Paras 3, 7, 9]

Section 79 does not get triggered; the assessee is entitled to carry forward and set off the brought forward business losses in AY 2014-15.

Final Conclusion: The Revenue's appeal is dismissed; the order of the CIT(A) allowing set off of brought forward business losses is sustained.

Deduction under section 80IB(10) - Proportionate / pro rata allowance of deduction - Disallowance limited to non qualifying units - Eligibility confined to qualifying residential units - Liberal interpretation of exemption provisions

Deduction under section 80IB(10) - Proportionate / pro rata allowance of deduction - Disallowance limited to non qualifying units - Whether deduction claimed under section 80IB(10) can be allowed pro rata in respect of those residential units which satisfy the statutory conditions, and whether the assessing officer was justified in disallowing the entire deduction for the project. - HELD THAT: - The Tribunal upheld the first appellate authority's conclusion that denial of the deduction for the whole project was not warranted where only certain units breached the conditions of section 80IB(10). The CIT(A) applied precedent of various Tribunals and High Courts and the ratio accepted by the Supreme Court that the relief under section 80IB(10) is available in respect of profits derived from qualifying smaller units and that a narrow interpretation denying deduction for the entire project is improper. On that basis the CIT(A) directed the AO to restrict the disallowance to the extent of profit attributable to the particular units that contravened the statutory condition, leaving deduction intact for the remaining eligible units. The Tribunal found these reasons well founded and in consonance with judicial authorities, and therefore declined to interfere with the direction to allow deduction on a proportionate basis. [Paras 6]

The CIT(A)'s order directing the AO to restrict disallowance to profits of the non qualifying units and to allow deduction pro rata for qualifying units is upheld; the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal affirms the CIT(A)'s reappraisal: where only specific residential units in a housing project violate conditions of section 80IB(10), denial of deduction for the entire project is inappropriate and the assessing officer must restrict disallowance to profits attributable to the non qualifying units; the Revenue's appeal is dismissed.

Notice under Section 148 - operation of Section 148A - prior enquiry and opportunity of hearing - delegated power to extend or defer commencement of statutory amendments by executive notification - Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - notification-based extension of time-limits - validity of executive notification deferring operation of amended provisions - conditional legislation and permissible delegation

Notice under Section 148 - operation of Section 148A - prior enquiry and opportunity of hearing - Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - notification-based extension of time-limits - validity of executive notification deferring operation of amended provisions - delegated power to extend or defer commencement of statutory amendments by executive notification - Validity of notices dated 25.06.2021 and 30.06.2021 issued under Section 148 for Assessment Years 2015-16, 2014-15 and 2013-14 despite insertion of Section 148A with effect from 01.04.2021. - HELD THAT: - The court examined the effect of the Finance Act, 2021 which inserted Section 148A effective from 1 April 2021 and the subsequent notifications issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Notifications S.O. 1432(E) dated 31.03.2021 and S.O. 1703(E) dated 27.04.2021, issued under the delegated power in the 2020 Act, first extended the end-date for actions under Section 148 to 30 April 2021 and thereafter further extended applicable time-limits to 30 June 2021, expressly providing that for issuance of notice under Section 148 the provisions of Section 148 as they stood on 31 March 2021 shall apply. The court held that this delegation constituted conditional legislation intended to preserve the pre-amendment reassessment mechanism in view of the pandemic and lockdown, and did not amount to an unlawful abdication of legislative power or contravene the Finance Act, 2021. Consequently, because the executive notifications validly deferred the operative effect of the amendment (Section 148A) until 30 June 2021, notices issued under Section 148 on 25.06.2021 and 30.06.2021 were within the period saved by those notifications and therefore legally sustainable. The court relied on the principle that delegated power to notify commencement or extension in exceptional circumstances is permissible and does not change the essential policy of the statute when exercised within the legislative mandate.

Notices dated 25.06.2021 and 30.06.2021 under Section 148 are valid as the executive notifications lawfully preserved the pre-amendment operation of Section 148 until 30.06.2021.

Final Conclusion: The petition challenging the notices under Section 148 dated 25.06.2021 and 30.06.2021 is dismissed; the notices are upheld as valid because executive notifications under the 2020 Act lawfully deferred the operative effect of the amendment inserting Section 148A until 30.06.2021.

Violation of principles of natural justice - maintainability of writ petition despite alternate remedy - scrutiny assessment under Section 143(3) of the Income Tax Act - adequacy of opportunity in assessment proceedings - remand for fresh assessment with reasonable opportunity to produce records

Maintainability of writ petition despite alternate remedy - violation of principles of natural justice - Writ petition under Article 226 was maintainable despite availability of an alternative statutory remedy because the assessment proceedings involved breach of the principles of natural justice. - HELD THAT: - The Court applied the settled exceptions to the rule of alternate remedy as articulated in the cited Supreme Court authorities, observing that where there is a violation of the principles of natural justice the High Court may exercise its discretionary writ jurisdiction notwithstanding the existence of an alternative remedy. Having examined the facts - non-receipt or late receipt of e-notices by the individual assessee, short time given to procure voluminous documents from banks and the Assessing Officer's reliance on the appellant's alleged failure to furnish credit-card statements - the Court concluded that the appellant had established a case of denial of adequate opportunity, bringing the matter within the natural-justice exception and thereby rendering the writ maintainable. [Paras 6, 7, 9]

The writ petition was maintainable and the High Court was justified in entertaining the challenge to the assessment on grounds of breach of natural justice.

Scrutiny assessment under Section 143(3) of the Income Tax Act - adequacy of opportunity in assessment proceedings - remand for fresh assessment with reasonable opportunity to produce records - The assessment order dated 19.04.2021 was passed in violation of principles of natural justice and must be quashed and remitted for fresh assessment with reasonable opportunity to the assessee to produce records. - HELD THAT: - The Court held that a scrutiny assessment under Section 143(3) requires the Assessing Officer to afford adequate opportunity to the assessee, and that adequacy varies with the circumstances of the case. An individual assessee, unlike a corporate or well-resourced entity, may require more time to obtain voluminous documents from banks; short time-limits imposed by the authority and passing of the assessment without taking on record the documents subsequently filed by the assessee amounted to denial of fair opportunity. Relying on the principle that appellate or judicial opportunity cannot substitute for the initial opportunity before the Assessing Officer, the Court quashed the impugned order and remanded the matter for fresh assessment, directing that sufficient time be granted to produce records and that additional objections be invited before completing assessment afresh. [Paras 8, 10, 11]

Assessment order quashed; matter remanded for fresh assessment after affording reasonable time and opportunity to the assessee to produce records and file objections.

Final Conclusion: Writ appeal allowed; impugned assessment order of 19.04.2021 quashed for breach of natural justice and remitted for fresh assessment for AY 2018-19 after affording the assessee reasonable time and opportunity to produce records and file additional objections.

Abuse of process - maintainability of a second writ petition on the same subject matter - effect of unconditional withdrawal of earlier petition - forum shopping - exemplary costs to curb frivolous litigation

Maintainability of a second writ petition on the same subject matter - effect of unconditional withdrawal of earlier petition - abuse of process - Whether the writ petition filed by the appellant was maintainable in view of earlier proceedings on the same subject matter and the unconditional withdrawal of the PIL. - HELD THAT: - The Court held that the petitioner's present writ petition raises the same core controversy that was the subject of the earlier PIL which was withdrawn unconditionally. Relying on the principle that an unconditional withdrawal has the effect of barring subsequent proceedings raising the same contentions, and having regard to Sarguja Transport Service (supra) and the Division Bench's prior conclusions reproduced in the judgment, the Court found the present petition to be a re run of the same cause and constituting an abuse of process. The repeated filings and attempts to relitigate the identical subject matter amounted to impermissible forum shopping and misuse of judicial time. In these circumstances the learned Single Judge's conclusion that the petition was not maintainable was upheld and the writ appeal was dismissed. [Paras 5, 6]

Writ appeal dismissed on the ground of non maintainability and abuse of process.

Exemplary costs to curb frivolous litigation - abuse of process - Whether the imposition of exemplary costs by the learned Single Judge in relation to the frivolous and repeated proceedings was justified. - HELD THAT: - The Court noted the Division Bench's reproduction of earlier findings that the appellant had repeatedly instituted frivolous proceedings and that such conduct merits firm judicial response. While the judgment discusses authorities supporting imposition of exemplary costs to deter vexatious litigation, the appellate conclusion was that there was no reason to interfere with the learned Single Judge's approach in view of the established pattern of repetitious filings by the appellant. However, in the final disposal the Court ordered the writ appeal dismissed and recorded no order as to costs. [Paras 5, 6]

Court affirmed the view that exemplary costs are an appropriate instrument against frivolous litigation but, in the result, dismissed the appeal and recorded no order as to costs.

Final Conclusion: The writ appeal is dismissed as an abuse of process because it seeks to relitigate the same subject matter after unconditional withdrawal of the earlier petition; the Court found such repeated filings to be impermissible forum shopping and declined to interfere with the Single Judge's approach, and the appeal is dismissed with no orders as to costs.

Long term capital loss - Set-off against long term capital gains - Sham transaction / colourable device - Bonafides of sale of shares - Tax-motivated transaction v. legitimate tax planning - Illegality under Indian Contract Act Sections 23 and 24 - Timing of booking loss

Long term capital loss - Set-off against long term capital gains - Bonafides of sale of shares - Timing of booking loss - Allowability of set-off of the long term capital loss on sale of VCAM shares against long term capital gains on sale of property - HELD THAT: - The Tribunal found that the shares of VCAM were in fact worthless and that a real loss crystallised when the assessee sold them. The Assessing Officer's objections (discrepancy in valuation figures, sale to an associate/director, continuity of company address in ROC records, and timing of the sale) did not establish that the transaction was a paper-only or fictitious sale. Documentary evidence showed transfer of ownership, payment of consideration as stated in the sale instrument, change in board composition and that the buyers became shareholders; there was nothing on record to show the assessee retained legal or beneficial ownership post-sale. The Tribunal held that differences between valuation-derived per-share figures and the round sale consideration are immaterial. The fact that the buyer was a director or was known to the assessee, or that the company had negligible business, does not negate a bona fide sale of majority shares which confer control of a juridical entity. The timing of booking the loss was held immaterial: tax-motivation alone does not convert a genuine sale into a sham and legitimate tax planning within the law cannot be treated as illegal. Applying these principles, the Tribunal concluded the loss was real and allowable for set-off against long term capital gains. [Paras 6, 7, 8, 9, 10]

Set-off of the long term capital loss on sale of VCAM shares against the long term capital gains on sale of the property is allowable; the Assessing Officer's disallowance is vacated.

Sham transaction / colourable device - Illegality under Indian Contract Act Sections 23 and 24 - Tax-motivated transaction v. legitimate tax planning - Whether the sale was void or voidable as an illegal contract under sections 23 and 24 of the Indian Contract Act on the ground that it was arranged to defeat tax liability - HELD THAT: - The Tribunal rejected the view that the transaction was void under sections 23 and 24 merely because it had a tax-minimising object. It reiterated that contracts are void only where the object is illegal or intended to defeat the law in a manner that creates illegality; mere lawful tax planning which results in tax savings is not illegal. The Assessing Officer did not prove that the contract's object was unlawful or that colourable devices were employed to fabricate the transaction; on the contrary, the sale was effectuated and ownership and control passed to the buyers. Consequently, the contention that the sale was vitiated by illegality under the Indian Contract Act failed. [Paras 7, 9, 10]

Transaction is not void or voidable under sections 23 and 24 of the Indian Contract Act merely because it was tax-motivated; the allegation of colourable device was not established.

Final Conclusion: The appeal is allowed: the Tribunal vacated the Assessing Officer's disallowance, directed that the long term capital loss on sale of VCAM shares be set off against the long term capital gains on sale of the property for AY 2010-11, and rejected the contention that the sale was a sham or void under the Indian Contract Act.

Deduction under section 80P(2)(a)(i) - principle of mutuality - treatment of associate and nominal members under cooperative societies law - deduction under section 80P(2)(d) - remand for de novo consideration

Deduction under section 80P(2)(a)(i) - treatment of associate and nominal members under cooperative societies law - principle of mutuality - remand for de novo consideration - Claim for deduction under section 80P(2)(a)(i) in respect of income from dealings where the society has regular, nominal and associate members. - HELD THAT: - The Tribunal held that the expression "members" in section 80P(2)(a)(i) must be construed in the light of the definition of "members" in the relevant co-operative societies Act as explained by the Hon'ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. The question whether the presence of nominal and associate members (and the percentage thereof) breaches the principle of mutuality and precludes deduction under section 80P(2)(a)(i) requires fresh examination in the light of that Supreme Court decision. Accordingly, the Tribunal restores the issue to the file of the Assessing Officer for de novo consideration and directed that the Assessing Officer apply the Supreme Court's dictum and afford the assessee an opportunity of being heard. [Paras 8]

Issue remanded to the Assessing Officer for de novo consideration in the light of the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd.; direction to afford opportunity of hearing.

Deduction under section 80P(2)(d) - principle of mutuality - remand for de novo consideration - Allowability of deduction under section 80P(2)(d) in respect of interest/dividend income from investments with co-operative societies. - HELD THAT: - The Tribunal observed that the CIT(A) had not adjudicated the claim under section 80P(2)(d) solely because it found a breach of mutuality. The Tribunal recorded that interest/dividend income from investments with co-operative societies is, prima facie, eligible for deduction under section 80P(2)(d) and directed the Assessing Officer to re-examine the claim afresh as part of the remand exercise. [Paras 8]

Claim under section 80P(2)(d) restored to the Assessing Officer for fresh examination.

Admission of additional grounds - remand for de novo consideration - Admissibility of the additional grounds filed by the assessee and their restoration to the Assessing Officer. - HELD THAT: - The Tribunal held that the additional grounds were legal in nature and could be decided on the material on record. Relying on the principles in National Thermal Power Corporation Ltd., the Tribunal admitted the additional grounds and restored the issues raised therein to the Assessing Officer since the main claim under section 80P was being remitted for fresh consideration. [Paras 8]

Additional grounds admitted and restored to the Assessing Officer for consideration along with the remanded issues.

Final Conclusion: The appeal is allowed for statistical purposes by restoring the assessee's claims under sections 80P(2)(a)(i) and 80P(2)(d), and the admitted additional grounds, to the file of the Assessing Officer for de novo consideration in light of the Supreme Court's ruling; Assessing Officer to afford opportunity of hearing.

Unjust enrichment - Closing stock and inventory valuation - Treatment of duty on stock as receivable and not as expense - Passage of incidence of cost to consumers - Transfer to Consumer Welfare Fund

Unjust enrichment - Closing stock and inventory valuation - Treatment of duty on stock as receivable and not as expense - Passage of incidence of cost to consumers - Refund of duty in respect of Bills of Entry Nos. F-82, F-83 and F-85/2011 is not hit by unjust enrichment where the duty was included in closing stock as on 31st March, 2011 and subsequently shown as receivable in the balance sheet as on 30th September, 2011. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s finding that goods imported under the specified bills of entry were lying in stock on 31st March, 2011 and, in accordance with accounting principles, duty attributable to goods lying as finished or stock-in-process is carried forward in stock and is not posted as expense in that year. Although the refund amount was not separately shown as receivable on 31st March, 2011, it was included in the closing stock and thereafter appeared as receivable in the half-yearly balance sheet as on 30th September, 2011; accordingly the amount was not absorbed into the cost of the final product and the incidence of the cost was not passed on to consumers. The Tribunal found no infirmity in the Commissioner (Appeals)'s conclusion and upheld the order allowing the refund for the bills in question. [Paras 4, 5]

Refunds in respect of Bills of Entry Nos. F-82, F-83 and F-85/2011 are not barred by unjust enrichment and are allowable.

Unjust enrichment - Transfer to Consumer Welfare Fund - Refund amounts in respect of two other bills (F-68 and F-71) were correctly treated as not rebutting the presumption of unjust enrichment and transferred to the Consumer Welfare Fund. - HELD THAT: - The Commissioner (Appeals) found that the appellant did not furnish sufficient details about the accounting treatment of duty relating to Bills of Entry Nos. F-68 and F-71 and therefore failed to rebut the presumption of unjust enrichment as to those refunds. The Tribunal noted and adopted that finding in upholding the transfer of those specific amounts to the Consumer Welfare Fund. [Paras 4]

Amounts relating to Bills of Entry Nos. F-68/13.01.2011 and F-71/25.01.2011 were rightly held to be hit by unjust enrichment and directed to be credited to the Consumer Welfare Fund.

Final Conclusion: The impugned order of the Commissioner (Appeals) is upheld: the refunds relating to Bills of Entry Nos. F-82, F-83 and F-85/2011 are allowable (not hit by unjust enrichment), while refunds relating to Bills of Entry Nos. F-68 and F-71 were correctly held to be hit by unjust enrichment and transferred to the Consumer Welfare Fund; revenue's appeal is dismissed.

Refund of duty paid by creditable export incentive scripts (MEIS) - equivalence of creditable scripts and cash for refund purposes - right to refund when departmental liability ceases - re-assessment of transaction value and refund of differential duty

Refund of duty paid by creditable export incentive scripts (MEIS) - equivalence of creditable scripts and cash for refund purposes - right to refund when departmental liability ceases - Refund in cash of differential duty paid by using MEIS scripts where reassessment enhancing value was set aside by the Tribunal. - HELD THAT: - The Tribunal examined whether amounts paid by the appellant through MEIS scripts are refundable in cash after the reassessment that had required payment of differential duty was rejected. Relying on consistent authorities including decisions treating credit balances under export incentive scripts as equivalent to cash where the liability no longer exists, the Tribunal observed that the right to refund is not lost merely because payment was made by debiting such scripts. The Tribunal noted departmental orders in similar subsequent cases granting cash refunds and distinguished no principled basis for treating MEIS credits differently from DEPB or other creditable scripts for refund purposes. Since the reassessment was set aside and the departmental liability extinguished, the credit standing in MEIS scripts constituted an amount recoverable by the assessee and therefore refundable in cash.

Order under challenge set aside and appeal allowed; refund of amount paid by MEIS scripts to be allowed in cash.

Final Conclusion: The Tribunal allowed the appeal, holding that differential duty deposited by using MEIS scripts is refundable in cash where the reassessment requiring such payment has been set aside, and set aside the order refusing such refund.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Liability of directors and promoters despite moratorium - Approval of resolution plan under Section 31(1) of the IBC - Effect of pending approval on enforcement against promoters - Obligation of the Adjudicating Authority to decide approval applications expeditiously

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Liability of directors and promoters despite moratorium - Whether the moratorium under Section 14 of the IBC bars proceedings against the promoters/directors of the corporate debtor. - HELD THAT: - The Court held that the statutory moratorium declared under Section 14 operates in relation to the corporate debtor and interdicted continuation or initiation of proceedings only against the corporate debtor. Reliance on the three-judge decision in P. Mohanraj v. Shah Bros. Ispat (paras. 102 and surrounding reasoning) establishes that while Sections 138/141 NI Act proceedings cannot be continued against the corporate debtor during CIRP, natural persons such as directors and promoters are not covered by the moratorium and remain amenable to proceedings. Applying that principle, the petitioners are not prevented by the Section 14 moratorium from initiating or continuing proceedings against the promoters of the first respondent in relation to enforcement of settlements reached before this Court. [Paras 14, 15]

The moratorium under Section 14 does not bar proceedings against the promoters/directors of the corporate debtor; they may be proceeded against notwithstanding the moratorium.

Approval of resolution plan under Section 31(1) of the IBC - Effect of pending approval on enforcement against promoters - Whether this Court should direct attachment of the personal properties of the promoters or otherwise enforce the NCDRC execution order at the present stage when the Resolution Plan awaits approval under Section 31(1). - HELD THAT: - The Court declined to issue directions for attachment of the promoters' personal properties or to give effect to the NCDRC's execution direction relying on a Resolution Plan that has not yet been approved by the Adjudicating Authority. The judgment explains that consequences flowing from a Resolution Plan arise only after approval under Section 31(1) of the IBC; until such approval is granted, it would be inappropriate for the Court to order enforcement steps against the promoters premised on the unapproved plan. Petitioners retain remedies available in law after the Adjudicating Authority decides on approval, subject to statutory consequences thereafter. [Paras 11, 12, 13]

No direction for attachment or enforcement against promoters was issued at this stage; such relief may be pursued after the Resolution Plan is approved by the Adjudicating Authority.

Obligation of the Adjudicating Authority to decide approval applications expeditiously - Approval of resolution plan under Section 31(1) of the IBC - Whether the Adjudicating Authority should be directed to dispose of the application for approval of the Resolution Plan and, if so, within what time frame. - HELD THAT: - In view of the pendency of the approval application under Section 31(1), and the practical consequences for the home buyers and other stakeholders, the Court directed the National Company Law Tribunal (Adjudicating Authority) to dispose of the application for approval of the Resolution Plan expeditiously. The Court specified a preferred timeline, directing the NCLT to decide the application preferably within six weeks from receipt of a certified copy of the order, so that statutory consequences flowing from approval or rejection can follow without undue delay. [Paras 12]

The Adjudicating Authority was directed to dispose of the application for approval of the Resolution Plan expeditiously, preferably within six weeks from receipt of a certified copy of this order.

Final Conclusion: The petitions and appeals are disposed of: the moratorium under Section 14 IBC does not bar proceedings against promoters/directors, but this Court will not order attachment or enforcement against promoters while the Resolution Plan remains unapproved; the NCLT is directed to decide the approval application under Section 31(1) expeditiously (preferably within six weeks), and petitioners have liberty to pursue available remedies after the Adjudicating Authority's decision.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Exclusion of performance guarantee from security interest under Section 3(31) - Scope of Section 14(3)(b) - moratorium not to apply to a surety in a contract of guarantee - Independent character of a bank guarantee - distinct contract between issuing bank and beneficiary - Margin money held as trust against bank guarantee

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Exclusion of performance guarantee from security interest under Section 3(31) - Independent character of a bank guarantee - distinct contract between issuing bank and beneficiary - Margin money held as trust against bank guarantee - Whether the amount refunded on reversal of invocation of a Performance Bank Guarantee (invoked before initiation of CIRP but refunded during the moratorium) is an asset of the corporate debtor and thus subject to the moratorium under the Code. - HELD THAT: - The Tribunal held that the refunded amount is not an asset of the corporate debtor. The Code expressly excludes a performance guarantee from the definition of security interest and Section 14(3)(b) provides that the moratorium does not apply to a surety in a contract of guarantee; thus invocation or reversal of a performance bank guarantee does not automatically bring the proceeds within the moratorium. Bank guarantees are independent contracts between the issuing bank and the beneficiary and, absent fraud or special equity, must be honoured on their terms. The Legislature's exclusion of performance guarantees and the Insolvency Law Committee's reasoning support respecting contractual rights of third parties during CIRP. Further, margin money given against a bank guarantee acquires the character of a trust and is not an asset of the corporate debtor; in the present case the margin was furnished by the bank itself. On these bases the Tribunal concluded there was no contravention of Section 14 when the bank appropriated the refunded sum, and the amount refunded by the Indian Navy on reversal of invocation did not form part of the corporate debtor's assets. [Paras 18, 19, 20, 21]

The refunded amount on reversal of the Performance Bank Guarantee is not an asset of the corporate debtor and therefore not subject to the moratorium; the impugned order directing refund to the corporate debtor is set aside.

Final Conclusion: Appeal allowed. The Tribunal found that reversal of invocation of a Performance Bank Guarantee does not create an asset of the corporate debtor - having regard to the exclusion of performance guarantees from security interest, the moratorium exception for sureties, the independent character of bank guarantees and the trust-character of margin money - and set aside the adjudicating authority's direction to the bank to transfer the refunded amount to the corporate debtor.

Corporate Insolvency Resolution Process - role and powers of the Resolution Professional during CIRP - contractual liability of the corporate debtor in CIRP - preferential treatment of creditors/allottees - privity of contract - lifting the corporate veil

Corporate Insolvency Resolution Process - role and powers of the Resolution Professional during CIRP - contractual liability of the corporate debtor in CIRP - preferential treatment of creditors/allottees - Whether the Adjudicating Authority erred in dismissing the application for protection against eviction on the ground that the corporate debtor had nothing to do with the rent agreement and could be directed to continue payments during CIRP. - HELD THAT: - The Appellate Tribunal accepted that the appellant is an allottee under the builder-buyer agreement with the corporate debtor, but the rent agreement (dated 27.11.2018) is between the appellant and Respondent No.2 and the corporate debtor is not a party to it. Once CIRP was initiated, management and related liabilities rest with the IRP/RP, and the Tribunal declined to direct the RP or treat the corporate debtor as liable to continue paying rent under an arrangement that does not bind the corporate debtor by contract. Directing payment in such circumstances would give a preferential benefit to a single allottee contrary to the scheme of the IBC; treatment of allottees must be dealt with under a resolution plan or liquidation in a manner that is uniform and consistent with the insolvency regime. Consequently, relief compelling the corporate debtor (or its RP) to assume or continue the rent arrangement could not be granted. [Paras 7, 8, 12]

Application for protection against eviction could not be granted against the corporate debtor or its RP as the rent agreement does not bind the corporate debtor and directing payment would amount to impermissible preferential treatment during CIRP.

Privity of contract - lifting the corporate veil - Whether Respondent No.3 (who issued a cheque) or the corporate debtor could be made liable to the appellant on the basis of the cheque and related averments, including submissions invoking lifting the corporate veil. - HELD THAT: - The Tribunal noted the cheque bearing the number referred to in the rent agreement was produced by the appellant and that Respondent No.3 thereafter asserted the payment was an aid/loan. However, Respondent No.3 is not a signatory to the rent agreement and privity of contract applies; no prior contractual arrangement connecting the corporate debtor to the rent obligation was proved. While the Tribunal observed authorities on lifting the corporate veil and noted that veil may be lifted in appropriate circumstances, the facts here do not establish that the corporate debtor should be held liable for a private arrangement or that equitable veil-lifting would justify imposing the obligation on the corporate debtor during CIRP. The appellant remains free to contest eviction proceedings initiated by Respondent No.2 in the appropriate civil forum. [Paras 9, 10, 11, 12, 13]

Respondent No.3 cannot have liability fastened on the corporate debtor on the present record; privity of contract prevents imposing the rent-agreement obligations on parties not signatory thereto, and veil-lifting does not warrant treating the corporate debtor as liable in these circumstances.

Final Conclusion: The appeal is disposed of: although the Tribunal differed from some observations of the Adjudicating Authority, it declined to grant the appellant the relief sought to restrain eviction or to fasten liability on the corporate debtor/RP in respect of the rent arrangement; the appellant may defend the eviction proceedings in the civil court. No order as to costs.

Right of a Financial Creditor to initiate Corporate Insolvency Resolution Process under Section 7 of the IBC - Applicability of the Limitation Act to proceedings under the IBC and effect of written acknowledgment on limitation - Effect of acknowledgment in writing in restarting limitation period (Section 18 of the Limitation Act) - Primacy of the Insolvency and Bankruptcy Code over inconsistent laws and instruments - Consortium inter-se arrangements and nomination of a lead bank cannot oust statutory remedy of other financial creditors under the IBC

Right of a Financial Creditor to initiate Corporate Insolvency Resolution Process under Section 7 of the IBC - Consortium inter-se arrangements and nomination of a lead bank cannot oust statutory remedy of other financial creditors under the IBC - Primacy of the Insolvency and Bankruptcy Code over inconsistent laws and instruments - Whether the State Bank of India, though part of a consortium and despite inter-se/lead-bank arrangements, had the statutory right to file an application under Section 7 of the IBC against the Corporate Debtor. - HELD THAT: - The Tribunal applied the statutory scheme of the IBC and its overriding provision to hold that a financial creditor whose debt is due and in default has the statutory right to initiate the corporate insolvency resolution process under Section 7 of the IBC either by itself or jointly. Private arrangements between lenders, including inter-se agreements conferring roles on a lead bank or nomination of an agent, cannot extinguish or qualify the statutory right of an individual financial creditor to file under Section 7. The reasoning emphasises the primacy of the Code over inconsistent contractual or regulatory arrangements so that other members of a consortium are not left without remedy if a lead bank does not initiate proceedings. The Adjudicating Authority's admission on this basis was therefore sustained. [Paras 8]

The State Bank of India had the statutory right to file the Section 7 application notwithstanding consortium/lead-bank arrangements, and the Adjudicating Authority correctly proceeded to admit the application.

Applicability of the Limitation Act to proceedings under the IBC and effect of written acknowledgment on limitation - Effect of acknowledgment in writing in restarting limitation period (Section 18 of the Limitation Act) - Whether the Section 7 application filed by the State Bank of India on 5th March, 2018 was within limitation having regard to the date(s) of NPA and subsequent acknowledgments by the Corporate Debtor. - HELD THAT: - The Tribunal examined the dates relied upon and the communications from the Corporate Debtor. The Corporate Debtor's letter dated 21 May 2015 referring to the executed loan documents and Master Restructuring Agreement, together with the proposal/acknowledgment dated 15 June 2016 addressed to the lending banks, were held to qualify as acknowledgments in writing for the purposes of restarting the period of limitation. Applying the established principles governing the applicability of the Limitation Act to IBC proceedings (as explained by the Supreme Court in recent authorities), the Tribunal concluded that the Section 7 application filed on 5 March 2018 was within the fresh period of limitation computed from such acknowledgments and therefore the Adjudicating Authority rightly found the application time barred. [Paras 9, 10, 11, 12]

The Section 7 application was within limitation in view of the Corporate Debtor's written acknowledgments, and the Adjudicating Authority's conclusion that the application was not time barred is upheld.

Exclusion of time under appellate rules in relation to Section 12 of the IBC - Whether the interim period during which this appeal restrained constitution of the Committee of Creditors should be excluded for the purposes of Section 12 of the IBC. - HELD THAT: - The Tribunal noted its earlier interim order restraining constitution of the Committee of Creditors and exercised its powers under Rule 11 of the NCLAT Rules to exclude the period from 29 November 2019 until the date of the order for the computation under Section 12 of the IBC. The interim order previously granted was held not to survive; however the period during which that interim relief operated is excluded for statutory time computation purposes. [Paras 14, 15]

The interim order restraining constitution of the Committee of Creditors is vacated and the period from 29 November, 2019 to the date of the judgment is excluded for the purpose of Section 12 of the IBC.

Final Conclusion: Appeal dismissed; the admission of the Section 7 application by the Adjudicating Authority is upheld as within limitation and properly maintainable by the State Bank of India; the interim restraint on constitution of the Committee of Creditors is vacated and the period during which interim relief operated is excluded for the purpose of Section 12 of the IBC. No costs.

Power of the Adjudicating Authority under Rule 49(2) of the NCLT Rules to set aside ex-parte hearings - in rem nature of CIRP proceedings once admission under Sections 7-9 is made - effect of constitution of Committee of Creditors on jurisdiction to permit withdrawal or to set aside admission - permissibility of withdrawal/settlement before constitution of CoC under Section 12A of the IBC r/w Regulation 30A - consequence of notice not being duly served on the Corporate Debtor

Power of the Adjudicating Authority under Rule 49(2) of the NCLT Rules to set aside ex-parte hearings - in rem nature of CIRP proceedings once admission under Sections 7-9 is made - Whether the Adjudicating Authority can, in exercise of Rule 49(2) of the NCLT Rules, set aside an ex-parte order of admission of CIRP after the Committee of Creditors has been constituted. - HELD THAT: - The Tribunal applied the settled principle that admission under Section 7 or 9 of the IBC converts the proceeding into a proceeding in rem and, accordingly, the body overseeing the resolution process must be consulted before permitting individual settlements. While Rule 49(2) empowers the Tribunal to set aside an ex-parte hearing if notice was not duly served or sufficient cause prevented appearance, that power is subject to the Code's collective-process regime. Before constitution of the CoC the Adjudicating Authority may, in appropriate cases, set aside an ex-parte admission (or permit withdrawal/settlement) after hearing affected parties; however, once the CoC is constituted the Adjudicating Authority loses competence under Rule 49(2) to set aside an admission order and the remedy lies by way of appeal under Section 61 of the IBC or by following the statutory route for withdrawal under Section 12A and Regulation 30A. The Tribunal relied on the exposition in Swiss Ribbons regarding consultation of the CoC and the exercise of inherent powers prior to constitution of the CoC, and concluded that post-constitution the collective interest predominates over unilateral reinstatement of pre-admission status. [Paras 20]

Adjudicating Authority may set aside an ex-parte admission under Rule 49(2) only before constitution of the CoC; after constitution of the CoC it cannot exercise that power.

Consequence of notice not being duly served on the Corporate Debtor - effect of constitution of Committee of Creditors on jurisdiction to permit withdrawal or to set aside admission - Whether non-service of notice on the Corporate Debtor entitled it to have the ex-parte admission set aside in the present case. - HELD THAT: - The Tribunal accepted that there is evidence indicating the notice was not duly served on the Corporate Debtor. Ordinarily, non-service would permit the Adjudicating Authority to set aside an ex-parte hearing under Rule 49(2). However, the admissibility of that remedy depends on timing: since the CoC was constituted on 20.11.2020 and the Adjudicating Authority passed the impugned order on 23.03.2021 (after constitution of CoC), the statutory collective regime had already crystallised. Consequently, the procedural defect of non-service did not revive the Adjudicating Authority's power under Rule 49(2) at that belated stage; the proper course where settlement is claimed after CoC constitution is withdrawal under Section 12A r/w Regulation 30A or an appeal under Section 61. [Paras 15, 16, 21]

Although notice appears not to have been duly served, that ground could have been acted upon only before constitution of the CoC; in the present case the CoC was constituted prior to the Adjudicating Authority's order, so the defect did not warrant setting aside the admission.

Permissibility of withdrawal/settlement before constitution of CoC under Section 12A of the IBC r/w Regulation 30A - effect of constitution of Committee of Creditors on jurisdiction to permit withdrawal or to set aside admission - Whether the parties' asserted settlement required any specific direction by the Adjudicating Authority and what remedy was open where settlement was reported after admission. - HELD THAT: - The Tribunal reiterated that prior to constitution of the CoC the Adjudicating Authority may, exercising its powers (including inherent powers under Rule 11), allow withdrawal or settlement applications after hearing concerned parties. Once the CoC is constituted, any attempt to withdraw or settle must conform to the procedure under Section 12A and Regulation 30A and involve the CoC's consultation and approval. In the facts of this appeal the parties may pursue withdrawal under Section 12A/Regulation 30A; the Adjudicating Authority's refusal to set aside the admission after CoC constitution was therefore in accordance with the statutory scheme. [Paras 19, 22]

Settlement or withdrawal reported before constitution of the CoC can be considered by the Adjudicating Authority; after constitution the statutory route under Section 12A r/w Regulation 30A must be followed.

Finality of admission order post initiation of subsequent CIRP events - Whether interference was warranted with the Adjudicating Authority's order disposing of the application to set aside the ex-parte admission in the present appeal. - HELD THAT: - Having considered timing, the constitution of the CoC prior to the impugned order, and the statutory framework that assigns collective primacy to the CoC once constituted, the Tribunal found no illegality in the Adjudicating Authority's conclusion that it could not belatedly exercise Rule 49(2) to set aside the admission. The Tribunal noted that the Operational Creditor could pursue withdrawal under the prescribed statutory mechanism if settlement existed, and that the Corporate Debtor's remedy post-CoC constitution was by way of appeal under the IBC. [Paras 21, 23]

No interference; the appeal is dismissed as the Adjudicating Authority correctly declined to set aside the admission after CoC constitution.

Final Conclusion: The appeal is dismissed. The Tribunal held that while an Adjudicating Authority may set aside an ex-parte admission under Rule 49(2) if notice was not duly served, that power exists only prior to constitution of the Committee of Creditors; once the CoC is constituted the statutory collective-process regime applies and withdrawal/settlement must follow Section 12A r/w Regulation 30A or be challenged by appeal under the IBC.

Violation of Principles of Natural Justice - preferential transaction - avoidance and contribution to assets under Section 44 - transfer of property during moratorium - prohibition of disposition under moratorium (Section 14) - misconduct during CIRP and liability under Section 70 - powers to prevent abuse of process and give consequential reliefs

Violation of Principles of Natural Justice - Whether the appellant was denied opportunity of hearing and whether the plea of breach of natural justice succeeds. - HELD THAT: - The Tribunal examined the appellant's contention that his reply filed by email was not considered and that wrong counsel was recorded as appearing, causing denial of hearing. The Tribunal found no material that any advocate appearing before the Adjudicating Authority informed that he was not instructed in the I.A. or that a grievance was raised contemporaneously. The Tribunal noted that multiple advocates for the same party cannot be used to create a ground for prolongation where no attempt was made to apprize the Adjudicating Authority of substitution or non-availability, and that video-conferencing link could have been shared. On these facts the contention of breach of natural justice was rejected and the Impugned Order was upheld on this ground. [Paras 8]

The plea of violation of Principles of Natural Justice is rejected.

Preferential transaction - avoidance and contribution to assets under Section 44 - Whether the squaring off of receivables against the unsecured loan by the appellant amounts to a preferential transaction avoidable under the Code and whether the appellant must contribute to the assets of the corporate debtor. - HELD THAT: - The Tribunal accepted the Resolution Professional's documentary material including ledger entries and the auditor's report which recorded that receivables from three parties were written off and adjusted against the unsecured loan of the appellant, with entries dated 31st March, 2018 (after filing of Section 7). Applying the statutory test for preference, the Tribunal held there was a transfer of interest of the corporate debtor for the benefit of a related party which had the effect of putting that party in a better position vis-a -vis other creditors. The Tribunal concluded these acts were hit by the provisions of Section 43 and directed contribution to the assets of the corporate debtor under Section 44, upholding the Adjudicating Authority's direction to deposit the amount corresponding to the written-off receivables. [Paras 9, 11, 12, 17]

The squaring off of receivables is a preferential transaction; the appellant is directed to contribute to the corporate debtor's assets as ordered.

Transfer of property during moratorium - prohibition of disposition under moratorium (Section 14) - misconduct during CIRP and liability under Section 70 - powers to prevent abuse of process and give consequential reliefs - Whether the sale of the car by the appellant after initiation of CIRP is prohibited by the moratorium and what reliefs/directions should follow. - HELD THAT: - The Tribunal found on record that CIRP commenced on 18th December, 2018 and the tax invoice and related documents showed sale of the vehicle on 31st December, 2018 without permission of the Resolution Professional. The Tribunal held that the transaction contravened the moratorium provisions and was therefore voidable under the Code; it further observed potential misconduct actionable under Section 70 and possible criminal misappropriation. Consequentially, the Tribunal held the sale shall stand ignored, the car remains property of the corporate debtor and is to be taken into possession by the Resolution Professional who shall deal with it in accordance with the approved resolution plan or, where no provision exists, under the Code, Rules and Regulations and with directions of the Adjudicating Authority. The Tribunal also directed the Resolution Professional to take further action regarding an unaccounted amount identified in the delivery receipt and permitted exercise of powers under the Tribunal's rules to prevent abuse of process. [Paras 13, 15, 16, 17, 18]

The sale of the car during CIRP violated the moratorium; the sale is ignored, the car shall be taken into possession by the Resolution Professional and dealt with as part of the corporate debtor's assets; the Resolution Professional to pursue further action regarding unaccounted proceeds.

Final Conclusion: The appeal is disposed by dismissing the natural justice plea, upholding the Adjudicating Authority's finding that the receivables were preferential transactions requiring contribution to the corporate debtor's assets, and holding that the post CIRP sale of the car contravened the moratorium and shall be ignored; consequential directions are given to the Resolution Professional and the matter is remitted to the Adjudicating Authority for implementation and further action as necessary.

Retrospective application of procedural amendments - Power of regulatory circulars to alter applicability of statutory amendments - Enforceability of guidelines inconsistent with subordinate legislation - Liquidator's discretion to apply amended sale terms at the time of auction notice

Retrospective application of procedural amendments - Liquidator's discretion to apply amended sale terms at the time of auction notice - Applicability of the substituted Clause 12 of Schedule I (providing 90 days for payment of balance sale consideration) to liquidation processes initiated before 25.07.2019 and consequences for sales. - HELD THAT: - The substituted Clause 12 is procedural and contains no express bar to application in pending liquidation processes. The Tribunal held that the amended provision may be applied to liquidation processes which commenced before 25.07.2019 and that liquidators are at liberty to rely on the amended clause when issuing the auction notice, irrespective of the date of the liquidation order. The Court explained that allowing a longer payment period for the highest bidder does not prejudice other stakeholders and accords with the objectives and stakeholder feedback reflected in the Discussion Paper and the amendment. This disposes the contention that the amendment must be confined to liquidation processes commencing on or after 25.07.2019. [Paras 13, 15]

Amended Clause 12 is applicable to pending liquidation processes and the liquidator may apply its terms (including 90 days) at the time of issuing auction notices, even where liquidation commenced before 25.07.2019.

Power of regulatory circulars to alter applicability of statutory amendments - Enforceability of guidelines inconsistent with subordinate legislation - Whether the IBBI Circular dated 26.08.2019 can prevent application of the amended Clause 12 to liquidation processes commenced before 25.07.2019. - HELD THAT: - The Tribunal held that the Circular cannot be treated as substituting or interpreting the amendment in a manner that limits its applicability. While the Board may issue guidelines under its powers, a Circular inconsistent with a duly notified subordinate legislation cannot have the effect of altering or restricting the operative reach of that legislation. Interpretation of the scope and applicability of the Regulation is a judicial function and cannot be accomplished by issuing a Circular that effectively creates a different class of proceedings. [Paras 13]

The IBBI Circular dated 26.08.2019 is not legally enforceable to restrict the applicability of the amended Clause 12 and cannot be used to prevent the amendment's application to pending liquidation processes.

Retrospective application of procedural amendments - Whether sales already cancelled before 25.07.2019 for default under the earlier Clause 12 can be reopened in light of the amendment. - HELD THAT: - The Tribunal clarified that the amendment does not entitle reopening of sales which were already cancelled prior to 25.07.2019 for default of payment under the earlier clause. The decision to apply the amended clause is prospective in relation to actions taken after the amendment (for example, reliance when issuing auction notices), but does not revive or reopen finalized cancellations predating the amendment. [Paras 13]

Sales cancelled before 25.07.2019 for default of payment under the earlier Clause 12 cannot be reopened; the amendment applies to future actions such as subsequent auction notices.

Final Conclusion: The Tribunal modified the Adjudicating Authority's order and held that the liquidator is entitled to apply the amended Clause 12 of Schedule I (introducing 90 days for payment with consequential safeguards) to liquidation processes pending on 25.07.2019; the IBBI Circular purporting to limit the amendment's applicability is not legally enforceable, although sales cancelled before the amendment remain unaffected.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - adequacy of demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 and Rule 5(a) of the Rules - authority of authorised representative pursuant to board resolution - delivery/receipt of goods and negotiability/title under bill of lading - documents confirming non-payment under Section 9(3)(e) of the IBC - claim for interest and applicability of presumptions under the Interest Act - presumption as to execution/authentication of foreign powers of attorney/documents under Section 85 of the Evidence Act, 1872

Authority of authorised representative pursuant to board resolution - presumption as to execution/authentication of foreign powers of attorney/documents under Section 85 of the Evidence Act, 1872 - Validity of the Operational Creditor's authorisation to file the Section 9 application - HELD THAT: - The Adjudicating Authority relied on the board resolution and an accompanying "TO WHOMSOEVER IT MAY CONCERN" letter signed and stamped by the Operational Creditor which referred to the board resolution authorising Mr. Pratik D. Shah. The Appellants' objection that the circular resolution (being a foreign document) was not apostilled/notarised was examined, but the Tribunal observed that the company had two directors who had signed the circular resolution and that no representative of the Operational Creditor had complained about the formalities of the resolution. The court distinguished the authorities relied upon by the Appellant (which concerned notarisation in the context of powers of attorney and enforcement of foreign awards) and held that the facts here concerned a company board resolution authorising an authorised representative. On these facts the Adjudicating Authority was justified in accepting the documents and holding that the filing could not be said to be bad in law. [Paras 10, 11, 12, 13]

The Adjudicating Authority rightly accepted the Operational Creditor's authorisation and the challenge to the representative's authority failed.

Adequacy of demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 and Rule 5(a) of the Rules - Whether the demand notice dated 11.12.2017 satisfied the requirements of Section 8(1) of the IBC and the prescribed form - HELD THAT: - The notice annexed copies of the sales contract, tax invoice, bill of lading, packing list, certificate of origin, certificate of weight, declaration and a computation of interest. The Tribunal examined the notice against the statutory requirement and the format in Rule 5(a) (Form 3) and found that the notice met the substantive requirements of Section 8(1). A mere technical deviation from the exact proforma was held not to vitiate the notice when the requisite particulars and supporting documents were furnished. [Paras 14, 15, 16]

The demand notice was held to be adequate and compliant with Section 8(1); the technical objection was rejected.

Delivery/receipt of goods and negotiability/title under bill of lading - documents confirming non-payment under Section 9(3)(e) of the IBC - Whether there was a genuine dispute on non-receipt of goods such as to defeat the Section 9 claim - HELD THAT: - The Adjudicating Authority examined the sales contract, tax invoice, bill of lading (B/L No. AMRUIN863194), packing list, certificate of origin, certificate of weight, declaration and contemporaneous communications. The bill of lading was made "to order" and thus negotiable and capable of constituting title; the documents bore stamps/signatures of the Corporate Debtor and included a declaration by a director of the Corporate Debtor acknowledging verification of quality and quantity of the consignment and undertaking not to raise objections thereafter. Prior communications and emails from the Corporate Debtor acknowledged the outstanding dues and proposed payment arrangements. The Tribunal observed that the Corporate Debtor had not, prior to initiation of proceedings, questioned delivery of the goods in its communications and that the documentary evidence and acknowledgements rendered the contention of non-receipt misleading. On this basis the Adjudicating Authority found that the petition was complete and that outstanding dues existed attracting Section 9. [Paras 17, 19, 20, 21, 22]

The dispute of non-receipt was rejected; the Adjudicating Authority correctly held that documents and acknowledgements established delivery/receipt and outstanding debt.

Documents confirming non-payment under Section 9(3)(e) of the IBC - claim for interest and applicability of presumptions under the Interest Act - Whether the Operational Creditor had furnished requisite documents confirming non-payment and whether the interest claim was maintainable - HELD THAT: - The Adjudicating Authority considered the objection that documents confirming non-payment were not filed and that interest had not been agreed. Those objections were not pressed before the Tribunal in argument. The Adjudicating Authority concluded, for reasons recorded in its order, that the required documents were on record and that nothing showed an agreement not to charge interest; reference was made to principles under the Interest Act. The appellate court did not find fault with those findings and accepted the Adjudicating Authority's reasoning. [Paras 4]

The Adjudicating Authority's rejection of the Corporate Debtor's contentions on non-filing of documents and on interest was upheld.

Final Conclusion: The appeal is dismissed; the Appellate Tribunal upheld the Adjudicating Authority's admission of the Section 9 application, finding the demand notice, authorisation of the Operational Creditor's representative, documentary evidence (including the negotiable bill of lading) and the finding of outstanding debt to be properly accepted.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - declaration under the Scheme - designated committee's estimate of amount payable - rejection of declaration - opportunity of being heard - natural justice - benevolent legislation - remand for fresh hearing

Opportunity of being heard - designated committee's estimate of amount payable - rejection of declaration - natural justice - remand for fresh hearing - Whether the designated committee could reject the Form SVLDRS-1 declaration and thereby fix additional liability without first affording the declarant the opportunity of being heard as required under the Scheme - HELD THAT: - Section 127 of the SVLDRS Scheme contemplates that where the designated committee's estimate exceeds the amount declared, it must issue an estimate and thereafter give the declarant an opportunity of being heard before issuing the statement indicating the amount payable. A rejection of the declaration that results in fixation of additional liability operates as a levy; therefore the designated committee was statutorily obliged to afford the petitioner a hearing in accordance with the Scheme and the rules of natural justice. Given the benevolent object of the SVLDRS Scheme and the statutory mandate in Section 127(3), summary rejection recorded in the remarks column without hearing was impermissible. The impugned endorsement rejecting the Form SVLDRS-1 is therefore set aside and the matter is remanded to the designated committee to grant the petitioner an opportunity of hearing; after hearing, the committee may pass orders in accordance with law. [Paras 8, 9, 10]

Impugned rejection set aside; matter remanded to the designated committee to afford opportunity of hearing and then decide afresh in accordance with law.

Final Conclusion: Writ petition allowed to the extent that the order rejecting the SVLDRS declaration is set aside and the matter remitted to the designated committee for hearing in accordance with Section 127 of the Scheme and the rules of natural justice; thereafter the committee may pass such orders as permissible under law.

Dismissal for non-prosecution - Tribunal's discretion to dismiss or decide an appeal on merits under Rule 20 of the CESTAT (Procedure) Rules, 1982 - adjournment and limitation on adjournments under Section 129B(1A) of the Customs Act, 1962 - penalty under section 78(1) of the Finance Act, 1994 - imposition where contravention is with intent to evade duty - penalty leviability despite pre-notice payment where escape is intentional (principle in Rajasthan Spinning & Weaving Mills)

Dismissal for non-prosecution - Tribunal's discretion to dismiss or decide an appeal on merits under Rule 20 of the CESTAT (Procedure) Rules, 1982 - adjournment and limitation on adjournments under Section 129B(1A) of the Customs Act, 1962 - Whether the appeal should be dismissed for non-prosecution in view of repeated non-appearances and the Tribunal's procedure rules. - HELD THAT: - The Tribunal recorded that the appellant failed to appear on multiple listed dates and had either not attended or sought adjournments repeatedly. Rule 20 of the CESTAT (Procedure) Rules, 1982 permits the Tribunal, in its discretion, to dismiss an appeal for default where the appellant does not appear, or alternatively to hear it on merits. Section 129B(1A) of the Customs Act, 1962 permits adjournments where sufficient cause is shown but limits the number of adjournments. Having regard to the appellant's repeated non-appearance and the statutory scheme permitting limited adjournments, the appeal was held liable to be dismissed for non-prosecution under Rule 20. [Paras 3, 4]

Appeal dismissed for non-prosecution under Rule 20 of the CESTAT (Procedure) Rules, 1982.

Penalty under section 78(1) of the Finance Act, 1994 - imposition where contravention is with intent to evade duty - penalty leviability despite pre-notice payment where escape is intentional (principle in Rajasthan Spinning & Weaving Mills) - Whether the penalty under section 78(1) of the Finance Act, 1994 was correctly upheld on merits. - HELD THAT: - The Commissioner (Appeals) upheld total penalty under section 78(1) on the basis that the appellant contravened statutory provisions with intent to evade duty. The Tribunal examined relevant authority including the Supreme Court's decision in Rajasthan Spinning & Weaving Mills, which explains that payment of the differential duty before service of notice does not automatically negate levy of penalty where the escape of duty is intentional or by deception. Applying that principle, the Tribunal found the issue covered against the appellant and concluded that penalty was properly leviable. Consequently, even on merits the appeal could not succeed. [Paras 3, 4]

Appeal dismissed on merits; penalty under section 78(1) upheld as attracted by intentional evasion.

Final Conclusion: The appeal is dismissed both for non-prosecution under Rule 20 of the CESTAT (Procedure) Rules, 1982 and on merits; the penalty under section 78(1) of the Finance Act, 1994 as upheld by the Commissioner (Appeals) is sustained.

Classification as "air travel agent" service - incentives paid for achieving targets not leviable to service tax - no service tax on incentives received by a service recipient from a service provider - passenger cannot be deemed to be an audience for promotion of CRS companies

Classification as "air travel agent" service - the service performed by the appellant (air travel agent) falls under the category of "air travel agent" service and not under BAS - HELD THAT: - The Tribunal, relying on the Larger Bench's reasoning, held that an air travel agent promotes its own business and not the business of the airlines or CRS companies; accordingly the classification of the service in question is that of an "air travel agent" and not BAS. This classification was determinative of the chargeability question insofar as the commission/incentives received were concerned, and the finding treats the activity as falling within the specific taxable category of air travel agent service rather than a business auxiliary service. [Paras 84, 86]

Classification of the appellant's activity as "air travel agent" service upheld and not as BAS

Incentives paid for achieving targets not leviable to service tax - no service tax on incentives received by a service recipient from a service provider - the incentives/commission received by the appellant from airlines for achieving targets are not leviable to service tax - HELD THAT: - The Larger Bench expressly concluded that incentives paid for achieving targets cannot be subjected to service tax and that incentives received by a service recipient from a service provider do not attract levy. Applying that conclusion to the appellant's case, the Tribunal held that the demand confirmed by the adjudicating authority and Commissioner (Appeals) insofar as it sought to tax the commission/incentive receipts could not be sustained. [Paras 84, 86]

The demand for service tax on the incentives/commission received by the appellant is not sustainable

Passenger cannot be deemed to be an audience for promotion of CRS companies - a passenger cannot be treated as the 'audience' for the purpose of deeming the appellant to be promoting CRS companies such that BAS would apply - HELD THAT: - The Larger Bench found that a passenger does not constitute an audience for promotion of CRS companies; consequently the factual configuration necessary to treat the activity as falling within BAS (which would require an audience/targeted audience) is absent. That finding reinforces the conclusion that BAS is not the appropriate classification for the appellant's receipts. [Paras 86]

A passenger cannot be deemed an audience for CRS promotion and therefore BAS does not apply on that ground

Final Conclusion: The impugned orders confirming demand for service tax on commission/incentives received by the appellant are set aside; appeal allowed for the tax period 2007-08 to 2009-10, the receipts in question not being leviable as BAS or as taxable incentives under the service tax law.

Summary order. Appeal permitted to be withdrawn and dismissed as withdrawn; the substantial questions of law are left open; no costs.

Entitlement to refund of CENVAT/CVD/SAD paid on imported inputs - treatment of refund claims filed under existing law after commencement of GST (Section 142(3) and (8) of the CGST Act, 2017) - effect of DGFT redemption letter and subsequent payment of customs duty on availability of credit/refund - maintainability of departmental appeal under the GST Act against a refund claim filed under the erstwhile Central Excise Act

Entitlement to refund of CENVAT/CVD/SAD paid on imported inputs - Rule 3 of Cenvat Credit Rules, 2004 - Appellant entitled to refund in cash of unutilized Cenvat credit (CVD/SAD) paid on imported inputs where duty was deposited pursuant to DGFT redemption. - HELD THAT: - The appellant imported inputs under an advance licence but failed to fulfill the export obligation and sought redemption from DGFT. Pursuant thereto the appellant deposited the requisite customs duty with interest and penalty. Those admitted facts establish payment of CVD/SAD on the imported inputs and, under Rule 3 of the Cenvat Credit Rules, 2004, entitled the appellant to Cenvat credit. As the credit could not be utilized under the erstwhile law before the GST regime took effect, the provisions of the CGST Act operate to ensure refund in cash of amounts of Cenvat credit, duty or tax paid under the existing law. Thus denial of refund on the ground that the DGFT letter is not an assessment order is not tenable where the duty has in fact been paid in full, and the statutory scheme under Section 142 entitles the assessee to cash refund of such amounts. [Paras 6, 7]

Refund claim for CVD/SAD paid on imported inputs is allowable and the order rejecting the refund on the ground that the DGFT communication is not an assessment is incorrect.

Treatment of refund claims filed under existing law after commencement of GST (Section 142(3) and (8) of the CGST Act, 2017) - Section 142(3) and (8) of the CGST Act require disposal of refund claims arising under the existing law and mandate cash refund where applicable, so the appellant's claim filed under the Central Excise Act is governed by the existing law but payable in cash under GST. - HELD THAT: - Section 142(3) preserves claims for refund filed before, on or after the appointed day for amounts of Cenvat credit or duty paid under the existing law and directs disposal according to the existing law, with amounts eventually accruing to the claimant paid in cash. Sub-section (8) clarifies recovery and refund consequences of assessment or adjudication proceedings instituted under existing law. Applying these provisions, the Court found that the appellant's entitlement to refund under the erstwhile law survives and must be given in cash under the GST framework, thereby defeating the departmental contention that the refund is unsustainable merely because the DGFT letter was not an assessment order. [Paras 7]

The statutory scheme of Section 142 of the CGST Act supports payment in cash of refund claims that are otherwise allowable under the existing law.

Maintainability of departmental appeal under the GST Act against a refund claim filed under the erstwhile Central Excise Act - Department's appeal before the Commissioner (Appeals) filed under the GST Act against a refund claim originally filed under the Central Excise Act was not maintainable. - HELD THAT: - The refund application in question was filed under the Central Excise Act, 1944. The Department, after review, filed the appeal before the Commissioner (Appeals) invoking provisions of the GST Act, 2017. Given that the subject-matter of the claim arose under the erstwhile law and Section 142 preserves adjudication under the existing law with payment in cash under GST, the Tribunal held that the departmental appeal under the GST Act against a refund filed under the earlier law was not maintainable. This procedural defect independently vitiates the appellate order rejecting the refund. [Paras 8]

The departmental appeal before Commissioner (Appeals) under the GST Act was not maintainable; the order rejecting the refund is unsustainable on this ground as well.

Final Conclusion: The Tribunal set aside the appellate order rejecting the refund, held that the appellant is entitled to refund (in cash) of the CVD/SAD paid on imported inputs pursuant to DGFT redemption and that the departmental appeal under the GST Act was not maintainable; the appeal is allowed and the refund order restored.

Cenvat credit of countervailing duty - Restriction under Rule 3 of Cenvat Credit Rules - Exemption under Notification No. 12/2012-CE - Notification No. 12/2012-Cus - Applicability of exemption to imported coal

Cenvat credit of countervailing duty - Restriction under Rule 3 of Cenvat Credit Rules - Notification No. 12/2012-Cus - Entitlement to Cenvat credit of 2% CVD paid on import of coal where Notification No. 12/2012-Cus was availed - HELD THAT: - The Tribunal held that the bar in Rule 3 of the Cenvat Credit Rules relates to excise duty specified in the First Schedule to the Excise Tariff Act and the proviso disallowing Cenvat credit where benefit of Notification No.12/2012-CE is availed applies to duty of excise on indigenous goods. There is no analogous restriction in Rule 3 with respect to customs duties levied on imported goods. Consequently, payment of CVD under Notification No.12/2012-Cus on imported coal does not fall within the Rule 3 prohibition and is eligible for Cenvat credit. The Tribunal applied the reasoning of the earlier division bench decision in Asahi Songwon Colors Limited and allowed credit accordingly.

Allowed Cenvat credit of the 2% CVD paid on import of coal; impugned order set aside.

Exemption under Notification No. 12/2012-CE - Applicability of exemption to imported coal - Whether Notification No. 12/2012-CE (excise exemption) is applicable to imported coal - HELD THAT: - The Tribunal reiterated that Notification No.12/2012-CE grants exemption in respect of indigenously manufactured coal and does not apply to imported coal. Citing the Supreme Court's conclusion on this point (as noted in the impugned reasoning), the Tribunal observed that an importer cannot avail the excise notification to avoid CVD or to invoke the Rule 3 proviso. Since the excise notification is inapplicable to imports, it does not operate to deny Cenvat credit of CVD paid on import.

Notification No.12/2012-CE is not relevant to imported coal; it does not preclude grant of Cenvat credit for CVD paid on import.

Final Conclusion: The appeal is allowed; the appellant is entitled to Cenvat credit of the 2% CVD paid on imported coal and the impugned order is set aside, the Tribunal holding that Rule 3's proviso and Notification No.12/2012-CE (an excise exemption for indigenous coal) do not deny credit in respect of CVD paid under Notification No.12/2012-Cus on import.

Condonation of delay - administrative estoppel where one government department's delay prevents compliance by a claimant - interpretation and application of time limit in a statutory/administrative incentive scheme - requirement of production of tax paid certificates as supporting documents

Condonation of delay - administration of incentive schemes - interpretation and application of time limit in a statutory/administrative incentive scheme - Whether the District Industrial Centre was justified in rejecting the petitioner's subsidy claims solely on the ground of delay without examining petitioner's contention that the delay was caused by non issuance of tax payment certificates by the VAT authorities. - HELD THAT: - The Court had earlier directed the District Industrial Centre to examine the petitioner's further representations and to entertain the refund applications if it was found that delay was attributable to non issuance of VAT payment certificates by the concerned department. The authority's fresh order of 17.04.2021 rejected the claims on the sole ground that the scheme did not permit extension of time and on the further basis that the petitioner should have furnished alternative documents or sought waiver within the two year period. Those conclusions ignored the Court's prior observations and misconstrued the factual matrix: the prescribed claim proforma required annexure of VAT payment certificates, and the petitioner had produced applications and reminders showing pursuit of the VAT authority. It was not open to the District Industrial Centre to treat the time limit as an absolute bar without first verifying whether the delay was caused by another government department and, if so, to entertain the claims on merits. The authority was required to apply the Court's direction by examining the petitioner's averments and documentary material and then either grant the claim if delay was caused by the VAT department or pass a speaking order if not. The impugned order substituted fresh legal conclusions for the limited factual enquiry directed by the Court and therefore was set aside. [Paras 5, 6, 7]

Impugned order dated 17.04.2021 set aside; District Industrial Centre directed to examine the petitioner's refund applications on merits in light of the Court's earlier directions and dispose of them within two months.

Final Conclusion: The High Court set aside the DIC's order rejecting the subsidy claims for delay, held that the authority must assess whether the delay was caused by non issuance of VAT payment certificates by the VAT department and, accordingly, reconsider the claims on merits and pass a reasoned order within two months.

Upfront collection of tax and penalty without show cause notice - Mandatory opportunity of being heard under Section 73(10) of the OVAT Act - Distinction between Section 73(10) of the OVAT Act and Section 16 D of the OST Act - Refund with interest for unlawful collection

Upfront collection of tax and penalty without show cause notice - Mandatory opportunity of being heard under Section 73(10) of the OVAT Act - Collection of tax and penalty from the petitioner on 10th April, 2007 without issuance of a show cause notice and without affording an opportunity of being heard was legally impermissible under Section 73(10) of the OVAT Act. - HELD THAT: - The Court examined the language of Section 73(10) which mandates that the authorised officer may impose penalty only "after giving the dealer an opportunity of being heard and after holding such further enquiry as he may consider necessary." Applying the ratio of M.G. Garments (supra), the Court held that collecting tax and penalty upfront at the time of a surprise inspection, prior to issuing any show cause notice or affording hearing, contravenes the mandatory procedural requirement of Section 73(10). The facts show collection occurred on 10th April, 2007 while the assessment order was passed subsequently, and no show cause notice was issued before the collection; on this basis the collection was without authority of law. [Paras 8, 9]

The collection of tax and penalty without prior show cause notice and opportunity of being heard under Section 73(10) OVAT Act is invalid.

Distinction between Section 73(10) of the OVAT Act and Section 16 D of the OST Act - Decision in Sales Tax Officers v. Dutta Traders (construing Section 16 D of the OST Act) is not applicable to actions under Section 73(10) of the OVAT Act. - HELD THAT: - The Court contrasted the statutory schemes: Section 16 D(5) of the OST Act contains a proviso enabling payment of tax and penalty "to be assessed in the prescribed manner" as a condition for release of seized goods, which contemplates payment followed by assessment. By contrast, Section 73(10) OVAT Act expressly requires giving an opportunity of being heard and such enquiry before imposing penalty. Because the statutory language and procedural mandate differ, the Dutta Traders precedent based on Section 16 D cannot justify upfront collection under Section 73(10). [Paras 10, 11, 12]

The Dutta Traders authority is inapplicable and cannot validate upfront collection under Section 73(10) OVAT Act.

Refund with interest for unlawful collection - Appropriate remedy for the unlawful collection is refund of the amount collected together with interest until actual refund; the Department may, if it chooses, initiate fresh proceedings in accordance with law. - HELD THAT: - Having held the collection to be without authority, the Court directed refund of the sum collected from the petitioner with interest as applicable under the rules and ordered payment within four weeks, clarifying that interest would run until actual refund. The Court further observed that the Department retains the option to commence fresh proceedings in compliance with the statutory procedure governing imposition of penalty. [Paras 13]

The collected amount shall be refunded with interest; the Department may initiate fresh proceedings lawfully if it chooses.

Final Conclusion: Writ petition allowed: upfront collection of tax and penalty on 10th April, 2007 without prior show cause notice and opportunity to be heard under Section 73(10) OVAT Act was unlawful; the amount collected is to be refunded with interest and the Department may initiate fresh proceedings in accordance with law.

Entitlement to C-Form for inter-State purchase of high speed diesel - validity of CST registration post-GST migration - scope of goods under Section 2(d) of the CST Act including high speed diesel - non-inclusion of high speed diesel within the CGST regime due to absence of GST Council recommendation - interim direction subject to final adjudication and consequential liability

Entitlement to C-Form for inter-State purchase of high speed diesel - validity of CST registration post-GST migration - interim direction subject to final adjudication and consequential liability - Grant of interim relief directing the State to issue C-Form to the petitioner for inter State purchase of high speed diesel used in manufacture of cement, subject to final adjudication. - HELD THAT: - The Court, relying on the coordinate-bench judgment reproduced (para 39), accepted that the petitioner remains a registered dealer for inter State trade in high speed diesel because the definition of goods in Section 2(d) of the CST Act was amended to include high speed diesel prior to the GST regime and there has been no recommendation by the GST Council nor a notification bringing high speed diesel within the sweep of the CGST Act. On that basis, withholding C Form during pendency of the writ would be inequitable and the State was directed to issue the C Form to the petitioner for purchases of high speed diesel used in manufacture of cement. The Court made the issuance expressly provisional: if, on final adjudication, the C Form is found to have been wrongly obtained or issued, the State may recover differential tax, impose penalties and take other lawful measures against the petitioner. The direction is interlocutory and does not decide entitlement on merits, but permits provisional issuance consistent with the coordinate-bench reasoning.

State directed to issue C Form to the petitioner for inter State purchase of high speed diesel used in manufacture of cement, subject to final adjudication and consequential liabilities if issuance is later found wrongful.

Final Conclusion: Interim direction granted: C Form to be issued to the petitioner for inter State procurement of high speed diesel used in manufacture of cement, on the basis of the coordinate bench finding regarding continued validity of CST registration for such goods; issuance is provisional and liable to reversal and consequences upon final determination.

Cheating under Section 420 of Indian Penal Code - dishonest intention at the inception - breach of contract versus criminality - friendly loan - post-transaction conduct not proof of initial mens rea

Cheating under Section 420 of Indian Penal Code - dishonest intention at the inception - friendly loan - post-transaction conduct not proof of initial mens rea - breach of contract versus criminality - Whether the conviction under Section 420 IPC could be sustained in absence of dishonest intention at the inception where the transaction was found to be a friendly loan and subsequent non payment and bounced cheques occurred. - HELD THAT: - The Court examined the evidence and concurrent findings of the lower courts that the complainant and accused shared a long-standing relationship and that the amounts were advanced as a friendly loan. The complainant's own deposition did not show that the accused had a fraudulent or dishonest intention when the promises were made; witnesses described the transactions as friendly loans. The appellate court had relied on the accused's later conduct - dishonoured cheques and failure to honour an agreement executed during litigation - to infer that there was never an intention to repay. The High Court applied the settled principle that for offence under Section 420 IPC the prosecution must prove fraudulent or dishonest intention at the time of making the representation or promise, and that mere breach of contract or an intention to cheat developing after the transaction does not constitute cheating. Consequently, conduct subsequent to the completion of the transaction (bounced cheques, non payment pursuant to an agreement entered during proceedings) could not be used to supply the necessary mens rea at the inception. On that basis the conviction under Section 420 could not be sustained and the matter was properly treated as essentially a civil dispute between the parties. [Paras 18, 19, 27, 28, 29]

Conviction and sentence under Section 420 IPC set aside; petitioner acquitted.

Final Conclusion: The High Court allowed the criminal revision, set aside the conviction and sentence under Section 420 IPC, acquitted the petitioner and discharged him from his bail bond liabilities; the dispute was held to be civil in nature for want of dishonest intention at the inception.

Anticipatory bail under Section 438 CrPC - dishonour of cheque and proceedings under Negotiable Instruments Act - prima facie role and complicity in misuse of cheques - effect of compromise/withdrawal in NI Act proceedings on criminal prosecution - delay in seeking anticipatory bail and conduct of investigating agency

Anticipatory bail under Section 438 CrPC - dishonour of cheque and proceedings under Negotiable Instruments Act - prima facie role and complicity in misuse of cheques - delay in seeking anticipatory bail and conduct of investigating agency - Application for anticipatory bail under Section 438 CrPC was allowed. - HELD THAT: - The Court examined the prosecution case and the material placed by the applicant, including bills evidencing supply of material to the complainant and the sequence of events following dishonour of a cheque and initiation of proceedings under the Negotiable Instruments Act. The complaint to police was lodged after the complainant received notice of the NI Act complaint; co-accused had subsequently withdrawn NI proceedings on the basis of a settlement. The investigating records did not disclose any action taken against the applicant prior to 2021. On this factual backdrop, and without deciding merits of the allegations, the Court found sufficient ground to grant anticipatory bail, having regard to the applicant's documentation and the prosecution chronology. The Court also noted the delay in seeking anticipatory bail but observed that police had not acted against the applicant earlier, and on these considerations elected to enlarge the applicant on anticipatory bail. [Paras 6]

Application is allowed and the applicant shall be released on anticipatory bail subject to conditions.

Anticipatory bail under Section 438 CrPC - Terms and conditions of grant of anticipatory bail were specified. - HELD THAT: - The Court directed that upon arrest the applicant be released on anticipatory bail on execution of a personal bond with one surety. The order prescribed standard conditions: availability for interrogation, prohibition on inducement/threat/promise to witnesses, refraining from conduct prejudicial to a fair trial, and appearance before the trial court on all dates until disposal. [Paras 7]

Anticipatory bail granted on furnishing bond and subject to enumerated conditions.

Final Conclusion: Anticipatory bail under Section 438 CrPC granted to the applicant in respect of the offence alleged in Crime No. 278/2017, on execution of bond and compliance with specified conditions; no tax period is involved.

Anticipatory bail under section 438 Cr.P.C. - offences under the Prevention of Corruption Act, 1988 (sections 7A, 8 and 9) - balance between personal liberty and societal interest - factors laid down in Siddharam Satlingappa Mhetre for grant of anticipatory bail - risk of tampering with evidence and influencing witnesses - custodial interrogation and requests for virtual/video mode interrogation - conditions for release on pre-arrest bail (bond, sureties, cooperation, appearance, no foreign travel without permission)

Anticipatory bail under section 438 Cr.P.C. - balance between personal liberty and societal interest - risk of tampering with evidence and influencing witnesses - factors laid down in Siddharam Satlingappa Mhetre for grant of anticipatory bail - Grant of anticipatory bail to the petitioner accused under section 438 Cr.P.C. - HELD THAT: - The Court applied the established test for anticipatory bail, weighing the petitioner's personal liberty against the societal interest and the stage of investigation, as explained in Siddharam Satlingappa Mhetre. The materials on record showed that the petitioner, a Founder-Trustee who has been abroad since October 2020, had responded to notices and expressed willingness to cooperate and to attend for physical interrogation on arrival; raids and seizures have occurred and statements of CEO and CFO were recorded but the record did not disclose material demonstrating that the petitioner's pre-arrest release would impede the investigation or that documents pointing to the petitioner had been or were likely to be suppressed. Although the nature of the offences under the P.C. Act is serious, the Court found no prima facie material at this stage to hold that release on anticipatory bail would cause hindrance to a free and fair investigation. The Court therefore directed that, in the event of arrest, the petitioner be released on bail subject to specified protective conditions to guard against tampering with evidence and influencing witnesses and to ensure cooperation with the investigating agency. [Paras 4, 5]

Petitioner to be released on arrest on executing bond and two sureties with conditions: appear before the Investigating Officer on specified dates and as required, cooperate with investigation, not leave the country without prior permission of the Investigating Officer (and inform the officer of tours outside the State exceeding three days), and not tamper with evidence or influence witnesses.

Final Conclusion: Anticipatory bail granted to the petitioner in the event of arrest, subject to bond, sureties and conditions to secure cooperation with investigation and to prevent tampering or influencing of evidence and witnesses.