TaxTMI Updates e-Newsletter
Oct 01,2020

Treatment of Transferable Development Rights (TDR) / Floor Space Index (FSI) under GST - classification of supply as "service" under the definition of service in CGST Act - Schedule III exclusion for sale of land and its scope - interpretation of exemption/notification entries and strict construction of exemptions - classification under Heading 9972 and applicability of rate notifications - maintainability of advance ruling where applicant had already undertaken the transaction

Maintainability of advance ruling - Whether the Appellant could raise maintainability objection after having approached the Advance Ruling Authority for a transaction already undertaken - HELD THAT: - The Appellant had itself filed the application for advance ruling in respect of the transaction. The Appellate Authority applied the equitable principle Quod Approbo Non Reprobo to hold that the Appellant cannot approbate and reprobate by seeking the ruling and thereafter contesting the maintainability of the very proceeding it initiated. Given the Appellant's voluntary approach and participation before the Authority for Advance Ruling, the maintainability objection raised at the appellate stage was rejected as unnecessary to be adjudicated further in the peculiar facts of the case. [Paras 8]

The maintainability objection is rejected; the appeal proceeds to decide the substantive questions.

Schedule III exclusion for sale of land and its scope - treatment of Transferable Development Rights (TDR) / Floor Space Index (FSI) under GST - classification of supply as "service" under the definition of service in CGST Act - Whether sale/transfer of TDR/FSI is outside GST as sale of "land" under Clause 5 of Schedule III or is a taxable supply (service) under the CGST Act - HELD THAT: - The Authority analysed statutory definitions and precedents and distinguished decisions that treated TDR/FSI as "immovable property" from the question whether TDR/FSI is "land" for purposes of Schedule III. It noted that Schedule III expressly excludes "sale of land" and that neither "land" nor "benefits arising out of land" are defined in the CGST Act. The Authority held that where the legislature intended to exclude more than "land" it would have done so, and exemptions must be strictly construed with the burden on the assessee. Relying on reasoning in the cited ITAT decision, which treated TDR/FSI as a right arising out of land and not identical to "land and building", the Authority concluded that TDR/FSI are benefits arising from land and are not "land" within Schedule III. Further, as the definition of "service" in the CGST Act covers "anything other than goods, money and securities", transfer of TDR/FSI for consideration in course or furtherance of business falls within "service". The Authority rejected contentions based on popular meaning, earlier tax regimes, or characterisation of TDR as money, finding no absurdity in treating TDR as taxable and noting absence of statutory prohibition. [Paras 14, 15, 16, 17, 18]

Sale/transfer of TDR/FSI is not "sale of land" under Clause 5 of Schedule III and is taxable as a supply of service under the CGST Act.

Classification under Heading 9972 and applicability of rate notifications - interpretation of exemption/notification entries and strict construction of exemptions - Whether the taxable supply of TDR/FSI falls under Heading 9972 and attracts GST at the rate notified - HELD THAT: - The Authority examined the notifications and FAQs relied upon by the Advance Ruling Authority and the Department. It noted that the Central Government had notified real estate services under Heading 9972 and, by specific entries and subsequent notifications, addressed services by transfer of development rights/FSI. The Authority held that explanatory notes do not override the notification text; if the service falls within the description of a notification entry, it is covered notwithstanding its absence from explanatory notes. Having regard to Notification No. 11/2017 (Heading 9972) and subsequent amendments and notifications (including notifications postponing time of supply and prescribing conditions for exemption or reverse charge treatment), the Authority concluded that the supply of TDR/FSI is classifiable under entry at SI. No.16(iii) of Notification No.11/2017 and attracts GST at the effective rate of 18% (9% CGST + 9% SGST). [Paras 20, 21, 22, 23, 24]

The supply of TDR/FSI is classifiable under Heading 9972 (SI. No.16(iii) of Notification No.11/2017) and is taxable at 18% (9% CGST + 9% SGST) subject to the conditions and notifications applicable.

Final Conclusion: The Appellate Authority affirms the Advance Ruling: the sale/transfer of TDR/FSI is not "sale of land" under Schedule III and constitutes a taxable supply of service; it is classifiable under Heading 9972 and liable to GST at the effective rate of 18% (9% CGST + 9% SGST). The maintainability objection raised by the appellant is rejected.

Input tax credit - works contract services - immovable property - plant and machinery (exclusion in the explanation to section 17(5)) - blocked credit under section 17(5)(d) - exception for input service for further supply of works contract service (section 17(5)(c)) - CBIC Circular No. 109/28/2019-GST (scope limited to capital goods)

Immovable property - plant and machinery (exclusion in the explanation to section 17(5)) - blocked credit under section 17(5)(d) - Lift, once erected, installed and commissioned in the building, is an integral part of the building and thus immovable property; consequently it is excluded from the definition of "plant and machinery" and ITC on lift installation charges is blocked under section 17(5)(d). - HELD THAT: - The Appellate Authority agreed with the Authority for Advance Ruling that, following the Supreme Court decisions relied upon by the Advance Ruling Authority, a lift assembled, installed and commissioned at site becomes a permanent fixture and forms part of the building. The explanation to section 17(5) excludes land, buildings or other civil structures from the expression "plant and machinery." Since the lift becomes part of the building it falls within the excluded category and cannot be treated as "plant and machinery" for the purposes of section 17(5). Consequently, input tax credit on services received for construction or installation of such immovable property is not available under section 17(5)(d). [Paras 10, 11, 12, 17]

The lift is immovable property and excluded from "plant and machinery", therefore ITC on lift installation charges is not admissible under section 17(5)(d).

Works contract services - exception for input service for further supply of works contract service (section 17(5)(c)) - CBIC Circular No. 109/28/2019-GST (scope limited to capital goods) - The society is not a supplier of works contract services to its members and thus does not qualify for the exception in section 17(5)(c); the CBIC Circular relied on by the appellant pertains to capital goods and does not extend ITC to works contract services that become immovable property. - HELD THAT: - Section 17(5)(c) permits ITC on works contract services only where such services are an input for the further supply of works contract services. The Authority held that the society neither carries on the business of supplying works contract services nor supplies such services to members in the character of a works contractor; the works contract services were procured for the society's own benefit (replacement of the lift) and not for onward supply as works contract. Therefore the exception in section 17(5)(c) is inapplicable. Further, the CBIC Circular relied upon by the appellant relates to ITC on capital goods and does not permit ITC on works contract services that result in immovable property. [Paras 13, 14, 15, 17]

The appellant does not satisfy the conditions of section 17(5)(c) and cannot claim ITC thereunder; the CBIC Circular does not alter this conclusion.

Final Conclusion: The Advance Ruling was upheld: the appellant is not eligible to avail input tax credit on GST paid for lift installation charges paid to the lift contractor; the appeal is rejected.

Composite supply of goods and services - Composite supply of works contract involving predominantly earth work - Government Entity - Meaning and scope of "Earthwork" - Application of concessional GST notifications to works provided to government entities

Composite supply of goods and services - Government Entity - Application of concessional GST notifications to works provided to government entities - Whether the contract is covered under S. No. 3A of Notification No. 2/2018-Central Tax (Rate) dated 25th January 2018 - HELD THAT: - The Appellants contended that the work awarded by Godavari Marathwada Irrigation Development Corporation (GMIDC) falls within S. No. 3A as a composite supply where the goods component does not exceed 25% and the recipient is a Governmental Authority/Government Entity engaged in functions entrusted to Panchayats or Municipalities. The AAAR examined whether GMIDC is a "Government Entity" under the definition in Notification No. 31/2017 and found that GMIDC is constituted by a State enactment for irrigation and allied activities and thus qualifies as a "Government Entity." The AAAR further observed that entry 3A was inserted by Notification No. 2/2018 effective prospectively from 25th January 2018 and therefore, even if applicable, it would apply only from that date. Applying the statutory definition and the project characteristics (major project with large CCA), the AAAR concluded that the present tunnel work is part of a Major Project and not a function entrusted to a Panchayat under Article 243G; accordingly the condition in the latter part of the entry requiring relation to a function entrusted to a Panchayat or Municipality was not satisfied for this project. On these considerations the AAAR answered the question in the negative. [Paras 37, 39, 45]

The contract is not covered under S. No. 3A of Notification No. 2/2018-Central Tax (Rate) w.e.f. 25th January 2018.

Composite supply of works contract involving predominantly earth work - Meaning and scope of "Earthwork" - Application of concessional GST notifications to works provided to government entities - Whether the contract is covered under Entry No. 3 (vii) of the Table to Notification No. 11/2017-Central Tax (Rate) (as amended by Notification No. 31/2017) for composite works contracts involving predominantly earth work - HELD THAT: - Entry 3(vii) grants concessional tax where a composite works contract involves predominantly earthwork (more than 75% of contract value) and is provided to specified government bodies or a Government Entity. The AAAR reviewed the contract particulars and Schedule B which itemises the work; items 1-3 relate exclusively to excavation, dewatering, mucking and depositing excavated material. The AAAR considered dictionary and technical definitions showing that "earthwork" encompasses operations connected with excavation and embankments and earth-moving activities in construction. Given that earthwork constituted over 75% (indeed about 92.66% as claimed) of the contract value and the recipient (GMIDC) is a Government Entity and the services were procured in relation to the purpose for which the Corporation was set up, the AAAR held that all conditions of entry 3(vii) are fulfilled. The AAAR also rejected the AAR's narrow view that "earthwork" would exclude tunnel excavation by noting the entry's wording contemplates contracts (e.g., tunnels, canals, roads) where earthwork may predominate by value. [Paras 42, 43, 44, 45]

The contract qualifies under Entry No. 3(vii) (predominantly earth work) of Notification No. 11/2017 as amended by Notification No. 31/2017, and is therefore covered by the concessional rate.

Meaning and scope of "Earthwork" - What is the meaning of "Earthwork" for the purposes of the notification - HELD THAT: - In the absence of a statutory definition, the AAAR referred to recognized dictionary and engineering usages (Merriam, Webster, Collins, Wikipedia and engineering guides) and accepted that "earthwork" includes both excavation and embankment operations and generally denotes earth-moving operations in construction (removal, moving or adding of large quantities of soil or rock to achieve required grades/levels). Applying that meaning to the contract specifications (excavation of tunnel approaches, underground excavation, dewatering, mucking, depositing excavated material and related operations), the AAAR concluded that the work falls squarely within the accepted meaning of "earthwork." [Paras 41, 42, 44, 45]

"Earthwork" includes operations connected with excavation and embankments and thus encompasses the tunnel excavation and allied earth-moving works in the present contract.

Final Conclusion: The Appellate Authority modifies the AAR order: it rejects application of Notification S. No. 3A (answering Q.1 in the negative), holds that the contract qualifies as a composite works contract involving predominantly earthwork and is covered by Entry No. 3(vii) of Notification No. 11/2017 as amended (answering Q.2 in the positive), and construes "earthwork" to include excavation and related earth-moving operations.

Works contract service - affordable housing project - affordable residential apartment - concessional rate under Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) - infrastructure status - option to pay tax at the rate specified in Entry No. 3(ie) or 3(if)

Affordable housing project - affordable residential apartment - infrastructure status - The project 'Akriti' qualifies as an affordable housing project under the AHP Notification and units with carpet area up to 60 sqm (subject to price cap and other conditions) qualify as affordable residential apartments under the Rate Notification. - HELD THAT: - The Authority found that the applicant held WBHIRA registration and a commencement/building permit issued before 31/03/2019 and that earthwork for site preparation was completed before that cutoff, satisfying the conditions for an ongoing project. The architect's certification and project plan established that out of 192 flats, 120 flats have carpet area of 60 sqm or less and the FAR calculations showed that at least 50% of FAR/FSI is utilised for such dwelling units. Applying the definitions in the AHP Notification and clause 4(xvi) and 4(xx) of the Rate Notification, the Authority concluded the identified flats meet the carpet-area and FAR thresholds and that the project therefore enjoys the characteristics of an affordable housing project for the purposes of the notifications, subject to the gross amount charged per unit not exceeding the prescribed cap and subject to the promoter not having exercised the option to pay tax under Entry 3(ie) or 3(if). [Paras 4]

The RREP 'Akriti' is an affordable housing project and the identified flats qualify as affordable residential apartments under the notifications, subject to the price cap and non-exercise of alternative tax option.

Works contract service - concessional rate under Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) - option to pay tax at the rate specified in Entry No. 3(ie) or 3(if) - Works contract service for construction of those dwelling units in the RREP that qualify as affordable residential apartments is taxable under Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate), irrespective of whether supplied by the promoter or the contractor, provided the promoter has not opted to pay tax under Entry 3(ie) or 3(if). - HELD THAT: - Relying on the principle that the notification entry pertains to the supply of service rather than the identity of the supplier, and agreeing with precedents of another Advance Ruling authority, the Authority held that once the project and units qualify as affordable residential apartments, the concessional rate under Entry 3(v)(da) applies to the works contract service for those units. The applicability is conditional upon the units meeting the carpet-area and price conditions and the promoter not exercising the option to pay the alternative rates under Entry 3(ie) or 3(if). [Paras 1, 4]

The works contract service for construction of the qualifying affordable units in the project is taxable under Entry No. 3(v)(da), subject to the stated conditions and non-exercise of the alternative tax option.

Final Conclusion: The Authority ruled that the specified units in the 'Akriti' project qualify as affordable residential apartments and that the works contract service for construction of those units is taxable at the concessional rate under Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate), provided the units meet the statutory conditions and the promoter has not opted to pay tax under Entry 3(ie) or 3(if).

Detention and seizure under Section 129 - release of goods upon payment of applicable tax and penalty - notice and determination of tax and penalty under Section 129(3) - obligation of proper officer to examine defence and determine liability - statutory remedy before the C.G.S.T. Tribunal

Detention and seizure under Section 129 - notice and determination of tax and penalty under Section 129(3) - obligation of proper officer to examine defence and determine liability - Validity of the orders detaining goods and determining tax and penalty when the assessing and first appellate authorities did not examine the petitioner's claim that the movement was for job work and that no tax liability had arisen. - HELD THAT: - Section 129 empowers detention and seizure of goods in transit where movement contravenes the Act and requires release only on payment of applicable tax and penalty or on furnishing security. Section 129(3) mandates issuance of a notice specifying tax and penalty and thereafter an order for payment under the prescribed clauses. The proper officer must give opportunity, examine the defence raised in response to the notice and determine the tax liability; only thereafter can the appropriate penalty be fixed. In the present case the petitioner admitted that the e-way bill produced with the vehicle did not correctly describe the movement and asserted that the machine was being transported for performance of job work, relying on an earlier purchase (2018) for which tax had been paid and on a subsequently generated e-way bill and supporting documents. The orders under challenge do not record any substantive examination or rejection of the petitioner's claim that the movement was for job work nor any finding that the machine had been sold or that tax paid earlier was unpaid. Because the proper officer did not undertake the fact-specific determination of whether tax liability had arisen prior to fixing penalty, the orders are unsustainable. The Court accordingly quashed the impugned orders and remitted the matter to the proper officer to examine the petitioner's defence on merits and determine liability in accordance with law, permitting the petitioner to furnish necessary details and directing expeditious disposal.

Impugned orders dated 28.1.2020 and 6.2.2020 quashed; matter remitted to the proper officer to examine the petitioner's claim regarding job work and determine tax and penalty after giving opportunity, to be completed expeditiously.

Final Conclusion: The writ petition succeeds to the extent that the orders imposing tax and penalty are quashed and the matter is remitted to the proper officer for fresh, merit-based determination of tax and penalty after allowing the petitioner to place on record supporting material; no final conclusion on liability is recorded by this Court.

Condonation of delay - discretion under Section 119(2) - revised return under Section 139(4) as it stood prior to amendment - treatment of tax deducted at source in assessment - prejudice to the revenue

Condonation of delay - discretion under Section 119(2) - revised return under Section 139(4) as it stood prior to amendment - Legality of Ext.P9 order rejecting the petitioner's application under Section 119(2) for condonation of delay in filing the revised return - HELD THAT: - The Court examined Ext.P9 which refused condonation of a 42 day delay and noted that, as per S.139(4) prior to its 01.04.2017 amendment, a person who had not furnished a return within the time allowed could furnish a return before the expiry of one year from the end of the relevant assessment year or before completion of assessment, whichever was earlier. The petitioner had filed an initial return and a subsequent revised return (Ext.P2) and in any event applied under S.119(2) for relaxation. The Court found that Ext.P9's reasons - including the absence of documentary proof of belated TDS filing by the deductor and absence of established financial hardship - were not convincing. The Court held that the assessing authority could not ignore the fact of TDS deduction while completing assessment and that granting the requested relaxation would not prejudice the Department. Reliance on departmental guidelines did not validate the rejection where no real prejudice arose and the assessment remained pending. For these reasons the Court concluded that Ext.P9 could not be legally sustained. [Paras 5, 6]

Ext.P9 is quashed; the rejection of the condonation application under S.119(2) set aside.

Treatment of tax deducted at source in assessment - prejudice to the revenue - Remand for consideration of the revised return (Ext.P2) and the TDS details while finalising assessment - HELD THAT: - The Court directed that, having quashed Ext.P9, the respondents must consider the details contained in Ext.P2 revised return when finalising the assessment for AY 2014-2015. The Court observed that the assessing authority, in completing assessment, cannot ignore TDS reflected in departmental records and that consideration of the revised return would not prejudice the revenue. The matter of assessment remains open and the respondents are to give consequential benefits to the petitioner if justified on merits during assessment proceedings. [Paras 6]

Respondents to consider Ext.P2 revised return and the TDS details while finalising the assessment for AY 2014-2015, with consequential benefits to the petitioner.

Final Conclusion: Ext.P9 rejecting the petitioner's application under Section 119(2) is quashed; respondents are directed to consider the petitioner's Ext.P2 revised return and the TDS information while finalising the assessment for AY 2014-2015 and to grant consequential benefits if merited.

Reopening of assessment - failure to disclose fully and truly all material facts - limitations under proviso to Section 147 - requirement of a speaking order / reasons - remand for fresh consideration

Reopening of assessment - failure to disclose fully and truly all material facts - limitations under proviso to Section 147 - requirement of a speaking order / reasons - Whether the Tribunal validly held the reassessment reopened beyond four years to be invalid on the ground that the Assessing Officer had not recorded any failure on the part of the assessee to disclose fully and truly all material facts. - HELD THAT: - The High Court held that the Tribunal's conclusion that the Assessing Officer had not recorded any failure was not supported by reasons in the impugned order. The Court emphasised the settled principle that an adjudicatory order must stand on the reasons it contains and those reasons cannot be supplied or substituted at the appellate stage. While the assessment order and the order of the Commissioner (Appeals) contain material and reasons, the Tribunal did not articulate how it reached the view that no failure had been recorded by the Assessing Officer. Because the Tribunal's order does not set out the basis for its conclusion, it is effectively a non-reasoned order and unsustainable. The Court therefore declined to express any opinion on the merits as that would prejudice the parties, and instead set aside the Tribunal's order to permit fresh consideration by the Tribunal with reasons. [Paras 12, 15, 18, 19]

Impugned order set aside and matter remanded to the Tribunal for fresh consideration; substantial questions of law left open.

Final Conclusion: The Tribunal's order was quashed for want of reasons; the matter is remitted to the Tribunal for fresh consideration of whether reassessment was validly reopened, leaving the substantial questions of law open.

Eligibility for deduction under Section 80IB(10) - prospective operation of legislative amendments - allotment as the operative event for applicability of clauses (e) and (f) of Section 80IB(10) - treatment of unaccounted/on money as business income

Eligibility for deduction under Section 80IB(10) - treatment of unaccounted/on money as business income - Deductibility under Section 80IB(10) of amounts discovered as unaccounted/on money during search proceedings. - HELD THAT: - The Tribunal and this Court accepted the Assessing Officer's treatment of the amounts found during the search as business income. The Court noted that the assessee had claimed deduction under Section 80IB(10) in the return and that the Assessing Officer had treated the unaccounted receipts as business income. On that basis the Tribunal's conclusion that the assessee was entitled to deduction under Section 80IB(10) in respect of additional income so treated was upheld. The Court did not sustain the revenue's contention that such unaccounted/on money are ipso facto ineligible for deduction where they have been treated as business income and reflected in the assessee's claim. [Paras 4, 5]

Assessee entitled to deduction under Section 80IB(10) in respect of the unaccounted/on money treated as business income and claimed in the return.

Prospective operation of legislative amendments - allotment as the operative event for applicability of clauses (e) and (f) of Section 80IB(10) - Applicability of clauses (e) and (f) inserted into Section 80IB(10) with effect from 01.04.2010 to transactions entered into before that date. - HELD THAT: - Clauses (e) and (f) were inserted by Finance Act (No.2), 2009 with effect from 01.04.2010. The Court observed that the legislative language in clause (e) uses the expression 'allotted', signalling that allotment prior to 01.04.2010 preserves entitlement even if conveyance/registration occurs later. The Court held that clauses (e) and (f) are prospective in nature and apply only to transactions entered into on or after 01.04.2010, a conclusion supported by Circular No.5/2010 dated 03.06.2010. The Tribunal's finding that nearly all transactions (except two flats) were entered into in 2007 08 was therefore decisive: the post 2010 amendments could not be applied to those earlier transactions. [Paras 4, 5]

Clauses (e) and (f) of Section 80IB(10) operate prospectively from 01.04.2010; transactions/allotments prior to that date are not governed by those clauses and the assessee retains entitlement where allotment occurred before 01.04.2010.

Final Conclusion: Substantial questions of law answered against the revenue and in favour of the assessee; appeal dismissed.

Deduction under Section 80IB(10) - Minimum plot size of one acre for housing project - Maximum built-up area of residential unit and principle of proportionality - Limit on commercial area in housing project (percentage test) - Strict interpretation of exemption provisions in taxing statutes

Minimum plot size of one acre for housing project - Deduction under Section 80IB(10) - Whether the assessee satisfied the requirement of project being on a plot of land having a minimum area of one acre under Section 80IB(10). - HELD THAT: - The Assessing Officer recorded that the approved plan (approved on 30.04.2005) showed site area of 48,939 sq.ft., which exceeds one acre. Though part of the land was subsequently handed over to the local authority for public purposes and the area ultimately used for sale was 38,573 sq.ft., the Tribunal and preceding authorities treated the size of the plot as per the approved plan as determinative. The Court accepted the view in precedents that the size of the approved plot must be taken as a whole and areas surrendered for public purposes (roads, parks etc.) cannot be excluded for the purpose of clause (b). The Court observed that the housing project was approved in respect of an area exceeding one acre and therefore clause (b) is satisfied. [Paras 15]

Assessee complied with the minimum one acre plot-size requirement of clause (b) of Section 80IB(10).

Maximum built-up area of residential unit and principle of proportionality - Deduction under Section 80IB(10) - Whether clause (c) of Section 80IB(10) (maximum built-up area per residential unit) permits proportionate deduction in respect of units measuring less than 1,500 sq.ft. - HELD THAT: - Clause (c) uses the expression 'residential unit' and does not use the word 'each'. The Court noted that clauses (b) and (c) remained unchanged by the amendment and that legislative use of the word 'each' in other provisions but not in clause (c) indicates a different legislative intention. The Tribunal and lower authorities had applied the principle of proportionality in prior assessment years of the assessee and those views had attained finality (bench and Supreme Court dismissals). On literal construction and settled rules of interpretation of taxing and exemption provisions, clause (c) does not exclude proportional application; consequently, the Commissioner (Appeals) and Tribunal were right to allow proportionate deduction for units with built-up area up to 1,500 sq.ft. [Paras 16]

Clause (c) permits proportionate deduction for residential units within the maximum built-up area limit; the assessee satisfied clause (c).

Limit on commercial area in housing project (percentage test) - Deduction under Section 80IB(10) - Whether the assessee complied with the requirement that built-up area of shops and other commercial establishments in the housing project not exceed the prescribed percentage (5%), and whether commercial area must be computed for the entire project or could be considered block-wise. - HELD THAT: - The Assessing Officer contended that commercial area used exceeded the permissible limit. The Tribunal found, and this Court accepted, that individual residential blocks for which separate approvals were obtained could be treated as separate projects for computing the limit on commercial area, and that prior decisions in the assessee's earlier assessment years (which attained finality) support that approach. The Court further observed that principles of finality in repeated assessment years and the parties' conduct reinforced that a different view in the subsequent year was inappropriate. Applying those conclusions, the Court held that the assessee complied with the commercial-area requirement of clause (d). [Paras 17]

Assessee complied with the commercial-area limitation under clause (d); the per-block approach adopted by the Tribunal was upheld.

Final Conclusion: All substantial questions of law framed on admission were answered against the revenue; the assessee was held to have complied with clauses (b), (c) and (d) of Section 80IB(10) for Assessment Year 2007-08 and the revenue's appeal was dismissed.

Disallowance under Section 40A(3) of the Income-tax Act - allowability of professional fees paid in cash - application of Rule 6DD(b) to cash payments - verification of supporting bill and concurrent appellate findings - reopening of assessment under Section 147 of the Income-tax Act

Disallowance under Section 40A(3) of the Income-tax Act - allowability of professional fees paid in cash - application of Rule 6DD(b) to cash payments - verification of supporting bill and concurrent appellate findings - Deletion of the disallowance of Rs. 4,35,000 made under Section 40A(3) in respect of cash payment of professional fees to the solicitor was correct and requires no interference. - HELD THAT: - The assessing officer had disallowed the cash payment made to the solicitor under Section 40A(3). On appeal the CIT(A) examined the provisions of Section 40A(3) as amended w.e.f. assessment year 2008-09, inspected the bill produced by the assessee and on the evidence on record allowed the appeal deleting the disallowance. The Tribunal confirmed the CIT(A)'s conclusion. The High Court found no error in the concurrent appellate findings: the bill and documentary evidence were considered by the appellate authorities, who applied the amended law and law on Rule 6DD(b) insofar as relevant, and reached a conclusion that the cash payment for professional fees was allowable. There was therefore no legal or factual infirmity warranting interference with the concurrent orders deleting the disallowance.

Appeal dismissed; questions of law answered against the Revenue and in favour of the assessee with respect to deletion of the disallowance.

Final Conclusion: The High Court declines to interfere with the concurrent findings of the CIT(A) and the Tribunal deleting the disallowance under Section 40A(3); the Revenue's appeal is dismissed and the questions are decided in favour of the assessee.

Principal Officer - treatment of retired director as Principal Officer - liability of person connected with management or administration - administrative discretion to proceed against acting directors - obligation to furnish details of acting directors for relevant year

Principal Officer - treatment of retired director as Principal Officer - Impugned order treating the petitioner, a retired Director, as a Principal Officer was set aside - HELD THAT: - The Court held that, having regard to the short period during which the petitioner acted as Director and his subsequent retirement, effective proceedings may not be possible by treating him as Principal Officer. The Court observed that the legislative purpose of treating a person connected with management as a Principal Officer is to enable the revenue to proceed against a person who can prepare and submit returns, but where acting Directors continued in office they would be more appropriate persons to be proceeded against. On this basis the impugned order dated 26.11.2018 treating the petitioner as Principal Officer was set aside as unwarranted in the facts of this case. [Paras 4, 5]

Impugned order dated 26.11.2018 treating the petitioner as Principal Officer is set aside.

Obligation to furnish details of acting directors for relevant year - administrative discretion to proceed against acting directors - Petitioner directed to furnish details of acting Directors for the Financial Year 2011-2012 and respondent given liberty to proceed against any one of them as Principal Officer - HELD THAT: - The Court directed that the petitioner, who claims to possess details of the acting Directors during the relevant assessment year, must furnish those details in reply to the departmental proposal dated 13.11.2018 within 15 days of receipt of the order. Upon receipt of such particulars the respondent is at liberty to consider proceeding against any one of the acting Directors and to treat such person as Principal Officer under the statutory definition, thereby permitting the department to take further assessment action against an appropriate person who was in management during the relevant year. [Paras 4, 5]

Petitioner to furnish details of acting Directors for Financial Year 2011-2012 within 15 days; respondent may proceed against any one acting Director as Principal Officer.

Final Conclusion: The writ petition is disposed of by setting aside the order treating the petitioner as Principal Officer; the petitioner is directed to furnish details of acting Directors for Financial Year 2011-2012 and the department may, after receiving those particulars, proceed against any one of the acting Directors as Principal Officer.

Remand for fresh consideration - Reinstatement of penalty under section 271(1)(c) - Explanation 3 to section 271(1)(c) - deemed concealment where return not furnished within period specified in section 153 - Explanation 5A to section 271(1)(c) - search linked disclosure treated as concealment - Rebuttable presumption and burden to adduce factual evidence - Levy of penalty on matters not raised in grounds of appeal

Remand for fresh consideration - Reinstatement of penalty under section 271(1)(c) - Explanation 3 to section 271(1)(c) - deemed concealment where return not furnished within period specified in section 153 - Explanation 5A to section 271(1)(c) - search linked disclosure treated as concealment - Rebuttable presumption and burden to adduce factual evidence - Levy of penalty on matters not raised in grounds of appeal - The Tribunal's order restoring penalty under section 271(1)(c) was set aside and the matter remitted to the Tribunal for fresh hearing and decision after giving opportunity to both parties. - HELD THAT: - The High Court found that the Tribunal had committed prima facie factual errors concerning whether a return was filed before the search, and had invoked Explanation 3 and Explanation 5A to section 271(1)(c) without examining or recording facts necessary to confront the rebuttable presumptions created by those Explanations. The Tribunal also restored penalty on an issue not raised in the Revenue's grounds of appeal. Because the Explanations operate by creating rebuttable presumptions, the Tribunal was required to consider and record relevant factual rebuttal or lack thereof before reimposing penalty, particularly when reversing the Commissioner (Appeals) who had found the assessee's explanation satisfactory. In view of these defects, the High Court did not decide the substantive legal questions raised but directed that the Tribunal decide the appeal afresh in accordance with law after affording both parties an opportunity and discussing the relevant facts, with appropriate computation (including credit for advance tax) where applicable. [Paras 8, 9]

Impugned order dated 6.6.2017 is set aside and the matter is remanded to the Tribunal to decide the appeal afresh after giving both parties opportunity and considering relevant facts in law.

Final Conclusion: The Tribunal's order restoring penalty under Section 271(1)(c) for Assessment Year 2006-2007 is set aside and the appeal is remitted to the Tribunal for fresh adjudication after giving both parties an opportunity to be heard and addressing the factual and legal issues, including any rebuttal of the presumptions in Explanations 3 and 5A to Section 271(1)(c).

Reassessment beyond four years and limitation under the first proviso to Section 147 - Failure to truly and fully disclose and applicability of the proviso to Section 147 - Change of opinion is not a ground for reopening assessments - Audit report under Section 44AB and attribution of non-disclosure to the assessee

Reassessment beyond four years and limitation under the first proviso to Section 147 - Change of opinion is not a ground for reopening assessments - Whether reassessment notices issued in 2015 for Assessment Years 2007-2008 and 2008-2009 were barred by limitation as they were issued after the expiry of four years and were based only on a change of opinion. - HELD THAT: - The Court held that unless the Revenue establishes a factual failure by the assessee to truly and fully disclose material facts in the original assessment proceedings, reassessment cannot be initiated beyond four years merely on a later change of opinion. The records show that the Assessing Officer had called for and received details including TDS certificates, gross receipts, opening stock, work-in-progress, sub-contract payments, vehicle and machine hire details and had made enquiries; the assessee had also responded (including by a letter dated 7.12.2009). On these facts the Court found no failure of disclosure by the assessees and therefore the first proviso to Section 147 could not be invoked to extend limitation for reopening. Consequently the reassessment notices issued in 2015 for the impugned years (where four years had expired in 2013) were barred by limitation. [Paras 7, 8, 9, 12]

Reassessment notices issued after expiry of four years were barred by limitation and could not be sustained where there was no failure to truly and fully disclose materials in the original assessment proceedings.

Failure to truly and fully disclose and applicability of the proviso to Section 147 - Assessing Officer's knowledge and material on record in original proceedings - Whether there was a failure on the part of the assessees to truly and fully disclose machine hire charges and related facts such that the proviso to Section 147 would apply. - HELD THAT: - On the material placed before the Court, including the assessment order entries and communications during original scrutiny assessment, the Court found that machine hire charges and related payments were disclosed in books, audit reports and in replies to the Assessing Officer (notably the letter dated 7.12.2009). Though the Assessing Officer made additions under Section 40(a)(ia) in respect of certain amounts, the existence of the information before the Assessing Officer during original assessment showed there was no concealment or non-disclosure by the assessee to attract the proviso to Section 147. The reopening therefore could not be justified on the ground of non-disclosure. [Paras 8, 9]

There was no failure to truly and fully disclose material facts regarding machine hire charges; the proviso to Section 147 was not attracted.

Audit report under Section 44AB and attribution of non-disclosure to the assessee - Responsibility for omissions in the auditor's report - Whether omission or negligence by the auditor in the audit report under Section 44AB relieves the assessee of responsibility for non-disclosure to the Assessing Officer. - HELD THAT: - The Court disagreed with the Tribunal's broad proposition that an assessee cannot be faulted if the auditor omits to record relevant facts in the audit report. The Court observed that omissions in the auditor's report, or failure to highlight facts in the audit report, may be attributable to the assessee if the assessee failed to place material before the auditor; the assessee can, however, qualify the report or ensure disclosure. That said, the Court noted that in the present case there were no facts establishing that the assessee had placed relevant facts before the Assessing Officer but the auditor nonetheless failed to disclose them; independent findings on auditor negligence were thus unnecessary to the final outcome. [Paras 10, 11]

Omissions in an auditor's report are not ipso facto a shield for the assessee; such omissions may be attributable to the assessee, though no such factual circumstance arose here to alter the conclusion on disclosure.

Final Conclusion: The Revenue's appeals are dismissed. The reassessment notices issued in 2015 for Assessment Years 2007-2008 and 2008-2009 were barred by limitation and could not be sustained in the absence of failure by the assessees to truly and fully disclose relevant materials during the original assessment proceedings; no costs.

Deduction under Section 10AA - entrepreneur under the Special Economic Zone Act - Letter of Approval - competent authority to certify date of commencement of production - classification of medallion as a pendant

Deduction under Section 10AA - entrepreneur under the Special Economic Zone Act - Letter of Approval - classification of medallion as a pendant - competent authority to certify date of commencement of production - Assessee entitled to deduction under Section 10AA for the units in the Special Economic Zone for the assessment years in question and Tribunal's favorable findings affirmed. - HELD THAT: - The assessee had been granted a Letter of Approval and thus fell within the definition of an entrepreneur under the Special Economic Zone Act, which is the primary condition for claiming the benefit under Section 10AA. The Assessing Officer denied the benefit on the basis that the assessee had violated the Letter of Approval by manufacturing medallions instead of pendants. That factual substratum was undermined by subsequent judicial and administrative developments: the writ proceedings challenged the penalty imposed by the Development Commissioner and the writ court recorded that a medallion is a piece of jewellery worn as a pendant, noting the Customs Department's letter to the Development Commissioner to the same effect. The penalty order was quashed and the finding of violation set aside. Further, the date of commencement of production recorded by the Development Commissioner is binding on the Income Tax department because the Development Commissioner is the competent authority to certify commencement. In view of these developments the factual basis for denying the Section 10AA benefit no longer survived, and the Tribunal's conclusion that there was no breach of the Letter of Approval and that the assessee was entitled to the deduction was not liable to interference in the appeal under Section 260A.

Tribunal's finding that the assessee is entitled to the benefit under Section 10AA is upheld and the appeal is dismissed.

Final Conclusion: Both appeals by the Revenue are dismissed; the Tribunal's allowance of the Section 10AA benefit to the assessee for AY 2011-12 and AY 2012-13 is affirmed.

Principles of natural justice - service of notice - show cause notice - opportunity to be heard - fresh adjudication on merits after issuance of notice

Principles of natural justice - service of notice - opportunity to be heard - show cause notice - Impugned assessment annulled for failure to grant effective opportunity of hearing where show cause notice was only uploaded and not properly served. - HELD THAT: - The court found that the show cause notice dated 06.11.2019 was only uploaded on the website and was not served by e-mail as previous communications had been. Because the show cause notice is the stage at which the issues for assessment are crystallised and communicated to the assessee, it was incumbent on the Assessing Officer to ensure proper service and to grant sufficient time to the assessee to respond before finalising the assessment. The absence of proper service resulted in denial of an effective opportunity to state the assessee's case, thereby infringing the principles of natural justice. In consequence, the assessment order dated 19.11.2019 could not stand and the matter was remitted for fresh consideration after the assessee furnishes a reply and any other materials to the Assessing Officer, who must thereafter complete the assessment within the stipulated time. [Paras 4, 5, 6]

Assessment order dated 19.11.2019 set aside; matter remitted for fresh adjudication after the assessee supplies a reply to the show cause notice and appears before the Assessing Officer, who shall complete the assessment within six weeks thereafter.

Final Conclusion: Writ petition allowed: assessment for assessment year 2014-15 set aside for breach of natural justice due to defective service of the show cause notice; fresh assessment directed after the assessee's reply, to be completed within six weeks.

Rectification of Tribunal order under section 254(2) of the Income-tax Act - prevention of double taxation of the same income - application of accounting standard AS-9 and recognition of income - onus on the assessee to prove non-recognition in an earlier assessment year

Rectification of Tribunal order under section 254(2) of the Income-tax Act - prevention of double taxation of the same income - Amendment of para 14 of the Tribunal's order to clarify that income offered in the same assessment year or in a later assessment year cannot be taxed twice and to direct insertion of the words "either in this year or". - HELD THAT: - The miscellaneous petition under section 254(2) sought correction of an apparent omission in paragraph 14 of the Tribunal's order which referred only to income offered in a "later assessment year". The assessee asserted that part of the income not accounted on accrual basis was offered to tax in the same assessment year (AY 2012-13) and that omission of words giving that possibility led to misinterpretation by the Assessing Officer. The Tribunal examined the language of paragraph 14 and found that adding the words "either in this year or" after the phrase "how the income offered" would align the paragraph with its intent that the same income cannot be taxed twice. The Tribunal held that absence of the insertion could lead to an interpretation inconsistent with that intent and therefore directed the specific textual amendment. The order preserves the principle that the burden remains on the assessee to show that income offered in the same or a later assessment year was previously not recognised by application of AS-9. [Paras 5, 6, 7]

Miscellaneous petition allowed to the extent of directing insertion of the words "either in this year or" in line 6 of paragraph 14 of the Tribunal's order, clarifying that income offered in the same assessment year or in a later assessment year shall not be taxed twice.

Final Conclusion: The Tribunal allowed the rectification petition under section 254(2) to the limited extent of inserting the words "either in this year or" in paragraph 14 of its earlier order to make clear that the same income offered in the same assessment year or in a later assessment year cannot be taxed twice; the onus remains on the assessee to demonstrate non-recognition in the earlier year.

Capital asset - capital gains on retirement of a partner - treatment of goodwill in computation of capital gains - cost of acquisition of goodwill - scope of rectification under section 254(2) of the Income-tax Act, 1961 - mistake apparent on the face of the record

Capital gains on retirement of a partner - treatment of goodwill in computation of capital gains - cost of acquisition of goodwill - capital asset - Whether the value of goodwill paid on retirement of a partner can be excluded from the amount regarded as standing to the credit of the partner's capital account (or cost of acquisition) for computing capital gains, by invoking the deeming provision relating to cost of goodwill. - HELD THAT: - The Tribunal found that the right of a partner in the firm is a capital asset and that on relinquishment of that right the consideration received in excess of the sum standing to the credit of the partner's capital account constitutes capital gain. Goodwill itself was not the subject-matter of a separate transfer; rather, goodwill is one component of the partner's overall right in the partnership. Consequently, the deeming provision that treats cost of acquisition of self-generated goodwill as nil under the Income-tax Act does not apply to exclude the value of goodwill when it forms part of the consideration for relinquishment of the partner's capital right. The appellate record discloses no mistake apparent on the face of the record in this legal conclusion of the Tribunal. [Paras 6]

Goodwill, being a component of the partner's right in the firm, was correctly treated by the Tribunal as part of the consideration in computing capital gains; section 55(2)(a) (deeming cost of goodwill as nil) does not operate to exclude that value in this context.

Scope of rectification under section 254(2) of the Income-tax Act, 1961 - mistake apparent on the face of the record - Whether the Revenue's miscellaneous petition under section 254(2) seeking to re-open the Tribunal's computation by invoking a different legal view on goodwill is maintainable as a rectification for a mistake apparent on the face of the record. - HELD THAT: - Section 254(2) confines the jurisdiction of the Tribunal on a miscellaneous petition to rectifying mistakes apparent on the face of the record. The revenue's attempt amounted to seeking a review of the Tribunal's order by advancing a debatable legal contention about the applicability of the deeming provision for goodwill. The contention involved a substantive legal question which the Tribunal had considered and decided; it was not a clerical or apparent error. Therefore the matter could not be reopened under the limited remedial scope of section 254(2). [Paras 6]

The miscellaneous petition under section 254(2) is not maintainable for re-agitating a debatable legal issue and must be dismissed for lack of any mistake apparent on the face of the record.

Final Conclusion: The miscellaneous petition filed by the Revenue under section 254(2) is dismissed: the Tribunal correctly treated the partner's right (including goodwill as a component) as the capital asset whose relinquishment gave rise to capital gains, and the petition improperly sought re-examination of a debatable legal point rather than rectification of a mistake apparent on the face of the record.

Revisional jurisdiction under section 263 - notional annual letting value - property held as stock-in-trade vs. income from house property - two views doctrine - prejudicial to the interests of the revenue - prospective application of statutory amendment

Revisional jurisdiction under section 263 - notional annual letting value - property held as stock-in-trade vs. income from house property - two views doctrine - prejudicial to the interests of the revenue - prospective application of statutory amendment - Whether the Principal Commissioner of Income Tax validly invoked revisional jurisdiction under section 263 to direct addition of notional annual letting value on flats held as stock-in-trade for the assessment years in question. - HELD THAT: - The Tribunal found on the record that the Assessing Officer had issued specific enquiries during assessment, received detailed replies and was aware that the assessee was a real estate developer holding completed flats as inventory, and thereafter applied his mind and made no addition for notional letting value. Two conflicting decisions of non jurisdictional High Courts were available on the question whether notional letting value of unsold flats is assessable as income from house property or is business income; in such circumstances the Assessing Officer had adopted one of the possible views. Reliance on precedents of the Hon'ble Supreme Court that section 263 cannot be invoked where two views are possible and the view taken by the Assessing Officer is sustainable was held decisive. Further, the statutory amendment expressly taxing notional annual value of stock-in-trade was inserted prospectively with effect from 01-04-2018 and therefore inapplicable to the years under appeal. Applying these principles, the Tribunal concluded that the twin conditions for exercise of revisional jurisdiction-an erroneous order prejudicial to revenue-were not satisfied and the PCIT therefore erred in invoking section 263. [Paras 5, 7, 8, 10, 13]

The orders passed by the PCIT under section 263 for A.Y. 2014-15 and A.Y. 2015-16 are quashed and the appeals of the assessee are allowed.

Final Conclusion: Where the Assessing Officer had considered the issue of unsold flats held as stock in trade, taken one of two plausible views supported by judicial decisions, and the statutory amendment on notional annual value applied prospectively, the revisional power under section 263 could not be validly invoked; the PCIT's orders for A.Y. 2014 15 and A.Y. 2015 16 were quashed and the appeals allowed.

Evidentiary value of a seized document - admission recorded during investigation - addition to income on basis of uncorroborated receipt - requirement of corroboration before making an addition

Evidentiary value of a seized document - addition to income on basis of uncorroborated receipt - admission recorded during investigation - Sustainability of addition of Rs. 50 lakhs to assessee's income on the basis of a cancelled money receipt seized during search. - HELD THAT: - The Tribunal found that the only material for the Rs. 50 lakhs addition was a cancelled money receipt seized in search proceedings. The Investigation Wing had confronted the assessee with a receipt for Rs. 11 lakhs and the assessee admitted that amount and surrendered it in his return; however, the Investigation Wing did not confront the assessee regarding the alleged balance of Rs. 50 lakhs. The Assessing Officer subsequently made the addition for Rs. 50 lakhs without obtaining corroborative evidence - notably, without summoning the named payer whose address appeared on the seized sheet - and on the basis of presumption. In these circumstances the cancelled receipt, not being confronted or supported by independent evidence, lacked sufficient evidentiary value to sustain the addition. While admissions recorded during investigation are important, the Tribunal applied the requirement that a seized document relied upon to fasten tax liability must have adequate probative force and be corroborated; absence of such corroboration rendered the addition unsustainable.

Addition of Rs. 50 lakhs deleted for lack of corroborative evidence; appeal allowed.

Final Conclusion: The Tribunal deleted the Rs. 50 lakhs addition made by the Assessing Officer and sustained by the CIT(A), holding that the cancelled seized receipt was uncorroborated and insufficiently probative to fasten the addition; the appeal is allowed.

Revision under Section 263 - erroneous and prejudicial to the interests of revenue - Assessing Officer's duty to verify books of account and to examine genuineness of liabilities and current assets - Reexamination of valuation of stock and treatment of stock-shortfall as unaccounted sales - Scope of power under Section 263 to direct fresh assessment versus prohibition on roving enquiries - Reliance on audited accounts and production of books of account in scrutiny assessment

Assessing Officer's duty to verify books of account and to examine genuineness of liabilities and current assets - Revision under Section 263 - erroneous and prejudicial to the interests of revenue - Scope of power under Section 263 to direct fresh assessment - Whether the Principal CIT was justified in holding the assessment order erroneous and prejudicial to revenue for failing to verify genuineness of unsecured loans, sundry creditors/liabilities and sundry debtors and directing reexamination by the AO. - HELD THAT: - The Tribunal found on the record that the assessee repeatedly failed to produce books of account despite notices and that the AO had completed assessment largely on the basis of the audit report, ledger copies and bank statements without independent verification of the claimed liabilities and current assets. Reliance on the statutory scheme of Section 263(1) and its explanations led the Tribunal to hold that an order passed without making inquiries or verification which should have been made is 'erroneous and prejudicial to the interests of the revenue.' The Tribunal observed that the AO is not merely an adjudicator but must investigate genuineness of transactions, and that the Pr.CIT was therefore justified in directing the AO to call for audited books and verify the unsecured loan, sundry creditors, payables and sundry debtors before fresh adjudication. [Paras 10]

Direction of the Pr.CIT under Section 263 to re-examine the genuineness of unsecured loan, sundry creditors/liabilities and sundry debtors is upheld and the matter is remitted to the AO for fresh adjudication.

Reexamination of valuation of stock and treatment of stock-shortfall as unaccounted sales - Reliance on audited accounts and production of books of account in scrutiny assessment - Scope of power under Section 263 to direct fresh assessment versus prohibition on roving enquiries - Whether the Principal CIT was justified in directing reexamination of the valuation of stock recorded in the books vis-a -vis the stock statement submitted to the bank and treating any difference as unaccounted sales. - HELD THAT: - The Tribunal found that the AO had taken a plausible view in the assessment by accepting the closing stock as per the assessee's records and making an addition for the difference noted during survey under Section 133A. The record did not clearly show whether the Pr.CIT himself made independent enquiries with the bank or established whether the variance was in quantity or only value. Applying the principle that Section 263 cannot be used to substitute one plausible view taken by the AO with another or to initiate impermissible roving enquiries, the Tribunal held that the Pr.CIT was not justified in directing further verification of stock valuation; the decision of the AO on stock valuation did not warrant interference under Section 263. [Paras 9]

Direction of the Pr.CIT to reexamine the valuation of stock reported to the bank is not sustained; the AO's view on stock was a plausible one and does not call for interference under Section 263.

Final Conclusion: The appeal is partly allowed: the Tribunal upholds the Pr.CIT's invocation of Section 263 insofar as the AO must verify the genuineness of unsecured loan, sundry creditors/liabilities and sundry debtors and proceed to fresh adjudication, but disallows the Pr.CIT's direction for further reexamination of stock valuation reported to the bank, holding the AO's view on stock to be a plausible conclusion not warranting interference.

Implementation of Appellate Tribunal order pending expiry of statutory appeal period - statutory appellate remedy and preservation of six month period - exercise of writ jurisdiction - avoidance of futile or peremptory directions - contempt consequences where statutory appeal is contemplated - prohibition on coercive steps curtailing statutory right of appeal

Implementation of Appellate Tribunal order pending expiry of statutory appeal period - statutory appellate remedy and preservation of six month period - prohibition on coercive steps curtailing statutory right of appeal - Petition for a direction to implement Ext.P7 order of the CESTAT while the period for filing a statutory appeal before the Division Bench had not expired. - HELD THAT: - The Court held that the statutory scheme under the Customs Act grants the respondent a six month period to prefer an appeal against the Appellate Tribunal's order and that this statutorily conferred appellate remedy must be preserved. The mere contemplation or intention to file the statutory appeal by the respondent is not a valid reason to deny the petitioner any eventual relief, and the respondent cannot be coerced into implementing Ext.P7 so as effectively to curtail the period available for appeal. The right of the petitioner to insist on implementation of the Tribunal's order arises only if the respondent fails to file an appeal within the statutory period or if such an appeal, when filed, is dismissed by the appellate authority. The Court emphasized that it would be imprudent to issue peremptory directions at a stage when the statutory appeal period has not expired, because such directions could be futile and would undermine the statutory appellate process. [Paras 3, 4]

Writ petition dismissed as premature; no direction to implement Ext.P7 granted while the statutory period for appeal subsists.

Final Conclusion: The petition was dismissed as premature: the Court refused to direct implementation of the CESTAT order while the statutory period to file an appeal remained available to the respondent and emphasized that the petitioner's right to insist on implementation would arise only if the respondent did not file the appeal within the prescribed time or if any such appeal were dismissed.

Requirement of written examination for 'G' card - Illegality of oral examination not prescribed by regulation - Validity of selection procedure - Customs Brokers Licensing Regulations, 2018 - Principle against arbitrariness in promotional examinations - Duty to promote candidates who have met prescribed qualifying criteria

Requirement of written examination for 'G' card - Illegality of oral examination not prescribed by regulation - Customs Brokers Licensing Regulations, 2018 - Validity of conducting an oral examination in addition to the written examination for upgradation from an 'H' card to a 'G' card under the Customs Brokers Licensing Regulations, 2018. - HELD THAT: - The Court examined the Regulations which define a 'G card holder' as a person who has passed the examination referred to in regulation 13 and a 'H card holder' as one who has not passed that examination. Regulation 13 contemplates a written examination for selection. The impugned Public Notice, however, required both written and oral examinations. The Court found no regulatory basis for imposing an oral test in addition to the written examination and noted that other Customs authorities had conducted only the written examination as contemplated by the Regulations. The counter-affidavit gave no particulars about the nature, conduct or assessment of the oral test and therefore failed to justify the additional requirement. The Court held that conducting an oral examination beyond the scope of the Regulations was impermissible and susceptible to arbitrariness or bias, and consequently struck down the requirement of oral examination contained in the impugned notification. [Paras 6, 8, 9]

The requirement of an oral examination in the impugned notice is unlawful and is struck down.

Duty to promote candidates who have met prescribed qualifying criteria - Principle against arbitrariness in promotional examinations - Relief in respect of the petitioner who had passed the written examination but failed the impermissible oral examination. - HELD THAT: - Having held that the oral examination was beyond the Regulations and that the counter-affidavit did not justify it, the Court addressed the appropriate relief for the petitioner who had qualified in the prescribed written test. The Court directed that, insofar as the petitioner is concerned, he shall be appointed as a 'G' card license holder, subject only to his satisfying other eligibility requirements, by a specified date. [Paras 9]

The petitioner, having passed the written examination, is to be appointed as a 'G' card license holder if otherwise eligible, and the writ petition is allowed.

Final Conclusion: The Court struck down the impugned requirement of an oral examination imposed in the Public Notice as being beyond the Customs Brokers Licensing Regulations, 2018, and directed that the petitioner-who had passed the prescribed written examination-be appointed as a 'G' card license holder if otherwise eligible.

Scheme of Amalgamation - Sanction under Sections 230-232 of the Companies Act, 2013 - Vesting of assets and liabilities - Transferor companies dissolved upon sanction - Role of Regional Director's report in scrutiny of scheme - Compliance with statutory requirements notwithstanding sanction - Tribunal's supervisory jurisdiction in sanctioning compromise or arrangement

Scheme of Amalgamation - Sanction under Sections 230-232 of the Companies Act, 2013 - Tribunal's supervisory jurisdiction in sanctioning compromise or arrangement - Sanction granted to the Scheme of Amalgamation filed by the petitioner companies under Sections 230-232 of the Companies Act, 2013. - HELD THAT: - The Tribunal examined the affidavit of compliance with its earlier directions, the results of stakeholder meetings showing unanimous approval, the Regional Director's report and the Transferee Company's replies, the Official Liquidator's report (which recorded no objections), and certificates of statutory auditors regarding accounting treatment. Applying the supervisory standard of scrutiny appropriate to court-sanctioned corporate arrangements (as reflected in the principles cited from prior jurisprudence), the Tribunal found no impediment to sanctioning the Scheme. On that basis the Scheme was sanctioned under Sections 230-232. [Paras 10, 11, 12]

The Scheme of Amalgamation is sanctioned under Sections 230-232 of the Companies Act, 2013.

Vesting of assets and liabilities - Transferor companies dissolved upon sanction - Consequences of sanction: transfer of property, rights, liabilities and continuation of proceedings; dissolution of transferor companies. - HELD THAT: - Pursuant to the sanction, the Tribunal directed that all property, rights, powers, liabilities and duties of the Transferor Companies shall stand transferred to and vest in the Transferee Company without further act or deed; proceedings pending by or against transferors shall continue by or against the transferee; employees in service immediately before the effective date shall become employees of the transferee on terms not less favourable; and the Transferor Companies shall stand dissolved upon filing of the certified copy of this order with the Registrar of Companies, with consolidation of statutory records as directed. [Paras 15]

All assets, rights and liabilities of the Transferor Companies vest in the Transferee Company; Transferor Companies stand dissolved in consequence of the sanction.

Role of Regional Director's report in scrutiny of scheme - Filing under Section 230(8) and INC-28 - Regional Director's observation regarding non-filing on MCA portal (INC-28) was considered but did not preclude sanction after the Transferee Company's explanations and the overall satisfaction of statutory and procedural requirements. - HELD THAT: - The Tribunal recorded the Regional Director's para-wise observations and considered the Transferee Company's replies, including the demonstration of stakeholder approvals, prior related schemes, and the nature of group reorganisations. On the material before it (affidavit of compliance, proofs of service, meeting results, and other reports), the Tribunal found the RD's observation addressed and not a bar to sanctioning the Scheme. [Paras 4, 5, 6]

The Regional Director's observation about non-filing was considered and, on the explanations and supporting material, did not prevent the Tribunal from sanctioning the Scheme.

Compliance with statutory requirements notwithstanding sanction - Sanction not a bar to action for statutory violations - No exemption from payment of taxes or stamp duty - Sanction of the Scheme does not constitute an exemption from payment of taxes, stamp duty or other statutory liabilities, nor does it preclude action under other laws for any deficiency or violation. - HELD THAT: - The Tribunal expressly clarified that the order sanctioning the Scheme should not be construed as granting exemption from stamp duty, taxes (including income tax and GST) or other charges and that if any deficiency or violation of law is found, the sanction will not impede action being taken in accordance with law against concerned persons. The petitioners remain bound to comply with statutory requirements. [Paras 12, 13, 14]

The sanction does not relieve the parties from statutory obligations; authorities retain the power to take action for non-compliance and taxes/stamp duty remain payable in accordance with law.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013, directing vesting of assets and liabilities in the Transferee Company and dissolution of the Transferor Companies, while emphasising that sanction does not absolve compliance with statutory requirements nor bar appropriate action by authorities for any violations.

Sanction of scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 - Appointed date and compliance with Ministry of Corporate Affairs circular on backdating - Compliance with accounting standards in schemes of amalgamation - Set-off of transferor's fee on authorised capital against transferee's fee on amalgamation - Service of notices under Section 230(5) of the Companies Act, 2013 - Report of the Official Liquidator and Regional Director's representation - Directions for stamping, filing with Registrar of Companies and regulatory authorities

Sanction of scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 - Sanction of the Scheme of Amalgamation between the Transferor and Transferee companies and making the Company Scheme Petitions absolute. - HELD THAT: - The Tribunal considered the Scheme pursuant to Sections 230 to 232, the unanimous board approvals of both companies and the material on record. The Official Liquidator's report was filed and the Regional Director's observations were considered and responded to. The Tribunal found the Scheme to be fair and reasonable, not violative of law or public policy, and concluded that all requisite statutory compliances have been fulfilled. Accordingly, the Company Scheme Petitions were made absolute in terms of the prayers sought and the Scheme was sanctioned. [Paras 3, 12, 15, 16, 17]

Scheme sanctioned and Company Scheme Petitions made absolute.

Appointed date and compliance with Ministry of Corporate Affairs circular on backdating - Appointed date fixed as 1st April, 2018 - Validity of the Appointed Date chosen in the Scheme and conformity with the MCA circular requiring the appointed date to be a specific calendar date. - HELD THAT: - The Regional Director observed on the requirement in the MCA circular that the appointed date be a specific calendar date. The petitioners clarified that the Scheme specifies the Appointed Date as 1st April 2018, a specific calendar date and that it is not significantly antedated beyond one year from filing and follows the last audited accounts prior to filing. The Regional Director, after review of the rejoinder, found the replies satisfactory. The Tribunal fixed the Appointed Date as 1st April, 2018. [Paras 13, 14, 15, 23]

Appointed Date confirmed and fixed as 1st April, 2018; held to be in compliance with the MCA circular as responded to by the petitioners.

Compliance with accounting standards in schemes of amalgamation - Set-off of transferor's fee on authorised capital against transferee's fee - Service of notices under Section 230(5) of the Companies Act, 2013 - Response to the Regional Director's observations regarding accounting entries, fee set-off on authorised capital and service of statutory notices. - HELD THAT: - The Regional Director's representation raised (a) implementation of accounting entries in accordance with AS-14 (IND AS-103) and other applicable accounting standards, (b) confirmation that fees paid by the transferor on its authorised capital would be set off against any fees payable by the transferee post-amalgamation, and (c) that notices as required under Section 230(5) had to be served on concerned authorities. The petitioners filed an affidavit in rejoinder undertaking to make necessary accounting entries in accordance with applicable standards, affirming compliance with the fee set-off provision, and confirming service of notices on the prescribed authorities. The Regional Director's supplementary report recorded that the petitioners' replies were satisfactory. [Paras 13, 14, 15]

Petitioners' undertakings on accounting compliance, fee set-off and service of notices accepted as satisfactory by the Regional Director and noted by the Tribunal.

Report of the Official Liquidator and Regional Director's representation - Satisfaction with the Official Liquidator's report on affairs of the Transferor Company and the Regional Director's supplementary report. - HELD THAT: - The Official Liquidator filed a report stating that the affairs of the Transferor Company had been conducted properly. The Regional Director initially filed observations which the petitioners replied to; the Regional Director thereafter filed a supplementary report stating that the petitioners' replies were satisfactory. The Tribunal recorded these reports and relied on them in concluding that statutory compliances were met. [Paras 12, 15]

Official Liquidator's report accepted and Regional Director's supplementary report recorded as satisfactory.

Directions for stamping, filing with Registrar of Companies and regulatory authorities - Directions to the Transferee and Transferor companies as to stamping, filings with Registrar of Companies and notification to regulatory authorities, and payment of costs. - HELD THAT: - On sanction, the Tribunal directed the Transferee Company to file a certified copy of the Order with the Superintendent of Stamps for adjudication of stamp duty within sixty days, and directed the petitioner companies to file certified copies of the Order and Scheme with the Registrar of Companies electronically in E-Form INC-28 and physically, as required. The Tribunal also directed payment of specified costs to the Regional Director and Official Liquidator within four weeks and directed that all concerned regulatory authorities act on certified copies of the Order. The Tribunal allowed any affected person liberty to apply for further directions or modifications. [Paras 18, 19, 20, 21, 22]

Directed stamping, ROC filing, payment of costs, and allowed liberty for affected persons to seek further directions.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between Supreme Tradelinks Private Limited and Marks and Spencer Reliance India Private Limited under Sections 230-232 of the Companies Act, 2013, fixed the Appointed Date as 1st April 2018, recorded acceptance of the Official Liquidator's and Regional Director's reports (subject to petitioners' undertakings), and issued directions for stamping, ROC filing and payment of costs.

Moratorium - security interest - Performance Bank Guarantee - invocation of bank guarantee during moratorium - margin money - prohibition on enforcement of security interest under Section 14(1)(c) of the I&B Code

Moratorium - security interest - Performance Bank Guarantee - invocation of bank guarantee during moratorium - Whether invocation of a Performance Bank Guarantee during the moratorium and consequent adjustment of the corporate debtor's margin money by the bank was barred by the moratorium. - HELD THAT: - The Tribunal accepted the principle in Gail (India) Limited that a Performance Bank Guarantee is excluded from the definition of security interest and therefore is not caught by the prohibitions contained in the Moratorium (clause (c) of Section 14(1)). Consequently, invocation of the guarantee during the moratorium could not be restrained under Section 14(3) and the bank was entitled to honour the guarantee. The margin money deposited to secure the bank guarantee, being the borrower's contribution held by the bank while the guarantee subsisted, is applied towards payment to the beneficiary when the guarantee is invoked; once so applied nothing remains with the bank to be released to the resolution professional. The resolution professional cannot claim margin money that has been validly utilised to satisfy the invoked guarantee. [Paras 10, 11, 14, 15, 16]

Invocation of the Performance Bank Guarantee during the moratorium and adjustment of the margin money by the bank was not barred by the moratorium; the direction to release the margin money was set aside.

Margin money - registration of charge - Whether the margin money deposited as security for the bank guarantee constitutes a charge requiring registration under Section 77 of the Companies Act, 2013 and thus prevented the bank from applying it on invocation. - HELD THAT: - The Tribunal held that the margin money is not a security in the sense that attracts registration as a charge under Section 77 of the Companies Act, 2013. Section 77 applies to charges created by the company over its assets; margin money is the borrower's contribution held by the bank to secure the guarantee and, if invoked, is applied to satisfy the guarantee. No registered charge prevented the bank from using the margin money to honour the invoked guarantee, and therefore the respondent's contention founded on non-registration under Section 77 cannot sustain the claim for release of the funds. [Paras 12, 13, 14]

Margin money did not constitute a registrable charge under Section 77 and its adjustment on invocation of the guarantee was not invalid for want of registration.

Final Conclusion: The appeal is partly allowed: the NCLT direction to release the margin money kept for issuance of the bank guarantee (which was invoked during the moratorium and utilised to honour the guarantee) is set aside; no order as to costs.

Maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - service of demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - admission threshold for initiating corporate insolvency resolution process - requirement of contemporaneous supporting documents to establish contractual relationship - I&B Code is not a recovery mechanism

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - admission threshold for initiating corporate insolvency resolution process - Address mismatch in the Section 8 demand notice vitiated service and justified non-admission of the Section 9 application. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that the address shown in the demand notice served under Section 8 did not match the address furnished in the Section 9 application. Given this discrepancy, the operational creditor failed to discharge the burden of establishing valid service of the demand notice. The Appellate Tribunal observed that mere postal booking receipts relied upon by the operational creditor were insufficient to cure the defect where the notice and the application contained different addresses. Because valid service of the Section 8 notice is a precondition for admission, the defect in address justified dismissal of the Section 9 petition. [Paras 5, 6, 7]

Application under Section 9 was not admitted because the Section 8 notice did not correctly address or effect service on the corporate debtor.

Requirement of contemporaneous supporting documents to establish contractual relationship - admission threshold for initiating corporate insolvency resolution process - Failure to produce contract/appointment or other supporting documents to establish the relationship and claim weighed against admission of the petition. - HELD THAT: - The Tribunal endorsed the Adjudicating Authority's finding that the operational creditor had not filed documents such as an appointment letter or contract to substantiate the claim of engagement by the corporate debtor. The absence of such supporting material reduced the confidence required to initiate the corporate insolvency resolution process under Section 9, especially where admission would trigger stringent consequences. The Tribunal treated the lack of evidentiary support as a relevant factor in refusing to admit the application. [Paras 2]

The Section 9 application could not be admitted in the absence of requisite supporting documents establishing the contractual relationship.

I&B Code is not a recovery mechanism - maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Proceedings under the I&B Code cannot be used as a substitute for individual recovery and malicious or pressuring use of Section 9 supports dismissal. - HELD THAT: - The Tribunal agreed with the Adjudicating Authority's assessment that the I&B Code is concerned with corporate resolution and is not to be used as a tool for creditors' individual recovery. Where the operational creditor's conduct indicated a pressuring or malicious intent and where insolvency of the corporate debtor was not satisfactorily demonstrated, the petition was not maintainable. The Tribunal held that such considerations are material to the admission exercise under Section 9 and supported dismissal of the application. [Paras 2, 8]

The petition was dismissed because proceedings under the I&B Code cannot be employed as a recovery mechanism and the operational creditor failed to show insolvency or avoided pressuring conduct.

Final Conclusion: The Appeal is dismissed; the Adjudicating Authority did not err in refusing to admit the Section 9 application where the Section 8 notice suffered an address mismatch, the claimant failed to produce supporting contractual documents and did not satisfactorily demonstrate insolvency, and where the I&B Code cannot be used as a recovery tool.

Maintainability of applications under section 60(5) of the Insolvency and Bankruptcy Code, 2016 - moratorium under section 14 of the Code - inter-se claim between certificate-holder banks and auction purchaser - equitable direction for refund by certificate-holder banks where banks admit liability - responsibility of Committee of Creditors for funds received in recovery proceedings

Maintainability of applications under section 60(5) of the Insolvency and Bankruptcy Code, 2016 - inter-se claim between certificate-holder banks and auction purchaser - Whether an application under section 60(5) of the Code is maintainable where the relief sought is against certificate-holder banks (members of the CoC) for refund of auction consideration paid to them prior to initiation of CIRP. - HELD THAT: - The Adjudicating Authority held that an application of this nature, seeking refund from certificate-holder banks who received the auction consideration, amounts to an inter-se dispute between the banks and the auction purchaser and is therefore not maintainable under section 60(5) of the Code. The Tribunal relied on the principle that claims against third parties or inter-se claims among creditors do not fall within the jurisdiction conferred by section 60(5) for adjudicating disputes arising under the Code, as exemplified by prior authority cited in the order. Consequently, the application was not maintainable as a direct proceeding against the Corporate Debtor or assets held by it. [Paras 9]

Application under section 60(5) is not maintainable insofar as it seeks an inter-se refund claim against certificate-holder banks who received the auction proceeds.

Equitable direction for refund by certificate-holder banks where banks admit liability - responsibility of Committee of Creditors for funds received in recovery proceedings - moratorium under section 14 of the Code - Whether the Adjudicating Authority may record the CoC/banks' undertaking and direct the certificate-holder banks (members of the CoC) to refund the auction consideration with interest despite the application being one that raises an inter-se claim. - HELD THAT: - Although the Tribunal found the application not maintainable as an inter-se claim, it recorded the unequivocal stance of the Resolution Professional and the certificate-holder bank(s) that the banks were willing to refund the amount paid by the auction purchaser. In view of that admission and in the interest of justice and to prevent hardship to the auction purchaser who had paid the consideration prior to initiation of CIRP (and whose sale was thereafter set aside), the Tribunal exercised its power to record the submissions and to direct the banks to refund the amount held by them with accrued interest at the rate applicable to the banks. The Tribunal observed that retaining the funds after setting aside the sale would be unjust and cause economic loss to the purchaser, and therefore issued a time-bound directive for refund. [Paras 8, 10]

The certificate-holder banks who are members of the CoC are directed to refund the auction consideration with accrued interest to the applicant, preferably within two weeks of receipt of the order, and the IA is disposed accordingly.

Final Conclusion: The Tribunal held that an application under section 60(5) is not maintainable insofar as it seeks an inter-se refund from certificate-holder banks; nonetheless, recording the banks' admission of willingness to refund, the Tribunal directed the certificate-holder banks (members of the CoC) to refund the auction consideration with applicable interest within a stipulated time and disposed of the IA on that basis.

Admitted debt and default - Corporate Insolvency Resolution Process - IBC not intended as a substitute for recovery proceedings - protection of going concern and avoidance of CIRP for an otherwise solvent company - exercise of discretion to afford time for repayment - economic distress due to pandemic and legislative increase of default threshold

Admitted debt and default - Corporate Insolvency Resolution Process - exercise of discretion to afford time for repayment - IBC not intended as a substitute for recovery proceedings - Disposition of the petition under the Code in view of an admitted debt and the Corporate Debtor's request for time to settle the debt instead of commencing CIRP. - HELD THAT: - The Tribunal found on the record that the Corporate Debtor has admitted liability and that a default exists under the agreed terms between the parties. The Corporate Debtor had negotiated repayments previously, continues to have substantial business operations and receivables, and has arranged working capital support and settlements with several creditors. Applying the principle that the IBC is not to be used as a substitute for recovery proceedings and that an otherwise solvent going concern should not be pushed into CIRP, the Tribunal exercised its discretion to permit time for settlement. The Tribunal also took into account the exceptional economic circumstances caused by the COVID-19 pandemic and the legislative increase of the minimum default threshold, as factors counselling restraint from initiating insolvency processes where repayment is being arranged. In light of these considerations, the Tribunal directed the Corporate Debtor to settle the claim within a stipulated period, failing which the Financial Creditor would be at liberty to file a fresh petition. [Paras 11, 12, 13, 14, 15]

C.P. (IB) No. 412/BB/2019 disposed of by directing the Corporate Debtor to settle the claim within 90 days, failing which the Financial Creditor may file a fresh petition; no order as to costs.

Final Conclusion: The Tribunal declined to admit the petition into CIRP despite an admitted default, exercising discretion to allow the Corporate Debtor 90 days to settle the debt in view of its going concern status, repayment arrangements and the pandemic linked policy considerations; liberty granted to the Financial Creditor to institute fresh proceedings if settlement is not effected.

Initiation of Corporate Insolvency Resolution Process - existence of undisputed debt as prerequisite for CIRP - IBC not a substitute for recovery forum - demand notice under the Insolvency and Bankruptcy Code - dishonour of cheque and legal notice under negotiable instruments law - honour of cheques as discharge of operational debt

Initiation of Corporate Insolvency Resolution Process - existence of undisputed debt as prerequisite for CIRP - IBC not a substitute for recovery forum - Admissibility of the Company Petition under the Insolvency and Bankruptcy Code seeking commencement of CIRP against the Corporate Debtor - HELD THAT: - The Tribunal applied the settled principle that the Code is not a substitute for recovery proceedings and that the existence of an undisputed debt is a sine qua non for initiating CIRP, citing the jurisprudence noted in the order. Having considered the parties' pleadings and the material on record, the Tribunal recorded that the Corporate Debtor had drawn multiple cheques equivalent to the principal amount claimed and undertook to honour those cheques when presented. In those circumstances the Tribunal concluded that initiation of CIRP was not appropriate for recovery of the alleged outstanding amount and therefore the Company Petition would not be admitted; instead, the petition was disposed of by directing compliance by the Corporate Debtor. The Tribunal further noted that the Petitioner could pursue appropriate proceedings if the cheques were not honoured. [Paras 8, 9, 10]

The Company Petition is disposed of; CIRP not initiated as petition was inappropriate for mere recovery where respondent offered cheques to discharge the debt and undertook to honour them.

Dishonour of cheque and legal notice under negotiable instruments law - honour of cheques as discharge of operational debt - demand notice under the Insolvency and Bankruptcy Code - Relief and directions to be granted in lieu of admission of CIRP - HELD THAT: - The Tribunal considered the commercial facts that cheques had been drawn by the Corporate Debtor for the claimed amount and that the Corporate Debtor undertook to hand over those cheques and honour them on presentation. Having afforded opportunities to the parties to explore settlement, the Tribunal directed the Corporate Debtor to immediately hand over the drawn cheques to the Petitioner and to honour them when presented for realisation. The Tribunal also held that, given these circumstances, the Petitioner could not claim interest. The Tribunal recorded that failure to honour the cheques would entitle the Petitioner to initiate appropriate legal proceedings. [Paras 9, 10]

Respondent directed to hand over and honour the cheques on presentation; Petitioner precluded from claiming interest and may initiate appropriate proceedings if the cheques are dishonoured.

Final Conclusion: The Company Petition under the IBC for commencement of CIRP was disposed of without admission because respondent offered cheques to discharge the claimed operational debt; the respondent was directed to hand over and honour those cheques on presentation, the petitioner was denied interest, and was left free to pursue appropriate legal remedies if the cheques are not honoured.

Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - ascertainment of default by the Adjudicating Authority - corporate insolvency resolution process (CIRP) - appointment and eligibility of Interim Resolution Professional - declaration of moratorium on enforcement actions - financial debt under the Code

Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - ascertainment of default by the Adjudicating Authority - financial debt under the Code - Maintainability of the petition under Section 7 and the existence of debt and default - HELD THAT: - The Tribunal examined the petition filed by the financial creditor under Section 7 and applied the summary ascertainment standard set out in Innoventive/ICICI Bank and the Supreme Court. The petition relied on an inter corporate loan agreement and records of disbursement and partial repayments; the corporate debtor did not file a statement of objection but submitted a memo acknowledging the loan and payments and stating inability to fully repay. On the material before it the Adjudicating Authority was satisfied that a financial debt existed and that default had occurred; accordingly the petition was admitted and CIRP initiated. The Tribunal treated the debt and default as not being disputed for the purpose of admission, in line with the requirement that the Authority be satisfied of default from the records or other evidence furnished. [Paras 9]

C.P.(IB)No.307/BB/2019 admitted under Section 7 by initiating CIRP as debt and default were ascertained.

Appointment and eligibility of Interim Resolution Professional - corporate insolvency resolution process (CIRP) - Appointment and provisional eligibility of the proposed Interim Resolution Professional - HELD THAT: - The petition proposed a qualified resolution professional who executed the required Form 2 consent and declared absence of disciplinary proceedings. The Tribunal found the proposed professional provisionally eligible to act as Interim Resolution Professional and appointed him to carry out the functions under the Code and applicable IBBI rules, directing him to file progress reports. [Paras 9, 10]

Shri Surender Devasani appointed as Interim Resolution Professional and directed to perform duties under the Code.

Declaration of moratorium on enforcement actions - corporate insolvency resolution process (CIRP) - Imposition of moratorium and consequential directions following admission - HELD THAT: - Upon admission of the Section 7 petition and initiation of CIRP, the Tribunal declared the moratorium prescribed by the Code, prohibiting institution or continuation of suits or proceedings, transfer or disposal of assets, enforcement of security, recovery of leased property, and termination of supply of essential goods or services during the moratorium, subject to statutory exceptions. The Board of Directors and staff of the corporate debtor were directed to cooperate with the IRP, and the IRP was directed to follow IBC and IBBI rules including fee rules. [Paras 10]

Moratorium declared with directions to the IRP and the corporate debtor's management to cooperate; case posted for IRP's report.

Final Conclusion: The application under Section 7 was admitted after the Adjudicating Authority was satisfied of the existence of financial debt and default; CIRP was ordered, a qualified Interim Resolution Professional was appointed, and the statutory moratorium and consequential directions were imposed.

Locus standi - impleadment - intervener application - pleading and authorization requirements for representation - rejection of objections for procedural non-compliance - liberty granted by superior court subject to procedural compliance

Locus standi - impleadment - intervener application - rejection of objections for procedural non-compliance - Objections filed by Wishtown Home Buyers Welfare Society were maintainable despite not being impleaded or cited as a respondent in C.A. No. 5/2020. - HELD THAT: - The Bench found that the objector was not shown as a respondent in the principal application and had not filed an impleadment or intervener application. The affidavit relied upon did not identify who authorized the affiant to represent the society or name the dissenting creditors said to be represented; the resolution professional's record showed only 448 home buyers had voted against the plan and thus the claim of representing 1,500 dissenting home buyers was not supported. The Tribunal emphasised that to raise a grievance before the forum a party must either file an independent application or be properly cited as a respondent and must comply with basic pleading requirements demonstrating authority to represent others. For these procedural deficiencies, the objections were rejected without considering their merits.

Objections rejected for want of locus and failure to follow required procedure; not adjudicated on merits.

Pleading and authorization requirements for representation - liberty granted by superior court subject to procedural compliance - Whether prior orders of the Supreme Court permitting interested parties to raise issues before the NCLT entitled the objector to be heard despite procedural irregularities. - HELD THAT: - Counsel relied on Supreme Court orders which observed that applicants were free to raise issues before the NCLT. The Tribunal held that such liberty does not obviate the need to comply with procedural and pleading requirements before the forum. The Bench recorded that the Supreme Court had granted liberty to pursue remedies in accordance with law, and therefore the objector could not be permitted to proceed in the face of the identified procedural deficiencies. A belated offer to supply lists or particulars after the order was passed could not cure the non-compliance before the Tribunal.

Request to be permitted to argue despite procedural defects refused; Supreme Court's liberty is subject to adherence to procedural law.

Final Conclusion: The Tribunal dismissed the objections filed by Wishtown Home Buyers Welfare Society for lack of locus and failure to comply with impleadment/intervention and pleading requirements; the objections were rejected without consideration of their substantive merits, and the Tribunal declined to allow argument based on Supreme Court liberty absent proper procedural compliance.

Prima facie case - pre-deposit condition for admittance of appeal / stay - financial hardship of the assessee - stay/waiver of pre-deposit - bank guarantee as provisional security - setting aside order and directing adjudication on merits

Prima facie case - pre-deposit condition for admittance of appeal / stay - financial hardship of the assessee - bank guarantee as provisional security - setting aside order and directing adjudication on merits - Order of the Tribunal requiring a 10% pre-deposit without examination of the assessee's prima facie case or proper consideration of its financial hardship is unsustainable; appropriate interim mechanism to protect revenue is bank guarantee and direction to decide appeal on merits within a fixed time. - HELD THAT: - The Court held that an appellate authority considering a stay/waiver or fixation of a pre-deposit must apply its mind to the prima facie case on merits in addition to the financial condition of the appellant. The Tribunal's order demanding deposit of 10% of disputed tax for entertaining the appeal did not record any examination of the prima facie case of the revisionist and thus failed to meet the legal requirement. Reliance on precedents establishes that absence of such consideration renders the impugned order unsustainable. Rather than remitting for reassessment of the same mechanical requirement, the Court allowed the revision on terms: the revisionist may furnish a bank guarantee as provisional security for the 10% amount within four weeks, and the appellate authority is directed to conclude the pending appeal on merits within three months from presentation of the order. The provisional security is to remain subject to the final outcome in appeal, thereby protecting the interest of the revenue while ensuring adjudication on merits.

Tribunal's order set aside; revision disposed by directing final adjudication of the appeal within three months provided the revisionist furnishes a bank guarantee for the 10% amount within four weeks, the guarantee remaining subject to the appeal's final determination.

Final Conclusion: The Tribunal's conditional pre-deposit direction was quashed for failure to consider the prima facie merits and financial hardship; the appeal is to be decided on merits within three months subject to the revisionist furnishing a bank guarantee for the 10% amount within four weeks.

Entitlement to 'C' forms for inter-state purchase of High Speed Diesel - concessional rate of tax on inter-state sales of diesel - precedent applicability in rem - binding effect of a High Court judgment until stayed or reversed

Entitlement to 'C' forms for inter-state purchase of High Speed Diesel - concessional rate of tax on inter-state sales of diesel - precedent applicability in rem - binding effect of a High Court judgment until stayed or reversed - Benefit of concessional tax (via issuance of 'C' forms) is available to dealers who purchase High Speed Diesel by way of inter state sales and the decision in M/s Ramco Cements Ltd. applies in rem to all similarly situated dealers until stayed or reversed. - HELD THAT: - The Court followed and reiterated the reasoning of its earlier decision in M/s Ramco Cements Ltd., as well as other High Court decisions and a decision of the Punjab and Haryana High Court that has been affirmed by the Supreme Court, holding that dealers purchasing High Speed Diesel from other States by way of inter state sales are entitled to the concessional rate of tax through 'C' forms. The State did not dispute the precedential position but had indicated an intention to challenge the Ramco judgment; however, in the absence of any stay or reversal, the Ramco decision remains operative. The department's practice of extending the benefit only to those dealers who were parties to the Ramco proceedings was held impermissible because the judgment operates in rem and must be applied by assessing authorities to all pending assessments where the legal criteria are met. The Court therefore directed the Department to take necessary action forthwith, including facilitating issuance or access to 'C' forms (which the petitioner stated were blocked), and to apply the ratio of the Ramco decision across the State until such time as the Ramco judgment is stayed or set aside.

Writ petition allowed; department directed to apply the Ramco Cements reasoning statewide and take necessary action forthwith; no costs.

Final Conclusion: The High Court allowed the writ petition, reiterating that the benefit of concessional tax via 'C' forms for inter state purchases of High Speed Diesel applies in rem to all eligible dealers and directing the Department to implement the ratio of M/s Ramco Cements Ltd. immediately until any stay or reversal of that decision.

Applicability of Article 35 of the Limitation Act to suits on dishonoured cheques - Effect of reliance on a recalled precedent on the correctness of a subsequent judgment - Reasonable time for presentation under Section 84 of the Negotiable Instruments Act read with proviso (a) to Section 138 - Legal effect of a post dated cheque - date borne on the face of the cheque as the date of payability

Applicability of Article 35 of the Limitation Act to suits on dishonoured cheques - Article 35 of the Limitation Act is the appropriate provision governing a suit for recovery of money on dishonour of a cheque issued in discharge of liability. - HELD THAT: - The Court reaffirmed its conclusion, reached after detailed discussion of the Limitation Act and the Negotiable Instruments Act, that Article 35 governs suits founded on dishonoured cheques. Although the earlier unreported decision relied upon was later recalled, that reliance was an inadvertent error which did not vitiate the Court's independent reasoning or the applicability of Article 35 to the facts and law considered in the appeal. [Paras 2, 3]

The decree confirming the suit under Article 35 is upheld.

Effect of reliance on a recalled precedent on the correctness of a subsequent judgment - Reliance on a judgment that had been recalled was an error apparent on the face of the record, but the recalled status of that precedent did not require upsetting the Court's conclusions which were independently reached. - HELD THAT: - The Court accepted that the cited unreported decision had been recalled and that following it was an error. However, having re examined the issues on facts and law, the Court held that the recalled precedent had not been decisive of the outcome because the Court's conclusions were founded on its own analysis of the statutory provisions and evidence. Accordingly, correction was ordered limited to deletion of the sentence referring to the recalled judgment, without disturbing the remainder of the judgment. [Paras 2, 3, 11]

Review partly allowed to delete the reference to the recalled decision; otherwise the judgment stands.

Reasonable time for presentation under Section 84 of the Negotiable Instruments Act read with proviso (a) to Section 138 - Legal effect of a post dated cheque - date borne on the face of the cheque as the date of payability - Sections 84 and 138 of the Negotiable Instruments Act must be read harmoniously; the date on the face of a post dated cheque determines when the period for presentation commences, and presentation within the period prescribed by proviso (a) to Section 138 accords with the requirement of reasonable time under Section 84. - HELD THAT: - The Court observed that Section 84(2) requires assessment of 'reasonable time' having regard to the instrument and facts of each case, but that this assessment must be read in harmony with proviso (a) to Section 138, which prescribes the period within which a cheque ought to be presented (originally six months, later reduced). The date 'on which the cheque is drawn' must be understood as the date appearing on the face of the instrument; for post dated cheques the cheque date, not the date of delivery, determines when presentation may properly begin. An interpretation privileging date of delivery over the cheque date would frustrate the statutory scheme and the purpose of the NI Act. Applying these principles to the facts, the Court found that the cheques were post dated and became payable on the dates endorsed; presentation within two months of those dates satisfied the proviso to Section 138 and did not offend Section 84. [Paras 7, 8, 9, 10]

The presentation and suit were held to be within time; the challenge based on delayed presentation and alleged material alteration of cheques is rejected.

Final Conclusion: The review petition is partly allowed only to the extent of deleting the sentence in paragraph 15 referring to a recalled unreported decision; on all other points - including the application of Article 35, the harmonisation of Sections 84 and 138 of the NI Act, and the validity of presentation of the post dated cheques - the original judgment is affirmed.