TaxTMI Updates e-Newsletter
Oct 01,2022

Exemption from Goods and Services Tax for renting of residential accommodation - distinction between registered person and business use for taxability - Article 14 - intelligible differentia - GST Council recommendations - binding influence on taxation or exemption - exemption where proprietor rents in personal capacity not for business

Exemption from Goods and Services Tax for renting of residential accommodation - exemption where proprietor rents in personal capacity not for business - Scope of exemption under the impugned Notification dated 13.07.2022 insofar as it applies to a proprietor of a registered proprietorship firm who rents a residential dwelling in his/her personal capacity for use as his/her own residence and not in the course or furtherance of the proprietorship business. - HELD THAT: - Respondents furnished a clarificatory stance that where a proprietor of a registered proprietorship firm rents a residential dwelling in his/her personal capacity for his/her own residential use, and such renting is not for use in the course or furtherance of the proprietorship business and is not accounted for in the firm's accounts, the exemption for renting of residential accommodation continues to be available. The Court accepted this clarificatory position and held that the clarification will govern the application of the impugned Notification in such cases. The Court thereby confined the taxability under the Notification so as not to capture a proprietor's purely personal residential renting which is not for business use.

Clarification accepted and respondents held bound: exemption continues where a proprietor of a registered proprietorship firm rents in personal capacity for his/her own residence and not for business.

Distinction between registered person and business use for taxability - GST Council recommendations - binding influence on taxation or exemption - Status of the Government's obligation and the respondents' position regarding amendment or clarification of Notification No.04/2022 - Central Tax (Rate) and the role of the GST Council in framing any amendment. - HELD THAT: - Respondents stated that the Government is bound to tax or exempt supplies only on recommendations of the GST Council and that a proposal to amend the Notification to clarify taxability of registered persons is being examined for placement before the GST Council. The Court recorded and accepted this position and the undertaking given in the supplementary affidavits, and treated the same as binding on the respondents for present purposes. No further adjudication on the legislative process was made; the Court limited its order to accepting the clarification and binding the respondents to it.

The respondents' clarification regarding GST Council recommendations and the proposed amendment process was recorded; the Court accepted the undertaking and held respondents bound by the clarification furnished.

Final Conclusion: The Court accepted the respondents' clarificatory affidavit and held that the exemption for renting of residential accommodation under the impugned Notification will continue to apply where a proprietor of a registered proprietorship firm rents in his/her personal capacity for residential use and not for the proprietorship business; the writ petition and connected application were disposed of accordingly.

Zero-rated supply - refund of unutilised input tax credit - proof of export of electricity and admissible documentary evidence - Rule 89 of CGST Rules, 2017 - proof requirements for refund - impossibility of compliance / lex non cogit ad impossibilia - clarificatory amendment and retrospective operation - maintainability of writ petitions where statutory appellate forum is not constituted

Zero-rated supply - proof of export of electricity and admissible documentary evidence - Rule 89 of CGST Rules, 2017 - proof requirements for refund - Whether the petitioner supplied electrical energy across the border and thereby made zero-rated supplies entitling it to claim refund of unutilised input tax credit. - HELD THAT: - The Court examined the contractual and regulatory matrix including Letter of Intent, Power Purchase Agreements with BPDB, approval from Central Electricity Authority, injection of generated electricity at an interconnection point in Andhra Pradesh, transmission via interstate lines to Bohrompur sub-station (delivery point) and onward transmission to Bangladesh through the cross-border line. The Regional Energy Account (REA) issued monthly by the Southern Regional Power Committee records scheduled and actual units transmitted and identifies destination. The authorities in subsequent show-cause notices accepted transmission to Bangladesh (later show-cause notices rejected claims only for non-production of shipping bills). On the material on record the Court concluded that transmission to Bangladesh is established and that the supply qualifies as zero-rated supply for the purposes of claiming refund of unutilised input tax credit.

Transmission to Bangladesh was accepted as established on the record and the petitioner's supplies fall within zero-rated supply permitting consideration of refund of unutilised input tax credit.

Rule 89 of CGST Rules, 2017 - proof requirements for refund - impossibility of compliance / lex non cogit ad impossibilia - proof of export of electricity and admissible documentary evidence - Whether rejection of refund claims for non-production of shipping bills under Rule 89(2) of the CGST Rules, 2017 was justified in the case of export of electricity and whether REA reports can serve as proof. - HELD THAT: - The Court held that shipping bills are customs documents intended for physical export of tangible goods and cannot be generated for transmission of electricity; therefore insisting on shipping bills for electricity is practically impossible of compliance. The Court noted deliberations of the Regional Power Committee recognising that REA statements record scheduled energy and can be used as proof of export, and observed that Rule 89 was not envisaged to cover cross-border electricity transmission when originally framed. The July 5, 2022 amendment to Rule 89 (inserting clause (ba)) expressly permits use of export invoices, details of energy exported, tariff per unit and the statement of scheduled energy from the RPC Secretariat (REA) as basis for refund claims relating to export of electricity. Relying on the principle that law should not compel impossibilities and on precedent concerning impossibility and clarificatory enactments, the Court concluded that denial of refund solely on the ground of non-production of shipping bills was not sustainable.

Requirement to produce shipping bills cannot be applied to electricity exports; REA and the documents specified by the amended Rule 89(2)(ba) constitute acceptable proof for claiming refund of unutilised input tax credit.

Clarificatory amendment and retrospective operation - Rule 89 of CGST Rules, 2017 - proof requirements for refund - Whether the amendment to Rule 89 of the CGST Rules (notification dated 05.07.2022 and Circular No.175/07/2022-GST) is clarificatory and can be given retrospective effect for prior refund claims. - HELD THAT: - The Court analysed the wording and purpose of the amendment inserting clause (ba) in Rule 89(2) and the Board's Circular clarifying procedure for refund of unutilised ITC on account of export of electricity. Finding that the amendment was made to cure an anomaly and to clarify the mode of proving export of an intangible commodity which could not reasonably have been envisaged when Rule 89 was framed, the Court held the amendment to be clarificatory. Applying principles that clarificatory and beneficent procedural provisions addressing unintended consequences may be given retrospective effect, and noting departmental actions applying the amendment to earlier refund claims, the Court concluded that the clarification operates retrospectively to the extent necessary to afford the benefit.

The amendment to Rule 89 is clarificatory and may be applied retrospectively so as to permit use of REA and related documents to support refund claims for periods prior to 05.07.2022.

Maintainability of writ petitions where statutory appellate forum is not constituted - Whether the writ petitions were maintainable despite non-availing of statutory appellate remedy. - HELD THAT: - The Court considered the objection that writs were filed without pursuing statutory appeals. It found that the GST Tribunal was not constituted and an efficacious alternative remedy was not available; further, in cases where identical appeals had been decided unfavourably at the appellate authority, pursuing the same remedy would be futile. In view of the exceptional circumstances and the potential for irreparable loss, the Court accepted maintainability of the petitions under Article 226.

Writ petitions were maintainable and entertainable in the exceptional facts where statutory appellate forum was not constituted and no efficacious remedy existed.

Remand for fresh consideration in accordance with court's directions - refund of unutilised input tax credit - Whether the matters should be remanded to the tax authorities for fresh consideration in light of the Court's conclusions. - HELD THAT: - Having held that REA and the documents specified by the amended Rule 89(2)(ba) are acceptable proof and that the amendment is clarificatory and retrospective, the Court directed that the adjudicating authorities reconsider the refund claims in accordance with this order. The petitioner was directed to file relevant REA reports and other prescribed documents before the authorities, if not already filed.

Writ petitions were allowed in part; matters remanded to Additional Commissioner (GST Appeals) and Deputy Commissioner of Central Tax respectively to decide the refund claims in accordance with this order and applicable law.

Final Conclusion: The Court held that the petitioner's cross-border supply of electricity qualifies as zero-rated supply and that insisting on production of shipping bills under Rule 89 for such intangible export was impracticable; REA statements and the documents prescribed by the amended Rule 89(2)(ba) constitute acceptable proof. The amendment of 05.07.2022 is clarificatory and may be given retrospective effect; the writ petitions were entertained as maintainable and the matters are remanded to the respective authorities for fresh adjudication in accordance with this order.

Transitional credit through TRAN-1 and TRAN-2 - opening of GST portal for filing TRAN forms w.e.f. 01.09.2022 to 31.10.2022 - direction to ensure absence of technical glitches - permission to file or revise TRAN forms irrespective of earlier writs or ITGRC decisions - verification of transitional credit claims within 90 days with opportunity of hearing - reflection of allowed transitional credit in the Electronic Credit Ledger - remedy under Article 226 of the Constitution

Transitional credit through TRAN-1 and TRAN-2 - opening of GST portal for filing TRAN forms w.e.f. 01.09.2022 to 31.10.2022 - direction to ensure absence of technical glitches - permission to file or revise TRAN forms irrespective of earlier writs or ITGRC decisions - The petitioner's request to be permitted to file TRAN-1/TRAN-2 forms pursuant to the order of the Hon'ble Supreme Court dated 22.07.2022 is maintainable and is allowed to that extent. - HELD THAT: - The High Court examined the Supreme Court order of 22.07.2022 which directed GSTN to open a common portal for filing TRAN-1 and TRAN-2 for the period 01.09.2022 to 31.10.2022, required assurance against technical glitches, permitted any aggrieved registered person to file or revise forms irrespective of prior writs or ITGRC decisions, and directed verification of claims by officers within 90 days with opportunity to the parties and subsequent reflection of allowed credit in the Electronic Credit Ledger. The petition sought reopening of the portal to enable the petitioner to file TRAN-1 and claim transitional credit. Applying the Supreme Court directions, the High Court held that the petition must be allowed to the extent of enabling the petitioner to avail the benefit of the aforesaid window and order, noting that the Supreme Court's direction was not limited to any particular assessment year and is available to any assessee who was earlier prevented from filing due to technical problems. [Paras 6, 7, 8]

Writ petition allowed only to the extent of permitting the petitioner to avail the relief outlined in the Supreme Court order dated 22.07.2022 (portal opening for filing/revising TRAN-1/TRAN-2 from 01.09.2022 to 31.10.2022); no order as to costs.

Final Conclusion: The writ petition is disposed of at the admission stage and allowed to the extent of directing that the petitioner may avail the two month window ordered by the Supreme Court for filing/revising TRAN 1/TRAN 2 and seek verification and reflection of allowed transitional credit in the Electronic Credit Ledger; otherwise the petition is dismissed.

Issuance of notice - despatch under Section 13 of the Information Technology Act, 2000 - date of issuance for limitation under Section 149 of the Income tax Act, 1961 - attribution of delay caused by automated ITBA e mail triggering to the Department - authentication of electronic communication under Section 282A of the Income tax Act and Rule 127A of the Income tax Rules - Document Identification Number (DIN) does not by itself constitute issuance - digital signature date (DSC) recorded in ITBA as determinative of notice date where footnote so provides - upload to E filing portal (My Account) and requirement of real time alert for valid electronic service

Issuance of notice - date of issuance for limitation under Section 149 of the Income tax Act, 1961 - Document Identification Number (DIN) does not by itself constitute issuance - Generation of Section 148 notices on ITBA portal on 31st March 2021 without despatch does not satisfy the statutory requirement of 'shall be issued' under Section 149 and therefore does not save the notices from being time barred where despatch occurred on or after 1st April 2021. - HELD THAT: - The Court examined authorities and the ITBA process and concluded that in ordinary and legal parlance 'issue' requires an overt act of despatch so the notice leaves the control of the issuer. Precedent establishes that date of despatch (not mere drawing up or signing) is the relevant date for issuance under Section 149. The CBDT/DIT(Systems) instructions distinguish generation and issuance; the DIN is an audit marker and does not itself effectuate issuance. Where ITBA merely generated the notice on 31.03.2021 but the e mail or speed post despatch occurred on or after 01.04.2021, issuance did not occur on 31.03.2021 and such notices are time barred unless saved by Ashish Agarwal (Supra). The Court therefore rejected the Department's contention that generation (or assignment of DIN) alone completes issuance. [Paras 25]

Generation on ITBA without despatch is not issuance; notices despatched on or after 1 4 2021 are not 'issued' on 31 3 2021 and are time barred unless otherwise saved.

Despatch under Section 13 of the Information Technology Act, 2000 - attribution of delay caused by automated ITBA e mail triggering to the Department - date of issuance for limitation under Section 149 of the Income tax Act, 1961 - For e mail communications the moment of 'despatch' (and hence issuance for limitation) occurs when the electronic record enters a computer resource outside the control of the originator as per Section 13 IT Act, 2000; the timing of ITBA's e mail triggering (i.e. when the e mail leaves ITBA servers) is attributable to the Department and is the determinative date of issuance. - HELD THAT: - Notifications issued by DGIT(Systems) adopt the definition in Section 13 of the IT Act for time/place of despatch. The Department is the 'originator' and the ITBA platform and its servers are the Department's computer resources; despatch occurs when the e mail leaves the ITBA servers and enters the recipient's server. The Court accepted technical SMTP based explanation and prior High Court decisions holding that the ITBA 'trigger' timestamp is the date/time of issuance. Consequently, delays inherent in ITBA's programmed batching or triggering are attributable to the Department and cannot be ignored for limitation purposes. [Paras 26]

Despatch per Section 13 IT Act is a sine qua non for issuance by e mail; the ITBA trigger (when e mail leaves ITBA servers) is the date/time of issuance and any delay in triggering is attributable to the Department.

Authentication of electronic communication under Section 282A of the Income tax Act and Rule 127A of the Income tax Rules - digital signature date (DSC) recorded in ITBA as determinative of notice date where footnote so provides - Notices transmitted from the designated e mail addresses of JAOs without a DSC are nevertheless validly authenticated under Section 282A and Rule 127A where the name, office and designated e mail are present; where the ITBA footer records that 'if digitally signed, date of signature may be taken as date of document', that date controls. - HELD THAT: - The Court analysed statutory scheme and rule 127A which deems electronic communications authenticated if name/office are printed and e mail is issued from the designated address. Circulars and later notifications urged DSC use but do not make DSC mandatory for Section 148 notices. The legislature expressly mandated digital signature where it intended to do so in other provisions; absent such mandate, non affixation of DSC is not fatal and can be a curable defect. For notices with a footer indicating the DSC date governs, the date of DSC affixation in ITBA controls the notice date. [Paras 27]

Unsigned notices sent from designated JAO e mail IDs comply with Section 282A/Rule127A and are not invalid merely for lack of DSC; where ITBA records DSC date in the notice footer, that signature date determines the notice date.

Upload to E filing portal (My Account) and requirement of real time alert for valid electronic service - date of issuance for limitation under Section 149 of the Income tax Act, 1961 - Uploading a Section 148 notice to the assessee's E filing 'My Account' without issuing the statutorily prescribed real time alert does not constitute valid electronic service for the purpose of issuance; the date the assessee first viewed the notice (as per ITBA/E filing records) is to be treated as the date of issuance. - HELD THAT: - The Court noted that Notification No.4/2017 contemplates visibility on E filing but pairs that mode with a 'may also' e mail/text alert; statutory provision (e.g., Section 144B(6)(ii)(a)) contemplates upload coupled with a real time alert. Absent such alert the mere upload is not equivalent to despatch under Section 13/Section 282 and cannot be treated as issuance. To avoid injustice the Court directed JAOs to use ITBA logs to identify the first access/view date by the assessee and treat that as the issuance date for limitation analysis. [Paras 28]

Upload to My Account without real time alert is not valid service; the first date/time the assessee accessed/viewed the notice (per ITBA records) shall be treated as date of issuance.

Departmental verification of ITBA records and directions to JAOs - classification and consequential treatment of notices under Section 148A(b) - The Court directed JAOs to verify ITBA records and determine the date/time of despatch or first view as applicable and to treat notices despatched or first viewed on or after 1 4 2021 (and up to 30 6 2021) as deemed issued under substituted Section 148A and proceed in terms of Ashish Agarwal (Supra); the Court did not finally quash notices but remitted determination of issuance dates to the JAOs. - HELD THAT: - Recognising availability of ITBA timestamps (generation, DSC, trigger, delivery, shared to E filing, and view logs), the Court required administrative verification rather than blanket factual disputes. It classified notices into Categories A-E and gave category wise directions: treat DSC date as notice date for Category A; use ITBA despatch trigger for B and C; use first E filing view for D; use physical despatch booking date for E; where determined issuance date is on/after 1 4 2021 (and up to 30 6 2021) treat as Section 148A(b) showcause and follow Supreme Court directions in Ashish Agarwal. Petitioners remain free to raise other defenses. [Paras 31]

JAOs to verify and record ITBA/E filing timestamps and treat notices accordingly; notices issued on/after 1 4 2021 (up to 30 6 2021) to be handled as show cause notices under Section 148A(b) per Ashish Agarwal; factual determination remitted to JAOs.

Final Conclusion: The High Court held that mere generation (or allocation of DIN) of Section 148 notices on ITBA on 31 03 2021 does not constitute 'issuance' for limitation under Section 149; for e mail the moment of despatch is when the electronic record leaves ITBA servers (Section 13 IT Act) and any delay in ITBA triggering is attributable to the Department. Notices sent without DSC from designated JAO e mails satisfy authentication under Section 282A/Rule127A. Uploading to E filing without a real time alert is not valid service; JAOs are directed to determine issuance dates from ITBA/E filing logs category wise and, where issuance is on or after 01 04 2021 (up to 30 06 2021), to treat such notices as showcause notices under substituted Section 148A(b) and follow the procedure laid down by the Supreme Court in Ashish Agarwal.

Profits and gains derived from an industrial undertaking - derived from an industrial undertaking - direct nexus - interest on delayed payments - same transaction principle

Derived from an industrial undertaking - direct nexus - interest on delayed payments - Whether interest received from debtors for delayed payment of sale proceeds is profits and gains derived from the appellant's industrial undertaking for the purpose of deduction under Section 80(I) of the Income Tax Act, 1961. - HELD THAT: - The Court examined the phrase 'derived from' in the context of Section 80(I) and applied the established principle that only receipts having a direct and immediate nexus with the industrial undertaking qualify as 'derived from' that undertaking. Distinguishing receipts such as interest on bank or statutory deposits (which lack direct nexus), the Court held that interest charged to buyers for delayed payment is a direct consequence of the sale transaction and is directly relatable to the business of manufacture and sale. Reliance was placed on precedents construing 'derived from' to require an effective source and on authority that a payment which is the immediate and effective source of income qualifies. Applying that test to the facts, the interest collected for delayed payment forms part of the same transaction as the sale of goods and therefore has the requisite direct nexus with the industrial undertaking to be included in profits and gains eligible for deduction under Section 80(I). [Paras 21]

Interest received from debtors for delayed payment of sale proceeds is profits and gains derived from the industrial undertaking and is eligible for deduction under Section 80(I).

Final Conclusion: The appeal is allowed: the interest received on delayed payment of sale proceeds is held to be derived from the industrial undertaking and entitled to deduction under Section 80(I) of the Income Tax Act, 1961; no order as to costs.

Reopening of assessment - income escaping assessment - proviso to Section 147 - failure to disclose fully and truly all material facts - limitation

Proviso to Section 147 - failure to disclose fully and truly all material facts - income escaping assessment - limitation - Validity of reassessment proceedings initiated beyond four years from the end of the relevant assessment year - HELD THAT: - The Court examined the reasons recorded for reopening the assessment beyond the four-year period and applied the proviso to Section 147 which permits reassessment after four years only if any income chargeable to tax has escaped assessment by reason of failure by the assessee to make a return or in response to a notice or to disclose fully and truly all material facts. The reasons supplied merely refer to the original assessment order and its discussion of the depreciation claim and do not disclose any tangible material discovered post-assessment indicating that the petitioner had failed to make a full and true disclosure. There is no new material relied upon by the Assessing Authority independent of the materials already on record at the time of the original scrutiny assessment. Consequently, the statutory precondition in the proviso to Section 147 for invoking reassessment beyond four years is not satisfied and the proceedings are barred by limitation. [Paras 11, 12, 13, 14]

Reassessment proceedings initiated beyond four years set aside as barred by limitation for want of satisfaction of the proviso to Section 147.

Final Conclusion: The impugned reassessment proceedings under Section 147 insofar as initiated beyond the four-year period are quashed for failure to establish that any income had escaped assessment by reason of non-disclosure of material facts; the writ petition is allowed and the order set aside.

Revision under Section 264 of the Income tax Act - bar on revision where appeal is pending - withdrawal of appeal and its effect on revision jurisdiction - time limit for passing order under Section 264 - direction for expeditious disposal of appeal by appellate authority

Revision under Section 264 of the Income tax Act - bar on revision where appeal is pending - Whether the Commissioner could entertain and revise the assessment under Section 264 when an appeal against the assessment order was pending before the appellate authority. - HELD THAT: - The court examined Section 264(4) which precludes the Commissioner from revising an order where an appeal against that order has been filed or the order is pending on appeal. Applying that statutory prohibition to the facts, the Court held that the Commissioner had no jurisdiction to entertain the petition for revision while the appeal filed by the assessee was pending before the National Faceless Appeal Centre. Consequently, the Commissioner correctly rejected the revision application on the ground that an appeal was pending and revision could not be undertaken in such circumstances. [Paras 5, 6, 8]

Revision under Section 264 could not be entertained while the appeal was pending; the rejection on that ground was legally sustainable.

Withdrawal of appeal and its effect on revision jurisdiction - time limit for passing order under Section 264 - Whether the court could direct the Commissioner to treat the appeal as withdrawn and to consider the revision application beyond the statutory time limit for passing orders under Section 264. - HELD THAT: - The Court noted that Section 264 requires the Commissioner to pass an order within one year from the end of the financial year in which the application was made. The last date for passing the order in the present case was 31.03.2022 and the Commissioner passed an order within that period. The Court held that it could not direct the Commissioner to treat a non existing act (treating an appeal as withdrawn) so as to permit revision after the statutory period or otherwise circumvent the bar contained in Section 264(4). Therefore the petitioner's request to direct the Commissioner to treat the appeal as withdrawn and to decide the revision on merits was not grantable. [Paras 7, 8]

No direction could be given to treat the appeal as withdrawn so as to enable revision beyond or contrary to the statutory bar and time limit under Section 264.

Direction for expeditious disposal of appeal by appellate authority - withdrawal of appeal and its effect on revision jurisdiction - Whether the appellate authority should be directed to consider the petitioner's request for withdrawal and to dispose of the appeal expeditiously. - HELD THAT: - While the Court declined to grant the primary relief of ordering revision, it observed that if the petitioner legitimately seeks withdrawal of the appeal that course may be available. The Court therefore directed the appellate authority to decide the appeal in accordance with law as early as possible and to give appropriate consideration to any application for withdrawal; but it clarified that any order permitting withdrawal would not entitle the petitioner to a subsequent adjudication under Section 264, given the statutory constraints. [Paras 9, 10]

Appellate authority directed to consider the request for withdrawal and to dispose of the appeal expeditiously; withdrawal, if permitted, does not confer a right to revision under Section 264.

Final Conclusion: Writ petition disposed: the Commissioner rightly declined revision while an appeal was pending and within the statutory framework; the appellate authority is directed to consider any application for withdrawal and to decide the appeal expeditiously, subject to the statutory limitations on revision.

Validity of notice under Section 148A(b), order under Section 148A(d) and notice under Section 148 for reopening assessment - Service of notice and right to opportunity of hearing in proceedings under Section 148A/Section 148 - Use of active PAN and bank-account transactions as a foundation for issuance of reopening notice - Obligation to surrender PAN on dissolution of a partnership

Validity of notice under Section 148A(b), order under Section 148A(d) and notice under Section 148 for reopening assessment - Use of active PAN and bank-account transactions as a foundation for issuance of reopening notice - Obligation to surrender PAN on dissolution of a partnership - Whether the notices and order issued for Assessment Year 2015-16 were illegal because they were addressed to a partnership firm alleged to have been dissolved in 2001. - HELD THAT: - The Court found that the impugned show cause notice, the order under Clause (d) of Section 148A and the notice under Section 148 pertain to Assessment Year 2015-16 and were issued on the basis of information indicating substantial cash deposits and TDS in a bank account linked to the old PAN AACFV4149H. The record showed the bank account remained in operation and attracted tax consequences (including TDS and interest), which justified initiation of proceedings for reopening. The Court rejected the contention that issuance of notices was impermissible merely because the petitioner alleged earlier dissolution of a partnership, noting that if the PAN remained active and the account operated, the authorities were entitled to proceed; further, the petitioner had the statutory obligation to surrender PAN upon dissolution and no proof was placed on record to substantiate non-use of the PAN. For these reasons the first relief seeking quashment of the notices on the ground of dissolution was refused. [Paras 6, 8, 10]

The challenge to the validity of the notices and order on the ground that they were issued to a dissolved firm is rejected; the proceedings for AY 2015-16 may continue.

Service of notice and right to opportunity of hearing in proceedings under Section 148A/Section 148 - Validity of proceedings where initial physical/service attempts failed but subsequent electronic delivery occurred - Whether the proceedings were vitiated for lack of service and denial of opportunity to explain before passing the order under Section 148A(d) and issuing notice under Section 148. - HELD THAT: - The Court examined the service history: initial e-mail service failed due to unupdated email, a registered-post attempt returned with endorsement 'addressee left', and subsequently the order under Section 148A(d) and the Section 148 notice were sent to the ascertained e-mail address on 12.04.2022 and received by the petitioner. Given these attempts and ultimate electronic communication, the Court held that the petitioner was not deprived of an opportunity to explain; the statutory process under Section 148A(b) (issue of show cause), Section 148A(d) (decision where explanation absent) and consequent Section 148 notice had been followed in substance. The Court directed that the petitioner may, within four weeks, submit his explanation to the authorities particularly in relation to the substantial amount in the account, thereby preserving the petitioner's right to be heard before further action. [Paras 11, 12, 13, 14]

Service objections do not vitiate the proceedings; petitioner shall be permitted to file his explanation with the authorities within four weeks.

Final Conclusion: Writ petition dismissed. The challenge to the reopening notices for AY 2015-16 on the ground that they were issued to a dissolved firm was rejected; service was found to have been effected ultimately and the petitioner is permitted to submit his explanation to the income-tax authorities within four weeks. No order as to costs.

Income escaping assessment - reason to believe - reopening of assessment under section 147 - notice under section 148 - draft assessment order under section 144C(4) - transfer pricing officer report - sufficiency of reasons - Explanation 2 of section 147

Reopening of assessment under section 147 - notice under section 148 - draft assessment order under section 144C(4) - transfer pricing officer report - Assessing Officer's power to issue notice under section 148 when no final assessment order was passed under section 144C(4) after a draft assessment order based on the TPO's report - HELD THAT: - The Court held that the basic requirement for invoking section 147 is that the Assessing Officer has a reason to believe that income chargeable to tax has escaped assessment and, after recording reasons, may issue a notice under section 148. A draft assessment order under section 144C(4), even if founded on the Transfer Pricing Officer's report, is not a final order and remains alterable. There is no express prohibition in section 147 or related provisions preventing initiation of reassessment proceedings by issuing a section 148 notice merely because a final assessment under section 144C(4) was not passed; section 144C(4) requires the AO to pass an assessment in certain circumstances but does not bar reopening under section 147 where the statutory ingredients for reassessment exist. The Court thus found no legal infirmity in the Assessing Officer invoking section 147/148 within the period of limitation after the draft order. [Paras 12, 13, 31, 32]

The Assessing Officer was empowered to issue a notice under section 148 and initiate reassessment under section 147 even though no final assessment order was passed under section 144C(4).

Income escaping assessment - reason to believe - sufficiency of reasons - Explanation 2 of section 147 - Whether reopening was an impermissible device to cure the Assessing Officer's lapse in not passing a final assessment and whether the reasons for reopening were examinable by the High Court - HELD THAT: - The Court rejected the contention that reassessment was merely to remedy the AO's failure to pass a final order under section 144C(4). Citing Explanation 2 of section 147, the Court observed the AO may re-examine the correctness of an assessment and, if satisfied that income has escaped assessment, reopen proceedings. The High Court's role is limited to testing whether the recorded reasons prima facie permit formation of a reason to believe; it is not to adjudicate the sufficiency of the material supporting those reasons in detail at the interlocutory stage. Where the reasons, on their face, satisfy the statutory ingredients, the assessee must cooperate in reassessment and objections to the reopening are to be considered by the assessing authority rather than annulled by writ unless there is a blatant legal violation. [Paras 14, 29, 30]

Reopening was not held to be an illegitimate attempt to cover up the AO's lapse, and the High Court correctly limited its review to the sufficiency of reasons recorded to form a reason to believe.

Final Conclusion: The intra court appeal is dismissed. The High Court correctly upheld the Assessing Officer's initiation of reassessment under sections 147/148 (within limitation) despite absence of a final order under section 144C(4), and correctly confined judicial review to the prima facie sufficiency of the reasons recorded; no interference was warranted.

Summary suit under Order XXXVII CPC - presumption of admission upon non-appearance - proof of loan/advance through bank statements - treatment of TDS certificates and Form 26AS as evidence of payment towards interest - acknowledgement in audited balance-sheet as acknowledgement of liability under Section 18, Limitation Act - entitlement to decree on unimpugned documentary evidence

Summary suit under Order XXXVII CPC - presumption of admission upon non-appearance - entitlement to decree on unimpugned documentary evidence - The plaintiff proved its claim for recovery and was entitled to a decree in a summary suit following the defendant's non-appearance. - HELD THAT: - The Court applied the principle that where a defendant fails to enter appearance within the period specified under Order XXXVII Rule 2(3) CPC the averments in the plaint are to be presumed admitted and the plaintiff becomes prima facie entitled to a decree. Independently, on the merits the plaintiff produced bank account statements and other documentary evidence establishing advances aggregating to the claimed principal sum. The documents and the defendant's response (which implicitly admitted receipt of the advances) cumulatively supported the claim. As the plaintiff's evidentiary material remained unimpeached, the Court concluded that the plaintiff had succeeded in proving the advances and the contractual promise to pay interest, warranting a decree. [Paras 5, 8, 14, 15]

Suit decreed and plaintiff entitled to recovery of the claimed amount with interest and costs.

Acknowledgement in audited balance-sheet as acknowledgement of liability under Section 18, Limitation Act - application of Section 18, Limitation Act to entries in books of account - The plaintiff's claim was not barred by limitation because the defendant's entries in audited balance-sheets and the balance confirmation constituted an acknowledgement under Section 18 of the Limitation Act, thereby extending the limitation period and rendering the suit within time. - HELD THAT: - The Court considered whether the last tranche of advance (in 2014) rendered the claim time-barred. It accepted the plaintiff's submission that the defendant had, in subsequent audited balance-sheets (for Financial Years 2015-16, 2016-17 and 2017-18) and in a balance confirmation dated 1 April 2019, recorded the outstanding liability to the plaintiff. Relying on the principle that entries in books of account and balance-sheets can amount to an acknowledgement within the meaning of Section 18, Limitation Act, the Court held that such acknowledgements brought the suit within the statutory period from the date of acknowledgment, and therefore the suit was not barred by limitation. [Paras 11, 12, 13, 14]

Limitation defence repelled; suit held to be within time by reason of acknowledgements in audited accounts and balance confirmation.

Treatment of TDS certificates and Form 26AS as evidence of payment towards interest - effect of admission by way of defendant's reply to demand notice - Payments shown by the defendant, evidenced by TDS certificates and Form 26AS, were treated as payments towards interest and not as full and final settlement of the plaintiff's claim. - HELD THAT: - The Court examined the TDS certificates and entries in Form No.26AS which corresponded to amounts the defendant asserted to have paid. Those documents indicated deduction of tax at source on amounts characterized as interest, supporting the plaintiff's case that the payments were interest and not payments in reduction of principal by the extent claimed by the defendant. The defendant's bare assertion in reply that the amounts constituted full and final settlement was held to be unsupported by circumstances or documentary evidence showing acceptance by the plaintiff of such a settlement. Consequently, the Court accepted the plaintiff's characterization of the payments and the remaining principal and interest as due. [Paras 10, 14]

Entries in TDS certificates and Form 26AS accepted as evidence of payments towards interest; defendant's contention of full and final settlement rejected.

Final Conclusion: The commercial summary suit was decreed: the plaintiff proved the advances and contractual interest, the limitation defence failed by reason of acknowledgements in audited balance-sheets and a balance confirmation, and payments shown by TDS/Form 26AS were treated as interest; decree for recovery with interest and costs was directed.

Violation of principles of natural justice / failure to afford opportunity of hearing - failure to consider submissions in reply - availability of alternative remedy by statutory appeal - exercise of extraordinary writ jurisdiction under Article 226/227

Violation of principles of natural justice / failure to afford opportunity of hearing - The assessment order was not passed without affording opportunity of hearing to the petitioner. - HELD THAT: - The Court examined the chronology: a show cause notice was issued on 26.03.2022 and the petitioner filed a reply on 27.03.2022. The impugned assessment order dated 30.03.2022 was passed after consideration of the reply. On that basis the Court held that there was no failure to afford an opportunity of hearing and no breach of the principles of natural justice that would justify interference by writ. [Paras 7]

Petition on the ground of non-affording an opportunity of hearing and breach of natural justice is not maintainable and is declined.

Failure to consider submissions in reply - availability of alternative remedy by statutory appeal - exercise of extraordinary writ jurisdiction under Article 226/227 - Omission to consider one or more grounds raised in the reply to the show cause notice does not warrant exercise of extraordinary writ jurisdiction and is a matter for statutory appeal; the Court nonetheless granted limited relief to enable the appeal to be filed and decided on merits. - HELD THAT: - The Court reiterated the settled principle that where an order ignores one or more grounds taken in a reply, that grievance is ordinarily remedied by the alternative statutory appellate remedy under the Income Tax Act rather than by invoking Article 226/227. The petition filed within 20 days of the assessment order was therefore not entertained on merits. However, the Court directed that if the petitioner files the statutory appeal within a further period of 30 days, the appellate authority shall decide the appeal on merits, disregarding any delay in filing the appeal. This constituted a limited direction to facilitate the appellate remedy but did not convert the Court's finding on merits in favour of the petitioner. [Paras 8, 9]

Complaint about non-consideration of grounds is to be pursued by statutory appeal; order granting liberty to file appeal within 30 days and directing appellate authority to decide it on merits while ignoring delay.

Final Conclusion: Writ petition dismissed: the High Court declined to interfere with the assessment order, holding that opportunity of hearing was afforded and that grievances about non-consideration of grounds are subject to statutory appeal; petitioner permitted to file the appeal within 30 days which shall be decided on merits ignoring delay.

Deduction under section 80P(2) of the Income-tax Act - Intimation and opportunity to respond under the proviso to section 143(1)(a) - Processing of return and disallowance for incomplete ITR schedules - Remand to Assessing Officer for examination, verification and opportunity of hearing

Deduction under section 80P(2) of the Income-tax Act - Intimation and opportunity to respond under the proviso to section 143(1)(a) - Processing of return and disallowance for incomplete ITR schedules - Denial of the assessee's claim of deduction under section 80P(2) without giving the assessee an opportunity to substantiate the claim during processing under section 143(1). - HELD THAT: - The Tribunal found that the claim for deduction under section 80P(2) was made in the ITR-5 filed for AY 2018-19 but was denied at the electronic processing stage on account of certain schedules not being filled correctly. The proviso to section 143(1)(a) requires that no adjustments be made unless the assessee is given intimation of such adjustments and an opportunity to respond, and any response received is to be considered before making adjustments. The assessee was not given such an opportunity either during processing or in the appellate proceedings, and the rectification under section 154 was rejected on a prima facie basis without affording the assessee a chance to furnish supporting documents. Denying a substantive claim solely on the ground of incomplete schedule-filling, without affording the statutorily mandated intimation and opportunity to respond, was held not to be in accordance with law and justice. [Paras 5, 6, 7]

The denial of the deduction without issuing the requisite intimation and affording an opportunity to the assessee to substantiate the claim was set aside.

Remand to Assessing Officer for examination, verification and opportunity of hearing - Restoration of the matter to the file of the Assessing Officer for fresh examination and verification of the claim and for affording the assessee a reasonable opportunity to produce documents. - HELD THAT: - In view of the failure to afford the assessee the opportunity contemplated by the proviso to section 143(1)(a), the Tribunal directed that all issues including the claim under section 80P(2) be restored to the Assessing Officer having jurisdiction. The Assessing Officer is to examine and verify the claim afresh, provide the assessee a reasonable opportunity of being heard and consider the documents and details to be filed by the assessee; if on the basis of such verification and documentary evidence the Assessing Officer finds merit in the claim, the same shall be allowed in accordance with law. The remand was ordered for adjudication on merits and verification rather than for mere quantification. [Paras 6, 7]

The appeal is restored to the Assessing Officer for examination/verification of the deduction claim and for affording the assessee a reasonable opportunity to furnish supporting documents; if found meritorious, the deduction shall be allowed.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes by setting aside the denial of deduction made at the processing stage for AY 2018-19 and remanded the matter to the Assessing Officer to examine and verify the claim under section 80P(2) after affording the assessee a reasonable opportunity of hearing; allowance to follow if the claim is found meritorious in accordance with law.

Unexplained cash credits - taxation of profit element on unrecorded business receipts - reopening of assessment under Section 147

Unexplained cash credits - taxation of profit element on unrecorded business receipts - Whether the aggregate credits (cash and cheque) of Rs. 32,55,324/- in the assessee's undisclosed joint bank account could be treated as unexplained money and added in full to assessable income under Section 69A, or only the profit element ought to be taxed. - HELD THAT: - The Tribunal examined the pattern of deposits and withdrawals and accepted that the account exhibited frequent deposits and withdrawals indicative of usage for business transactions which were not disclosed to the department. The Tribunal held that where the assessee contends that bank credits arise from unreported business receipts, it is not justifiable to tax the entire bank credit as unexplained money; instead the taxable element is the profit arising from such business activity. In view of the assessee's admitted business of trading in plastic items and consistent with precedents cited, the Tribunal directed that 8% of the total deposits be treated as the profit element taxable in the hands of the assessee, and reduced the addition accordingly. The Tribunal noted that lower authorities had failed to consider withdrawals and had confirmed the entire deposits without assessing the profit margin arising from the unrecorded business transactions. [Paras 6, 7, 8]

Addition sustained only to the extent of profit element: 8% of the aggregate deposits of Rs. 32,55,324/- to be considered as taxable income; rest not added.

Reopening of assessment under Section 147 - Validity of reassessment initiated under Section 147/148 for AY 2012-13 as contested in the appeal. - HELD THAT: - The appellant did not press or advance any submissions challenging the validity of reopening before the Tribunal; accordingly the ground relating to reopening was not argued and is treated as dismissed for being not pressed. [Paras 9]

Ground relating to reopening under Section 147 dismissed as not pressed.

Final Conclusion: Appeal partly allowed: addition reduced so that 8% of the aggregate bank credits is treated as taxable profit; challenge to reopening under Section 147 dismissed as not pressed; other general grounds not adjudicated.

Rectification of mistake apparent on record under section 154 - typographical error in electronic return - revised return versus rectification distinction - power of appellate authority to admit claims without filing a revised return - requirement of revised return for making new claims or deductions

Rectification of mistake apparent on record under section 154 - typographical error in electronic return - revised return versus rectification distinction - Whether the typographical mistake in the e-filed return could be corrected by rectification under section 154 notwithstanding that the revised return filed by the assessee was held invalid for procedural reasons. - HELD THAT: - The Tribunal found that the assessee had, by a typographical error, declared a much larger income in the original e-return and that the correct salary income was evidenced by Form No.16 and bank statements. The error was an apparent, clerical mistake on the face of the record and did not constitute a new claim or deduction requiring a valid revised return. Reliance on the principle in Goetze (India) Ltd. was examined and distinguished: the rule that a new claim or deduction cannot be entertained without a revised return does not preclude rectification of an apparent clerical error under section 154. The assessing officer and the Commissioner (Appeals) erred in treating the matter as one necessitating a time-barred revised return rather than a rectifiable mistake on record. Having regard to the evidence submitted by the assessee and the nature of the error, rectification was appropriate and the addition/demand arising from the typing mistake had to be deleted.

Rectification under section 154 allowed; rejection of the rectification petition set aside and the additions/demand deleted.

Final Conclusion: Appeal allowed; the Tribunal set aside the rejection of the rectification petition, directed correction of the typographical mistake in the return and deletion of the resulting additions/demand.

Accommodation entry - entry provider - commission income taxed at 0.5% - characterisation of receipt as sale consideration versus revenue receipt - remand report and non-verification of third parties - prevention of double taxation

Accommodation entry - entry provider - commission income taxed at 0.5% - characterisation of receipt as sale consideration versus revenue receipt - remand report and non-verification of third parties - Whether the sum received by the assessee as a confirming party is taxable as sale proceeds/capital gain or is rightly treated as accommodation-entry receipts on which the assessee has been taxed as commission income at 0.5% - HELD THAT: - The Tribunal upheld the view recorded by the Commissioner (Appeals) that the assessee acted as an entry provider/confirming party and the amount received from the purchaser formed part of banking transactions where the assessee earned commission. The assessee furnished ledger entries showing receipt of the sum from the buyer and subsequent payments made to various third parties on the directions of the land owners, and offered the receipts as sales in its books while also being assessed on commission at 0.5%. The Assessing Officer's remand report merely recorded the director's statement that the sums did not belong to the assessee and were paid to other parties, but the AO did not verify or obtain statements from the alleged beneficiaries or the land owners. Having regard to the ledger evidence of receipts and onward payments and the absence of verification by the AO of third parties, the Tribunal found no infirmity in the CIT(A)'s conclusion that the assessee was only an accommodation entry provider and that the disputed sum had already been subjected to tax as commission income; consequently the addition treating the amount as business income/sale proceeds was deleted. [Paras 7]

The addition of the sum received by the assessee as business income/sale proceeds is deleted; the assessee is treated as an entry provider taxed at 0.5% commission and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and affirmed the CIT(A)'s finding that the assessee was an accommodation-entry provider; the amount in dispute having been offered and taxed as commission at 0.5% cannot be treated afresh as sale proceeds or charged as business income for AY 2010-11.

Disallowance of deduction under section 54/54F - capital gains reinvestment condition - belated return filing - assessment year allocation of deduction - double taxation - same deduction not to be taxed twice

Disallowance of deduction under section 54/54F - assessment year allocation of deduction - Addition in A.Y. 2013-14 arising from denial of deduction claimed under section 54/54F in A.Y. 2011-12 - HELD THAT: - The Tribunal held that the assessee had claimed the deduction/exemption under section 54 in A.Y. 2011-12 and not in A.Y. 2013-14. The alleged violation of the reinvestment condition (failure to deposit capital gains in the Capital Gains Account Scheme before the due date of filing the return for A.Y. 2011-12) occurred in A.Y. 2011-12, and any denial of the claim on that ground ought to have been made in that year. The fact that the return for A.Y. 2011-12 was filed belatedly during A.Y. 2013-14 does not justify taxing the previously claimed deduction in A.Y. 2013-14. The Tribunal further noted that the deduction had in any event been denied in A.Y. 2011-12 by the assessing officer who treated the gain as short-term and denied section 54 relief, and therefore the same deduction could not be disallowed again and taxed in a subsequent year. [Paras 5]

Addition made in A.Y. 2013-14 on account of denial of deduction under section 54/54F of Rs. 37,41,054/- is deleted.

Capital gains reinvestment condition - belated return filing - double taxation - same deduction not to be taxed twice - Whether the failure to comply with section 54 reinvestment condition, discovered because of belated filing, justified reopening taxation of the same claimed deduction in a later assessment year - HELD THAT: - The Tribunal clarified that non-compliance with the statutory condition for claiming exemption under section 54 (i.e., deposit into the Capital Gains Account Scheme before the due date of filing return) is a defect that relates to the year in which the deduction was claimed (A.Y. 2011-12) and must be addressed in that year. Belated filing in a subsequent year does not transform the character of the error into a ground for taxing the amount in the later year. Since the assessing officer for A.Y. 2011-12 had already disallowed the section 54 claim, there was no scope to subject the same claimed deduction to tax again in A.Y. 2013-14. [Paras 3, 5]

Violation of the reinvestment condition, if any, should have been addressed in A.Y. 2011-12; the deduction cannot be taxed again in A.Y. 2013-14.

Final Conclusion: The appeal is allowed: the addition in A.Y. 2013-14 disallowing the deduction claimed under section 54/54F is deleted, since the claim related to A.Y. 2011-12 and cannot be taxed again in the impugned year.

Credit for tax deducted at source - cash method of accounting - rectification under Section 154 - Form 26AS as guiding document for TDS credit

Credit for tax deducted at source - Form 26AS as guiding document for TDS credit - cash method of accounting - Whether the assessee's claim for full TDS credit as filed in the return for the year under consideration should be sustained in view of subsequent rectification by the Assessing Officer - HELD THAT: - The assessee claimed TDS credit in its return and, after initial processing, was granted only partial credit by the CPC-AO. The CIT(A) directed the AO to grant credit only insofar as the commensurate receipts were brought to tax in A.Y.2016-17 and refused to allow credit relating to earlier assessment years. Thereafter the AO passed an order under Section 154 dated 28.06.2019 granting the assessee the full TDS credit claimed in the return. The Tribunal noted that the post-appeal rectification by the AO disposed the substantive dispute in favour of the assessee, that the departmental representative raised no objection to this position, and that the CIT(A)'s order had consequently become infructuous. Having regard to the rectification order which afforded the relief sought by the assessee, the Tribunal set aside the impugned CIT(A) order and allowed the appeal.

Impugned order of the CIT(A) set aside and the assessee's appeal allowed, the AO's subsequent Section 154 order granting full TDS credit being given effect.

Final Conclusion: The Tribunal allowed the appeal and set aside the CIT(A) order because the Assessing Officer, by a later order under Section 154 dated 28.06.2019, granted the full TDS credit claimed by the assessee for A.Y.2016-17, rendering the appellate order infructuous.

Penalty under section 271(1)(c) - Furnishing inaccurate particulars of income - Concealment of income - Mens rea / contumacious conduct requirement for penalty - Claim not sustainable in law does not automatically amount to inaccurate particulars - Deduction under section 35E - Depreciation on leased assets / sale and leaseback transactions - Entitlement to depreciation where lease rent is taxed as business income

Penalty under section 271(1)(c) - Furnishing inaccurate particulars of income - Deduction under section 35E - Claim not sustainable in law does not automatically amount to inaccurate particulars - Mens rea / contumacious conduct requirement for penalty - Deletion of penalty under section 271(1)(c) levied for claiming deduction under section 35E for the Assessment Years 2003-04 to 2006-07. - HELD THAT: - The Tribunal held that penalty under section 271(1)(c) can be imposed only where there is furnishing of inaccurate particulars or concealment of income, which requires contumacious conduct or mens rea. Mere assertion that a claim is not sustainable in law does not, by itself, constitute furnishing inaccurate particulars. The assessee had obtained mining rights from the State and produced communications and reports evidencing prospecting activities; the issue of eligibility under section 35E and commencement of commercial production was debatable and subject to appellate scrutiny. In these circumstances, and having regard to authoritative decisions stressing that incorrect claims in law do not automatically attract penalty unless concealment or inaccurate particulars are shown, the Tribunal concluded that the levy of penalty in respect of the section 35E claim was not justified and deleted it. [Paras 6, 7, 8, 17]

Penalty under section 271(1)(c) in respect of the deduction claimed under section 35E is deleted.

Penalty under section 271(1)(c) - Furnishing inaccurate particulars of income - Depreciation on leased assets / sale and leaseback transactions - Entitlement to depreciation where lease rent is taxed as business income - Mens rea / contumacious conduct requirement for penalty - Deletion of penalty under section 271(1)(c) levied for claiming depreciation on sale and leaseback transactions for the Assessment Years 2003-04 to 2006-07. - HELD THAT: - The Tribunal examined the facts that the assessee, a State undertaking, had engaged in sale and leaseback transactions with GEB and treated lease rent as business income. The Assessing Officer disputed change of possession, but did not assert non-existence of the machinery; the transaction was explained as an extension of financial assistance between public undertakings and leasing was an object of the assessee's business. Relying on precedent that mere rejection of a claim after appreciation of evidence does not constitute inaccurate particulars or concealment, and noting that allegations of non-genuineness (as in Sundaram Finance) were distinguishable on facts, the Tribunal found no contumacious suppression of particulars. Consequently, the penalty imposed for the depreciation claim was not warranted and was deleted. [Paras 7, 8, 11, 17]

Penalty under section 271(1)(c) in respect of depreciation claimed on sale and leaseback transactions is deleted.

Final Conclusion: The Tribunal deleted the penalties levied under section 271(1)(c) for Assessment Years 2003-04 to 2006-07 in respect of claims under section 35E and depreciation on sale and leaseback transactions, and allowed the assessee's appeals.

Prospectivity of statute - retroactive application of penal and confiscation provisions - substantive effect of amendment - in rem forfeiture as punitive and prospective - constitutional invalidity of pre-amendment penal provisions

Prospectivity of statute - substantive effect of amendment - retroactive application of penal and confiscation provisions - Whether the Benami Transactions (Prohibition) Amendment Act, 2016 (the 2016 Act) can be applied to transactions entered into prior to its coming into force. - HELD THAT: - The Court applied the law declared by the Supreme Court in Union of India v. Ganpati Dealcom Pvt. Ltd. and this Court's prior decision in Nexus Feeds Limited, holding that the 2016 Act is not merely procedural but prescribes substantive provisions. Because key provisions of the pre-amendment Act (including penal and confiscation provisions) were found constitutionally infirm, the 2016 Act cannot be given retrospective effect so as to revive or punish transactions entered into before the coming into force of the Amendment Act. Consequently, the 2016 Act's penal and confiscation provisions operate only prospectively and cannot be applied to transactions prior to 25.10.2016 (and the notified date 01.11.2016). [Paras 16, 24, 25, 26]

The 2016 Amendment Act's substantive penal and forfeiture provisions cannot be applied retrospectively and operate prospectively only.

Constitutional invalidity of pre-amendment penal provisions - in rem forfeiture as punitive and prospective - Effect of the Supreme Court's declaration regarding Sections 3 and 5 of the pre-amendment Benami Property Act on existing proceedings. - HELD THAT: - Relying on the Supreme Court's determination that Sections 3 and 5 of the unamended 1988 Act were overly broad, disproportionately harsh and thus unconstitutional from inception, the Court recorded that the Amendment Act of 2016 created new substantive provisions. Given that the pre-amendment penal regime was incapable of valid application, authorities cannot initiate or continue criminal prosecution or confiscation proceedings in respect of transactions entered into before the 2016 Act's commencement; in rem forfeiture under the 2016 Act, being punitive, can only be applied prospectively. [Paras 23, 24, 25, 26]

As Sections 3 and 5 of the pre-amendment Act are declared unconstitutional from inception, confiscation and criminal proceedings in respect of transactions prior to the 2016 Act cannot be sustained; in rem forfeiture under the 2016 Act is prospective.

Retroactive application of penal and confiscation provisions - prospectivity of statute - Whether show cause notices, provisional attachments and adjudicating orders under the 2016 Act in respect of transactions predating 25.10.2016 are sustainable. - HELD THAT: - Applying the binding Supreme Court precedent and this Court's consistent view, the impugned show cause notices, provisional attachment orders and adjudicating orders issued under the 2016 Act in relation to transactions that took place before the Amendment Act came into force are without jurisdiction. The Court therefore set aside and quashed those notices, attachments and orders impugned in the batch of writ petitions. [Paras 11, 26, 27, 28]

The impugned show cause notices, provisional attachment orders and adjudicating orders relating to transactions prior to 25.10.2016 are quashed.

Final Conclusion: The writ petitions are allowed: in view of the binding Supreme Court precedent and this Court's decisions, the 2016 Amendment cannot be applied retrospectively to transactions prior to its commencement and all challenged show cause notices, provisional attachments and adjudicating orders in respect of such pre-2016 transactions are set aside and quashed.

Proof of value by contemporaneous admission and post-claim conduct - liability of principal for wrongful acts of agent / selection of agent - agent of disclosed principal and Section 230 of the Indian Contract Act, 1872 - duty to mitigate loss - effect of duty drawback on claim for value - currency of decree and award of interest

Proof of value by contemporaneous admission and post-claim conduct - The value of the goods consigned (US$ 84,353.31 / Rs.29,87,795/-) was proved for the purpose of awarding damages. - HELD THAT: - Although the Bills of Lading contained a disclaimer as to weight, measure and value, the plaintiff promptly claimed US$ 84,353.31 after wrongful delivery and contemporaneous correspondence shows defendant nos.3 and 4 treated that claim as valid by debiting and seeking to recover the said amount from the consignee. The trial Court was justified in treating the defendants' post-claim conduct and admissions in correspondence as sufficient to establish the value for the claim despite absence of independent evidence aliunde of invoices. [Paras 35, 36, 37, 38]

Finding affirmed that the value as claimed by the plaintiff was established by contemporaneous correspondence and conduct of defendants.

Agent of disclosed principal and Section 230 of the Indian Contract Act, 1872 - liability of principal for wrongful acts of agent / selection of agent - Defendant no.3 could be held liable for wrongful delivery by defendant no.4 despite defendant no.3's contention of being merely an agent of a disclosed principal. - HELD THAT: - Section 230 generally protects an agent of a disclosed principal from personal liability, but the real question was the juridical relationship between defendant nos.3 and 4. Contemporaneous documents repeatedly refer to defendant no.3 as principal of defendant no.4; defendant no.3 did not controvert that position prior to suit; and evidence showed defendant no.3 exercised authority in appointing/endorsing the handling agent at destination. The Court applied principles that a principal is responsible for acts of agents selected by it and that liability arises where the agent acted in course of employment. On the facts, defendant no.3 was not entitled to avoid liability as a mere disclosed-agent and the trial Court rightly fastened liability on defendant no.3 jointly and severally with others. [Paras 49, 50, 51, 53, 54]

Finding upheld that defendant no.3 is liable for the wrongful delivery by defendant no.4 on the basis of the relationship and contemporaneous conduct; Section 230 did not absolve defendant no.3 on these facts.

Duty to mitigate loss - The plaintiff's failure to mitigate loss did not disentitle it to damages on the proved claim. - HELD THAT: - The asserted defence that the consignee rejected the goods was not proved by reliable contemporaneous evidence, and there was no material showing the alleged rejection was communicated to the plaintiff so as to enable mitigation. Given the undisputed wrongful delivery and that the plaintiff had parted with possession, an abstract submission that the plaintiff should have mitigated was not established. The Court observed that mitigation is a matter of reasonableness and does not permit the wrongdoer to escape liability where mitigation was not practicable or notice of rejection was not given. [Paras 55, 56, 57, 58, 59]

Finding affirmed that the plaintiff was not barred from damages for failure to mitigate under the facts of the case.

Effect of duty drawback on claim for value - currency of decree and award of interest - Availment of duty drawback did not establish receipt of sale proceeds; the damages decree should have been in Indian currency and the rate of interest reduced from 24% to 18% p.a. - HELD THAT: - An admission in cross examination that duty drawback might have been availed did not prove the plaintiff had received the sale proceeds from the consignee. Statutory provisions permit recovery procedures where drawback is allowed but proceeds are not received; they do not automatically imply receipt of consideration. Moreover, the plaintiff's original claim crystallized in Indian rupees in the communication of 14th September, 1996. Consequently the quantification of damages ought to be in Indian currency. The appellate Court found the rate of interest at 24% excessive for a commercial dispute and reduced it to 18% p.a. [Paras 61, 62, 63, 64, 65]

Duty drawback did not negate plaintiff's claim; decree modified to Rs.29,87,795/- with interest at 18% p.a. from institution of suit.

Final Conclusion: The appeal is partly allowed: the trial Court's findings on value, defendant no.3's liability, and rejection of mitigation defence are affirmed; the decree is modified to direct joint and several payment of Rs.29,87,795/- with interest at 18% p.a. from institution of the suit; appellant to pay costs of the appeal and bear its own.

Permission to move imported goods to a public warehouse under Section 49 of the Customs Act - no prohibition on movement of imported articles from custodian warehouse to public warehouse - obligation of FSSAI to inspect and analyse imported food samples - refusal to prescribe a fixed timeframe for FSSAI inspection and clearance despite statutory five day analysis report provision - FSSAI cannot decline inspection on the sole ground that goods are stored in a public warehouse

Permission to move imported goods to a public warehouse under Section 49 of the Customs Act - no prohibition on movement of imported articles from custodian warehouse to public warehouse - Whether an importer may move imported food articles from a custodian warehouse at the port/airport to a public warehouse pending statutory clearance - HELD THAT: - The court recorded that neither the Customs Act nor the Import Regulations prohibit an importer from applying to the Customs authority for permission to store imported goods in a public warehouse pending clearance. Section 49 of the Customs Act contemplates storage in a public warehouse where the proper officer is satisfied that goods cannot be cleared within a reasonable time. The movement, if permitted, remains subject to regulatory control by Customs because goods in transit to a public warehouse continue to be uncleared for home consumption. Parties including the Ministry of Civil Aviation and the customs authorities also conceded that movement to a public warehouse is permissible in principle and would be considered in accordance with law. [Paras 17]

Importers may apply under Section 49 for permission to move imported articles from custodian warehouses to public warehouses; such movement is not prohibited and will be regulated and permitted by Customs where appropriate.

Obligation of FSSAI to inspect and analyse imported food samples - refusal to prescribe a fixed timeframe for FSSAI inspection and clearance despite statutory five day analysis report provision - FSSAI cannot decline inspection on the sole ground that goods are stored in a public warehouse - Extent of FSSAI's duty to inspect and analyse imported food and whether the Court should lay down a fixed timeline for inspection, sampling and grant of NOC - HELD THAT: - The court noted Section 47(5) of the Act and Regulation 9(12) require the Food Analyst to forward analysis reports within five days, and that the Import Regulations envisage storage in customs warehouses pending analysis. The court held that FSSAI is under a duty to conduct inspection and analysis with expedition and promptitude. However, the court declined to prescribe a specific timeframe for completion of inspection, sampling and clearance because it cannot anticipate variable circumstances such as volume of imports and situational vagaries. The court further recorded that FSSAI must not refuse to inspect solely because goods are stored in a public warehouse; inspection and sampling may be undertaken irrespective of whether consignments are in custodian or public warehouses. [Paras 18, 19]

FSSAI must inspect and analyse imported food consignments with expedition, but the Court will not fix a rigid time limit for completion of that process; FSSAI cannot deny inspection merely because goods are stored in a public warehouse.

Final Conclusion: Writ petition disposed: importers are entitled in principle to seek Customs' permission under Section 49 to move imported food consignments from custodian warehouses to public warehouses pending clearance; FSSAI must carry out inspection and analysis with expedition but the Court will not prescribe a fixed timeframe for grant of NOC, and FSSAI cannot refuse inspection solely because goods are in a public warehouse.

Entitlement to refund of terminal excise duty for DTA supplier to EOU under the Foreign Trade Policy - EOU not independently entitled to TED refund but may avail DTA supplier's entitlement subject to disclaimer - non availment of CENVAT credit/rebate as condition for TED refund - processing of TED refund claims under FTP consistent with CENVAT credit reversal/encashment principles - conversion of excise refund remedy into electronic credit in GST era pursuant to Sandoz

Entitlement to refund of terminal excise duty for DTA supplier to EOU under the Foreign Trade Policy - non availment of CENVAT credit/rebate as condition for TED refund - processing of TED refund claims under FTP consistent with CENVAT credit reversal/encashment principles - Whether supplies to EOU/licence holders under EPCG scheme attract entitlement to refund of terminal excise duty and the conditions governing such entitlement under the Foreign Trade Policy. - HELD THAT: - The Court affirmed that Chapter 8 of the Foreign Trade Policy confers an entitlement to refund of terminal excise duty on DTA suppliers of goods to EOUs where such supplies fall within the deemed export categories in para 8.2 read with para 8.3(c). The entitlement is subject to the stipulation in para 8.5 that refund is available only if the recipient has not availed CENVAT credit/rebate; after the 2012 amendments a declaration as per ANF 8 is required. The FTP scheme treats EOUs as ab initio exempt from payment of excise, and therefore EOUs do not have an independent entitlement to cash refund of TED; however, an EOU which has nevertheless paid TED may claim the entitlement available to the DTA supplier provided the supplier gives a disclaimer and other procedural formalities under Chapter 8 are complied with. Where CENVAT credit has been utilized, the correct course is reversal of commensurate credit rather than cash refund; conversely, if TED was paid in cash and entitlement is established, refund may be in cash. The Court rejected arguments that Policy Circular No.16 effected a substantive change to entitlement; rather the scheme is explicit that refunds are conditional and must be processed in accordance with FTP and principles underlying CENVAT credit reversal/encashment.

Entitlement to TED refund exists for DTA suppliers to EOUs under FTP subject to non availment of CENVAT credit/rebate and compliance with Chapter 8 procedures; EOUs are not independently entitled but may avail supplier's entitlement on fulfilment of disclaimer and other conditions; where CENVAT credit has been utilized, reversal to CENVAT account is the remedy rather than cash refund.

EOU not independently entitled to TED refund but may avail DTA supplier's entitlement subject to disclaimer - conversion of excise refund remedy into electronic credit in GST era pursuant to Sandoz - What relief is available to the petitioner who paid TED and claimed refund in the GST era. - HELD THAT: - Having found that the petitioner had in fact paid the duty and that the legal position is settled by the Supreme Court's decision in Sandoz (directing treatment of excise refunds/credits in the GST regime), the Court directed that the appropriate relief is to credit the amount of duty paid into the petitioner's electronic credit register rather than ordering any other mode of cash refund. The GST authorities were impleaded for this purpose; however, they deferred to DGFT. On the admitted fact of payment and the settled law, the Court set aside the impugned orders and directed R3 to grant electronic credit to the petitioner within eight weeks, leaving open that where CENVAT credit was utilized the commensurate reversal to the credit account is appropriate.

Petitioners who paid TED are entitled to have the amount credited to their electronic credit register in the GST regime; the respondent (R3) is directed to grant such credit within eight weeks.

Final Conclusion: Writ petitions allowed. The impugned orders are set aside and the authority is directed to grant the petitioner credit of the duty paid in the electronic credit register within eight weeks, subject to compliance with the conditions and procedural requirements under Chapter 8 of the FTP and the rule that where CENVAT credit has been utilized the commensurate amount be reversed to the concerned CENVAT/GST credit account.

Deemed conclusion of proceedings under Section 28(6)(i) - application of deemed closure to co-noticees/other persons - applicability of Board Circular No. 11/2016-Cus. excluding seizure/confiscation cases - penalty under Section 112(A) of the Customs Act

Deemed conclusion of proceedings under Section 28(6)(i) - application of deemed closure to co-noticees/other persons - Whether the deemed conclusion of proceedings in Section 28(6)(i) applies to the customs broker (co-noticee) upon payment of duty, interest and penalty by the importer. - HELD THAT: - Section 28(6)(i) provides that where duty with interest and penalty has been paid in full by the person served with notice, proceedings in respect of "such person or other persons" to whom notice is served shall be deemed to be conclusive as to matters stated therein. The Tribunal examined the text of Section 28(6)(i) and the factual matrix in which the importer paid the differential duty with interest and penalty before the show-cause notice was adjudicated. The Commissioner had extended the benefit of Section 28(6)(i) to the importer and its Managing Director but denied it to the Appellant (the customs broker) despite both being co-noticees charged under the same provisions. The Tribunal held that the Appellant, being a co-noticee to whom no demand of duty was raised while the importer settled the duty liability, fell within the category of "other persons" contemplated by Section 28(6)(i) and was thus eligible for deemed closure of proceedings based on the importer's compliance. [Paras 6, 7]

The deemed conclusion under Section 28(6)(i) applies to the Appellant (customs broker) where the importer has paid the duty, interest and penalty, and the Commissioner erred in denying that benefit to the Appellant.

Applicability of Board Circular No. 11/2016-Cus. excluding seizure/confiscation cases - Whether the clarificatory Board Circular No. 11/2016-Cus. (excluding cases involving seizure/confiscation) or its interpretation justifies denying the benefit of Section 28(6)(i) to the Appellant. - HELD THAT: - The Tribunal considered the text of Circular No. 11/2016-Cus., which explains the operation of the deemed-conclusion facility and states that cases involving seizure under Section 110 or confiscation provisions would be out of its purview. The Tribunal noted the legal position, as reflected in cited authority relied upon by the Appellant, that a clarificatory circular cannot override or have an effect contrary to the legislative provision in Section 28. The Tribunal found that the Circular's exclusion, as applied by the Commissioner in this case, produced an artificial distinction that was not in conformity with Section 28(6)(i) as applied to co-noticees where the importer had complied. The Tribunal further observed that the Circular did not individualise violators and that its exclusionary language could not justify extending closure to the importer while denying it to the Appellant charged under the same penal provisions. [Paras 7]

The Board Circular's exclusion of seizure/confiscation cases did not justify denying the deemed-conclusion benefit to the Appellant, and the Circular could not be applied so as to defeat the operation of Section 28(6)(i) in the present facts.

Penalty under Section 112(A) of the Customs Act - Whether confirmation of penalty on the Appellant under Section 112(A) should be sustained despite the importer's payment of duty, interest and penalty and the operation of Section 28(6)(i). - HELD THAT: - The Commissioner confirmed penalty on the Appellant for alleged failure to perform customs broker duties, relying on the Circular to exclude deemed closure. Having held that Section 28(6)(i) applied to the Appellant and that the Circular could not be used to deny that benefit, the Tribunal concluded that confirmation of penalty on the Appellant was unsustainable. The Tribunal emphasised the inconsistency of extending closure to the importer while denying it to the co-noticee under identical charges and found that, in law and equity, the Appellant should have been entitled to the benefit arising from the importer's compliance. [Paras 6, 7, 8]

The confirmation of penalty under Section 112(A) on the Appellant is unsustainable and must be set aside in view of the operation of Section 28(6)(i).

Final Conclusion: Appeal allowed; the order imposing penalty of Rs.50,000 on the Appellant is set aside as the deemed-conclusion provision of Section 28(6)(i) applies to the co-noticee (customs broker) on the importer's payment of duty, interest and penalty, and the Board Circular could not be applied to deny that benefit in the circumstances.

Summary suit under Order XXXVII CPC - Admissions in pleadings / Judicial admissions - Acknowledgment of debt - Value of entries in audited balance-sheet as acknowledgement - Maintainability of summary suit without a written refund agreement - Conditional leave to defend subject to deposit

Admissions in pleadings / Judicial admissions - Acknowledgment of debt - Summary suit under Order XXXVII CPC - Maintainability of summary suit without a written refund agreement - Whether the defendant's admissions in affidavits before NCLT and the statement in its audited balance-sheet constitute an acknowledgment of debt sufficient to sustain a summary suit under Order XXXVII CPC. - HELD THAT: - The Court held that admissions in pleadings stand on a high pedestal and, if true and clear, can constitute a foundation of rights and liabilities. Reliance was placed on the authority of Nagindas Ramdas for the principle that judicial admissions are binding and may dispense with further proof. The Court examined the affidavits filed before the NCLT which admitted an agreement to refund the consideration subject to specified deductions and acknowledged payment of two cheques, and concluded that those averments satisfy the dual requirements of an ascertained or readily calculable amount and an acknowledgement of liability to the extent agreed. The Court further treated the audited balance-sheet entry showing advances from customers as carrying sanctity and capable of amounting to an acknowledgement of liability, following the reasoning in Jyotsna K. Valia and the discussion in Asset Reconstruction Company (India) Ltd regarding balance-sheet entries as acknowledgements. On this cumulative foundation the Court held that, notwithstanding absence of a formal written agreement expressly promising a full refund, the pleaded admissions and the balance-sheet entry render the claim, to the admitted extent, maintainable as a summary suit under Order XXXVII CPC; entitlement to full refund and interest remained triable issues not finally adjudicated. [Paras 23, 24, 26, 27]

Pleadings and the audited balance-sheet record constitute an acknowledgement of debt to the extent admitted by the defendant and therefore furnish a sustainable foundation for institution of a summary suit under Order XXXVII CPC, while remaining contentions as to quantum and interest are triable.

Conditional leave to defend subject to deposit - Summary suit under Order XXXVII CPC - Whether the defendant should be granted leave to defend the summary suit and, if so, on what conditions. - HELD THAT: - Balancing that the defendant has raised triable defences (including dispute over quantum and entitlement to interest) against the plaintiffs' admitted entitlement to a definite portion of repayment, the Court exercised its discretion to permit the defendant to defend the suit only upon making a security deposit of the admitted amount. The Court observed the relative positions of the parties and the plaintiffs' substantial payment and lack of development of the project, and concluded that conditional leave - rather than unconditional leave - is appropriate to protect the plaintiffs' admitted entitlement while permitting adjudication of disputed issues on the merits. [Paras 27, 29]

Defendant granted leave to defend the suit on condition of deposit of the amount acknowledged by it within six weeks; failure to deposit will entitle plaintiffs to apply for ex parte decree after obtaining a non-deposit certificate.

Final Conclusion: Admissions in the defendant's pleadings before NCLT and the audited balance-sheet entry amount to an acknowledgement of debt to the extent admitted, sufficient to sustain a summary suit under Order XXXVII CPC; the defendant is permitted to defend the suit only upon deposit of the acknowledged amount within six weeks, failing which the plaintiffs may seek an ex parte decree.

Transfer of winding up proceedings to NCLT under the second proviso to Section 434(1)(c) of the Companies Act, 2013 - test of irreversibility in exercising discretion to transfer - continuation of winding up order as interim protection until NCLT passes order under Section 13 of the IBC - conduct of directors as a criterion in exercise of judicial discretion - treatment of transferred winding up petition as application for initiation of corporate insolvency resolution process under IBC

Transfer of winding up proceedings to NCLT under the second proviso to Section 434(1)(c) of the Companies Act, 2013 - treatment of transferred winding up petition as application for initiation of corporate insolvency resolution process under IBC - Transfer of the Company Petition to NCLT, Mumbai under the second proviso to Section 434(1)(c) was permissible and was ordered, with the transferred petition to be dealt with as an application for initiation of corporate insolvency resolution process under the IBC. - HELD THAT: - The second proviso to Section 434(1)(c) enables any party to apply for transfer of winding up proceedings to the Tribunal and vests discretion in the Company Court to order such transfer; on transfer, the proceedings are to be treated as an application for initiation of corporate insolvency resolution process under the IBC. The decision in Action Ispat establishes that transfer may be ordered even after admission of a winding up petition and appointment of a liquidator; the pertinent test is whether the liquidation has progressed to an irreversible stage. Applying these principles to the facts, the Court found that irreversible steps had not been taken and that transfer would further the object of the IBC by enabling a process focused on revival. Consequently, the Company Petition was directed to be transferred to NCLT, Mumbai to be considered under the IBC framework. [Paras 23, 24, 25, 26, 27]

Company Petition No.399 of 2013 was transferred to NCLT, Mumbai to be dealt with as an application for initiation of corporate insolvency resolution process under IBC.

Test of irreversibility in exercising discretion to transfer - irreversible action by Official Liquidator - Whether the Official Liquidator had taken irreversible steps in liquidation that would preclude transfer was considered and answered in the negative. - HELD THAT: - The Court adopted the test of irreversibility: transfer should be refused only if liquidation has reached a stage where it is impossible to set the clock back, commonly evidenced by actual sale or other irreversible disposals of assets. The Official Liquidator's actions (symbolic and physical possession of premises, taking records, seeking disclosures and lodging a complaint) did not, on the material placed, amount to irreversible liquidatory measures; there was no finding of actual sale of immovable or movable assets undertaken by the Official Liquidator or consummated distribution of assets. On that basis, the Court concluded that the stage of irreversibility had not been reached and transfer could be permitted. [Paras 27, 28, 32, 33]

The Official Liquidator had not taken irreversible steps in liquidation; the petition could be transferred.

Conduct of directors as a criterion in exercise of judicial discretion - Whether the alleged blameworthy conduct of the ex-directors disentitled them to seek transfer was considered but found not to be a conclusive ground to refuse transfer. - HELD THAT: - The Court recognized that the ex-directors' conduct-selling assets despite knowledge of revival of winding up and alleged misappropriation of sale proceeds-was blameworthy and relevant to judicial discretion. However, the Court held that to decline transfer solely because of such conduct would unduly curtail the remedial benefits of the IBC and deprive creditors, workmen and other stakeholders of the insolvency regime's prospects for revival. While the conduct remains a material consideration and the criminal and other proceedings remain unaffected, it was not held to be determinative against transfer in the present facts. [Paras 34, 35, 36]

Alleged misconduct by ex-directors did not, by itself, oust the discretion to transfer; transfer was ordered notwithstanding those allegations.

Continuation of winding up order as interim protection until NCLT passes order under Section 13 of the IBC - Whether the winding up order should continue to operate after transfer until NCLT passes an effective order under Section 13 of the IBC was decided in the affirmative and appropriate interim directions were issued. - HELD THAT: - Given the risk of asset dissipation and the interim nature of transfer, the Court directed that the winding up order dated 22nd June, 2018 and appointment of the Official Liquidator be recalled for the purpose of enabling NCLT to initiate proceedings under the IBC, but with a rider that the winding up order would continue to operate until NCLT passes an effective order under Section 13. This preserves the status quo and stakeholder interests in the interregnum while allowing the transferred petition to be treated as an insolvency application. The order also clarified that criminal proceedings and existing rights and liabilities up to the date of the order would not be affected. [Paras 40, 41]

The winding up order and appointment of the Official Liquidator were recalled for transfer purposes but shall continue to operate until NCLT passes an effective order under Section 13 of the IBC; only thereafter will the Official Liquidator stand discharged.

Final Conclusion: The High Court ordered transfer of Company Petition No.399 of 2013 to NCLT, Mumbai to be dealt with as an application under the IBC, holding that the stage of irreversibility in liquidation had not been reached, that alleged misconduct of ex-directors did not by itself preclude transfer, and that the winding up order would continue as interim protection until the NCLT passes an effective order under Section 13 of the IBC; criminal and other rights/liabilities existing up to the date of the order remain unaffected.

Pre-existing dispute - existence of dispute - plausible contention requiring further investigation - Demand Notice under Section 8 of the I&B Code - Section 9 application under the I&B Code - invocation of arbitration clause - Mobilox principle

Pre-existing dispute - existence of dispute - plausible contention requiring further investigation - Demand Notice under Section 8 of the I&B Code - Section 9 application under the I&B Code - Whether the Adjudicating Authority rightly rejected the Section 9 application on the ground of a pre-existing dispute. - HELD THAT: - The Tribunal applied the settled test that the Adjudicating Authority must reject a Section 9 application if there is a notice or record demonstrating the existence of a dispute that is not patently feeble, relying on the Mobilox formulation. The material preceding the Demand Notice dated 30.12.2019 - notably emails dated 14.12.2018, 11.02.2019, 15.02.2019, 26.02.2019 and 16.04.2019 - conveyed month-wise short-supply of supervisor and security personnel with specific man-days, stated that recoveries under the contract would be effected and that payments were conditionally released to avoid hardship to employees, with all recoveries to be visited on conclusion of the contract. The 20.12.2019 communication further recorded that issues relating to observing contractual terms remained to be settled and were being processed. The minutes of the meeting dated 07.06.2019 relied on by the Operational Creditor were unsigned and self-generated; the Corporate Debtor specifically denied their authenticity. The communication of detailed alleged breaches and the corporate debtor's stance that recoveries would be effected at contract conclusion constituted a plausible, non-spurious dispute existing at the time the Demand Notice was issued. The Tribunal found no substance in the appellant's contention that the dispute had been resolved before issuance of the Demand Notice, and treated the Corporate Debtor's later letter of 05.02.2021 as a reiteration/finalisation of reconciliatory calculations rather than the first raising of a dispute. Applying the Mobilox/Kay Bouvet standard, the Adjudicating Authority's conclusion that a pre-existing dispute barred the Section 9 petition was supported by the contemporaneous records and communications. [Paras 16, 17, 24, 25, 27]

The Adjudicating Authority did not err in rejecting the Section 9 application on the ground of a pre-existing dispute; the appeal is dismissed.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's rejection of the Section 9 petition, concluding that contemporaneous communications from the Corporate Debtor disclosed a genuine pre-existing dispute regarding short-supply and recoveries which precluded initiation of CIRP; the appeal is dismissed.

Withdrawal of approved resolution plan by successful resolution applicant - Finality of an approved resolution plan and enforcement of commitments under the insolvency resolution process - Impact of unforeseen financial difficulties (including pandemic-related effects) on implementation of resolution plans and limits of judicial intervention - Preservation of the legislative scheme and object of the Insolvency and Bankruptcy Code

Withdrawal of approved resolution plan by successful resolution applicant - Finality of an approved resolution plan and enforcement of commitments under the insolvency resolution process - Impact of unforeseen financial difficulties (including pandemic-related effects) on implementation of resolution plans and limits of judicial intervention - Whether the resolution applicant could be permitted to withdraw an approved resolution plan on account of subsequent financial incapacity or pandemic-related adverse effects. - HELD THAT: - The Appellate Tribunal upheld the Adjudicating Authority's rejection of the application seeking permission to withdraw the resolution plan after its approval. The Tribunal relied on the reasoning in Ebix Singapore, which observed that although the Covid-19 pandemic adversely affected businesses and gave rise to requests for withdrawal or renegotiation of pending resolution plans, there is no provision under the statute to permit withdrawal by a successful resolution applicant and judicially granting such a right would subvert the legislative scheme. The Court noted the emphasis in Ebix on (i) the wider adverse impact of permitting post-approval withdrawal on the insolvency resolution process, and (ii) the need to preserve the legislative intent and objectives of the IBC rather than creating exceptions by judicial interpretation (paras. 161 and 220 as reproduced). Applying that principle, the Tribunal held that permitting a successful resolution applicant to back out of commitments after approval - even on grounds of subsequent financial difficulty or events beyond the applicant's control - would be destructive of the process and purpose of the IBC. Consequently, the Adjudicating Authority was correct in refusing the application to withdraw the approved plan.

Application for withdrawal of the approved resolution plan was rightly rejected; the resolution applicant cannot be permitted to withdraw an approved plan on the grounds of subsequent financial incapacity or pandemic-related difficulties.

Final Conclusion: Appeal dismissed; the order refusing permission to withdraw the approved resolution plan is maintained, applying the principle that successful resolution applicants cannot withdraw sanctioned plans as doing so would frustrate the statutory insolvency resolution process.

Commercial wisdom of the Committee of Creditors - judicial non-interference in CoC commercial decisions - liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - evaluation of resolution plan by CoC including sources of funds and EMD requirement - scope of review by the Adjudicating Authority of CoC voting decision

Commercial wisdom of the Committee of Creditors - judicial non-interference in CoC commercial decisions - evaluation of resolution plan by CoC including sources of funds and EMD requirement - scope of review by the Adjudicating Authority of CoC voting decision - liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Whether the Adjudicating Authority erred in directing liquidation of the corporate debtor after the CoC rejected the resolution plan. - HELD THAT: - The Tribunal found that the Resolution Applicant's plan was considered, examined and discussed in the 12th and 13th CoC meetings, where CoC members repeatedly asked for particulars including sources of funds, EMD and performance guarantee; the minutes record detailed interaction and the CoC gave time to cure deficiencies but remained unconvinced. The e voting result (8.61% for, 71.44% against, 19.95% abstained) showed the plan was rejected by the requisite majority. In view of the Supreme Court precedent in K. Sashidhar, the commercial wisdom of the CoC is accorded paramount status and is generally non justiciable; judicial interference in the CoC's commercial decision is minimal. Applying that principle, the Tribunal held that the CoC's rejection, based on concerns about sources of funds, EMD and other shortcomings recorded in the minutes, could not be interfered with by the Adjudicating Authority. Consequently, the Adjudicating Authority did not commit error in allowing the Resolution Professional's application under Section 33(1) for liquidation. [Paras 14, 15, 16, 17, 18]

The Adjudicating Authority's order directing liquidation of the corporate debtor is upheld and the appeals are dismissed.

Final Conclusion: The Tribunal dismissed both appeals, upholding the Adjudicating Authority's order of liquidation under Section 33(1) of the IBC because the CoC, after detailed consideration and recorded deliberations, rejected the resolution plan and its commercial decision could not be judicially interfered with.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - completeness of a Section 9 application - pre-existing dispute and notice of dispute - acknowledgement and its effect on limitation - corporate insolvency resolution process - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional

Completeness of a Section 9 application - pre-existing dispute and notice of dispute - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - The Section 9 application filed by the Operational Creditor was complete and fit for admission and the adjudicating authority could admit the petition under Section 9. - HELD THAT: - The Tribunal examined whether the operational creditor had furnished the invoice/demand notice, affidavit and proof of non-payment and whether any notice of dispute had been raised by the corporate debtor. The demand notice dated 21.10.2019 was served on the corporate debtor (delivered on 28.10.2019) and the ledger and related material showed that payments remained outstanding. The corporate debtor had not raised a notice of dispute in the record before the Adjudicating Authority and its contentions concerning set-off and payments were considered documentary/contentious matters requiring examination beyond the threshold prima facie inquiry under Section 9. Applying the statutory gatekeeper conditions in Section 9(5), the Tribunal found the application to be defect free and that there was no established notice of dispute recorded that would bar admission. [Paras 5, 8, 9]

Application under Section 9 admitted and CIRP initiated against the corporate debtor.

Acknowledgement and its effect on limitation - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - The claim was not time-barred because the corporate debtor had acknowledged the debt on 26.09.2017, thereby affecting the limitation defence. - HELD THAT: - The corporate debtor asserted the claim was barred by limitation, the last invoice being dated 01.07.2015. The Tribunal relied on an undated letter dated 26.09.2017 signed by the director of the corporate debtor acknowledging that an amount had been withheld as of 31.03.2017 and undertaking that payment from PGVCL would be remitted to the operational creditor. The Tribunal treated that acknowledgment as sufficient to displace the limitation defence for the Section 9 proceeding and, accordingly, rejected the plea that the petition was time-barred. [Paras 6, 8]

Limitation defence repelled by the corporate debtor's acknowledgement; claim not time-barred for the purpose of admission.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional - corporate insolvency resolution process - On admission, moratorium was declared and an Interim Resolution Professional was appointed to conduct the CIRP. - HELD THAT: - Having admitted the Section 9 application and commenced the CIRP, the Tribunal declared the moratorium proscribing initiation or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property occupied by the corporate debtor, in terms of Section 14(1). The Tribunal also appointed an Interim Resolution Professional and directed him to perform functions under the Code, to make the public announcement and call for claims, and to receive interim funds to enable smooth conduct of the CIRP. [Paras 9]

Moratorium declared and IRP appointed; CIRP to proceed in accordance with the Code.

Final Conclusion: The Tribunal admitted the Section 9 petition, holding the application complete and the claim not time barred due to an acknowledgement by the corporate debtor; it declared the statutory moratorium, appointed an Interim Resolution Professional and directed initiation of the CIRP procedures.

Service of statutory demand notice - Pre-existing dispute in operational debt - Limitation for filing Section 9 petition - Threshold requirement for initiation of CIRP - Admission of petition under Section 9 and imposition of moratorium - Appointment of Interim Resolution Professional and vesting of management

Service of statutory demand notice - The demand notice in Form 3 dated 13.11.2019 was duly served on the corporate debtor. - HELD THAT: - The petition placed on record a copy of the demand notice and the Tribunal noted delivery to the corporate debtor. The Tribunal examined service as a preliminary matter and found that the notice was properly served, supporting continuation of the petition. [Paras 8]

Service of the demand notice was proper.

Pre-existing dispute in operational debt - There was no valid pre-existing dispute to bar admission of the Section 9 petition. - HELD THAT: - Although a reply dated 30.11.2019 was received by the operational creditor alleging pre-existing disputes, the Tribunal, noting the respondent's non-appearance and the content of the affidavit of the operational creditor, concluded that the corporate debtor raised baseless and frivolous contentions and did not establish a real pre-existing dispute. The Tribunal therefore treated the liability as undisputed for the purposes of admission. [Paras 5, 9, 12]

No pre-existing dispute existed that would preclude admission of the petition.

Limitation for filing Section 9 petition - The petition was filed within the limitation period applicable to the claim. - HELD THAT: - The Tribunal recorded the date of default as 18.05.2019 (30 days from the first outstanding invoice dated 18.04.2019) and noted that the petition was filed on 24.02.2020. On that basis the Adjudicating Authority found the petition to be within limitation and proceeded to adjudicate the merits. [Paras 4, 10]

The application was filed within limitation.

Threshold requirement for initiation of CIRP - The operational creditor proved debt and default above the statutory threshold existing at the relevant time. - HELD THAT: - The Tribunal examined the pleadings and annexures in Form 5 and found that the operational creditor had sold and supplied goods and had supporting invoices and ledger entries. The total unpaid operational debt in default was shown to exceed the threshold applicable prior to the amendment of the monetary limit, and the Tribunal held that the requirements for invocation of Section 9(5)(i) were satisfied. [Paras 3, 11, 12]

Debt and default were proved and exceeded the applicable threshold.

Admission of petition under Section 9 and imposition of moratorium - The petition under Section 9 was admitted, moratorium was declared, and CIRP was ordered to commence. - HELD THAT: - Having found proper service, absence of a pre-existing dispute, limitation compliance, and satisfaction of Form 5 requirements, the Tribunal held that conditions for admission under Section 9(5)(i) were met. The Tribunal admitted the petition, directed the declaration of moratorium in terms of Section 14(1) and related provisions, and specified the effects of moratorium including protection of supply of essential goods and services as provided in the order. [Paras 12, 13, 14, 15, 18]

Petition admitted; moratorium imposed and CIRP initiated.

Appointment of Interim Resolution Professional and vesting of management - An Interim Resolution Professional (IRP) was appointed and the management's powers stood suspended in favour of the IRP. - HELD THAT: - The Tribunal accepted the written consent of the proposed IRP, found no adverse material against him, and appointed him with directions to act in accordance with the Code and regulations. The order specified vesting of management in the IRP under the Code, duties such as inventorying assets, constituting the Committee of Creditors within prescribed timelines, and filing fortnightly progress reports. The petitioner was directed to deposit an amount to meet immediate CIRP expenses. [Paras 16, 17]

IRP appointed; management vested in IRP with directions; petitioner to deposit initial CIRP expenses.

Final Conclusion: The Tribunal found the demand notice to be duly served, no bona fide pre-existing dispute, and the petition to be timely and complete; accordingly the Section 9 petition was admitted, moratorium declared, an Interim Resolution Professional appointed, and the Corporate Insolvency Resolution Process initiated in respect of the corporate debtor.

Initiation of corporate insolvency resolution process under section 7 of the Insolvency and Bankruptcy Code, 2016 - adjustment of SARFAESI sale proceeds against secured debt - tender of cheque as discharge of outstanding liability - maintainability of section 7 petition where debt appears to have been satisfied - Vidarbha Industries Power Limited v. Axis Bank Limited

Initiation of corporate insolvency resolution process under section 7 of the Insolvency and Bankruptcy Code, 2016 - adjustment of SARFAESI sale proceeds against secured debt - tender of cheque as discharge of outstanding liability - maintainability of section 7 petition where debt appears to have been satisfied - Vidarbha Industries Power Limited v. Axis Bank Limited - Admissibility and viability of the Company Petition under section 7 in view of realization of SARFAESI sale proceeds and subsequent attempt to discharge the residue debt. - HELD THAT: - The Tribunal recorded that the secured creditor had invoked SARFAESI powers and sold mortgaged property, realizing Rs.6.32 crore which reduced the claimed default. The records and the Debt Recovery Tribunal's order show confirmation of sale and receipt of entire sale consideration, leaving a substantially reduced outstanding amount. The corporate debtor (through its personal guarantor/director) tendered a cheque towards the residual liability, which the financial creditor did not accept, contesting other calculations. Having regard to the realized sale proceeds, communications between the parties, and the fact that the petition appeared directed more to recovery than to resolution of insolvency, the Tribunal applied the principle in Vidarbha Industries Power Limited v. Axis Bank Limited regarding the object and maintainability of insolvency proceedings. On that basis the Tribunal found that the petition under section 7 was not maintainable for initiating CIRP and that the financial creditor had not established a case for insolvency proceedings to be initiated. [Paras 10, 11, 12, 13, 14]

C.P. (IB)/739(KB)2020 is dismissed; the petitioner is at liberty to pursue remedies available under other laws.

Final Conclusion: The petition under section 7 seeking initiation of CIRP was dismissed because the secured creditor had realized sale proceeds which materially reduced the claimed debt and the corporate debtor had attempted to discharge the residue; the Tribunal found the petition not maintainable for insolvency resolution and declined to admit it, while permitting the creditor to pursue other remedies.

Lease-cum-sale agreement - possession and enjoyment of immovable property - asset of the corporate debtor - moratorium under the Insolvency and Bankruptcy Code - eviction only by due process of law - remedy by approaching civil court - continuation of rights of resolution applicant during CIRP

Lease-cum-sale agreement - asset of the corporate debtor - possession and enjoyment of immovable property - Reliefs sought by the lessor to exclude the lease property from the assets of the corporate debtor and to restrain the resolution professional/corporate debtor were not grantable by the Tribunal in the interlocutory forum. - HELD THAT: - The Tribunal examined the registered Lease-Cum-Sale-Agreement and concluded that the document conferred possessory legal rights on the lessee and was not a mere licence. The terms indicate the lessee's entitlement to seek extension of the lease or to purchase the property at a price to be fixed by the lessor, and the corporate debtor was in physical possession and enjoyment of the land. Given these contractual rights and the concurrent allegations of breach by both parties, the Tribunal held that the reliefs seeking declaration that the property is not an asset of the corporate debtor and prohibitory reliefs against the resolution professional could not be granted in the present interlocutory petition before the Adjudicating Authority. The Tribunal therefore directed that the appropriate remedy for determination of alleged breaches and for eviction lies before a competent Civil Court and not by summary interlocutory orders in the CIRP proceedings. [Paras 21, 22, 23]

Application for interlocutory reliefs to exclude the lease property from the corporate debtor's assets and to restrain the resolution professional is not maintainable before this Tribunal; such contractual and possessory disputes require civil adjudication.

Moratorium under the Insolvency and Bankruptcy Code - eviction only by due process of law - continuation of rights of resolution applicant during CIRP - remedy by approaching civil court - The resolution applicant is entitled to continue in possession of the leased property during CIRP and cannot be evicted except by due process of law; KIADB's notice and actions are constrained by the moratorium. - HELD THAT: - The Tribunal noted that moratorium under the Code was in force from the date of admission and thereby prevented eviction or unilateral takeover by the lessor. It emphasised the settled legal proposition that a person in settled possession of immovable property cannot be evicted by force and that where both parties allege breach of the lease-cum-sale agreement the lessor's remedy is to seek civil adjudication. Consequently, whatever legal rights the corporate debtor had under the registered lease-cum-sale agreement were held to continue to vest with the resolution applicant until eviction is effected by due process; the resolution applicant remains at liberty to approach the lessor for extension of lease or purchase on the lessor's discretion and rules. [Paras 22, 23, 24]

Resolution applicant entitled to remain in possession during CIRP; eviction or determination of contractual breaches must be pursued in a civil court, and moratorium limits unilateral action by KIADB.

Final Conclusion: Interlocutory Application dismissed. The Tribunal held that the registered lease-cum-sale agreement conferred possessory rights on the corporate debtor which continue to vest with the resolution applicant during CIRP, eviction can occur only by due process of law and the lessor's remedy is to seek civil adjudication; accordingly the application seeking to exclude the property from the corporate debtor's assets and to restrain steps relating thereto was rejected.

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Appointment of liquidator under Section 34(1) of the Code - Committee of Creditors' rejection of the resolution plan and failure to secure approval - Liquidator's entitlement to fees under the IBBI (Liquidation Process) Regulations, 2016 - Vesting of management powers in the liquidator and cessation of board/key managerial personnel authority - Obligation to issue public notice and intimate Registrar of Companies on liquidation - Bar on suits and legal proceedings subject to Section 52 of the Code

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' rejection of the resolution plan and failure to secure approval - Corporate Debtor ordered to be liquidated under Section 33(1) of the Code. - HELD THAT: - The Tribunal recorded that the Committee of Creditors did not approve the sole resolution plan (the plan received from the prospective resolution applicant garnered less than the prescribed percentage) and that, despite a unanimous decision in the 12th CoC meeting to liquidate, no voting had been conducted for unspecified reasons. Coupled with the lapse of over 397 days without an approved resolution plan and the imminent expiry of the CIRP timeline, the Tribunal exercised its power under Section 33(1)(b)(i) to order liquidation as the only viable option in absence of an approved resolution plan.

I.A. No. 528/2022 is allowed and Topsgrup Services and Solutions Limited is ordered to be liquidated.

Appointment of liquidator under Section 34(1) of the Code - Liquidator's entitlement to fees under the IBBI (Liquidation Process) Regulations, 2016 - Appointment of Mr. Anshul Gupta as liquidator and his entitlement to fees under the Liquidation Process Regulations. - HELD THAT: - The Resolution Professional, being eligible and having consented in writing to act as liquidator, was appointed under Section 34(1). The Tribunal directed that the liquidator shall be entitled to fees as provided in Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016 and shall conduct the liquidation in accordance with the Chapter III provisions of the Code and the applicable liquidation regulations.

Mr. Anshul Gupta is appointed as the liquidator and shall be entitled to fees as per the IBBI (Liquidation Process) Regulations, 2016.

Vesting of management powers in the liquidator and cessation of board/key managerial personnel authority - Obligation to issue public notice and intimate Registrar of Companies on liquidation - On initiation of liquidation, management powers shall vest in the liquidator and public notice/ROC intimation shall be issued. - HELD THAT: - The Tribunal ordered that upon commencement of liquidation all powers of the board of directors, key managerial personnel and partners shall cease and be vested in the liquidator. The liquidator was directed to issue a public notice stating that the Corporate Debtor is in liquidation and to send the order to the Registrar of Companies where the company is registered, in accordance with the liquidation process mandated by the Code and regulations.

Management powers vest in the liquidator and the liquidator must issue the prescribed public notice and inform the ROC.

Bar on suits and legal proceedings subject to Section 52 of the Code - Restriction on instituting suits or other legal proceedings against the Corporate Debtor after initiation of liquidation, subject to Section 52. - HELD THAT: - The Tribunal directed that, save as permitted by Section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor after commencement of liquidation, with liberty granted to the liquidator to institute proceedings on behalf of the Corporate Debtor only with prior approval of the Adjudicating Authority.

Post-initiation of liquidation, suits or proceedings are barred subject to Section 52, and the liquidator may institute proceedings with prior approval of the Adjudicating Authority.

Liquidation order as notice of discharge to employees - Liquidation order deemed to be notice of discharge to officers, employees and workmen except insofar as business continues under the liquidator. - HELD THAT: - The Tribunal held that the liquidation order shall be deemed a notice of discharge to the officers, employees and workmen of the Corporate Debtor, except in respect of any part of the business that the liquidator continues during the liquidation process.

The liquidation order is a notice of discharge to employees subject to the exception for continuing business under the liquidator.

Final Conclusion: The Tribunal allowed I.A. No. 528/2022, ordered liquidation of Topsgrup Services and Solutions Limited, appointed Mr. Anshul Gupta as liquidator with fees as per the IBBI (Liquidation Process) Regulations, directed vesting of management powers in the liquidator, required public notice and ROC intimation, restricted suits subject to Section 52, and treated the order as notice of discharge to employees.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - resolution of the Committee of Creditors recommending liquidation by requisite voting share - appointment of liquidator with written consent and valid authorisation for assignment - cessation of existing moratorium and commencement of fresh moratorium under Section 33(5) - duties of liquidator including public announcement, investigation of financial affairs and submission of preliminary report under the Insolvency and Bankruptcy (Liquidation Process) Regulations

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - resolution of the Committee of Creditors recommending liquidation by requisite voting share - Order for liquidation of the corporate debtor upon the Committee of Creditors' resolution after conclusion of the CIRP - HELD THAT: - The Adjudicating Authority noted that the corporate insolvency resolution process ended on 24.08.2021 and that the Committee of Creditors, in its 9th meeting dated 02.03.2022, passed a unanimous resolution recommending liquidation. Applying Section 33(2) of the IBC, 2016, and having regard to the CoC's decision, the Tribunal concluded that the present application for liquidation deserved to be allowed and accordingly ordered the corporate debtor to be liquidated. [Paras 10, 11, 13]

Liquidation of the corporate debtor ordered.

Appointment of liquidator with written consent and valid authorisation for assignment - Appointment of the liquidator and acceptance of the liquidator's eligibility - HELD THAT: - The Tribunal recorded that the applicant had given written consent (Form AA) to act as liquidator and that the Insolvency and Bankruptcy Board of India records showed a valid authorisation for assignment. On that basis the Tribunal appointed Mr. Arumugam Arumugam as the liquidator to carry out the liquidation process subject to the directions contained in the order. [Paras 12, 13]

Mr. Arumugam Arumugam appointed as liquidator.

Duties of liquidator including public announcement, investigation of financial affairs and submission of preliminary report under the Insolvency and Bankruptcy (Liquidation Process) Regulations - cessation of existing moratorium and commencement of fresh moratorium under Section 33(5) - Scope of directions to the liquidator concerning conduct of liquidation, investigations, notifications and moratorium - HELD THAT: - The Tribunal issued detailed directions to the liquidator to act in accordance with the IBC and relevant Regulations, to make the public announcement about liquidation, to treat the order as notice of discharge for officers/employees in light of Section 33(7), to investigate the financial affairs of the corporate debtor including preferential, undervalued and fraudulent transactions and to file appropriate applications, to notify statutory authorities (Registrar of Companies, IBBI, Income Tax Department and other fiscal/regulatory authorities), and to submit a preliminary report within 75 days from the liquidation commencement date as required by regulation 13. The Tribunal further directed that the moratorium under Section 14 shall cease effect and a fresh moratorium under Section 33(5) shall commence, and that the liquidator shall proceed as per Chapter III of Part II of the IBC. [Paras 13]

Liquidator directed to carry out liquidation in terms of IBC and Regulations, investigate affairs, notify authorities, commence fresh moratorium and file prescribed reports.

Final Conclusion: The Tribunal allowed the application and ordered liquidation of the corporate debtor pursuant to the Committee of Creditors' unanimous resolution; appointed the liquidator named in the order and issued directions governing the conduct of the liquidation, investigations, notifications to authorities and reporting, with a fresh moratorium to commence under Section 33(5).

Goods Transport Agency (GTA) service - Cargo Handling Service - composite service and essential character - abatement and inclusion of ancillary charges within GTA - refund under Notification No.17/2009 - Reverse Charge Mechanism (RCM)

Goods Transport Agency (GTA) service - Cargo Handling Service - composite service and essential character - refund under Notification No.17/2009 - Whether the amounts paid to AB Commercial were for 'GTA' or for 'Cargo Handling Service' and consequently whether the refund sanctioned under Notification No.17/2009 in respect of those invoices was admissible. - HELD THAT: - The Tribunal held that the determinative test is the essential character of the transaction and that a composite service must be classified according to its principal service. Applying Circular No.104/7/2008-ST dated 06.08.2008, ancillary activities such as loading/unloading or packing, when provided as part of a single service of road transportation and invoiced by the transporter, form part of the GTA service and are not to be segregated and treated as independent Cargo Handling Service. The adjudicating authority's de novo disallowance was reversed because the earlier factual findings and documentary record showed the services were for transportation to port of export, the invoices described transportation of iron ore fines, and service tax had been discharged by the appellant under the taxable category of GTA (RCM), bringing the refund claim within the scope of Notification No.17/2009. The Tribunal expressly relied on its prior decisions following the same principle, e.g., Rungta Projects Ltd. , DRS Logistics Pvt. Ltd. , Drolia Electrosteels Pvt. Ltd. , and Leo Packers & Movers , and concluded that the present facts are squarely covered by those precedents and the Circular. For these reasons the impugned orders disallowing the refund could not be sustained. [Paras 11, 12, 13, 14, 15]

The disallowance of the refund in respect of invoices issued by AB Commercial is set aside; the appeal is allowed and the refund claim is admissible under Notification No.17/2009.

Final Conclusion: The Tribunal allowed the appeal, holding that the services rendered by AB Commercial were essentially transport services (GTA) including ancillary activities, and therefore the refund sanctioned earlier falls within Notification No.17/2009; the impugned orders disallowing the refund were set aside with consequential relief.

Rule 3(5A) of the CENVAT Credit Rules, 2004 - Classification of capital goods as 'scrap' or 'used capital goods' - Liability of an output service provider for payment on clearance of capital goods as scrap - Burden of proof on the assessee to establish that capital goods are scrap

Rule 3(5A) of the CENVAT Credit Rules, 2004 - Liability of an output service provider for payment on clearance of capital goods as scrap - Whether an output service provider was liable to pay the amount specified under rule 3(5A) on clearance of capital goods as scrap for the periods in dispute. - HELD THAT: - The Tribunal examined the text and amendments of rule 3(5) and rule 3(5A) across the relevant periods and, on that basis, held that during the periods 01.03.2011 to 16.03.2012 and from 27.09.2013 onwards the statutory obligation to pay an amount on clearance of capital goods as 'waste and scrap' did not extend to output service providers. The Additional Director's order itself records acceptance of this position. Applying the statutory scheme set out in the tabular comparison of the rule before and after amendments, the Tribunal concluded that an output service provider (the appellant) was not required to pay the amount under rule 3(5A) in respect of capital goods cleared as scrap during the stated periods. [Paras 16, 17, 23]

Output service provider was not liable to pay amount under rule 3(5A) on clearance of capital goods as scrap for the periods 01.03.2011 to 16.03.2012 and 27.09.2013 to 31.03.2015.

Classification of capital goods as 'scrap' or 'used capital goods' - Burden of proof on the assessee to establish that capital goods are scrap - Whether the capital goods cleared by the appellant in the present case qualified as 'scrap' (thereby attracting no liability for output service provider) or were 'used capital goods' (attracting liability). - HELD THAT: - The Tribunal applied the evidentiary material and the appellant's prescribed internal procedure for determining scrap status: internal inspection, OEM certification, Chartered Engineer inspection, and sale only to scrap management companies holding requisite certificates under the Hazardous Waste Management Rules. The Tribunal relied on the Division Bench's detailed reasoning in Bharti Infratel Ltd., which accepted similar evidence (third party vendor reports, sale invoices, and scrap management certificates) and rejected the Department's reliance on an Income tax Act definition as inapposite. Given the appellant's documentary and third party certification process and sale to licensed scrap recyclers, the Tribunal found that the goods qualified as scrap. The Additional Director had also conceded that the onus to prove scrap lay on the assessee; the appellant discharged that onus here. [Paras 5, 6, 19, 20, 21]

The capital goods cleared by the appellant qualified as 'scrap'; therefore no amount was payable by the appellant under rule 3(5A) for those clearances.

Final Conclusion: The impugned order confirming demand under rule 3(5A) is set aside; the appeal is allowed and the amount appropriated earlier shall be refunded to the appellant with applicable interest.

Application of amended rule 17(2) of the Pan Masala Packing Machines Rules with retrospective effect - determination of duty liability for unregistered unit by reference to statutory deeming provision - imposition of enhanced duty retrospectively - penalty under Rule 26 read with Section 11AC - personal liability of partner - scope of amendment by substitution versus retrospective operation

Application of amended rule 17(2) of the Pan Masala Packing Machines Rules with retrospective effect - imposition of enhanced duty retrospectively - scope of amendment by substitution versus retrospective operation - Amended rule 17(2) (as inserted by the 20.10.2008 amendment) does not apply to searches conducted before its date of coming into force and therefore cannot be given retrospective effect to impose a higher duty for the period July-August 2008. - HELD THAT: - The Tribunal held that at the time of search (04.08.2008) the unamended rule 17(2) was in force and the amended provision, which came into effect on 20.10.2008, did not itself contain any express retrospective operation. The contention that the amended rule's deeming language (that machines shall be deemed to have been in operation since 01.07.2008) converts the amendment into a retrospective imposition of a higher duty was rejected. The Tribunal explained that the amended rule would apply only to searches or proceedings taking place after the amendment's coming into force, and only then would the deeming consequence reach back to 01.07.2008; it could not be used to increase liability for a search conducted prior to amendment. Reliance on authorities concerning amendment by substitution was distinguished as those decisions involved removal of an obvious mistake and did not bear on an amendment that would impose a heavier liability retrospectively. Applying these principles, the Principal Commissioner's decision to compute duty under the unamended rule and to drop the higher demand for the July-August 2008 period was upheld. [Paras 13, 16, 17, 18, 22]

Amended rule 17(2) cannot be applied retrospectively to impose a higher rate of duty for the period prior to its commencement; demand reduced accordingly under the unamended rule.

Penalty under Rule 26 read with Section 11AC - personal liability of partner - appropriation of amounts deposited towards duty - No penalty was imposed on partner Sumit Agarwal by the adjudicating authority and the department's challenge to that aspect has no merit. - HELD THAT: - The adjudicating authority, on remand, refrained from imposing penalty on Sumit Agarwal (while imposing penalty on the firm and on another employee). The department advanced no substantive argument before the Tribunal challenging the exercise of discretion not to impose personal penalty on Sumit Agarwal; the Tribunal noted that penalty had been imposed on the firm and that there was no additional submission on the point. Accordingly the Tribunal found no reason to interfere with the adjudicating authority's order declining to impose personal penalty on Sumit Agarwal and affirmed appropriation of amounts deposited towards duty as ordered. [Paras 7, 23]

The adjudicating authority's decision to refrain from imposing penalty on Sumit Agarwal (and to appropriate deposited amounts) is sustained; the department's challenge is dismissed.

Final Conclusion: The appeals filed by the Department are dismissed. The adjudicating authority's order applying the unamended rule 17(2) to the period up to 04.08.2008, the recalculated duty, the option to redeem seized goods, the penalties as imposed on the firm and on the other employee, and the refraining from imposing personal penalty on Sumit Agarwal are upheld.

Eligibility of CENVAT credit on inputs - definition of "inputs" under Rule 2(k)(i) of the CENVAT Credit Rules, 2004 (amended w.e.f. 01.04.2011) - goods used for repair and maintenance as inputs - clarificatory Circular No. 943/4/2011-CX dated 29.04.2011 - distinction between manufacturing process and repair/maintenance

Eligibility of CENVAT credit on inputs - definition of "inputs" under Rule 2(k)(i) of the CENVAT Credit Rules, 2004 (amended w.e.f. 01.04.2011) - goods used for repair and maintenance as inputs - clarificatory Circular No. 943/4/2011-CX dated 29.04.2011 - CENVAT credit availed on Welding Electrodes and Dissolved Acetylene (D.A.) Gas for use in repair and maintenance of plant and machinery is eligible as input credit. - HELD THAT: - The Tribunal accepted the finding of the adjudicating authority that Welding Electrodes and D.A. Gas were used for repair and maintenance of plant and machinery which are employed in manufacturing cement and clinker. Applying the broadened post amendment definition of "inputs" in Rule 2(k)(i) (w.e.f. 01.04.2011) and the Board's clarificatory Circular dated 29.04.2011, goods used indirectly in relation to manufacture were held to fall within the term "inputs" and are not excluded by the clause dealing with goods having "no relationship whatsoever" with manufacture. The Tribunal rejected reliance on pre amendment precedents treating repair/maintenance as distinct from manufacture, noting that those decisions predated the widened statutory definition and therefore are not applicable as binding precedent to the post amendment regime. On this basis the credits availed by the appellant were held to be rightly claimed. [Paras 5, 6]

Appeal allowed; order denying CENVAT credit of Rs.10,28,852/- set aside and credits held eligible and rightly availed by the appellant.

Final Conclusion: The Tribunal allowed the appeal, holding that Welding Electrodes and D.A. Gas used for repair and maintenance of plant and machinery fall within the amended definition of "inputs" and that the CENVAT credit claimed for the period April, 2013 to June, 2017 was rightly availed; the order of the Commissioner (Appeals) denying the credit is modified accordingly.

Eligibility of input credit for steel items used in fabrication of gantry/rails and conveyor systems - Cenvat credit classification of goods as capital goods versus inputs - input service: Service Tax on motor vehicle insurance as eligible input service - compliance with Rule 16(1) and Rule 16(2) of the Central Excise Rules and Rule 9 of the Cenvat Credit Rules - limitation and extended period of limitation for demand based on willful suppression - penalty under Section 11AC of the Central Excise Act, 1944

Eligibility of input credit for steel items used in fabrication of gantry/rails and conveyor systems - Cenvat credit classification of goods as capital goods versus inputs - Denial of 50% Cenvat credit on square rail used in construction of support structures for movement of cranes was not sustainable. - HELD THAT: - The Tribunal applied its earlier precedent holding that steel items used for fabrication and installation of gantry rails on which EOT cranes move, and MS rails used for conveyor movement, are to be treated as part of machinery/equipment used in production and hence eligible for Cenvat credit. The impugned denial treating the rails as non-creditable capital goods was contrary to that consistent view and therefore set aside. [Paras 3]

Denial of credit of Rs.17,650/- on square rail set aside; credit allowed.

Input service: Service Tax on motor vehicle insurance as eligible input service - Denial of credit of Service Tax on insurance premium of motor vehicles for the financial year 2010-11 was not sustainable. - HELD THAT: - The service on which credit was taken falls within the definition of input service for the period 2010-11. Although the definition was amended w.e.f. 01.04.2011, the Tribunal found that for the year 2010-11 the insurance premium paid on motor vehicles used in or in relation to manufacture was allowable as input service and therefore the denial of the claimed credit for 2010-11 was set aside. [Paras 4]

Denial of credit of Rs.5,799/- for 2010-11 set aside; credit allowed.

Compliance with Rule 16(1) and Rule 16(2) of the Central Excise Rules and Rule 9 of the Cenvat Credit Rules - limitation and extended period of limitation for demand based on willful suppression - penalty under Section 11AC of the Central Excise Act, 1944 - Denial of Cenvat credit for returned/rejected goods and related demand and penalty arising from alleged non-compliance with Rule 16 and Rule 9 and alleged willful suppression. - HELD THAT: - The assessee had sought and received guidance from the jurisdictional Commissioner regarding practical difficulties in accounting returned goods under its SAP ERP system and claimed to have followed the conditions prescribed. The adjudicating authority and Commissioner(Appeals) found that one-to-one correlation between clearances and returns could not be established and disallowed credit. The Tribunal examined the records and communications, and held that the invoking of extended period of limitation on the ground of willful suppression was not sustainable because statutory returns had been filed and the assessee had been in communication with the Department. Consequently, demands raised beyond the normal period were barred by limitation and set aside. However, the demand for the normal period of limitation, along with interest, was upheld. Since suppression with intent to evade duty was not established, penalty under Section 11AC was set aside. [Paras 5, 6, 7, 8]

Demand beyond the normal period (extended period) set aside as barred by limitation; demand for the normal period with interest upheld; penalty under Section 11AC set aside.

Final Conclusion: Appeal allowed in part: credit on square rails and Service Tax on motor vehicle insurance for 2010-11 restored; demand beyond the normal period set aside for limitation and penalty under Section 11AC set aside; demand for the normal period maintained with interest.

Condonation of delay - limitation - COVID period exclusion - requirement of plausible and cogent explanation for delay - departmental bureaucratic lethargy not a sufficient ground for condonation - governmental obligation to prosecute appeals/revisions diligently

Condonation of delay - limitation - COVID period exclusion - requirement of plausible and cogent explanation for delay - departmental bureaucratic lethargy not a sufficient ground for condonation - Application for condonation of delay in filing the revision was rejected and, consequently, the revision was dismissed. - HELD THAT: - The revision was filed with an initial delay of 584 days which, after applying the Apex Court's direction to exclude the COVID period from 15.03.2020 to 10.02.2021, amounted to a delay of 250 days. The revisionist relied on internal departmental processes, delays in obtaining permissions and drafting, and a generalized contention of bureaucratic inertia to explain the delay. The Court examined precedents relied upon and later authoritative decisions of the Apex Court, which require government departments to provide plausible and acceptable explanations for delay and caution against treating routine procedural red tape or inherited bureaucratic methods as sufficient ground for condonation. Applying those principles to the material on record, the Court found the explanation to be cavalier and casual: documents reached the counsel for drafting months before the limitation expired and yet substantial time lapsed without adequate justification. In view of the absence of a cogent, bona fide, and plausible explanation and having regard to the binding direction that government bodies must prosecute appeals and revisions with diligence, the Court was not inclined to exercise discretion in favour of condonation. Consequently, the application for condonation of delay was rejected and the revision dismissed.

Application for condonation of delay rejected; revision dismissed for being time-barred.

Final Conclusion: The High Court refused to condone a 250-day delay (after excluding the COVID period) because the revisionist failed to furnish a plausible and cogent explanation; accordingly the application for condonation was rejected and the revision dismissed.