TaxTMI Updates e-Newsletter
Oct 01,2024

Previous authorization for inspection under Section 67 - assessment of un-registered persons under Section 63 - opportunity of personal hearing under Section 75(4) - adjournment limit under Section 75(5) as an outer limit

Previous authorization for inspection under Section 67 - Validity of inspection where prior authorization under Section 67 was alleged to be absent. - HELD THAT: - The Court examined Section 67 which requires previous authorization from the competent authority before an officer may inspect premises or conduct an audit. The record showed that the requisite previous authorization had been obtained on 05.11.2019. Consequently, the inspection carried out on 07.11.2019 was not vitiated for want of prior authorization. [Paras 6]

Inspection was valid as previous authorization under Section 67 had been obtained.

Assessment of un-registered persons under Section 63 - proper officer - Whether a separate prior authorization was required for the officer who conducted assessment of an un-registered person arising from such inspection. - HELD THAT: - Section 63 empowers the "proper officer" to assess un-registered persons to the best of his judgment and contains no requirement for prior authorization when the assessment is carried out by the proper officer. The term "proper officer" is an officer to whom functions are assigned by the Commissioner and territorial limits are so assigned. The material showed that the officer who conducted the proceedings was the territorial assessing authority for the area at the relevant time (Adanki circle), and thus no separate authorization under Section 63 was required for the assessment by the proper officer. [Paras 8, 9]

No separate prior authorization was required for assessment under Section 63 when undertaken by the proper territorial assessing officer.

Adjournment limit under Section 75(5) as an outer limit - Whether Section 75(5) mandates granting three adjournments before passing an order. - HELD THAT: - Section 75(5) provides that no adjournment shall be granted for more than three times. The Court construed this language as placing an outer limit on adjournments that may be granted, and not as prescribing a minimum number of adjournments that must be granted before an order can be passed. The petitioner had not shown any record of seeking multiple adjournments beyond the initial request. [Paras 10, 11, 12]

Section 75(5) does not require three adjournments to be granted before an order may be passed; it only caps the maximum number of adjournments.

Opportunity of personal hearing under Section 75(4) - Whether the assessing authority was obliged to grant a personal hearing before passing the assessment and penalty orders. - HELD THAT: - Section 75(4) mandates that an opportunity of hearing shall be granted where a request is received in writing or where any adverse decision is contemplated against the person chargeable with tax or penalty. The show-cause notice provided for filing written objections but did not grant a personal hearing, and an adverse decision was clearly contemplated. In these circumstances the Court found that a personal hearing ought to have been afforded before passing the orders. Having reached this conclusion, the Court set aside the assessment and penalty orders and directed that fresh proceedings may be undertaken after affording a personal hearing to the petitioner. [Paras 13, 14, 16]

Assessment and penalty orders were set aside for want of required opportunity of personal hearing under Section 75(4); fresh proceedings may be conducted after granting personal hearing.

Final Conclusion: The inspection was valid as prior authorization under Section 67 had been obtained and no separate authorization was required for assessment under Section 63 when conducted by the proper territorial officer; Section 75(5) limits adjournments but does not mandate three adjournments; however, because Section 75(4) required a personal hearing where an adverse decision was contemplated and no such hearing was granted, the assessment and penalty orders are set aside and the authorities are permitted to undertake fresh proceedings after affording a personal hearing to the petitioner.

Distinction between proceedings under Section 73 and Section 74 of the CGST Act - Requirement of prima-facie satisfaction of fraud, wilful mis-statement or suppression of facts to invoke Section 74 - Show Cause Notice must disclose the specific ground of fraud or wilful mis-statement to confer jurisdiction - Finality of proceedings under Section 73 and bar on reopening except on fraud or wilful mis-statement - Maintainability of writ under Article 226 where a Show Cause Notice is without jurisdiction

Requirement of prima-facie satisfaction of fraud, wilful mis-statement or suppression of facts to invoke Section 74 - Show Cause Notice must disclose the specific ground of fraud or wilful mis-statement to confer jurisdiction - Impugned Show Cause Notice dated 03.08.2024 under Section 74 of the CGST Act lacked the essential averment that the petitioner had wrongly availed or utilized Input Tax Credit by reason of fraud or wilful mis-statement or suppression of facts, and therefore was without jurisdiction. - HELD THAT: - The Court analysed the separate fields of operation of Sections 73 and 74 of the CGST Act and held that Section 74 applies only where the proper officer is prima facie satisfied that tax was not paid or input tax credit was wrongly availed by reason of fraud, or any wilful mis-statement or suppression of facts. For the adjudicating authority to validly proceed under Section 74, the Show Cause Notice itself must specifically record or disclose that prima-facie belief or the information/evidence on which such belief is founded, thereby putting the assessee on notice of that particular allegation. Reliance was placed on precedents requiring that where an extended limitation or special proviso is to be invoked, the notice must allege the particular ground (fraud/collusion/wilful misstatement/suppression) so the assessee has an opportunity to meet it. In the present case the impugned notice contained only an allegation of excessive ITC and did not even whisper that the excessive claim arose from fraud, wilful mis-statement or suppression of facts; consequently the notice did not disclose the basic ingredient necessary to invoke Section 74 and was therefore without jurisdiction. [Paras 21, 22, 25, 27]

The Show Cause Notice dated 03.08.2024 under Section 74 was quashed for want of the essential averment of fraud or wilful mis-statement or suppression of facts necessary to confer jurisdiction.

Finality of proceedings under Section 73 and bar on reopening except on fraud or wilful mis-statement - Maintainability of writ under Article 226 where a Show Cause Notice is without jurisdiction - Whether proceedings under Section 73, once finalized and dropped, can be reopened under Section 74 absent a prima-facie case of fraud or wilful mis-statement; and whether the writ petition challenging a jurisdictionally defective Show Cause Notice is maintainable. - HELD THAT: - The Court noted that Section 73 deals with recovery for wrongly availed or utilised ITC for reasons other than fraud or wilful mis-statement or suppression, whereas Section 74 is confined to cases involving fraud or wilful mis-statement or suppression. Once proceedings under Section 73 were concluded in favour of the petitioner (dropped by order dated 30.12.2023), they could only be reopened under Section 74 if the adjudicating authority was prima-facie satisfied that fraud or wilful mis-statement or suppression of facts existed. Because the impugned notice failed to allege any such grounds, it could not lawfully reopen the finalized Section 73 proceedings. The Court further held that where a Show Cause Notice is without jurisdiction for lack of the essential ingredients, a writ under Article 226 is an appropriate remedy and therefore the petition challenging the defective notice is maintainable. [Paras 20, 21, 22, 25, 26]

Reopening finalized Section 73 proceedings is impermissible unless Section 74's fraud-related ingredient is made out; the writ petition was maintainable and the challenge to the jurisdictionally defective Show Cause Notice succeeds.

Final Conclusion: Writ petition allowed; the Show Cause Notice dated 03.08.2024 issued under Section 74 of the CGST Act is quashed for lack of the necessary allegation of fraud or wilful mis-statement or suppression of facts; liberty granted to issue a fresh notice only if it expressly contains the basic ingredients justifying proceedings under Section 74.

Principles of natural justice - opportunity of personal hearing - failure to comply with Section 75(4) (opportunity of hearing) - inordinate delay vitiating adjudication - self-imposed bar of alternative remedy - remand for fresh adjudication after quashing - appellate authority's power to remand

Opportunity of personal hearing - failure to comply with Section 75(4) (opportunity of hearing) - principles of natural justice - Impugned adjudication order was passed without granting the petitioner personal hearing as required by law and thereby violated principles of natural justice. - HELD THAT: - The Court found that no further notice was issued to the petitioner to participate in an oral hearing and no opportunity of personal hearing was granted. It reiterated the settled procedural requirement under taxing statutes that an assessee must be granted an opportunity of personal hearing before any adverse adjudication is passed. The deficiency in affording personal hearing was held to be a fundamental breach of natural justice, rendering the impugned order unsustainable. The Court also noted administrative guidance issued by the Commissioner highlighting recurring defects in recording dates and times of personal hearings and related practices which must be rectified. [Paras 5, 7, 11]

Impugned order quashed for having been passed without affording the petitioner a personal hearing; order unsustainable for violation of natural justice.

Inordinate delay vitiating adjudication - principles of natural justice - Delay of five years between issuance of show cause notice and passing of order vitiated the adjudication and amounted to a violation of natural justice. - HELD THAT: - The Court observed that the show cause notice was issued in 2019 while the impugned order was passed in 2024, an inordinate delay of five years. Such prolonged delay was characterised as a manifestation of breach of principles of natural justice and a factor contributing to the unsustainability of the order. The Court treated the delay, together with absence of personal hearing, as sufficient to set aside the order. [Paras 10, 11]

Impugned order set aside on account of unreasonable delay which vitiated the adjudication.

Self-imposed bar of alternative remedy - appellate authority's power to remand - The State's plea of availability of an alternative remedy was not an absolute bar to grant relief where the impugned order was passed in gross violation of natural justice; the appeal forum's inability to remand was noted. - HELD THAT: - A preliminary objection was taken regarding the availability of remedy of appeal under the Act. The petitioner relied on the violation of Section 75(4) and principles of natural justice. The Court held that where an adjudication is in gross violation of natural justice, the mere existence of an alternative remedy of appeal cannot operate as a self-imposed bar to judicial review; to apply such a bar in these facts would be counter-productive to justice. The Court further observed that the appeal authority in the present scheme does not possess power to remand the proceedings, which bears on the effective availability of the alternative remedy. [Paras 3, 4, 11]

Self-imposed bar of alternative remedy not applied in view of breach of natural justice; availability of appeal did not preclude quashing of the order.

Remand for fresh adjudication after quashing - opportunity of personal hearing - Matter remitted for fresh adjudication after quashing of the impugned order, with direction to afford due opportunity of hearing. - HELD THAT: - Having set aside the impugned order for procedural infirmities, the Court remitted the matter to the adjudicating authority to pass a fresh order in accordance with law. The authority was directed to afford the petitioner a personal hearing before passing any adverse order and to follow the procedural requirements emphasised in the administrative memo regarding fixation and recording of hearing dates and timings. The remand was for fresh consideration and compliance with mandatory procedural safeguards. [Paras 12, 13]

Proceedings remitted to the Deputy Commissioner to pass a fresh order after affording the petitioner due personal hearing and in accordance with law.

Final Conclusion: Writ petition allowed; impugned order dated 30.4.2024 set aside for denial of personal hearing and inordinate delay; matter remitted for fresh adjudication after affording the petitioner due opportunity of hearing and observing procedural safeguards.

Reimbursement of tax - difference in GST rate payable on contracts awarded to government entities - maintainability of writ petition despite contractual dispute resolution clause - liability of government entity to discharge enhanced GST - interest for delayed payment of statutory dues

Reimbursement of tax - difference in GST rate payable on contracts awarded to government entities - Respondent No.2 was directed to reimburse the petitioner the additional GST of 6% for invoices issued on or after 01.01.2022 up to 30.09.2022. - HELD THAT: - The Court recorded that the petitioner had been charging and discharging GST at 18% from 01.01.2022 whereas running bills from respondent No.2 continued to provide for 12%. The petitioner sought reimbursement of the 6% differential for invoices issued on or after 01.01.2022. Respondent No.2 accepted liability by letter dated 26.09.2022 but stated that State Government approval was pending. In these circumstances and having found no disputed question of fact, the Court directed respondent No.2 to pay the difference of GST @ 6% for the period 01.01.2022 to 30.09.2022 within three months of receipt of certified copy of the order, subject to statutory interest on failure to comply. [Paras 4, 5, 9]

Respondent No.2 to pay the additional 6% GST for the period 01.01.2022 to 30.09.2022 within three months, failing which interest at 6% p.a. shall apply from the date of entitlement.

Maintainability of writ petition despite contractual dispute resolution clause - The writ petition was held maintainable and the petitioner was not relegated to the contractual dispute resolution mechanism (arbitration) because no disputed question of fact was involved. - HELD THAT: - Respondents relied upon the agreement's arbitration clause and insisted on alternative remedy. The Court observed that the controversy did not involve disputes of fact requiring adjudication under the contract's dispute resolution forum. Given absence of factual disputes and the petitioner's entitlement being a legal determination of payment of enhanced tax by a government entity, the petition could be entertained under Article 226 without reference to the arbitration procedure. [Paras 6, 7]

Writ petition entertained notwithstanding the contractual dispute resolution clause; petitioner not relegated to arbitration.

Liability of government entity to discharge enhanced GST - interest for delayed payment of statutory dues - The State GST Department's position that the enhanced GST rate applies and that the government entity (respondent No.2) is liable to pay the differential was accepted; interest was made payable on delayed reimbursement. - HELD THAT: - The Court noted the State GST Department's stance that the rate of GST had been enhanced from 12% to 18% and that respondent No.2, being a government entity, was liable to discharge the enhanced rate. Consequently, where respondent No.2 failed to pay the admitted differential within the stipulated period, the Court directed payment of interest at 6% per annum from the date of entitlement. [Paras 8, 9]

Accepted that enhanced GST is payable by the government entity; interest at 6% p.a. to accrue on delayed payment.

Final Conclusion: Writ petition disposed of by directing the government entity to reimburse the 6% GST differential for invoices from 01.01.2022 to 30.09.2022 within three months, with interest at 6% p.a. on any delayed payment; petition held maintainable despite contractual arbitration clause.

Right to appeal despite payment of the demand - deemed conclusion of proceedings upon payment under Section 129(5) - conditional requirement for filing appeal under Section 107(6) including proviso relating to payment of penalty - payment under protest - administrative portal malfunction preventing filing of statutory appeal - equitable relief for enabling filing of appeals where state fault prevented filing

Right to appeal despite payment of the demand - deemed conclusion of proceedings upon payment under Section 129(5) - conditional requirement for filing appeal under Section 107(6) including proviso relating to payment of penalty - payment under protest - Whether payment in full of the tax, penalty and cess as determined under an order passed under Section 129(3) of the State Act operates to bar the petitioners from filing statutory appeals against those orders. - HELD THAT: - The Court examined the interplay between the appellate filing conditions and the effect of payment. Section 107(6) prescribes conditions for filing an appeal, and its proviso requires payment equal to 25% of the penalty for appeals against orders under Section 129(3); Section 129(5) provides that upon payment of the amount referred to in subsection (1) all proceedings in respect of the notice under subsection (3) shall be deemed concluded. The Court held that Section 129(5)'s deeming of conclusion of proceedings upon payment of the amount referred to in subsection (1) does not operate to extinguish the statutory right to appeal against an order passed under Section 129(3). The Court observed that Section 129(5) refers to the notice and not to the order and therefore cannot be read to take away the right of appeal where payment has been made, particularly where payment was made under protest and the appellants sought to exercise their appeal rights within the prescribed period. The Court further noted that the petitioners had timely informed the authorities of a portal malfunction which prevented filing of the appeals and that no corrective steps were taken by the respondents despite representations. Applying these legal principles to the facts, the Court concluded that the petitioners' right to file appeals remained intact and that the respondents' failure (portal glitch or non setoff) had prevented the filing of appeals. [Paras 8, 9, 10, 11, 12]

Payment in full of the demand did not bar the petitioners from filing appeals against the orders passed under Section 129(3); the petitioners retained the right to appeal and their inability to file due to the respondents' fault was not imputable to them.

Administrative portal malfunction preventing filing of statutory appeal - payment under protest - equitable relief for enabling filing of appeals where state fault prevented filing - What relief should be granted where petitioners, having paid the demanded amount and having been prevented by a portal malfunction (and despite representations) from filing the statutory appeals within the limitation period. - HELD THAT: - The Court found on the factual matrix that the petitioners had paid the demanded amounts, had informed the authorities within the appeal period about the portal alert and the payments being made under protest, but were unable to file appeals because the portal continued to require a setoff entry. In view of the respondents' admitted position that the demands stood concluded on payment and the respondents' failure to rectify the portal glitch or accept the appeals, the Court exercised its supervisory jurisdiction to grant prospective and remedial directions. The directions permit the petitioners to file the appeals within a limited period, require the respondents to make infrastructure available so the appeals are accepted on the portal, allow an additional short window to file manually if infrastructure is not provided, and preclude the respondents from insisting on limitation where appeals are filed within the periods directed by the Court. [Paras 13]

Petitioners granted liberty to file appeals within ten days; respondents to ensure portal infrastructure to accept the appeals or accept manual filings within a further seven days; limitation shall not be insisted upon for appeals filed within the periods ordered.

Final Conclusion: Writ petitions disposed of by holding that payment of the demand does not extinguish the statutory right to appeal; petitioners were allowed limited time to file the appeals and respondents were directed to facilitate acceptance of the appeals (electronic or manual) without taking a limitation point.

Cancellation of GST registration - suspension of GST registration - physical verification of principal place of business - opportunity of hearing - furnishing of supporting documents to establish business existence - registration obtained by means of fraud, wilful misstatement or suppression of facts (alleged under Section 29(2)(e)) - violation of Rule 86B (alleged under Rule 21(g) via Rule 21(g))

Physical verification of principal place of business - furnishing of supporting documents to establish business existence - opportunity of hearing - suspension of GST registration - cancellation of GST registration - Petitioner permitted to furnish documents to establish existence of business at the declared principal place of business and respondent directed to consider the same and pass an appropriate order after hearing. - HELD THAT: - The impugned show cause notice proposed cancellation and recorded suspension on the basis that during physical verification the assessee was found non-existent at the declared principal place of business. The petitioner filed a reply but did not annex supporting documents to demonstrate that business was being carried on from the declared address. Having noted the absence of supporting documents in the petitioner's response and that the principal reason for the proposed cancellation is the physical verification remark, the Court found it appropriate to allow the petitioner a limited opportunity to furnish all documents relevant to establish existence and functioning at the principal place of business. The respondents were directed to consider the documents so filed and thereafter pass an appropriate order after affording the petitioner an opportunity of hearing, thereby preserving the adjudicatory process and ensuring determination on merits. [Paras 2, 3, 4, 5, 6]

Petitioner granted one week to file supporting documents; respondents to consider the documents and pass an appropriate order after hearing; petition disposed accordingly.

Final Conclusion: The High Court disposed of the petition by permitting the petitioner to file supporting documents within one week to prove existence at the declared principal place of business and directing the respondents to consider the same and pass an appropriate order after affording the petitioner a hearing; the petition is disposed of on these terms.

Cancellation of registration for non-compliance with procedural fairness - violation of principles of natural justice for failure to provide reasons and opportunity of hearing - defective show cause notice and requirement of a speaking order - remand to Assessing Officer for fresh adjudication with timelines - suspension of registration pending disposal of show cause notice - dismissal of appeal on ground of limitation and effect on revisional power under Section 108 of the GST Act

Violation of principles of natural justice for failure to provide reasons and opportunity of hearing - defective show cause notice and requirement of a speaking order - Impugned order of cancellation of registration and the appellate order were quashed on account of absence of reasons and denial of opportunity of hearing, constituting breach of natural justice. - HELD THAT: - The Court held that the cancellation order was passed without assigning reasons and that the petitioner was not afforded a proper opportunity to be heard. Relying on the approach earlier laid down by the Coordinate Bench in M/s. Aggrawal Dyeing & Printing which requires issuance of show cause notices and final orders containing necessary particulars and reasons and furnishing them to the dealer, the Court found the impugned proceedings procedurally defective. The Court emphasised that authorities must disclose the material and particulars they intend to rely upon so that the dealer can respond before a final speaking order is passed. The consequence of these procedural lapses is that both the order cancelling registration and the appellate order could not stand and therefore required quashing and remand for fresh consideration. [Paras 2, 3, 5, 6, 9]

The cancellation order and the appellate order are quashed and set aside for failure to provide reasons and an opportunity of hearing; merits not adjudicated.

Dismissal of appeal on ground of limitation and effect on revisional power under Section 108 of the GST Act - remand to Assessing Officer for fresh adjudication with timelines - Because the Appellate Authority dismissed the appeal on limitation, the respondent authorities cannot exercise revisional power under Section 108, and the matter is remanded to the Assessing Officer at the show cause stage. - HELD THAT: - The Court observed that the appellate dismissal on limitation forecloses the exercise of revisional jurisdiction by respondent authorities under Section 108. Consequently, the appropriate course is to remit the matter to the Assessing Officer for fresh adjudication commencing at the show cause notice stage. The remand is directed so that the Assessing Officer may supply detailed reasons if not already given, allow the petitioner to file replies, provide personal hearing and thereafter pass a speaking order on merits in accordance with law. [Paras 7]

Matter remanded to the Assessing Officer at the show cause notice stage; respondent authorities cannot exercise revisional power in the circumstances.

Suspension of registration pending disposal of show cause notice - remand to Assessing Officer for fresh adjudication with timelines - Petitioner's registration shall remain suspended until the show cause notice is decided; specific timelines and procedural directions were issued for supply of reasons, reply, personal hearing and final order. - HELD THAT: - The Court ordered that the registration remain suspended pending disposal of the show cause notice. It directed the Assessing Officer to provide detailed reasons within two weeks (if not already supplied), allow the petitioner two weeks to file a written reply upon receipt of reasons, afford personal hearing, and thereafter pass an appropriate order within four weeks from the date of personal hearing. The timeline is mandatory on both sides and the petitioner is expected to cooperate in meeting these timelines. The Court clarified that it has not examined the merits and that the respondent authorities must act in accordance with law while passing the fresh order. [Paras 7, 8]

Registration suspended until disposal of the remanded show cause notice; Assessing Officer to follow the prescribed timelines and provide a speaking order after hearing.

Final Conclusion: Writ petition partly allowed: impugned cancellation order and appellate order quashed and set aside for procedural infirmity; matter remitted to the Assessing Officer for fresh adjudication at the show cause stage with prescribed timelines and modalities; registration to remain suspended until disposal; merits not gone into.

Refund of input tax credit - reconciliation between GSTR-2B and GSTR-3B - requirement of reasons and verification for grant of refund - appellate authority's duty to decide and not remand under Section 107(11) of the CGST Act

Appellate authority's duty to decide and not remand under Section 107(11) of the CGST Act - requirement of reasons and verification for grant of refund - Validity of the appellate authority's order which set aside part of the refund without addressing the reconciliation and effectively left verification open. - HELD THAT: - The appellate authority faulted the adjudicating authority for granting refund without adequately addressing the mismatch between returns and for relying on the assessee's reconciliation without sufficient discussion. However, the appellate authority itself did not examine or decide the reconciliation issue and in effect remitted the matter for verification. Under the statutory scheme the appellate authority is required to decide the question in issue and cannot remand the matter to the adjudicating authority. Leaving verification open and setting aside the refund portion without conducting the requisite adjudicatory exercise rendered the impugned appellate order unsustainable. [Paras 8, 9]

The appellate authority's order is set aside to the extent it disturbed the refund without deciding the reconciliation/verification issue; the appellate authority must decide the matter afresh.

Reconciliation between GSTR-2B and GSTR-3B - refund of input tax credit - Disposition of the claim for refund qua the contested portion and the need for fresh adjudication on reconciliation and quantification. - HELD THAT: - The challenge concerned a specific portion of the refund that the appellate authority held was wrongly granted because of mismatches between GSTR-2B and GSTR-3B and between GSTR-1 and GSTR-3B. The High Court found that neither the adjudicating authority nor the appellate authority has conclusively examined the reconciliation statement and the verification-dependent quantification. Accordingly, the High Court has set aside the impugned appellate order and remitted the appeal to the appellate authority for fresh consideration, directing that the appellate authority decide the appeal after affording the parties an opportunity of being heard and after undertaking proper verification and quantification of the reconciliation issues. [Paras 7, 10]

Matter remitted to the appellate authority to decide afresh, addressing the reconciliation between returns and carrying out verification and quantification after hearing the parties.

Final Conclusion: Impugned appellate order set aside insofar as it disturbed the refund without deciding the reconciliation/verification issues; appeal remitted to the appellate authority to be decided afresh after hearing the parties and undertaking proper verification and quantification.

GST registration cancellation - processing of cancellation application expeditiously - effect of cancellation on tax liability - no stay of cancellation due to pending assessment

GST registration cancellation - processing of cancellation application expeditiously - Direction to the proper officer to process the petitioner's application for cancellation of GST registration without undue delay. - HELD THAT: - The petitioner filed an application dated 03.07.2024 seeking cancellation of its GST registration and, after receiving a notice dated 08.07.2024 requesting additional information, furnished the required documents. In these circumstances the Court directed that the proper officer shall process the petitioner's cancellation application as expeditiously as possible, thereby mandating timely administrative action on the pending application. [Paras 5, 7]

Proper officer directed to process the petitioner's cancellation application expeditiously; petition and pending application disposed of accordingly.

Effect of cancellation on tax liability - no stay of cancellation due to pending assessment - Clarification that cancellation of GST registration need not be withheld merely because an assessment of tax liability is pending, and that cancellation does not absolve the petitioner of liability or consequences of statutory non-compliance. - HELD THAT: - The Court clarified that withholding cancellation on account of any assessment is unnecessary because cancellation of registration does not relieve the petitioner of any liability to pay tax, interest or penalty, nor does it negate the consequences of statutory non-compliance. Consequently, the existence of a pending assessment is not a ground to refuse or indefinitely delay processing the cancellation application. [Paras 6, 7]

Cancellation need not be withheld due to pending assessment; petitioner remains liable for tax, interest and penalties despite cancellation.

Final Conclusion: The High Court directed expeditious processing of the petitioner's GST cancellation application and clarified that cancellation may not be withheld on account of pending assessment, while confirming that cancellation does not absolve the petitioner of tax, interest or penalty; the petition and pending application were disposed of.

Alternative and efficacious remedy / rule of exhaustion of alternative remedies - exceptional circumstances for exercise of writ jurisdiction despite availability of alternative remedy - violation of principles of natural justice - jurisdictional validity of composite order under Section 74(10) of the Assam GST Act, 2017 - pre-deposit requirement for filing appeal under Section 107(6)(b) of the Assam GST Act, 2017

Alternative and efficacious remedy / rule of exhaustion of alternative remedies - exceptional circumstances for exercise of writ jurisdiction despite availability of alternative remedy - Entitlement to writ relief when an effective statutory appellate remedy under the Assam GST Act, 2017 is available. - HELD THAT: - The High Court applied the settled principle that it will ordinarily not entertain a petition under Article 226 where an effective alternative remedy exists, with greater rigor in matters of tax recovery. Reliance was placed on the standard that writ jurisdiction may be exercised despite availability of an alternate remedy only in exceptional categories (for example, enforcement of fundamental rights, violation of natural justice, proceedings wholly without jurisdiction, challenge to vires or pure questions of law). Having examined the petitioner's contentions, the Court found no such exceptional circumstance that would justify departure from the rule of self-imposed restraint; the issues raised could be agitated before the Appellate Authority under Section 107 of the Assam GST Act, 2017. Consequently the Court declined to exercise writ jurisdiction and refused to entertain the petition insofar as it challenged the impugned order dated 12.08.2024 on the ground of availability of an alternative and efficacious remedy. [Paras 7, 8, 12, 13, 14]

Writ petition not entertained in view of availability of an adequate and efficacious statutory appeal under Section 107 of the Assam GST Act, 2017; liberty granted to file appeal.

Violation of principles of natural justice - Alleged violation of natural justice in issuance of Show Cause Notice and passing of the Order-in-Original. - HELD THAT: - The Court considered the petitioners' contention that they were denied opportunity to reply and hence suffered breach of natural justice. The record showed the Show Cause Notice specified a 30-day time for reply, the petitioners sought additional time by filing FORM GST DRC-06 and declined personal hearing in the portal. The Court observed that the petitioners did not pursue their request or make further inquiry and that a lapse of time occurred before the impugned order was passed. On these facts the Court concluded there was no established violation of principles of natural justice warranting intervention by the writ court. [Paras 3, 6, 10]

Submission of violation of natural justice rejected; no ground to interfere by writ on that basis.

Jurisdictional validity of composite order under Section 74(10) of the Assam GST Act, 2017 - Whether passing a single composite order covering two financial years rendered the Order-in-Original without jurisdiction under Section 74(10). - HELD THAT: - The petitioners contended that Section 74(10) required separate orders for each financial year and that a single composite order was therefore invalid. The Court held that although, in the Court's view, there ought to have been separate orders, the fact that one composite order was passed did not render the proceedings or the order void for want of jurisdiction. The defect identified was not of such character as to take the matter outside the appellate remedy or to justify writ intervention. [Paras 11]

Challenge to composite order under Section 74(10) rejected as not amounting to lack of jurisdiction.

Pre-deposit requirement for filing appeal under Section 107(6)(b) of the Assam GST Act, 2017 - Interim directions concerning compliance with the pre-deposit requirement where the petitioners' bank accounts mentioned in the Show Cause Notice are frozen. - HELD THAT: - Acknowledging that the Appellate Authority has no statutory power to waive the pre-deposit mandated by Section 107(6)(b), and that frozen accounts may impede the petitioners' ability to make the pre-deposit, the Court directed a limited, conditional departure to balance equities: where the frozen accounts (as specified in the Show Cause Notice) contain deposits equal to or exceeding the required pre-deposit, the Appellate Authority shall permit filing and entertain the appeal without an initial pre-deposit; if the frozen accounts do not contain sufficient funds, the petitioners must make up the deficit to meet the pre-deposit requirement; and if the freeze is subsequently lifted during appeal proceedings, the petitioners must deposit the requisite amount for continuation, subject to consequences as lawfully determined by the Appellate Authority. [Paras 16]

Directed the Appellate Authority to permit filing and entertain the appeal without pre-deposit subject to conditions regarding amounts in the frozen accounts, and to require compliance with pre-deposit if frozen funds are insufficient or subsequently released.

Final Conclusion: The writ petition challenging the Order-in-Original dated 12.08.2024 is not entertained on the ground that an adequate and efficacious remedy exists under Section 107 of the Assam GST Act, 2017; the petitioners are granted liberty to file an appeal and limited directions have been issued concerning the pre-deposit requirement where specified bank accounts are frozen.

Input Tax Credit reversal on non-business transactions and exempt supplies - Prohibition of simultaneous adjudication by multiple authorities - Adjudication deferred to authority issuing show cause notice - Order under Section 73 of the Central Goods and Services Tax Act, 2017

Input Tax Credit reversal on non-business transactions and exempt supplies - Prohibition of simultaneous adjudication by multiple authorities - Whether the demand for reversal of ITC in respect of non-business transactions and exempt supplies confirmed by respondent no.1 could be adjudicated when the same subject-matter was the subject of a show cause notice issued by DGGI. - HELD THAT: - The Court accepted the petitioner's contention that respondent no.1 cannot adjudicate a demand that is simultaneously the subject-matter of proceedings before another authority. The impugned order covered the tax period July 2017 to March 2018, which is subsumed within the DGGI show cause notice; the impugned order itself records awareness of parallel DGGI proceedings and notes that the DRC-01 demand 'stands as it is' because DGGI was executing proceedings. On instructions, respondent no.1's counsel conceded that the demand in respect of ITC reversal on non-business transactions and exempt supplies would be set aside and adjudicated by the DGGI. In light of the concurrency, the Court set aside respondent no.1's demand insofar as it relates to the ITC reversal issue and directed that the concerned authority (DGGI) shall adjudicate the matter pursuant to its show cause notice dated 02.02.2024. [Paras 4, 5, 6, 7]

The demand confirmed by respondent no.1 for reversal of ITC on non-business transactions and exempt supplies is set aside and the issue is to be adjudicated by the DGGI pursuant to its show cause notice.

Final Conclusion: The petition is allowed insofar as the demand for reversal of Input Tax Credit on non-business transactions and exempt supplies for the period July 2017 to March 2018 is set aside; the DGGI shall adjudicate the issue pursuant to its show cause notice dated 02.02.2024.

Refund of wrongly paid GST - place of service determining taxability - provisional refund under Section 54(6) of the CGST Act - processing of refund applications within a specified time - opportunity of hearing before rejection of refund claim

Refund of wrongly paid GST - processing of refund applications within a specified time - opportunity of hearing before rejection of refund claim - Respondents directed to process the petitioner's refund applications and to state reasons and afford hearing before any rejection. - HELD THAT: - The petitioner filed three refund applications dated 15.01.2024, 10.02.2024 and 15.02.2024 seeking refund of GST allegedly wrongly paid on inbound courier services, relying on the CBIC circular dated 27.10.2023 which clarified that the place of service is not in India and therefore no GST is payable. The respondents, on instructions, informed the Court that the petitioner's applications are lodged and undertook to process them within one month from the date of the order. The Court accepted that statement and bound the respondents to it. The Court further directed that if the respondents propose to reject the refund applications they must record and communicate the reasons for rejection and pass an order after affording the petitioner an opportunity to be heard. [Paras 7, 8, 9]

Respondents to process the refund applications within one month; any proposed rejection must state reasons and be preceded by an opportunity of hearing.

Final Conclusion: Writ petition disposed of with directions that the respondents shall process the refund applications within one month and, if rejecting them, shall record reasons and afford the petitioner an opportunity to be heard; no further relief granted.

Establishment of GST Appellate Tribunal - time bound completion of selection process - judicial relief by way of mandamus - amendment of statutory provision regarding modes of service - principles of natural justice and service of notices - maintainability of public interest litigation for legislative amendment

Establishment of GST Appellate Tribunal - time bound completion of selection process - judicial relief by way of mandamus - Whether direction should be issued to the respondents to establish the GST Appellate Tribunal and complete the selection process within a specified time. - HELD THAT: - The Court recorded the respondents' statement that steps to establish the GST Appellate Tribunal have already been taken and the selection process is underway. Having noted that process has been initiated, the Court exercised its supervisory power to impose a time bound direction to ensure expeditious establishment. The Court ordered that the entire selection process shall be completed within four months, thereby directing completion rather than ordering fresh measures to initiate establishment. [Paras 2, 4]

The selection process for establishing the GST Appellate Tribunal shall be completed within four months.

Amendment of statutory provision regarding modes of service - principles of natural justice and service of notices - maintainability of public interest litigation for legislative amendment - Whether the Court should direct rectification of Section 169 of the CGST Act to alter the word "or" to "and" so as to mandate service through multiple modes. - HELD THAT: - The petition sought a judicial direction to effect a legislative amendment altering the statutory wording to require multiple alternative modes of service to protect natural justice. The Court held that such relief seeking amendment of a statute or correction of statutory language is not maintainable in the public interest petition filed by the petitioners; an individual grievance arising from service of notices must be pursued by the affected person in appropriate individual proceedings. Consequently, the Court declined to grant the prayer for amendment or statutory rectification in this PIL. [Paras 3]

Prayer for rectification of Section 169 (changing "or" to "and") is declined in this public interest litigation; affected individuals must seek appropriate individual remedies.

Final Conclusion: The writ petition is disposed of: the Court recorded that steps to establish the GST Appellate Tribunal are underway and directed completion of the selection process within four months, and it declined to order the requested amendment of Section 169 in this public interest petition, leaving grievances about service to individual litigation.

Jurisdiction of the assessing officer to issue notice - Notice u/s 143(2) and section 142(1) - Jurisdictional objection goes to the root of the matter - Assessment void ab initio for want of jurisdiction - Admission of additional grounds before the Income Tax Appellate Tribunal - Delay filling SLP

HELD THAT: - The Court noted that the tax amount in dispute was approximately Rs.1,50,000 and observed that the legal issues raised in the petition were also pending adjudication in other proceedings. In light of the trivial monetary stake and the existence of other cases where the same legal questions will be decided, the Court found no reason to entertain the petition and dismissed it without engaging in substantive adjudication of the legal issues.

Special leave petition dismissed on grounds of trivial amount involved and because the contested legal issues are pending determination in other cases.

Final Conclusion: The application for condonation of delay and the special leave petition were dismissed; pending applications, if any, were disposed of. The Court declined to entertain the petition both for inordinate delay and because the disputed tax amount was petty and the legal questions are pending in other proceedings.

Assessment or reassessment proceedings issued in the name of a dissolved/amalgamating company - Nullity of proceedings for want of notice to the successor entity - Curability of defect under Section 292B of the Income tax Act - Succession and liability on amalgamation versus winding up - Section 170 and succession to business otherwise than on death - Section 159 and liability of legal representatives - Factual distinction where successor has misrepresented or suppressed amalgamation (Mahagun Realtors principle)

Assessment or reassessment proceedings issued in the name of a dissolved/amalgamating company - Nullity of proceedings for want of notice to the successor entity - Validity of notices/orders issued in the name of an amalgamating company which stood dissolved after sanction of a scheme - HELD THAT: - The Court held that where a transferor (amalgamating) company ceases to exist by operation of an approved scheme of arrangement and the Revenue has been apprised of the merger, issuance or continuation of assessment/reassessment proceedings in the name of the dissolved company is a nullity. Maruti Suzuki (following Spice Entertainment) establishes that an assessment framed against a non existing entity is not a mere procedural irregularity but goes to jurisdiction and cannot be sustained. Where the scheme and intimation were on record and the transferor had ceased to exist, the impugned notices and orders drawn in the name of the transferor were quashed as void ab initio. [Paras 33, 36, 37, 42, 48]

Notices and assessment/reassessment orders issued or maintained in the name of a company that had ceased to exist pursuant to an approved amalgamation, where the Revenue had been informed of the merger, are void and are liable to be quashed.

Curability of defect under Section 292B of the Income tax Act - Whether Section 292B can cure issuance of notices/orders in the name of a dissolved entity - HELD THAT: - The Court reaffirmed that Section 292B cannot be invoked to cure substantive or jurisdictional defects. A notice or assessment addressed to a non existent juristic person is a defect of substance and not a mere mistake, defect or omission of a technical nature contemplated by Section 292B. The reasoning in Spice Entertainment and subsequent exposition in Maruti Suzuki was applied to hold that such defects are incurable by Section 292B. [Paras 14, 16, 20]

Section 292B does not validate notices or assessments that suffer from the jurisdictional defect of being made in the name of a company that has ceased to exist.

Section 170 and succession to business otherwise than on death - Section 159 and liability of legal representatives - Whether Sections 159 or 170 can validate proceedings issued in the name of a dissolved amalgamating company - HELD THAT: - The Court held that Sections 159 and 170 address recovery and assessment in the context of succession or liability of legal representatives and successors but do not operate to validate a jurisdictionally defective notice or assessment issued in the name of a person or company that has ceased to exist. Section 159 pertains to liability of legal representatives of a deceased person; Section 170 governs taxation consequences of succession to business. Neither provision was intended to convert a nullity in procedural naming into a valid initiation of proceedings against an extinguished juristic person. [Paras 34, 35]

Sections 159 and 170 do not salvage notices or orders issued in the name of a non existent amalgamating company.

Factual distinction where successor has misrepresented or suppressed amalgamation (Mahagun Realtors principle) - Effect of Mahagun Realtors and when an assessment in the name of the transferor may be sustained - HELD THAT: - The Court explained that Mahagun Realtors is fact sensitive and does not displace Maruti Suzuki. Mahagun was decided on distinct facts - notably, deliberate non disclosure or conduct by the successor that held it out as the transferor and suppression of amalgamation in returns and proceedings. Where the successor's conduct amounts to misrepresentation or suppression, the Court in Mahagun sustained proceedings on those facts. Absent such conduct, Mahagun does not permit a departure from the principle in Maruti Suzuki that proceedings in the name of a dissolved entity are void. [Paras 22, 23, 29, 31]

Mahagun Realtors does not overrule Maruti Suzuki; only on its special facts (suppression/misrepresentation by successor) can an assessment in the name of a dissolved entity be sustained.

Nullity of proceedings where merger was intimated to the Assessing Officer - Relief in lead matters where merger had been intimated to the AO but assessment/reassessment proceeded in the name of the transferor - HELD THAT: - Applying the principles above to the batch, the Court found that in multiple matters the assessees had timely informed the AO of the sanctioned scheme; notwithstanding that, notices/orders were issued in the name of the dissolved transferor. On those facts the proceedings were held to be void. The Court allowed a series of writ petitions and quashed specified notices and orders listed in the operative directions. Conversely, where material facts were disputed or intimation had not been given, petitions were dismissed. [Paras 4, 5, 6, 33, 48]

Writ petitions where the Revenue proceeded against a dissolved transferor despite being apprised of the amalgamation were allowed and the impugned notices/orders quashed; petitions where intimation was absent or facts were disputed were dismissed.

Statutory reassessment regime post-Ashish Agarwal and procedural consequence - Disposition of specific interlocutory and contested matters including ITA 116/2023 and certain writ petitions raising PAN or procedural discrepancies - HELD THAT: - The Court allowed ITA 116/2023 (International Hospital Ltd. v. DCIT) holding that rectification under Section 154 and post hoc amendment could not be used to cure the jurisdictional error of framing assessment in the name of a dissolved entity, where merger had been intimated and no suppression was found. Petitions challenging notices under Section 142(1) that merely contained the erstwhile PAN while being addressed to the successor were dismissed on facts as not establishing the kind of incurable illegality envisaged in Maruti Suzuki; similarly, petitions where there was factual dispute about intimation of the scheme were dismissed leaving merits open. [Paras 43, 44, 46, 47, 51]

ITA 116/2023 allowed and Tribunal order set aside; petitions attacking notices founded only on PAN mismatches or where intimation facts were disputed were dismissed, with parties' rights on merits kept open where appropriate.

Final Conclusion: The High Court held that proceedings (notices, assessments or reassessments) drawn in the name of a company that has ceased to exist pursuant to an approved scheme of amalgamation - where the Revenue had been informed of the merger - are null and void and cannot be cured by Section 292B; Sections 159 and 170 do not validate such proceedings; Mahagun Realtors is distinguishable on its facts (suppression/misrepresentation by the successor). Consequential relief was granted in the identified matters (including ITA 116/2023) and specified notices/orders were quashed; petitions where intimation was disputed or the defect amounted only to a PAN discrepancy were dismissed.

Statutory notice under Section 133(6) for information - notice under Section 148 for reopening of assessment - inclusion of income in return and processing under Section 143(1) - non-application of mind in issuance of notice - jurisdictional competence of assessing officer and faceless assessment procedure

Statutory notice under Section 133(6) for information - inclusion of income in return and processing under Section 143(1) - non-application of mind in issuance of notice - Validity of the notices under Section 133(6) where the assessee had filed a reply disclosing the commission and the same was reflected in the return processed under Section 143(1). - HELD THAT: - The Court found on the record that the assessee had furnished a specific reply to query No.6 under the Section 133(6) notice, stating that the alleged commission had been received and offered to tax as part of business turnover in the return. The return for AY 2020-21 recorded the receipt and had been processed under Section 143(1) with a refund shown. Given these facts, the issuance of further notices proceeded on the erroneous premise that no reply had been filed and that the amount had escaped assessment. The Court concluded that issuing further proceedings in such circumstances demonstrated lack of application of mind and was therefore vitiated. [Paras 9, 10, 11, 12, 17]

Notices dated 16.12.2022, 26.12.2022 and 06.01.2023 issued under Section 133(6) are quashed for having been issued despite an on-record reply and inclusion of the income in the processed return.

Notice under Section 148 for reopening of assessment - inclusion of income in return and processing under Section 143(1) - non-application of mind in issuance of notice - jurisdictional competence of assessing officer and faceless assessment procedure - Validity of the notice under Section 148 dated 31.03.2024 which assumed escapement of income despite the assessee having disclosed the commission in the return and filed a reply to the Section 133(6) notice; and competence of the issuing officer in light of faceless assessment requirements. - HELD THAT: - The Court recorded that the notice under Section 148 was issued on the premise that the assessee had neither replied to the Section 133(6) notice nor disclosed the commission in the return. The material on record demonstrated the contrary: the commission was disclosed in the ITR for AY 2020-21 and the assessee had filed a specific reply. Consequently the formation of belief for reopening lacked rational nexus to the material and amounted to non-application of mind. Separately, the Court observed that the notice was issued by an officer (ACIT Central Karnal) and, having regard to the judgment relied upon concerning procedural mandates of faceless assessments and jurisdictional competence, such issuance was also unsustainable. On these combined grounds the Section 148 notice and consequential proceedings were set aside. [Paras 6, 13, 16, 17, 18]

Notice dated 31.03.2024 under Section 148 and consequential proceedings are quashed as issued without application of mind and in light of the issuing officer's lack of jurisdiction under the faceless assessment regime.

Final Conclusion: The writ petition is allowed: the notices issued under Section 133(6) and the consequential notice under Section 148 (dated 31.03.2024) and any proceedings based thereon are quashed; all pending applications disposed of; no costs.

Interest under Section 234B - Settlement Commission admission under Section 245D(1) - Order of Settlement Commission under Section 245D(4) - Pre-assessment aggregation under Section 245C(1) - Power of Settlement Commission to waive or reduce interest

Interest under Section 234B - Settlement Commission admission under Section 245D(1) - Order of Settlement Commission under Section 245D(4) - Whether interest under Section 234B is leviable up to the date of admission of the settlement application under Section 245D(1) or up to the date of the final order under Section 245D(4). - HELD THAT: - The Court applied the reasoning of the Constitution Bench in Brij Lal, which treats a Section 245C(1) settlement application as a mechanism of pre-assessment aggregation of returned income and disclosed undisclosed income and requires payment of tax and interest for maintainability. Chapter XIX A engrafts computation of total income at the stage of admission under Section 245D(1), and the scheme contemplates pre assessment collection. Consequently, the statutory machinery integrates Sections 234A/234B/234C into Chapter XIX A only up to the stage of admission; Parliament did not extend the statutory liability under Section 234B beyond the date the application is admitted. On that conspectus the Court held that interest under Section 234B is chargeable only up to the date of the order admitting the application under Section 245D(1) and not up to the date of the final determination under Section 245D(4). [Paras 25, 42, 43]

Interest under Section 234B is chargeable only up to the date of admission of the application under Section 245D(1).

Pre-assessment aggregation under Section 245C(1) - Maintainability condition requiring payment of tax and interest before filing - Interest computation and pre-assessment collection - Whether the proviso to Section 245C(1) and the scheme of Chapter XIX A required payment of tax and interest on the aggregate income disclosed in the settlement application before filing for maintainability, and the legal consequence of that scheme for interest liability. - HELD THAT: - The Court observed that the proviso to Section 245C(1) (as amended) mandates that the additional tax and the interest which would have been payable had the disclosed income been declared in the return must be paid on or before the date of making the application, with proof attached. That fiction effects pre assessment collection by treating the aggregate (returned income plus disclosed income) as total income for purposes of computing tax and interest for maintainability. Given this statutory structure, interest under the collection provisions follows the computation engrafted by Chapter XIX A and therefore runs only up to admission under Section 245D(1). [Paras 21, 22, 31]

The scheme of Section 245C(1) obliges payment of tax and interest on the aggregate disclosed income prior to filing; interest linked to that computation therefore runs up to admission under Section 245D(1).

Power of Settlement Commission to waive or reduce interest - Interest statutorily payable under Sections 234A/234B/234C - Whether the Settlement Commission has power to waive or reduce interest statutorily payable under Sections 234A, 234B and 234C when passing an order under Section 245D(4). - HELD THAT: - Relying on the precedents discussed in the judgment (notably Anjum Ghaswala) and statutory construction, the Court reiterated that Section 245D(6) is procedural, prescribing terms of payment (instalments, dates etc.) and does not confer substantive power to waive or reduce statutory interest which is mandated by Sections 234A/234B/234C. The Commission's power to grant relief from interest is constrained to the limited scope permitted by the Act and by Board circulars issued under Section 119. The Court accepted that the Settlement Commission cannot, by virtue of Section 245D(6), abrogate the mandatory nature of statutory interest provisions. [Paras 6, 35]

The Settlement Commission does not have power under Section 245D(6) to waive or reduce statutorily payable interest under Sections 234A/234B/234C except to the limited extent permitted by the Act or Board circulars.

Application of Finance Act amendments to interest computation - Statutory amendment addressing interest for settlement applications - Whether subsequent statutory amendments (including insertion of Section 234B(2A) and deletions in Section 234B(4)) alter the liability to pay interest on amounts disclosed in a settlement application. - HELD THAT: - The Court noted the legislative amendments and the Memorandum to the Finance Bill, 2015 acknowledging an earlier absence of specific provision for charging interest on additional amount disclosed before the Settlement Commission and the consequent insertion of Section 234B(2A). However, the Court's decision on the core question followed the earlier Constitution Bench analysis that, as originally framed, interest under Section 234B ran only up to admission; the later amendments clarify and modify the statutory scheme prospectively. The judgment therefore interprets the existing scheme as it applied to the facts and relies on Brij Lal for the temporal cut off for interest liability. [Paras 13, 16, 17]

Legislative amendments (including Section 234B(2A)) clarify the chargeability of interest but do not affect the Court's conclusion that, under the statutory scheme addressed, interest under Section 234B runs up to admission under Section 245D(1).

Final Conclusion: Applying the Constitution Bench decision in Brij Lal and construing Chapter XIX A as a scheme of pre assessment aggregation and pre assessment collection, the Court held that interest under Section 234B is chargeable only up to the date the settlement application is admitted under Section 245D(1); the Settlement Commission did not err in so restricting interest, and the writ petition is dismissed.

Penalty under Section 271G for failure to furnish transfer pricing documentation - Transfer pricing documentation compliance under Rule 10D - Bonafides and conduct of the assessee in furnishing information - Effect of deletion of transfer pricing adjustment by DRP on penalty

Penalty under Section 271G for failure to furnish transfer pricing documentation - Transfer pricing documentation compliance under Rule 10D - Bonafides and conduct of the assessee in furnishing information - Effect of deletion of transfer pricing adjustment by DRP on penalty - Whether the penalty under Section 271G is sustainable where the assessee furnished the information called for by the TPO, there was no finding of inaccurate or insufficient information, no lack of bonafides, and the TP adjustments were subsequently deleted by the DRP. - HELD THAT: - The Tribunal found that the assessee, a non-resident distributor, had responded to the TPO's queries and furnished the requested information during transfer pricing proceedings, complying with the requirements of Section 92D(3) read with Rule 10D. The TPO did not record any finding that the information or explanations were inaccurate or insufficient or that the assessee's conduct lacked bonafides or demonstrated supine indifference preventing determination of arm's length price. Crucially, the Transfer Pricing Officer's adjustments were deleted by the DRP and accepted by the Revenue. On these facts, and following precedents where penalty under Section 271G was held unsustainable where the TPO accepted the assessee's benchmarking or no variation was made, the imposition of penalty could not be sustained. The Tribunal applied this reasoning to direct deletion of the penalty. [Paras 10, 11, 14]

Penalty under Section 271G deleted; appeals allowed.

Final Conclusion: On the facts the penalty under Section 271G for alleged non-furnishing of transfer pricing documentation was unsustainable: the assessee had furnished the information, there was no finding of inaccuracy or want of bonafides, and the TP adjustments were deleted by the DRP; the penalty is deleted and the appeals are allowed.

Revisionary jurisdiction under Section 263 of the Income-tax Act - Erroneous and prejudicial to the interest of the revenue - Disallowance under section 43B of the Income-tax Act - Reliance on auditor-certified Form 3CD under section 44AB of the Income-tax Act - Claim of deduction under section 80IA of the Income-tax Act - Verification of depreciation and additional depreciation - Double disallowance - Acceptance of audited financial statements by the Assessing Officer

Revisionary jurisdiction under Section 263 of the Income-tax Act - Erroneous and prejudicial to the interest of the revenue - Claim of deduction under section 80IA of the Income-tax Act - Validity of the Principal CIT's exercise of revisionary jurisdiction under Section 263 directing fresh assessment - HELD THAT: - The Tribunal analysed whether the assessment order was both erroneous and prejudicial to the revenue, the twin conditions for invoking Section 263. The AO had conducted conscious examination of records, made specific additions and had issued and disposed of a Section 154 rectification application on the section 80IA claim. The Court accepted the assessee's position that even if the alleged disallowances were sustained, the available deduction under section 80IA would absorb any enhancement of profits so that taxable income would remain NIL. Reliance upon CBDT Circular No.37/2016 and relevant High Court decisions showing that disallowances enhancing business profits are eligible for corresponding Chapter VI-A deductions reinforced that the alleged defects, even if accepted, would not prejudice revenue in practical effect. The PCIT's view that further enquiry was necessary was speculative and unsupported by material demonstrating substantive error in the AO's verification. In these circumstances the statutory conditions for invoking Section 263 were not satisfied. [Paras 8, 9]

PCIT's exercise of revisionary jurisdiction under Section 263 was not justified and the order directing fresh assessment was quashed.

Disallowance under section 43B of the Income-tax Act - Tax Audit Report Column 26(i)(A)(b) - Double disallowance - Whether unpaid leave salary disclosed in the Tax Audit Report required disallowance under section 43B - HELD THAT: - The Tribunal found that the unpaid leave salary appearing as a closing liability in Column 26(i)(A)(b) of the Tax Audit Report was not claimed as a deduction in the profit and loss account for the year under appeal; only the amount actually paid during the year was claimed. The assessee furnished ledger details and earlier years' computations to demonstrate that amounts had not been claimed previously in a manner that would justify a fresh disallowance. Re-disallowing the unpaid amount would amount to double disallowance. On the materials before the AO and the PCIT, there was no substantive misreading of disclosure or omission by the AO warranting revision under Section 263. [Paras 6, 8]

No disallowance under section 43B was required in the facts of this case and the AO's treatment was not erroneous or prejudicial to revenue.

Reliance on auditor-certified Form 3CD under section 44AB of the Income-tax Act - Verification of depreciation and additional depreciation - Acceptance of audited financial statements by the Assessing Officer - Whether the AO failed to verify the claim of depreciation and additional depreciation and whether such failure made the assessment order erroneous and prejudicial - HELD THAT: - The Tribunal observed that the AO examined the audited financial statements and Form 3CD which set out additions to fixed assets and depreciation computations certified by the statutory auditor. In the absence of any qualifications or adverse remarks by the auditor, the AO was entitled to rely on the audit certifications under section 44AB and need not re-perform the auditor's work. The PCIT did not point to specific discrepancies or material contradictions that would have required further inquiry. Consequently, the AO's acceptance of the depreciation claims was held to be a reasonable application of mind and not a ground for invoking revisionary jurisdiction under Section 263. [Paras 6, 8]

The AO's verification of depreciation and additional depreciation was adequate on the record; no error prejudicial to revenue was established.

Final Conclusion: The appeal is allowed and the Principal CIT's order under Section 263 directing fresh assessment for A.Y. 2018-19 is quashed.

Penalty under section 271(1)(c) - Specification of charge in penalty notice under section 274 - Vague notice rendering penalty proceedings void ab initio - Bona fide explanation and absence of deliberate concealment

Specification of charge in penalty notice under section 274 - Vague notice rendering penalty proceedings void ab initio - Whether the penalty proceedings under section 271(1)(c) are vitiated by failure to specify the exact charge in the notice issued under section 274. - HELD THAT: - The Tribunal held that the Assessing Officer must clearly specify whether penalty is being levied for concealment of income or for furnishing inaccurate particulars of income. The notice issued under section 274 read with section 271(1)(c) in the present case failed to specify the nature of the alleged default. Citing precedent that a vague notice under section 274 renders penalty proceedings void, the Tribunal concluded that this procedural lapse is fatal to the validity of the penalty proceedings. Consequently, the penalty could not be sustained on the basis of a notice that did not disclose the precise charge against the assessee. [Paras 6]

Penalty proceedings are vitiated and penalty cannot be sustained due to failure to specify the exact charge in the section 274 notice.

Penalty under section 271(1)(c) - Bona fide explanation and absence of deliberate concealment - Whether, on merits, the penalty under section 271(1)(c) was maintainable for alleged concealment or furnishing of inaccurate particulars of income. - HELD THAT: - The Tribunal examined the sustained addition relating to disputed adjustment of sale consideration for copyrights and cable rights and found no affirmative finding that the assessee deliberately concealed income or furnished inaccurate particulars. The assessee's explanation was held to be bona fide and there was no evidence of mala fide intention. In view of the absence of deliberate concealment or inaccurate particulars proved against the assessee, the imposition of penalty under section 271(1)(c) was not justified on merits. [Paras 6]

Penalty under section 271(1)(c) is not sustainable on merits as there was no deliberate concealment or furnishing of inaccurate particulars; the explanation was bona fide.

Final Conclusion: Both on procedural grounds (vague section 274 notice) and on merits (absence of deliberate concealment and bona fide explanation), the penalty imposed under section 271(1)(c) for AY 2012-13 is deleted and the assessee's appeal is allowed.

Validity of assessment under section 143(3) vis-a -vis section 153C - Deemed date of recording satisfaction as date of receipt of seized documents for reckoning limitation under section 153C - Quashing of assessment for want of jurisdiction - Requirement to initiate proceedings under section 153C where seized documents relate to another person

Validity of assessment under section 143(3) vis-a -vis section 153C - Deemed date of recording satisfaction as date of receipt of seized documents for reckoning limitation under section 153C - Quashing of assessment for want of jurisdiction - Assessment framed under section 143(3) for A.Y. 2021-22 is invalid because proceedings should have been initiated under section 153C with limitation reckoned from the date of recording satisfaction/receipt of seized documents. - HELD THAT: - The Tribunal held that the date on which the Assessing Officer recorded satisfaction and thus took possession of the seized documents in the file of the other person is the deemed date for reckoning the six-year period under section 153C. On the facts, the satisfaction/possession date was 03-10-2022, which makes the assessment year relevant to the previous year in which the seized documents were received AY 2023-24 and the six immediately preceding assessment years AY 2018-19 to 2022-23. Since the AO issued notice and completed assessment for A.Y. 2021-22 under section 143(3) instead of proceeding under section 153C for the correctly reckoned blocked period, the assessment dated 29-12-2022 is without jurisdiction. The Tribunal followed coordinate decisions holding that the proviso to section 153C substitutes the date of initiation of search by the date of receiving the seized books/documents by the AO having jurisdiction over the other person, and that initiation of valid proceedings under section 153C requires recording satisfaction and placing seized documents in the other person's file before issuing notices. [Paras 13, 14]

Assessment order dated 29-12-2022 passed under section 143(3) for A.Y. 2021-22 is quashed as void for neglecting to initiate proceedings under section 153C with limitation reckoned from 03-10-2022.

Final Conclusion: The appeal is allowed: the assessment for A.Y. 2021-22 completed under section 143(3) is quashed for want of jurisdiction because proceedings should have been initiated under section 153C with the six-year period reckoned from the date of recording satisfaction/receipt of seized documents (03-10-2022).

Employer-employee relationship - Fee for Technical Services - tax deduction at source under section 195 - deduction under section 192 - arm's length price - transfer pricing adjustment - benefit test for lump-sum royalty - admission of additional evidence - remand for de novo examination

Employer-employee relationship - Fee for Technical Services - tax deduction at source under section 195 - deduction under section 192 - admission of additional evidence - remand for de novo examination - Characterisation of payments to secondment (international assignee) employees as salaries or as Fee for Technical Services and attendant TDS consequences - HELD THAT: - The Tribunal examined appointment letters, the secondment agreement and Form 16s filed by the assessee and found that while certain clauses (designation, control, appraisal and evidence of salary payment) support an employer-employee relationship, other clauses (provisions regarding tools/infrastructure, indemnity, and lien on parent company employment) raise material issues as to the true nature of the relationship. Those contractual clauses and surrounding facts require investigation by the Assessing Officer. The assessee also argued that TDS was in fact deducted under section 192 (salary) at rates higher than section 195 rates; the Tribunal directed the AO to consider this alternative plea. Having regard to the conflicting contractual indicia and the additional evidence placed before the Tribunal, the issue was not finally determined on merits but remitted for fresh adjudication by the AO who is to examine the contractual terms, the additional evidence admitted by the Tribunal and the assessee's alternative contention regarding TDS deduction. [Paras 15]

Remitted to the Assessing Officer for de novo examination of the nature of payments to secondment employees and for consideration of additional evidence and the assessee's alternative plea on TDS.

Benefit test for lump-sum royalty - arm's length price - transfer pricing adjustment - admission of additional evidence - remand for de novo examination - Allowability of lump-sum technology/royalty payments to parent company and the TPO/DRP's disallowance for lack of proof of services or benefit - HELD THAT: - The Tribunal noted that authorities below disallowed the expenditure on two grounds: absence of cogent material showing that the associated enterprise rendered the services, and failure to demonstrate any benefit derived from the payment. The Tribunal observed that disallowance solely because no benefit is shown is not permissible as a general principle and cited the lower-court authority relied upon by the parties. However, on the question whether the parent company actually rendered technical services, the Tribunal found the e-mail correspondence and other material before it insufficient to establish receipt and utilization of the claimed services. The assessee sought to place further documents, which the Tribunal allowed for consideration. In view of the insufficiency of the record before the authorities below and the additional evidence filed before the Tribunal, the matter was remitted to the AO/TPO for fresh decision in accordance with law after considering all evidence. [Paras 16]

Remitted to the Assessing Officer/Transfer Pricing Officer for fresh adjudication of the allowability of the lump-sum technology/royalty payments after considering all evidence filed before the authorities and the Tribunal.

Final Conclusion: Both principal factual/legal issues (characterisation of payments to secondment employees and allowability of lump-sum technology/royalty payments) were remitted to the Assessing Officer/ TPO for fresh consideration after taking into account the additional evidence; appeal allowed for statistical purposes.

Fees for included services - make available - commercial information - technical or consultancy services - development and transfer of technical design - ancillary/supporting services - Article 12(4)(b) of India-US DTAA

Fees for included services - make available - commercial information - Article 12(4)(b) of India-US DTAA - Software licensing and provision of access to Mixpanel's software do not constitute 'fees for included services' under Article 12(4)(b) of the India-US DTAA. - HELD THAT: - The Tribunal, relying on the coordinate bench decision in the assessee's own case and on the MoU and judicial authority, held that the reports and outputs generated by access to the software constitute commercial information and not the transfer of technical knowledge, know how or enduring capability to apply the technology. The contract retained all rights and the application/test remained with the assessee, source code was not provided, access was time limited and customer content was deleted on expiry; accordingly the requisite 'make available' test-whether the recipient is enabled to apply the technology independently and obtain an enduring benefit-was not satisfied. The Tribunal held that the use of a product embodying technology or receipt of commercially useful information does not, by itself, amount to making technology available within Article 12(4)(b). [Paras 2]

Decided in favour of the assessee; software licensing/access is not taxable as fees for included services under Article 12(4)(b).

Ancillary/supporting services - fees for included services - installation and integration - Article 12(4)(b) of India-US DTAA - Installation of Mixpanel software into a customer's system and integration of customer content are ancillary/supporting services and do not amount to 'fees for included services' under Article 12(4)(b). - HELD THAT: - The Tribunal accepted the characterization of the installation and integration activities as support services that facilitate use of the primary software service. Applying the principle that ancillary services to a primary activity that is not itself within Article 12(4)(b) cannot be separately taxed as fees for included services, and following coordinate-bench precedents which treated installation/integration as non FTS support services, the Tribunal concluded that these professional services do not make technical knowledge available to the customer and therefore fall outside Article 12(4)(b). [Paras 3]

Decided in favour of the assessee; installation and integration services are support services and not taxable as fees for included services.

Final Conclusion: The appeal is allowed: both the licensing/access to Mixpanel's software and the installation/integration professional services were held not to constitute 'fees for included services' under Article 12(4)(b) of the India-US DTAA for AY 2021-22; remaining grounds were left academic.

Jurisdictional validity of notice under section 143(2) - pecuniary jurisdiction - application of CBDT Instruction No.1/2011 for allocation of cases between ITO and ACIT/DCIT - time bar and limitation to challenge jurisdiction under section 124(3) - quashing assessment as void ab initio for want of jurisdiction - distinction between additions under section 68 and section 69C - requirement of show cause before enhancement by appellate authority

Jurisdictional validity of notice under section 143(2) - pecuniary jurisdiction - application of CBDT Instruction No.1/2011 for allocation of cases between ITO and ACIT/DCIT - time bar and limitation to challenge jurisdiction under section 124(3) - Validity of the notices issued and the jurisdiction of the Assessing Officer in respect of A.Y. 2012-13 - HELD THAT: - The Tribunal examined the sequence of notices and transfer memos and applied CBDT Instruction No.1/2011 to determine pecuniary jurisdiction. The returned income for A.Y. 2012-13 was below the threshold, so initial jurisdiction by ACIT was within the scope of the instruction and transfer thereafter to the ITO rendered issuance of a fresh notice by the ITO proper. The first notice issued by ACIT on 06-08-2013 was within time and not barred by limitation; subsequent proceedings and a fresh notice by the jurisdictional ITO after transfer cured the procedural sequence. The Tribunal also held that the assessee did not challenge jurisdiction within the time allowed under section 124(3) and therefore could not rely on belated objections; the factual matrix here was distinguishable from cases where notices were issued by officers lacking pecuniary jurisdiction because, in this case, ACIT had power to issue notice for the returned income bracket involved. On these grounds the contentions that the assessment was void ab initio for lack of jurisdiction or time-barred were rejected. [Paras 12, 13, 14]

The notices and assessment were held valid; the jurisdictional challenge and limitation objections of the assessee were dismissed.

Distinction between additions under section 68 and section 69C - requirement of show cause before enhancement by appellate authority - onus of proof and assessment of genuineness of purchases - Sustenance of addition made in respect of purchases and creditors and appropriateness of invoking section 69C as done by the CIT(A) - HELD THAT: - The Tribunal analysed the factual findings of the Assessing Officer and the CIT(A). While the AO had made additions under section 68, the CIT(A) substituted that view and sustained an addition under section 69C on the ground that purchases were not made through banking channels and surrounding circumstances cast doubt on genuineness. The Tribunal observed that the AO had accepted trading results, corresponding sales and gross profit, had not rejected books of account, and had not undertaken adequate verification such as physical inspection of suppliers. Relying on authorities and the principle that section 68/69C cannot be invoked mechanically where trading results and corresponding sales are accepted, and noting the absence of adequate notice or fresh material to justify enhancement by the appellate authority on a new source without putting the assessee on notice, the Tribunal concluded that the addition sustained under section 69C was not justified. Consequently the Tribunal deleted the addition made by the CIT(A). [Paras 15, 17, 18, 19]

The addition under section 69C imposed by the CIT(A) is deleted and the appeal is allowed on this ground.

Final Conclusion: The Tribunal held the assessment proceedings and notices valid (jurisdiction and limitation objections dismissed) but deleted the addition sustained by the CIT(A) under section 69C, allowing the assessee's appeal for A.Y. 2012-13.

Validity of revision under Section 263 of the Income-tax Act - Eligibility for exemption under Section 54F relating to investment in a new residential house - Characterisation of property as stock-in-trade versus residential house for purposes of Section 54F and taxability under the head Income from House Property - Taxability of income from residential property under the head Income from House Property

Validity of revision under Section 263 of the Income-tax Act - Eligibility for exemption under Section 54F relating to investment in a new residential house - Whether the Principal Commissioner of Income Tax was justified in invoking revisionary powers under Section 263 to deny the assessee's claim of exemption under Section 54F on the basis that the assessee owned more than one residential house on the date of transfer. - HELD THAT: - The Tribunal found the revision order unsustainable because the PCIT did not arrive at any conclusive or legally supported finding that the properties identified were 'residential house' within the meaning of Section 54F. The PCIT's conclusion that the assessee owned more than one residential house on the date of sale - the foundational factual premise for excluding the benefit of Section 54F - was not supported by adequate reasoning or evidence in the revision order. In the absence of a valid basis for the critical finding of ownership of additional residential houses, the Tribunal held that the PCIT had not demonstrated that the assessment order was erroneous or prejudicial to the revenue so as to justify exercise of revisionary powers under Section 263. [Paras 4, 7, 19, 21]

The PCIT's revision under Section 263 directing denial of deduction under Section 54F is set aside; the assessee's grounds on this point are allowed.

Characterisation of property as stock-in-trade versus residential house for purposes of Section 54F and taxability under the head Income from House Property - Whether Flat No. A/1.B1 (Vastu Luxuria, Surat) qualified as a 'residential house' for the purposes of Section 54F or was properly treated as stock in trade. - HELD THAT: - The Tribunal accepted the assessee's documentary material showing the property was held as stock in trade in the proprietary concern's balance-sheet filed with the return. The PCIT had concluded the nature of the asset was indeterminate and rejected the assessee's contention without arriving at a conclusive finding or providing reasons why a trading asset should be treated as a residential house for Section 54F. The Tribunal observed that, for the relevant year (AY 2015 16), properties held as stock in trade were not to be treated as income chargeable under the head 'Income from House Property' and that the PCIT offered no legal basis to include trading assets within the scope of Section 54F. [Paras 8, 9, 11, 16]

The PCIT's finding that the Vastu Luxuria flat was a residential house is unsupported; the property is shown as stock in trade and the PCIT's direction on this basis is set aside.

Characterisation of property as stock-in-trade versus residential house for purposes of Section 54F and taxability under the head Income from House Property - Taxability of income from residential property under the head Income from House Property - Whether the houses constructed on the agricultural lands at Village Patialps, Dahanu, Thane, qualified as 'residential houses' for the purpose of denying Section 54F exemption and for taxation under the head 'Income from House Property'. - HELD THAT: - The Tribunal noted that the PCIT's conclusion rested on two factual predicates - assessment to local property tax and presence of electricity supply - without explaining how those facts transform small structures used for agricultural operations into 'residential houses' for tax law purposes. The PCIT did not apply or cite any legal test or evidence establishing that the structures were intended or used as residential accommodation chargeable under Section 23. The Tribunal concluded that the PCIT's finding was based on conjecture and lacked legal or evidentiary foundation. [Paras 17, 18, 19]

The PCIT's finding that the agricultural land structures were residential houses is without basis and is set aside; directions to assess income therefrom under 'Income from House Property' are not sustained.

Validity of revision under Section 263 of the Income-tax Act - Whether the PCIT was justified in directing the Assessing Officer to deny any claim of deduction under Chapter VI A. - HELD THAT: - The Tribunal observed that the assessee had not claimed any deduction under Chapter VI A in the computation of income filed for the impugned year. Consequently, there was no occasion for the PCIT to direct denial of a non existent claim. The Revenue was unable to controvert this factual position. [Paras 20]

The PCIT's direction to deny deduction under Chapter VI A is without substance and is set aside.

Final Conclusion: The PCIT's revisionary order under Section 263 is set aside in toto for want of legally sustainable findings; the directions to deny exemption under Section 54F, to assess income under 'Income from House Property', and to disallow Chapter VI A deductions are quashed and the assessee's appeal is allowed.

Limitation for proceedings under section 201/201(1A) - Assessee in default under section 201 - Reasonable period for initiating proceedings is four years - Survey proceedings under section 133A(2A) and consequent assessments

Limitation for proceedings under section 201/201(1A) - Assessee in default under section 201 - Reasonable period for initiating proceedings is four years - Survey proceedings under section 133A(2A) and consequent assessments - Whether the order treating the assessee as assessee in default under section 201/201(1A) for A.Y. 2012-13 is barred by limitation and unsustainable. - HELD THAT: - The Tribunal applied the jurisprudence of the Hon'ble Supreme Court and the Jurisdictional High Court, and the Coordinate Bench decisions, holding that proceedings under section 201/201(1A) must be initiated within a reasonable period which the Tribunal, following authority, fixes as four years. The impugned proceedings arose out of a survey dated 09/12/2019 and the relevant notice/orders were issued beyond four years from the end of the financial year in which the TDS was deductible. The Tribunal found that insofar as the amounts related to non-residents, the action was time barred; the departmental proceedings therefore went to the root of the matter and were quashed. The Tribunal also noted that the survey-based initiation was belated and unsustainable. As to the small credit attributable to a resident which had not crystallized, the Tribunal treated the non resident aspect as determinative and set aside the orders, holding that the assessee could not be considered an assessee in default for the year. [Paras 7, 8]

Impugned order for A.Y. 2012-13 is quashed and the appeal is allowed; the assessee cannot be treated as assessee in default.

Limitation for proceedings under section 201/201(1A) - Assessee in default under section 201 - Reasonable period for initiating proceedings is four years - Whether the order treating the assessee as assessee in default under section 201/201(1A) for A.Y. 2013-14 is barred by limitation and unsustainable. - HELD THAT: - The Tribunal held that the facts and legal question for A.Y. 2013-14 are mutatis mutandis identical to those decided for A.Y. 2012-13. Applying the same limitation principle (four year reasonable period for initiating proceedings under section 201/201(1A)), the Tribunal found the impugned order to be time barred. The departmental concession based on a later relaxation Act was rejected in view of binding jurisdictional precedent (Mahindra & Mahindra Ltd.). For consistency with the earlier reasoning, the Tribunal set aside the CIT(A)'s order and allowed the assessee's grounds of appeal. [Paras 10, 12, 13]

Impugned order for A.Y. 2013-14 is set aside and the appeal is allowed.

Final Conclusion: Both appeals for A.Y. 2012-13 and A.Y. 2013-14 are allowed: the Tribunal quashed/set aside the orders treating the assessee as an assessee in default under section 201/201(1A) as being time barred, following the four year reasonable period for initiation of such proceedings.

Rectification under section 254(2) limited to mistakes apparent from the record - appealability of an intimation under section 200A as covered by section 246A(1)(a) - non-applicability of fee under section 234E to defaults prior to 01/06/2015 - remedy against erroneous tribunal orders lies by statutory appeal to the High Court

Rectification under section 254(2) limited to mistakes apparent from the record - remedy against erroneous tribunal orders lies by statutory appeal to the High Court - Whether the Revenue could seek rectification of the ITAT's order under section 254(2) to revisit merits and overturn the Tribunal's decision. - HELD THAT: - The Tribunal held that powers under section 254(2) are confined to correcting mistakes apparent from the record and do not permit re-opening or rehearing of merits. Relying on the principle enunciated by the Supreme Court in CIT v. Reliance Telecom Limited, the Bench observed that alleged errors in merits cannot be remedied by the Tribunal under rectification procedure; the appropriate remedy for the Revenue is to prefer an appeal to the higher forum. Consequently, the Miscellaneous Applications seeking rectification to revisit the merits were held to be without merit and dismissed. [Paras 8, 9]

Miscellaneous Applications seeking rectification under section 254(2) dismissed; merits cannot be re opened by rectification and Revenue's remedy is by appeal to higher forum.

Appealability of an intimation under section 200A as covered by section 246A(1)(a) - Whether an appeal lies to the Commissioner (Appeals) against an intimation under section 200A. - HELD THAT: - The Bench examined the text of section 246A(1)(a) and concluded that where an assessee or deductor objects to an intimation made under sub section (1) of section 200A, an appeal to the Commissioner (Appeals) is maintainable. The Tribunal noted that the question of maintainability was a prerequisite issue which ought to have been considered earlier, but the statutory provision itself permits an appeal against such intimations when the assessee objects to the making of adjustments. [Paras 6, 7]

An intimation under section 200A, to the extent objected to by the assessee/deductor, is an appealable order under section 246A(1)(a).

Non-applicability of fee under section 234E to defaults prior to 01/06/2015 - Whether the Tribunal's deletion of fees levied under section 234E for periods before 01/06/2015 stands. - HELD THAT: - The Tribunal in its consolidated order had deleted the late filing fees levied under section 234E for the relevant periods by following High Court decisions holding that clause inserting section 234E was effective only from 01/06/2015. The present Bench declined to entertain the Revenue's attempt to have that order rectified, observing that the Tribunal had relied upon binding High Court precedents and that any challenge to the Tribunal's conclusion on the merits must be pursued by the Revenue before the appropriate higher forum rather than by rectification. [Paras 5]

Tribunal's deletion of section 234E fees for periods prior to 01/06/2015 remains intact; Revenue's recourse is by appeal to higher forum, not rectification.

Final Conclusion: The three Miscellaneous Applications filed by the Revenue seeking rectification of the ITAT's order are dismissed: rectification under section 254(2) is limited to mistakes apparent from the record and cannot re open merits; an intimation under section 200A is appealable under section 246A(1)(a) when objected to; the Tribunal's deletion of fees under section 234E for periods prior to 01/06/2015 remains undisturbed and the Revenue's remedy is to approach the higher forum.

Rectification under section 254(2) of the Income tax Act - mistake apparent on the face of the record - non maintainability of successive rectification applications / finality of Tribunal's order - power of the Tribunal to review or recall its earlier order - remand to the Assessing Officer for verification of challans - compliance with precedential Tribunal order

Rectification under section 254(2) of the Income tax Act - non maintainability of successive rectification applications / finality of Tribunal's order - power of the Tribunal to review or recall its earlier order - mistake apparent on the face of the record - The second miscellaneous application seeking rectification of the Tribunal's order was not maintainable as it raised the same grounds already considered and rejected in the first miscellaneous application. - HELD THAT: - The Tribunal noted that the assessee had earlier filed MA No.31/Bang/2024 which was disposed of on 30.07.2024 after application of mind; the present MA repeats identical grounds and seeks rectification of the original order in ITA No.276/Bang/2024. Reliance was placed on higher court authorities holding that the power under section 254(2) is confined to correcting an obvious, patent mistake apparent on the face of the record and does not permit reconsideration or rehearing on merits or repeated rectification applications on the same issue. Applying those precedents, the bench held that a second rectification application on grounds already adjudicated is not maintainable and the Tribunal cannot be asked to re open merits already finally considered. [Paras 4, 5, 6]

Second miscellaneous application dismissed as not maintainable for raising the same grounds already rejected in the earlier MA.

Remand to the Assessing Officer for verification of challans - substantial justice - The request to remit the appeal to the Assessing Officer for verification of the EPF/ESI challans was refused. - HELD THAT: - Although the assessee contended that certain EPF and ESI payments were made within statutory due dates and sought a limited remand to verify challans said to have been produced at the appeal hearing, the Tribunal found that the papers on record did not include the challans (only 3CB & 3CD report and salary ledger were available). Since the material relied upon for the proposed remand was not before the Tribunal, the plea for remand for limited verification could not be accepted. [Paras 2, 5]

Remand for verification of challans refused for lack of supporting documents on record.

Compliance with precedential Tribunal order - Direction that the Assessing Officer shall pass consequential order in compliance with Para 10.7 & 10.8 of the Tribunal's earlier order in Manikandan Vazhukkapara Kumaran (ITA No.577/Bang/2023). - HELD THAT: - While dismissing the second miscellaneous application, the Tribunal clarified that its earlier conscious decision to follow the conclusions in the original order (which relied on ITA No.577/Bang/2023) remains and directed the Assessing Officer to implement the consequential directions contained in Para 10.7 and 10.8 of that referenced Tribunal order. [Paras 6]

Directed the Assessing Officer to pass consequential order in compliance with Para 10.7 & 10.8 of the Manikandan Vazhukkapara Kumaran decision.

Final Conclusion: The second miscellaneous application filed under section 254(2) was dismissed as not maintainable for re raising grounds already decided in the earlier rectification application; the request for remand to verify EPF/ESI challans was refused for want of the asserted documents on record; the Assessing Officer is directed to act in accordance with Para 10.7 & 10.8 of the referenced Tribunal order.

Reason to believe - recording of reasons - seizure under Section 110 of the Customs Act, 1962 - requirement of material basis for formation of belief - quasi-judicial duty to record reasons - reliability of local traders' opinion in determining country of origin - provisional release and discharge of bank guarantee

Reason to believe - recording of reasons - requirement of material basis for formation of belief - seizure under Section 110 of the Customs Act, 1962 - Impugned seizure memo dated 02.04.2024 did not record reasons supporting the 'reason to believe' required under Section 110 of the Customs Act, 1962 and is therefore unsustainable. - HELD THAT: - The Court examined the statutory and judicial exposition of the phrase 'reason to believe' and held that invocation of Section 110 requires the seizing officer to record specific material information and reasons in writing showing a nexus between available material and the belief that statutory provisions have been violated. A bare recital that provisions (Sections 7, 11, 46, 47 of the Customs Act read with Section 3(2) of the FTDR Act) are violated, without any contemporaneous material particulars or application of mind, does not satisfy the statutory requirement. The seizure memo in Item No.6 contains only a conclusory statement of violation without narrating facts or materials which led to the belief; subsequent reliance on post-hoc examinations or opinions does not cure the absence of recorded reasons at the time of seizure. Reliance on legislative history and authorities was applied to conclude that recording of reasons is mandatory and omission vitiates the seizure. [Paras 24, 25, 26]

Seizure memo dated 02.04.2024 is set aside for failure to record reasons supporting the 'reason to believe' under Section 110 of the Customs Act, 1962.

Reliability of local traders' opinion in determining country of origin - requirement of material basis for formation of belief - Opinion of local traders based on naked-eye examination as to foreign origin of Areca Nuts is not reliable and cannot found a seizure. - HELD THAT: - The Court found that mere visual inspection and unstandardised opinion of local traders lack the requisite scientific or evidential basis to determine country of origin. Expert inputs from the Ministry of Agriculture/ICAR indicate that country-of-origin cannot be determined reliably by naked-eye examination and no laboratory standard or comparative samples from the alleged foreign origin were available. In these circumstances the traders' suspected opinion failed the Wednesbury/unreasonableness test and cannot sustain the formation of 'reason to believe'. [Paras 27, 28]

Local traders' naked-eye opinion that the seized Areca Nuts were of foreign origin is rejected as unreliable.

Provisional release and discharge of bank guarantee - seizure under Section 110 of the Customs Act, 1962 - Documents of transit and available corroborative material support genuineness of the transaction and, coupled with failure to record reasons for seizure, warrant interference with the seizure and discharge of security. - HELD THAT: - The Court observed that the invoice, e-way bill and transport consignment particulars showed dispatch from Assam to Karnataka and that the Arecanut Research & Development Foundation's report stating the nuts 'resembled Areca Nuts of India' corroborated the petitioner's case. The seizure memo did not note or evaluate the documents presented by the driver nor record any contemporaneous grounds of suspicion with respect to transit documents. Given the absence of recorded reasons and the corroborative material on record, the Court concluded that interference was warranted. [Paras 29]

The transit documents and corroborative material do not sustain the seizure; interference with the seizure memo is justified.

Provisional release and discharge of bank guarantee - Consequential relief ordering discharge of bank guarantee and bond furnished for provisional release of goods. - HELD THAT: - Having set aside the seizure memo on the primary ground of non-recording of reasons and having found the local traders' opinion unreliable and the documentary material corroborative of the petitioner's case, the Court directed that the bank guarantee and bond furnished to secure provisional release be discharged. The Court fixed a timeline for discharge to give effect to the order. [Paras 33]

Bank guarantee and bond furnished to secure provisional release shall be discharged within three months from receipt of the order; seizure memo set aside.

Final Conclusion: Writ petition allowed: the seizure memo dated 02.04.2024 is set aside for failure to record reasons supporting 'reason to believe'; the opinion of local traders is rejected as unreliable; corroborative material favours the petitioner; the bank guarantee and bond securing provisional release are directed to be discharged within three months.

Clandestine removal - onus of proof on revenue - corroborative evidence requirement - parameters to prove clandestine clearance - inadmissibility of uncorroborated statement of director without cross-examination - cross-examination under section 9D of the Central Excise Act, 1944

Clandestine removal - corroborative evidence requirement - onus of proof on revenue - parameters to prove clandestine clearance - inadmissibility of uncorroborated statement of director without cross-examination - Whether demand of customs duty and penalties for alleged clandestine clearance of imported Polyester Filament Yarn was sustainable in absence of corroborative evidence and without cross-examination of the director - HELD THAT: - The Tribunal found that Revenue relied solely on the statement of the director to impute clandestine clearance of 23,159 Kgs of PFY but produced no corroborative material such as recovery of finished goods outside the factory, evidence of actual transportation, sale to identified parties, receipt of sale proceeds, or linked documentary/material evidence as enumerated in the parameters laid down in Arya Fibres Pvt. Ltd. The burden to establish clandestine removal rests on Revenue and must be discharged by tangible evidence rather than inferences or assumptions. Further, the director's statement was not subjected to cross-examination as required under section 9D of the Central Excise Act, 1944, undermining its evidentiary value. The Tribunal also noted absence of any investigation or recorded statements from the alleged agent and buyer, and reliance on uncorroborated statements was held insufficient to sustain demand. Applying the settled tests and authorities cited, the Tribunal concluded that the requisite proof for clandestine removal and consequent duty/penalty was lacking. [Paras 4, 5]

Demand and penalties set aside for want of corroborative evidence and for reliance on an untested statement of the director; impugned order quashed and appeals allowed with consequential relief as per law

Final Conclusion: The Tribunal held that Revenue failed to discharge the onus of proving clandestine removal by tangible corroborative evidence and could not rely on the un-cross examined statement of the director; the impugned adjudication was set aside and the appeals allowed with consequential relief.

Revocation of Customs Broker license - suspension of Customs Broker license - proportionality of punishment - failure to verify antecedents under Regulation 13(o) of CHALR - procedure under Regulation 20(2) of CBLR 2013 - forfeiture of security deposit

Revocation of Customs Broker license - proportionality of punishment - failure to verify antecedents under Regulation 13(o) of CHALR - Revocation of the appellant's Customs Broker licence - HELD THAT: - The appellant was alleged to have facilitated clearance through an unauthorised person and failed to verify client antecedents as required by Regulation 13(o); the manager's statement did not satisfactorily explain the facilitation. While the factual violation is recorded, the Tribunal found that revocation (a permanent removal of licence) is a disproportionate response to the misconduct, particularly given that the appellant has already suffered suspension and financial loss since 2014. In consequence, the Tribunal ordered re-issuance of the Customs Broker licence subject to compliance with prescribed procedural requirements, treating permanent revocation as excessive punishment in the circumstances. [Paras 7, 11, 12]

Revocation set aside to the extent that the appellant's licence shall be re-issued subject to fulfillment of procedural requirements; revocation deemed disproportionate.

Forfeiture of security deposit - suspension of Customs Broker license - procedure under Regulation 20(2) of CBLR 2013 - Validity of the Commissioner's order forfeiting the appellant's entire security deposit - HELD THAT: - The Tribunal noted procedural chronology including the dates of suspension, inquiry report and revocation, and observed that while the suspension order may have been passed after the 15-day period referred to in Regulation 20(2), the present challenge was to the revocation and forfeiture. The Tribunal declined to disturb the impugned order insofar as forfeiture of the security deposit is concerned, leaving that part intact. [Paras 10, 12]

Forfeiture of the entire security deposit upheld; no interference with that portion of the impugned order.

Final Conclusion: Appeal partly allowed: revocation of the Customs Broker licence set aside to the extent of directing re-issuance subject to procedural compliance; the order forfeiting the security deposit is not interfered with.

Interpretation of 'removal' under customs law - physical removal requirement for liability under section 73A - liability of warehouse-keeper under indemnity undertakings - scope of indemnity clause in Public Warehouse License Regulations - application of warehousing regulations read with custody provisions

Interpretation of 'removal' under customs law - physical removal requirement for liability under section 73A - Destruction of warehoused goods by fire constitutes 'removal' for purposes of Section 71/73A and attracts liability for duty, interest and penalties. - HELD THAT: - The Tribunal examined Sections 71 and 73A and concluded that those provisions address the physical taking out of warehoused goods from the warehouse. A combined reading shows that liability under Section 73A is contingent on illicit physical removal in contravention of Section 71. There is no provision treating destruction or loss by fire (or other accidental causes) as a deemed removal. Consequently, loss by fire within the bonded warehouse does not give rise to liability under Section 71/73A for duty, interest or penalties because there was no illicit physical removal. [Paras 5]

Destruction by fire is not 'removal' under Sections 71/73A; no liability under those provisions arises on that basis.

Scope of indemnity clause in Public Warehouse License Regulations - liability of warehouse-keeper under indemnity undertakings - Whether the indemnity in regulation 4(c) of the Public Warehouse License Regulations, 2016 makes the warehouse-keeper liable to pay duty or interest when the Commissioner has no liability. - HELD THAT: - Regulation 4(c) requires the warehouse-keeper to give an undertaking indemnifying the Commissioner against liability arising from loss of warehoused goods due to accident, destruction or other causes. That undertaking is intended to protect the Commissioner from a liability on his part. In the present case the Commissioner has not shown any liability to customs duty or interest arising against the Commissioner himself. Absent any liability on the part of the Commissioner, the indemnity provision cannot be invoked to create a liability of duty or interest against the warehouse-keeper in respect of loss by fire. [Paras 6]

Regulation 4(c) cannot be invoked to impose duty or interest on the warehouse-keeper where no liability of the Commissioner exists.

Application of warehousing regulations read with custody provisions - physical removal requirement for liability under section 73A - Whether clause (b) of Regulation 4 (undertaking to pay duties, interest, fine and penalties under Section 73A) applies where loss occurred due to fire and there was no physical removal. - HELD THAT: - Clause (b) of Regulation 4 explicitly invokes liability under Section 73A. Since Section 73A applies only when goods are physically removed from the warehouse in contravention of Section 71, and since destruction by fire does not amount to such removal, clause (b) cannot be validly invoked to recover duty, interest or penalties in the facts of this case. The Regulations must be read along with the statutory custody/removal scheme; where the statutory predicate (illicit removal) is absent, clause (b) offers no independent basis for liability. [Paras 6]

Clause (b) of Regulation 4 is not applicable to losses by fire where there was no illicit physical removal; it cannot support recovery of duty, interest or penalties.

Final Conclusion: The Tribunal set aside the impugned order: loss of goods by fire within the bonded warehouse does not amount to 'removal' under Sections 71/73A and the indemnity and undertaking provisions in Regulation 4 cannot be invoked to recover duty, interest or penalties in the absence of any liability on the Commissioner; appeal allowed.

Approval of Resolution Plan under Section 31 - Compliance with Section 30(2) requirements - Limited judicial review of Committee of Creditors' commercial decision - Eligibility under Section 29A - Extinguishment of claims not part of the approved Resolution Plan - Implementation and monitoring of the Resolution Plan - Deemed shareholder approval for capital reduction and allotment - No waiver of future statutory liabilities by Tribunal's approval - Denial of concession for stamp duty, taxes and registration charges - Termination of moratorium on approval of the Resolution Plan

Approval of Resolution Plan under Section 31 - Compliance with Section 30(2) requirements - The Resolution Plan submitted by the Successful Resolution Applicant is approved by the Adjudicating Authority as meeting the requirements of Section 30(2) and may be sanctioned under Section 31. - HELD THAT: - The Tribunal examined the Resolution Plan and the record of the Committee of Creditors' voting and found that the plan provides for payment of CIRP costs, payment to operational creditors, management of the corporate debtor post approval and mechanisms for implementation and supervision as required by Section 30(2). The CoC approved the plan by requisite voting share (100%) and the Adjudicating Authority confined its scrutiny to the matters specified in Section 30(2) and the relevant regulations. No provision of law appears contravened and the plan otherwise complies with the CIRP Regulations, including provisions governing feasibility, viability and manner of distribution. [Paras 19, 20, 21, 25, 26]

The Resolution Plan submitted by the Successful Resolution Applicant is approved and shall become effective as part of the order.

Limited judicial review of Committee of Creditors' commercial decision - The Tribunal's scrutiny is limited to the requirements of Section 30(2) and it will not re open the commercial wisdom of the Committee of Creditors. - HELD THAT: - The Adjudicating Authority reiterated that its role is to satisfy itself only that the resolution plan, as approved by the requisite percent of voting share of financial creditors, meets the statutory requirements listed in Section 30(2). The Tribunal accordingly did not substitute its judgment for the CoC's commercial decision and confined review to the permissible parameters under the Code and regulations. [Paras 20, 23, 24]

The Tribunal will not modify the commercial decision of the CoC and limited its review to the statutory criteria under Section 30(2).

Eligibility under Section 29A - The Resolution Applicant is not barred under Section 29A and is eligible to submit and have its plan approved. - HELD THAT: - The Resolution Applicant confirmed eligibility in the required declarations and the Tribunal found that the Resolution Plan is not in contravention of Section 29A. The CoC had considered eligibility reports and the Tribunal's scrutiny did not reveal any disqualifying element under the bar on ineligible persons. [Paras 16, 25]

The Resolution Applicant is eligible under Section 29A and the plan complies with that requirement.

Payment and undertaking in respect of claims by statutory authorities - Claims by statutory authorities submitted before approval have been provided for in the Resolution Plan and by additional undertaking from the Successful Resolution Applicant. - HELD THAT: - The Employees' Provident Fund Organisation's claim was on record prior to approval. The Successful Resolution Applicant executed an affidavit undertaking to pay the principal portion within 180 days of handover and to deal with other contested components in accordance with appellate outcomes; payments remain subject to statutory rights of appeal. The Tribunal noted this undertaking and the provision in the plan addressing operational and statutory claims, and treated such provision as part of the approved plan. [Paras 21, 22, 26]

The EPFO claim is addressed by the plan and by the SRA's undertaking; payment obligations are incorporated into the approved plan subject to statutory appeals.

Extinguishment of claims not part of the approved Resolution Plan - On approval of the Resolution Plan by the Adjudicating Authority, claims not included in the plan stand extinguished and no person may initiate or continue proceedings in respect of such claims. - HELD THAT: - The Tribunal applied the principle that approval of a resolution plan extinguishes claims not forming part of the plan and bars initiation or continuation of proceedings in respect of such claims. This consequence was made part of the order and held binding on all stakeholders including government authorities, guarantors and others. [Paras 27]

Claims not forming part of the approved Resolution Plan stand extinguished upon approval and are barred from further proceedings.

Implementation and monitoring of the Resolution Plan - Monitoring committee supervision - A Monitoring Committee shall supervise implementation of the approved Resolution Plan and report its status to the Adjudicating Authority periodically. - HELD THAT: - The approved plan provides for a Monitoring Agency and a Steering Committee with specified composition and timelines for implementation. The Tribunal directed that the Monitoring Committee shall supervise implementation and file status reports before the Authority, preferably quarterly, and set out the implementation timelines embedded in the plan. [Paras 11, 28, 31]

The Monitoring Committee will supervise implementation and file periodic status reports before the Tribunal.

Deemed shareholder approval for capital reduction and allotment - Shareholders' approval required under other laws for extinguishment of existing shares and allotment under the plan is deemed to have been given for the purposes of implementing the Resolution Plan. - HELD THAT: - The Tribunal directed that, for implementation of the plan, where shareholder approval would otherwise be required under company law for capital reduction and allotment, such approval shall be deemed to have been given and the Memorandum and Articles shall be amended and filed for recordation. This deeming is limited to facilitating implementation and does not purport to override statutory requirements beyond enabling allotment/ capital reduction under the plan. [Paras 31]

Shareholders' approval required for extinguishment and allotment under the plan is deemed given to enable implementation.

No waiver of future statutory liabilities by Tribunal's approval - Denial of concession for stamp duty and taxes - Approval of the Resolution Plan does not constitute a waiver of future statutory obligations; concessions for stamp duty, taxes and registration charges sought are not granted by the Tribunal. - HELD THAT: - The Tribunal clarified that its approval shall not be construed as waiver of any future statutory liabilities and that any waiver in the plan affecting statutory obligations is subject to approval of competent authorities. The application for concession in relation to stamp duty, taxes and registration charges was refused, with liberty to the Resolution Applicant to approach competent authorities as permitted by law. [Paras 29, 30]

No waiver of future statutory liabilities; concession for stamp duty, taxes and registration charges is denied by the Tribunal.

Termination of moratorium on approval of the Resolution Plan - The moratorium under Section 14 ceases to have effect from the date of approval of the Resolution Plan. - HELD THAT: - Upon sanctioning of the resolution plan and making it effective by the order, the protective moratorium declared during CIRP is terminated as part of the operative directions of the Tribunal. [Paras 26, 35]

The moratorium declared under Section 14 shall cease to have effect from the date of this order.

Final Conclusion: The Adjudicating Authority approved the Resolution Plan submitted by the Successful Resolution Applicant after finding compliance with Section 30(2), the CIRP Regulations and Section 29A; the plan is effective from the date of the order, binding on all stakeholders, extinguishes claims not included in the plan, requires implementation and monitoring as directed, does not waive future statutory liabilities, denies requested tax/stamp concessions, and terminates the moratorium from the date of approval.

Oppression and mismanagement - validity of share allotment in a private company - rectification of the register of members - service of notice for Extraordinary General Meeting and compliance with special notice for removal - sale of company property and fiduciary duties of directors - power to allot shares vested in the board after amendment of articles - non-application of pre-emptive right under section 81 to private companies

Oppression and mismanagement - sale of company property and fiduciary duties of directors - service of notice for Extraordinary General Meeting and compliance with special notice for removal - Acts or conduct of the respondents are prejudicial or oppressive to the petitioners or whether the affairs of the company are being conducted in a manner prejudicial to the interests of the company - HELD THAT: - The Tribunal examined the sale transactions, board resolutions, meeting notices and related records and found no demonstrable illegality or mala fides amounting to oppression or mismanagement. The sale deeds refer to board authorisation and note the bank charge; stamp duty was paid on the applicable valuation and the petitioner had not contemporaneously objected to the board resolution fixing the minimum price. The valuation filed by petitioners was filed without permission, contained caveats and did not correspond exactly to the properties in dispute, and thus was not relied upon. Notices for the EGM dated 24.03.2008, together with the shareholder special notices for removal, were held to have been dispatched and acknowledged; the record supported service and compliance with the procedure for removal. The alleged lease was cancelled and advance refunded and therefore did not constitute continuing oppressive conduct. Allegations as to appointment of a director and payment of remuneration were unsupported by evidence of illegality or unfairness. On these findings the Tribunal concluded that the respondents' acts did not amount to oppression or mismanagement and that the company's affairs were not being conducted prejudicially to the petitioners or the company. [Paras 29, 31, 33, 34, 35]

The acts and conduct of the respondents are not prejudicial or oppressive and the affairs of the company are not being conducted in a prejudicial manner.

Validity of share allotment in a private company - power to allot shares vested in the board after amendment of articles - non-application of pre-emptive right under section 81 to private companies - rectification of the register of members - Whether the allotment of 17,29,000 equity shares on 19.05.2008, 10.09.2008 and 13.10.2008 is illegal and void ab initio and whether rectification of the register of members is required - HELD THAT: - The Tribunal found that the Articles were lawfully amended at the EGM of 24.03.2008 to confer the power of allotment on the Board. The allotments on the stated dates were effected by Board resolutions. The petitioners' principal complaint was non offer of shares proportionately to existing shareholders, but the Tribunal accepted that the statutory pre emptive provision (the right reflected in section 81) does not apply to a private company. Having regard to the amended Articles and the exemption of private companies from the pre-emptive offer regime, and in absence of evidence establishing that the allotments were a sham or otherwise unlawful, the allotments were not held to be void ab initio and no rectification of the register was warranted. [Paras 36, 37, 38]

The allotments are not illegal or void ab initio and do not necessitate rectification of the register of members.

Final Conclusion: The petition is dismissed as devoid of merit; the Tribunal found no oppression or mismanagement and upheld the validity of the challenged allotments, and disposed of the petition without costs.

Oppression and mismanagement - removal of directors by majority at an extraordinary general meeting - notice and quorum for general meeting - special notice for removal of director - requirement of continuous or cumulative wrongful conduct - just and equitable grounds

Oppression and mismanagement - requirement of continuous or cumulative wrongful conduct - just and equitable grounds - Alleged acts do not constitute oppression or mismanagement warranting relief under sections 241-242 of the Companies Act. - HELD THAT: - The Tribunal applied the established legal standard that a petition under the statutory scheme requires proof of conduct that is oppressive or prejudicial to members or the company, ordinarily consisting of continuous or cumulative wrongful acts rather than isolated incidents. The Tribunal found that the petitioners failed to demonstrate that the affairs of the company were being conducted in a manner oppressive or prejudicial to them or that just and equitable grounds for relief (including winding up) were established. The pleadings and material did not disclose the burden of continuous mismanagement or lack of probity needed to invoke the remedial powers under sections 241-242; isolated complaints about family disputes and single incidents of alleged impropriety were insufficient. On this basis, the petition was held to be without merit and liable to dismissal. [Paras 44, 45, 46, 56, 57]

Petitioners failed to prove oppression or mismanagement; petition dismissed on merits.

Removal of directors by majority at an extraordinary general meeting - notice and quorum for general meeting - special notice for removal of director - The convening of the EGM, the notice given and the consequent removal of the petitioners as directors were not shown to be invalid or vitiating in a manner that would attract relief under the Act. - HELD THAT: - The Tribunal examined the procedural requirements for convening an EGM and the law on removal of directors, noting that removal by simple majority at a general meeting is a recognized aspect of corporate democracy. It found that the Articles required seven days' notice and a quorum of three members; the petitioners admitted receipt of notice on 04.10.2022 and the record showed attendance by five directors, indicating compliance with quorum requirements. The Tribunal concluded that the notice and meeting process, including any contention about short notice, did not in the facts amount to an invalid meeting or an act of oppression; mere inconvenience or disagreement with the majority decision does not render a validly convened meeting void or oppressive. Consequently, the removal was not shown to be unlawful or prejudicial to attract relief. [Paras 47, 48, 51, 52, 53]

EGM procedure and removal were not shown to be invalid; no relief on this ground.

Insufficient notice and single-act challenge - requirement of continuous or cumulative wrongful conduct - A single alleged lapse (short notice) or isolated act is insufficient to establish oppression; the petitioners' contention about insufficient notice did not invalidate proceedings. - HELD THAT: - The Tribunal considered the petitioners' submission that the notice period was short and that a single procedural lapse vitiated the EGM. It reiterated that the law does not treat a solitary procedural irregularity as automatically oppressive; the jurisprudential requirement is for a pattern of oppressive conduct. The petitioners had knowledge of the proposed meeting and admitted receipt of the notice within the statutory timeframe; the Tribunal therefore held that the contention of insufficient notice, taken in isolation, does not justify relief under the oppression/mismanagement provisions. [Paras 51, 52, 54]

Single-act complaint about notice was insufficient to establish oppression; challenge rejected.

Final Conclusion: The petition is dismissed for lack of merit: the material did not establish oppression or mismanagement, the EGM and removal of the petitioners were not shown to be invalid or prejudicial in law, and isolated procedural grievances did not warrant relief under sections 241-242 of the Companies Act.

Investigation under Section 213(b) of the Companies Act - Prima facie satisfaction to direct investigation - Regulatory domain of Reserve Bank of India and parallel adjudication - Locus standi and maintainability of petition under Section 213(b) - Requirement of procedure and notice before directing investigation / reference to SFIO

Investigation under Section 213(b) of the Companies Act - Prima facie satisfaction to direct investigation - Petition under Section 213(b) seeking appointment of an inspector was maintainable on merits - HELD THAT: - Section 213(b) permits the Tribunal to order an investigation only if satisfied that circumstances suggest the company's business is being conducted with intent to defraud, for a fraudulent or unlawful purpose, or in an oppressive manner. The Tribunal directed the petitioner to demonstrate a prima facie case. On perusal of the documents filed by the petitioners, the Tribunal found that the averments of fraud and unlawful conduct were not supported or corroborated by the material placed on record. The petitioners failed to establish circumstances suggesting conduct warranting an investigation under Section 213(b). The Tribunal further noted settled practice that an order directing investigation (including reference to investigative agencies) requires formation of a prima facie opinion after giving notice and following statutory procedure. Consequently, the petition did not satisfy the statutory threshold for ordering an investigation. [Paras 21, 22, 27, 29]

Petition dismissed on merits for failure to make out a prima facie case under Section 213(b).

Regulatory domain of Reserve Bank of India and parallel adjudication - Locus standi and maintainability of petition under Section 213(b) - Whether the matters raised by the petitioners fell within the regulatory purview of the RBI and affected the maintainability of the petition - HELD THAT: - The Tribunal recorded that the Reserve Bank of India had examined the petitioners' complaints and issued an order addressing the disputes as matters of reconciliation between lender and borrower, observing that no RBI intervention was warranted beyond direction to complete specific adjustments. The petitioners' challenge to the RBI process was pending in the High Court. The Tribunal observed that the sectoral regulator (RBI) is empowered to examine such grievances and that the existence of RBI examination and findings undermined the case for parallel exercise of investigatory jurisdiction by the Tribunal. Additionally, the petitioners were unable to satisfactorily explain their locus to file the present application in face of multiple pending proceedings involving substantially the same cause of action. These considerations contributed to the Tribunal's conclusion on maintainability. [Paras 23, 24, 25, 26, 28]

Petition is not maintainable in the face of regulatory examination by the RBI and for want of satisfactory explanation of locus; this factor supports dismissal.

Requirement of procedure and notice before directing investigation / reference to SFIO - Whether the Tribunal could straightaway direct an investigation without forming a prima facie opinion and following prescribed procedure - HELD THAT: - The Tribunal relied on authority holding that the Adjudicating Authority cannot straightaway direct an investigation (including by SFIO) without giving notice to concerned persons and forming a prima facie opinion after following the procedure under the Companies Act. That procedural requirement underpins the need for the petitioner to establish the requisite prima facie basis before any direction for investigation can be issued. In absence of such prima facie satisfaction and compliance with procedural safeguards, the impugned petition could not be allowed to succeed. [Paras 29]

Tribunal will not direct investigation without following statutory procedure and forming prima facie satisfaction; petition failed this requirement.

Final Conclusion: The Company Petition under Section 213(b) was dismissed in limine: the petitioners failed to establish the requisite prima facie circumstances to warrant an investigation, the matters raised had been examined by the Reserve Bank of India (with related litigation pending), the petitioners did not satisfactorily demonstrate locus/maintainability, and the Tribunal accordingly declined to order an investigation.

Right to apply under Section 399(1) and (3) as condition precedent to proceedings under Sections 397/398 - Consent in writing as a condition precedent - Qualification threshold of one tenth of members or share capital and the rule of rounding off - Oppression and mismanagement - Limitation and public notice through ROC/MCA filings - Validity and effect of amendment to Articles of Association affecting quorum - Infructuousness of reliefs on factual supervening events (death and cessation of operations)

Right to apply under Section 399(1) and (3) as condition precedent to proceedings under Sections 397/398 - Consent in writing as a condition precedent - Qualification threshold of one tenth of members or share capital and the rule of rounding off - Whether the petition satisfied the condition precedent in subsections (1) and (3) of Section 399 of the Companies Act, 1956 and was thus maintainable. - HELD THAT: - The Tribunal held that fulfilment of subsection (a) of Section 399 is a pre condition to invoke Section 397 and that the written consent contemplated by subsection (3) is not a mere formality but must reflect that the consenting members applied their minds to the specific petition and reliefs sought. The purported consent affidavits filed after a lapse of some 15 years, filed at a late stage and stating that consent was mentioned in the petition but without particulars, did not satisfy the test of informed consent laid down in the authorities. The Tribunal therefore found subsection (3) unsatisfied. The contention that the numerical member threshold could be met by applying a rounding off rule was examined and rejected on the facts; the rounding principle relied upon was held inapplicable in the circumstances. For these reasons the Tribunal concluded that the procedural prerequisites under Section 399(1) and (3) were not met and the petition was not maintainable on that ground. [Paras 21, 23, 26]

Precondition under Section 399(1) and informed written consent under Section 399(3) not satisfied; petition not maintainable on that ground.

Oppression and mismanagement - Limitation and public notice through ROC/MCA filings - Validity and effect of amendment to Articles of Association affecting quorum - Infructuousness of reliefs on factual supervening events (death and cessation of operations) - Whether the alleged amendments to the Articles, appointments, share transfers and Registrar filings amounted to acts of oppression and mismanagement warranting relief. - HELD THAT: - The Tribunal tested the allegations against the factual backdrop that the company ceased operations shortly after the petition was filed, the second respondent had died during pendency, and long delays had occurred. The Tribunal observed that statutory filings on the MCA/ROC are public notices and that the petitioners could not avoid limitation by asserting late discovery where the documents were in the public domain. No reliable material was placed to substantiate the asserted illegal board meetings, forged resolutions or unlawful transfers; the challenges were therefore held to be either time barred, not supported by evidentiary material, or factually without merit. The specific amendment to Article 109B making a particular director necessary for quorum was noted to have become infructuous following the death of that director. The alleged shifting of the registered office likewise did not survive on the material before the Tribunal. Overall the pleaded acts did not constitute oppression and mismanagement deserving relief. [Paras 33, 34, 36, 38]

Allegations of oppression and mismanagement not established; challenges are time barred or without merit and the contested amendments/filings do not warrant relief.

Infructuousness of reliefs on factual supervening events (death and cessation of operations) - Whether any relief could be granted under Section 111 of the Companies Act, 1956 based on the petition as pleaded. - HELD THAT: - The Tribunal noted that the petition merely mentioned Section 111 but contained no specific pleading or argument seeking relief under that provision. No substantive case was advanced in respect of Section 111 in oral submissions. In the absence of specific pleadings or argument, the Tribunal declined to grant any relief under Section 111. [Paras 39]

No relief can be granted under Section 111 as there is no specific pleading or argument in that regard.

Final Conclusion: The company petition was dismissed on the grounds that the condition precedent in Section 399(1) and (3) was not satisfied (the required informed written consents were not proved) and that the substantive allegations of oppression and mismanagement were either time barred, unproven or rendered infructuous by subsequent events; no relief was granted under Section 111. The petition is dismissed, however without costs.

Financial debt - financial creditor - disbursement against the consideration for the time value of money - co-borrower liability joint and several - default and initiation of CIRP under Section 7 - limitation extended by acknowledgement or part-payment - Section 10-A bar to filing - insufficient stamping as a curable defect - RBI/MSME revival framework not a bar to IBC proceedings

Financial debt - financial creditor - disbursement against the consideration for the time value of money - co-borrower liability joint and several - default and initiation of CIRP under Section 7 - Respondent No.1 is a financial creditor and the Corporate Debtor was a co-borrower whose liability was co-extensive; a financial debt stood discharged in law and default occurred enabling initiation of CIRP under Section 7. - HELD THAT: - The Court examined the definition of "financial debt" and "financial creditor" and held that the essential ingredient of disbursement against consideration for the time value of money is satisfied because the sanction letters and facility agreements provided for interest. Documentary evidence on record-mortgage application, sanction letters, board resolutions, undertaking-cum-declaration, facility agreements, demand promissory note and related documents-bore the signature of the Corporate Debtor and established it as a Co-Borrower. The Facility Agreement expressly made liabilities "joint and several" and the Corporate Debtor had given indemnities and acted as a "Confirming Party" to the mortgage. The Corporate Debtor also acknowledged the debt and made part payments and offered a restructuring, facts which confirm the existence of a debt and an incidence of default. Given these materials, the Adjudicating Authority rightly concluded that a financial debt existed, that the Corporate Debtor was liable as co-borrower, and that default had occurred, entitling the Financial Creditor to proceed under Section 7. [Paras 12, 13, 21, 22, 23]

The Section 7 petition was maintainable against the Corporate Debtor; Respondent No.1 is a financial creditor and the Corporate Debtor had a co-extensive financial debt in default.

Insufficient stamping as a curable defect - Insufficiency of stamp duty on the Facility Agreement did not render the instrument void or bar admission of the Section 7 petition. - HELD THAT: - The Tribunal agreed with the Adjudicating Authority that inadequate stamping is a curable, technical defect and does not invalidate the instrument. Reliance was placed on higher court authority indicating that non-payment or short payment of stamp duty renders an instrument inadmissible but not void. Therefore, the alleged stamping deficiency could not defeat the Financial Creditor's claim at the admission stage. [Paras 15, 22]

The plea regarding insufficient stamping is not a ground to set aside admission of the Section 7 petition.

Section 10-A bar to filing - The Section 10-A bar did not apply to the date of default pleaded in the Section 7 application. - HELD THAT: - The Court noted that Section 10-A prohibits filing for defaults occurring on or after 25.03.2020 till 24.03.2021. The date of default specified in the petition was 15.03.2020, which falls outside the prohibited window. The Adjudicating Authority correctly held that Section 10-A did not render the petition inadmissible. [Paras 16]

Section 10-A does not bar the Section 7 petition as the date of default preceded the statutory moratorium period.

Limitation extended by acknowledgement or part-payment - The Section 7 petition was not barred by limitation because part-payment and subsequent acknowledgement by the Corporate Debtor revived the limitation period. - HELD THAT: - Applying the principle that acknowledgement or part-payment restarts the limitation period, the Tribunal upheld the Adjudicating Authority's finding that a part payment on 01.05.2021 and an email acknowledgement on 11.05.2022 constituted fresh points from which limitation runs. Consequently, the petition filed on 16.11.2023 fell within three years of the relevant acknowledgement/part-payment and was not time-barred. [Paras 17, 18, 19]

Limitation objection is rejected; the petition is within time by virtue of part-payment/acknowledgement.

RBI/MSME revival framework not a bar to IBC proceedings - Non-compliance with the RBI/MSME revival framework prior to NPA classification did not preclude initiation of CIRP under Section 7. - HELD THAT: - The Tribunal observed that declaration of an account as NPA and any RBI/MSME frameworks governing revival and rehabilitation constitute independent proceedings and do not, by themselves, disentitle the Financial Creditor from invoking the IBC. The records established that the Corporate Debtor had been afforded opportunity to regularise its account and had failed to pay the stipulated amount by the agreed date; thus the invocation of Section 7 was not barred by alleged non-adherence to the MSME framework. [Paras 20, 22]

The plea based on RBI/MSME revival framework does not obstruct the Financial Creditor from initiating Section 7 proceedings.

Final Conclusion: The appeal is devoid of merit and is dismissed; the Adjudicating Authority did not err in admitting the Section 7 application and directing initiation of CIRP against the Corporate Debtor.

Existence of financial debt and default - record or evidence of default under section 7(3) and Regulation 2A - maintainability of section 7 petition and limitation/Section 10A - effect of part payment and acknowledgement of debt - adequacy of stamping of loan agreement and admissibility of collateral evidence - requirement of authorization to file under the Code - operation of moratorium and initiation of CIRP

Existence of financial debt and default - effect of part payment and acknowledgement of debt - The Petition under section 7 is maintainable as the Financial Creditor proved existence of financial debt and occurrence of default by the Corporate Debtor. - HELD THAT: - The Tribunal examined the loan documents including the sanction letter, loan agreement naming the Corporate Debtor as co borrower in Schedule I, the disbursement record, revised repayment schedule and the parties' conduct during proceedings. The Corporate Debtor had signed the loan agreement on every page and admitted part payments and promised further instalments in court orders, which the Tribunal treated as acknowledgement of existing financial debt. The revised repayment schedule showed payment history and that default occurred on 05.07.2021. On this basis the Tribunal rejected the Corporate Debtor's defence that no financial debt existed and concluded that debt was due and remained unpaid. [Paras 14, 15, 16, 24, 26]

Section 7 petition is maintainable; existence of debt and default proved and default found to have occurred on 05.07.2021.

Record or evidence of default under section 7(3) and Regulation 2A - Documents relied upon by the Financial Creditor constituted "such other record" under section 7(3)(a) and Regulation 2A, and were adequate to establish default in the absence of an Information Utility record. - HELD THAT: - While the Financial Creditor had not annexed an Information Utility record or a banker's book certified statement as per Regulation 2A, it produced loan sanction letter, executed loan agreement, statement of account showing disbursement, SARFAESI notice and revised repayment schedule. The Tribunal held these documents fall within the statutory phrase "such other record or evidence" envisaged by section 7(3)(a). The Corporate Debtor did not dispute these records and had admitted part payments; hence the Tribunal rejected the contention that the petition was defective for want of IU or Regulation 2A evidence. [Paras 17, 18, 19, 20]

The materials on record constitute compliant evidence of default under section 7(3)(a); absence of IU entry is not fatal where "such other record" is furnished.

Maintainability of section 7 petition and limitation/Section 10A - The petition is not barred by Section 10A; the first date of default as per the repayment schedule and payments made shows the cause of action arose within permissible period and petition filed in time. - HELD THAT: - The Tribunal considered the payment history under the revised repayment schedule and noted that instalments were paid intermittently and that the third EMI became payable on 05.07.2021 which the Corporate Debtor failed to honour. On that basis the Tribunal found the first date of default relevant to admission occurred on 05.07.2021 and therefore the petition was within limitation and not hit by Section 10A bar. [Paras 16]

Petition is within limitation; Section 10A does not bar admission.

Adequacy of stamping of loan agreement and admissibility of collateral evidence - Defect in stamping of the loan agreement did not render the petition unsustainable where other concurrent records establish existence of debt and default. - HELD THAT: - The Tribunal, relying on authoritative precedent and the suite of documents on record - sanction letter, proof of disbursement, SARFAESI notice, revised repayment schedule and the Corporate Debtor's conduct - held that these materials sufficed to establish the debt and default notwithstanding the contention of inadequate stamping. Accordingly, the objection to admissibility based on stamping was rejected. [Paras 21]

Stamping objection overruled; loan transaction and default held admissible on the basis of contemporaneous records.

Requirement of authorization to file under the Code - The petition was validly filed: the Financial Creditor produced a board resolution authorising the signatory to represent it before the Tribunal. - HELD THAT: - The Corporate Debtor contested the authority of the petition's signatory. The Tribunal examined Annexure 8, the Board Resolution, which authorised the named individual to represent the Financial Creditor before the NCLT/NCLAT and other authorities in matters under the Code. On that basis the Tribunal was satisfied that the petition had been lawfully initiated. [Paras 23]

Authorization requirement satisfied by the Board Resolution; petition properly instituted.

Operation of moratorium and initiation of CIRP - Company Petition is admitted and CIRP is ordered; Interim Resolution Professional appointed and moratorium under section 14 directed. - HELD THAT: - Having found existence of debt and default exceeding statutory threshold and the petition to be within limitation and duly constituted, the Tribunal admitted the Company Petition, appointed the named IRP, directed deposit for initial CIRP costs, and ordered operation of moratorium and consequential directions as provided under the Code. [Paras 27, 28]

Petition admitted; CIRP ordered, IRP appointed and moratorium imposed.

Final Conclusion: The Tribunal admitted the Company Petition filed under section 7, holding that the Financial Creditor proved existence of financial debt and default (default found on 05.07.2021), that the documents produced satisfied section 7(3)(a) and Regulation 2A requirements, that the petition was within limitation and duly authorised; consequently CIRP against the Corporate Debtor was ordered, an IRP appointed and moratorium directed.

Maintainability under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 - invocation of guarantee - co-borrower cum guarantor status - adequacy of the Resolution Professional's report under Section 99 - contractual arbitration clause restricting remedies

Invocation of guarantee - maintainability under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 - co-borrower cum guarantor status - Application under Section 94(1) IBC by the personal guarantor is not maintainable because the guarantee was not shown to have been invoked against the applicant. - HELD THAT: - The Tribunal examined the demand notice relied upon by the applicant and found that the demand notice dated 07.03.2018 was addressed to the corporate debtor and another guarantor but not to the present applicant. No other document was produced to demonstrate that the guarantor's liability of the applicant was invoked for recovery. In the absence of invocation of the guarantee against the applicant and with material particulars not disclosed or documented, the application filed in the capacity of co-borrower cum guarantor cannot be entertained under Section 94(1) of the IBC. The Tribunal also noted that the applicant had signed the loan in the capacity of director cum guarantor and that the loan agreement contained clause 11.6 restricting default remedies to arbitration, further weighing against maintainability. [Paras 6, 7]

Application is not maintainable and is dismissed for want of invocation of guarantee and non-disclosure of pertinent details.

Adequacy of the Resolution Professional's report under Section 99 - maintainability under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 - The Resolution Professional's report recommending admission under Section 94 was found unsatisfactory and not accepted. - HELD THAT: - Although the Resolution Professional had been appointed and had filed a report under Section 99 recommending admission, the Tribunal held that the report failed adequately to examine the eligibility of the applicant to file under Section 94. Given the absence of material showing invocation of the guarantee against the applicant, the Tribunal did not agree with the RP's conclusion of maintainability and found the report deficient for the purpose of admitting the application. [Paras 3, 8]

Report of the Resolution Professional is rejected as unsatisfactory and cannot support admission of the application.

Final Conclusion: The Company Petition CP(IB) 60 of 2022 is rejected and the application under Section 94(1) IBC is dismissed as not maintainable; the Resolution Professional's report recommending admission is held to be unsatisfactory.

Barred by limitation - initiation of insolvency resolution process against a personal guarantor - admission of liability by the personal guarantor - report under Section 99 of the Insolvency and Bankruptcy Code, 2016 - SARFAESI demand notice - classification of loan account as non-performing asset (NPA)

Barred by limitation - initiation of insolvency resolution process against a personal guarantor - SARFAESI demand notice - classification of loan account as non-performing asset (NPA) - report under Section 99 of the Insolvency and Bankruptcy Code, 2016 - The application under Section 94(1) of the IBC, 2016 for initiation of IRP against the applicant/personal guarantor was rejected on the ground of limitation. - HELD THAT: - The Resolution Professional filed a report under Section 99 recommending admission of the application, noting the respondent's admission of execution of guarantee and that no payment had been made against the demand. The financial creditor (Bank of Baroda) placed no objection to initiation of IRP. However, the application did not enclose relevant documents of invocation and the SARFAESI demand notice, and the Tribunal found that the cause of action arose on classification of the loan as NPA and issuance of the demand notice dated 19.11.2015. Taking that date as the relevant starting point, the Tribunal concluded that the application was filed beyond the prescribed limitation period and therefore was time-barred. For these reasons the Tribunal rejected the petition despite the RP's recommendation and the bank's lack of objection.

CP(IB) 24 of 2023 is rejected as barred by limitation.

Final Conclusion: The application for initiation of the Insolvency Resolution Process against the personal guarantor is dismissed on the sole ground of being time-barred; other contentions and the RP's recommendation were not sufficient to overcome the limitation bar.

Presumption of security interest under Regulation 21A - Obligation of secured creditor to inform liquidator within thirty days - Obligation to pay amounts on realisation within 90 and 180 days - Consequence of failure to comply - asset becomes part of liquidation estate - Interpretation of proviso and estimated amount under Regulation 21A - Time bound object of the Insolvency and Bankruptcy Code

Presumption of security interest under Regulation 21A - Obligation to pay amounts on realisation within 90 and 180 days - Interpretation of proviso and estimated amount under Regulation 21A - Interpretation and application of Regulation 21A(1)-(3) of the IBBI (Liquidation Process) Regulations, 2016, including the scope of the provisos and the consequence of non compliance. - HELD THAT: - The Tribunal held that Regulation 21A casts a clear, mandatory duty on a secured creditor who elects to realise its security interest. Under Regulation 21A(1) the secured creditor must inform the liquidator within thirty days of its decision to relinquish or to realise; failure gives rise to the statutory presumption that the asset is part of the liquidation estate. Where a secured creditor proceeds to realise, Regulation 21A(2) obliges it to pay the amounts specified - the proportionate share within ninety days and any excess realised value within 180 days - and Regulation 21A(3) makes non compliance with sub regulation (2) the trigger for the asset becoming part of the liquidation estate. The first proviso (relating to estimation where the amount payable is not certain) does not relieve the secured creditor of the primary obligation to realise and pay within the stipulated period; the question of an estimated amount arises only after the creditor has taken steps to realise and inquired of the liquidator. The secured creditor cannot avoid the time limits by contending that the liquidator failed to furnish an estimate when the creditor itself did not seek realisation or request the estimate. This construction gives effect to the plain language of Regulation 21A and to the time bound object of the Code and the Regulations, and avoids frustrating completion of liquidation within prescribed timelines. [Paras 12, 16, 17, 20]

Regulation 21A(1)-(3) must be given their plain meaning: a secured creditor electing to realise must comply with the payment obligations within the prescribed timelines; failure to do so attracts Regulation 21A(3) and the asset becomes part of the liquidation estate.

Obligation of secured creditor to inform liquidator within thirty days - Consequence of failure to comply - asset becomes part of liquidation estate - Time bound object of the Insolvency and Bankruptcy Code - Application of Regulation 21A to the facts concerning the Haldia property and the applicant's claim over 12.84 acres and the additional 8.04 acres. - HELD THAT: - On the facts the Tribunal found that the applicant filed Form D claiming 12.84 acres and indicated it was not relinquishing security; however no realisation was effected within the time prescribed under Regulation 21A(2). The applicant did not, within thirty days of liquidation commencement, communicate a claim to the remaining 8.04 acres; its later revised Form D (dated 28.01.2023) claiming the additional 8.04 acres was therefore time barred and could not defeat the presumption under Regulation 21A(1). As the applicant failed to realise the security and to make the payments required within the 90/180 day windows, the liquidator was justified in treating the entire Haldia property as part of the liquidation estate. The Tribunal noted that the applicant never sought an estimated amount from the liquidator at the stage required and thus cannot rely on absence of an estimate to avoid the statutory timelines. Applying the legal interpretation of Regulation 21A to these facts, the Tribunal concluded the liquidator's decision to include the property in the liquidation estate complies with law. [Paras 9, 10, 18, 20, 21]

The applicant's claimed rights in respect of the Haldia property (including the additional 8.04 acres) did not survive the statutory timelines; the entire property correctly forms part of the liquidation estate and the application is liable to be dismissed.

Final Conclusion: The application challenging the liquidator's inclusion of the Haldia property in the liquidation estate is rejected. Regulation 21A mandates the secured creditor's time bound obligations to inform, realise and pay; the applicant failed to comply and the liquidator's action to treat the entire property as part of the liquidation estate is upheld.

Summary order. Special Leave Petitions dismissed as withdrawn; question of law reserved to be decided in an appropriate case.

Legality of arrest under the Prevention of Money Laundering Act, 2002 - requirement of recorded "reasons to believe" and communication of "grounds of arrest" - scheduled offence requirement for prosecution under the PMLA - effect of omission/deletion of an offence from the Schedule to the PMLA - judicial review of remand orders where foundational arrest is illegal - subsequent judicial validation cannot cure initial illegality (sublato fundamento cadit opus) - right to personal liberty and humane treatment during interrogation under Article 21

Legality of arrest under the Prevention of Money Laundering Act, 2002 - requirement of recorded "reasons to believe" and communication of "grounds of arrest" - Whether the arrest of the petitioner under the PMLA was legally sustainable. - HELD THAT: - On scrutiny of the grounds of arrest and the materials placed on record the Court found no prima facie material linking the petitioner to the affairs of M/s Development Strategies India Pvt. Ltd. (DSPL) or to the alleged syndicate. The public document from the Ministry of Corporate Affairs (Director Master Information, P-8) showed that the petitioner ceased to be a director of DSPL w.e.f. 07.11.2013 and the ED produced no material to the contrary. The "grounds of arrest" and "reasons to believe" relied upon the narrative of "illegal mining" and beneficiary status, but did not establish that the petitioner was a person in charge or connected to the alleged G.M. Co.; nor was existence or registration of such an entity shown. In that factual matrix the Court concluded that there was no reason to believe, within the meaning of Section 19 PMLA, that the petitioner was guilty of an offence under the PMLA and that the arrest was therefore unsustainable. [Paras 6, 7, 8, 13]

Arrest quashed as there was no material to justify reasons to believe that petitioner was guilty of an offence under the PMLA.

Scheduled offence requirement for prosecution under the PMLA - effect of omission/deletion of an offence from the Schedule to the PMLA - Whether allegations rooted in "illegal mining" or offences under the Environment Protection Act, 1986 could sustain prosecution under the PMLA in the present case. - HELD THAT: - The Court observed that the core allegations concerned "illegal mining" and related environmental contraventions. The Mines and Minerals (Development and Regulation) Act offences are not part of the PMLA Schedule, and Paragraph 25 of the Schedule (offences under the Environment Protection Act, 1986) has been omitted by the Jan Vishwas (Amendment of Provisions) Act, 2023 with effect notified on 13.08.2024. In view of the amendment and notification, prosecution based on the deleted paragraph would be unwarranted. On the material before it, the Court held that the foundational predicate for invoking PMLA in respect of the environmental offences and the illegal mining narrative was not established against the petitioner. [Paras 9, 12]

Prima facie prosecution under PMLA based on the environmental/illegal mining allegations was not sustainable; deletion of Paragraph 25 reinforced that such offences cannot serve as a valid scheduled predicate in this case.

Judicial review of remand orders where foundational arrest is illegal - subsequent judicial validation cannot cure initial illegality (sublato fundamento cadit opus) - Whether the remand orders dated 20.07.2024 and 29.07.2024 could validate an arrest which the Court found to be illegal. - HELD THAT: - Applying the principle that if the foundational action is contrary to law the superstructure collapses (sublato fundamento cadit opus), the Court held that judicial orders of remand cannot cure an unlawful arrest. The Court examined the materials and concluded that the arrest and its recorded grounds lacked the necessary foundation; consequently, the subsequent remand orders based on that arrest were rendered indefensible in law. [Paras 14, 15]

Remand orders issued on the basis of the illegal arrest were quashed and set aside.

Right to personal liberty and humane treatment during interrogation under Article 21 - Whether the manner and duration of interrogation legitimately supported the necessity for arrest or custodial detention. - HELD THAT: - The Court noted that the petitioner had complied with summons under Section 50 PMLA and was interrogated for an extended period (about 14 hours 40 minutes) before arrest. While not converted into a determinative legal ground for release, the Court observed that prolonged interrogation in one stint is inimical to human dignity under Article 21 and recommended that the ED adopt reasonable time limits and humane practices during investigations. That observation formed part of the Court's evaluative context in concluding that arrest was unnecessary in the factual matrix before it. [Paras 10]

Observation recorded regarding humane limits to interrogation; such treatment did not justify the arrest in the circumstances of this case.

Legality of arrest under the Prevention of Money Laundering Act, 2002 - judicial review of remand orders where foundational arrest is illegal - Relief to be granted consequent to findings on illegality of arrest and remand. - HELD THAT: - Having found absence of material to constitute 'reasons to believe' and that the predicate offences relied upon were not sustainably within the PMLA Schedule for the present prosecution, the Court concluded that the arrest, the grounds of arrest and the remand orders were indefensible and must be set aside. The Court clarified its order should not be treated as an expression on the ultimate merits of the ED's complaint under Sections 44/45 PMLA. [Paras 13, 20, 21]

Arrest order, grounds of arrest and the remand orders quashed; petitioner to be released forthwith if not required in any other case.

Final Conclusion: Petition allowed. The arrest order and grounds of arrest dated 20.07.2024 and the remand orders dated 20.07.2024 and 29.07.2024 are quashed and set aside as legally indefensible; petitioner ordered to be released forthwith if not required in any other case. Observations on Article 21 and investigative conduct are recorded; no expression made on the merits of the ED's complaint under Sections 44/45 PMLA.

Summary order. Civil appeal dismissed owing to low tax effect recorded on reliance upon the Circular dated 06.08.2024; pending applications, if any, disposed of.

Reverse charge mechanism - services provided by a director in capacity of director - renting of immovable property not a director's service - notification entry 5A - person liable for paying service tax - service tax on renting of immovable property

Reverse charge mechanism - services provided by a director in capacity of director - renting of immovable property not a director's service - notification entry 5A - Whether rent paid by the company to premises owned by its directors attracts service tax on reverse charge basis under entry 5A of the Notification dated 07.08.2012. - HELD THAT: - The Tribunal found on undisputed facts that the premises were owned by the directors in their individual capacity and rent was paid to them as individuals. Entry 5A applies only to services provided by a director to the company in the capacity of a director (for example director fees or sitting fees) and not to transactions entered into by a director in his individual capacity. The adjudicating authority and Commissioner (Appeals) erred in treating the rent paid to the individual owners as a director-to-company service falling under the reverse charge. The Tribunal relied on its earlier decision in M/s. Cords Cable Industries Ltd. (Final Order No.50456/2023 dated 12.04.2023) where identical facts were held to be outside entry 5A: mere fact that rent recipients are directors does not convert individual rental receipts into services provided by them as directors. As the rent receipts had been earned in individual capacity and service tax had in any event been deposited on the rent received, the requirement for reverse charge under entry 5A was not made out. Applying that ratio, the impugned demand was unsustainable. [Paras 4, 5]

Impugned order set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that rent paid to directors in their individual capacity does not attract service tax under the reverse charge provision of Notification entry 5A and setting aside the demand confirmed by the lower authorities.

Service tax exemption - erection, commissioning and installation service - transmission of electricity exemption - management, maintenance or repair service exemption - production of evidence to claim exemption - remand for fresh adjudication

Service tax exemption - erection, commissioning and installation service - transmission of electricity exemption - management, maintenance or repair service exemption - production of evidence to claim exemption - Whether the appellants are entitled to consideration of exemption claims under Circular No. 123/05/2010-TRU dated 24.05.2010 and Notification No. 11/2010 dated 27.02.2010 and whether the matter requires fresh adjudication. - HELD THAT: - The Commissioner (Appeals) denied the benefit of the Circular and Notification on the ground that the appellants failed to produce supporting documents such as work orders, tenders or detailed scopes of work. The appellants contend that many original records had been taken by the revenue during investigation and have furnished copies (approximately 150 pages) before the Tribunal. The Tribunal noted that the Commissioner (Appeals) recognised the applicability of the Circular and Notification but rejected the claim for lack of evidence. Given the appellants' production of documentary material before the Tribunal and the likelihood that the original adjudicating authority already possessed those records, the Tribunal found it appropriate to set aside the impugned order and remand the matter to the original adjudicating authority for re-examination and fresh decision in light of the documents presented and the extant Circular and Notification.

Appeal allowed by way of remand to the original adjudicating authority to re-examine and decide the claim for exemption under Circular No. 123/05/2010-TRU dated 24.05.2010 and Notification No. 11/2010 dated 27.02.2010 in light of the documents produced.

Final Conclusion: The Tribunal allowed the appeals by setting aside the impugned order and remanding the matters to the original adjudicating authority for fresh adjudication on the appellants' exemption claims under the specified Circular and Notification, having regard to the documents now placed on record.

Import of services - reverse charge mechanism - time bar / extended period of limitation - classification requirement in show cause notice - no service tax on legal services prior to 1.7.2012 - no service tax on salary - reimbursement not taxable where treated as out of pocket reimbursement - evidence of non payment/write off negates tax liability

Evidence of non payment/write off negates tax liability - import of services - reverse charge mechanism - Whether the confirmed Service Tax demand in respect of database usage charges is sustainable where the assessee established by documents that no foreign exchange outflow took place and the liability was subsequently written off - HELD THAT: - The Tribunal examined documentary evidence-emails and letters from the foreign supplier (FICO) waiving the invoices, a bank certificate of foreign exchange outflow showing no payment for the database charges, and the auditor's certificate recording the liability as written off and reflected as income. Mere booking of a provision in the accounts was not treated as sufficient to sustain the demand where independent contemporaneous evidence established that no payment ever flowed to the overseas supplier and the liability was waived and written off. On these facts the Department erred in treating the invoiced amount as a taxable import of services. The Tribunal set aside the demand on merits. [Paras 14, 21]

Demand in respect of database usage charges set aside on merits

No service tax on legal services prior to 1.7.2012 - reverse charge mechanism - Whether the confirmed Service Tax demand in respect of legal consultancy fees for the years under dispute is sustainable where legal services were not leviable to service tax prior to the Notification effective 1.7.2012 - HELD THAT: - The Tribunal noted that although Section 66A imposes liability on the recipient under reverse charge where the service is taxable, the service must be taxable per se. Legal services were brought into the service tax net only by Notification No.30/2012 ST effective 1.7.2012. For the years 2009-10 and 2010-11 the legal consultancy fees did not fall within the charge and therefore could not be taxed under Section 66A. The Tribunal accordingly held the confirmed demand unsustainable and set it aside. [Paras 15, 21]

Demand in respect of legal services set aside on merits

No service tax on salary - import of services - Whether the confirmed Service Tax demand made on account of salary payments to an overseas employee is sustainable - HELD THAT: - The Tribunal accepted the appellant's documentary evidence (agreement and bank remittance certificate) and held that salary payments do not fall within the taxable services under the Finance Act for the relevant period. Accordingly, the demand premised on such salary outflow did not attract service tax and was set aside. [Paras 16, 21]

Demand in respect of salary set aside on merits

Classification requirement in show cause notice - reimbursement not taxable where treated as out of pocket reimbursement - Whether confirmed demands in respect of reimbursements and a small residual quantification error can be sustained where the SCN did not specify the classification/service wise quantification - HELD THAT: - The Tribunal found the SCN deficient insofar as it did not specify classification or undertake service wise quantification for the amounts alleged to be for royalty/management/consultancy/database usage. The appellants had produced extensive supporting documentation showing many items were out of pocket reimbursements. Given the absence of specific classification in the SCN and the appellants' documentation, the Tribunal was not required to parse voluminous papers but concluded the demands for reimbursements and the small quantification error could not be sustained and set them aside. [Paras 17, 18, 21]

Demands in respect of reimbursements and the minor quantification error set aside on merits

Time bar / extended period of limitation - reverse charge mechanism - revenue neutrality - Whether the Department could invoke the extended period of limitation for the entire demand when the liability arose under reverse charge and would have resulted in cenvat credit/refund (revenue neutral) and there was no suppression with intent to evade - HELD THAT: - Applying settled principles and precedent relied upon by the Tribunal, where a reverse charge demand would be revenue neutral because the assessee (a 100% EOU) would have been entitled to cenvat credit/refund, invocation of the extended period is not sustainable absent evidence of suppression with intent to evade. The Tribunal found no cogent material to fasten suppression and noted the Department had not appealed the portion it had itself dropped. Consequently the demands falling in the extended period were held time barred and set aside. [Paras 19, 20, 21]

Extended period demands set aside on ground of time bar

Final Conclusion: The appeal is allowed. The Tribunal set aside the confirmed demands in respect of database usage charges, legal services, salary, reimbursements and the minor quantification error on the grounds stated above, and further held the extended period demand time barred; the appellant is entitled to consequential relief as per law.

Deemed exercise of option under the Works Contract Composition Scheme - taxable event is rendition of service - point of taxation - accrual versus receipt - reconciliation of trial balance vis-a -vis ST-3 returns in EPC contracts - project-wise/contract-wise Cenvat records sufficiency under Rule 6 of the Cenvat Credit Rules - no provision for reversal of Cenvat credit on write-off of bad debts - extended period of limitation not invokable in absence of suppression with intent to evade tax

Deemed exercise of option under the Works Contract Composition Scheme - Validity of demand for alleged irregular availment of Works Contract Composition Scheme for TC No.70 and TC No.103 - HELD THAT: - The Tribunal found no dispute about eligibility to opt for the composition scheme but noted absence of any prescribed written/formal procedure under Rule 3(3) for exercising the option. In the absence of a statutory format or requirement to exercise the option in writing, payment of service tax at the composition rate reflected in statutory returns constitutes sufficient compliance and amounts to a deemed exercise of option. The Tribunal relied on the Calcutta High Court decision in Larsen & Toubro which held that filing returns showing payment at the composition rate is enough to evidence election to the scheme. Applying that principle to the appellant's disclosed returns and payments, the confirmed demand was held unsustainable and set aside. [Paras 14]

Demand confirmed on account of alleged irregular availment of composition scheme set aside.

Taxable event is rendition of service - point of taxation - accrual versus receipt - Sustainability of demand that tax should have been discharged at higher rate prevailing on date of receipt instead of rate prevailing on date of rendition/invoice - HELD THAT: - The Tribunal held that for service tax the taxable event is the rendition of the service and therefore the rate applicable on the date of rendition governs liability. Relying on the Delhi High Court decision in Vistar Construction and Supreme Court precedent recognizing rendition as the taxable event, the demand premised on applying the higher rate as on date of receipt was held contrary to law. Accordingly, the demand confirmed on this ground was set aside. [Paras 15]

Demand based on applying rate as of receipt of payment set aside; rate at time of rendition governs.

Reconciliation of trial balance vis-a -vis ST-3 returns in EPC contracts - Extent of demand based on alleged short-payment by comparing 'gross amount billed' and 'gross amount realised' and related reconciliation - HELD THAT: - The appellant produced a detailed reconciliation, certified by a Chartered Accountant, showing that after application of POT rules and excluding non-taxable components (e.g., VAT, adjusted mobilisation advances) only a nominal liability of business auxiliary service for July 2011 remained. The adjudicating authority gave no contrary finding on the reconciliation. In absence of departmental evidence rebutting the reconciliation, the Tribunal accepted the reconciliation, confirmed only the nominal amount already paid by the appellant (appropriated against demand) and set aside the remaining demand; no penalty was imposed as there was no suppression. [Paras 16]

Only the reconciled amount in respect of Business Auxiliary Service confirmed; remaining demand set aside; payment appropriated and no penalty imposed.

Reconciliation of trial balance vis-a -vis ST-3 returns in EPC contracts - Sustainability of large demand based on comparison of select GL codes in Trial Balance with income in ST-3 returns - HELD THAT: - The appellant submitted a detailed, CA-certified reconciliation demonstrating no difference between Trial Balance income and ST-3 returns. The Tribunal noted that the adjudicating authority did not address this reconciliation. Further, relying on the Madras High Court's analysis in Firm Foundations that P&L reporting under accounting standards is not a straightjacket for point of taxation and that Rule 3 of the POT rules governs when accrual occurs in EPC contracts, the Tribunal held that a simple comparison with P&L/Trial Balance is not the correct yardstick. On that basis and in absence of contrary findings, the demand founded on such comparison was set aside. [Paras 17]

Demand based on select GL code comparison set aside.

Project-wise/contract-wise Cenvat records sufficiency under Rule 6 of the Cenvat Credit Rules - Validity of demand for reversal of Cenvat credit on alleged failure to maintain separate records for input services used for dutiable and exempt output services - HELD THAT: - The Tribunal found that the appellant maintained contract-wise/project-wise records in SAP with each contract shown as a separate profit centre. Relying on the Tribunal's decision in Essar Projects that Rule 6(3) does not apply where records are maintained project-wise/contract-wise and noting departmental acceptance of that view, the Tribunal held that the appellant complied with Rule 6 and that the reversal demand was unsustainable. The confirmed demand on this count was set aside. [Paras 18]

Demand for reversal of Cenvat credit for alleged non-maintenance of separate records set aside.

No provision for reversal of Cenvat credit on write-off of bad debts - Sustainability of demand for reversal of pro rata Cenvat credit attributable to bad debts written off - HELD THAT: - The Tribunal observed absence of any provision in the Cenvat Credit Rules, 2004 or the Finance Act, 1994 mandating reversal of Cenvat credit where consideration for services was not received. Relying on the Tribunal, Chandigarh decision in SBI Cards which held entitlement to Cenvat credit notwithstanding write offs for periods prior to 01.04.2011 and no rule requiring reversal on that account, the Tribunal held the confirmed reversal demand unsustainable and set it aside. [Paras 19]

Demand for reversal of Cenvat credit on account of bad debts written off set aside.

Extended period of limitation not invokable in absence of suppression with intent to evade tax - Validity of invocation of extended period of limitation and penalties - HELD THAT: - The Tribunal found no evidence of suppression with intent to evade tax; the appellant had regularly filed returns and multiple audits had been conducted. The demands were raised on the basis of the appellant's own profit & loss account and balance sheet. In view of absence of deliberate suppression, invocation of extended limitation and imposition of penalties were held unsustainable. Consequently, penalties were set aside and extended period invocation rejected. [Paras 20, 21]

Extended period invocation and penalties set aside for lack of suppression with intent to evade tax.

Final Conclusion: All demands and penalties confirmed in the impugned Order in Original are set aside on merit and limitation except a reconciled nominal service tax liability in respect of Business Auxiliary Service (July 2011) which the appellant had already paid and which is appropriated against the confirmed demand; appeal disposed accordingly.

Exemption under Notification No. 33/2012 ST for aggregate value below threshold - proviso clause (ii) - exclusion where service tax is paid under sub section (2) of section 68 (reverse charge) - CENVAT credit linkage to availability of exemption - aggregate value for exemption - treatment of reverse charge payments

Exemption under Notification No. 33/2012 ST for aggregate value below threshold - aggregate value for exemption - treatment of reverse charge payments - Whether rent receipts of Rs. 6,57,000 for January 2013 to January 2014 qualify for exemption under Notification No. 33/2012 ST - HELD THAT: - The Tribunal found that Notification No. 33/2012 ST exempts taxable services of aggregate value not exceeding ten lakh rupees in any financial year. The rent received by the appellant during the specified period aggregated to Rs. 6,57,000, which is below the ten lakh rupees threshold. The Tribunal accepted the appellant's submission that the rent receipts fall within the exemption as the aggregate value condition is satisfied. The revenue's demand, based on treating the rent as taxable and not exempt, was therefore unsustainable in view of the threshold criterion expressed in the notification. [Paras 4, 5]

Rent receipts of Rs. 6,57,000 for the period are covered by the exemption in Notification No. 33/2012 ST and the demand is not sustainable.

Proviso clause (ii) - exclusion where service tax is paid under sub section (2) of section 68 (reverse charge) - CENVAT credit linkage to availability of exemption - Whether payments of service tax on certain services under reverse charge and the taking of CENVAT credit disentitle the appellant from claiming the exemption for renting of immovable property - HELD THAT: - The Tribunal held that proviso (ii) excludes from the notification any taxable services in respect of which service tax is paid by the person in the manner specified under sub section (2) of section 68 read with Service Tax Rules (i.e., reverse charge). However, in the present case the appellant were not providers of the output service of renting of immovable property and had not availed CENVAT credit in respect of that renting service. The payments made under reverse charge related to other services (GTA, security, insurance, transportation, detective agency) and were paid under section 68(2); such reverse charge amounts cannot be clubbed with the renting service receipts for the purpose of determining aggregate value for exemption. Further, the plain reading of clause (ii) and the conditions in the notification show that the bar on CENVAT credit and on reverse charge paid services applies to the specific output service for which exemption is claimed. Because no CENVAT credit was availed for providing the renting service, the condition in clause (ii) was not attracted to defeat the exemption claim. [Paras 4]

Payments of service tax under reverse charge for other services and the taking of CENVAT credit thereon do not disentitle the appellant from the exemption in respect of rent receipts, since no CENVAT credit was availed for the renting of immovable property and reverse charge payments are not to be aggregated with the renting receipts for the exemption.

Final Conclusion: The Tribunal allowed the appeal, holding that the rent receipts for January 2013 to January 2014 totalling Rs. 6,57,000 are within the exemption of Notification No. 33/2012 ST and that reverse charge payments and CENVAT credit taken on unrelated services do not disqualify the appellant from the exemption; the demand was set aside.

Air travel agent services - commission received from airline included in taxable value - valuation rules deeming inclusion of commission - service tax collected as representing service tax - Section 73A(2) recovery of amounts collected - service provider-service recipient relationship

Commission received from airline included in taxable value - valuation rules deeming inclusion of commission - Whether the commission received by the appellant from the airlines was inclusive of service tax - HELD THAT: - The clause in the Passenger Sales Agency Agreement stating that remuneration constitutes "full compensation" for services rendered cannot be read as meaning that commission included service tax, particularly since the PSA was executed in 1994 and service tax on air travel agent services was introduced in 1997. The tribunal accepted the appellant's production of certificates from airlines and held that ordinary phrases like "full compensation" or "inclusive of all taxes" do not automatically imply recovery of tax unless an amount is specifically recovered as tax. Further, statutory valuation provisions and the Valuation Rules treat commission received from the airline as an element of the taxable value of air travel agent services when those services are provided to customers/sub-agents, but this statutory treatment does not convert the contractual remuneration clause into evidence that airlines paid commission as inclusive of tax. On these bases the tribunal rejected the department's contention that the commission was inclusive of service tax. [Paras 15, 41, 43, 54]

Commission paid by the airlines is not to be treated as including service tax on the facts of this case.

Air travel agent services - service provider-service recipient relationship - Whether the appellant rendered air travel agent services to the airlines or to sub agents/customers - HELD THAT: - Having considered the PSA and PLB agreements, the statutory definitions of "air travel agent" and "taxable service", and precedent (Madras High Court decision and the Tribunal larger bench), the tribunal found that the commission paid by airlines has a direct nexus with services rendered by the travel agent to sub agents/customers. The valuation provisions (including Rule 6 which includes commission in value) confirm that commission is to be treated as part of consideration for services provided to the sub agents/customers rather than reflecting a service provided to the airlines. Consequently, the tribunal held that the appellant rendered services to sub agents/customers and did not render taxable services to the airlines. [Paras 32, 34, 41, 49, 54]

Appellant rendered air travel agent services to sub agents/customers and not to the airlines.

Service tax collected as representing service tax - Section 73A(2) recovery of amounts collected - Whether recovery under section 73A(2) of the Finance Act of amounts collected from sub agents as representing service tax was justified - HELD THAT: - Section 73A(2) applies where a person who is not a service provider has collected amounts from another person as representing service tax. The tribunal analysed both limbs of s.73A and found that (i) the appellant had provided taxable air travel agent services to the sub agents/customers, (ii) the appellant discharged service tax liability on the commission (either under the Basic Fare Model or Commission Model), and (iii) the amounts collected from sub agents were recoveries of service tax from the true service recipients. Because a service provider-service recipient relationship existed between appellant and sub agents, s.73A(2) (which is directed to collections where no such relationship exists) was not attracted. On this basis the tribunal held that invocation of s.73A(2) for recovery was incorrect and set aside the adjudicating authority's invocation of that provision. [Paras 51, 52, 53, 54]

Provisions of Section 73A(2) were not applicable and recovery under that provision was not justified.

Final Conclusion: Impugned order dated 30.05.2018 is set aside and all 27 appeals are allowed: the commission from airlines was not held to include service tax on the facts, the appellant rendered services to sub agents/customers (not to the airlines), and recovery under Section 73A(2) was not sustainable for the period under dispute (01.04.2009 to 31.03.2014).

Penalty under Section 77 of the Finance Act, 1994 - penalty under Section 78(1) of the Finance Act, 1994 - closure of proceedings on payment of admitted tax, interest and part penalty - appropriation of amounts paid towards service tax liability - setting aside of penalty where proceedings are closed

Penalty under Section 77 of the Finance Act, 1994 - penalty under Section 78(1) of the Finance Act, 1994 - closure of proceedings on payment of admitted tax, interest and part penalty - Whether the penalties imposed on the appellants under Section 77 and Section 78(1) of the Finance Act, 1994 should be set aside and the proceedings closed in view of payment of the service tax, interest and 25% of the penalty. - HELD THAT: - The appellants had paid the entire service tax liability along with interest and 25% of the penalty imposed under Section 78 of the Finance Act, 1994. The amounts paid were appropriated against the service tax liability pursuant to the adjudication order. Having satisfied the admitted tax, interest and part of the penalty within the stipulated period, the Tribunal recorded that, in these circumstances, the proceedings against the appellants ought to be closed. Consequent to closure of proceedings, the penalties imposed on the main appellant under Section 77 and on the co-appellant under Section 78(1) were set aside. [Paras 6, 7]

Proceedings closed; penalties under Section 77 and Section 78(1) set aside and the appeals allowed.

Final Conclusion: The Tribunal closed the proceedings as the appellants paid the service tax, interest and 25% of the penalty, set aside the penalties imposed under Section 77 and Section 78(1) of the Finance Act, 1994, and allowed the appeals.

Interpretation of exemption notifications - Benefit of exemption not confined to goods manufactured 'exclusively' from specified inputs - Construction of the word 'including' in exemption entries - Classification of 'popcorn' as recycled PET plastic waste - Extended period of limitation under Section 11A(4) - suppression of facts requirement - Invocation of extended limitation requires deliberate suppression with intent to evade duty - Penalty under rule 26(1) of the Central Excise Rules - liability linked to principal demand

Interpretation of exemption notifications - Benefit of exemption not confined to goods manufactured 'exclusively' from specified inputs - Construction of the word 'including' in exemption entries - Whether PSF manufactured using predominantly PET bottle scrap but also using small quantities of 'popcorn' is entitled to nil or concessional duty under the Notifications. - HELD THAT: - The Court examined the language of the two relevant exemption entries and the authorities on interpretation of notifications. It held that where a notification does not employ words such as 'only', 'exclusively', 'wholly' or 'entirely', the benefit cannot be denied merely because the final product incorporates a minor quantity of material not specified. Reliance on Tata Iron and Steel and subsequent Tribunal authorities established that absence of restrictive words imports entitlement to benefit proportionately or at least does not disentitle the manufacturer when the specified input predominates. The Tribunal decision relied upon by the department did not consider this specific contention and therefore could not govern the present facts. The Notifications under consideration did not expressly restrict inputs to the exclusion of other materials and the Government has, in other notifications, expressly used restrictive language where it intended exclusivity; that distinction supports a non-restrictive construction here. [Paras 28, 29, 30, 31, 32]

Benefit of the nil/concessional Notifications could not be denied merely because PSF also used a small percentage of 'popcorn'; the adjudicating authority's restrictive construction was set aside.

Classification of 'popcorn' as recycled PET plastic waste - Interpretation of exemption notifications - Whether the material described as 'popcorn' used in manufacture of PSF qualifies as plastic waste/scrap within the scope and purpose of the Notifications. - HELD THAT: - The Court reviewed technical reports from CIPET, MANTRA, IIT Roorkee and other expert inputs placed before it, which described 'popcorn' as a densified, recycled PET/polyester material manufactured from plastic/textile polymer waste and suitable as recycled PET raw material. The Court observed that the object of the Notifications is to encourage use and recycling of plastic waste and that treating 'popcorn' as outside the scope (by reference to a narrow tariff heading) would defeat that purpose. The adjudicating authority's approach of confining 'plastic waste' to a particular Customs Tariff Heading and treating 'popcorn' as a primary PET form was rejected in view of the expert findings and the recycling purpose of the Notifications. [Paras 41, 42, 43, 44, 45]

'Popcorn' is recycled PET plastic waste and falls within the scope and purpose of the Notifications; denial of benefit on that ground was set aside.

Extended period of limitation under Section 11A(4) - suppression of facts requirement - Invocation of extended limitation requires deliberate suppression with intent to evade duty - Whether the extended five-year period under Section 11A(4) could be invoked on the ground of suppression/mis-declaration by the appellant. - HELD THAT: - The Court reviewed the show cause allegation that the appellant procured 'popcorn' in the guise of PET flakes and thereby suppressed material facts to evade duty. It examined the appellant's disclosure in ER-1 returns, the conduct of audits, the obligation and opportunity of departmental officers to scrutinize returns, and relevant Supreme Court precedents (Pushpam Pharmaceuticals, Anand Nishikawa, Easland, Uniworth, Continental Foundation, Reliance) which require deliberate suppression with intent to evade duty for Section 11A(4) to apply. The Court found that the appellant had filed returns disclosing PSF clearances and the Notifications under which benefit was claimed, had a bona fide belief supported by precedent that the Notifications applied despite minor use of 'popcorn', and that the adjudicating authority's finding of deliberate suppression was not supported by positive evidence or reasons but rested on presumption. Accordingly, invocation of the extended period was held impermissible. [Paras 62, 63, 64, 66, 67]

Extended limitation under Section 11A(4) could not be invoked; the demand based on extended period was unsustainable.

Penalty under rule 26(1) of the Central Excise Rules - liability linked to principal demand - Whether penalty imposed on the Director under rule 26(1) could be sustained. - HELD THAT: - The Court noted that the demand itself was found not sustainable on merits and limitation grounds. Given the principal demand was set aside, it was unnecessary to examine the quantum or evidence supporting imposition of penalty on the Director; the factual basis for director's culpability was not established in any event in the adjudicating order relied upon. [Paras 68, 69, 70]

Penalty on the Director under rule 26(1) need not be sustained in view of the setting aside of the impugned demand; appeals allowed.

Final Conclusion: The adjudicating authority's order confirming duty, interest and penalties dated 16.09.2020 was set aside: the Notifications were construed non-restrictively where exclusivity was not stated; 'popcorn' qualifies as recycled PET plastic waste for the purpose of the Notifications; the extended five-year limitation under Section 11A(4) could not be invoked on the facts; and consequential penalties were not to be sustained. Appeals allowed.

Excisability of spent solvent - waste versus by-product - benefit of exemption under Notification No. 23/2003-CE - consistency of revenue stance / estoppel by acceptance of earlier principle - twin tests for excisability

Excisability of spent solvent - waste versus by-product - twin tests for excisability - The spent solvent (spent/ non-usable solvent) generated in the appellant's manufacturing process is not liable to central excise duty as it constitutes waste and not an excisable by product. - HELD THAT: - The Tribunal accepted the appellant's contention that the spent solvent emerging during manufacture is mere waste which cannot be reused in the manufacturing process and therefore is not an excisable product. Reliance was placed on earlier decisions-including the Andhra Pradesh High Court in Commissioner of C. Ex., Hyderabad I v. Aurobindo Pharma Ltd., and subsequent affirmance by the Supreme Court-which applied the established twin tests for excisability and held that spent solvents which have lost marketable character or are not the product of a process amounting to manufacture are not dutiable. The Tribunal also followed the decision in Sandoz Pvt. Ltd. where similar factual findings (waste not marketable as a manufactured product) led to negation of duty demands. Applying these precedents to the facts, the Tribunal found the department's demand unsustainable and set aside the impugned order confirming duty.

Demand of duty on the spent solvent is unsustainable; the spent solvent is waste and not excisable.

Consistency of revenue stance / estoppel by acceptance of earlier principle - benefit of exemption under Notification No. 23/2003-CE - The department cannot re open or take a contrary stand in subsequent cases after having accepted the principle in earlier decisions; consequently the appellant was entitled to treatment consistent with the earlier accepted position and availment of exemption could not be disallowed on that reopened basis. - HELD THAT: - The Tribunal relied upon the principle reiterated in Indian Oil Corporation Ltd. and subsequent authorities that once the revenue has accepted the principle on an identical issue by not preferring appeal, it is not entitled to take an adverse stand in later matters. The Andhra Pradesh High Court's reasoning-that the department, having accepted earlier findings (including that spent solvent was not a dutiable product), could not re agitate the issue-was held to be determinative. In view of this settled position of law, the Tribunal held there was no need to re examine the technicalities of Note 11 or other tariff questions where the revenue had previously accepted the contrary position.

Revenue is precluded from taking a contrary stand once it has accepted the principle in earlier final orders; therefore reassessment on that ground is not permissible.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order confirming duty, and held that the spent solvent is waste not liable to central excise; further, the revenue cannot re open an issue on which it had earlier accepted a contrary principle.

Denial of Cenvat credit and refund on the basis of alleged fake invoices - reliance on investigation conducted at a different Commissionerate without local verification - proof of receipt of inputs by toll/check-post records and RG-23A intimation - limitation and applicability of fraud/condonation for recovery beyond normal period - penalty under Rule 26 of the Central Excise Rules, 2002 - precedential value of co-ordinate Tribunal decisions in same investigation

Denial of Cenvat credit and refund on the basis of alleged fake invoices - reliance on investigation conducted at a different Commissionerate without local verification - proof of receipt of inputs by toll/check-post records and RG-23A intimation - precedential value of co-ordinate Tribunal decisions in same investigation - Validity of the demand confirming denial of Cenvat credit and rejection of refund where demand was premised on alleged fake invoices and on investigations conducted by another Commissionerate without local verification - HELD THAT: - The Tribunal found that the show-cause proceedings and the impugned order were founded on assumptions and presumptions arising from investigations conducted by Commissionerate Meerut-II without corresponding local verification of consignors. The appellants produced contemporaneous records for all 53 consignments including RG-23A (Part-1) entries signed by Range Inspectors, intimations to the jurisdictional Range Superintendent, ER-2 returns, toll/check-post receipts and certified entries evidencing vehicle movements. The Adjudicating Authority improperly treated those documentary proofs as not cogent and disregarded co-ordinate Tribunal decisions arising from the same investigation which had repeatedly set aside similar demands where the Meerut-II investigation was not supported by local enquiry. Applying those precedents and on the basis of the evidence on record, the Tribunal held that the Jammu-based suppliers were manufacturing and dispatching inputs during the relevant period and that denial of Cenvat credit and rejection of refund on the basis of the Meerut-II investigation was unsustainable. [Paras 6, 7]

Impugned demand and rejection of refund set aside; Cenvat credit/refund entitlement upheld in favour of the appellants.

Limitation and applicability of fraud/condonation for recovery beyond normal period - proof of disclosure in ER-2 returns and due diligence - Whether the substantial demand is time-barred because appellants did not conceal facts and had filed ER-2 returns and other disclosures - HELD THAT: - The Tribunal observed that the appellants regularly filed ER-2 returns and produced records demonstrating due diligence and disclosure of requisite information. In the absence of concealment, collusion or other culpable conduct justifying invocation of extended limitation for fraud, the Revenue's substantial demand is liable to be barred by limitation. The Tribunal relied on the documentary record produced by the appellants and concluded that recovery beyond the normal period could not be sustained on the facts. [Paras 9]

Substantial demand held to be barred by limitation; demand unsustainable on limitation grounds.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Legality of penalties imposed on the partner and manager under Rule 26 C.E. Rules, 2002 - HELD THAT: - The Tribunal noted that Rule 26 penalises dealing with goods which are liable to confiscation and does not refer to the concept of 'offending goods' as alleged in the impugned order. There was no material on record to show that the partner or manager had acted in contravention of provisions attracting Rule 26. Given that the primary allegation that no goods accompanied the invoices was not established and in view of the legal scope of Rule 26, the imposition of penalties on the partner and manager was held to be incorrect. [Paras 10]

Penalties under Rule 26 set aside as legally incorrect.

Final Conclusion: Following assessment of the documentary evidence, application of co-ordinate Tribunal precedents arising from the same investigation, and findings on limitation and Rule 26, the Tribunal set aside the impugned order, allowed the appeals and granted consequential relief to the appellants.

Tariff classification of corrugated paper and paperboard - Classification under Heading 4819 (48191010 and 48191090) versus Heading 4808 (48081000) - Applicability of exemption Notification No.04/2006-CE to goods classified under 4819 - Interpretation of tariff sub headings and ejusdem generis application within 481910 - Demand unsustainable where alternative classification attracts same rate of duty

Tariff classification of corrugated paper and paperboard - Classification under Heading 4819 (48191010 and 48191090) versus Heading 4808 (48081000) - Applicability of exemption Notification No.04/2006-CE to goods classified under 4819 - Demand unsustainable where alternative classification attracts same rate of duty - Whether corrugated plates/sheets cleared independently (without being made up into boxes) are classifiable under 48191010/48191090 or under 48081000 and whether any duty demand is sustainable given the exemption and identical rate of duty. - HELD THAT: - The Tribunal examined the tariff headings and the exemption entry relied upon by the appellant. The entry in the exemption Notification No.04/2006-CE covers goods falling under 481910 (cartons, boxes and cases of corrugated paper or paperboard). Sub heading 48191010 is limited to boxes, while 48191090 covers other articles such as cartons and cases of corrugated paper and paperboard. Even if the Revenue's contention that the goods fall under 48191090 were accepted, those goods would still fall within the exemption entry applicable to 481910. Separately, the Tribunal found that corrugated sheets/plates cleared without being made up into boxes are appropriately classifiable under Heading 4808 (specifically 48081000 for corrugated paper and paperboard). The rate of duty applicable under 48081000 and the effective duty after applying the exemption under 48191010 as claimed by the appellant were the same for the relevant period. Because either classification (48191090 within the exemption or 48081000) results in the same duty outcome, the adjudicating authority correctly dropped the demand raised in the show cause notice. The Tribunal therefore upheld the impugned order that classified the corrugated sheets under 48081000 and dismissed the Revenue's appeal. [Paras 4, 5]

Corrugated sheets/plates cleared independently are correctly classifiable under 48081000; alternatively, sub heading 48191090 would also be covered by the exemption; since the applicable duty is the same, the demand in the show cause notice is unsustainable and the impugned order is upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the adjudicating authority's classification of the corrugated sheets under 48081000 and holding that no duty demand is sustainable because either classification yields the same duty outcome and the exemption entry for 481910 covers the relevant items.

Classification as compressed air versus synthetic/zero air - commercial and technical use in laboratories affecting classification - suppression of facts justifying invocation of extended period - applicability of tribunal precedent to factual matrix

Classification as compressed air versus synthetic/zero air - commercial and technical use in laboratories affecting classification - Whether the product cleared as 'Zero Air' during December 2002 to June 2007 is classifiable as compressed air under Chapter heading 2851 or as a mixture of gases under Chapter heading 2804. - HELD THAT: - The Tribunal found that while the manufacturing processes for Zero Air (compressed and purified natural air) and Synthetic Air (mixture of separated gases) differ, the determinative factor for classification was the product as actually used and represented to customers. Unchallenged statements recorded from customers disclosed that the gas purchased from the appellant was used for Gas Chromatograph tests and had a composition consistent with Synthetic/Zero Air (78% Nitrogen, 20.8% Oxygen, 1.2% Argon) and could not be substituted by ordinary compressed air. No cross-examination was sought and these statements were not disputed before the authorities below. On that factual matrix the Tribunal concluded that the gas cleared was not ordinary compressed air but Zero/Synthetic Air and is classifiable under Chapter Heading 2804, attracting duty as held in the impugned order. [Paras 6, 8, 11]

The Zero Air cleared in the period in question is classifiable under Chapter Heading 2804 and not under Chapter Heading 2851; the appeal on classification is dismissed.

Applicability of tribunal precedent to factual matrix - Whether the tribunal's decision in Indian Oxygen Ltd. is applicable to the present facts to support classification as compressed air. - HELD THAT: - The Tribunal held that the ratio in Indian Oxygen Ltd. was inapposite because, unlike the present case, the customers in that earlier decision were not examined and there were no recorded statements indicating that the product could not be used in laboratory Gas Chromatograph tests. Given the presence of unchallenged customer statements in the present proceedings showing the product's distinct laboratory use, the precedent could not be applied to override the factual finding that the gas in question was Zero/Synthetic Air. [Paras 9]

The precedent relied upon by the appellant (Indian Oxygen Ltd.) does not apply to the present case.

Suppression of facts justifying invocation of extended period - Whether invocation of the extended period for assessment/demand was justified in the light of suppression of facts by classifying Zero Air under Chapter Heading 2851. - HELD THAT: - The Tribunal found that classification of Zero Air under Chapter Heading 2851 by the appellant involved suppression of facts, particularly given the customers' statements about the product's composition and use which were not disclosed or disputed. The finding that the appellant subsequently accepted the Revenue's classification from July 2007 by discharging duty for such clearances supported the conclusion that extended period invocation was justified. [Paras 10]

Invocation of the extended period was justified.

Final Conclusion: The appeal is dismissed; the impugned order confirming duty, interest and penalty for Zero/Synthetic Air cleared during December 2002 to June 2007 under Chapter Heading 2804 is upheld, and invocation of the extended period is justified.

Eligibility of input service for Cenvat credit - place of removal / delivery as completion of sale - FOR / DDP delivery terms and seller's obligation up to buyer's premises - inclusion of transit and incidental storage charges in assessable value - incidental storage during transit as part of outward transportation - distinguishing earlier precedents in light of subsequent High Court decisions

Eligibility of input service for Cenvat credit - place of removal / delivery as completion of sale - incidental storage during transit as part of outward transportation - inclusion of transit and incidental storage charges in assessable value - Whether godown rent and expenses for security personnel incurred for temporary storage of tyres en route to the OEM, prior to delivery at the OEM's premises, qualify as eligible input services for Cenvat credit. - HELD THAT: - The Tribunal found on the terms of the purchase orders that supplies to OEMs were on DDP/ FOR basis and the sale was complete only on delivery at the OEM's factory; ownership and risk remained with the seller until such delivery. Situations requiring temporary storage in godowns arose as a necessary incident of transportation and to comply with strict delivery schedules; such storage formed part of the outward transportation obligations of the seller. Because the freight/transportation and related costs up to delivery at the buyer's premises were included in the assessable value and duty was paid accordingly, services comprising godown rent and security incurred prior to delivery qualify as input services. Earlier contrary authorities were held distinguishable in view of subsequent decisions of the Gujarat High Court upholding this approach. On these grounds the impugned orders denying credit were set aside and credit allowed. [Paras 5, 6, 7, 8]

Godown rent and security charges incurred for temporary storage en route to OEMs, until delivery at the OEM's premises, are eligible input services for Cenvat credit; impugned orders set aside and appeals allowed.

Final Conclusion: Appeals allowed; the Tribunal held that where contracts require delivery at the OEM's premises (DDP/ FOR terms) and costs up to that delivery are includible in assessable value, incidental godown rent and security charges during transit are admissible as input services and Cenvat credit is entitled.

Specific performance - Alternative relief - recovery of earnest money - Fraudulent execution of document / fabrication of agreement - Concurrent findings - perversity standard for interference under Article 136

Specific performance - Readiness and willingness to perform - Entitlement of the plaintiff to a decree for specific performance of the agreement to sell. - HELD THAT: - The Court examined the terms of the disputed agreement, the surrounding circumstances and the plaintiff's evidence. Noting that (i) the agreement bore large blank spaces on the first two pages with signatures/thumb impression only on the last page, (ii) the plaintiff admitted possession was not delivered, (iii) the plaintiff did not seek departmental permission as required for a government employee and did not show payment in tax returns, and (iv) the plaintiff did not bring or offer the balance consideration to the Sub Registrar on the appointed date, the Court found the agreement to be highly suspicious and that the plaintiff's case as to execution and performance of the agreement lacked credibility. On that basis the Court held that the plaintiff was not entitled to specific performance. [Paras 28, 31, 32, 34, 36]

The plaintiff is not entitled to specific performance; the agreement is unreliable and does not justify a decree of specific performance.

Alternative relief - recovery of earnest money - Characterisation of transaction (loan v. sale) - Whether the plaintiff was entitled to recover the earnest money (alternative relief) and whether the transaction should be characterised as a loan or sale. - HELD THAT: - Although the trial Court had characterised the transaction as a loan and awarded refund of the earnest money with interest, the Supreme Court re appreciated material aspects of the document and evidence and concluded that the plaintiff's account of payment and the provenance of the document were flawed. The Court observed absence of any credible testimony of offering or tendering of the balance consideration, the suspicious manner of preparation of the agreement (blank pages, pre taken thumb impression), and other admissions of the plaintiff which undermined the claim. These factors led the Court to conclude that the case was a product of fraud and concoction, rendering the alternative relief findings of the Courts below untenable. [Paras 30, 32, 33, 34, 36]

The award of refund/recovery based on the impugned agreement cannot be sustained in view of the finding that the case is vitiated by fraud and concoction.

Concurrent findings - perversity standard for interference under Article 136 - Whether this Court should interfere with the concurrent findings of fact recorded by the trial court, first appellate court and High Court under Article 136. - HELD THAT: - Applying settled principles governing interference under Article 136, the Court acknowledged that concurrent findings are normally binding unless shown to be perverse, based on no evidence, reached by ignoring material evidence, or otherwise such that no reasonable judge could have arrived at them. Having identified material factual aspects that were overlooked or glossed over by the courts below (notably the suspicious document features, absence of proof of tender/offer of balance consideration, and admissions by the plaintiff), the Court concluded that the concurrent findings suffered from perversity on the face of the record and warranted interference in the interest of justice. [Paras 22, 23, 36, 37, 38]

The concurrent findings are perverse and liable to be interfered with under Article 136; interference is justified in the facts of this case.

Final Conclusion: The appeal is allowed. The judgments and decree of the trial Court, the First Appellate Court and the High Court are quashed and set aside on the ground that the case was vitiated by fabrication/fraud and the concurrent findings below were perverse; decree to be prepared accordingly; no order as to costs.

Undervaluation of auction upset price - failure to follow prescribed auction procedure - mala fide in auction process - laches and delay in seeking writ relief - accrual and protection of third-party rights - bona fide purchaser for value - exercise of powers under Article 142 for complete justice

Undervaluation of auction upset price - failure to follow prescribed auction procedure - laches and delay in seeking writ relief - accrual and protection of third-party rights - Whether the appellant could impugn the auction sale on grounds of undervaluation and procedural lapses after finalisation of the sale. - HELD THAT: - The Court held that, notwithstanding possible infirmities in valuation or imperfect compliance with procedural formalities, the appellant slept on its rights and failed to challenge the e auction notice promptly. The appellant had notice of the upset price and did not object when the e auction notice was published, and it only approached the court after finalisation of sale and after third party rights in favour of the purchaser had accrued. A writ court does not ordinarily entertain belated challenges by litigants who approach it tardily; where a party allows the auction process to complete and third party rights to crystallise, relief is ordinarily barred by that conduct. For these reasons the Court declined to unsettle the sale on the appellant's procrastination and conduct. [Paras 30, 33]

The challenge to the auction sale on grounds of undervaluation and procedural non compliance was rejected on grounds of laches and protection of accrued third party rights; the sale was not set aside on that ground.

Mala fide in auction process - bona fide purchaser for value - Whether the auction process was vitiated by mala fide or improper favour to respondent no.6. - HELD THAT: - The Court observed that allegations of mala fide were unsupported and that the High Court had recorded absence of mala fide. It noted the settled principle that courts should be cautious in adjudicating mala fide allegations, particularly where persons against whom mala fides are alleged are not made parties. The respondent no.6 was a statutory body and was a bona fide purchaser who participated in an open bidding process and emerged as the highest bidder. The appellants' contentions of deliberate favouritism were held to be unsubstantiated on the record. [Paras 22, 23]

Allegations of mala fide were rejected; the purchaser was treated as a bona fide purchaser and the sale was not vitiated for mala fide.

Exercise of powers under Article 142 for complete justice - Whether the Court should exercise its power under Article 142 to do complete justice between the parties despite upholding the sale. - HELD THAT: - Although the Court declined to interfere with the sale, it invoked Article 142 to fashion equitable relief between the parties. Having regard to the appellant's admitted claim as quantified in the award, and the need to do complete justice in the circumstances where the purchaser acquired the property and third party rights had crystallised, the Court directed the purchaser (respondent no.6) to pay to the appellant the sum quantified by the dispute award as full and final settlement of the dues, to be paid within a stipulated period, with provision for simple interest on default. The Court also directed residual balance with the Liquidator to be disbursed as per priority, and if other creditors had been paid, the remaining balance could be applied in favour of the appellant. [Paras 34, 35]

Under Article 142 the Court directed respondent no.6 to pay the appellant the awarded sum as full and final settlement within three months, with interest on default; residual balance with the Liquidator to be dealt with as indicated.

Final Conclusion: The appeal against the High Court judgment was dismissed on the principal ground of the appellant's delay and the protection of accrued third party rights; no mala fide was found. In exercise of Article 142 the Court, while upholding the sale, directed the purchaser to remit the quantified dues to the appellant within a specified period (with interest on default) and provided for distribution of any remaining liquidator balance as indicated.

Limited judicial intervention in arbitration - scope of interference under Section 34 - appellate power under Section 37 - public policy of India - finality of arbitral award - no reappraisal of evidence by courts

Appellate power under Section 37 - scope of interference under Section 34 - limited judicial intervention in arbitration - no reappraisal of evidence by courts - Whether the Appellate Court under Section 37 was entitled to set aside an arbitral award already upheld under Section 34 without recording a finding of illegality as envisaged by Section 34. - HELD THAT: - The Court held that the appellate jurisdiction under Section 37 is confined to the ambit of Section 34 and is not a plenary appellate review of the merits. Intervention by an appellate court is permissible only to examine whether the court exercising power under Section 34 acted within its statutory limits or exceeded or failed to exercise them. The appellate court has no authority to reappraise evidence or substitute its view merely because it considers an alternative view preferable; such reappraisal would frustrate the object of the Act of minimal court intervention and finality of awards. Consequently, setting aside an award on merits without demonstrating that the award suffered from any ground of illegality under Section 34 amounts to manifest error of law. [Paras 8, 16, 20, 23]

The appellate court exceeded its limited jurisdiction under Section 37 by setting aside the award without any finding of illegality under Section 34, and that exercise of power was erroneous.

Public policy of India - finality of arbitral award - no reappraisal of evidence by courts - Whether the arbitral award dated 08.11.2012 was liable to be set aside on grounds of public policy or other illegality. - HELD THAT: - The Court found that the award was based on evidence and was reasonable. It was not shown to be contrary to the public policy of India, to the fundamental policy of Indian law, to basic notions of morality and justice, or to any substantive provision of the Act or the contract. In view of the narrow scope of judicial interference, an award not shown to suffer from the statutory grounds for setting aside must be respected and enforced. Therefore the earlier confirmation of the award under Section 34 was correct and could not be displaced by the appellate court in the absence of a demonstrated ground under Section 34. [Paras 5, 22, 24]

The arbitral award was not contrary to public policy or otherwise illegal and was rightly upheld under Section 34; it is restored and to be implemented.

Final Conclusion: The High Court's judgment under Section 37 setting aside the Section 34 order and the arbitral award was set aside; the arbitral award dated 08.11.2012, having been validly upheld under Section 34 and not shown to suffer any statutory illegality, is restored for implementation.

Mandatory state-wise GST/Trade Tax registration for bidding - Distinction between empanelment and eligibility to bid - Author of tender document as primary interpreter of tender terms - No concluded contract until issuance of Release Order - Judicial restraint in interference with tendering process absent mala fides or arbitrariness - Requirement of proper pleadings and affidavit in writ proceedings

Mandatory state-wise GST/Trade Tax registration for bidding - Whether GST/Trade Tax registration in the State of Assam was mandatory for participation in the NIT dated 07.07.2023 and whether cancellation of bids for lack thereof was justified. - HELD THAT: - Clause 6 of the NIT requires PAN as a unique identifier and expressly mandates that bidding would be allowed in a State against the GST/Trade Tax registration registered in that State only, and that a bidder registered in another State may participate for that State's stocks only if it has a separate registration for that State. The Court found that this clause is mandatory and not challenged. It was admitted none of the petitioners had GST registration in Assam, though they had registration in West Bengal. The Court held empanelment on the M. Junction platform does not cure non-compliance with the specific tender condition requiring state-wise GST registration for bidding. The Ministry of Finance notification of 17.07.2022 confirms wheat is covered under GST, negating the petitioners' argument of exemption. The respondent's action in cancelling bids for the absence of Assam GST registration was therefore in accordance with the tender terms and not susceptible to challenge on that ground. [Paras 12, 13, 14, 15, 16]

The requirement of GST/Trade Tax registration in the State of Assam for participating in the tender was mandatory and cancellation of bids for lack of such registration was justified.

Distinction between empanelment and eligibility to bid - Whether empanelment on the M. Junction platform without GST registration in the concerned State renders a bidder eligible to participate in the State-specific e-auction. - HELD THAT: - The Court noted empanelment on the e-platform facilitates online participation but does not conclusively determine eligibility under a particular tender. Eligibility must be judged by the conditions set out in the NIT. Communications relied upon by petitioners related to empanelment requirements and did not alter or override the explicit state-specific GST requirement of the NIT. Consequently, empanelment absent the requisite State GST registration does not confer entitlement to bid for stocks of that State. [Paras 15]

Empanelment alone did not make the petitioners eligible to bid in Assam without Assam GST registration.

No concluded contract until issuance of Release Order - Whether a concluded contract arose upon system-generated acceptance of offer or whether a Release Order was a prerequisite to a binding contract. - HELD THAT: - The respondent explained that the system-generated acceptance is sent after bidding but that further verification at the Divisional Office level is required before issuance of a Release Order, and only upon issuance of the Release Order would a binding contract arise. The impugned cancellations were effected prior to any Release Order being issued. The Court accepted this process distinction and held that no concluded contract had crystallised at the stage when bids were cancelled. [Paras 17]

No concluded contract had arisen prior to issuance of a Release Order; cancellation before a Release Order did not violate a concluded contract.

Author of tender document as primary interpreter of tender terms - Judicial restraint in interference with tendering process absent mala fides or arbitrariness - Whether the Court should interfere with the Corporation's interpretation and application of the tender condition requiring state-wise GST registration. - HELD THAT: - Relying on settled principles that the author of tender documents is best placed to interpret them, the Court observed that interference is warranted only where the decision is mala fide, perverse or so arbitrary that no reasonable authority could have reached it. The petitioners did not establish mala fide or arbitrariness in the Corporation's application of Clause 6. The incidental reference to a lapse in Jharkhand was treated as an inadvertent error and not a precedent obliging the Corporation to follow the same in Assam. Given the absence of mala fides and that the interpretation aligned with the tender language, judicial restraint was applied. [Paras 18, 20]

The Corporation's interpretation and application of the tender condition warranted deference; no interference was called for.

Requirement of proper pleadings and affidavit in writ proceedings - Whether the writ petition was maintainable in view of defects in pleadings, common court-fee payment and deficiencies in the affidavit and disclosure of addresses. - HELD THAT: - The Court recorded that nine petitioners joined in a single petition though their causes of action, while similar, were independent. Only one petition's Court-fee was paid. The petition recited identical, vague addresses for all petitioners notwithstanding documents showing registered offices in West Bengal. The affidavit was signed by a deponent claiming to be Director of petitioner no.1 without a statement of authorization from other petitioners; annexed certificates were insufficient in the absence of an authorization statement in the affidavit. The Court noted the paramount importance of proper affidavits in writ proceedings where evidence and cross-examination are ordinarily not available, and found the pleadings and affidavits deficient. [Paras 22, 23, 24]

The petition suffered from material procedural and affidavit deficiencies rendering it improper for relief.

Final Conclusion: The writ petition was dismissed: the Court upheld the NIT requirement of state-wise GST registration and the cancellations for lack of Assam GST were justified; empanelment did not cure non-compliance; no binding contract had arisen prior to a Release Order; and the petition was procedurally defective.