TaxTMI Updates e-Newsletter
Oct 04,2022

Exemption under Notification No.99/2011-Cus - classification under tariff heading 9806 00 00 for goods originating in Pakistan - burden of proof for claiming exemption - continuous chain of documentary evidence linking export and import - Bill of Lading as document of title - power to grant exemption under section 25 of the Customs Act - emergency increase of import duties under section 8A of the Customs Tariff Act

Continuous chain of documentary evidence linking export and import - Bill of Lading as document of title - exemption under Notification No.99/2011-Cus - classification under tariff heading 9806 00 00 for goods originating in Pakistan - burden of proof for claiming exemption - Whether the imported Colchicum was of Afghanistan origin transiting through Pakistan (entitling the importer to exemption under Notification No.99/2011-Cus) or was exported from Pakistan and hence classifiable under tariff heading 9806 00 00 and chargeable to duty at 200%, and whether the appellant discharged the burden of proof for claiming the exemption. - HELD THAT: - The Tribunal examined documentary links between the exporter's invoice and origin certificates on one hand and the Bill of Lading and Bill of Entry on the other. The Bill of Lading, being the shipping line's receipt and document of title, correctly records the port and particulars from the point the carrier received the goods and therefore could legitimately show Karachi as the Port of Loading even though the goods originated in Afghanistan and were transported under customs bond through Pakistan. The determinative question is the existence of a continuous chain of documents establishing that the goods exported under the commercial invoice and country of origin/transit documents are the same goods reflected in the Bill of Lading and imported by the Bill of Entry. The Tribunal found that the Goods Declaration (GD-1/Transhipment Permit) filed before Pakistan Customs, with an examination report linking the truck number, seal number and container number, provided that missing link by showing that the 505 bags loaded from Afghanistan under Pakistan customs bond were examined at Karachi and permitted to be stuffed into the container described in the Bill of Lading. Suspicion arising from same-date issuance of exporter invoice, country of origin and transit certificates was rejected as unsound, as was the contention that Indian Customs could require Pakistan Customs endorsement on documents issued by Afghan authorities. The absence of a place-of-receipt entry in the Bill of Lading did not negate the link proved by the Pakistan Customs examination report. On these findings the appellant discharged the evidentiary burden to show Afghanistan origin and transit through Pakistan rather than export from Pakistan. [Paras 15, 17, 18, 19, 20]

The documentary chain establishes Afghanistan origin and transit through Pakistan; the appellant discharged the burden to claim the exemption and is entitled to relief.

Final Conclusion: Appeal allowed; the impugned order denying exemption, demanding differential duty, and sustaining confiscation/penalties set aside with consequential relief to the appellant.

Condition No. 104 - exemption notification granting nil rate to aircraft for non-scheduled services - non-scheduled (passenger) services - non-scheduled (charter) services - undertaking at time of import - NSOP (passenger) permit issued by DGCA - scope of customs authority to examine DGCA permit and enforcement of undertaking - confiscation and redemption under section 125 of the Customs Act

Condition No. 104 - non-scheduled (passenger) services - non-scheduled (charter) services - undertaking at time of import - NSOP (passenger) permit issued by DGCA - Whether the appellant violated Condition No. 104 of the exemption notification so as to forfeit the nil rate benefit on import of Aircraft BRT. - HELD THAT: - The Tribunal, following its Larger Bench, held that Condition No. 104 was not violated. The Larger Bench construed Condition No. 104 and its Explanation to mean that services falling within the statutory definition of "air transport service" other than scheduled (passenger) services qualify as NSOP (passenger) services, and that NSOP (passenger) covers charter operations including hire of the entire aircraft. There is no requirement in Condition No. 104 or the definition to have a published tariff or to operate on a per-seat ticketing basis; therefore absence of a published tariff or issuance of individual tickets does not vitiate the exemption. The use of the aircraft for remuneration and in accordance with the DGCA permit (NSOP) satisfies the undertaking given at import. Further, mere provision of flights to group companies or occasional flights without separate contracts does not convert the aircraft into a private aircraft or remove it from the scope of non-scheduled (passenger) service. Finally, the Customs Authority cannot independently re examine or overturn the validity of the DGCA permit: action under the undertaking based on import-time assurances can be taken by Customs only when DGCA itself holds that the permit conditions have been violated.

Condition No. 104 was not contravened and the appellant was entitled to the benefit of the exemption notification in respect of Aircraft BRT.

Confiscation and redemption under section 125 of the Customs Act - scope of customs authority to examine DGCA permit and enforcement of undertaking - Whether the confiscation of Aircraft BRT with option of redemption on payment and the confirmed duty/penalty could be sustained. - HELD THAT: - Having found no breach of Condition No. 104 and that the aircraft was used in accordance with the DGCA NSOP for remunerative services, the Tribunal held that the Commissioner's confirmation of duty, imposition of penalty and order of confiscation with option of redemption could not be sustained. The Tribunal relied on the principle that Customs cannot proceed to enforce the undertaking or demand duty on the basis of its own independent reassessment of the DGCA permit where DGCA has not cancelled or held non-compliance; consequently the impugned demand, penalty and confiscation order fall to be set aside.

The confirmation of demand, penalty and confiscation with option of redemption was set aside; the appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that Condition No. 104 of the exemption notification was not violated and, accordingly, quashed the confirmation of duty, penalty and confiscation/ redemption order in respect of Aircraft BRT.

Exemption on re-import of goods - claim for refund of integrated tax (IGST) on export - effect of erroneous declaration in shipping bill - absence of actual payment or receipt of IGST - classification under Notification No.45/2017-Customs - no revenue loss as determinative of liability - penalty under the Customs Act

Exemption on re-import of goods - claim for refund of integrated tax (IGST) on export - effect of erroneous declaration in shipping bill - absence of actual payment or receipt of IGST - Whether the appellant was entitled to exemption on re-import under Sl.No.5 of the Table to Notification No.45/2017-Customs despite the shipping bill incorrectly recording that IGST was paid/claimed for refund. - HELD THAT: - The Tribunal found as an admitted fact that the appellant had exported jewellery for self-exhibition and that no sale occurred; IGST was neither paid nor was any refund actually claimed or received (the entry in the shipping bill was an error). Notification No.45/2017-Customs differentiates re-import treatments depending on whether IGST refund had been availed at export. Because no IGST payment/refund was in fact effected, the appellant properly fell within the category of goods covered by Sl.No.5 of the Table, and not Sl.No.1(c). The Tribunal treated the erroneous mention in the shipping bill as immaterial in view of the factual finding of non-payment/non-receipt of IGST and the absence of revenue involvement, allowing the appeal on this ground. [Paras 12]

Appellant entitled to exemption under Sl.No.5 of the Table to Notification No.45/2017-Customs; the error in the shipping bill did not attract treatment under Sl.No.1(c) where no IGST was paid or refunded.

No revenue loss as determinative of liability - penalty under the Customs Act - Whether the demand, interest and penalty confirmed by the adjudicating authority should be sustained in the factual matrix of no actual IGST payment and no revenue loss. - HELD THAT: - The adjudicating authority had confirmed demand and imposed a penalty after proposing confiscation; however, the Tribunal recorded that there was no actual payment of IGST and no revenue loss arising from the export-re-import transactions. Given the factual conclusion that the entire exercise was academic and did not occasion any revenue shortfall, the Tribunal found the confirmations and penalty unsustainable. Consequently, the appellate relief was granted and the impugned order set aside, with consequential benefits to the appellant. [Paras 7, 12]

Demand, interest and penalty set aside as no revenue loss had occurred; impugned adjudicating order vacated.

Final Conclusion: Appeal allowed; impugned order set aside on the finding that no IGST was paid or refunded and no revenue loss occurred; appellant entitled to consequential benefits.

Penalty under Section 114 of the Customs Act - Reliability of third-party statement as evidence - Requirement of examination under Section 138B of the Customs Act - Need for corroborative evidence to sustain penalty

Penalty under Section 114 of the Customs Act - Reliability of third-party statement as evidence - Requirement of examination under Section 138B of the Customs Act - Need for corroborative evidence to sustain penalty - Whether the penalty under Section 114 imposed on the appellant was justified in the absence of corroborative evidence and without examination of the witness whose statement formed the basis of the case - HELD THAT: - The Tribunal found that the Revenue's case against the appellant rested solely on the statement of the person from whose possession the currency was recovered. That statement amounted to third party evidence and remained uncorroborated by any other material. Crucially, the person whose statement formed the foundation of the case was not examined during adjudication proceedings as required by Section 138B of the Customs Act. In the absence of his examination and of any independent corroborative evidence linking the appellant to the alleged violation, the statement could not be treated as reliable for the purpose of imposing penalty under Section 114. Having regard to these defects in proof, the Tribunal concluded that penalty could not be sustained against the appellant. [Paras 17]

Penalty imposed under Section 114 on the appellant is set aside for want of reliable and corroborative evidence and failure to examine the material witness as required by law.

Final Conclusion: The appeal is allowed insofar as the appellant is concerned; the penalty under Section 114 imposed on the appellant is set aside and the appellant is entitled to consequential benefits.

Locus standi to challenge striking off of company name - striking off of company name by Registrar of Companies under Section 560(5) of the Companies Act, 1956 - restoration of company name - defunct company status by reference to paid-up capital and Section 3 of the Companies Act, 1956 - reliance on Registrar of Companies' records in determining status

Locus standi to challenge striking off of company name - reliance on Registrar of Companies' records in determining status - The appellant has no locus to seek restoration of the company's name because he was not shown in the Registrar's records as a director, member or creditor at the time of striking off. - HELD THAT: - The Division Bench of the High Court relied upon the admitted records maintained by the Registrar of Companies which did not show any nexus of the appellant with the company as on the date of striking off; the appellant's alleged documentary evidence of directorship post-dating the striking off was contested and insufficient to establish his status. The Court held that Section 560 does not empower the court to adjudicate disputes as to a person's status as director or member and that such disputes must be resolved in an appropriate forum; accordingly, the learned Single Judge erred in restoring the company's name at the instance of a person whose identity vis-a -vis the company was not established on the Registrar's records. [Paras 6, 11]

The finding of the High Court that the appellant lacked locus standi was upheld and not interfered with.

Restoration of company name - defunct company status by reference to paid-up capital and Section 3 of the Companies Act, 1956 - There was no reason to restore the company's name in the circumstances, having regard to the company's defunct status and the long lapse of time since striking off. - HELD THAT: - The Court noted the last balance sheet showing very low paid-up capital, which under the statutory scheme renders the company a defunct company, and observed that the name had been struck off in 2006 with no operations thereafter; sixteen years having elapsed and the appellant's documents being disputed, the Court found no justification to direct restoration of the company's name. Taking these material facts together with the Division Bench's findings, the Supreme Court found no reason to interfere with the order dismissing restoration. [Paras 7, 10, 12]

The appellate challenge to the Division Bench's refusal to restore the company's name was dismissed.

Final Conclusion: The appeal is dismissed; the Supreme Court declined to interfere with the High Court's finding that the appellant lacked locus and with the conclusion that there was no justification for restoration of the company's name, and the order restoring the company's name was set aside.

Jurisdiction of NCLT/NCLAT under Section 60(5)(c) of the IBC - moratorium under Section 14 and Section 33(5) of the IBC - proceedings under the SARFAESI Act against a personal guarantor - rights of a surety/guarantor and subrogation under Section 140 of the Indian Contract Act - definition and inclusion in the liquidation estate and list of creditors under Section 36 and Section 38 of the IBC - overriding effect of the IBC (Section 238) vis-a -vis other statutes including the Indian Contract Act

Jurisdiction of NCLT/NCLAT under Section 60(5)(c) of the IBC - proceedings under the SARFAESI Act against a personal guarantor - Maintainability of an application by a third party personal guarantor under Section 60(5) of the IBC in respect of SARFAESI recovery proceedings. - HELD THAT: - The Tribunal examined whether Section 60(5)(c) confers jurisdiction to entertain disputes that do not arise solely out of or in relation to the insolvency or liquidation of the corporate debtor. Applying the caution in Gujarat Urja (and Arcelor Mittal as considered therein), the court held that Section 60(5)(c) is to be invoked only where the question of law or fact arises out of or relates to the insolvency resolution or liquidation proceedings. Proceedings under the SARFAESI Act against a personal guarantor for recovery are independent recovery proceedings and, on the facts, did not arise solely from the corporate insolvency; therefore the Adjudicating Authority rightly held the application to be not maintainable under Section 60(5). The conclusion to uphold the Adjudicating Authority on maintainability is confirmed. [Paras 44, 45, 46, 47, 48]

Application under Section 60(5) was not maintainable: the Adjudicating Authority correctly dismissed the interlocutory application.

Moratorium under Section 14 and Section 33(5) of the IBC - proceedings under the SARFAESI Act against a personal guarantor - Whether the moratorium under the IBC (during CIRP or after liquidation) bars recovery proceedings under the SARFAESI Act against a personal guarantor. - HELD THAT: - The court considered the text and scope of Section 14 and Section 33(5). Section 14 and Section 33(5) prohibit suits or proceedings against the corporate debtor; by contrast sub section (3) of Section 14 (as amended) excludes a surety in a contract of guarantee from the moratorium's application. The moratorium therefore interdicted proceedings only against the corporate debtor and not against third parties such as a personal guarantor. Consistent authority (including the Delhi High Court and Supreme Court precedents discussed) and legislative history were applied to conclude that SARFAESI proceedings against a personal guarantor are not barred by the moratorium imposed in respect of the corporate debtor. [Paras 51, 52, 53, 54, 55]

Moratorium under Section 14 or Section 33(5) does not bar recovery proceedings under the SARFAESI Act against a personal guarantor; the Adjudicating Authority's finding is sustained.

Rights of a surety/guarantor and subrogation under Section 140 of the Indian Contract Act - definition and inclusion in the liquidation estate and list of creditors under Section 36 and Section 38 of the IBC - overriding effect of the IBC (Section 238) vis-a -vis other statutes including the Indian Contract Act - Whether the personal guarantor is entitled to be treated as a secured creditor in the liquidation process and the interplay between Section 140 Indian Contract Act and the IBC (including the overriding effect of the IBC). - HELD THAT: - The Tribunal accepted that upon payment a guarantor acquires the rights of the creditor by subrogation under Section 140 of the Indian Contract Act, and thus may claim as a creditor to recover amounts paid. However, to be a 'secured creditor' under the IBC a security interest as defined in Section 3(31) must exist in favour of that person; personal subrogation does not automatically create a security interest in the guarantor's favour. Section 36(4) excludes third party personal assets from the liquidation estate. The court further applied binding Supreme Court authority that the IBC, via its non obstante clause, overrides inconsistent provisions of other laws. Consequently, while the guarantor can seek to claim as a creditor (subject to Sections 38/39 and limitation), he cannot be treated as a 'secured creditor' in the liquidation estate absent a security interest created in his favour. [Paras 72, 78, 79, 80, 82]

The guarantor may claim as a creditor by virtue of Section 140 of the Indian Contract Act but cannot be included as a 'secured creditor' in the liquidation process where no security interest in his favour exists; the IBC prevails over inconsistent provisions of the Indian Contract Act.

Final Conclusion: The appeal is dismissed. The NCLT/NCLAT correctly held that (i) a third party personal guarantor cannot maintain an application under Section 60(5) in respect of independent SARFAESI recovery proceedings; (ii) the moratorium in respect of the corporate debtor does not bar SARFAESI proceedings against a personal guarantor; and (iii) a guarantor who pays may claim as a creditor under general law (Section 140 Indian Contract Act) but cannot be treated as a 'secured creditor' in the liquidation estate absent a security interest; the IBC overrides inconsistent provisions of the Indian Contract Act.

Approval of Resolution Plan binding on stakeholders - Clean slate principle - Determination and verification of claims by the Resolution Professional - Requirement of documentary evidence for operational creditor claims - Contingency Fund in a Resolution Plan - Time limit for filing claims under CIRP Regulations

Determination and verification of claims by the Resolution Professional - Requirement of documentary evidence for operational creditor claims - Approval of Resolution Plan binding on stakeholders - Clean slate principle - Resolution Professional was justified in rejecting the Appellant's claims for want of adequate documentary proof and verification. - HELD THAT: - The Tribunal found that the Appellant failed to furnish the documentary evidence requested by the Resolution Professional to substantiate the alleged operational debt as required for verification. In light of Section 9(3) requirements and the role of the Resolution Professional to invite, assess and verify claims during CIRP, the adjudicatory findings that the claims were unsupported were held to be unimpeachable. The Tribunal applied the binding effect of an approved resolution plan and the 'clean slate' principle, as explained in Ghanashyam Mishra, observing that post-approval surprise or undecided claims cannot be allowed to be imposed on the successful resolution applicant. Having regard to the statutory scheme and appellate precedents limiting late or unverified claims, the Tribunal upheld the Adjudicating Authority's decision to reject the Appellant's claims for lack of proper documentation and verification.

The rejection of the Appellant's claims for being unsupported by adequate documentary evidence and for being unverified was upheld.

Contingency Fund in a Resolution Plan - Approval of Resolution Plan binding on stakeholders - Time limit for filing claims under CIRP Regulations - Clean slate principle - Relief for payment from the Contingency Fund was not admissible after the contingency period and after full implementation of the Resolution Plan. - HELD THAT: - The Tribunal accepted that a Contingency Fund is a temporary provision in a resolution plan to meet contingent or inevitable liabilities during a stipulated period. Here the contingency provision was confined to six months from plan approval, which had expired and, on the implementation report, no funds remained payable. The Tribunal noted that once the resolution plan is implemented, the monitoring committee ceases and the successful resolution applicant takes over; post-implementation claims outside the contingency window cannot be entertained without undermining the binding effect of the approved plan. Having regard to Regulation 14 (estimation of contingent claims), Regulation 37 (contents of resolution plan), the CIRP time limits, and the clean-slate doctrine, the Tribunal sustained the Adjudicating Authority's refusal to direct payment from the contingency fund.

The claim for payment from the contingency fund was inadmissible and the Adjudicating Authority's refusal to grant relief from that fund was upheld.

Final Conclusion: The Tribunal dismissed the appeal, sustaining the Adjudicating Authority's order: the Resolution Professional was correct to reject the unverified, undocumented claims and the Appellant was not entitled to payment from the contingency fund after its stipulated period and after implementation of the approved resolution plan.

Corporate Insolvency Resolution Process - Committee of Creditors voting share - insolvency resolution process costs - fees of Interim/Resolution Professional - Rule 112 of NCLT Rules, 2016 - fee exemption for officers acting on behalf of Central Government - CBIC Master Circular on Recovery and Write-off of Arrears of Revenue - IBC as a complete code and non-obstante clause in Section 238 of the IBC - Adjudicating Authority's power to direct conduct of CIRP and recovery of CIRP costs

Rule 112 of NCLT Rules, 2016 - fee exemption for officers acting on behalf of Central Government - CBIC Master Circular on Recovery and Write-off of Arrears of Revenue - insolvency resolution process costs - fees of Interim/Resolution Professional - IBC as a complete code and non-obstante clause in Section 238 of the IBC - Whether the Central Government department (the Appellant) is exempted from payment of fees of the Resolution Professional and CIRP costs by virtue of Rule 112 of the NCLT Rules, 2016 or the CBIC Master Circular. - HELD THAT: - The Tribunal held that the exemption in Rule 112 of the NCLT Rules, 2016 relates to fees payable to the Tribunal for petitions, applications and documents and does not encompass insolvency resolution process expenses or the fees of the Interim/Resolution Professional, which are defined and governed under the IBC and CIRP Regulations. The CBIC Master Circular was examined and found not to prescribe treatment of CIRP costs or RP fees; in any event, the IBC being a complete code and containing a non-obstante clause in Section 238, its provisions and the CIRP Regulations governing payment and allocation of insolvency resolution costs prevail over the Master Circular. Consequently, neither Rule 112 nor the CBIC circular exempts the Central Government department from bearing CIRP costs or RP fees as per the IBC framework. [Paras 10, 11, 12]

The Appellant is not exempted from payment of the Resolution Professional's fees or CIRP costs under Rule 112 of the NCLT Rules or the CBIC Master Circular; IBC and CIRP Regulations govern recovery of such costs.

Committee of Creditors voting share - Adjudicating Authority's power to direct conduct of CIRP and recovery of CIRP costs - Corporate Insolvency Resolution Process - Whether the Adjudicating Authority erred in directing the Resolution Professional to proceed with CIRP and directing the Appellant (holding 88% voting share) to participate and contribute to CIRP costs. - HELD THAT: - The Tribunal found that the IRP had validly initiated and conducted the CIRP after admission and appointment, collated claims including the Appellant's, and convened the CoC in accordance with the IBC and CIRP Regulations. The Appellant, though an integral participant, repeatedly abstained or voted against continuance; when a withdrawal resolution failed to secure the requisite 90% vote, the Resolution Professional sought directions to enable the process to proceed. The Adjudicating Authority was within jurisdiction to direct the CIRP to continue and to require CoC members to bear CIRP costs in proportion to their voting shares so that the statutory insolvency process could be effectuated. [Paras 13, 14]

The Adjudicating Authority did not err in directing the Resolution Professional to proceed with the CIRP and in directing the Appellant to take part and contribute to CIRP costs as per voting share.

Final Conclusion: The appeal is dismissed for lack of merit; the orders directing the CoC members to participate in CIRP and to pay CIRP costs and Resolution Professional's fees in accordance with the IBC and voting shares are upheld.

Resolution plan binding on stakeholders (clean slate doctrine) - Extinguishment of claims not part of approved resolution plan - Verification and admission of claims by the resolution professional - Time-limit for filing claims and inadmissibility of claims beyond 90 days - Contingency fund in a resolution plan for contingent/undetermined liabilities - Determination and estimation of contingent claims by the resolution professional

Verification and admission of claims by the resolution professional - Time-limit for filing claims and inadmissibility of claims beyond 90 days - Resolution plan binding on stakeholders (clean slate doctrine) - Resolution Professional was justified in rejecting the appellant's claims as unsupported by requisite documentary evidence and not filed within the prescribed period. - HELD THAT: - The Tribunal examined the appellant's failure to furnish documents requested by the resolution professional during verification and noted that the claim was filed after the statutory outer limit for filing claims. The Tribunal applied the statutory framework requiring proof of operational debt and the Supreme Court's exposition of the 'clean slate' principle that an approved resolution plan freezes and extinguishes claims not part of the plan. In light of the appellant's inability to produce the documents listed by the resolution professional and the legal requirement that claims be submitted and verified during CIRP, the rejection of the claims as unsupported was upheld.

The rejection of the appellant's claims for being unsupported by documentary evidence and for having been filed beyond the permissible period is upheld.

Contingency fund in a resolution plan for contingent/undetermined liabilities - Determination and estimation of contingent claims by the resolution professional - Resolution plan binding on stakeholders (clean slate doctrine) - Relief for payment from the contingency fund was not admissible after expiry of the contingency period and after implementation of the resolution plan. - HELD THAT: - The Tribunal construed the nature and purpose of a contingency fund as a time bound provision in a resolution plan to meet contingent or undetermined liabilities during the specified period. Regulation 14 empowers the resolution professional to estimate contingent claims and Regulation 37 permits inclusion of such provisions in the resolution plan. As the contingency provision was limited to six months from approval and the plan was fully implemented with the monitoring committee and new management having taken charge, the contingency fund ceased to exist and could not be invoked subsequently to entertain belated and unverified claims. The Tribunal therefore found no basis to direct payment from the contingency fund after implementation.

The claim for payment from the contingency fund is not admissible and the Adjudicating Authority's refusal to direct payment is sustained.

Final Conclusion: The Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision to reject the appellant's unverified and belated claims and refusing relief from the contingency fund after expiry and full implementation of the resolution plan; the impugned order is sustained and the appeal fails.

Compliance with public announcement under Regulation 6(1) of CIRP Regulations - declaration and effect of moratorium under Section 14(1) of the Insolvency and Bankruptcy Code - prohibition on institution or continuation of proceedings and enforcement during moratorium - prohibition on encumbering, alienating or disposing of assets during moratorium - locus of a creditor who did not file a claim in CIRP

Compliance with public announcement under Regulation 6(1) of CIRP Regulations - locus of a creditor who did not file a claim in CIRP - Public announcement made by the Resolution Professional and the effect of non-filing of claim by the Municipal Corporation on its standing to object to the Resolution Plan. - HELD THAT: - The Tribunal examined the newspapers in which Form A was published and the material on record and found that the public announcement dated 09.02.2020 was published in an English edition and in a Hindi edition having circulation in the location where the corporate debtor carried material business - specifically including the "Hari Bhoomi" (Hindi, Rohtak Edition). On that basis the publication was held to be in compliance with Regulation 6(1) of the CIRP Regulations. Relying on precedent of coordinate Benches, the Tribunal further recorded that the Resolution Professional is not obligated to intimate each creditor individually; the public notice mechanism invites claims and it is the responsibility of a creditor to file its claim within the prescribed time. Consequently, in absence of any claim filed by the Municipal Corporation during the CIRP, the applicant could not be treated as a stakeholder entitled to object to the Resolution Plan approved by the Committee of Creditors. [Paras 4, 5]

Publication in Form A dated 09.02.2020 complied with Regulation 6(1) and the Municipal Corporation, having not filed a claim, lacked locus to challenge the Resolution Plan on that ground; IA No. 93/2022 dismissed.

Declaration and effect of moratorium under Section 14(1) of the Insolvency and Bankruptcy Code - prohibition on institution or continuation of proceedings and enforcement during moratorium - prohibition on encumbering, alienating or disposing of assets during moratorium - Validity of the municipal order attaching and sealing the corporate debtor's property issued during the moratorium and whether such action violated Section 14(1) of the IBC. - HELD THAT: - The Tribunal noted that the insolvency commencement date and the moratorium were in effect from 07.02.2020. The impugned order dated 18.11.2020, directing attachment and sealing of the corporate debtor's property and recovery of tax, was passed during the period of declared moratorium. The Tribunal applied Section 14(1) which bars institution or continuation of proceedings and prohibits transferring, encumbering, alienating or disposing of assets of the corporate debtor during moratorium. On that foundation the action of the Municipal Corporation was held to be in direct violation of the moratorium: in the first connected application the enforcement step was found to contravene Section 14(1)(a), and in the resolution-professional's application the attachment and sealing were held to contravene Section 14(1)(b) and the moratorium order. The Tribunal therefore set aside the impugned notice/order passed during the moratorium. [Paras 6, 8, 9]

The order dated 18.11.2020 attaching and sealing the property was in violation of the moratorium under Section 14(1) of the IBC and is set aside; IA No. 837/2020 allowed.

Final Conclusion: The Tribunal held that the public announcement made by the Resolution Professional complied with Regulation 6(1) and, consequently, the Municipal Corporation's objection to the Resolution Plan for lack of notice failed; however, the Municipal Corporation's action of attaching and sealing the corporate debtor's property on 18.11.2020 was passed during the moratorium and violated Section 14(1) of the IBC, and that impugned order/notice is set aside.

Service of demand notice - existence of operational debt and default - dispute under Section 8(2) of the Code - limitation for filing Section 9 application - admission of petition under Section 9 of the Code and initiation of CIRP - moratorium under Section 14 of the Code - appointment of Interim Resolution Professional and duties

Service of demand notice - Demand notice dated 24.04.2019 was validly served on the corporate debtor. - HELD THAT: - The demand notice sent to the registered address as per the corporate debtor's master data was initially returned as 'insufficient address', but the operational creditor filed the undelivered speed post article and thereafter furnished proof of service by email and postal delivery in compliance with directions of the Adjudicating Authority. The Bench held that sending the notice to the address available in the master data constituted proper service and proceeded to issue notice on the respondent. [Paras 6, 10]

Demand notice treated as properly served on the corporate debtor.

Existence of operational debt and default - dispute under Section 8(2) of the Code - The operational debt and default were established and the debt was not shown to be disputed by the corporate debtor. - HELD THAT: - The petitioner produced invoices, ledger statements and a statutory Form 3/4 demand notice. The respondent did not file any reply or furnish any notice disputing the debt under Section 8(2) of the Code. The Tribunal found the liability to be undisputed and the petitioner to have proved debt and default exceeding the statutory threshold (pre-revised). [Paras 11, 13, 14]

Debt and default established; no dispute in terms of Section 8(2) of the Code.

Limitation for filing Section 9 application - The Section 9 application was filed within limitation. - HELD THAT: - The application was filed on 24.07.2019 while the date of default was 11.02.2017. On examining the record, the Adjudicating Authority concluded that the application satisfied the limitation requirement for filing under Section 9 of the Code. [Paras 12]

Application held to be within limitation.

Admission of petition under Section 9 of the Code and initiation of CIRP - The petition under Section 9 of the Code is admitted and CIRP is initiated against the corporate debtor. - HELD THAT: - Having found proper service, established debt and default above the threshold, and no rebuttal by the corporate debtor, the Tribunal held that the conditions of Section 9(5)(i) were satisfied. The petition in Form 5 was complete and admission was ordered for initiation of the Corporate Insolvency Resolution Process. [Paras 13, 16]

Petition admitted and CIRP initiated.

Moratorium under Section 14 of the Code - Moratorium under Section 14 is declared from the date of the order until completion of CIRP or further orders. - HELD THAT: - Upon admission of the petition, the Tribunal imposed the moratorium bars - including institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property occupied by the corporate debtor - and clarified exceptions relating to supply of essential goods/services and transactions as notified by the Central Government. The moratorium's temporal scope was fixed to run till completion of CIRP or until approval of a resolution plan or order of liquidation. [Paras 17, 19]

Moratorium directed to operate from the date of the order until completion of CIRP or further orders.

Appointment of Interim Resolution Professional and duties - Mr. Ashok Kumar Jain is appointed as Interim Resolution Professional with specified duties and reporting obligations. - HELD THAT: - The Tribunal examined the proposed IRP's Form No.2 and online credentials, found no adverse record, and appointed him. Directions were given regarding suspension of board powers, vesting of management with the IRP, inventory and data retrieval (including use of digital forensics if required), public announcement, constitution of Committee of Creditors, fortnightly progress reports, and reimbursement of CIRP expenses from the CoC. [Paras 15, 20]

Interim Resolution Professional appointed with specified responsibilities and reporting requirements.

Final Conclusion: The Section 9 petition is allowed and admitted; the demand notice was held properly served, the operational debt and default were established and not disputed, the application was within limitation, CIRP is initiated, moratorium under Section 14 is imposed, and Mr. Ashok Kumar Jain is appointed as Interim Resolution Professional with directions for conducting the resolution process.

Prematurity of appeal - leave to withdraw appeal - jurisdiction of appellate tribunal to retain appeal pending decision on withdrawal application - intervenors' remedy before the appellate tribunal - direction for expeditious disposal of pending application

Prematurity of appeal - jurisdiction of appellate tribunal to retain appeal pending decision on withdrawal application - Whether this Court should entertain the appeal when the NCLAT has not yet decided the application for leave to withdraw the appeal. - HELD THAT: - The Court declined to entertain the appeal as premature because the NCLAT has a pending application filed by the appellant seeking leave to withdraw the appeal. The Supreme Court observed that the NCLAT must first determine whether the proceedings before the NCLT have in fact come to an end in view of the earlier order of this Court, and only thereafter decide the fate of the appeal. Given that the NCLAT has not decided the withdrawal application, the appellate proceedings before this Court are not ripe for consideration and therefore the appeal will not be entertained at this stage.

Appeal not entertained as premature; Supreme Court declined to adjudicate while the NCLAT's application for leave to withdraw remains pending.

Leave to withdraw appeal - direction for expeditious disposal of pending application - intervenors' remedy before the appellate tribunal - Whether intervenors' applications before this Court should be entertained and what direction should be given to the NCLAT regarding the pending withdrawal application. - HELD THAT: - The Court refused to entertain the applications filed by intervenors before the Supreme Court because those intervenors have already filed applications before the NCLAT. The Court noted that if the appellant's prayer to withdraw the appeal is allowed by the NCLAT, the intervenors will have to pursue their remedies in accordance with law before the appropriate forum. In view of the delay since the last NCLAT order dated 15.04.2019, the Supreme Court directed the NCLAT to decide the pending application seeking withdrawal of the appeal expeditiously, specifically within six weeks from the date of the Supreme Court's order.

Intervenors' applications before the Supreme Court not entertained; NCLAT directed to dispose of the application for leave to withdraw the appeal within six weeks.

Final Conclusion: The Supreme Court dismissed the present petitions without adjudicating the merits as premature, refused to entertain intervenors' applications, and directed the NCLAT to decide the appellant's pending application for leave to withdraw the appeal expeditiously within six weeks; the appeals are disposed of accordingly.

Liability of sub-contractor to pay service tax despite main contractor's payment - Cenvat credit and prevention of double taxation - extended period of limitation on ground of suppression - abolition/rescission of abatement under Notification No.15/2004 ST - penalty for wilful evasion and penalty for failure to file returns

Liability of sub-contractor to pay service tax despite main contractor's payment - Cenvat credit and prevention of double taxation - A sub-contractor is liable to pay service tax on taxable services rendered even if the main contractor has discharged service tax on the contract. - HELD THAT: - The Tribunal applied the Larger Bench decision in Melange Developers Pvt. Ltd., which, relying on the Master Circular dated 23-08-2007 and the Cenvat/Cenvat Credit scheme, held that a sub-contractor is essentially a taxable service provider and the taxability of the service does not get altered because the service is used as input by the main contractor. The possibility of purported 'double taxation' is addressed by the credit mechanism under the Cenvat Credit Rules whereby tax paid at an earlier stage can be availed as credit at a later stage, so that payment by both sub-contractor and main contractor does not inherently result in unlawful double taxation. The appellant did not contest this binding position. The Tribunal therefore upheld the finding that the sub-contractor had a standalone liability to pay service tax on the services it provided. [Paras 4]

Uphold demand on merits: sub-contractor liable to pay service tax; decisions to contrary are overruled.

Extended period of limitation on ground of suppression - penalty for wilful evasion and penalty for failure to file returns - Extended limitation period was correctly invoked by the revenue on the ground of suppression; penalties under the Act were justified and upheld, and penalty under the alternative provision was not imposed. - HELD THAT: - The Tribunal accepted the adjudicating authority's findings that the appellant had suppressed material information and failed to declare taxable amounts until departmental inquiry, including admissions in recorded statements that tax was not paid for certain subcontracted work and that service tax was charged selectively. The contract terms inspected also placed tax liability on the appellant. On these facts the ingredients for invoking the proviso to section 73(1) for extended period on account of suppression were found satisfied. In consequence, the Tribunal upheld imposition of penalties: (i) penalty under the provision corresponding to wilful evasion was sustained in view of settled precedents that, once extended period is invokable, prescribed penalties follow; and (ii) penalty for failure to file ST-3 returns was sustained. The adjudicator had refrained from imposing the alternative penalty under section 76; that selective non-imposition was recorded in the original order and not disturbed. [Paras 4]

Extended period validly invoked; penalties under the relevant provisions upheld; penalty under the alternative provision left not imposed as in the original order.

Abolition/rescission of abatement under Notification No.15/2004 ST - Claim for abatement under Notification No.15/2004 ST was rejected as the notification had been rescinded prior to the relevant period. - HELD THAT: - The Tribunal noted that Notification No.15/2004 ST (granting abatement) was rescinded by Notification No.2/2006 ST with effect from 01.03.2006. The contracts and periods in dispute (2006-07 to 2008-09) therefore fell after the rescission, and the appellant's claim to abatement under the rescinded notification was not available. The Tribunal further observed that the contracts in issue were for pure service contracts simpliciter without transfer of property in goods, and hence no abatement could be claimed on that basis either. [Paras 4]

Claim for abatement under Notification No.15/2004 ST denied.

Interest on demand - appropriation of amounts paid - Interest on the sustained service tax demand follows as a matter of course; amounts already paid are to be appropriated against the confirmed demand. - HELD THAT: - Having upheld the tax demand, the Tribunal recorded that interest as prescribed by law must be levied. The adjudicating authority's appropriation of amounts already paid by the appellant against the confirmed demand was also sustained. These follow automatically once the tax liability is established and the demand is sustained. [Paras 4]

Interest on the demand upheld and earlier payments ordered to be appropriated against the demand.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the service-tax demand for 2006-07 to 2008-09 against the appellant (sub-contractor), affirmed invocation of the extended period for suppression, denied the abatement claim under Notification No.15/2004 ST, sustained interest and appropriation of payments, and upheld the penalties imposed (with one alternative penalty left not imposed as in the original order).

Liability under reverse charge mechanism and obligation to deposit tax collected - breach of obligation to deposit tax under Section 73A of Finance Act, 1994 - recovery under Section 73(1) of Finance Act, 1994 - contractual shifting of tax incidence is not tax collected for recovery - nomenclature neutrality and payer neutrality in service tax discharge - taxation of non compete fee as provision of business support service - remand for fresh adjudication where factual evidence of tax discharge exists

Liability under reverse charge mechanism and obligation to deposit tax collected - breach of obligation to deposit tax under Section 73A of Finance Act, 1994 - contractual shifting of tax incidence is not tax collected for recovery - Validity of recovery under Section 73A(2) for amounts alleged to have been collected from agents by the assessee while discharging reverse charge obligations - HELD THAT: - The Tribunal held that mere contractual contribution or recovery from agents towards tax liability, in circumstances where the recipient (assessee) has paid tax under reverse charge and is entitled to credit under applicable rules, does not amount to tax collected in a manner warranting recourse to the special recovery provision relied upon by Revenue. Reliance on earlier Tribunal decisions was appropriate; the pendency of appeals by Revenue did not render those decisions unavailable for the adjudicating authority. The court emphasised the dichotomy between statutory obligation to deposit tax and private arrangements between parties, and applied the principle that contracting to shift tax incidence does not convert such amounts into tax collected for the purpose of Section 73A. On these considerations Revenue's appeal lacked merit and was dismissed. [Paras 6]

Revenue's appeal dismissed; recovery under Section 73A(2) as applied was held unsustainable.

Taxation of non compete fee as provision of business support service - remand for fresh adjudication where factual evidence of tax discharge exists - Whether amounts characterized as 'non compete fee' and 'exclusivity bonus' are taxable as commission or as business support/service and the appropriate treatment in light of Tribunal precedents - HELD THAT: - The Tribunal observed that the question of taxing 'non compete' fee as provision of business support service has been considered by the Tribunal in earlier decisions and that the demand confirmed in adjudication should have been examined against those precedents. Because those decisions were either not available to or not considered by the adjudicating authority, the matter requires reconsideration. Accordingly, the Tribunal directed that the demand in respect of the contested sum be subjected to the test of conformity with the cited precedents and remitted for fresh adjudication. [Paras 8]

Demand in respect of 'non compete' fee/exclusivity bonus remitted for fresh consideration applying relevant Tribunal decisions.

Nomenclature neutrality and payer neutrality in service tax discharge - remand for fresh adjudication where factual evidence of tax discharge exists - Sustainability of confirmed demands treating various payments to agents and third party service providers (rewards and recognition, market support/administrative support, advertisement/publicity, sales training) as taxable 'hidden commission' and the need to examine invoices/evidence of tax discharge and limitation - HELD THAT: - The Tribunal found that the adjudicating authority did not adequately examine the evidence produced by the assessee showing discharge of tax by the third party providers (ICICI Bank/ICICI Securities and India Infoline) and failed to address submissions regarding cessation of agency status and limitation. Principles of nomenclature and payer neutrality and Supreme Court authority were noted as barriers to double recovery where tax had been discharged by providers. Given these lacunae, the Tribunal set aside the recoveries confirmed under Section 73 and remitted the issues to the jurisdictional Commissioner for fresh adjudication, directing that the submissions and documentary evidence (including cessation dates and invoices evidencing tax payment) be considered and limitation/contentions on revenue neutrality be adjudicated. [Paras 9, 10, 11, 13, 14]

Demands in respect of payments to India Infoline, ICICI Bank and ICICI Securities (rewards, market support, advertisement, sales training) set aside and remitted for fresh adjudication on the evidence and limitation/contentions raised by the assessee.

Final Conclusion: The appeal of Revenue is dismissed. The recoveries confirmed in the impugned order under the cited provisions are set aside to the extent indicated, and the matters concerning classification of 'non compete' fees and several payments to agents/third party providers are remitted to the adjudicating authority for fresh adjudication after considering the assessee's submissions and documentary evidence; appeals disposed accordingly.

Cenvat credit on GTA services - amalgamation effective from appointed date - single entity principle post-amalgamation - service provider and service receiver

Cenvat credit on GTA services - amalgamation effective from appointed date - single entity principle post-amalgamation - Whether Cenvat credit availed on GTA services by the Special Purpose Vehicle after the appointed date of merger (01.04.2013) could be allowed to the appellant as services received by the appellant following amalgamation. - HELD THAT: - The Tribunal found that the scheme of amalgamation fixed the appointed date as 01.04.2013 and, following the ratio in ITC HOTELS LTD, the appointed date in the sanctioned scheme must be treated as the date of amalgamation even if formalities conclude later. Consequently, transactions and services received by the transferor company after that appointed date are to be treated as having been carried on for and on behalf of the transferee company. The facts show that the services in question were received by JK Environ-tech LTD for the period 01.04.2013 to 30.09.2015, i.e. after the appointed date; the appellant was a manufacturer of excisable goods and thus eligible to take Cenvat credit of GTA services. Applying the principle that post-amalgamation the two entities are one, the services received by the SPV are to be treated as services received by the appellant and, therefore, Cenvat credit on those GTA services is allowable to the appellant.

The impugned denial of Cenvat credit is set aside and the appeal is allowed, holding that GTA services received by the SPV after 01.04.2013 are to be treated as received by the appellant who is entitled to the credit.

Final Conclusion: Appeal allowed; services received by JK Environ-tech Ltd. after the appointed date of amalgamation (01.04.2013) are to be treated as services received by the appellant and Cenvat credit of GTA services is allowable to the appellant.

Restriction on CENVAT/MODVAT credit where inputs are used in the manufacture of exempt or nil rated final products (Rule 57C/Rule 57CC) - protection for inputs contained in inevitable by products and interplay of Rules 57D/Rule 6 with Rule 57CC - classification of coke oven gas as an inevitable technological by product - requirement to maintain separate inventory and accounts for inputs used in dutiable and exempt products - distinction between a final product and a by product for purposes of disallowance of credit - extended period of limitation and necessity of a recorded finding of willful suppression or intent to evade duty

Classification of coke oven gas as an inevitable technological by product - restriction on CENVAT/MODVAT credit where inputs are used in the manufacture of exempt or nil rated final products (Rule 57C/Rule 57CC) - Whether Wash Oil and Sulphuric Acid were used in the manufacture of coke oven gas (coal gas) so as to attract reversal/denial of input credit under the Rules. - HELD THAT: - On the evidence and the undisputed manufacturing flow chart, crude coke oven gas emerges at the coke oven battery as an inevitable by product of coal carbonisation and prior to any use of Wash Oil or Sulphuric Acid. The recovery/cleaning operations in the by product recovery plant - including use of Sulphuric Acid to recover ammonium sulphate and Wash Oil to extract benzol/naphthalene fractions - occur after the coke oven gas has already been produced. The court accepted the technical material and process description showing that the impugned inputs do not contribute to the generation of coke oven gas but are employed to derive separate saleable by products. Consequently, the facts do not establish that the duty paid inputs were used in the manufacture of coal gas so as to attract the presumptive disallowance or reversal under the scheme embodied in Rule 57C/Rule 57CC. [Paras 21, 22, 26]

Findings that Wash Oil and Sulphuric Acid were used only in by product recovery and did not have a role in producing coke oven gas; therefore reversal/denial of credit under Rule 57C/57CC is not attracted.

Protection for inputs contained in inevitable by products and interplay of Rules 57D/Rule 6 with Rule 57CC - distinction between a final product and a by product for purposes of disallowance of credit - Whether Rule 57CC (and related rules) can be applied to by products which emerge inevitably and technologically, thereby denying CENVAT/MODVAT credit. - HELD THAT: - By reference to established precedents (including Hindustan Zinc, Sterling Gelatin, Hi Tech Carbon and related reasoning), the court held that Rule 57CC must be read in the context of the overall MODVAT/CENVAT scheme (including Rule 57D/Rule 6). Where a product is an inevitable technological by product that emerges without use of the impugned inputs in its generation, the mischief of Rule 57CC (designed to prevent double benefit where common inputs are used to produce both dutiable and exempt final products) is not attracted. The authorities cited and applied establish that when the entire input is consumed in the manufacture of the main dutiable product and the by product emerges inevitably, separate record keeping or presumptive payment under Rule 57CC is not required; the by product does not become a 'final product' for the purposes of invoking Rule 57CC merely because it is later processed or purified. [Paras 24, 25, 26, 27, 28]

Rule 57CC (and cognate provisions) do not apply to deny credit where the commodity in question is an inevitable technological by product and the impugned inputs are not used in its generation; the scheme of Rules 57D/Rule 6 protects such situations.

Requirement to maintain separate inventory and accounts for inputs used in dutiable and exempt products - restriction on CENVAT/MODVAT credit where inputs are used in the manufacture of exempt or nil rated final products (Rule 57C/Rule 57CC) - Whether non maintenance of separate inventory/accounts by the assessee justified disallowance of credit/demand under the Rules in the present factual context. - HELD THAT: - Although Rule 57CC(9) and analogous provisions require separate inventory and accounts where common inputs are used for dutiable and exempt products, that requirement cannot be mechanically applied where the factual position demonstrates that the impugned inputs were not used in producing the exempt/by product but were employed in a subsequent, separate recovery process. The revenue did not contest the manufacturing flow or materially contradict the factual finding that coke oven gas emerges prior to use of the inputs. Given that factual matrix and the legal principles outlined in the cited authorities, mere absence of segregated records does not, by itself, mandate reversal of credit where the substantive fact is that the inputs were not used in generating the exempt/nil rated product. [Paras 20, 21, 26]

Non maintenance of separate accounts did not justify denial of credit or presumption of misuse in the factual circumstances where inputs were not used to generate the exempt product.

Extended period of limitation and necessity of a recorded finding of willful suppression or intent to evade duty - Whether invocation of the extended period of limitation (and imposition of penalty under Sections 11A/11AC) was justified on the record. - HELD THAT: - The extended limitation and penalty provisions require a finding that duty was not levied or paid by reason of fraud, collusion, willful mis statement or suppression of facts with intent to evade duty. The adjudicating authority did not record any material finding that the assessee engaged in willful suppression or had intent to evade; the assessee had specifically denied withholding information and relied on bona fide disclosure and established industry practice. In the absence of a recorded determinative finding of willful suppression, invocation of extended limitation and penalty provisions is unsustainable. [Paras 31]

Invocation of extended period of limitation and penalty was vitiated for want of any recorded finding of willful suppression or intent to evade duty; such measures could not be sustained.

Final Conclusion: The revenue appeal is dismissed. The court concluded that Wash Oil and Sulphuric Acid were used only in subsequent by product recovery and did not contribute to generation of coke oven gas; Rules disallowing credit do not apply to inevitable technological by products in this factual matrix; absence of a recorded finding of willful suppression precluded invocation of extended limitation and penalty.

Transitional Modvat credit - declaration under Rule 57G and Rule 57H - scope of allegations in show cause notice - extended period of limitation - SSI exemption (Notification No. 1/93-CE) and non-disclosure

Scope of allegations in show cause notice - SSI exemption (Notification No. 1/93-CE) and non-disclosure - Whether the demand could be sustained when the adjudicating authority based disallowance on the assessee's alleged availment of SSI exemption which was not pleaded in the show cause notice. - HELD THAT: - The Tribunal found that the Ld. Joint Commissioner disallowed Modvat credit principally on the ground that the assessee had availed SSI exemption, an allegation that was not made in the SCN dated 02.04.1996. The authority below thus travelled beyond the scope of the SCN. The record showed that the availment of the exemption was disclosed in quarterly returns (albeit belatedly) and therefore within the Department's knowledge at the time of issuing the SCN. It is a settled legal principle that demand cannot be sustained when the assessee is not put to notice of the reasons on which the demand is founded; consequently the demand was quashed on this procedural ground. [Paras 11]

Demand set aside because the disallowance rested on an allegation (availment of SSI exemption) not raised in the SCN, and the proceedings thus exceeded the scope of notice.

Extended period of limitation - declaration under Rule 57G and Rule 57H - transitional Modvat credit - Whether invocation of the extended period of limitation for issuing the SCN was sustainable. - HELD THAT: - The Tribunal held that the sole allegation in the SCN concerned availment of transitional Modvat credit under Rules 57G/57H and that the assessee had filed the requisite declaration under Rule 57G on 20.12.1994 and the Rule 57H declaration on 19.09.1995. Since the extended period was invoked on the basis of an alleged wrongful availment of the SSI exemption-a matter not alleged in the SCN-the basis for invoking the extended period failed. The authorities therefore erred in invoking the extended limitation period. The Tribunal did not examine entitlement to credit on merits because the appeal was disposed of on these legal grounds. [Paras 12]

Invocation of the extended period of limitation was unsustainable and the demand could not be sustained on that ground.

Final Conclusion: The appeal is allowed; the duty demand is set aside because the adjudication proceeded beyond the scope of the SCN by relying on an unpleaded allegation of SSI exemption and because the extended period of limitation was wrongly invoked; consequential relief to the assessee follows as per law.

Assessment of turnover enhancement - survey and subsequent entries in books - recording reasons for findings - appellate fact-finding role of Tribunal - remand for fresh consideration - input tax credit

Assessment of turnover enhancement - survey and subsequent entries in books - recording reasons for findings - appellate fact-finding role of Tribunal - Whether the Tribunal's reduction of enhanced purchase and sale turnover is sustainable when it did not record specific reasons or explain the basis for the quantum arrived at. - HELD THAT: - The Court found that the Tribunal recorded that two loose papers (papers no. 1 and 3) had entries subsequently made in the books of account, yet the Tribunal reduced the enhanced purchase and sale turnovers to specific figures without explaining the basis for arriving at those figures. The Tribunal, being the final fact-finding appellate forum, must record specific reasons and rationale when increasing or decreasing the quantum of assessment because such alterations have direct fiscal consequences for the assessee and the revenue. Absent articulated findings explaining how the reduced figures were computed, the Tribunal's order was held to be casual and unsustainable. The absence of rationale vitiates the Tribunal's exercise of its fact-finding and appellate function. [Paras 10, 11, 12, 13, 14]

Tribunal's order modifying the quantum without recording specific reasons is unsustainable and is set aside.

Remand for fresh consideration - recording reasons for findings - input tax credit - assessment of turnover enhancement - Whether the matter should be remitted to the Tribunal for fresh consideration with directions to record specific findings on the grounds raised by the assessee. - HELD THAT: - The Court directed that the Tribunal must reconsider the matter afresh on merits and record specific findings on each ground raised by the assessee in the revision, including the contentions regarding the nature of various seized loose papers (indicators 2, 4, 5 and 6), the basis for the enhancement in purchase and sale turnover, and the contention that dual taxation was imposed without appropriately granting input tax credit. The Tribunal was required to articulate its reasons and explain the methodology by which any enhancement or reduction in quantum is determined. The remand is for fresh adjudication on merits and not for limited computation only; the Tribunal must complete this exercise within the prescribed time. [Paras 5, 6, 11, 15, 16]

Matter remanded to the Tribunal for fresh consideration on merits with directions to record specific findings on each ground; exercise to be completed within two months from production of certified copy.

Final Conclusion: Revision partly allowed; Tribunal's order dated 20.06.2022 is set aside and the matter is remanded to the Tribunal for fresh consideration and specific findings on the grounds raised by the assessee, to be completed within two months.

Exemption under Entry 68 of Schedule IV - turnover threshold for exemption - burden of proof on dealer to establish turnover - revisional remand and principles of natural justice - assessment to be decided on merits irrespective of earlier judicial pronouncements

Exemption under Entry 68 of Schedule IV - turnover threshold for exemption - burden of proof on dealer to establish turnover - Entitlement to exemption for pulses and related items under Entry 68 of Schedule IV subject to the dealer's total turnover being not more than Rs.300 Crores and the dealer bearing the onus to prove such turnover. - HELD THAT: - The Court accepted the legal position that Section 15 of the TNVAT Act provides for exemption in respect of items listed in Schedule IV and that Entry 68 covers pulses and related items dealt with by the petitioner. The exemption is conditional on the total turnover of the dealer not exceeding the statutory threshold. The obligation to produce evidence to substantiate that the dealer's turnover is below the threshold lies with the dealer. The Court noted that this legal position is independent of the earlier decision in M/s. Sunrise Foods Private Limited and forms the proper basis for decision by the assessing authority. The petitioner therefore is entitled to an opportunity to produce supporting documents on this issue and have the claim adjudicated on merits. [Paras 13]

Assessing authority directed to afford the petitioner four weeks' time for a personal hearing and to consider documents proving turnover below the threshold, then decide the exemption claim on merits.

Revisional remand and principles of natural justice - assessment to be decided on merits irrespective of earlier judicial pronouncements - Validity of the assessing authority's view that the revisional remand had become infructuous due to a Division Bench decision erasing findings in M/s. Sunrise Foods Private Limited and consequent confirmation of purchase tax and penalty without fresh adjudication. - HELD THAT: - The Court held that the revisional remand was not grounded solely on the Sunrise Foods judgment but on the dealer's right to establish entitlement to exemption under the statute. Hence, the assessing authority's conclusion that the remand became infructuous in light of the Division Bench judgment was erroneous. The assessing authority cannot rely on that premise to bypass fresh consideration; it must evaluate the documents and inputs produced by the petitioner and pass orders on merits, observing principles of natural justice. The Court therefore set aside the assessing authority's action and remanded the matter with specific timelines for hearing and decision. [Paras 14, 15]

Impugned communication set aside; matter remanded to assessing authority to afford opportunity, independently examine submissions unmindful of the Division Bench reference, and pass a reasoned order on merits within prescribed time limits.

Final Conclusion: Writ petitions disposed by remanding the matters to the assessing authority: petitioner to be given four weeks for personal hearing and production of documents to prove turnover below Rs.300 Crores; assessing authority to independently examine the material and decide the exemption claim under Entry 68 of Schedule IV on merits within four weeks thereafter; no costs.

Locus standi of a non-profit/NGO to challenge tender conditions - judicial review of tender conditions - arbitrariness, discrimination, mala fides - administrative/policy discretion in framing tender terms - applicability of MSME procurement orders to concession/license-like grants

Locus standi of a non-profit/NGO to challenge tender conditions - Respondent No.1 (an NGO) lacked locus standi to maintain the writ petition challenging the tender conditions. - HELD THAT: - The Court observed that the writ petition was not a public interest litigation and that none of the actual Ground Handling Agencies who were or could have been affected had challenged the tender. On this basis the Court held that the NGO could not be treated as an "aggrieved party" entitled to invoke Article 226 to assail the eligibility criteria and tender conditions, and that the High Court erred in entertaining the petition at the instance of respondent No.1. [Paras 5]

Writ petition ought to have been dismissed for want of locus standi of respondent No.1.

Judicial review of tender conditions - arbitrariness, discrimination, mala fides - administrative/policy discretion in framing tender terms - The challenged eligibility criteria and tender conditions were not arbitrary, discriminatory or mala fide, and the High Court erred in striking them down on merits. - HELD THAT: - Applying settled principles that tender terms lie within the commercial and administrative domain of the tendering authority and are amenable to judicial interference only if arbitrary, discriminatory or mala fide, the Court reviewed the rationale offered by AAI for clustering airports, prescribing past experience with scheduled flights and fixing financial capacity (reduced turnover requirement). The Court concluded that the impugned conditions fell within the authority's commercial discretion and were supported by discernible reasons; hence interference by the High Court was unwarranted. [Paras 6, 9, 10, 12]

High Court's quashing of the eligibility criteria and tender conditions was set aside and the writ petition on merits was dismissed.

Applicability of MSME procurement orders to concession/license-like grants - The MSME procurement orders relied upon by respondent No.1 did not render the tender conditions invalid in the facts of this case. - HELD THAT: - The Court held that selection of Ground Handling Services for concession cannot be equated with procurement of goods and services forming the core of MSME orders; further, the MSME orders contemplate departures subject to substantiation. Consequently, the High Court's reliance on those MSME orders to strike down the tender conditions was misplaced. [Paras 3, 11]

MSME orders do not invalidate the tender conditions in this case and do not justify quashing of the RFPs.

Final Conclusion: The appeals are allowed; the High Court's judgment and the review order are quashed and set aside, and the writ petition filed by respondent No.1 is dismissed, with no order as to costs.

Award of pre-award, pendente lite and post-award interest - reasonableness of interest rate under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 - duty of arbitral tribunal to record reasons when awarding interest - laches / claimant's delay disentitling to interest - reduction of interest in exercise of powers under Article 142 of the Constitution

Award of pre-award, pendente lite and post-award interest - laches / claimant's delay disentitling to interest - entitlement to interest for specified periods prior to and during proceedings - HELD THAT: - The Court found that the respondent remained inactive for prolonged periods after final measurement (30th August 1977) and after the decree (14th February 1990). The respondent did not pursue his claim from 30th August 1977 until issuance of notice on 25th July 1989 and further did not act to produce the original agreement or prosecute arbitration promptly between 14th February 1990 and filing before the High Court leading to appointment of arbitrator on 15th October 2001. Having regard to that conduct, the Court held that the respondent was disentitled to interest for the periods during which he remained inert, and therefore excluded interest for 30th August 1977 to 25th July 1989 and for 14th February 1990 to 15th October 2001. [Paras 11, 12, 13, 14, 21]

No interest shall be awarded for the periods 30th August 1977 to 25th July 1989 and 14th February 1990 to 15th October 2001.

Reasonableness of interest rate under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 - duty of arbitral tribunal to record reasons when awarding interest - reduction of interest in exercise of powers under Article 142 of the Constitution - appropriateness of the rate of interest awarded and its modification - HELD THAT: - Section 31(7)(a) vests the arbitral tribunal with a discretion to award interest at a rate it deems reasonable, and when exercising that discretion the tribunal must apply its mind and give reasons for the rate and period selected. The award under challenge granted interest at 18% without any reasons addressing rate, quantum or periods on which interest was to run. Applying the established approach in this Court's precedents and having regard to the long delays caused in prosecution of the claim, the Court exercised its powers to moderate the interest rate. While upholding the principal award, the Court reduced the rate of interest for the remaining periods (i.e., excluding the two disallowed spans) to 9% per annum for prereference, pendente lite and post-award periods as the equitable and reasonable rate in the circumstances. [Paras 17, 18, 19, 20, 21]

Interest for the remaining periods is awarded at 9% per annum; the arbitral tribunal ought to have recorded reasons for the 18% rate but the Court, in exercise of its jurisdiction, reduces the rate to 9%.

Final Conclusion: Appeal partly allowed: interest disallowed for 30th August 1977-25th July 1989 and 14th February 1990-15th October 2001; for all other pre-reference, pendente lite and post-award periods interest allowed at 9% per annum; principal award otherwise upheld and execution directed for quantification and payment in terms of the judgment.

Preventive detention - Live and proximate link - Unreasonable and unexplained delay vitiates detention - Requisite subjective satisfaction of the detaining authority - Withholding of vital material by the sponsoring authority - Effect of bail under NDPS regime on preventive detention

Unreasonable and unexplained delay vitiates detention - Live and proximate link - Requisite subjective satisfaction of the detaining authority - Delay between proposal and passing of detention order snapped the live and proximate link and, being unexplained, vitiated the detention. - HELD THAT: - The Court found that the proposal for detention was dated 28.06.2021, forwarded on 14.07.2021, while the detention order was passed only on 12.11.2021, a delay of almost five months which was not explained by the State. Drawing on settled precedents, the Court reiterated that preventive detention is intended to prevent imminent prejudicial activity and that an unreasonable and unexplained delay - whether between order and arrest or between proposal and order - undermines the necessary "live and proximate link" between the grounds relied upon and the avowed purpose of detention. Where such delay is unexplained, it casts doubt on the genuineness of the detaining authority's subjective satisfaction and renders the detention order invalid. Applying these principles to the facts, the Court held that the detaining authority had been indifferent in promptly acting on the proposal, the link was snapped, and no satisfactory explanation for the delay was offered. [Paras 11, 12, 20, 21, 29]

Detention order quashed insofar as it was vitiated by unreasonable and unexplained delay which snapped the live and proximate link.

Withholding of vital material by the sponsoring authority - Requisite subjective satisfaction of the detaining authority - Effect of bail under NDPS regime on preventive detention - Failure to disclose that the detenu had been released on bail in the relied-upon NDPS cases (despite Section 37 rigours) amounted to withholding vital material and vitiated the detaining authority's satisfaction. - HELD THAT: - The Court observed that the detaining authority relied on prior NDPS cases but was not informed that in both cases the detenu had been released on bail by the Special Court despite the stringent regime of Section 37 of the NDPS Act. The fact of grant of bail under those circumstances was material and could have influenced the detaining authority's decision whether to order preventive detention. Precedents cited by the Court establish that suppression or non-placing of material facts that would weigh upon the detaining authority's mind vitiates the requisite subjective satisfaction. As the sponsoring authority did not place this vital fact before the detaining authority and the State did not challenge the bail orders, the detention order could not stand. [Paras 11, 22, 27, 29]

Detention order quashed insofar as it was founded on material facts which were withheld and which vitiated the detaining authority's subjective satisfaction.

Final Conclusion: The preventive detention order dated 12.11.2021 was quashed and set aside because (a) an almost five month unexplained delay between proposal and order snapped the live and proximate link and undermined the detaining authority's satisfaction, and (b) the sponsoring authority withheld the material fact that the detenu had been released on bail in the relied upon NDPS cases; the detenu was ordered to be released if not wanted in any other case.

Interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 - preconditions of Order XXXVIII Rule 5 CPC for attachment before decree/award - invoked performance bank guarantees - security for enforcement of prospective arbitral award - deposit or undertaking

Interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 - invoked performance bank guarantees - preconditions of Order XXXVIII Rule 5 CPC for attachment before decree/award - Validity of the Commercial Court's order under Section 9(ii)(e) directing deposit of amounts of performance bank guarantees already invoked and paid by the bank - HELD THAT: - The Court held that orders under Section 9 of the Arbitration Act are essentially interim measures intended to secure the amounts in dispute. Where the performance bank guarantees had already been invoked and payments realised by the bank prior to the Section 9 order, the Commercial Court could not have directed deposit of those amounts unless the preconditions of Order XXXVIII Rule 5 CPC were satisfied. The Court emphasised that absent specific allegations supported by cogent material and prima facie satisfaction that the opponent was likely to defeat any future decree/award (for example by disposing of properties), the Commercial Court should not exercise Section 9 powers to require deposit. The existence of serious disputes on the merits regarding the amounts claimed militated against such an order in the circumstances of the case, and the Section 9 order could not be sustained. [Paras 4]

The Section 9(ii)(e) order directing deposit of amounts of the performance bank guarantees already invoked and realised was quashed and set aside.

Security for enforcement of prospective arbitral award - deposit or undertaking - interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 - Procedure to protect parties' interests after quashing the Section 9 order - HELD THAT: - While setting aside the impugned orders, the Court directed a protective measure short of the deposit ordered below. It required the appellant to furnish an undertaking, supported by a board resolution, to the Commercial Court that any award passed in the arbitration will be honoured by the appellant subject to any challenge before a higher forum. The undertaking is to be filed within four weeks, thereby securing the respondent's interest without the invocation's deposit which the Court found unsustainable in the absence of Order XXXVIII Rule 5 CPC preconditions. [Paras 5]

Appellant to file an undertaking backed by a company resolution before the Commercial Court within four weeks; appeal allowed and impugned orders quashed with no costs.

Final Conclusion: The Section 9(ii)(e) order directing deposit of amounts of invoked performance bank guarantees was quashed for lack of satisfaction of Order XXXVIII Rule 5 CPC preconditions; appeal allowed subject to the appellant filing an undertaking backed by its company resolution to honour any award.

Default bail under Section 167(2) Cr.P.C. - piecemeal/incomplete charge-sheet and effect on statutory bail - regular bail under Section 439 Cr.P.C. in economic offences - economic offences as a class apart and gravity in bail jurisprudence - status of officials of a market infrastructure institution as public servants - sanction for prosecution not a condition precedent to investigation or filing charge-sheet

Regular bail under Section 439 Cr.P.C. in economic offences - economic offences as a class apart and gravity in bail jurisprudence - Grant of regular bail to the applicant under Section 439 Cr.P.C. - HELD THAT: - The Court considered the nature and gravity of allegations relating to co-location, sharing of confidential information and the illegal appointment and remuneration of a senior executive at NSE. Having regard to the seriousness of the allegations, their potential impact on the national financial system and settled precedents holding economic offences to be a class apart, the Court found that no ground for grant of regular bail under Section 439 Cr.P.C. was made out. All arguments on cooperation, absence of mens rea, or administrative nature of certain acts were examined but the Court concluded that the gravity of the charges and ongoing interconnected investigation weighed against regular bail. [Paras 13, 14, 23]

Application for regular bail under Section 439 Cr.P.C. rejected on merits.

Default bail under Section 167(2) Cr.P.C. - piecemeal/incomplete charge-sheet and effect on statutory bail - Entitlement to statutory (default) bail under Section 167(2) Cr.P.C. - HELD THAT: - The Court analysed whether the charge-sheet filed on 21.04.2022 (within 60 days of arrest) sufficed to defeat the applicant's entitlement to default bail. Applying binding and persuasive authorities, the Court held that Section 173 envisages filing of a final report only after completion of the entire investigation and deprecated the practice of fragmenting an investigation to file piecemeal charge-sheets to frustrate statutory bail. The charge-sheet before the trial court related only to offences under the PC Act and Section 120B IPC while substantial investigation into other offences in the FIR (including IT Act and other IPC/PC Act heads) remained pending; therefore the 21.04.2022 filing was a piece meal/incomplete charge-sheet and did not extinguish the applicant's indefeasible right to default bail under Section 167(2). [Paras 41, 42, 43]

Applicant entitled to default bail under Section 167(2) Cr.P.C.; bail granted on furnishing bond and conditions.

Piecemeal/incomplete charge-sheet and effect on statutory bail - Whether the charge-sheet dated 21.04.2022 was a complete charge-sheet within the meaning of Section 173(2) Cr.P.C. - HELD THAT: - The Court examined the contents and scope of the 21.04.2022 filing and the state of the broader investigation. It found that investigation into several allegations in the FIR remained incomplete and that the 21.04.2022 filing covered only part of the alleged offences (appointment/remuneration-related offences) while co-location and related IT/offences were still under investigation. Consequently the charge-sheet was held to be piece meal/incomplete and could not be equated with a final report for the purposes of defeating the statutory right under Section 167(2). The Court emphasised the distinction between completion of investigation and subsequent further investigation under Section 173(8). [Paras 42]

The 21.04.2022 filing is a piece meal/incomplete charge-sheet and does not satisfy Section 173(2) so as to defeat entitlement to default bail.

Status of officials of a market infrastructure institution as public servants - Whether the applicant (an official of NSE) qualifies as a public servant for purposes of the PC Act offences alleged. - HELD THAT: - On the argument that the applicant was not a public servant, the Court referred to precedent holding the National Stock Exchange as a statutory body and its officials as public servants within the meaning of the PC Act. The submission that the applicant was never a public servant was rejected as without force. [Paras 15]

Applicant held to fall within the ambit of 'public servant' as relevant to the PC Act allegations.

Sanction for prosecution not a condition precedent to investigation or filing charge-sheet - Whether non-obtaining of sanction to prosecute precludes filing charge-sheet or affects Section 167(2) entitlement. - HELD THAT: - The Court observed that grant of sanction is an enabling provision for prosecution but is separate from the investigatory process and not a condition precedent for completion of investigation or filing of a charge-sheet. Reliance was placed on authority to the effect that filing of a charge-sheet within the statutory period is sufficient compliance with Section 167(2) and that the absence of sanction does not automatically confer a right to default bail. [Paras 16, 36]

Non-obtaining of prosecution sanction does not prevent investigation or filing of a charge-sheet and is not a bar to proceedings; sanction requirement rejected as ground for default bail.

Final Conclusion: The petition for regular bail under Section 439 Cr.P.C. was refused on merits given the gravity of the economic-offence allegations; however, because the investigating agency filed a piece meal/incomplete charge-sheet and failed to complete investigation of all offences in the FIR within the statutory period, the applicant acquired an indefeasible right to default bail under Section 167(2) Cr.P.C., and was admitted to bail subject to bond and conditions.