TaxTMI Updates e-Newsletter
Oct 08,2022

CIF contracts - imposition of IGST on ocean freight - payment of IGST on CIF value - legislative competency - ultra vires - refund of tax paid

CIF contracts - imposition of IGST on ocean freight - payment of IGST on CIF value - legislative competency - ultra vires - Declaration that further imposition of IGST on ocean freight, where IGST has already been paid on the full CIF value of imports, is beyond legislative competency and ultra vires the IGST Act, 2017. - HELD THAT: - The Court, having received and considered the judgment of the Supreme Court in Civil Appeal No.1390 of 2022 (Union of India v. M/s Mohit Minerals Pvt. Ltd.) which upheld the decision of the Gujarat High Court, concluded that the impugned Notifications imposing IGST again on ocean freight where IGST had already been paid on CIF value lack legislative competency. On that basis the High Court made the rule absolute in terms of the petitioner's prayers seeking declaration of invalidity and non-payability of IGST on ocean freight in cases where IGST has been paid on CIF value. The Court recorded the parties' concurrence that the Supreme Court's decision governs the present petition and adopted that decision as determinative of the legal question before it. [Paras 6]

Rule made absolute declaring that re-imposition of IGST on ocean freight where IGST was paid on CIF value is ultra vires and not payable.

Refund of tax paid - payment of IGST on CIF value - Direction permitting the petitioner to apply for refund and directing respondents to process such application in accordance with law within a specified timeframe. - HELD THAT: - The Court granted the petitioner liberty to file an application for refund in respect of any IGST paid on ocean freight and directed the concerned authorities to process and dispose of the refund application according to law. The Court imposed a timeline for administrative compliance, directing that the application be processed and disposed of expeditiously and, in any case, not later than eight weeks from receipt. This relief was agreed between the parties and accepted by the Court as the practical consequence of the declaratory relief granted. [Paras 7]

Petitioner permitted to apply for refund; respondents directed to process and dispose of the refund application in accordance with law within eight weeks of receipt.

Final Conclusion: The writ petition was allowed: the court declared that the re-imposition of IGST on ocean freight where IGST had been paid on CIF value is ultra vires and not payable, and directed that any refund application by the petitioner be processed and disposed of in accordance with law within eight weeks; no order as to costs.

Principles of natural justice - furnishing material relied upon with show-cause notice - alternative statutory remedy of appeal under Section 107 - exhaustion of statutory remedies - jurisdiction under Article 226 - discretionary relief

Principles of natural justice - furnishing material relied upon with show-cause notice - jurisdiction under Article 226 - discretionary relief - alternative statutory remedy of appeal under Section 107 - Whether the assessment-cum-penalty order is liable to be set aside for violation of the principles of natural justice for non-furnishing of the seized material with the show-cause notice. - HELD THAT: - The Court examined the solitary ground urged - non-furnishing of seized slips and other material with the show-cause notice - and found that the petitioner had filed detailed objections to the notice and, on the face of that reply, did not assert lack of knowledge of the contents of the seized slips nor request supply of those documents when filing objections. The assessing authority issued personal hearing notices and expressly answered the objections in the impugned order. Several precedents relied upon by the petitioner were considered but distinguished on facts where either the material was alien to the assessee or a specific request for supply had been made and refused. The Court reiterated the established principle that writ jurisdiction under Article 226 is discretionary and that where a statutory remedy (an appeal under Section 107) is available, ordinarily that remedy must be exhausted; exceptional interference is confined to cases of lack of jurisdiction, breach of fundamental rights, demonstrable violation of natural justice or ultra vires action. In the present case the petitioner failed to establish a breach of natural justice warranting exercise of extraordinary writ jurisdiction, and the contested matters of fact are more appropriately addressed in the statutory appeal. [Paras 11, 13, 20, 21, 22]

The challenge to the assessment-cum-penalty order on the ground of non-furnishing of material is rejected; the Writ Petition is dismissed and the petitioner is left to pursue the statutory appeal under Section 107, with the period of pendency of the writ to be set off for limitation.

Final Conclusion: Writ Petition dismissed at admission: the petitioner failed to establish a violation of the principles of natural justice warranting interference under Article 226; remedy by appeal under Section 107 is available and open, and the period of pendency of the writ shall be set-off for limitation.

Benefit of input tax credit - commensurate reduction in prices - Section 171 of the CGST Act, 2017 - methodology of comparing pre GST and post GST ITC to turnover ratios - determination of profiteered amount - interest at 18% on profiteered amount - penalty under Section 171(3A) - investigation period 01.07.2017 to 30.09.2020

Benefit of input tax credit - commensurate reduction in prices - Section 171 of the CGST Act, 2017 - methodology of comparing pre GST and post GST ITC to turnover ratios - Whether the respondent obtained an additional benefit of input tax credit on supply of construction services after implementation of GST and was therefore required to pass that benefit to recipients by way of commensurate reduction in prices under Section 171. - HELD THAT: - The Authority accepted the DGAP's verified computation comparing the ratio of CENVAT/ITC to turnover in the pre GST period (0.12%) with the post GST period (5.81%), yielding an increase of 5.69% attributable to additional ITC. The DGAP's methodology - allocating relevant CENVAT/ITC to project turnover and applying the differential ITC percentage to recalculate base prices and cum tax prices - was examined, found factually based on returns and project data supplied by the respondent, and approved as the basis for determining whether the benefit arose and was required to be passed on under Section 171. The Authority rejected the respondent's contentions challenging the statutory scheme, delegation to make rules, and the general applicability of Section 171, holding that the provision is aimed at protecting end consumers and does not infringe fundamental rights. [Paras 15, 21]

The respondent did obtain an additional benefit of input tax credit after 01.07.2017 and was required under Section 171 to pass the commensurate reduction in prices to eligible buyers.

Determination of profiteered amount - interest at 18% on profiteered amount - Quantum of profiteering to be returned to eligible recipients and identification of beneficiaries for the investigation period. - HELD THAT: - On the basis of the DGAP's tables (Tables D and E) and the verified project sales and ITC data, the Authority determined that the respondent realised an additional amount which includes the profiteered component computed at 5.69% of the base price and the applicable GST on that component, in respect of supplies made during 01.07.2017 to 30.09.2020 to 535 buyers. The Authority found the DGAP's verification of amounts passed to some buyers to be inconclusive except insofar as confirmations were received from a subset of buyers and therefore relied on the DGAP's computation for the aggregate determination. The Authority directed restitution to identifiable eligible buyers together with interest at 18% per annum from the dates the profiteered amounts were collected until refund. [Paras 22, 23, 24]

The Authority determined the profiteered amount as computed by the DGAP to be returned to the eligible buyers identified in Annexure A, and ordered repayment with interest at 18% within three months, failing which recovery under the CGST Act will follow.

No profiteering computed for buyers with no consideration received during investigation period - Whether profiteering is to be computed in respect of the Applicant No.1 who had booked a unit but had not made payment during the investigation period. - HELD THAT: - DGAP recorded that no demand was raised nor amount collected from the Applicant No.1 during 01.07.2017 to 30.09.2020 and the Applicant confirmed non receipt of any demand. The Authority noted that profiteering has been computed only for purchasers from whom consideration was raised/collected in the investigation period; amounts for buyers who did not pay during that period are excluded from the current computation and must be addressed when consideration is received. [Paras 9, 22]

No profiteering has been computed in respect of the Applicant No.1 for the period 01.07.2017 to 30.09.2020; benefit in respect of such unit shall be computed when demand is raised or consideration is received.

Penalty under Section 171(3A) - Whether the respondent is liable for penal consequences for contravention of Section 171 and the temporal scope of such liability. - HELD THAT: - The Authority found that the respondent contravened Section 171(1) by not passing the additional ITC benefit to eligible buyers and held that contravention constitutes an offence attracting penalty under Section 171(3A). As that penal provision was inserted with effect from 01.01.2020, the Authority limited penal liability to the period from 01.01.2020 onwards and directed issuance of notice to the respondent for imposition of penalty under the statutory provision. [Paras 25]

The respondent is liable for penalty under Section 171(3A) for the amount profiteered from 01.01.2020 onwards and a notice is to be issued for the purpose.

Profiteering post 30.09.2020 not examined - investigation directed into other projects - Whether further investigation or action is required in respect of periods after 30.09.2020 and other projects of the respondent. - HELD THAT: - The Authority recorded that the present investigation was limited to 01.07.2017 to 30.09.2020 and that profiteering for periods after 30.09.2020 could not be determined because the respondent continues to avail ITC and the final quantum cannot presently be ascertained. The Authority therefore directed that: (a) the respondent must pass on future ITC benefits accruing up to the date of issuance of the completion certificate to eligible buyers as per the approved methodology; (b) the Commissioners of CGST and SGST shall monitor compliance and ensure publicity so that eligible buyers may claim benefits; and (c) the DGAP is directed to investigate profiteering in the respondent's other projects, if any. [Paras 29, 30]

Profiteering post 30.09.2020 was not adjudicated and is to be addressed later; DGAP is directed to investigate other projects and commissioners are directed to monitor implementation and future passing on of ITC benefits.

Final Conclusion: The Authority, accepting the DGAP's verified methodology, held that the respondent secured an additional benefit of input tax credit after implementation of GST and failed to pass the commensurate reduction in prices to eligible buyers for the period 01.07.2017 to 30.09.2020; it determined the aggregate profiteered amount as computed, ordered repayment to identifiable buyers with interest at 18% within three months (with recovery measures if not complied with), directed issue of notice for penalty under Section 171(3A) from 01.01.2020 onwards, and directed further investigations and supervisory steps for post investigation period benefits and other projects.

Liability to pass on input tax credit benefit - period up to issuance of Completion Certificate - investigation cut-off date - direction to jurisdictional Commissioner to ensure compliance - reporting to Authority through DGAP - complaint before State Screening Committee for non-compliance

Liability to pass on input tax credit benefit - investigation cut-off date - period up to issuance of Completion Certificate - Respondent's obligation to pass on the benefit of input tax credit beyond the investigation period until the Completion Certificate is issued - HELD THAT: - The Authority recorded that the present investigation was carried out only up to 30.11.2020 but the Respondent had not obtained the Completion Certificate by that date. The Authority concluded that, notwithstanding the temporal limit of the investigation, the Respondent remains liable to pass on any benefit of input tax credit that would become available to him up to the date of issue of the Completion Certificate. This extends the Respondent's pass-through obligation beyond the probe cut-off to the decisive contractual/registration milestone (issuance of Completion Certificate). [Paras 32]

Respondent is liable to pass on the benefit of input tax credit which becomes available up to the date of issue of the Completion Certificate.

Direction to jurisdictional Commissioner to ensure compliance - reporting to Authority through DGAP - Administrative direction to the jurisdictional Commissioner for enforcement and reporting - HELD THAT: - The Authority directed the concerned jurisdictional Commissioner CGST/SGST to ensure that the Respondent passes on the benefit of input tax credit to eligible home buyers/customers/recipients of supply in accordance with the methodology approved by the Authority in the present proceedings. The Commissioner is required to ensure compliance and submit a report to the Authority through the Director General, Anti-Profiteering (DGAP). The direction imposes an administrative supervisory and reporting obligation on the jurisdictional tax authority to effectuate the Authority's remedial mandate. [Paras 32]

Jurisdictional Commissioner CGST/SGST to ensure pass-through as per the approved methodology and report compliance to the Authority through the DGAP.

Complaint before State Screening Committee for non-compliance - Right of applicants or interested persons to seek further remedy if remaining benefit is not passed on - HELD THAT: - The Authority clarified that Applicant No. 1 or any other interested party/person is at liberty to file a complaint before the Maharashtra State Screening Committee in the event the remaining benefit of input tax credit is not passed on to them. This preserves the private right to seek statutory enforcement through the prescribed State-level complaint mechanism where administrative directions are not effectively implemented. [Paras 32]

Applicants or other interested persons may file a complaint before the Maharashtra State Screening Committee if the remaining benefit of input tax credit is not passed on.

Final Conclusion: The Authority inserted paragraph 32A directing that, although the investigation was conducted up to 30.11.2020, the Respondent must pass on input tax credit benefits that accrue until issuance of the Completion Certificate; the jurisdictional Commissioner is directed to ensure compliance and report via the DGAP; and affected persons retain the right to file complaints before the Maharashtra State Screening Committee for any remaining non-passage of benefit.

Benefit of input tax credit under Section 171 of the CGST Act, 2017 - commensurate reduction in prices/anti profiteering - methodology for quantification of profiteering based on ITC to turnover ratio - directory nature of time limits in Rule 133 of the CGST Rules, 2017 - recovery of profiteered amount with interest and compliance directions

Benefit of input tax credit under Section 171 of the CGST Act, 2017 - commensurate reduction in prices/anti profiteering - Additional ITC benefit accrued to the respondent post GST and was required to be passed on to eligible recipients for the period under investigation. - HELD THAT: - On examination of the DGAP report and the materials on record the Authority found that the respondent's ITC as a percentage of turnover rose from 3.36% (pre GST) to 4.27% (post GST), yielding an additional benefit of 0.91% of turnover. The Authority accepted DGAP's computation methodology and its application to sales realized during the investigation period, concluding that the additional ITC constituted a benefit within the meaning of Section 171(1) which ought to have been passed on to recipients. [Paras 8, 14]

The Authority held that additional ITC accrued post GST and was required to be passed on to eligible flat/shop buyers for 01.07.2017 to 31.10.2019.

Methodology for quantification of profiteering based on ITC to turnover ratio - The DGAP's methodology of quantifying the ITC benefit by comparing ITC to turnover ratios pre and post GST and computing resultant excess realization was lawful and appropriate in the circumstances. - HELD THAT: - The Authority examined the respondent's challenges to the DGAP's methodology - including arguments about tax rate differences, allocation of land value, project life aggregation and correlation between receipts and credits - and held that the methodology conformed to the mandate of Section 171. The Authority noted that certain input taxes not available as credit pre GST became available post GST, embedding a net benefit in cost which must be passed on; the DGAP's approach of computing additional ITC as percentage of turnover and applying it to amounts realized from eligible buyers was therefore vindicated. The Authority also observed that credits attributable to unsold units were excluded from the impugned computation and left to be reversed when required. [Paras 10, 11, 12, 14]

DGAP's methodology and computations were upheld as consistent with Section 171 and applicable rules.

Directory nature of time limits in Rule 133 of the CGST Rules, 2017 - The objection that the investigation/calling of information under Rule 133(5) was time barred was rejected because the statutory time limits are directory and non mandatory. - HELD THAT: - The Authority addressed the respondent's plea that the exercise under Rule 133(5) was initiated after the six month period and relied upon precedent and principle to treat the time limit as directory where no penal consequence for delay is prescribed. The Authority noted that the DGAP had sought guidance from the Authority and was directed to proceed; judicial precedents were cited to support liberal construction of procedural time limits. [Paras 9, 11]

The Authority held that the time limits in Rule 133 are directory and the investigation was not invalidated by the delay.

Recovery of profiteered amount with interest and compliance directions - The amount profiteered and the manner of redress were determined and directed: refund of profiteered amount with interest and supervisory compliance measures. - HELD THAT: - Applying the accepted methodology to the material supplied, the DGAP computed the profiteered amount for the investigation period as Rs. 50,09,158/-, which the Authority accepted. The respondent was ordered to pass on/refund the profiteered amount to the identified eligible recipients along with interest at 18% from the date of profiteering until payment, within three months, failing which recovery proceedings under the CGST Act were directed. The Authority also directed jurisdictional Commissioners to ensure compliance and publication of the order to inform affected recipients. [Paras 16, 17, 19, 21, 22]

Respondent ordered to refund/pass on Rs. 50,09,158/- with interest @18% to eligible recipients within three months and comply with supervisory and publication directions.

Final Conclusion: The Authority accepted the DGAP report and held that M/s Bhartiya Urban Pvt. Ltd. profiteered by Rs. 50,09,158/ for the period 01.07.2017 to 31.10.2019 by failing to pass on additional ITC; DGAP's computation methodology and the directory character of Rule 133 time limits were upheld; respondent directed to refund the amount with 18% interest to identified recipients and to comply with publication and enforcement directions.

Violation of the principle of natural justice - maintainability of writ jurisdiction under Article 226 - re-appreciation of evidence by a writ court - speaking order - challenge to appellate fact-finding

Violation of the principle of natural justice - speaking order - challenge to appellate fact-finding - maintainability of writ jurisdiction under Article 226 - re-appreciation of evidence by a writ court - Whether the impugned appellate order suffers from any violation of natural justice or legal infirmity warranting exercise of writ jurisdiction under Article 226, and whether the High Court may re-appreciate evidence in exercise of such jurisdiction. - HELD THAT: - The appellate order dated 5th August, 2022 is a speaking order and, on its face, shows no breach of the principle of natural justice nor any contravention of law. The contentions raised by the petitioner relate to factual findings and evaluation of evidence made by the appellate authority. Such factual controversy cannot be re-opened by the High Court in exercise of constitutional writ jurisdiction under Article 226, which is not a substitute appellate forum to re-appreciate evidence. In the absence of any legal infirmity or denial of fair hearing, the petitioner has not made out grounds for interference under Article 226.

Writ petition dismissed; no interference with the impugned appellate order.

Final Conclusion: Petition dismissed for lack of jurisdictional grounds: the appellate order is speaking and free from breach of natural justice, and the High Court will not re-appreciate factual findings under Article 226.

Treatment of State instrumentalities vis-a -vis Central/State Government employees for computation of perquisites under Section 17(2) - application of government service rules and pay-scales in determining perquisites - limited review and remand for fresh consideration on merits

Whether the petitioner, even if a State instrumentality under Article 12, can be treated at par with Central/State Government employees under Table-I of Rule 3 of the Income Tax Rules, 1962 for computing value of perquisites under Section 17(2)? - HELD THAT: - The Court concurs with the High Court's conclusion [2021 (7) TMI 1052 - KARNATAKA HIGH COURT] that mere adoption by the petitioner of Central Government rules and pay-scales does not convert the petitioner into the Central or a State Government for the purpose of treating its employees identically with Government employees under Table-I of Rule 3. The High Court's legal finding that the rules applicable to government employees cannot be automatically applied to the petitioner for computation of perquisites under Section 17(2) is accepted. The Supreme Court did not find any ground to interfere with that legal conclusion.

The High Court's finding that the petitioner cannot be treated at par with Central/State Government employees for the purpose of computing perquisites under Section 17(2) is upheld; no interference.

Limited review and remand for fresh consideration on merits - HELD THAT: - The Court permitted the petitioner to file a review application before the High Court limited to certain merits aspects which, according to the petitioner, were not considered on merits by the High Court. The Supreme Court expressly refrained from expressing any view on those merits issues and directed that any review filed be considered in accordance with law and on its own merits. The Court, however, restricted the scope of review by prohibiting re-agitation of the question already concluded - namely, whether the petitioner can be treated at par with Central/State Government employees for the purposes of Section 17.

Petitioner is permitted to file a review in the High Court on specified merits aspects; the High Court shall consider it on merits in accordance with law, but the petitioner is precluded from reopening the concluded issue of parity with Government employees.

Final Conclusion: Special Leave Petitions dismissed/disposed of; High Court's conclusion that the petitioner cannot be equated with Central/State Government employees for perquisites under Section 17(2) is affirmed, and petitioner is allowed to seek a limited review in the High Court on other merits issues subject to the stated restriction.

Disposal of objections to reopening assessment by speaking order - Prohibition on proceeding with reassessment pending communication of speaking order - Procedure under GKN Driveshafts (India) Ltd. - Reopening of assessment

Prohibition on proceeding with reassessment pending communication of speaking order - Procedure under GKN Driveshafts (India) Ltd. - Whether the Respondents could proceed with reassessment before disposing of the Petitioner's objections to reopening - HELD THAT: - The Court held that in terms of GKN Driveshafts (India) Ltd., objections filed by an assessee to the reopening of assessment must be disposed of by passing a speaking order. Until such speaking order is made and communicated to the assessee, there is no occasion for the department to proceed with reassessment. Given that the Respondents were in the process of considering the Petitioner's objections and proposed to pass a speaking order, the petition challenging the reopening notice was premature. The court expressly refrained from examining rival contentions on the merits. [Paras 6, 9]

Petition premature; Respondents must not proceed with reassessment until a speaking order disposing of the objections is passed and communicated.

Disposal of objections to reopening assessment by speaking order - Reopening of assessment - Disposal of the Petitioner's objections to the reopening and the temporal limitation on proceeding after overruling objections - HELD THAT: - The Court directed that the Respondents are at liberty to consider the objections and dispose of them in accordance with law by passing a speaking order and communicating it to the assessee. Further, if the objections are overruled or rejected, the department was directed to refrain from proceeding with reassessment for a period of four weeks from the date of communication of that speaking order. The Court did not decide the merits of the reopening itself and left all substantive contentions open for consideration in the speaking order or subsequent proceedings. [Paras 7, 8]

Respondents to consider and dispose of objections by a speaking order to be communicated to the assessee; if overruled, reassessment may not proceed for four weeks from communication.

Final Conclusion: The petition challenging the reopening notice for Assessment Year 2015-16 is disposed of as premature; the department is directed to consider and dispose of the assessee's objections by a speaking order to be communicated to the assessee, and, if the objections are overruled, to wait four weeks from communication before proceeding with reassessment; merits remain open.

Deemed income under section 69 C - Burden of proof regarding genuineness of purchases - Concurrent findings of fact - Admissibility of third-party affidavits - Reliance on information from Sales Tax records - Interference in exercise of jurisdiction under section 260A

Deemed income under section 69 C - Burden of proof regarding genuineness of purchases - Admissibility of third-party affidavits - Concurrent findings of fact - Whether additions made under section 69C treating purchases as unexplained expenditure could be sustained. - HELD THAT: - The Court upheld the concurrent factual findings of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal that the assessee had satisfactorily established the genuineness of the purchases for the year under consideration. The lower authorities relied on documentary evidence produced by the assessee including stock registers and proof of payments made through banking channels (account payee cheques/RTGS), and found that mere information from the Sales Tax Department and affidavits of third parties, not subjected to cross examination and not naming or properly confronting the assessee, could not be treated as admissible evidence to prove the purchases to be bogus. The Court applied the principle that where two appellate authorities have arrived at concurrent findings after considering material on record, such concurrent findings on fact are not liable to be disturbed in exercise of jurisdiction under section 260A. Having found no perversity or legal error in the appreciation of evidence by the lower authorities, the Court concluded that no addition under section 69C was sustainable. [Paras 6, 7, 15]

Concurrent factual findings that the purchases were genuine are upheld; additions under section 69C are not sustainable and are therefore deleted.

Final Conclusion: The appeal is dismissed; the orders of the Commissioner of Income Tax (Appeals) and the ITAT deleting the addition under section 69C for Assessment Year 2010-2011 are upheld and no substantial question of law arises for consideration under section 260A.

Reassessment notice time-bar under the first proviso to Section 149(1) (Finance Act, 2021) - limitation exception where income chargeable to tax represented as asset escaping assessment exceeds fifty lakh rupees - requirement of 'information' under the proviso to Section 148 (Finance Act, 2021) - duty to furnish investigation report/material forming basis of belief with notice under Section 148A(b) - live link between information received and formation of belief to initiate proceedings under Section 147/148 - right to additional opportunity to file reply before passing order under Section 148A(d)/(b)

Reassessment notice time-bar under the first proviso to Section 149(1) (Finance Act, 2021) - limitation exception where income chargeable to tax represented as asset escaping assessment exceeds fifty lakh rupees - Whether the reassessment notice for AY 2013-14 was time-barred - HELD THAT: - The Court found that a reassessment notice had been issued to the petitioner within the extended period (a notice dated 19th April, 2021 having been served within the extended limitation). The Court applied the proviso and clauses of Section 149 as amended by the Finance Act, 2021 and held that the first proviso to Section 149(1) is not attracted in the facts of the case. The Court also noted that the income alleged to have escaped assessment exceeded fifty lakh rupees, thereby satisfying the requirement of clause (b) of Section 149(1) and removing the bar created by ordinary limitation. Consequently, the reassessment proceedings in respect of AY 2013-14 were not time-barred.

Reassessment notice for AY 2013-14 is not time-barred and the limitation exception under Section 149(1)(b) is satisfied.

Duty to furnish investigation report/material forming basis of belief with notice under Section 148A(b) - live link between information received and formation of belief to initiate proceedings under Section 147/148 - Whether the notice under Section 148A(b) and the order under Section 148A(d) were validly issued when the detailed Investigation Wing Report was not provided to the assessee - HELD THAT: - The Court examined the Report produced by the Revenue which identified the petitioner as a seller in specified transactions in the scrip of Mahanivesh and concluded that large-scale manipulation and bogus profits/losses had been generated. Although the notice and order identified the petitioner and the value of transactions and alleged bogus LTCG from trading in a penny scrip, the detailed Investigation Wing Report that formed the factual basis for those conclusions was not furnished to the petitioner with the earlier Section 148A(b) notice despite the petitioner having sought the material. The Court held that non-provision of the Report deprived the assessee of an effective opportunity to meet the specific findings relating to transactions with identified counterparties and the Report's conclusions about the nature of the trading. For that reason the order under Section 148A(d) and the notice under Section 148 were set aside to afford the petitioner a meaningful opportunity to reply.

The order under Section 148A(d) and the consequential notice under Section 148 are set aside insofar as they were issued without providing the Investigation Report; the omission deprived the assessee of an effective opportunity to respond.

Right to additional opportunity to file reply before passing order under Section 148A(d)/(b) - Remedial direction required where material forming basis of belief was not furnished - HELD THAT: - Having set aside the impugned order and notice for failure to supply the Report, the Court directed that the petitioner be allowed to file an additional reply specifically responding to the findings of the Investigation Wing Report within two weeks. The Assessing Officer was directed to consider that additional reply and thereafter pass a fresh order under Section 148A(b) within eight weeks, deciding the matter on merits and not being influenced by observations in the present judgment except on the question of limitation. This direction preserves the assessee's opportunity to be heard and limits the remedy to re-adjudication after disclosure of the material.

Petitioner to file additional reply within two weeks; AO to consider the reply and pass a fresh order under Section 148A(b) within eight weeks, after giving due regard to the material furnished.

Final Conclusion: The writ petition is allowed in part: the Court held the reassessment proceedings for AY 2013-14 are not time-barred, but set aside the order under Section 148A(d) and the consequential Section 148 notice for failure to furnish the Investigation Wing Report; the petitioner is granted an opportunity to file an additional reply and the Assessing Officer is directed to decide afresh under Section 148A(b) within the stipulated time.

Attachment of bank accounts and assets - ownership of fixed deposit receipts - Tax Deducted at Source credited to PAN - either-or-survivor joint holding for operational convenience - direction to banker to permit encashment

Attachment of bank accounts and assets - ownership of fixed deposit receipts - Tax Deducted at Source credited to PAN - Whether the attachment order dated 27th December, 2019, issued in respect of the PAN of the petitioner's son operates against the fixed deposit receipts held by the petitioner and whether the bank must permit encashment of those FDRs. - HELD THAT: - The Court found that the petitioner is the primary holder of the fixed deposits and that the interest from the FDRs has been disclosed in her returns and accepted in assessment for AY 2017-18, with TDS credited to her PAN, which evidences ownership. The attachment notice addressed to the bank specifically identified the son's bank account numbers but did not particularise the petitioner's FDRs; the direction as to FDRs was general and did not enumerate particulars of the petitioner's deposits. The Bank itself had sought clarification from the Assessing Officer about applicability to the petitioner's FDRs and had not remitted those amounts, indicating the Bank did not treat the FDRs as the son's assets. The Department and the Bank did not dispute the petitioner's contentions or show cause to justify withholding encashment. In those circumstances the Court held that the attachment order does not operate against the petitioner's FDRs and that there is no legal basis to deny encashment. [Paras 6, 7]

The attachment order dated 27th December, 2019, does not operate against the petitioner's FDRs and the Bank is directed to permit the petitioner to encash her fixed deposits forthwith.

Final Conclusion: Writ petition allowed; attachment order held not to apply to the petitioner's fixed deposits and the bank directed to permit encashment without further delay.

Validity and genuineness of notice bearing distinct Document Identification Numbers (DIN) - generation of DIN constituting issuance of notice - date of issuance versus date of service for limitation purposes - limitation under Section 149 as amended by the Finance Act, 2021 - requirement of mandatory signature under Section 282A(1) - reassessment procedure under the pre-amendment regime and application of Section 148A(b) post 1 April 2021 - remand to Assessing Officer for verification in accordance with R.K. Upadhyaya

Validity and genuineness of notice bearing distinct Document Identification Numbers (DIN) - requirement of mandatory signature under Section 282A(1) - Authenticity of the two Section 148 notices bearing distinct DINs and whether the notices, though having different DINs and one unsigned on ITBA portal, are genuine. - HELD THAT: - The Court examined the email explanations from ADIT, ITBA which described a technical failure in the bulk generation process that resulted in an intermittent/rolled-back document state and retriggering of notice generation with a new DIN. The technical team's account explained how an earlier DIN might have been visible/downloadable before rollback and manually signed and dispatched, while the retriggered DIN was the version saved and shared with e-filing. The contents of both notices were identical. On this basis the Court recorded that both the speed-posted notice and the ITBA-portal/email notice, despite bearing distinct DINs and one being uploaded unsigned, are genuine. The emails were taken on record and the application challenging genuineness was disposed of accordingly.

Both notices bearing distinct DINs are genuine; no further action arises in the application challenging their authenticity.

Date of issuance versus date of service for limitation purposes - generation of DIN constituting issuance of notice - limitation under Section 149 as amended by the Finance Act, 2021 - reassessment procedure under the pre-amendment regime and application of Section 148A(b) post 1 April 2021 - remand to Assessing Officer for verification in accordance with R.K. Upadhyaya - Whether the Section 148 notice was issued on 31 March 2021 (pre-amendment regime) or on/after 1 April 2021 (post-amendment regime), and consequent procedural regime to be applied. - HELD THAT: - The Court found a disputed question of fact regarding the date the notice was handed over to postal authorities for dispatch: the petitioner relied on records indicating dispatch on 2 April 2021, while the Department relied on records indicating dispatch on 31 March 2021. The Court directed the Assessing Officer to verify the records produced by both parties and determine the date of issuance in accordance with the legal principle in R.K. Upadhyaya (that the date of issuance must be determined by reference to record evidence). If the AO finds dispatch on 31 March 2021, reassessment is to proceed under the pre-amendment procedure applicable prior to the Finance Act, 2021; if dispatch is on or after 1 April 2021, the notice will be treated under Section 148A(b) and the Supreme Court directions in Union of India v. Ashish Aggarwal will apply mutatis mutandis. The AO was directed to complete the verification within four weeks and, if 31 March 2021 is found, to complete reassessment within twelve weeks under the old procedure. [Paras 10, 11, 12]

Matter remanded to the Assessing Officer to verify date of despatch; outcome dictates whether pre-amendment Section 148 procedure applies (if 31 March 2021) or Section 148A(b) regime and Ashish Aggarwal directions apply (if on/after 1 April 2021).

Final Conclusion: The writ petition is disposed of: the challenge to genuineness of the notices is rejected as both notices are held genuine; a factual dispute on the date of issuance is remanded to the Assessing Officer to be verified within four weeks, with consequent directions to proceed under the pre-amendment procedure if dispatch is found to be 31 March 2021, or under Section 148A(b) and relevant Supreme Court directions if dispatch is on or after 1 April 2021.

Maintainability of writ under Article 226 against reassessment proceedings - Reassessment proceedings under Section 148/Section 148A - Disputed questions of fact not amenable to writ relief - Requirement to address merits in reply to statutory show cause notice - Prohibition on bypassing statutory assessment/reassessment machinery

Maintainability of writ under Article 226 against reassessment proceedings - Disputed questions of fact not amenable to writ relief - Requirement to address merits in reply to statutory show cause notice - Writ petition challenging issuance of notice under Section 148 for AY 2013-14 is not maintainable at the interim stage where disputed questions of fact require adjudication by statutory authorities. - HELD THAT: - The assessee challenged the notice dated 26th July, 2022 issued under Section 148 (proceedings initiated pursuant to Section 148A) for AY 2013-14. The statutory show cause notice and the impugned order recorded that the assessee had not responded on the merits to allegations of a high value transaction with an entity alleged to be providing accommodation entries. Although the assessee had earlier filed replies (dated 16th April, 2021 and 24th July, 2021) and produced ledger and bank statements showing a single transaction with the third party, those communications did not explain the purpose of the transaction or place material to show it was in the ordinary course of business. The Revenue and the assessee advance rival factual contentions - one that the third party is a shell providing accommodation entries and the other that the transaction was genuine commercial activity. Determination of these rival pleas demands appreciation of evidence by the statutory authorities and cannot be resolved in writ proceedings at this interlocutory stage. The court applied the settled principle that an assessee cannot bypass the complete statutory machinery under the Income-tax Act and invoke writ jurisdiction, as reiterated in the cited precedent concerning the exclusivity of assessment/reassessment procedures. Consequently, the petition seeking to quash the reassessment notice was dismissed as premature, while leaving the assessee to pursue remedies and defenses before the statutory authorities. [Paras 8, 9, 10, 11, 12]

Writ petition dismissed as not maintainable; factual disputes to be adjudicated by the assessing authorities through the statutory reassessment process.

Final Conclusion: The petition challenging the notice under Section 148/148A for AY 2013-14 is dismissed as premature because it raises disputed questions of fact requiring adjudication by the statutory authorities; the AO is directed to decide the matter on merits without being influenced by observations in this order.

Principles of natural justice - reassessment under Section 148A(d) - supplementary show cause notice under Section 148A(b) - opportunity to explain source of funds

Principles of natural justice - opportunity to explain source of funds - reassessment under Section 148A(d) - Validity of the order passed under Section 148A(d) and notice under Section 148 where the Assessing Officer proceeded on the basis that the assessee had not explained source of purchase despite not having been asked to do so. - HELD THAT: - The Court found that the Assessing Officer committed a clear violation of the principles of natural justice by treating the petitioner as having failed to explain the source of funds for the property purchase when no requirement to explain source had been put to the petitioner before passing the order under Section 148A(d). The impugned order proceeded on that assumed failure despite an admitted factual mistake in the earlier communication and without giving the petitioner an opportunity to address the question of source. In these circumstances the order and subsequent notice could not stand and required setting aside so that the respondent may issue a corrigendum and a proper opportunity under Section 148A(b) to explain the transaction and source of funds. [Paras 5, 6]

Impugned order under Section 148A(d) and notice under Section 148 dated 17th and 18th July, 2022 set aside for breach of natural justice; respondent permitted to issue corrigendum and a supplementary show cause notice under Section 148A(b) and thereafter decide afresh.

Supplementary show cause notice under Section 148A(b) - opportunity to explain source of funds - Scope of directions on remand and duties of the parties following setting aside of the impugned order. - HELD THAT: - The Court granted liberty to the revenue to issue a corrigendum and a supplementary show cause notice under Section 148A(b) within two weeks. The petitioner is to be given four weeks from that notice to file a reply treating the transaction as a purchase and to explain the source of funds for the purchase. Thereafter the Assessing Officer is directed to pass an order under Section 148A(d) in accordance with law, ensuring that the petitioner has had a proper opportunity to be heard. [Paras 6]

Respondent may issue corrigendum and supplementary show cause notice under Section 148A(b); petitioner to file reply within four weeks explaining source of funds; Assessing Officer to decide under Section 148A(d) in accordance with law.

Final Conclusion: Writ petition disposed of by setting aside the impugned order and notices for breach of natural justice, with directions permitting issuance of a corrigendum and a supplementary show cause notice under Section 148A(b), an opportunity to the petitioner to reply (including explanation of source of funds), and a fresh decision by the Assessing Officer under Section 148A(d) in accordance with law.

Direction for early hearing of appeal - expeditious disposal of early hearing applications - transfer of appeals under the Faceless Appeal Scheme - freezing of bank accounts under proceedings under section 226 of the Income tax Act, 1961 - recovery pursuant to a freezing order

Direction for early hearing of appeal - expeditious disposal of early hearing applications - transfer of appeals under the Faceless Appeal Scheme - Petition for a direction to the appellate authority to list, hear and decide the pending first appeal within a specified time-frame. - HELD THAT: - The petitioner filed an appeal against an assessment order on January 20, 2020, which was subsequently transferred to the National Faceless Appeal Centre under the Faceless Appeal Scheme. The petitioner complained that the appeal had not been listed for more than two and a half years and that bank accounts were frozen and amounts recovered pursuant to a notice issued on February 20, 2020 under proceedings under section 226 of the Income tax Act, 1961. On notice, the respondents' counsel accepted notice and stated that an application for early hearing would be considered expeditiously. In the circumstances, the court directed the petitioner to file an application for early hearing before the National Faceless Appeal Centre within two weeks and directed respondent No. 2 to decide that application in accordance with law within four weeks thereafter, thereby securing an expedited adjudication of the pending appeal transferred under the Faceless Appeal Scheme. The direction is procedural and limited to prompt consideration and decision of an early hearing application; the court did not adjudicate the merits of the underlying assessment, the freezing order or the legality of recoveries made thereunder. [Paras 5]

Petitioner to file an early hearing application within two weeks; National Faceless Appeal Centre to decide the application in accordance with law within four weeks.

Final Conclusion: Writ petition disposed of by directing the petitioner to move an early hearing application before the National Faceless Appeal Centre within two weeks and directing the appellate authority to decide the same expeditiously, i.e., within four weeks; no adjudication on the merits of the assessment or freezing order.

Validity of initiation under Section 148A of the Income tax Act - Adjournment and right to be heard in proceedings under Section 148A - Treatment of a single cash deposit as multiple transactions for triggering reopening under Section 149 - Obligation of assessing authority to verify bank transactions and record clear reasons when reopening under Section 148

Validity of initiation under Section 148A of the Income tax Act - Adjournment and right to be heard in proceedings under Section 148A - Whether the orders passed under clause (d) of Section 148A should be interfered with for failure to grant the adjournment sought by the petitioners. - HELD THAT: - Notices under Section 148A were issued giving seven days to respond. The petitioners sought a short adjournment to file their response, but the orders under clause (d) do not refer to that prayer. The material placed before the Court did not disclose any extraordinary grounds for granting the adjournment. In view of that absence of exceptional circumstances, the Court declined to interfere with the orders passed under clause (d) of Section 148A. The Court therefore upheld the procedural validity of the initiation under Section 148A and the consequent orders, subject to consideration of substantive objections in the reopened proceedings.

Orders under clause (d) of Section 148A are not interfered with; no relief granted on the ground of the adjournment prayer.

Treatment of a single cash deposit as multiple transactions for triggering reopening under Section 149 - Obligation of assessing authority to verify bank transactions and record clear reasons when reopening under Section 148 - Whether the assessing authority must examine the petitioners' contention that a single cash deposit was erroneously treated as two transactions and must decide if the alleged income chargeable to tax exceeds the threshold for reopening. - HELD THAT: - Petitioners raised a substantial factual objection that an alleged single cash deposit of Rs.34,01,000 was taken as two separate deposits to aggregate beyond the threshold for reopening under Section 149. The Court found this contention material and directed that the objection be considered in the proceedings under Section 148. The assessing authority is obliged to examine the relevant material placed by the petitioners and to collect other material as necessary, including bank transactions, slips and statements, and to record clear reasons while deciding whether the alleged income chargeable to tax meets the statutory threshold. The matter is therefore remitted to the authority for adjudication on the merits of this specific factual contention in the reopened proceedings.

Objection that a single deposit was double counted is remitted to the assessing authority for fresh consideration with directions to verify bank records and record clear reasons in proceedings under Section 148.

Final Conclusion: The petitions are disposed of by declining interference with the orders under clause (d) of Section 148A for lack of extraordinary grounds to grant an adjournment, while directing the assessing authority, in the proceedings under Section 148, to examine the petitioners' specific contention that a single cash deposit was incorrectly treated as two transactions and to verify bank records and record clear reasons in deciding whether the statutory threshold for reopening is satisfied; liberty granted to petitioners to revive the petitions if required.

Territorial jurisdiction - place of assessment and forum for appellate remedy - effect of change of registered office on forum - liberty to file appeal in appropriate forum - condonation of delay application to be decided on merits

Territorial jurisdiction - place of assessment and forum for appellate remedy - effect of change of registered office on forum - The Delhi High Court has no territorial jurisdiction to entertain the present Income Tax Appeal arising from assessments and appellate orders issued by authorities located in Noida, despite the appellant's registered office being subsequently situated in Bangalore after amalgamation. - HELD THAT: - The Court examined the situs of the original assessment proceedings and subsequent appellate orders and noted that the assessment order, remand report and the order in appeal were passed by the Assessing Officer and the Commissioner of Income Tax (Appeals) located in Noida. Although the appellant's registered office is now situated in Bangalore following amalgamation and the appeal has been preferred by the Principal Commissioner of Income Tax, Bangalore, the situs of the assessment and the authorities who made the impugned orders determines the proper territorial forum for entertaining the appeal. On that basis, the Court concluded that it did not have territorial jurisdiction to hear the appeal and therefore could not adjudicate the substantive dispute on merits.

Appeal dismissed for want of territorial jurisdiction with liberty to file the appeal in the Court having territorial jurisdiction.

Liberty to file appeal in appropriate forum - condonation of delay application to be decided on merits - Whether the appellant should be granted leave to re-file the appeal and to seek condonation of delay. - HELD THAT: - The Court granted the appellant liberty to institute the appeal before the forum having proper territorial jurisdiction. The appellant was additionally permitted to submit, along with any re-filed appeal, an application for condonation of delay if required. The Court observed that any such condonation application shall be considered by the competent forum on its own merits and did not express any view on the merits of delay condonation.

Liberty granted to file the appeal in the competent territorial forum and to file a condonation of delay application, which shall be considered on its merits.

Final Conclusion: The appeal was dismissed by the Delhi High Court for want of territorial jurisdiction in respect of Assessment Year 2009-10, with the appellant granted leave to file the appeal before the appropriate territorial forum and to seek condonation of delay, if any, which shall be considered on its merits.

Territorial jurisdiction - condonation of delay - liberty to institute proceedings in proper forum - exemptions from filing formalities

Territorial jurisdiction - The Court has no territorial jurisdiction to entertain or decide the appeal. - HELD THAT: - The Court examined the locus of the assessment and appellate proceedings and found that the assessee's initial registered office was in Noida (U.P.), and the assessment order as well as the remand report and appellate order were passed by authorities based in Noida. Although the assessee's registered office stands amalgamated and is now situated in Bangalore and the appeal was preferred by the Principal CIT, Bangalore, those facts did not confer territorial jurisdiction on this Court. For these reasons the appeal could not be entertained on merit by this Court and was dismissed on the ground of lack of territorial jurisdiction. The Court, however, exercised judicial restraint by granting the appellant liberty to institute the appeal before the forum having proper territorial jurisdiction and to seek condonation of delay there, if required; any such condonation application was directed to be considered on its own merits.

Appeal dismissed for lack of territorial jurisdiction; liberty granted to file the appeal in the court having territorial jurisdiction and to apply therefor for condonation of delay.

Condonation of delay - The delay in filing the present appeal (as prayed in the miscellaneous application) is condoned. - HELD THAT: - On consideration of the averments in the miscellaneous application (CM APPL. 24996/2022), the Court found the explanation satisfactory and proceeded to condone the delay in filing the appeal. This order condoning delay was procedural and limited to the application before this Court; the Court's ultimate dismissal of the appeal for want of territorial jurisdiction does not affect the discretionary grant of condonation, and the appellant was permitted to seek condonation before the proper forum where the appeal is to be filed.

Delay in filing the appeal condoned; miscellaneous application disposed of accordingly.

Final Conclusion: The appeal (ITA 166/2022 concerning Assessment Year 2010-11) is dismissed for want of territorial jurisdiction; the appellant is permitted to file the appeal in the forum having territorial jurisdiction and may seek condonation of delay there, which shall be considered on its merits. Miscellaneous applications for exemption were allowed and the application for condonation of delay before this Court was disposed of by condonation.

Revisional jurisdiction under section 263 - Explanation 2(a) to section 263 - Erroneous and prejudicial to the interests of the revenue - Lack of inquiry versus inadequate inquiry - Plausible view of the Assessing Officer - Scope of enquiries by the Assessing Officer

Explanation 2(a) to section 263 - Erroneous and prejudicial to the interests of the revenue - Lack of inquiry versus inadequate inquiry - Plausible view of the Assessing Officer - Scope of enquiries by the Assessing Officer - Whether the Principal Commissioner of Income-tax was justified in invoking revisional jurisdiction under section 263 to set aside the assessment on the ground that the Assessing Officer had not made enquiries or verifications which should have been made in respect of share capital, unsecured loans, and claims of depreciation and investment allowance. - HELD THAT: - The Tribunal examined the scope of Explanation 2(a) to section 263 and reiterated that an order is 'erroneous' under section 263 only if it is not in accordance with law, or where the Assessing Officer has completely omitted to make any enquiry or the order demonstrates non-application of mind. Mere inadequacy of inquiry, or the Commissioner's disagreement with the extent of enquiries made, does not render an assessment order erroneous. The Tribunal relied upon established authorities holding that where the Assessing Officer has made inquiries, applied his mind and taken a plausible view on the materials on record, the revisional power under section 263 cannot be invoked to substitute the Commissioner's view for that of the Assessing Officer. On the facts, the assessee was selected for complete scrutiny; the Assessing Officer issued specific notices under section 142(1) seeking details of shareholders, source of funds, unsecured loans and assets; the assessee furnished bank statements, PAN, returns of income, asset details, bills and annexures in response; and the Assessing Officer, after considering those materials and the time-to-time submissions, accepted the explanations and allowed the claims. The Principal Commissioner did not contend that the AO had failed to apply his mind or omitted inquiries altogether but took the view that further inquiries should have been made. Applying the legal principles, the Tribunal held that the AO had carried out enquiries which a reasonable and prudent officer would have conducted and had taken a plausible view; consequently, the revisional order setting aside the assessment was unjustified. [Paras 9]

The revisional order passed by the Principal Commissioner under section 263 is set aside and the assessment order passed under section 143(3) is upheld.

Final Conclusion: The appeal is allowed: the Tribunal held that the Assessing Officer had made enquiries, applied his mind and taken a plausible view on the genuineness of share capital, unsecured loans and claims of depreciation/investment allowance; the revisional order under section 263 was therefore unjustified and is set aside.

Deduction under section 80IC - New industrial undertaking / establishment of new unit - Principle of consistency in successive assessments - Independence of an eligible unit despite processing of semi-finished goods from another unit - Allocation and apportionment of expenses between eligible and non eligible units - Requirement of substantial investment in plant and machinery for expansion

Deduction under section 80IC - New industrial undertaking / establishment of new unit - Principle of consistency in successive assessments - Independence of an eligible unit despite processing of semi-finished goods from another unit - Requirement of substantial investment in plant and machinery for expansion - Assessee entitled to deduction under section 80IC for the Rudrapur unit - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the Rudrapur unit was a new industrial undertaking entitled to deduction under section 80IC. The Court noted that Rudrapur had separate licences, significant investments in land, buildings and plant & machinery, incurred manufacturing expenses (wages, PF, electricity) and maintained unit wise audited accounts and purchase/job work records. There was no material before the AO showing transfer of assets or reconstruction/splitting of the existing Rajkot business. The principle of consistency was applied as the AO had allowed the identical claim in the immediately preceding year and the Revenue did not point to any material change in facts; authorities were cited to the effect that an assessee cannot be negatived in a later year on the same fundamental aspect without convincing reasons. The Tribunal also accepted that there is no statutory prohibition on an eligible unit manufacturing from semi finished goods supplied by another unit and that such inter unit processing does not ipso facto defeat the claim under section 80IC. Having found the requisite facts and conditions satisfied on the record, the Tribunal directed allowance of the deduction. [Paras 10]

Deduction under section 80IC in respect of the Rudrapur unit is allowable and the AO's disallowance is set aside.

Allocation and apportionment of expenses between eligible and non eligible units - Deduction under section 80IC - Principle of consistency in successive assessments - Additions and apportionments made by AO to allocate expenses and gross profit to the non eligible unit are unsustainable and deleted - HELD THAT: - The Tribunal affirmed the CIT(A)'s deletion of the AO's reallocations. The AO had reallocated administrative and selling expenses, partner remuneration and a gross profit difference on a presumptive percentage basis, alleging the assessee had not furnished unit wise cost details and had diverted expenses to manipulate profits. The Tribunal observed that the assessee had furnished audited unit wise accounts, Form 10CCB, cost sheets, purchase and job work details and explanations regarding partner remuneration as per the partnership deed. The AO did not point to any specific defect in these documents during assessment nor did the Revenue identify any material change from earlier years where the eligible unit's profits had been accepted. Apportionments made on assumptions without documentary support were held to be unjustified. On this basis the Tribunal found no reason to interfere with the CIT(A)'s deletion of the additions. [Paras 13, 17]

Additions and apportionments effected by the AO are deleted and the CIT(A)'s relief is upheld.

Final Conclusion: The Revenue's appeal is dismissed; the deduction claimed under section 80IC for the Rudrapur unit is to be allowed and the additions/apportionments made by the Assessing Officer are to be deleted as directed by the Tribunal.

Definition of capital asset under section 2(14) - agricultural land - capital asset - short-term capital gains - actual user for agricultural purposes - onus of proof on assessee - reliance on revenue records not conclusive

Agricultural land - definition of capital asset under section 2(14) - actual user for agricultural purposes - onus of proof on assessee - reliance on revenue records not conclusive - short-term capital gains - capital asset - Whether the land sold by the assessee qualified as agricultural land and hence was not a capital asset so as to exempt the sale proceeds from tax as agricultural income, or whether it was a capital asset and the profit on sale was taxable as short-term capital gains. - HELD THAT: - The Tribunal examined the material on record and held that the primary onus to establish that the land was agricultural lay on the assessee. Apart from the conveyance deeds and the 7/12 revenue extracts, no evidence was produced to show that the land was actually and ordinarily used for agricultural purposes either during the period of assessee's ownership or prior thereto. The 7/12 extract itself described the land as barren/Jirayat fallow and there was no declaration of agricultural income or documentary proof of agricultural operations. The Tribunal applied precedents including an earlier coordinate-bench decision in Abhijit Subash Gaikwad which follows the view that mere recitals in sale/purchase deeds or entries in revenue records are not conclusive, and that actual user for agricultural purposes in recent times is a decisive test. The Tribunal noted conflicting authorities but, being bound by jurisdictional precedent and the factual absence of proof of cultivation or intent to use the land agriculturally, concluded that the land did not retain the character of agricultural land and fell within the definition of capital asset for the purposes of section 2(14), rendering the profit taxable as short-term capital gains. [Paras 11, 12, 13]

Assessee failed to discharge onus to prove the land was agricultural; impugned addition treating the land as capital asset and assessing profit as short-term capital gains is upheld and grounds of appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal and upheld the CIT(A)'s order treating the land as a capital asset and sustaining the addition of the short term capital gain; the assessee's claim of exemption as agricultural land was rejected for want of proof.

Levy of interest on delayed payment of customs duty - imposition of penalty as an additional tax - charging section for additional duty (CVD), special additional duty (SAD) and surcharge - application of procedural/machinery provisions by incorporation - scope of judicial review of Settlement Commission orders for contravention of statute - limits of Settlement Commission's power to determine terms of settlement

Levy of interest on delayed payment of customs duty - imposition of penalty as an additional tax - application of procedural/machinery provisions by incorporation - Interest and penalty cannot be levied on surcharge, additional duty equal to excise duty (CVD) or special additional duty (SAD) in the absence of substantive charging provisions in the enactments imposing those duties. - HELD THAT: - The Court held that interest and penalty are substantive liabilities and require a specific statutory charging provision. Sub-section (6) of Section 3 and sub-section (4) of Section 3A of the Customs Tariff Act, 1975 and Section 90 of the Finance Act, 2000 make procedural provisions of the Customs Act applicable only insofar as they relate to matters like refunds, drawbacks, exemptions, non-levy, short-levy and appeals, but do not expressly borrow provisions creating liability for interest or penalty. Jurisprudence establishes that penalty partakes of the character of an additional tax and interest on delayed payment is substantive; therefore machinery provisions cannot be read down to create substantive liabilities where the charging enactment is silent. The legislative amendment that inserted express reference to interest and penalties in Section 9A(8) for anti-dumping duty (by Finance (No.2) Act, 2004) but did not make similar insertions in Section 3(6) or Section 3A(4) demonstrates legislative intent to limit borrowing of interest/penalty to certain duties only. Consequently, imposition of interest at 10% and the specified penalties on amounts relating solely to surcharge, CVD and SAD was without authority of law and liable to be quashed. [Paras 31, 34, 36, 37, 40]

Order of the Settlement Commission to impose interest and penalty on the portions of demand attributable to surcharge, CVD and SAD is quashed and set aside.

Charging section for additional duty (CVD), special additional duty (SAD) and surcharge - application of procedural/machinery provisions by incorporation - The charging sections for surcharge, CVD and SAD are Section 90(1) of the Finance Act, 2000 and Sections 3(1) and 3A(1) of the Customs Tariff Act, 1975 respectively, and not Section 12 of the Customs Act, 1962. - HELD THAT: - The Court rejected the contention that Section 12 of the Customs Act, 1962 is the charging section for surcharge, CVD and SAD. While Section 12 levies duties at rates specified in the Customs Tariff Act, the statutory scheme and language of Sections 3, 3A and 90 show that those sections themselves create independent charges for CVD, SAD and surcharge. The rates and the charging mechanism for these duties are specified in their own provisions and in some cases are not linked to the First or Second Schedules; hence they constitute separate charging sections. This distinction supports the conclusion that substantive liabilities (such as interest and penalty) cannot be imported from Section 28AB of the Customs Act to these independent charging provisions where the latter do not expressly provide for them. [Paras 33, 35, 36]

Section 90 of the Finance Act, 2000 and Sections 3 and 3A of the Customs Tariff Act, 1975 are the charging provisions for surcharge, CVD and SAD respectively; they do not subsume those duties under Section 12 for the purpose of creating ancillary liabilities absent express provision.

Limits of Settlement Commission's power to determine terms of settlement - scope of judicial review of Settlement Commission orders for contravention of statute - The Settlement Commission cannot, by exercise of inherent or settlement powers, impose interest or penalty beyond what is expressly provided by the relevant charging enactments; its orders are subject to judicial review where they contravene statutory provisions. - HELD THAT: - Having applied the principle that orders of the Settlement Commission are examinable to the extent they are contrary to statutory provisions, the Court found that the Commission's reliance on Section 127C (or its inherent authority) to include interest and penalty in settlement terms is misplaced insofar as those charges are not authorised by the enactments creating the relevant duties. The Commission must act within the limits of the statute; it cannot depart from the statute to create substantive liabilities like interest or penalty when the charging provisions do not provide for them. Therefore the Commission's imposition of interest and specified penalties in the settlement exceeded its statutory authority. [Paras 8, 14, 39, 40]

Settlement Commission's orders to include interest and penalty beyond statutory authority are invalid and are quashed.

Final Conclusion: The writ petition was allowed: the Settlement Commission's directions to pay interest at 10% and the specified penalties insofar as they related to surcharge, CVD and SAD were quashed and set aside; the penalty amount deposited was ordered refunded with interest and the bank guarantee cancelled and returned; the Rule made absolute and the petition disposed, without costs.

Penalty under Section 112(b) of the Customs Act, 1962 - knowledge or reason to believe - possession or in any way concerned with goods - mens rea requirement for imposition of penalty - reliance on third party statements and need for corroboration - principles of natural justice - supply of relied upon documents

Principles of natural justice - supply of relied upon documents - reliance on third party records - Adjudication conducted without supplying the worksheet and other documents relied upon to the appellant violated principles of natural justice. - HELD THAT: - The Tribunal found that the department relied upon a worksheet and emails retrieved from a pen drive seized from a third party (Ms. Nita Parmar) titled with the appellant's name but did not supply those documents to the appellant despite requests (letters dated 12.10.2021, 11.11.2021 and 30.11.2021). When a show cause notice proposes heavy penalties, all relied upon documents ought to have been supplied for effective defence. Proceeding to adjudicate and impose penalty without furnishing such material vitiates the proceedings and is contrary to natural justice. [Paras 6]

Impugned adjudication was vitiated for non supply of relied upon documents; reliance on such unsupplied third party material cannot sustain penalty.

Reliance on third party statements and need for corroboration - right to confrontation / cross examination - Uncorroborated statements of co accused/third parties and the worksheet could not be the sole basis for imposing penalty in absence of recording the appellant's statement or granting opportunity to test that evidence. - HELD THAT: - The Tribunal observed that the adjudicating authority relied heavily on statements of co noticees and third party documents without recording the appellant's statement, without confronting him with those documents, and without granting cross examination of key witnesses whose statements were relied upon. Legal precedent and principle require that statements of co accused cannot, standing alone and without corroboration, support penal consequences. The revenue made no further investigative effort (search of appellant's premises or recording of his statement) and failed to produce independent corroborative evidence linking the appellant to the offence. [Paras 6]

Findings based solely on uncorroborated third party statements and records, without confronting or recording the appellant's statement, are insufficient to impose penalty.

Penalty under Section 112(b) of the Customs Act, 1962 - possession or in any way concerned with goods - knowledge or reason to believe - mens rea requirement for imposition of penalty - Penalty under Section 112(b) could not be sustained because the department failed to prove that the appellant acquired possession, dealt with the goods, or knew or had reason to believe the goods were liable to confiscation. - HELD THAT: - Section 112(b) requires that a person must have acquired possession of or been in some way concerned with goods and must have known or had reason to believe that those goods were liable to confiscation. The Tribunal analysed authoritative interpretations and held that acts enumerated in the provision contemplate physical dealing or conduct comparable to carrying, removing or concealing. In the present case there was no evidence that the appellant physically dealt with the smuggled gold or had knowledge that the goods were liable to confiscation; no documents or incriminating material were recovered from the appellant's premises and the investigative material did not establish mens rea. Merely appearing by name in a third party worksheet or occasional payments for travel bookings (on instructions, as claimed) do not demonstrate the requisite possession, dealing or guilty knowledge. [Paras 6]

Penalty under Section 112(b) cannot be imposed in the absence of proof of dealing/possession and knowledge; the penalty therefore cannot be sustained.

Final Conclusion: The Tribunal set aside the penalty imposed under Section 112(b) of the Customs Act, 1962 on the appellant, allowed the appeal and granted consequential relief.

Look Out Circular (LOC) - right to travel abroad under Article 21 - extra territorial operation of Office Memoranda - authority of Indian originator to request LOC for dues of foreign sister entities - issuance of LOC in relation to non cognizable offences - decriminalization of dishonour of cheques in UAE - exceptional cases under Office Memorandum paragraph 8(j) - territorial jurisdiction under Article 226 (part cause of action)

Territorial jurisdiction under Article 226 (part cause of action) - This High Court has territorial jurisdiction to entertain the writ petition. - HELD THAT: - Applying the principle that a High Court may exercise jurisdiction if even a part of the cause of action accrues within its territory, the Court found material facts connecting the dispute to Haryana (petitioners' residence in Faridabad and mortgaged properties in Haryana, and the prospect of enforcement of a Dubai decree in India under Section 44A CPC after notification declaring UAE a reciprocating country). The objection to territorial jurisdiction raised in pleadings by some respondents was considered but not pressed; authorities on avoiding technical pleas by State bodies were noted. Consequently the petition was entertained by this Court.

Court exercises territorial jurisdiction; objection overruled in favour of petitioners.

Authority of Indian originator to request LOC for dues of foreign sister entities - extra territorial operation of Office Memoranda - exceptional cases under Office Memorandum paragraph 8(j) - Look Out Circular (LOC) - right to travel abroad under Article 21 - Indian entities of banks (respondents No.7 and 8) cannot request LOCs from Bureau of Immigration in respect of dues owed to their separate UAE incorporated sister entities. - HELD THAT: - The Court examined the Office Memoranda governing LOCs and held that such administrative instructions do not have extra territorial operation so as to permit Indian bank entities to seek coercive travel restrictions for debts owed to distinct overseas incorporated branches/sister entities. The amendment enabling public sector bank heads to request LOCs (and paragraph 8(j) for 'exceptional cases') cannot be stretched to cover loan defaults owed solely to foreign incorporated entities absent any demonstrated nexus with India's economic interest. There was no allegation of cognizable offences in India, no willful defaulter or fugitive economic offender declaration, and material showed the Indian bank exposures were settled. The Bureau of Immigration had also acted mechanically without applying its mind to whether the requests met the OMs' thresholds; issuance of LOCs in these circumstances unlawfully interfered with the fundamental right to travel.

Requests by Indian bank entities to issue/extend LOCs for dues of their UAE sister entities are impermissible and set aside.

Issuance of LOC in relation to non cognizable offences - decriminalization of dishonour of cheques in UAE - Look Out Circular (LOC) - right to travel abroad under Article 21 - LOCs issued or extended at the instance of the National Central Bureau (Interpol) and the Serious Fraud Investigation Office (respondents No.5 and 6) were not sustainable in the facts of this case. - HELD THAT: - The Court accepted petitioners' unrefuted record that UAE has, by Federal Decree Law No.14 of 2020 and related circular, decriminalized issuance of cheques in bad faith except in specified circumstances and mandated cancellation of travel bans/orders passed in absentia where execution has not occurred. No request or material was shown by respondent No.5 evidencing a continuing cognizable offence within Indian law; dishonour of cheques as relied upon is non cognizable in India and, under the OMs, LOCs cannot be used to prevent departure where no cognizable offence is made out. Regarding SFIO (respondent No.6), the investigation under section 212(1)(c) of the Companies Act concerned ACCIL and, in any event, there was no adverse report, no FIR in India, and no MHA OM empowering SFIO to seek LOCs on that basis. Therefore neither respondent was entitled to seek or continue LOCs here.

LOCs issued/extended at the instance of respondents No.5 and No.6 are unsustainable and are set aside.

Look Out Circular (LOC) - authority of Indian originator to request LOC for dues of foreign sister entities - issuance of LOC in relation to non cognizable offences - Relief: All LOCs issued and/or extended against the petitioners by respondent No.2 at the instance of respondents No.3 to No.8 are set aside and enforcement restrained. - HELD THAT: - Having found that (i) Indian bank entities could not validly request LOCs in respect of debts owed to their separate UAE incorporated sister entities; (ii) LOCs based on non cognizable cheque dishonour allegations and post decriminalization UAE law could not be sustained; and (iii) SFIO lacked basis to seek LOCs on the present record, the Court declared the subsisting LOCs invalid. The respondents were directed to communicate the order to the Bureau of Immigration and officials of respondents No.1 and No.2 were restrained from preventing the petitioners from travelling abroad.

All challenged LOCs are quashed; respondents directed to communicate order and prevented from restricting petitioners' travel.

Final Conclusion: Writ petition allowed. The High Court exercised jurisdiction, set aside the Look Out Circulars issued or continued by the Bureau of Immigration at the instance of respondents No.3 to No.8 for the reasons stated (lack of extra territorial application of OMs to foreign sister entities, absence of cognizable offences under Indian law, and decriminalization in UAE), and restrained officials from preventing the petitioners from travelling abroad; respondents to communicate the order. No costs.

Family settlement - specific performance - interlocutory injunction - agreement to agree / reference to subsequent formal document - ouster of civil court jurisdiction under Section 430 of the Companies Act - prima facie assessment on interlocutory applications

Family settlement - specific performance - agreement to agree / reference to subsequent formal document - The Minutes of Discussion dated 14th June 2019 is a valid, subsisting contract in the nature of a family settlement and is prima facie enforceable by specific performance. - HELD THAT: - The Court accepted the Single Judge's prima facie finding that the MOD recorded an overall family settlement between the three family groups and was not merely a compromise limited to the pending NCLT proceedings. The appellate court held that a clause contemplating a more detailed formal document does not render the earlier instrument inchoate; family settlements are to be approached with less technical strictness and, where acted upon, courts should give effect to them. The material relied on (signed MOD, steps taken in furtherance, communications and conduct of parties) supported a reasonably possible view that the MOD constituted a concluded agreement capable of specific performance, and the Kamdars' subsequent conduct suggested attempt to resile from the agreed valuation and mechanics rather than any absence of contract. [Paras 27, 42, 60]

The MOD is prima facie a binding family settlement enforceable in a suit for specific performance.

Ouster of civil court jurisdiction under Section 430 of the Companies Act - prima facie assessment on interlocutory applications - The Civil Court has jurisdiction to adjudicate the question whether the MOD is a binding family settlement and to grant interlocutory relief, notwithstanding overlapping powers of the NCLT under the Companies Act. - HELD THAT: - Applying settled principles, the Court held that the ouster in Section 430 must be narrowly construed. Jurisdictional ouster does not bar the Civil Court from deciding whether a concluded agreement exists and entertaining a claim for specific performance where such relief and related issues fall within the Civil Court's remit. The appellate court found that Chagla J's view on jurisdiction was a reasonably possible one on the material and not perverse or arbitrary; the NCLT's powers do not ipso facto preclude concurrent Civil Court inquiry into the existence and enforceability of a contract between parties. [Paras 41, 43]

No jurisdictional bar; Civil Court competent to decide existence of MOD and to grant interlocutory relief.

Interlocutory injunction - prima facie assessment on interlocutory applications - The interlocutory injunction granted by the Single Judge restraining the Kamdars from acting contrary to the MOD was a valid exercise of discretion and not susceptible to appellate interference. - HELD THAT: - The Court reiterated the high threshold for disturbing interlocutory orders on appeal - interference is permissible only if the trial court's discretion was exercised arbitrarily, capriciously, perversely, or on a view not reasonably possible. On the material, including evidence of steps taken in furtherance of the MOD and the Kamdars' conduct seeking fresh valuation and buyout, the Single Judge's conclusion of a prima facie case and grant of injunctive relief was a tenable exercise of discretion. The appellants failed to demonstrate that the impugned order was perverse or untenable. [Paras 24, 26, 27]

The interlocutory order is sustained; appeal against it is dismissed for lack of merit.

Repudiation / approbation and reprobation - family settlement - Allegations that the Sanghvis repudiated the MOD were rejected on the prima facie record. - HELD THAT: - The Court examined the correspondence, affidavits and conduct relied upon by the Kamdars and found no cogent evidence of repudiation by the Sanghvis. Isolated statements in procedural filings were read in context and the record contained repeated affirmations and actions in furtherance of the MOD. The appellate court agreed with the Single Judge that the inconsistencies, if any, were on the Kamdars' side and not inconsistent with the conclusion that the Sanghvis regarded and acted upon the MOD as binding. [Paras 46, 48]

The claim of repudiation by the Sanghvis is not established on the material before the Court.

Final Conclusion: The appeal is dismissed. The High Court found no infirmity in the Single Judge's prima facie conclusion that the 14th June 2019 Minutes of Discussion is a binding family settlement capable of specific performance, that the Civil Court had jurisdiction to adjudicate that question despite overlapping NCLT powers, and that the interlocutory injunction restraining the Kamdars from acting contrary to the MOD was a proper exercise of discretion; no costs were ordered.

Principles of natural justice - requirement to record reasons - interlocutory order / vacating interim relief - appellate interference with discretionary orders - remand for fresh consideration

Principles of natural justice - interlocutory order / vacating interim relief - Denial of an opportunity to file a counter/reply in an application seeking vacation of an earlier interim order vitiates the impugned order. - HELD THAT: - The Tribunal held that the respondents filed IA No.86/KB/2022 to recall the undertaking recorded in the order dated 28 June 2019 and the appellants were not afforded an opportunity to file a counter to rebut subsequent allegations relied upon to vacate that undertaking. Citing settled law that a party must be given reasonable opportunity to file a counter-affidavit to an application to vacate an interim order, the Tribunal concluded that depriving the appellants of that opportunity amounted to violation of the principles of natural justice and warranted setting aside the impugned order. The denial of opportunity rendered any findings based on those unchallenged allegations unsustainable. [Paras 12, 16, 17, 26]

Impugned order set aside on the ground that the appellants were denied the opportunity to file counter/reply; IA remanded for fresh hearing after affording such opportunity.

Requirement to record reasons - appellate interference with discretionary orders - An unreasoned or non considered order that fails to record focused reasons is legally unsustainable and justifies appellate interference. - HELD THAT: - The Tribunal affirmed the principle that orders and judgments must contain reasons showing consideration of rival contentions. It observed that the impugned NCLT order amounted to a brief mechanical recital that settlement had failed without recording analysis on merits or reasons for modifying/vacating the interim undertaking. Reliance was placed on rules and authorities requiring that a tribunal's order be reasoned so parties understand the basis for decision and may avail remedies. Given the absence of reasons and the cursory nature of the decision, the appellate forum found the order to be slipshod and liable to be set aside, notwithstanding contentions that discretion should not be lightly disturbed. [Paras 22, 23, 24, 25, 26]

Impugned order set aside for being unreasoned; appellate interference held justified.

Interlocutory order / vacating interim relief - remand for fresh consideration - Findings that the appellant acted prejudicial to the company cannot be sustained where they rest on allegations in the vacate application that were not subject to reply; the matter is remanded to the Tribunal for fresh adjudication of the interlocutory application together with the interim reliefs in the main petition. - HELD THAT: - The Tribunal noted that allegations of prejudice and misuse of the undertaking by the first appellant constituted subsequent events forming the basis for the vacate application. Because no opportunity was afforded to the appellants to contest those allegations, any findings on prejudice would violate natural justice and cannot stand. The appellate court accordingly remanded IA No.86/KB/2022 to the NCLT, directing restoration of its original number, opportunity to file counter, and a directive to hear and decide the interim reliefs claimed in the main petition along with the interlocutory application in accordance with law. [Paras 30, 31, 32, 33, 36]

Application remanded to NCLT to restore original number, permit filing of counter, and hear & decide the interim reliefs together with IA No.86/KB/2022.

Final Conclusion: The appeal is allowed: the order dated 20 September 2022 is set aside as unreasoned and contrary to principles of natural justice; IA No.86/KB/2022 is remanded to the NCLT to be restored to its original number, with directions to afford the appellants an opportunity to file counter and to hear and decide the interim reliefs together with the interlocutory application in accordance with law.

Regulation 35-A timeline directory not mandatory - Fraudulent trading / wrongful trading under Section 66 of the IBC - Avoidance of undervalued transactions and recovery for benefit of corporate debtor - Ineligibility of resolution applicant under Section 29-A(g) for being promoter where fraudulent/undervalued transactions found - Duty and role of the resolution professional in forming determination and applying to Adjudicating Authority

Regulation 35-A timeline directory not mandatory - Duty and role of the resolution professional in forming determination and applying to Adjudicating Authority - The Section 66 application filed by the Resolution Professional beyond the 135th day of the insolvency commencement date was not barred by limitation solely for that delay and was maintainable. - HELD THAT: - The Tribunal examined Regulation 35-A which prescribes that the resolution professional shall form an opinion by the 75th day, make a determination by the 115th day and apply to the Adjudicating Authority by the 135th day of the insolvency commencement date. Applying established principles of statutory interpretation and precedent, the Tribunal held that the timelines in Regulation 35-A are directory and not mandatory. The Tribunal reasoned that treating the timelines as mandatory would frustrate the Code's object of maximising corporate assets by excluding avoidance claims for mere delay. In the present case the Resolution Professional filed the Section 66 application after the 135th day but furnished factual explanations for delay - including a stalled CIRP on account of an OTS proposal, directions by a creditor to hold the audit, delayed cooperation and late provisioning of reconciled accounts, and pandemic-related factors - which the Adjudicating Authority accepted. On that basis the Tribunal found no error in condoning the delay and holding the application maintainable despite being filed beyond the prescribed days. [Paras 16, 18, 25]

Regulation 35-A is directory; the delay in filing the Section 66 application was satisfactorily explained and the application could be considered despite being filed after 135 days.

Fraudulent trading / wrongful trading under Section 66 of the IBC - Avoidance of undervalued transactions and recovery for benefit of corporate debtor - Ineligibility of resolution applicant under Section 29-A(g) for being promoter where fraudulent/undervalued transactions found - The Adjudicating Authority correctly found that the appellants had carried out fraudulent and undervalued transactions and validly directed recovery; consequent on that finding the Resolution Applicant was ineligible under Section 29-A(g) and the Resolution Plan was rightly rejected, leading to liquidation. - HELD THAT: - The Tribunal reviewed the Transaction Audit Report, the pleadings and material before the Adjudicating Authority and concurred with the findings that (a) funds of the corporate debtor were wrongfully diverted to a sister concern while the corporate debtor lacked surplus funds and had borrowed monies, thereby aggravating creditor loss and amounting to diversion/fraudulent practice; (b) there was an unusual and inadequately documented write-off of large inventory (including a single-day write-off coinciding with CIRP initiation) and failure to record milling outputs, supporting the TAR's conclusion of suppression and siphoning; and (c) advances to several parties were routed at a time when the corporate debtor's operations were eroded and adequate records were not produced, supporting a finding of undervalued transactions. On this basis the Tribunal held that the Adjudicating Authority was justified in directing recovery from the appellants for the benefit of the corporate debtor. Having affirmed that such preferential/undervalued/fraudulent transactions took place and an order had been made, the Tribunal further held that Section 29-A(g) barred the Resolution Applicant (being a promoter/manager involved in such transactions) from being eligible to submit a resolution plan; accordingly the Adjudicating Authority's rejection of the plan and direction for liquidation stood affirmed. [Paras 21, 22, 24, 25, 29]

Findings of fraudulent and undervalued transactions sustained; recovery directions upheld and the Resolution Applicant rendered ineligible under Section 29-A(g), justifying rejection of the plan and liquidation.

Final Conclusion: The Tribunal dismissed the appeals: Regulation 35-A timelines are directory and the delayed Section 66 application was rightly considered on its merits; the Adjudicating Authority's findings of diversion, unusual inventory write-offs and undervalued transactions were affirmed, recovery directions were upheld, and consequent ineligibility under Section 29-A(g) warranted rejection of the resolution plan and liquidation.

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - appointment of liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - power of the committee of creditors to decide liquidation - limitation on change of resolution professional as liquidator in absence of specific provision or reason - entitlement to fees under Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016 - vesting of management and managerial powers in the liquidator on initiation of liquidation - obligations to issue public notice and file order with Registrar of Companies on liquidation - bar on suits and proceedings subject to Section 52 of the Code during liquidation

Limitation on change of resolution professional as liquidator in absence of specific provision or reason - power of the committee of creditors to decide liquidation - Resolution of the Committee of Creditors proposing change of the Resolution Professional as Liquidator was not considered and was rejected by the Tribunal. - HELD THAT: - The Tribunal observed that although the CoC had passed a resolution seeking appointment of an alternative Insolvency Professional as liquidator with 88.64% voting share, there are no specific provisions permitting the CoC to effect a change of the Resolution Professional after the RP has consented to act as liquidator, nor had the CoC given any reason for the change. In view of absence of a statutory mechanism or stated reasons to justify the change, the resolution for change of RP as liquidator could not be considered and was rejected. [Paras 4]

Prayer of the CoC for change of RP as Liquidator rejected.

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - appointment of liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - Application under Section 33(1) for initiation of liquidation was allowed and the applicant (the Resolution Professional) was appointed as Liquidator under Section 34(1). - HELD THAT: - The Tribunal allowed the application for liquidation pursuant to the CoC's decision to liquidate the corporate debtor, noting the CIRP had ended under the proviso to Section 12(3) and that the CoC's resolution to liquidate exceeded the requisite voting threshold. Having found the CoC-approved recommendation that the applicant had consented to act and was not disqualified, the Tribunal appointed the applicant as Liquidator under Section 34(1) and directed initiation of the liquidation process as provided under Chapter III of the Code. [Paras 3, 5, 7]

IA for liquidation allowed; Mr. Devarajan Raman appointed as Liquidator to conduct liquidation proceedings.

Entitlement to fees under Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016 - The Liquidator shall be entitled to fees in accordance with Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016. - HELD THAT: - The Tribunal explicitly recorded that the liquidator would be entitled to the fees as provided in the specified regulation, thereby fixing the basis for remuneration of the Liquidator in line with the Liquidation Process Regulations. [Paras 6]

Liquidator's fees to be governed by Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016.

Vesting of management and managerial powers in the liquidator - obligations to issue public notice and file order with Registrar of Companies on liquidation - bar on suits and proceedings subject to Section 52 of the Code during liquidation - On initiation of liquidation, the Liquidator exercises all powers of the board and key managerial personnel; directions were issued regarding public notice, filing with ROC, cooperation by personnel, and the bar on suits subject to Section 52. - HELD THAT: - The Tribunal directed that upon initiation of the liquidation process the Liquidator would have all powers of the Board of Directors and Key Managerial Personnel and that such persons would cease to have effect. The Liquidator was directed to issue public notice stating the corporate debtor is in liquidation and to send the order to the Registrar of Companies. Corporate personnel were directed to cooperate with the Liquidator. Further, the Tribunal recorded that, subject to Section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the corporate debtor except that the Liquidator may institute proceedings on behalf of the corporate debtor with prior approval of the Adjudicating Authority. [Paras 8, 9, 10, 11, 12]

Liquidator vested with management powers; directed to issue public notice and file order with ROC; personnel to cooperate; bar on suits subject to Section 52 with liberty to liquidator to institute proceedings with prior approval.

Final Conclusion: The Tribunal allowed the application for liquidation, appointed the Resolution Professional as Liquidator under Section 34(1), rejected the CoC's resolution seeking change of the liquidator for want of statutory basis and reasons, fixed the liquidator's entitlement to fees as per Regulation 4(2)(b) and issued consequential directions for conducting the liquidation process.

Admission of application under section 7 of the Insolvency & Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process (CIRP) - Financial debt and default - Limitation criteria satisfied by admission of liability - Minimum threshold for initiation of CIRP - Moratorium under section 14 of the Insolvency & Bankruptcy Code, 2016 - Appointment of Interim Resolution Professional - Public announcement of CIRP

Admission of application under section 7 of the Insolvency & Bankruptcy Code, 2016 - Financial debt and default - Minimum threshold for initiation of CIRP - Limitation criteria satisfied by admission of liability - The section 7 application filed by the financial creditor is admissible and merits initiation of CIRP against the corporate debtor. - HELD THAT: - The Tribunal examined the loan sanction letters, loan agreements, security documents, demand notices and the statement of account submitted by the financial creditor and found that a financial debt in excess of the statutory threshold (more than Rupees One Crore) was due and payable by the corporate debtor. The corporate debtor had, by its reply dated 11.11.2019 to the loan recall notice, admitted liability; on that basis the Bench held the limitation requirement to be fulfilled. In view of the established default, the completeness of the petition and the statutory monetary threshold being met, the Tribunal concluded there was no objection to admitting the section 7 application and initiating CIRP. [Paras 10, 11, 12, 13]

The section 7 petition is admitted and CIRP is to be initiated against the corporate debtor.

Moratorium under section 14 of the Insolvency & Bankruptcy Code, 2016 - A moratorium under section 14 of the I&B Code is to be declared upon admission of the section 7 application, with the usual consequences and protections for the corporate debtor's assets and ongoing supplies. - HELD THAT: - Upon admission of the application the Tribunal declared the moratorium effective from the date of the order until completion of the CIRP or further order. The moratorium prohibits institution or continuation of suits or proceedings against the corporate debtor, transfer or disposal of its assets, actions to enforce security interests (including under the SARFAESI Act, 2002), and recovery of property from possession of the corporate debtor. The order also directed continuity of supply of essential goods or services during the moratorium and noted recognized exceptions to section 14(1) as set out in the statute. [Paras 15]

Moratorium under section 14 is declared with the consequential prohibitions and directions specified in the order.

Appointment of Interim Resolution Professional - Public announcement of CIRP - An Interim Resolution Professional (IRP) is to be appointed and the financial creditor must make the public announcement and deposit funds to meet initial IRP expenses. - HELD THAT: - The applicant proposed a named, registered insolvency professional and furnished the required declaration. The Tribunal appointed the proposed professional as Interim Resolution Professional to perform functions under the I&B Code and directed that the public announcement of CIRP be made immediately as specified under the statute. The financial creditor was directed to deposit a specified sum with the IRP to meet costs of issuing public notice and inviting claims, subject to approval by the Committee of Creditors, and to comply with regulatory directions concerning IRP/RP fees. Administrative steps were ordered for communication of the order and updating of statutory registries. [Paras 14, 15]

The proposed insolvency professional is appointed as IRP; public announcement and deposit to meet IRP expenses are directed.

Final Conclusion: The Tribunal admitted the section 7 petition filed by the financial creditor, initiated the CIRP against the corporate debtor, declared moratorium under section 14 of the I&B Code, appointed the nominated Interim Resolution Professional, and directed immediate public announcement and initial deposit to meet IRP expenses.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - commercial wisdom of the committee of creditors - appointment of liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - moratorium under Section 14 and fresh moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - investigation of avoidance, undervalued and preferential transactions

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - commercial wisdom of the committee of creditors - Application under Section 33(2) of the Code for liquidation of the corporate debtor was allowed. - HELD THAT: - The Committee of Creditors (CoC), holding 97.70% voting share, resolved in its commercial wisdom to liquidate the corporate debtor and directed the Resolution Professional to seek a liquidation order. The Tribunal, having considered the record and submissions, held that the CoC's decision to liquidate, taken prior to confirmation of any resolution plan and approved by the requisite voting share, should not be interfered with and accordingly allowed the application for liquidation in terms of the Code and Chapter III of Part II.

The application seeking liquidation of the corporate debtor is allowed and a liquidation order is passed.

Appointment of liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - investigation of avoidance, undervalued and preferential transactions - moratorium under Section 14 and fresh moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - Appointment of the Resolution Professional as Liquidator and directions for the liquidation process were made. - HELD THAT: - On allowance of the liquidation petition, the Tribunal appointed the Applicant (the Resolution Professional) as Liquidator in terms of Section 34(1) and directed compliance with the liquidation regime: issuance of public announcement, conduct of the liquidation process under Chapter III of Part II and applicable regulations, continuation of investigation into the corporate debtor's financial affairs to identify undervalued and preferential transactions, submission of a preliminary report within the stipulated period, and that the previous moratorium ceases while a fresh moratorium under Section 33(5) commences.

Mr. Reuben George Joseph is appointed as Liquidator and is directed to carry out the liquidation process subject to the specified statutory and regulatory requirements; the earlier moratorium ceases and a fresh moratorium under Section 33(5) commences.

Separate corporate insolvency proceedings and non-joinder of corporate debtors - rejection of objections to liquidation - The request to combine the CIRP of the corporate debtor with that of a related group company and objections by the suspended management were rejected. - HELD THAT: - The Tribunal observed that the two corporate debtors were admitted to CIRP on separate applications and had different Interim Resolution Professionals; therefore, the suspended management's request to combine the proceedings could not be acceded to. The Tribunal also found that the ex-management was given sufficient opportunity to submit a viable resolution plan but failed to do so and that the affidavit opposing liquidation amounted to an attempt to delay the liquidation process. Consequently, the objection by the suspended management was rejected.

Request to combine the proceedings is refused and the objections of the ex-management are rejected.

Final Conclusion: The Tribunal allowed the RP's application for liquidation under Section 33(2) of the Code, appointed the RP as Liquidator with directions for the liquidation process and investigations, held that the earlier moratorium ceases and a fresh moratorium under Section 33(5) commences, and rejected the ex-management's request to combine proceedings or otherwise obstruct liquidation.

Exemption from earnest money deposit for MSME promoters - condonation of delay in deposition of EMD - consideration of resolution plan on merits - maximisation of value under the Insolvency Code - third party deposition of EMD

Exemption from earnest money deposit for MSME promoters - third party deposition of EMD - Whether the applicant, an erstwhile promoter claiming MSME status, was exempt from furnishing the requisite earnest money deposit (EMD) and whether his resolution plan could be considered without the EMD. - HELD THAT: - The Tribunal found that the dispute arose because the resolution plan was submitted without the requisite EMD and that initial contentions of exemption were not accepted by the RP or CoC. The RP and CoC had repeatedly recorded non compliance for lack of EMD and had declined to consider the applicant's plan on that ground. The Tribunal noted the applicant's reliance on MSME related relaxations and authorities but treated the core issue as one of non deposit of EMD. While recognising submissions on MSME exemptions and the policy emphasised by the Code towards MSMEs, the Tribunal did not hold that MSME promoters are per se exempt from depositing EMD in the present process; instead it treated the case as one where delay in depositing EMD required consideration for condonation before the plan could be reconsidered. The Tribunal observed that the RP and counsel indicated willingness to consider the plan if valid EMD were deposited and any delay in submission of the plan was condoned. [Paras 18, 21]

The applicant is not entitled to automatic acceptance of his claim of exemption from EMD; the plan will be considered only upon deposit of the required EMD and compliance with other legal requirements.

Condonation of delay in deposition of EMD - consideration of resolution plan on merits - maximisation of value under the Insolvency Code - Whether the delay in depositing the EMD should be condoned and the resolution plan of the applicant be remitted to the CoC/RP for fresh consideration. - HELD THAT: - Balancing the object of the Code to maximise the value of the corporate debtor and the facts that the applicant had submitted his plan within prescribed timelines (though without EMD), participated in CoC meetings, and offered to deposit the EMD when pressed, the Tribunal exercised its discretion to condone the delay. The Tribunal directed that the applicant deposit the requisite EMD within two days from the date of the order and ordered the RP and CoC to consider the applicant's resolution plan afresh and on merits, uninfluenced by past non consideration, subject to legal compliance. The Tribunal made clear that earlier steps taken in the process, including consideration of other plans, shall not be disturbed and that subsequent steps by CoC/RP should not necessitate extension of the overall resolution process. [Paras 22, 23, 24]

Delay in deposition of EMD is condoned; matter remitted to the RP and CoC to consider the applicant's resolution plan afresh upon deposit of EMD within two days, and the CoC shall consider the plan on its merits.

Final Conclusion: The Tribunal declined to uphold a blanket exemption of the applicant (an erstwhile promoter claiming MSME status) from furnishing the required EMD; instead it condoned the delay in depositing the EMD on the stated facts and remitted the matter to the RP and CoC to consider the applicant's resolution plan afresh on merits upon deposit of the requisite EMD within two days, without disturbing steps already taken in the resolution process.

Right of financial creditors to participation and voting in the Committee of Creditors through an Authorised Representative - electronic communication and voting under Regulation 16A of the Insolvency Resolution Process for Corporate Persons Regulations, 2016 - duty of the Resolution Professional to prepare and circulate the Information Memorandum - identification of preferential, undervalued, fraudulent and extortionate credit transactions and reporting under the Insolvency and Bankruptcy Code - maintainability of relief under Section 60(5) of the Insolvency & Bankruptcy Code, 2016

Right of financial creditors to participation and voting in the Committee of Creditors through an Authorised Representative - electronic communication and voting under Regulation 16A of the Insolvency Resolution Process for Corporate Persons Regulations, 2016 - Applicants' contention that they were deprived of participation and voting in COC and that the Authorised Representative was obliged to conduct physical meetings and obtain prior voting instructions by non-electronic means was not accepted. - HELD THAT: - The Tribunal found that the applicants had submitted claims in time and thus had opportunity to participate and to provide contact details. The RP and AR had used electronic means (including circulation of notices, agenda and a dedicated website) and relied on provided email IDs to communicate COC matters. Considering the large number (6547) of NCD holders forming the class, practical difficulties of conducting physical meetings and the time-bound nature of CIRP, electronic communication in accordance with Regulation 16A was held to be appropriate. The Tribunal observed that members who did not receive communications could have approached the AR to update contact details and that the small percentage represented by the applicants did not justify extraordinary relief. [Paras 6]

Relief seeking directions for physical meetings or alternate non-electronic voting measures was refused; electronic communication and voting arrangements adopted by RP/AR were held adequate.

Duty of the Resolution Professional to prepare and circulate the Information Memorandum - identification of preferential, undervalued, fraudulent and extortionate credit transactions and reporting under the Insolvency and Bankruptcy Code - Applicants' claim that the Information Memorandum and forensic audit report were not made available to them did not warrant intervention directing RP/AR to take the steps sought. - HELD THAT: - The RP explained that preparation and dissemination of the Information Memorandum required access to records which had been confiscated by the Police Crime Branch and were subject to proceedings before criminal courts, causing difficulty in preparation and quantification of transactions. The RP further explained that IM dissemination required confidentiality undertakings and was communicated to NCD holders for whom email IDs were available. The forensic audit reportedly found indicia of preferential/undervalued/extortionate/fraudulent transactions but amounts were not quantifiable due to lack of records; RP had initiated further action under the Companies Act. In the circumstances the Tribunal did not compel the RP/AR to further circulate the IM or forensic report to grant the reliefs sought by the applicants. [Paras 4, 6]

No direction issued to compel circulation of IM or forensic report; RP's explanation of unavailability of records and steps taken was accepted.

Maintainability of relief under Section 60(5) of the Insolvency & Bankruptcy Code, 2016 - identification of preferential, undervalued, fraudulent and extortionate credit transactions and reporting under the Insolvency and Bankruptcy Code - Application under Section 60(5) seeking directions to identify and report transactions under Sections 43-50 IBC was dismissed. - HELD THAT: - Although the forensic audit allegedly indicated existence of preferential, undervalued and fraudulent transactions, the audit could not quantify amounts due to missing records; RP had initiated investigation under the Companies Act. The Tribunal emphasised that the applicants represent only a minuscule fraction of the COC and that the CIRP had already extended beyond statutory timeframes with liquidation proceedings pending. Granting the reliefs sought at this stage would further delay the CIRP. The Tribunal also noted alternative fora (including SEBI) available to aggrieved NCD holders and observed that many NCD holders had lost confidence in pursuing the CIRP. [Paras 4, 6, 7]

Application seeking identification and reporting of transactions under Sections 43-50 IBC was refused and the petition dismissed.

Maintainability of relief under Section 60(5) of the Insolvency & Bankruptcy Code, 2016 - Whether the applicant's M.A. under Section 60(5) IBC should be allowed given the CIRP status, composition of COC and conduct to date - held not maintainable as sought. - HELD THAT: - The Tribunal found the applicants' recourse before it at the present stage to be frivolous and liable to cause further delay in the CIRP which had already exceeded the statutory period. The applicants constituted a very small proportion of the COC and could have pursued grievances with the RP/AR earlier. The pendency of liquidation proceedings and the collective decision of the COC to cease pursuing the CIRP in favour of other remedies weighed against granting the requested directions. [Paras 6, 7]

Application dismissed as not maintainable in the circumstances; no relief granted under Section 60(5).

Final Conclusion: The application by certain NCD holders under Section 60(5) IBC was dismissed. The Tribunal held that electronic communications in accordance with Regulation 16A were adequate, that difficulties in preparing and circulating the IM and forensic quantification arose from confiscation/unavailability of records, and that directing the RP/AR as prayed would unduly delay a CIRP already beyond statutory timelines; aggrieved members were left to pursue remedies before SEBI or other appropriate fora.

Existence of operational debt and default - absence of pre-existing dispute - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - moratorium - public announcement of CIRP - vesting of management in IRP/RP during CIRP

Existence of operational debt and default - absence of pre-existing dispute - An aggregate operational debt exists and the Corporate Debtor committed default with no credible pre-existing dispute. - HELD THAT: - The Tribunal examined the ledger records and invoices annexed to the petition and found an aggregate operational debt of Rs. 4,05,44,443/- outstanding and unpaid. The Corporate Debtor admitted inability to pay and there was no credible or established pre-existing dispute recorded between the parties. The date of default was recorded as 20th March 2019, being the due date of the last invoice. On these findings the Tribunal concluded that debt and default were proved and that there was no ground to treat the claim as disputed. [Paras 6]

The operational debt and default were established and no pre-existing dispute existed.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - moratorium - public announcement of CIRP - vesting of management in IRP/RP during CIRP - The Company Petition under Section 9 is admitted and CIRP is ordered with consequential directions including appointment of an IRP and imposition of moratorium. - HELD THAT: - Having found that the Operational Creditor proved debt and default and that no pre-existing dispute justified refusal, the Tribunal held that the petition met the statutory requirements for admission under Section 9. Consequently, the Tribunal admitted the petition, ordered initiation of CIRP, appointed an Interim Resolution Professional to perform functions under the Code, directed the Operational Creditor to deposit initial CIRP costs, mandated public announcement of CIRP, imposed the moratorium operative from the date of the order until completion of CIRP or approval of a resolution plan or liquidation, and directed vesting of management in the IRP/RP and cooperation by suspended directors and employees. Registry was directed to communicate the order and to inform the Registrar of Companies for updating master data. [Paras 7, 8]

The petition is admitted under Section 9; CIRP is initiated with appointment of an IRP and the statutory moratorium and ancillary directions are issued.

Final Conclusion: The Tribunal admitted the Section 9 petition, having found debt and default with no pre-existing dispute, and directed initiation of CIRP against the Corporate Debtor with appointment of an Interim Resolution Professional, imposition of moratorium and ancillary directions including public announcement and vesting of management in the IRP/RP.

Existence of financial debt and default - admission of petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process and declaration of moratorium - appointment of Interim Resolution Professional and compliance with Regulation 7A

Existence of financial debt and default - balance confirmation and documentary proof - Existence of financial debt due and payable by the corporate debtor and default in repayment - HELD THAT: - The Tribunal found the corporate debtor had availed financial facilities from the financial creditor, supported by a loan agreement, Memorandum of Understanding(s), promissory note and a balance confirmation letter. The corporate debtor was given opportunity to file a reply but, having forfeited its right to file a counter and not placing any material to rebut the claims, its contentions remained unsubstantiated. The balance confirmation dated 10.09.2020 acknowledging the debt, together with the Annual Tax Return FORM 26AS for 2019-20 evidencing lending and tax deducted on amounts credited, satisfied the Tribunal that a financial debt exceeding one crore was due and payable. Receipt of the legal notice and the absence of any material to discharge the liability led the Tribunal to hold that default in repayment stood established. [Paras 10]

Existence of the financial debt and default by the corporate debtor established.

Admission of petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process and declaration of moratorium - appointment of Interim Resolution Professional and compliance with Regulation 7A - Whether the Company Petition under Section 7 should be admitted and consequent directions issued - HELD THAT: - Having found that a financial debt existed and that default had occurred, the Tribunal was inclined to admit the petition. The Tribunal accordingly admitted the Company Petition under Section 7, declared the moratorium under Section 14 to operate from the date of the order until completion of CIRP or earlier in accordance with the Code, directed public announcement as prescribed, appointed the named Interim Resolution Professional after noting compliance with Regulation 7A of the IBBI (Insolvency Professionals) Regulations, 2016, and directed the petitioner to deposit initial CIRP costs with the IRP. Ancillary directions to the Registry for statutory compliance and communication of the order were also issued. [Paras 11]

Petition admitted; moratorium declared; Interim Resolution Professional appointed; related directions issued.

Final Conclusion: The Tribunal held that the financial creditor established existence of a financial debt and default by the corporate debtor, admitted the Section 7 petition, declared moratorium under the Code, appointed the Interim Resolution Professional (finding compliance with Regulation 7A) and issued consequential directions for initiation and conduct of the CIRP.

Late submission of claim in the corporate insolvency resolution process - time bound nature of the insolvency resolution process and protection of asset value - finality of claims upon approval of the resolution plan - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - 90 day claim filing deadline under Regulation 12(2) of the CIRP Regulations - entertainment of fresh claims after approval of resolution plan

Late submission of claim in the corporate insolvency resolution process - 90 day claim filing deadline under Regulation 12(2) of the CIRP Regulations - finality of claims upon approval of the resolution plan - Whether the applicant's request for condonation of delay and admission of a Form B claim filed long after the claim submission deadline and after approval of the resolution plan could be allowed. - HELD THAT: - The Tribunal found the facts regarding delayed filing to be undisputed: the last date for submission of claims as per the public announcement was 31.12.2019, the CIRP was initiated on 17.12.2019, the resolution plan was approved on 13.11.2020 and the applicant filed Form B only on 10.09.2021. The claim was therefore filed well beyond the 90 day period contemplated by Regulation 12(2) of the CIRP Regulations and after approval of the resolution plan. Relying on the principle that the insolvency resolution process is time bound and that entertaining new claims after plan approval would jeopardize the process and defeat the objectives of the Code, the Tribunal held that acceptance of such belated claims would violate the basic tenets of the IBC. Earlier decisions cited by the applicant were held not to advance his case, while the Tribunal approved the reasoning that post plan admission of claims undermines the finality required for a prospective resolution applicant. On these grounds the application for condonation and admission of the late claim was rejected. [Paras 10, 11]

Application for condonation of delay and admission of the late Form B claim dismissed.

Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - treatment of provident fund and gratuity in relation to the resolution plan - rendering of proceedings infructuous by compliance affidavit of the successful resolution applicant - Whether the application challenging the resolution plan insofar as it related to provident fund and gratuity dues should be proceeded with or disposed of in view of the SRA's compliance affidavit. - HELD THAT: - The applicants alleged that provident fund and gratuity amounts had been incorrectly treated in the resolution plan and sought cancellation/modification of the plan or direct payment. During proceedings the successful resolution applicant (SRA) filed a compliance affidavit undertaking to pay the contributions and other sums due under the relevant statutory schemes for the period up to the date of approval of the resolution plan, while preserving its rights regarding treatment/levy. In view of this affidavit and its undertaking to make the dues good, the Tribunal held that the application was rendered infructuous and did not require further adjudication. [Paras 15, 16]

Application challenging the resolution plan disposed of as infructuous in view of the compliance affidavit by the successful resolution applicant.

Final Conclusion: The application for condonation and admission of a substantially late claim was dismissed for being contrary to the time bound objectives and finality attendant on a concluded resolution process; a separate challenge to the resolution plan concerning provident fund and gratuity was disposed of as infructuous after the successful resolution applicant filed an affidavit undertaking payment of the dues up to plan approval.

Twin conditions under Section 45 of the PMLA - proceeds of crime - standard for bail under special statutes as enunciated in Ranjitsingh Sharma and Vijay Choudhary - reliability of statements of a co-accused/approver - first proviso to Section 45 - sick or infirm as discretionary ground for bail

Twin conditions under Section 45 of the PMLA - standard for bail under special statutes as enunciated in Ranjitsingh Sharma and Vijay Choudhary - Whether the accused has satisfied the twin conditions under Section 45(1) of the PMLA so as to be enlarged on bail. - HELD THAT: - Applying the approach in Ranjitsingh Sharma and Vijay Choudhary, the court examined the material on record on the basis of broad probabilities and not by weighing evidence as in trial. The court found that, on the material produced, the prosecution case rests heavily on the statements of a co-accused and that the overall materials prima facie permit a conclusion that the applicant may not, in all probability, be ultimately convicted. The court further held that satisfaction that the accused is not likely to commit an offence while on bail can be based on antecedents and the fact that the applicant no longer holds the public office alleged to be abused. On this touchstone the applicant crossed the first statutory hurdle and the court was satisfied, on the limited record and for the purpose of bail, that the twin conditions were met. [Paras 25, 26, 76, 77]

The court was satisfied, on prima facie assessment and broad probabilities, that the twin conditions under Section 45(1) are met for the purpose of grant of bail.

Proceeds of crime - standard for bail under special statutes as enunciated in Ranjitsingh Sharma and Vijay Choudhary - Whether the various amounts alleged to have been transferred to the trust qualify, prima facie, as 'proceeds of crime' for the offence of money-laundering. - HELD THAT: - Relying on the exposition in Vijay Choudhary, the court reiterated that only property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence can be regarded as 'proceeds of crime'. On the material, the prosecution divided the alleged money trail into three components. The court concluded that two components (the alleged transfers during 2011-19 and Rs.1.12 Crores during Sept-Nov 2020) are not, on the record, projected as proceeds of crime. The first component (Rs.1.71 Crores said to have been transferred in Feb-Mar 2021 out of alleged collections) alone required closer consideration as potentially forming part of proceeds of crime, but that finding too depended on the credibility of the co-accused's account. [Paras 33, 37, 38, 39]

On prima facie appraisal the court held that two components did not prima facie partake the character of 'proceeds of crime', while the question as to whether the first component constitutes proceeds of crime required consideration against the credibility of the prosecution's primary witness.

Reliability of statements of a co-accused/approver - twin conditions under Section 45 of the PMLA - Whether the statements of the principal prosecution witness/co-accused (Mr. Sachin Waze) are sufficiently reliable to sustain the prosecution case at the bail stage. - HELD THAT: - The court examined inconsistencies in multiple versions attributed to the co-accused, deviations in other witness statements (including those recorded under Section 164), and the circumstances of the co-accused (period of suspension, arrest, pending status as approver). The court observed material inconsistencies - for example, differing accounts as to who called whom before delivery of cash and contrary indications from other witnesses that 'No.1' referred to the Commissioner rather than the applicant. Given these factors, and the special caution required in assessing co-accused statements, the court found it prima facie unsafe to rely on Mr. Waze's statements as conclusively establishing delivery of proceeds to the applicant, which affected the assessment under Section 45. [Paras 70, 72, 73, 74]

The court found the statements of the co-accused to be prima facie unreliable for the purpose of negativing the applicant's entitlement to bail.

First proviso to Section 45 - sick or infirm as discretionary ground for bail - twin conditions under Section 45 of the PMLA - Whether the first proviso to Section 45(1) permitting release of a sick or infirm person on bail can be invoked and whether it should influence the bail decision in this case. - HELD THAT: - The court held that the proviso is a legislative moderation of the main bar and is to be construed so as to allow judicial discretion; it need not be read as applicable only after full satisfaction of the twin conditions. Having reviewed the medical reports, the applicant's advanced age and chronic ailments, and considering them together with the prima facie assessment of the prosecution material, the court concluded that the proviso legitimately informed the exercise of discretion in favour of bail in the totality of circumstances. [Paras 80, 81, 82, 85, 87]

The court exercised its discretion under the first proviso to Section 45 and took the applicant's medical condition and age into account in granting bail.

Conditions of bail - twin conditions under Section 45 of the PMLA - What conditions are appropriate to impose upon release on bail to address risks of absconding, tampering with evidence or repeating alleged activities. - HELD THAT: - Balancing the liberty interest, public interest and the prosecution's apprehensions, the court imposed a set of substantive conditions including personal recognizance and surety, periodic reporting to the Enforcement Directorate, requirement to attend trial dates, territorial restriction to Greater Mumbai, surrender of passport, prohibition on tampering with prosecution evidence or contacting co-accused, cooperation with trial and a direction that breach would render bail liable to cancellation. These conditions were fashioned to mitigate risks identified by the prosecution while allowing interim liberty. [Paras 88]

Bail granted subject to enumerated conditions aimed at securing attendance, preventing tampering and ensuring cooperation with trial.

Final Conclusion: The High Court granted bail to the applicant after a prima facie assessment under the twin-conditions framework in Section 45 of the PMLA, finding the principal prosecution material insufficiently cogent on probabilities (notably due to concerns over the co-accused's statements) and taking the applicant's age and medical condition into account under the first proviso; release was ordered subject to specified conditions, and the court's observations were confined to the bail question and not to the merits of the prosecution.

Anticipatory bail in economic offences under the Prevention of Money Laundering Act, 2002 - offence of money-laundering as an independent offence connected with proceeds of crime - restriction on grant of bail under Section 45(1) of the PMLA - joint and several liability of partners for acts of the firm - effect of absence of charge-sheet in the scheduled offence on prosecution under PMLA

Effect of absence of charge-sheet in the scheduled offence on prosecution under PMLA - offence of money-laundering as an independent offence connected with proceeds of crime - Absence of individual charge-sheeting in the scheduled offence does not automatically preclude action under the PMLA where the person is implicated through the firm and proceeds of crime are shown to be involved. - HELD THAT: - The court noted the principle from the Apex Court that prosecution under PMLA depends on existence of 'proceeds of crime' and involvement in processes connected therewith, but held that the applicant's case cannot avail the protection that arises where an accused is acquitted or not charge-sheeted in the scheduled offence when allegations substantially relate to the firm of which he is a partner. The record (including the FIR/charge-sheet and the applicant's own statement) shows transfer and diversion of the impugned funds into accounts of the partnership and related entities and that vehicles were purchased from those proceeds. The court therefore found that non-filing of a separate charge-sheet against the applicant in the scheduled offence does not, on the material on record, preclude proceedings under the PMLA against him in his capacity connected with the firm. [Paras 11, 16, 17]

Non-filing of an individual charge-sheet in the scheduled offence does not by itself bar action under the PMLA on the material before the court.

Anticipatory bail in economic offences under the Prevention of Money Laundering Act, 2002 - restriction on grant of bail under Section 45(1) of the PMLA - joint and several liability of partners for acts of the firm - Whether the applicant, being a partner of M/s. Bhanu Construction and having admitted involvement, is entitled to anticipatory bail under the PMLA. - HELD THAT: - The court recorded the applicant's statements admitting partnership in M/s. Bhanu Construction, knowledge of and participation in decisions to divert the wrongly credited amount, receipt and retransmission of funds, and the partnership profit-sharing ratio. Applying Section 25 of the Indian Partnership Act, 1932, every partner is jointly and severally liable for acts of the firm done while a partner. Given the applicant's admissions and the material showing that proceeds were used for acquisitions in the firm's name, the court found prima facie involvement. In light of the PMLA framework and the twin conditions in Section 45(1) that limit bail in offenses punishable for more than three years, and having regard to the gravity of economic offences and the settled approach that anticipatory bail is to be sparingly granted in such cases, the court concluded there are reasonable grounds to believe the applicant has committed the offence and may reoffend if enlarged on bail. [Paras 12, 14, 15, 23, 24]

Anticipatory bail refused as the applicant, a partner who admitted participation and whose liability is joint and several, is prima facie involved and the conditions for bail under the PMLA are not satisfied.

Final Conclusion: The anticipatory bail application is rejected; on the material and admissions the applicant, as a partner of the firm, is prima facie involved in money laundering and the statutory and jurisprudential restrictions on bail in PMLA economic offences warrant denial of anticipatory bail.

Security agency service - construction service - taxable service - assessable value - composite service - in any manner - valuation mechanism

Security agency service - in any manner - taxable service - Whether the appellant's activity of erecting compound walls/fencing and development/maintenance of green belt around water tank mains and reservoirs constitutes a 'security agency service' taxable under section 65(105)(w) read with 'security agency' in section 65(94) of Finance Act, 1994. - HELD THAT: - The Tribunal examined the definitions of 'security agency' and the taxable service in the context of the facts and concluded that the phrase 'in any manner' must be read in a restricted sense linked to activities commonly understood as security agency functions. Allowing an expansive meaning would subsume ordinary civil construction within 'security agency' and render distinct taxable entries for construction or work contract services redundant. The adjudicating authority's reliance on the tender cover-page terminology and the grammatical breadth of 'in any manner' to classify civil works as security services was rejected. The Tribunal held that civil works such as erection of compound walls/fences and afforestation, intended as safeguards against encroachment or ingress, do not, by themselves, convert such work into 'security agency service' without a clear identification of security activity as per the statutory meaning. Consequently, the finding that the appellant's civil works fell within the definition of 'security agency service' was unsustainable. [Paras 3, 4, 10, 11]

The activity of erecting compound walls/fencing and related civil works was not held to be a 'security agency service' and cannot be treated as such for service tax purposes.

Assessable value - composite service - valuation mechanism - Whether the adjudicating authority could include the amounts invoiced for civil works in the appellant's assessable value as taxable security agency services and sustain demand, interest and penalty. - HELD THAT: - The Tribunal noted that the appellant had in fact discharged service tax on amounts that were clearly for security services rendered, but the invoices for civil works in dispute were not identified in nature by the adjudicating authority. The revenue's chain of inferences-treating the appellant as the principal tenderer, treating the tender document language as determinative, and aggregating civil works into the taxable security service value-was held to be legally unsound. Absent identification of the disputed services as falling within the statutory definition, invoking composite-service valuation principles or section 65A was academic. The hierarchical assumptions underlying the demand collapsed, and therefore the demand, interest and penalty based on inclusion of civil-work invoices in the taxable value could not be sustained. [Paras 5, 6, 7, 9, 11]

The inclusion of civil-work invoices in the appellant's assessable value for security agency service was set aside; the demand, interest and penalty based thereon could not be sustained.

Final Conclusion: The appeal was allowed; the impugned order demanding service tax, interest and penalty by treating the appellant's civil construction and maintenance works as 'security agency service' and by including those amounts in the assessable value was set aside for the period April 2009 to March 2012.

Eligibility of Cenvat credit on input services received by associated units/captive mines under centralised registration - Proviso to Rule 9(2) and Rule 2(l) of the Cenvat Credit Rules - receipt and accounting in books as basis for allowing credit - Rule 9(1)(f) of the Cenvat Credit Rules - documentary requirement for taking Cenvat credit - Tour operator services as eligible input service when incurred for employee training/skill enhancement - Invocation of extended period of limitation - requirement to specify suppression, wilful misstatement or collusion in the show cause notice - Burden on revenue to plead and prove specific acts of omission or commission to extend limitation

Eligibility of Cenvat credit on input services received by associated units/captive mines under centralised registration - Proviso to Rule 9(2) and Rule 2(l) of the Cenvat Credit Rules - receipt and accounting in books as basis for allowing credit - Rule 9(1)(f) of the Cenvat Credit Rules - documentary requirement for taking Cenvat credit - Cenvat credit claimed against invoices (Sl. Nos.1-4 & 6-10) held admissible as input services utilised in manufacture by the appellant despite invoices bearing the headquarters address and separate registration of captive mines. - HELD THAT: - The Tribunal found admitted facts that the appellant's operations include multiple units and captive mines, all registered under a common PAN and centralised registration; the services were used in relation to the appellant's business and the coal from the captive mines is raw material for manufacture. The invoices contained particulars required under Rule 9(1)(f) and the case falls within the definition in Rule 2(l) and the proviso to Rule 9(2) permitting credit where the receiver has received and accounted for the goods or services. On these factual admissions and documentary compliance, the Tribunal held that the Commissioner (Appeals) erred in disallowing credit on the ground that invoices related to other units and that the headquarter address on invoices was determinative. The Tribunal therefore set aside the adverse findings on merits in respect of these invoices. [Paras 7, 8]

Credit availed against invoices at Sl. Nos.1-4 & 6-10 is admissible; findings to the contrary are set aside.

Tour operator services as eligible input service when incurred for employee training/skill enhancement - Eligibility of Cenvat credit on input services - Cenvat credit on tour operator services (invoice No.5) held admissible as the travel was for employee participation in a programme to enhance human resources performance and not for personal consumption. - HELD THAT: - The Tribunal examined the supporting documents regarding the Bangkok visit and accepted the appellant's case that the trip was for a training/programme organized to enhance employee skills relevant to the appellant's production. On that basis the Tribunal concluded the services were not personal consumption but input services connected with manufacture, and therefore eligible for credit. The Commissioner (Appeals) finding that these were personal expenses was held to be incorrect. [Paras 6, 9]

Tour operator services charged under invoice No.5 are eligible input services and credit is admissible.

Invocation of extended period of limitation - requirement to specify suppression, wilful misstatement or collusion in the show cause notice - Burden on revenue to plead and prove specific acts of omission or commission to extend limitation - Show Cause Notice issued after the normal limitation period held barred by limitation because it did not specify any particular act of suppression, wilful misstatement or collusion required to invoke the extended period. - HELD THAT: - The Tribunal observed that the SCN was based on documents (invoices) maintained in the appellant's regular course and that returns reflecting the credit were filed. Relying on precedent principles requiring that a notice invoking the extended period must specifically aver which omission or commission is relied upon to extend limitation, the Tribunal found the SCN deficient as it merely asserted that the irregularity came to light on audit without identifying specific acts of suppression or mens rea. The adjudicating authorities failed to make speaking findings pointing to particular acts warranting extension of limitation. Consequently, the extended period could not be invoked and the SCN was held time barred. [Paras 10, 11, 12, 13, 14]

Show Cause Notice is not sustainable as barred by limitation; extended period could not be invoked in absence of specific averments of suppression or wilful misstatement.

Final Conclusion: The Tribunal allowed the appeal: credit disallowance in respect of the ten invoices (including the tour operator services) was set aside on merits as admissible input services under the Cenvat Credit Rules, and the Show Cause Notice was additionally held barred by limitation for failure to plead specific suppression or wilful misstatement; consequential orders were set aside and the appeal allowed.

Dismissal for default - duty to decide appeal on merits - power to restore appeal under Rule 20 proviso - obligation imposed by the word 'shall' in Rule 20 proviso - interpretation of Section 35C of the Central Excise Act - principles of natural justice - judicial discipline in appellate tribunals

Dismissal for default - duty to decide appeal on merits - interpretation of Section 35C of the Central Excise Act - Whether the Tribunal may dismiss an appeal by an ex parte order for non-appearance without adjudicating the appeal on merits. - HELD THAT: - The Court held that the Tribunal cannot pass an ex parte order dismissing an appeal for non-prosecution without considering the merits. Section 35C confines the Appellate Tribunal to pass orders confirming, modifying, annulling or remanding the decision appealed against; it does not confer power to finally dispose of an appeal by summary ex parte dismissal. Rule 20 contemplates that where an appellant does not appear the Tribunal may either dismiss for default or hear on merits, but read together with Section 35C and the authoritative pronouncement in Balaji Steel Re-rolling Mills, the practice of summary dismissal without adjudication on merits is impermissible. The Tribunal is therefore duty bound to decide appeals on merits rather than effectuate a final ex parte disposal by reason of non-appearance. [Paras 11, 12]

Tribunal's power to dismiss an appeal for non-appearance is subject to the statutory duty to decide on merits; ex parte dismissal for non-prosecution without considering merits is impermissible.

Power to restore appeal under Rule 20 proviso - obligation imposed by the word 'shall' in Rule 20 proviso - principles of natural justice - Whether the Tribunal was obliged to set aside its dismissal and restore the appeal upon a showing of sufficient cause for non-appearance. - HELD THAT: - The Court emphasised that the proviso to Rule 20 uses the term 'shall' and thus casts an obligation on the Tribunal to set aside a dismissal and restore the appeal where the appellant subsequently appears and satisfies the Tribunal that there was sufficient cause for non-appearance. Applying the ratio of Balaji Steel Re-rolling Mills and the combined operation of Section 35C and Rule 20, the High Court found that the Tribunal erred in dismissing the restoration application without properly applying the mandatory proviso and without giving due weight to the appellant's explanation that nonappearance was not deliberate. The Tribunal's reliance on precedents concerning delay, without addressing the Apex Court's direct authority, was held to be improper. [Paras 12, 14]

Tribunal should have set aside the dismissal and restored the appeal upon being satisfied of sufficient cause; its refusal to do so was erroneous.

Duty to decide appeal on merits - power to restore appeal under Rule 20 proviso - judicial discipline in appellate tribunals - Remand for fresh consideration: whether the matter should be restored and referred back to the Tribunal for adjudication on merits. - HELD THAT: - Having found that the Tribunal improperly dismissed the appeal in default and wrongly refused restoration, the High Court exercised its supervisory jurisdiction to set aside both the dismissal order and the order refusing restoration, and directed that the appeal be restored. The Court remitted the matter to the Tribunal for fresh consideration on merits in accordance with law, directing the Tribunal to observe judicial decorum, to consider the Apex Court's precedent relied upon by the appellant and to determine the appeal afresh on its merits. [Paras 14, 15, 16, 17]

Orders dated 22.12.2016 and 01.08.2018 set aside; appeal restored and remitted to the Tribunal for fresh adjudication on merits with directions to follow applicable precedents and judicial discipline.

Final Conclusion: Appeal allowed; the Tribunal's dismissal in default and refusal to restore were set aside. The appeal is restored and remitted to the Tribunal to be considered afresh on merits in accordance with Section 35C, Rule 20 proviso and the Apex Court precedent, with directions to observe judicial discipline and to consider directly applicable authorities.

Utilisation of cenvat credit for payment of duty - concessional clearance under Notification No. 1/2011-CE - proviso to Rule 3(4) of Cenvat Credit Rules, 2004 - extended period of limitation under Section 11A - transmission/refund of accumulated cenvat credit on migration to GST under Section 142 - revenue neutrality

Utilisation of cenvat credit for payment of duty - concessional clearance under Notification No. 1/2011-CE - proviso to Rule 3(4) of Cenvat Credit Rules, 2004 - extended period of limitation under Section 11A - transmission/refund of accumulated cenvat credit on migration to GST under Section 142 - revenue neutrality - Whether the demand, interest and penalty for alleged wrongful utilisation of cenvat credit to discharge duty on goods cleared at concessional rate during April, 2016 to February, 2017, and invocation of extended limitation, were justified. - HELD THAT: - The Tribunal found that the appellant had disclosed the clearances and mode of duty payment in ER-1 returns for the period and had not taken cenvat credit on inputs used in manufacture of goods cleared under Notification No.1/2011-CE. The accumulated cenvat credit arose from other inputs and packing materials and, because of migration to GST (effective 01.07.2017), the accumulated credit as on 30.06.2017 was available for transmission/refund under the transitional provision in Section 142. The show cause notice dated 01.05.2018 was issued after GST implementation. On these facts the Tribunal concluded the use of cenvat credit was a venial breach without intent to evade duty, the position was revenue neutral (since payment in cash as demanded would entitle the appellant to re-credit/refund of equal amount), and there was no suppression, mis-statement or fraud. Having regard to these factors, the demand, interest and penalty were not justified and the impugned order was set aside. [Paras 10, 11]

The demand, interest and penalty were set aside and the appeal allowed with consequential benefits.

Final Conclusion: Demand and penalty for alleged wrongful utilisation of cenvat credit in relation to concessional clearances for April, 2016 to February, 2017 were quashed on the ground of disclosure in returns, absence of intent to evade, and revenue neutrality because of entitlement to re-credit/refund on migration to GST; impugned order set aside and appeal allowed.

Clandestine removal of dutiable goods - corroboration by resumed documents and admissions - treatment of undisclosed income admitted before Income Tax authorities as not necessarily proceeds of clandestine excise sales - penalty for clandestine removal under Section 11AC and penalties under Rule 25 and Rule 26 of the Central Excise Rules

Treatment of undisclosed income admitted before Income Tax authorities as not necessarily proceeds of clandestine excise sales - Whether cash receipts accepted by the Income Tax authority as income from property dealings can be treated as proceeds of clandestine removal and form basis for a duty demand - HELD THAT: - The Tribunal found that the amounts recorded in the diary and excess cash (totaling Rs.3,01,69,127/-) were accepted by the Income Tax authority as income from property dealing for the relevant period. On this basis, the appellate authority concluded there was no reason to treat those receipts as attributable to clandestine despatches of finished goods for Central Excise purposes. The consequence is that the demand raised on the cash component (Rs.37,28,904/-) which was premised on treating those receipts as proceeds of clandestine sales could not be sustained and was therefore set aside. [Paras 12]

Demand of Rs. 37,28,904/- (raised on the cash receipts) is set aside.

Clandestine removal of dutiable goods - corroboration by resumed documents and admissions - penalty for clandestine removal under Section 11AC and penalties under Rule 25 and Rule 26 of the Central Excise Rules - Whether duty and penalties can be confirmed for shortage of finished stock found on physical verification and supported by recovered despatch documents and admissions - HELD THAT: - The Tribunal held that the shortage in physical stock discovered during the search was corroborated by weighment slips and despatch summaries recovered during the panchnama, and admissions by the Accountant, Despatch Clerk and the Director. Those materials supported the conclusion of clandestine removal in respect of the shortage detected on 10.06.2014. Consequently the demand corresponding to the shortage (Rs.7,19,477/-) was confirmed. In relation to penalties, the Tribunal moderated the quantum: penalty under Section 11AC was reduced to equal the duty confirmed (Rs.7,19,477/-), the penalty under Rule 25 was set aside, and the personal penalty under Rule 26 imposed on the Director was reduced. [Paras 13, 14]

Demand of Rs. 7,19,477/- is confirmed; penalty under Section 11AC reduced to Rs.7,19,477/-, penalty under Rule 25 set aside, and personal penalty under Rule 26 reduced.

Final Conclusion: Appeal allowed in part: demand based on cash receipts accepted by Income Tax as property income is set aside; demand and moderated penalties relating to the shortage in finished stock are confirmed as stated above.

Refund of unutilized Cenvat credit - availability of refund under Section 11B(2)(c) of the Central Excise Act, 1944 - transitional credit as a vested right - operation of transitional provisions under Section 140 and Section 142 of the CGST Act, 2017 - filing of FORM GST TRAN 1 and remedy for failure due to IT glitches under Circular No.39/13/2018 GST

Refund of unutilized Cenvat credit - availability of refund under Section 11B(2)(c) of the Central Excise Act, 1944 - transitional credit as a vested right - Claim for cash refund of unutilized Cenvat credit standing in the assessee's Cenvat account as on 30.06.2017 is maintainable under Section 11B read with the transitional provisions and recognized judicial precedents - HELD THAT: - The Tribunal held that the appellant's claim for refund of the Cenvat balance recorded as on 30.06.2017 was admissible. The Court noted that Section 11B(2)(c) contemplates refund of credit relatable to duty paid on inputs and that transitional provisions were enacted to protect credits lying unutilized at the introduction of GST. Reliance was placed on precedents holding that such transitional credit is a vested right and cannot be forfeited on procedural or technical grounds. The Tribunal found no merit in the departmental contention that Section 11B cannot be invoked for cash refund of unutilized Cenvat credit and concluded that the substantive right to the credit continued post transition, entitling the appellant to seek refund under the erstwhile law read with applicable transitional safeguards. [Paras 5, 8, 10, 11, 12]

First ground of rejection overturned; refund claim under Section 11B(2)(c) held allowable as the transitional credit is a vested right.

Operation of transitional provisions under Section 140 and Section 142 of the CGST Act, 2017 - filing of FORM GST TRAN 1 and remedy for failure due to IT glitches under Circular No.39/13/2018 GST - Failure to successfully file TRAN 1 due to IT glitches and the appellant's application to the Nodal Officer did not disentitle the appellant from obtaining refund; refund under transitional provisions was the available remedy - HELD THAT: - The Tribunal observed that the GST enactment provided two routes for dealing with unutilized credit: carry forward by TRAN 1 (Section 140) or refund where TRAN 1 was not carried forward (Section 142). Evidence showed the appellant attempted to file TRAN 1 but could not do so due to system glitches and had applied to the Nodal Officer under Circular No.39/13/2018 GST for facilitation, which was not acted upon. Having regard to judicial decisions accepting relief where TRAN 1 filing failed for IT reasons and the purpose of the transitional provisions to protect accrued credit, the Tribunal held that rejection of refund on the ground of non filing of TRAN 1 or by strict application of the Circular was unsustainable. Consequently, the second ground of rejection was also set aside. [Paras 6, 14, 15, 16, 17]

Second ground of rejection overturned; appellant entitled to refund where TRAN 1 could not be filed due to IT glitches and remedial procedure under the Circular was not effectively provided.

Final Conclusion: Both grounds on which the refund was rejected were found unsustainable; the order under challenge is set aside and the appeal allowed, directing grant of the refund of the unutilized Cenvat credit standing as on 30.06.2017, in accordance with Section 11B read with the transitional provisions and the relief available where TRAN 1 could not be filed due to IT glitches.

Cenvat credit on outward transportation - availability of Cenvat Credit where supporting invoices are not produced - remand for segregation and quantification - penalty under Rule 15 of the Cenvat Credit Rules read with Section 11(AC) of the Central Excise Act, 1944

Cenvat credit on outward transportation - remand for segregation and quantification - Entitlement to Cenvat credit on service of outward transportation from factory/depot to buyer's premises. - HELD THAT: - The Tribunal had earlier allowed the appellant benefit of Cenvat credit on outward transportation by following the Larger Bench decision in M/s ABB Ltd., and set aside the demand; the High Court dismissed the department's challenge and the Supreme Court declined review, leaving the Tribunal's decision intact. The Tribunal's subsequent order remanded the matter only for segregation and quantification. Having regard to the earlier adjudicatory conclusion and the limited scope of the remand, the demand for reversal of Cenvat credit on outward transportation is set aside. [Paras 4]

Demand of reversal of Cenvat credit on outward transportation is set aside.

Availability of Cenvat Credit where supporting invoices are not produced - penalty under Rule 15 of the Cenvat Credit Rules read with Section 11(AC) of the Central Excise Act, 1944 - Liability for Cenvat credit availed without production of supporting invoices and related penalty/quantification. - HELD THAT: - The Tribunal had held that where the assessee could not produce documents to prove payment of service tax, the credit claimed is not admissible and confirmed the demand, remanding only for quantification. In the present appeal the appellant did not contest the quantification portion relating to the specified amount, and that demand is therefore confirmed. Given the admitted absence of supporting documents for the credit taken, penalty liability under Rule 15 (read with Section 11(AC)) is sustainable; the penalty imposed is revised downwards to correspond with the confirmed quantified demand. [Paras 4]

Demand confirmed in respect of amounts for which invoices were not produced; penalty revised to the confirmed quantified amount.

Final Conclusion: Appeal partly allowed: demand of reversal of Cenvat credit on outward transportation set aside; demand confirmed for credits unsupported by invoices (quantified amount upheld) and penalty reduced to the confirmed quantified amount.

Treatment of credits as a single pool under Rule 3 of Cenvat Credit Rules, 2004 - interest liability on inadmissible cenvat credit after amendment to Rule 14 by Notification No.12/2012-CE(N.T) dated 17.03.2012 - refund of interest on reversed cenvat credit - re-quantification of interest on reversed cenvat credit

Treatment of credits as a single pool under Rule 3 of Cenvat Credit Rules, 2004 - re-quantification of interest on reversed cenvat credit - Whether, for re quantifying the refund of interest in respect of cenvat credit reversed after 17.03.2012, the adjudicating authority was right in considering only the balance of service tax credit instead of the consolidated cenvat credit balance comprising inputs, input services and capital goods. - HELD THAT: - The Tribunal observed that Rule 3 of the Cenvat Credit Rules, 2004 treats credits of inputs, input services and capital goods as one consolidated pool. The Tribunal recalled its earlier remand directing computation of interest for the period after 17.03.2012 in view of the amendment to Rule 14 by Notification No.12/2012 CE(N.T.) dated 17.03.2012, which made interest payable only where inadmissible credit was availed and utilized. In the remand proceedings the adjudicating authority limited its computation to the service tax credit balance, treating utilized service tax credit as reducing the refundable interest. The Tribunal held that this approach was incorrect because credits cannot be compartmentalised; the consolidated cenvat credit balance (inputs, input services and capital goods) must be taken to ascertain unutilized credit. If the consolidated balance exceeded the reversed credit, no interest would be payable for the post 17.03.2012 period. Consequently the impugned decision was set aside and the matter remitted to the adjudicating authority for de novo re quantification of interest after taking the total cenvat credit pool into account. [Paras 4, 5]

Impugned order set aside; matter remanded to the adjudicating authority to re quantify and sanction the refund of interest taking the consolidated cenvat credit balance (inputs, input services and capital goods) into account, with directions to decide de novo within three months.

Final Conclusion: The Tribunal held that cenvat credits of inputs, input services and capital goods form a single pool under Rule 3 and directed de novo re quantification of the refund of interest for amounts reversed after 17.03.2012 by the adjudicating authority, setting aside the impugned order and remanding the matter for computation and sanction accordingly.

Scope of arbitration clause in e auction terms - Contractual dispute versus public law remedy - Acceptance of Form C and issuance of Form E 1 for concessional tax - Remand for fresh consideration on merits

Scope of arbitration clause in e auction terms - Contractual dispute versus public law remedy - Acceptance of Form C and issuance of Form E 1 for concessional tax - Whether the High Court was correct in dismissing the writ petition on the ground that disputes arising from the e auction terms were arbitrable and that the petitioner was seeking enforcement of a contract rather than a writ remedy relating to tax certificates and concessional rate of tax. - HELD THAT: - The High Court erred in treating the present controversy as a contractual dispute amenable to arbitration. The reliefs sought were in the nature of mandamus directing the respondent to accept Form C, to issue Form E 1 and to grant the benefit of the concessional rate of tax, which are not merely enforcement of contractual rights under the e auction. The petition therefore invoked writ jurisdiction for enforcement of statutory or quasi statutory tax certificate rights and could not be summarily relegated to arbitration on the basis of the e auction terms. Having found that the matter was wrongly dismissed on those grounds, the Supreme Court set aside the impugned order and remanded the writ petition to the High Court for fresh consideration on merits. The Court expressly declined to express any opinion on the substantive merits of the parties' contentions and directed the High Court to decide the matter expeditiously, with the respondents filing their reply within four weeks.

Impugned judgment set aside; writ petition restored to the High Court for fresh adjudication on merits; no opinion expressed on merits.

Final Conclusion: Appeal allowed. The Division Bench judgment of 15 March 2018 is set aside and Writ Tax No. 850 of 2016 is remitted to the High Court for fresh consideration on merits (to be preferably disposed of within four months); the Supreme Court has not decided the substantive rights on acceptance of Form C, issuance of Form E 1 or entitlement to concessional tax.

Limitation for filing appeal - electronic filing of appeal - principles of natural justice - quashing of administrative order - remand for fresh consideration

Electronic filing of appeal - limitation for filing appeal - The appeal filed electronically on 30.03.2019 was within the prescribed period and not barred by limitation. - HELD THAT: - The Court examined the memorandum of appeal, the provisional electronic acknowledgment produced as Annexure-J and the letter dated 12.10.2021 (Annexure-K) intimating the Appellate Authority, and held that these materials establish that the appeal was electronically filed on 30.03.2019 within the prescribed period from the order dated 02.02.2019. The Appellate Authority's finding that the appeal was time barred was based on an erroneous premise and ignored the available documentary record. Reliance was placed on decisions of other High Courts to the effect that where an appeal is preferred electronically within the prescribed period, subsequent physical filing of certified copies cannot be treated as rendering the appeal barred by limitation. On this basis the Court concluded that the limitation objection as recorded by respondent No.2 is unsustainable and must be set aside. [Paras 5, 6]

Findings that the appeal was barred by limitation set aside; limitation in preferring the appeal is concluded in favour of the petitioner.

Principles of natural justice - quashing of administrative order - remand for fresh consideration - The impugned order was passed without affording sufficient opportunity to the petitioner and is quashed; the matter is remitted for fresh consideration excluding the aspect of limitation. - HELD THAT: - The Court found that respondent No.2 passed the impugned order without adequately considering the documentary evidence of timely electronic filing and without providing the petitioner a sufficient or reasonable opportunity, thereby rendering the order violative of principles of natural justice. Consequently, the impugned order dated 19.02.2022 is set aside and the matter is remitted to the Appellate Authority for reconsideration afresh on all aspects except limitation. All other rival contentions were left open for determination by the Appellate Authority on merits. [Paras 5, 7]

Impugned order quashed for lack of opportunity; matter remitted for fresh consideration in accordance with law, with limitation excluded from reconsideration.

Final Conclusion: Petition allowed; impugned appellate order set aside. Appeal remitted to the Appellate Authority for fresh consideration on merits, excluding the question of limitation which is decided in favour of the petitioner; other contentions left open.

Extension of time under Article 226 - one time settlement (OTS) scheme - non-discretionary and non-discriminatory nature - bona fide payment and acceptance of OTS instalment - COVID-19 pandemic as relevant ground for extension - bank's right to cancel OTS for failure to pay by stipulated time

Extension of time under Article 226 - one time settlement (OTS) scheme - non-discriminatory application - bona fide payment and acceptance - COVID-19 pandemic as relevant ground for indulgence - Whether the High Court should, in exercise of its jurisdiction under Article 226, extend the OTS timeline and direct the bank to accept the delayed payment and close the loan account. - HELD THAT: - The Court applied the established principle that it may, under Article 226, extend the period stipulated in an OTS letter when facts justify indulgence, having regard to factors set out by earlier benches such as extent of payments made, reasons for delay, bona fides of the borrower, conduct of the bank, and attendant circumstances including the COVID-19 pandemic (Anu Bhalla ; Samarth Woolen Mills ; Hindustan Trading Company ). The petitioner had paid substantial instalments under the OTS and demonstrated that the balance was realized by sale of property and placed to his account immediately after the due date, resulting in only a one-day delay. The bank admitted receipt of earlier payments and the petitioner's submission of the cheque and enclosing letter after 27.07.2021. Balancing the non-discriminatory nature of the OTS scheme and the bank's contractual right to cancel on default, the Court found these circumstances sufficient to exercise supervisory power to extend time as a matter of equity and justice. Consequently, letters cancelling the OTS were set aside and the bank was directed to accept the payment within the limited period granted, failing which the bank may proceed in accordance with law. The Court limited relief by permitting the bank to recover agreed interest for the delayed period and by giving a short fixed period for compliance, thereby preserving the bank's statutory and contractual rights if the petitioner fails to comply. [Paras 18, 19, 20]

The writ petition is allowed; letters dated 31.07.2021 and 06.08.2021 issued by the bank are set aside and the bank is directed to receive the said payment and close the loan account; ten days from the date of order are granted to the petitioner to make payment at the agreed rate, failing which the bank may proceed in accordance with law.

Final Conclusion: The High Court exercised its Article 226 power to grant a limited extension of the OTS deadline on facts showing substantial prior payments, bona fide efforts to arrange the balance (including sale proceeds), and only a one day delay; the bank was directed to accept the payment and close the account within ten days, subject to agreed interest, failing which it may act in accordance with law.

Building permit - administrative consideration of permit application - hearing before authority - production of documents for decision - video conferencing as mode of hearing - time-bound disposal of application

Building permit - administrative consideration of permit application - hearing before authority - production of documents for decision - video conferencing as mode of hearing - time-bound disposal of application - Direction to the Panchayat authority to consider and decide the petitioner's building permit application after hearing the petitioner and allowing production of documents, within a specified time-frame. - HELD THAT: - The High Court did not adjudicate the merits of the petitioner's entitlement to a building permit or resolve the dispute over the revenue record entry (nilam). Instead, the Court directed the competent Panchayat authority to take up the petitioner's application, hear the petitioner by any appropriate means including video conferencing, permit the production of all documents relied upon by the petitioner, and thereafter pass appropriate orders. The direction is limited to administrative consideration and time-bound disposal; it does not pre-empt or decide the substantive merits of the permit application or the legal effect of the nilam entry in revenue records.

The 2nd respondent is directed to consider the building permit application, hear the petitioner (including via video conferencing), allow production of documents, and pass appropriate orders within three weeks from receipt of a copy of the judgment.

Final Conclusion: Writ petition disposed by directing the Panchayat authority to consider and decide the building permit application after hearing the petitioner and permitting production of documents, within three weeks; no substantive determination on entitlement or revenue record was made.