TaxTMI Updates e-Newsletter
Oct 17,2022

Statutory timelines under Section 129 - order of detention - show cause notice - vitiation of proceedings for non-compliance - release of detained vehicle

Statutory timelines under Section 129 - order of detention - show cause notice - vitiation of proceedings for non-compliance - Whether failure to issue order of detention and show cause notice within the timelines prescribed by Section 129 vitiates the proceedings under the Act. - HELD THAT: - The Court found that the vehicle was intercepted on 01.08.2022 but the order of detention was passed only on 11.08.2022 and the show cause notice was issued on 16.08.2022. The statutory scheme under Section 129 requires issuance of the detention order and issuance of a show cause notice within prescribed time limits; non-compliance with those timelines renders the subsequent proceedings invalid. The earlier dismissal-with-liberty order dated 06.09.2022, permitting the petitioner to file a reply to the show cause notice, did not amount to a judicial condonation of the procedural delay because the earlier proceedings had not addressed or waived the statutory timeline requirement and the direction was limited to consideration of any reply "in accordance with law." The petitioner had specifically relied upon the statutory timeline and precedent; the authority failed to take that into account. For these reasons the admitted lapses in adhering to the statutory timelines vitiated the proceedings impugned in this petition. [Paras 4, 6, 9, 11, 12]

Proceedings were vitiated for failure to comply with the timelines under Section 129; impugned orders set aside.

Release of detained vehicle - Relief to be granted consequent to vitiation of proceedings. - HELD THAT: - Having concluded that the detention order and show cause notice were not issued within the statutory periods and that the proceedings were consequently vitiated, the Court directed immediate release of the detained vehicle. The Court rejected the respondent's contention that the earlier order permitting withdrawal of a writ petition operated as condonation of the delay, noting that no waiver of the statutory timeline had been recorded and the officer was to act "in accordance with law" when considering any reply. [Paras 11, 12]

Vehicle to be released forthwith; writ petition allowed.

Final Conclusion: Impugned detention and demand proceedings were quashed for failure to comply with the timelines prescribed by Section 129 of the Act; the detained vehicle is ordered to be released immediately and the writ petition is allowed.

Principles of natural justice - opportunity of personal hearing - opportunity of hearing under Section 75(4) and adjournment for sufficient cause under Section 75(5) of the Central Goods & Service Tax Act, 2017

Principles of natural justice - opportunity of personal hearing - opportunity of hearing under Section 75(4) and adjournment for sufficient cause under Section 75(5) of the Central Goods & Service Tax Act, 2017 - Whether the impugned orders dated 19.04.2022 for the financial years 2017-18, 2018-19 and 2019-20, passed without granting personal hearing, are vitiated for non-compliance with principles of natural justice and require setting aside and fresh consideration. - HELD THAT: - The Court found that the final orders for the three years were passed without affording the petitioner an opportunity of personal hearing. Although the petitioner had, in the reply to the show-cause notices, indicated it did not opt for personal hearing, the petitioner explained that this was a mistake and sought the right to be heard. Reliance placed on the decision in M/s. Alkem Laboratories Ltd. was accepted in principle by the respondents' counsel. In the totality of facts the Assistant Government Pleader stated that the competent authority would grant personal hearing and reconsider the matter. In view of non-compliance with the requirements of an opportunity of hearing as envisaged by the embedded provisions and the principles of natural justice, the impugned orders were set aside to enable the authority to afford personal hearing and pass fresh orders. [Paras 4, 5, 6]

Impugned orders quashed; matter remitted to the competent authority to afford personal hearing to the petitioner within three weeks and to pass fresh orders within two weeks thereafter; no opinion expressed on merits.

Final Conclusion: The writ petition is allowed to the extent that the impugned orders dated 19.04.2022 for the tax periods 2017-18, 2018-19 and 2019-20 are set aside for failure to afford personal hearing; the competent authority shall grant personal hearing within three weeks and pass fresh orders within two weeks thereafter; the Court has not adjudicated the merits.

Benefit of input tax credit - commensurate reduction in prices - methodology of computing profiteering by comparison of pre GST and post GST ITC-to-turnover ratios - tripartite supply / joint liability of developer and landowner - calculation and return of profiteered amount with interest - non imposition of retrospective penalty

Benefit of input tax credit - commensurate reduction in prices - Whether additional benefit of ITC accrued on implementation of GST for the project and whether that benefit was required to be passed on to recipients for the period 01.07.2017 to 30.09.2019. - HELD THAT: - The Authority accepted the DGAP's finding that the ratio of CENVAT/ITC to turnover for the project rose from 1.16% (pre GST) to 6.85% (post GST), giving an additional ITC benefit of 5.69% of turnover. On this basis the Authority held that the benefit of such additional ITC was required to be passed on by way of commensurate reduction in prices under Section 171(1) of the CGST Act for supplies made during the investigation period. The Authority adopted the DGAP's unit wise computations and identified the quantum of benefit attributable to the Respondents and to the Applicant. [Paras 11, 13]

Additional ITC benefit of 5.69% was found to have accrued and was required to be passed on for the period 01.07.2017 to 30.09.2019; profiteering quantified accordingly.

Tripartite supply / joint liability of developer and landowner - procedure to implead other persons for fair enquiry - Whether the developer (Respondent No. 2) could be investigated and held liable along with the landowner (Respondent No. 1) for passing on the ITC benefit. - HELD THAT: - The Authority found the agreements to be tripartite and noted that Respondent No. 2 was a necessary party to the sale agreements; Respondent No. 2 had availed CENVAT/ITC for the whole project (including units allocated to Respondent No.1). Relying on Rule 129(4) the DGAP was justified in issuing notices and impleading the developer for a fair enquiry. Consequently, the developer could not deny liability to pass on the benefit pertaining to the landowner's share. [Paras 12]

Respondent No. 2 was properly impleaded and is statutorily liable, along with Respondent No. 1, to pass on the benefit of ITC.

Methodology of computing profiteering by comparison of pre GST and post GST ITC-to-turnover ratios - Whether the DGAP's methodology-comparing pre GST and post GST ratios of CENVAT/ITC to turnover to quantify additional ITC benefit-is valid. - HELD THAT: - The Authority upheld the DGAP's approach as a rational and case sensitive mathematical exercise to quantify additional ITC available post GST. It accepted the standard practice of using a pre GST reference period (01.04.2016 to 30.06.2017) to compute an average ratio and comparing it with the post GST period covered by investigation. The Authority rejected contentions that ITC accrual and turnover are unrelated for the purpose of Section 171(1), observing that the computation is to quantify the net additional benefit that must be passed on and that no single universal formula can be prescribed for all fact patterns. [Paras 6, 12, 13]

The DGAP's ratio comparison methodology to quantify additional ITC and compute profiteering was affirmed as lawful and appropriate in the facts of the case.

Calculation and return of profiteered amount with interest - What orders should be made for refund/return of the profiteered amount and interest, and the timeframe and compliance mechanism. - HELD THAT: - The Authority directed reduction of prices commensurate with ITC benefit, and directed the Respondents to refund/return the quantified profiteered amounts to identified homebuyers/customers along with interest at 18% from the date when the amounts were profiteered until date of payment. The Authority specified the quantified profiteered sums attributable to each Respondent for the investigation period, directed repayment within three months failing which recovery under the CGST Act, and required publication and reporting by jurisdictional commissioners and monitoring by DGAP. The Authority also required the developer to pass on to the landowner the amount determined for the landowner so that the landowner could, in turn, pass it to his recipients. [Paras 15, 17, 19, 20, 21]

Respondent No.1 and Respondent No.2 to refund/pass on the determined profiteered amounts with 18% interest within three months; compliance and monitoring directions issued to tax authorities and DGAP.

Exclusion of land value from profiteering computation - Whether the value of land should have been excluded from the profiteering computation in this case. - HELD THAT: - The Authority distinguished precedents relied upon by Respondent No.2 where separate agreements/invoices existed for land and construction. In the present case there was a common agreement and taxable turnover considered by the DGAP already reflected abatement for land; therefore the DGAP's calculation (which applied GST @12% after abatement) had effectively excluded land value where appropriate and the respondent's contention to further exclude land value was rejected. [Paras 12]

No additional exclusion of land value was warranted; DGAP's treatment was correct given the contractual and invoicing facts.

Non imposition of retrospective penalty - Whether penalty under Section 171(3A) could be imposed for profiteering that occurred during 01.07.2017 to 30.09.2019. - HELD THAT: - The Authority observed that Section 171(3A) came into force w.e.f. 01.01.2020, while the profiteering occurred in the earlier period. Consequently, penalty under that provision could not be imposed retrospectively for the investigation period. [Paras 18]

Penalty under Section 171(3A) not imposed because the provision post dates the period of violation.

Continuing obligation to pass on ITC benefit till issuance of completion certificate - Whether Respondents remain obliged to pass on ITC benefits accruing after the investigation period until issuance of completion certificate. - HELD THAT: - The Authority recorded that the investigation covered only up to 30.09.2019 and directed that Respondents remain liable to pass on any further ITC benefit that becomes available to them until the date of issuance of the completion certificate. The jurisdictional commissioners were directed to ensure compliance and report back; interested buyers were permitted to lodge fresh complaints if remaining benefits were not passed. [Paras 22]

Respondents required to pass on any additional ITC benefit accruing up to the date of completion certificate and tax authorities to monitor compliance.

Final Conclusion: The Authority accepted the DGAP's findings and methodology, held that an additional ITC benefit of 5.69% accrued for the project for 01.07.2017-30.09.2019, quantified profiteering for Respondent No.1 and Respondent No.2, directed refund/return of the profiteered amounts with 18% interest within three months and compliance measures by tax authorities, declined to impose retrospective penalty, and required continuation of passing on any further ITC benefit until issuance of the completion certificate.

Anti-evasion proceedings - show-cause notice - jurisdiction - procedural irregularity - duplication of proceedings / audit completed by another wing

Duplication of proceedings / audit completed by another wing - jurisdiction - Whether initiation of the impugned anti-evasion proceeding can be interdicted on the ground that the same financial years were already audited by another wing of the department. - HELD THAT: - The petitioners urged that because an audit covering the same financial years had been completed by another wing of the CGST department, the Anti-Evasion wing was precluded from initiating fresh proceedings. The Court observed that petitioners failed to point to any specific statutory provision which bars a different wing from initiating anti-evasion proceedings in respect of the same period. The Division Bench decision relied upon by the petitioners was distinguished on facts: in that case multiple earlier proceedings had not been taken to a logical end and spot memos were repeatedly issued without appropriate resolution. By contrast, no jurisdictional defect or procedural illegality in the initiation of the present impugned notice was shown. The Court treated the impugned notice as akin to a show-cause notice but found nothing in the record to demonstrate that the notice was without jurisdiction or in contravention of statutory provisions, and therefore there was no basis to interfere at the writ stage with the ongoing investigation by the Anti-Evasion wing.

The challenge to the impugned notice on the ground of prior audit was rejected; initiation of the anti-evasion proceeding is not barred.

Final Conclusion: Writ petition dismissed; the impugned anti-evasion investigation may proceed as the notice is not shown to be without jurisdiction or procedurally irregular.

Summary order. Writ petition dismissed as withdrawn; petitioner granted liberty to file a reply to the show cause notice dated 16.08.2022; officer directed to consider the reply and dispose/close the proceedings after hearing the petitioner within one (1) from date of receipt of reply; no costs.

Revisional jurisdiction under Section 263 of the Income Tax Act - Change of opinion and prohibition on successive re-opening of same issue - Administrative error of cancelling an already cancelled assessment order - Prohibition on multiplicity of remands leading to repeated scrutiny of same records - Validity and legal effect of assessment order passed pursuant to a defective Section 263 order

Revisional jurisdiction under Section 263 of the Income Tax Act - Change of opinion and prohibition on successive re-opening of same issue - Prohibition on multiplicity of remands leading to repeated scrutiny of same records - Whether the second exercise of revisional jurisdiction by the PCIT under Section 263, directing re-examination of issues already examined in the original and earlier remand assessment orders, was legally sustainable. - HELD THAT: - The Court found that the PCIT in the second Section 263 order effectively directed re-examination of the same expenditures and accounts which had already been examined by the Assessing Officer in the original assessment dated 28.12.2016 and again in the assessment framed pursuant to the first 263 remand (dated 31.12.2018). The Tribunal correctly noted that allowing the PCIT to compel a third scrutiny of identical issues would amount to permitting a change of opinion by a subsequent officer and to subjecting the assessee to multiplicity of proceedings. Ordinarily Section 263 may be invoked within time and for valid reasons, but it cannot be used to require repeated examination of the same books and documents where those matters have already been considered. The second 263 order was therefore held to be erroneous because it sought to cancel an assessment already cancelled earlier and to re-open matters already decided on two prior occasions. [Paras 5, 6, 7, 8]

Second order under Section 263 was invalid insofar as it directed further scrutiny of issues already examined and amounted to impermissible successive re-opening/change of opinion.

Administrative error of cancelling an already cancelled assessment order - Validity and legal effect of assessment order passed pursuant to a defective Section 263 order - Whether the assessment order dated 28.12.2019 passed pursuant to the second (defective) Section 263 order has any legal effect. - HELD THAT: - The Court observed that the PCIT's second 263 order erroneously purported to cancel the first assessment order which had already been cancelled in the earlier 263 proceeding, while it did not cancel the assessment order actually in existence (dated 31.12.2018) that had been framed after the first remand. Because the second 263 order was vitiated by that error and by directing an impermissible third scrutiny, any assessment order passed pursuant to that defective 263 direction cannot stand. The Tribunal's conclusion that the assessment order of 28.12.2019 had no legal effect was therefore upheld. [Paras 5, 6, 9]

Assessment order dated 28.12.2019 passed pursuant to the second Section 263 order has no legal effect.

Final Conclusion: The order of the Income Tax Appellate Tribunal quashing the second order passed by the Principal Commissioner under Section 263 was affirmed; the revenue's appeal is dismissed and the assessment order dated 28.12.2019 (passed pursuant to the defective second 263 order) has no legal effect.

Disallowance under Section 14A in relation to income which does not form part of total income - computation under Rule 8D(2)(iii) to be based on investments yielding exempt income - Rule 8D as a machinery provision limited by Section 14A - CBDT Circular No.5/2014 cannot override Section 14A read with Rule 8D

Computation under Rule 8D(2)(iii) to be based on investments yielding exempt income - Rule 8D as a machinery provision limited by Section 14A - Disallowance under Rule 8D(2)(iii) must be computed with reference only to the average value of those investments which yielded exempt income in the relevant assessment year, and not on total investments. - HELD THAT: - The Court held that Section 14A is the charging provision and Rule 8D provides the method to determine expenditure in relation to income which does not form part of total income. Rule 8D(2)(iii) expressly refers to "investment, income from which does not or shall not form part of the total income", and therefore the numeric factor (0.5%) must be applied to the average value of investments that actually yielded exempt income in the year under consideration. The decision follows precedent of coordinate Benches of this Court and other High Courts which have construed the machinery provision in Rule 8D as confined to tax-exempt yielding investments and not to all investments held by the assessee. The Tribunal and authorities erred in applying 0.5% to the assessee's entire investments instead of only those investments which produced dividend income in the year, and such application was reversed. [Paras 15, 16, 17, 20, 21]

Disallowance computed under Rule 8D must be restricted to 0.5% of the average value of investments that yielded exempt income during the relevant assessment year.

CBDT Circular No.5/2014 cannot override Section 14A read with Rule 8D - disallowance under Section 14A in relation to income which does not form part of total income - The CBDT Circular No.5/2014 cannot be relied upon to expand the scope of disallowance under Section 14A/Rule 8D to investments which did not yield exempt income in the year. - HELD THAT: - The Court rejected the Revenue's reliance on the CBDT Circular to contend that disallowance could be based on potential to earn exempt income or on total investments. The Court explained that Rule 8D(1) contemplates a correlation between expenditure and exempt income "for such previous year", and that Section 14A operates with reference to realisable exempt income in the assessment year. Earlier Division Bench decisions were cited to emphasise that the Circular cannot override the express statutory scheme of Section 14A read with Rule 8D, and that computation by reference to notional or potential exempt income would be inconsistent with the statutory text and scheme. [Paras 21, 22, 23]

Reliance on CBDT Circular No.5/2014 to justify disallowance from total investments or potential exempt income is untenable; the Circular cannot override Section 14A read with Rule 8D.

Final Conclusion: The appeal is allowed on the legal question framed: the Tribunal erred in computing disallowance under Rule 8D on total investments; disallowance at 0.5% is to be applied only to the average value of investments which yielded exempt income in the relevant assessment year, and the CBDT Circular cannot be used to expand the statutory scheme.

Re-assessment under Section 148 - Section 148A procedure - Deeming of notices as Section 148A show-cause notices - Dispensation of prior approval requirement under Section 148A(a) - Remedial application of amended provisions to notices issued on or after 01.04.2021 - Procedure under Section 148A(d) before issuance of notice under Section 148 - Article 142 remedy to modify High Court orders

Re-assessment under Section 148 - Section 148A procedure - Deeming of notices as Section 148A show-cause notices - Validity of the notice dated 07.04.2021 issued under Section 148 for AY 2013-14 in view of the substituted Section 148A and the Supreme Court's decision in Ashish Agarwal. - HELD THAT: - The writ petition challenging the Section 148 notice for AY 2013-14 was disposed of by the High Court by applying the Supreme Court's decision in Ashish Agarwal. The Supreme Court held that the substituted provisions (including Section 148A) are remedial and their benefit must be made available where a Section 148 notice was issued on or after 01.04.2021. Rather than quashing such notices, the Supreme Court modified the High Courts' orders by deeming notices issued under the unamended Section 148 (from 01.04.2021) to be issued under Section 148A and to be treated as show-cause notices under Section 148A(b). The Supreme Court further directed, as a one-time measure, that the requirement of prior approval under Section 148A(a) be dispensed with for such notices, directed assessing officers to furnish the material relied on within thirty days and afforded assessees two weeks to reply, and required assessing officers to thereafter pass orders under Section 148A(d) before proceeding under the substituted Section 147-151 framework. The High Court therefore disposed of the petition in terms of that order while leaving all substantive defenses and rights open to the parties.

Writ petition disposed of in terms of the Supreme Court's Ashish Agarwal order: the impugned notice is to be treated as deemed issued under Section 148A and the procedural directions in Ashish Agarwal are to be followed; all contentions kept open.

Final Conclusion: The writ petition challenging the Section 148 notice dated 07.04.2021 (AY 2013-14) is disposed of by applying the Supreme Court's order in Ashish Agarwal: the notice is to be deemed issued under Section 148A, the one-time dispensation and procedural directions given by the Supreme Court are to be followed, and all defenses and rights of the parties are preserved; no order as to costs.

Assessment under Section 153C - applicability of Section 153C(2) - limitation for block assessment - validity of return under Section 139(4) - notice under Section 143(2) and limitation - notice under Section 142(1) - relegation to statutory appeal - limitation under proviso to Section 153B for assessments upon other persons

Notice under Section 142(1) - relegation to statutory appeal - Challenge to notices issued under Section 142(1) relating to A.Y.2015-16 - HELD THAT: - The writ petitions attacking notices under Section 142(1) issued for A.Y.2015-16 were at a nascent stage. No independent legal infirmity was established warranting extraordinary interference. Petitioners were directed to appear before the assessing authority and furnish materials in support of returns filed under Section 153C, and to pursue available statutory remedies before the appellate authorities. [Paras 6]

Petitions challenging the Section 142(1) notices dismissed with direction to proceed before the assessing authority and pursue statutory remedies.

Assessment under Section 153C - relegation to statutory appeal - Challenge to the assessment order dated 31.12.2019 passed under Section 153C - HELD THAT: - The impugned assessment order under Section 153C did not disclose such legal infirmity as would justify interference under Article 226. The regular assessment was the subject matter of first appeal and the petitioner was relegated to the statutory appellate forum to contest the assessment. [Paras 7]

Writ petition challenging the Section 153C assessment dismissed; petitioner relegated to first appeal.

Applicability of Section 153C(2) - limitation for block assessment - validity of return under Section 139(4) - notice under Section 143(2) and limitation - limitation under proviso to Section 153B for assessments upon other persons - Whether assessments for a year outside the ordinary six-year block (including the year of search) could be framed under Section 153C where seized materials were handed over before the due date and whether conditions of Section 153C(2)(b) were satisfied - HELD THAT: - Section 153C(2) permits inclusion of the year of search in the block period only where books/documents handed over to the Assessing Officer are received after the due date for furnishing the return for the assessment year of the search, and where one of the standalone conditions (a), (b) or (c) is satisfied. The handing over in these matters occurred on 27.08.2019/28.08.2019, which was before the due date for filing returns (31.08.2018) for the year of search; therefore the temporal condition for invoking Section 153C(2) was not met in the sense that the receipt was not after the due date. Independently, the clause (b) condition requires that a return filed by the other person be followed by expiration of the limitation for issuance of notice under Section 143(2) without such notice being served. In W.P.No.558 the return filed on 26.09.2018 under Section 139(4) was valid and a Section 143(2) notice was timely issued on 27.08.2019, so condition (b) was not satisfied and proceedings under Section 153C could not be initiated; the assessment was set aside. In W.P.No.563 the original return (filed 30.03.2019) was valid but the notice under Section 143(2) was issued beyond time (07.11.2019), thereby satisfying condition (b) and supporting the Section 153C assessment, which was confirmed. [Paras 15, 16, 18]

Writ in respect of the petitioner where condition (b) was not satisfied (W.P.No.558) allowed and assessment set aside; in the other matter (W.P.No.563) condition (b) held satisfied and assessment confirmed, subject to statutory appeal.

Final Conclusion: Matters challenging interlocutory notices under Section 142(1) and assessments under Section 153C were largely relegated to statutory proceedings; one writ (W.P.No.558 of 2020) was allowed and the impugned assessment set aside for non-satisfaction of Section 153C(2)(b), while another (W.P.No.563 of 2020) was upheld on the basis that condition (b) was satisfied; other petitions were directed to pursue appeals before the prescribed authorities with liberty for limited interim relief.

Exemption under sections 11 & 12 of the Act - retrospective registration under section 12AA - entitlement to exemption pending appellate challenge - remand for fresh consideration to the Assessing Officer

Retrospective registration under section 12AA - exemption under sections 11 & 12 of the Act - Effect of retrospective registration under section 12AA on the assessee's entitlement to exemption under sections 11 and 12 for A.Y. 2006-07. - HELD THAT: - The Tribunal recorded that registration under section 12AA had been granted retrospectively pursuant to its earlier directions and that such retrospective registration legitimises the assessee's claim to exemption under sections 11 and 12 for the assessment year in question. The fact that the revenue has preferred an appeal against the Tribunal's earlier order does not, by itself, defeat the assessee's entitlement to claim exemption for the year under consideration while the higher appellate challenge is pending. The Assessing Officer's earlier approach of following other assessment years and treating excess of income over expenditure as taxable income could not be allowed to override the effect of retrospective registration and the consequent claim to exemption. [Paras 9]

Registration under section 12AA having been granted retrospectively, the assessee is entitled to claim exemption under sections 11 and 12 for A.Y. 2006-07; the Tribunal remitted the matter to the Assessing Officer for adjudication in accordance with law.

Remand for fresh consideration to the Assessing Officer - Scope and purpose of remand to the Assessing Officer. - HELD THAT: - The Tribunal directed that, in view of retrospective registration and the assessee's claim, the assessment file be returned to the Assessing Officer to examine and decide the claim for exemption under sections 11 and 12 in accordance with law. The remand is for the AO to consider the assessee's submissions, examine compliance with conditions for exemption (including application of income, accumulations and filing of requisite forms) and grant relief if legally permissible. The Tribunal explicitly rejected the proposition that departmental appeal alone could justify denial of the exemption claim for the impugned year. [Paras 9]

Matter remitted to the Assessing Officer to determine the claim for exemption under sections 11 and 12 in accordance with law.

Final Conclusion: The appeal is allowed for statistical purposes; registration under section 12AA having been granted retrospectively, the assessee may claim exemption under sections 11 and 12 for A.Y. 2006-07 and the case is remitted to the Assessing Officer for fresh adjudication in accordance with law.

Characterisation of donation as corpus donation - specific direction for corpus donation under section 11(1)(d) - allowability of carry forward of unabsorbed depreciation - carry forward of excess of expenditure over income - prospective application of amendment to section 11(6)

Characterisation of donation as corpus donation - specific direction for corpus donation under section 11(1)(d) - Donation of USD 6,50,000 (Rs. 3,96,45,981/-) from SVVFUIP is to be treated as a corpus donation pursuant to a specific direction from the donor. - HELD THAT: - The Tribunal examined the donor communication placed at page 80 of the paper book and the findings of the Ld. CIT(A). The Commissioner (Appeals) treated substance over form and found that the donor expressly directed that the amount be used to build a corpus fund for the long term running of the trust's activities; accordingly the donation qualified as a corpus donation. The Tribunal agreed with that factual and legal conclusion, endorsing the CIT(A)'s approach of looking to the intention of the donor and the substance of the document rather than form, and found no reason to interfere with the conclusion that the donation constituted a corpus donation under the law. [Paras 5, 6]

The donation is corpus in nature and the AO's treatment of it as a general donation is set aside; ground (ii) of the Revenue's appeal is dismissed.

Allowability of carry forward of unabsorbed depreciation - prospective application of amendment to section 11(6) - Assessee entitled to carry forward unabsorbed depreciation from earlier years despite AO's rejection; amendment to section 11(6) is to be applied prospectively. - HELD THAT: - The Tribunal noted that the assessee had sought relief which was initially rejected by the AO for lack of claim in the return, but an additional ground with evidence was admitted by the CIT(A) under section 250(5). Relying on the precedent referred to by the CIT(A) (Framjee Cawasjee Institute and subsequent Supreme Court authority in CIT vs. Rajasthan and Gujarathi Charitable Foundation), the Tribunal held that once depreciation has been allowed as application of income, depreciation may be taken into account in computing income in subsequent years and hence carried forward. The Tribunal accepted the CIT(A)'s application of settled judicial precedent and found no infirmity in allowing the carry forward of unabsorbed depreciation. [Paras 7, 8, 9]

Claim for carry forward of unabsorbed depreciation is allowable and the AO is directed to give effect to the CIT(A)'s direction; ground (iii) of the Revenue's appeal is dismissed.

Carry forward of excess of expenditure over income - Assessee entitled to carry forward excess of expenditure over income from earlier years as a loss to be set off, as allowed by the CIT(A). - HELD THAT: - The Tribunal noted that the CIT(A) relied on authoritative High Court decisions (including Rajasthan High Court, Gujarat High Court and Bombay High Court authorities) holding that a charitable trust is eligible to claim carry forward of excess expenditure over income. Applying those precedents to the facts, the Tribunal found no error in the CIT(A)'s allowance of carry forward of such excess expenditure and declined to interfere with that direction to the AO. [Paras 10]

Allowance of carry forward of excess of expenditure over income is upheld and the AO is directed to give effect to the CIT(A)'s order; ground (iii) (as relevant) is dismissed.

Final Conclusion: The Revenue's appeal is dismissed in entirety; the Cross Objection filed by the assessee is dismissed as infructuous.

Belated application for registration under Section 10(23C)(vi) - no power in Commissioner (Exemption) to condone delay - power to condone delay vested in CBDT under Section 119(2)(b) - consideration of application for subsequent assessment years

Belated application for registration under Section 10(23C)(vi) - no power in Commissioner (Exemption) to condone delay - power to condone delay vested in CBDT under Section 119(2)(b) - Legality of rejection of the Form No.56D filed on 27.10.2018 as time barred for the financial year 2017-18 and whether the Commissioner (Exemption) could condone the delay. - HELD THAT: - The Tribunal found that the application in Form No.56D was filed on 27.10.2018 which, as per the law in force, ought to have been filed on or before 30.09.2018 for the financial year 2017-18. There is no provision in the Income tax Act empowering the Commissioner (Exemption) to condone such delay; the authority to grant any special order for condonation rests with the CBDT under Section 119(2)(b). The Tribunal relied on consistent judicial authorities and held that rejection of a belated application by the Commissioner (Exemption) was legally sustainable. Consequently the Commissioner (Exemption) did not err in rejecting the application as time barred for the year in question. [Paras 3, 5]

Rejection of the Form No.56D filed on 27.10.2018 as belated for financial year 2017-18 was upheld; the Commissioner (Exemption) had no power to condone the delay.

Consideration of application for subsequent assessment years - belated application for registration under Section 10(23C)(vi) - Whether the application (as filed) covered subsequent assessment years and whether the Commissioner (Exemption) was required to consider the application for those subsequent years. - HELD THAT: - The Tribunal noted a material dispute of fact: the record before the Tribunal did not contain the copy of the Form No.56D and there was conflicting notation in the record as to whether the application was confined to the single year or sought registration from that year onwards. If the application extended to subsequent years, rejection for the single belated year did not preclude consideration of the application insofar as it related to subsequent years (for which the filing date might be within the prescribed cut off). For these reasons the Tribunal set aside the Commissioner's order and remitted the matter to the Commissioner (Exemption) to verify the disputed factual aspects (scope of the application) and to proceed to adjudicate the claim for subsequent years on merits in accordance with law. [Paras 5]

Matter remitted to the Commissioner (Exemption) for verification of whether the Form No.56D was filed for subsequent years and, if so, for fresh adjudication of the claim for those years in accordance with law.

Final Conclusion: The Tribunal upheld the rejection of the belated Form No.56D filed on 27.10.2018 for financial year 2017-18 because the Commissioner (Exemption) had no power to condone the delay; however, because it was disputed whether the application also covered subsequent years, the matter was set aside and remitted to the Commissioner (Exemption) for verification of that fact and fresh consideration of the claim for subsequent years in accordance with law. The appeal is allowed for statistical purposes as directed.

Exemption under section 10(38) - Reassessment jurisdiction and reopening under section 147/148 - Reliance on SEBI investigation and interim order in tax proceedings - Accommodation entries and bogus penny stock transactions

Exemption under section 10(38) - Accommodation entries and bogus penny stock transactions - Reliance on SEBI investigation and interim order in tax proceedings - Long term capital gains claimed as exempt under section 10(38) cannot be treated as unexplained investment/other income on the basis of alleged penny stock manipulation where the securities regulator, after investigation, revoked its interim directions against the assessee. - HELD THAT: - The Tribunal examined the material relied upon by the AO, including interim SEBI orders which initially restrained trading by certain entities and subsequent investigative findings. SEBI's interim order dated 06/09/2017 modified and revoked earlier directions as to 91 entities, including the assessee, finding them not in violation of the relevant statutory/regulatory provisions. The assessee had specifically placed this SEBI order before both the AO (in objections to reopening) and the CIT(A). In view of SEBI's reversal on investigation, the foundational premise that the assessee's LTCG arose from price manipulation or accommodation entries was undermined. The Tribunal therefore found no basis to sustain the AO's conclusion that the claimed LTCG were bogus entries or unexplained investments and directed deletion of the impugned addition. [Paras 12]

Impugned addition of long term capital gains treated as unexplained investment deleted; consequential broker commission addition deleted.

Reassessment jurisdiction and reopening under section 147/148 - Validity of reassessment proceedings under section 147/148 was not adjudicated on merits because, having granted relief to the assessee on the substantive issue, questions about reopening were rendered academic. - HELD THAT: - The Tribunal expressly stated that since the appeal was allowed on merits by deleting the additions, the grounds challenging invocation of reassessment provisions (formation of reason to believe, borrowed satisfaction, compliance with legal precepts) no longer required adjudication. The factual and legal consequences flowing from the deletion made consideration of the validity of reopening unnecessary in the present appeal. [Paras 13]

Grounds challenging reopening under section 147 of the Act rendered academic.

Final Conclusion: Appeal allowed; additions of claimed long term capital gains and consequential broker commission deleted, and challenge to reopening under section 147 rendered academic.

Treatment of capital receipts for computation of book profits under section 115JB - nature of receipts - capital versus income - exclusion of non-income/exempt receipts from book profit computation

Treatment of capital receipts for computation of book profits under section 115JB - nature of receipts - capital versus income - exclusion of non-income/exempt receipts from book profit computation - Whether excise refund and interest subsidy of capital character credited to profit and loss account can be excluded from book profits for the purpose of computation under section 115JB. - HELD THAT: - The Tribunal examined competing authorities and the factual nature of the receipts. It distinguished the decision in B & B Infratech Ltd., which related to remission of liability and where the scope of Explanation to section 115JB was pivotal. The Bench relied on the reasoning in Ankit Metal and Power Ltd. (Calcutta High Court) and coordinate decisions which held that where a receipt is not in the nature of income at all (being a capital receipt or a non-income grant/subsidy), it does not enter into the computation of book profits under section 115JB. Applying that principle to the facts, the Tribunal found that the excise refund and interest subsidy are capital in nature and not taxable income and therefore rightly excluded by the assessee while computing book profits. Consequently, the addition made by the Assessing Officer and upheld by the CIT(A) was not sustained and the matter was remitted to the AO for recomputation of book profits in accordance with this view. [Paras 9, 10]

Assessee's grounds allowed; excise refund and interest subsidy of capital character to be excluded from book profits under section 115JB and matter remitted to the AO for recomputation.

Final Conclusion: Appeal allowed. The Tribunal held that the excise refund and interest subsidy are capital/non-income receipts and need not be included in book profits under section 115JB; the AO is directed to recompute the book profits accordingly.

Treatment of return as invalid under section 139(9) - maintainability of appeal under section 246A - rectification under section 154 - interest of substantial justice prevailing over technicalities - remand for fresh decision with opportunity of hearing

Rectification under section 154 - treatment of return as invalid under section 139(9) - remand for fresh decision with opportunity of hearing - Ld. CIT(A)'s failure to decide the rectification application under section 154 in relation to the return treated as invalid under section 139(9) was remitted for fresh consideration. - HELD THAT: - The Tribunal observed that the Assessing Officer treated the return as defective and therefore invalid under section 139(9) on account of mismatch in name/PAN and rejected the rectification application under section 154. The CIT(A) dismissed the appeal as not maintainable under section 246A but did not answer the merits of the rectification claim under section 154. The assessee maintained it did not receive the defect notice and asserted entitlement to TDS credit/refund based on the identity change. The Tribunal held that because the CIT(A) had not addressed the section 154 issue and the assessee's plea that it had not received notice was not categorically rebutted, the matter should be remitted to the CIT(A) to decide the rectification application afresh. The Tribunal directed that the CIT(A) shall consider the section 154 claim in the light of observations made by the Tribunal, allow the assessee adequate opportunity of hearing, and verify the factual and legal position including whether TDS payment was actually made and to whom credit appropriately belongs. [Paras 9, 10]

Issue remitted to the file of the ld. CIT(A) for fresh adjudication of the section 154 rectification application, with directions to afford the assessee adequate opportunity of hearing.

Maintainability of appeal under section 246A - interest of substantial justice prevailing over technicalities - The Tribunal applied the principle that substantial justice prevails over technicalities and treated the appeal as allowed for statistical purposes while remitting the substantive rectification issue. - HELD THAT: - Although the CIT(A) dismissed the appeal as not maintainable under section 246A because the statute does not expressly provide for an appeal against treating a return as invalid under section 139(9), the Tribunal emphasised that where interests of substantial justice are pitted against technicalities, substantial justice should prevail. Given the CIT(A)'s omission to decide the section 154 claim and the unresolved factual contention about non-receipt of defect notice, the Tribunal did not adjudicate on maintainability as a final bar but instead remitted the matter for fresh consideration and adjusted its own disposal by allowing the appeal for statistical purposes to enable that remediation. [Paras 9, 11]

Appeal allowed for statistical purposes; substantive consideration remitted so that substantial justice is secured despite technical objections on maintainability.

Final Conclusion: The Tribunal remitted the rectification application under section 154 to the ld. CIT(A) for fresh adjudication (with opportunity of hearing), holding that substantial justice should prevail over technicalities and directing reconsideration of the claim arising from the return treated as invalid under section 139(9); the appeal is allowed for statistical purposes.

Section 68 unexplained cash credit - burden of proof under Section 68 - identity, creditworthiness and genuineness of subscribers - obligation on assessing officer to make independent enquiries - adverse inference for non-appearance of third parties - double addition principle - non-speaking order of appellate authority

Section 68 unexplained cash credit - burden of proof under Section 68 - identity, creditworthiness and genuineness of subscribers - obligation on assessing officer to make independent enquiries - adverse inference for non-appearance of third parties - double addition principle - non-speaking order of appellate authority - Deletion of addition of share capital and share premium treated as unexplained income under Section 68. - HELD THAT: - The Tribunal found that the assessee had produced documentary evidence to establish the identity, creditworthiness and genuineness of the investments from seven subscribing companies, including incorporation particulars, audited financial statements, income tax acknowledgements, bank statements showing payment and replies to notices under section 133(6). The Assessing Officer, though acknowledging receipt of these documents, insisted on personal appearance of the directors of subscriber companies without specifying any discrepancy in the documents or what further inquiry was necessary and without conducting independent enquiries to verify creditworthiness. The Tribunal held that an adverse inference could not be drawn solely because the directors did not appear, since their personal presence was not within the control of the assessee and the AO did not point out any insufficiency in the material on record. The Tribunal also noted that additions made in the hands of the subscriber companies in their assessments preclude double addition of the same sums in the assessee's hands. Further, the Tribunal found the CIT(A)'s order to be non speaking as it reproduced case law without applying or discussing material facts; therefore the lower authorities' additions were unsustainable. Applying these principles, the Tribunal deleted the impugned addition under Section 68. [Paras 6, 8, 9, 10]

Impugned addition of share capital and share premium treated as unexplained income under Section 68 deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, deleted the addition made under Section 68 after finding that the assessee had discharged the initial burden by documentary evidence, the Assessing Officer failed to conduct or record requisite independent enquiries and could not draw an adverse inference merely on non appearance of third party directors, and the CIT(A)'s non speaking order was unsustainable.

Condonation of delay by reason of COVID-19 extension of limitation - disallowance of interest expenses under Section 57(iii) of the Income-tax Act, 1961 - application of Section 58(2) read with Section 40A(2) - excessive and unreasonable payment to related parties - reasonableness test for interest rates paid to related parties - commercial expediency test for diversion of borrowed funds

Condonation of delay by reason of COVID-19 extension of limitation - Delay in filing the appeal was condoned. - HELD THAT: - The Tribunal examined the date of receipt of the order and noted that the period of limitation falling within the national lockdown triggered the Apex Court's suo motu directions extending and excluding the period from 15-3-2020 to 14-3-2021 for computing limitation. Consequently, the 30-day delay in filing the appeal fell within the excluded period and was condoned. [Paras 3]

Delay of 30 days in filing the appeal is condoned.

Disallowance of interest expenses under Section 57(iii) of the Income-tax Act, 1961 - application of Section 58(2) read with Section 40A(2) - excessive and unreasonable payment to related parties - reasonableness test for interest rates paid to related parties - commercial expediency test for diversion of borrowed funds - The CIT(A)'s disallowance of one-fourth of the interest paid to specified related parties was upheld and the balance disallowance was deleted as directed. - HELD THAT: - On merits the Tribunal found that the assessee borrowed at varying rates (including 12%) and advanced funds at lower rates (8-9%), without establishing any commercial expediency for borrowing at higher rates from specified persons and lending at lower rates to others (including related parties). The AO had made a larger addition by imputing notional interest; the CIT(A) limited the disallowance to 1/4th of interest paid to related parties where loans from others were at rates not exceeding 8.5%. Applying the principle embodied in Section 58(2) read with Section 40A(2) concerning payments excessive and unreasonable having regard to market rates, and relying on precedents cited by the Tribunal, the approach of restricting the disallowance to one-fourth of the higher interest was held to be reasonable in the facts of the case. The Tribunal therefore found no error in the CIT(A)'s conclusion and affirmed the partial deletion directed by the CIT(A). [Paras 4, 5, 7]

CIT(A)'s restriction of the disallowance to one-fourth of the excessive interest (and direction to delete the balance addition) is upheld; the appeal on merits is dismissed.

Final Conclusion: The application for condonation of delay is allowed in view of the COVID-19 limitation exclusion; on merits the Tribunal upholds the CIT(A)'s approach of disallowing one-fourth of the excessive interest paid to related parties under Section 58(2) read with Section 40A(2), and the assessee's appeal is dismissed.

Creditworthiness of investor - genuineness of share application/share premium receipts - normal course of business of a SEBI registered venture capital fund - onus on revenue to establish adverse view overcome by documentary evidence and judicial precedents - consequential recomputation of interest following deletion of taxable addition

Creditworthiness of investor - genuineness of share application/share premium receipts - normal course of business of a SEBI registered venture capital fund - onus on revenue to establish adverse view overcome by documentary evidence and judicial precedents - Deletion of addition of Rs.99,88,082/- held to be warranted as receipts from IL & FS were genuine and investor creditworthy - HELD THAT: - The Tribunal found that the entire sum was reflected in the balance sheet of IL & FS as investment, shares were allotted against the receipts, IL & FS was registered with SEBI as a venture capital fund and an internal departmental report treated the transactions as explained and verified. No adverse view was taken by the Assessing Officer in respect of related receipts in a subsequent assessment year. The Revenue did not controvert the assessee's contentions or the applicability of precedent authorities relied upon by the assessee. Applying those authorities and having regard to the documentary material on record, the Tribunal held that the AO and the CIT(A) were not justified in drawing an adverse inference as to IL & FS's creditworthiness or as to the genuineness of the transactions, and directed deletion of the addition. Grounds 1 and 3 were accordingly allowed for statistical purposes.

Addition of Rs.99,88,082/- deleted; grounds 1 and 3 allowed (for statistical purposes).

Recomputation of interest consequent to deletion of taxable addition - Interest under sections 234A, 234B and 234C to be recomputed, if applicable, consequent to deletion of the addition - HELD THAT: - The direction to delete the addition is consequentially relevant to the computation of interest. The Tribunal directed the Assessing Officer to recompute interest under the applicable provisions in accordance with law, as a consequence of the deletion of the addition.

Ground 4 treated as partly allowed; AO to recompute interest under sections 234A, 234B and 234C, if applicable.

Final Conclusion: The appeal is partly allowed: the addition of Rs.99,88,082/- on account of share application/share premium from IL & FS is deleted and the Assessing Officer is directed to recompute interest, if any, in accordance with law; an ancillary ground concerning an amount received in the earlier year was rendered academic.

Validity of satisfaction note under Section 153C - Applicability of pre-amendment or post-amendment 153C - relevant date for applicability - Jurisdiction to initiate assessment under Section 153C - Assessment under Section 153C void-ab-initio where foundational satisfaction is vitiated - Cancellation of penalty under Section 271(1)(c) consequent upon quashing assessment

Validity of satisfaction note under Section 153C - Applicability of pre-amendment or post-amendment 153C - relevant date for applicability - Jurisdiction to initiate assessment under Section 153C - Assessment under Section 153C void-ab-initio where foundational satisfaction is vitiated - Satisfaction note recorded by AO of the searched person did not satisfy the jurisdictional requirement of pre-amended Section 153C and therefore the assessee's AO had no jurisdiction to initiate assessments under Section 153C for the captioned years. - HELD THAT: - The Tribunal applied the rule that the relevant date for determining applicability of the pre-amended Section 153C is the date of search (27.10.2014), following the reasoning in Anilkumar Gopikishan Agrawal v. CIT. Under the pre-amended provision the AO of the searched person must record a factual satisfaction that seized material 'belongs' to a person other than the searched person. The satisfaction note dated 03.03.2017 was examined and the seized documents (A-1/154 to 156 and A-2/45) were found to be ledger entries maintained by the searched entity (M/s Navjeevan Charitable Trust) recording transactions with the assessee, not documents that by any stretch 'belonged' to the assessee. Because the foundational factual finding in the searched person's satisfaction note - that the seized material belonged to the assessee - was erroneous, the satisfaction note was vitiated. Once the first-stage satisfaction was invalid, the assessee's AO (ITO Ward 4(3)) lacked jurisdiction to proceed under Section 153C and all consequent assessment actions founded on that defective satisfaction were void-ab-initio. The Tribunal therefore quashed the assessments framed under Section 153C for AY 2010-11, AY 2011-12 and AY 2012-13. [Paras 11, 12]

Satisfaction note is invalid; assessments under Section 153C for AY 2010-11, AY 2011-12 and AY 2012-13 are quashed.

Cancellation of penalty under Section 271(1)(c) consequent upon quashing assessment - Penalty under Section 271(1)(c) framed on the basis of the quashed assessments must similarly be set aside. - HELD THAT: - The Tribunal applied the principle that when the foundational order or basis of proceedings is removed, consequential orders based on it must fall (Sublato fundamento cadit opus). Since the assessments under Section 153C were quashed as void-ab-initio, the penalty orders imposed under Section 271(1)(c) which flowed from those assessments had no sustaining basis and were therefore cancelled. [Paras 13]

Penalties levied under Section 271(1)(c) for the captioned years are cancelled.

Final Conclusion: Appeals allowed; assessments framed under Section 153C for AY 2010-11, AY 2011-12 and AY 2012-13 quashed for want of valid satisfaction at the first stage, and the consequential penalties under Section 271(1)(c) are set aside.

Deductibility of employees' contribution to PF/ESIC - application of section 43B for payments made before the due date of filing return u/s.139(1) - prospective operation of amendment to section 36(1)(va) and 43B by Finance Act, 2021 - retrospective/clarificatory character of taxing amendments

Deductibility of employees' contribution to PF/ESIC - application of section 43B for payments made before the due date of filing return u/s.139(1) - Whether employees' contribution to PF and ESIC paid after the statutory due under the PF/ESI enactments but before the due date for filing return u/s.139(1) of the Income-tax Act is allowable as a deduction for A.Y.2019-20. - HELD THAT: - The Tribunal found that the assessee had deposited the employees' contribution to PF and ESI before the due date for furnishing the return under section 139(1). Relying on coordinate Tribunal and High Court authorities, the Tribunal accepted the consistent view that payments of employees' contribution remitted to the respective accounts before the due date of filing the return are allowable as a deduction under the provisions read with section 43B. The Tribunal noted the factual compliance by the assessee and concluded that the addition disallowing such contribution could not be sustained for the relevant assessment year.

Addition disallowing employees' contribution to PF/ESIC is deleted and deduction granted for A.Y.2019-20.

Prospective operation of amendment to section 36(1)(va) and 43B by Finance Act, 2021 - retrospective/clarificatory character of taxing amendments - Whether the amendment introduced by Finance Act, 2021 to section 36(1)(va) and section 43B applies to A.Y.2019-20 or is prospective w.e.f. 01.04.2021. - HELD THAT: - The Tribunal examined the character of the Finance Act, 2021 amendment and relevant precedents, observing that the amendment was stated to be effective from 01.04.2021. It followed judicial decisions holding that the amendment altered the law adversely to taxpayers and therefore could not be treated as retrospective or clarificatory so as to affect earlier assessment years. Applying this reasoning to the facts, the Tribunal held that the Finance Act, 2021 changes do not apply to the assessment year under consideration.

Amendment by Finance Act, 2021 to section 36(1)(va) and 43B does not apply to A.Y.2019-20; the amendment is prospective.

Final Conclusion: The Tribunal allowed the appeal for A.Y.2019-20, directing deletion of the disallowance and granting deduction for employees' contribution to PF/ESIC paid before the due date for filing the return, and held that the Finance Act, 2021 amendment to section 36(1)(va) and 43B is prospective and does not apply to the relevant assessment year.

Order VII Rule 11 CPC - plaint to be tested on averments and documents filed with the plaint - demurrer test for rejection of plaint - exception to prohibition on suits in cases where property is held in name of a coparcener for benefit of Hindu undivided family - scope of trial versus summary rejection

Order VII Rule 11 CPC - plaint to be tested on averments and documents filed with the plaint - demurrer test for rejection of plaint - Whether the plaint is liable to be rejected under Order VII Rule 11 of the CPC. - HELD THAT: - The Court applied the settled demurrer principle that an application under Order VII Rule 11 CPC must be decided with reference only to the averments in the plaint and documents filed therewith, accepting those averments as true for the limited purpose of the application. Relying on precedents which require that the plaint be read as a whole and only material facts need be pleaded, the Court held that the possibility that the plaintiff may not ultimately succeed is not a ground to reject the plaint at this stage. The Court found that the plaint contains specific averments and documents (including HUDCO receipts, income tax assessment orders and TDS certificates) relevant to the claim that the suit property was purchased from HUF funds and held by the father as Karta for the benefit of coparceners. On that basis, the Court concluded that the plaint discloses a cause of action and is not liable to be rejected under Order VII Rule 11 CPC. [Paras 9, 16, 19, 20, 26]

The application under Order VII Rule 11 CPC for rejection of the plaint is dismissed; the plaint is not liable to be rejected at the demurrer stage.

Exception to prohibition on suits in cases where property is held in name of a coparcener for benefit of Hindu undivided family - scope of trial versus summary rejection - Whether the plaint is barred by the unamended provisions of Section 4 of the Benami Transactions (Prohibition) Act, 1988, having regard to the exception for property held in the name of a coparcener for the benefit of the HUF (Section 4(3)(a) as unamended). - HELD THAT: - The Court examined the unamended provision and the exception in Section 4(3)(a) and applied binding and persuasive authorities which hold that applicability of that exception is a matter to be decided on evidence after trial, not on an Order VII Rule 11 application. Considering the plaint averments that HUF funds (supported by documentary references to HUDCO bond receipts, income tax assessments and TDS certificates) were used to purchase the suit property and that the father purchased and held the property as Karta for the benefit of coparceners, the Court concluded that the plaintiff has pleaded facts sufficient to bring the case within the statutory exception at the prima facie stage. Consequently, whether the plea ultimately succeeds requires trial; the plaint is not barred by Section 4 of the unamended Benami Act at this stage. [Paras 13, 14, 15, 18, 20]

On the averments and documents before the Court, the case prima facie falls within the exception in Section 4(3)(a) of the unamended Benami Act and the question must be adjudicated after trial; the plaint is not barred by that statute for the purpose of Order VII Rule 11 CPC.

Final Conclusion: The application under Order VII Rule 11 CPC seeking rejection of the plaint is dismissed; the plaint, on its averments and accompanying documents, discloses a cause of action and raises issues under the unamended Benami Act which require adjudication at trial.

Attachment of salary for recovery of income-tax demand - interim protection from appellate authority in income-tax proceedings - maintainability for non-joinder / improper array of parties - order under Section 24(4) of the PBPT Act - discretion of the appellate authority to grant stay

Maintainability for non-joinder / improper array of parties - Writ petition not maintainable in its existing form for want of proper parties, but Court impleaded the proper assessing authority suo motu and directed amendment of the cause title. - HELD THAT: - The petitioner had proceeded on the incorrect premise as to the authority that issued the impugned garnishee/attachment order. The Court found that the impugned order was passed by the Deputy Commissioner of Income Tax, Central Circle, 3(4), Chennai and not by the officer under the PBPT Act claimed by the petitioner. For want of proper parties, the writ petition was not maintainable in its present form. Bearing in mind the petitioner's profile, the Court impleaded the correct Deputy Commissioner of Income Tax as respondent and directed amendment of the cause title so that the proper party is before the Court. [Paras 7, 9]

Writ petition was not maintainable as originally framed for non-joinder of the proper assessing authority; the Court impleaded the proper Deputy Commissioner suo motu and permitted amendment of the cause title.

Attachment of salary for recovery of income-tax demand - order under Section 24(4) of the PBPT Act - Court declined to interfere with the assessing authority's garnishee/attachment order and left the impugned order undisturbed. - HELD THAT: - Although proceedings under both the PBPT Act and the Income Tax Act were initiated, the attachment impugned in the petition was issued by the assessing authority under the Income Tax Act to secure the demand arising from an income-tax assessment order. The Court held that the order under Section 24(4) of the PBPT Act was irrelevant to the challenge against the garnishee notice issued by the assessing authority. exercising judicial restraint, the Court refrained from granting interim relief and declined to intervene in respect of the attachment order. [Paras 4, 8, 12]

The impugned attachment order is left undisturbed and the Court will not grant interim protection in this writ petition.

Interim protection from appellate authority in income-tax proceedings - discretion of the appellate authority to grant stay - Petitioner granted liberty to seek interim protection before the statutory appellate authority; such stay application to be disposed of within three weeks after hearing, taking into account prima facie case, financial stringency and balance of convenience. - HELD THAT: - The Court observed that the petitioner has an available statutory remedy of appeal against the assessment order and that interim relief, if any, should ordinarily be sought from the appellate authority. The Court declined to substitute its discretion for that of the appellate forum but directed that any stay application filed before the Assessing and/or Appellate authorities under the Income Tax Act shall be disposed of by the authority within three weeks from receipt, after hearing the petitioner. The authority is directed to take into account the conventional trifecta for interim relief-existence of a prima facie case, financial stringency, and balance of convenience-while deciding the stay application. [Paras 11, 12, 14]

Liberty granted to the petitioner to move the Assessing or Appellate authority for interim protection; any such stay application must be heard and disposed of within three weeks, with the authority considering prima facie case, financial hardship and balance of convenience.

Final Conclusion: Writ petition dismissed; proper assessing authority impleaded and cause title amended; impugned attachment left undisturbed; petitioner granted liberty to seek interim protection from the statutory appellate authority which must decide any stay application within three weeks after hearing, taking into account prima facie case, financial stringency and balance of convenience.

Appellate interference - plausible and reasonable view - cess not being enforced w.e.f. 2006

Appellate interference - plausible and reasonable view - Whether the impugned judgment warrants interference by this Court. - HELD THAT: - The Court examined the impugned judgment and found that the view adopted by the tribunal/High Court is plausible and reasonable. In the absence of any demonstrable legal error or illegality in the reasoning, the Court declined to disturb the concurrent finding and held that interference is not warranted. [Paras 1]

The impugned judgment does not require interference and is upheld.

Cess not being enforced w.e.f. 2006 - Whether the cess in question continues to be enforced from 2006 onwards. - HELD THAT: - The Court recorded that the cess which formed part of the dispute is not being enforced with effect from 2006. This factual-legal position was noted as a material circumstance in disposing of the appeals. [Paras 1]

The cess is not being enforced w.e.f. 2006.

Final Conclusion: Appeals dismissed; the impugned judgment is sustained as a plausible and reasonable conclusion, and the cess in question is not being enforced with effect from 2006. Pending applications disposed of.

Condonation of delay - hearing on merits - revisional jurisdiction - remand for de novo hearing - confiscation under Customs Act - costs for litigant's inaction

Condonation of delay - hearing on merits - revisional jurisdiction - remand for de novo hearing - Whether the appellate and revisional orders dismissing the appeal/revision for delay without deciding the matter on merits should be set aside and remitted for fresh consideration. - HELD THAT: - The Court noted that the Commissioner of Customs (Appeals) dismissed the first appeal for a delay of ten days because no application for condonation of delay had been filed and that the revisional authority declined to disturb that conclusion, also recording non-appearance and absence of substantiation for the alleged mistake of the lawyer. Given that neither the first appeal nor the revision was decided on merits and that the delay was short, the Court held that the appellate and revisional orders should be set aside and the matter remitted for fresh hearing on merits. The Court observed that while a litigant is accountable for his counsel's failures, there are limits to that accountability and that the absence of a merits hearing in a matter involving confiscation warrants reconsideration. Accordingly, the revisional order dated 20.07.2021 and the appellate order dated 27.04.2018 were set aside and the matter remitted to the Commissioner of Customs (Appeals) for a de novo hearing, with directions to serve written notice on the petitioner for hearing on merits. [Paras 15, 16, 19, 20]

Orders of the Commissioner of Customs (Appeals) and the revisional authority set aside; matter remitted to Commissioner of Customs (Appeals) for de novo hearing on merits and notice to the petitioner to be served.

Costs for litigant's inaction - hearing on merits - Whether the petitioner should be burdened with costs for the procedural failures that occasioned the remand and the consequences of non-payment of such costs. - HELD THAT: - The Court accepted that the petitioner bore partial responsibility for the procedural posture that led to dismissal for delay and eventual remand. In exercise of its discretion, the Court imposed costs on the petitioner to reflect that responsibility, directing payment into the "Bar Council of Delhi Indigent & Disabled Lawyers Account" within two weeks. The Court further directed that proceedings before the Commissioner of Customs (Appeals) shall not proceed if the costs are not deposited, and fixed a compliance listing before the Registrar to ensure payment. [Paras 17, 18, 21]

Petitioner directed to pay costs of Rs. 25,000 to the specified Bar Council fund within two weeks; non-deposit will stay further proceedings before the Commissioner of Customs (Appeals).

Final Conclusion: The writ petition is allowed in part: the appellate and revisional orders dismissing the proceedings for delay are set aside and the matter remitted to the Commissioner of Customs (Appeals) for a de novo hearing on merits; petitioner to deposit costs with the designated Bar Council fund within two weeks, failing which proceedings before the Commissioner of Customs (Appeals) will not proceed.

Classification of monitors under Heading 8528 - sub heading 8528 52 00 - monitors capable of directly connecting to and designed for use with an automatic data processing machine - Heading 8471 - automatic data processing machines and units - Chapter Note 6(C), 6(D) and 6(E) - treatment of units and exclusion of monitors and projectors from Heading 8471 - eligibility for exemption under Serial Number 17 of Notification No. 24/2005 Cus. - restrictive interpretation of exemption notifications

Classification of monitors under Heading 8528 - sub heading 8528 52 00 - monitors capable of directly connecting to and designed for use with an automatic data processing machine - Heading 8471 - automatic data processing machines and units - Chapter Note 6(C), 6(D) and 6(E) - treatment of units and exclusion of monitors and projectors from Heading 8471 - Ten specified Sharp LCD/touchscreen monitors are classifiable under Heading 8528 and, specifically, sub heading 8528 52 00. - HELD THAT: - The Authority examined whether the monitors fall within Heading 8471 or Heading 8528 by applying Chapter Note 6(C)-(E). Note 6(C) lays down conditions under which a unit is part of an ADP system, but Note 6(D) expressly excludes "monitors and projectors, not incorporating television reception apparatus" from Heading 8471 even if they satisfy Note 6(C). Note 6(E) directs classification according to the unit's function where machines work in conjunction with ADP machines. The monitors in question are non CRT display devices capable of directly connecting to and designed for use with ADP machines; however, being monitors (and not integral ADP machines), they fall within the exclusion in Note 6(D) and must be classified according to their function as image/video display devices under Heading 8528. At sub heading level, non cathode ray monitors designed to connect to ADP machines are classifiable under 8528 52 00; this sub heading also admits monitors having built in USB media players or the ability to display photos/videos. On this basis the ten models specified are classifiable under sub heading 8528 52 00. [Paras 16, 17]

The ten specified models are correctly classifiable under Heading 8528 and more specifically sub heading 8528 52 00.

Eligibility for exemption under Serial Number 17 of Notification No. 24/2005 Cus. - principally used in an automatic data processing system - restrictive interpretation of exemption notifications - The said monitors are not eligible for exemption under Serial Number 17 of Notification No. 24/2005 Cus. - HELD THAT: - Serial Number 17 grants exemption only to goods "of a kind solely or principally used in an automatic data processing system of Heading 8471." The applicant did not contend the monitors are solely used with ADP machines and admitted they are only principally used with such machines in practice. Crucially, the monitors possess enabling features (built in USB media player, capability to display AV content, touch/writing functions) that permit use without any ADP machine. Because these features enable ready operation independent of ADP machines, the monitors cannot be regarded as principally designed for use with ADP machines. Applying the settled rule that notification benefits are to be interpreted restrictively, the Authority holds that the exemption under Serial Number 17 is not admissible to these monitors. [Paras 18, 19]

The monitors do not qualify for exemption under Serial Number 17 of Notification No. 24/2005 Cus.

Final Conclusion: The Authority rules that the ten specified Sharp LCD/touchscreen monitors are classifiable under Heading 8528, specifically sub heading 8528 52 00, and that the exemption under Serial Number 17 of Notification No. 24/2005 Cus. is not available to these monitors due to features enabling their use independent of ADP machines.

Registration of stock brokers - certificate of registration - co-terminus registration with stock exchange - ad valorem fee for registration and renewal - purposive construction of subordinate legislation

Certificate of registration - registration of stock brokers - co-terminus registration with stock exchange - Form A and Form D - Regulations framed under Section 30 - Whether a stock broker must obtain separate certificate(s) of registration from SEBI in respect of each stock exchange where he is a member, or whether a single certificate suffices for multiple exchanges. - HELD THAT: - The Court examined the Act, the Rules and the Regulations together with Form A (application routed through the stock exchange) and Form D (certificate of registration) and held that the scheme contemplates registration in relation to the stock exchange(s) of which the broker is a member. The regulations prescribe that an application is to be made through the stock exchange or stock exchanges (Reg. 3), registration is to be granted and intimated to the stock exchange or stock exchanges (Reg. 6), and the conditions in the Rules require membership of a stock exchange as a precondition. Reading the expression "a certificate" in Section 12(1) in the light of the regulatory scheme, the Court concluded that certificates of registration are co-terminus with the stock exchange(s) to which the broker belongs and that multiple registrations (one for each exchange where the broker operates) are envisaged by the subordinate legislation. The Division Bench's emphasis on the singular word in Section 12(1) was rejected as overlooking the statutory scheme and the purposive/contextual construction adopted by the Court. [Paras 42, 43, 47, 51]

Each certificate of registration is in relation to the stock exchange(s) of which the broker is a member and multiple registrations with SEBI-co-terminus with respective stock exchanges-are permitted and required under the statutory scheme.

Ad valorem fee for registration and renewal - Schedule III - date of initial registration - payment of fees under Regulation 10 - Whether the ad valorem fee for the initial five-year block recurs with every such registration and how the 'date of initial registration' is to be understood for multiple certificates. - HELD THAT: - The Court held that Schedule III(1)(c) refers to the 'date of initial registration' in relation to each certificate of registration obtained by a stock broker in respect of a stock exchange of which he is a member. Where multiple certificates are held, each certificate is subject to the fee and renewal mechanism prescribed by Regulation 10 and Schedule III; after expiry of five financial years from the date of initial registration for that certificate, the prescribed fee is payable to keep that particular registration in force. The Circular dated 28th March, 2002 which clarified that fees are payable for each certificate of registration was found to be in conformity with this scheme, and the ad valorem fee blocks are to be reckoned with reference to the initial registration date of each certificate. [Paras 34, 48, 49, 51]

The ad valorem fee/renewal obligation applies to each certificate of registration separately; the five-year reckoning operates from the date of initial registration of each certificate.

Final Conclusion: The appeal is allowed; the Division Bench judgment is quashed and set aside. The Court affirms that multiple certificates of registration with SEBI-co-terminus with the stock exchange(s) of which a broker is a member-are envisaged by the statutory scheme, and the ad valorem fees and five-year renewal mechanism under Regulation 10 and Schedule III apply to each such certificate.

Financial debt - Section 7 application under the Insolvency and Bankruptcy Code - Enforceability of an agreement (MOU) against a non party corporate debtor - Disbursement for time value of money as characterization of debt - Effect of attachment under the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 on characterization as financial debt

Financial debt - Enforceability of an agreement (MOU) against a non party corporate debtor - Section 7 application under the Insolvency and Bankruptcy Code - Whether the Section 7 application based on the MOU between the appellant and M/s ABW Infrastructure Ltd. could be maintained as a claim of financial debt against M/s Dove Infrastructure Pvt. Ltd. - HELD THAT: - The Adjudicating Authority and this Tribunal found that the Memorandum of Undertaking was executed between the appellant and M/s ABW Infrastructure Ltd., and the corporate debtor (M/s Dove Infrastructure Pvt. Ltd.) was not a party to that MOU. The clause relied upon merely records the developer proposed to construct an IT Park through the corporate debtor but does not create an obligation of the corporate debtor to repay the sums disbursed by the appellant. The disbursements were made to M/s ABW Infrastructure Ltd. and, being payments for the time value of money to that entity, cannot be recast as a financial debt owed by the corporate debtor. On these findings the Section 7 petition was liable to be rejected as the essential requirement of a claim of financial debt against the corporate debtor was missing. [Paras 5, 6, 8]

The Section 7 application was rightly rejected because the MOU did not establish a financial debt owing from the corporate debtor.

Effect of attachment under the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 on characterization as financial debt - Financial debt - Whether the District Magistrate's order of attachment under the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 converted or established the appellant's claim as a financial debt against the corporate debtor. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's conclusion that the order of attachment under the Haryana statute and the observations contained therein do not transform or otherwise render the appellant's claim a financial debt owed by the corporate debtor. Attachment for recovery under that Act does not, by itself, create the legal character of a financial debt under the insolvency framework when the underlying obligation is not owed by the corporate debtor. [Paras 7, 8]

The attachment order did not make the appellant's claim a financial debt against the corporate debtor.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's rejection of the Section 7 application is upheld as the MOU did not create a financial debt owed by the corporate debtor and the attachment order under the Haryana statute did not alter that characterisation.

Condonation of delay - computation of limitation from date of e filing - presentation of appeal under Rule 22 of NCLAT Rules, 2016 - mandatory physical filing after e filing - exclusion of period for limitation by Supreme Court (15.03.2020-28.02.2022) - 90 days limitation w.e.f. 01.03.2022

Presentation of appeal under Rule 22 of NCLAT Rules, 2016 - mandatory physical filing after e filing - computation of limitation from date of e filing - Whether limitation for filing appeals before NCLAT must be computed from the date of e filing or from the date of physical presentation where the Tribunal's circulars do not specify the date for computation, and whether delay should be condoned in the present appeals. - HELD THAT: - Filing of appeals before this Tribunal is governed by the NCLAT Rules, 2016 which require presentation in physical form at the filing counter (Rule 22), and Rule 103 permits electronic filing subject to adoption of rules. The NCLAT Circular dated 03.01.2021 permits e filing but also mandates filing of the physical copy; however the Circular and subsequent related circulars do not specify from which date limitation is to be computed. In the absence of any indication in the Tribunal's circulars, and having regard to differing approaches in other courts and tribunals (some computing limitation from e filing, others from physical presentation, or subject to conditions), the ends of justice require that litigants be allowed to compute limitation from the date of e filing in the facts of these cases. Applying that principle, Company Appeal (AT) (Ins.) No. 1031 of 2022 (e filed 25.05.2022) is within time and the one day delay in Company Appeal (AT) (Ins.) No. 984 of 2022 (e filed 30.05.2022) is condoned. [Paras 11, 16, 17, 21]

Limitation may be computed from date of e filing in the present circumstances; Appeal No. 1031 of 2022 held within time and one day delay in Appeal No. 984 of 2022 condoned.

Exclusion of period for limitation by Supreme Court (15.03.2020-28.02.2022) - 90 days limitation w.e.f. 01.03.2022 - Whether the benefit of the Supreme Court's directions that expired limitation during 15.03.2020 to 28.02.2022 be allowed as a 90 day period from 01.03.2022 (para 5(III)) and whether para 5(IV) restricts that benefit. - HELD THAT: - The Supreme Court's directions restore exclusion of the period 15.03.2020 to 28.02.2022 for purposes of limitation and provide that where limitation expired in that period all persons shall have 90 days from 01.03.2022 (para 5(III)). Paragraph 5(IV) is clarificatory as to certain statutes and outer limits and does not curtail the benefit conferred by para 5(III). Consequently, appellants are entitled to the benefit of the 90 day period afforded by para 5(III). The 90 day period expired on 29.05.2022, and appeals e filed within that window qualify for the benefit. [Paras 18, 19, 20]

Appellants are entitled to the benefit of the Supreme Court's para 5(III) 90 day relief from 01.03.2022; para 5(IV) does not restrict that benefit.

Final Conclusion: Delay condonation applications disposed: Company Appeal (AT) (Ins.) No. 1031 of 2022 held within time; one day delay in Company Appeal (AT) (Ins.) No. 984 of 2022 condoned. Registry directed to place the order for administrative consideration to clarify computation of limitation in relation to e filing.

Setting aside order of liquidation - recording of improved resolution plan - continuation of liquidator as resolution professional - exclusion of time for computation of CIRP period - appropriation of amounts remitted by resolution applicant - directions to Adjudicating Authority to proceed under the Insolvency & Bankruptcy Code, 2016 - dismissal of contempt proceedings

Setting aside order of liquidation - recording of improved resolution plan - directions to Adjudicating Authority to proceed under the Insolvency & Bankruptcy Code, 2016 - Order of liquidation dated 06.06.2022 set aside and Adjudicating Authority directed to take on record the improved resolution plan dated 30.08.2022 and proceed in accordance with law. - HELD THAT: - The Tribunal found that the resolution applicant had remitted the total sum agreed under the improved resolution plan and that receipt of the remittance was not disputed by the sole financial creditor. To prevent an injustice and in the interest of permitting the substantial cause of justice, the Tribunal set aside the impugned liquidation order and directed the Adjudicating Authority to take the improved resolution plan on record and proceed further as per the Insolvency & Bankruptcy Code, 2016 and applicable rules and regulations. The direction is based on the admitted fact of receipt of the funds and the absence of objection from the creditor and liquidator. [Paras 6]

Impugned order of liquidation set aside; Adjudicating Authority directed to record the improved resolution plan and proceed under the IBC and rules.

Continuation of liquidator as resolution professional - The incumbent liquidator is to continue as the resolution professional for carrying out the Committee of Creditors' proceedings. - HELD THAT: - The Tribunal noted that the liquidator is presently in charge of the operations of the corporate debtor and directed that he be continued as the resolution professional to ensure continuity in the conduct of the CoC proceedings while the Adjudicating Authority proceeds with the recorded resolution plan and related steps. [Paras 7]

Current liquidator to continue as resolution professional for CoC proceedings.

Exclusion of time for computation of CIRP period - Period from 07.03.2022 till 28.09.2022 (205 days) is to be excluded for the purpose of computing the completion period of the Corporate Insolvency Resolution Process. - HELD THAT: - Having regard to the time spent before the Adjudicating Authority and the period up to the date of the Tribunal's order, the Tribunal directed exclusion of the specified period from the CIRP timeline for computation purposes. The exclusion is ordered to reflect the time consumed in the proceedings before the Adjudicating Authority and to permit continuation of the resolution process in accordance with the directions given. [Paras 8]

Time from 07.03.2022 to 28.09.2022 excluded for CIRP completion computation.

Appropriation of amounts remitted by resolution applicant - directions to Adjudicating Authority to proceed under the Insolvency & Bankruptcy Code, 2016 - The Tribunal permitted the financial creditor to raise a plea before the Adjudicating Authority regarding appropriation of the sum remitted, and left the final decision on appropriation to the Adjudicating Authority to be taken in accordance with law. - HELD THAT: - Although the Tribunal recorded that the remittance of the agreed sum had been received by the financial creditor, it did not itself adjudicate on appropriation. Instead, the Tribunal allowed the bank to place its plea before the Adjudicating Authority and directed that the Adjudicating Authority take the final call on appropriation in the manner known to law. This leaves the appropriation question for fresh consideration and final determination by the Adjudicating Authority. [Paras 9]

Bank permitted to press plea on appropriation before the Adjudicating Authority; Adjudicating Authority to decide appropriation in accordance with law.

Dismissal of contempt proceedings - Contempt case filed in relation to the main appeal is dismissed. - HELD THAT: - In view of the disposal of the main company appeal by setting aside the liquidation order and directing further proceedings, the Tribunal dismissed the connected contempt proceedings brought in the context of that appeal.

Contempt proceeding dismissed.

Final Conclusion: The Tribunal set aside the Adjudicating Authority's liquidation order, directed the AA to record and proceed with the improved resolution plan under the IBC, continued the incumbent liquidator as resolution professional, excluded the specified period for CIRP computation, permitted the bank to seek adjudication on appropriation before the AA (to be finally decided by the AA), and dismissed the related contempt proceedings.

Fraudulent trading under Section 66(1) of the Insolvency and Bankruptcy Code, 2016 - Wrongful trading and requirement of dishonest intent - Standard of proof for establishing fraudulent intent - Transfer of assets among group companies and intra-group transactions - Principles of natural justice and disclosure of transaction audit reports

Fraudulent trading under Section 66(1) of the Insolvency and Bankruptcy Code, 2016 - Transfer of assets among group companies and intra-group transactions - Whether the transfer of land (purchased with corporate funds but registered in a related/holding company) amounted to fraudulent trading under Section 66(1) of the IBC. - HELD THAT: - The Tribunal held that a transfer of assets within group companies, by itself, does not ex facie constitute fraudulent trading under Section 66(1). The question of liability for fraudulent or wrongful trading turns on proof of dishonest intent or that individuals knowingly carried on business to defraud creditors. Directors may act bona fide believing the company can recover; negligent management may attract wrongful trading only where the requisite state of mind and conduct are established. The respondents had explained that land acquisitions were effected in light of state-specific regulatory requirements and business needs, records of intra-group transactions and asset details were maintained on an SAP system (including fixed assets register), and annual audits were conducted. On the material before the Adjudicating Authority and on appeal, the appellant did not establish, to the subjective satisfaction required, that the transfers were effected with a dishonest intent to defraud creditors. Mere averments and allegations without high level probative material of dishonesty were insufficient to invoke Section 66(1). [Paras 32, 33, 36, 38, 39]

Transfer of assets among the group companies on the facts before the Tribunal did not amount to fraudulent trading under Section 66(1) of the IBC; the application under Section 66 was rightly dismissed for lack of proof of dishonest intent.

Standard of proof for establishing fraudulent intent - Principles of natural justice and disclosure of transaction audit reports - Whether the Adjudicating Authority's reliance on non-disclosure of the transaction audit report (and natural justice) required dismissal of the application, and what standard of disclosure and proof is mandated when alleging fraud. - HELD THAT: - The Adjudicating Authority observed that non-disclosure of the entire transaction audit report to respondents may offend principles of natural justice, citing authority that fraud allegations require disclosure of underlying reports. The Tribunal, however, proceeded to examine the merits and concluded that irrespective of procedural objections, the substantive material produced did not meet the high threshold required to prove fraudulent intent. The Tribunal emphasised that allegations of fraud are sensitive and require cogent proof; nondisclosure of a report may be a procedural lapse, but where the substantive record (including audited accounts, SAP records and the respondents' explanations) did not establish dishonest intent, the application could be dismissed on merits. Consequently, the absence of full disclosure did not render the Adjudicating Authority's final conclusion vitiated where the material before it did not sustain the allegation of fraud. [Paras 35, 36, 37, 38, 39]

While nondisclosure of audit material raises natural justice concerns, the Tribunal found on the substantive record that the requisite high standard of proof for fraud was not met; dismissal on merits was justified and not vitiated by material irregularity.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's dismissal of IA(IBC)/591(CHE)/2021: transfers among group companies did not, on the material placed before the court, constitute fraudulent trading under Section 66(1) IBC; allegations of fraud were not proved to the requisite standard and the appeal is dismissed.

Limitation - Article 14 of the Limitation Act - price of goods sold and delivered - date of delivery as commencement of limitation - date of default - admission of a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - pre-existing dispute

Limitation - Article 14 of the Limitation Act - price of goods sold and delivered - date of delivery as commencement of limitation - date of default - Whether the company petition under Section 9 is barred by limitation - HELD THAT: - The Tribunal held that Article 14 of the Limitation Act governs suits for the price of goods sold and delivered where no fixed credit period is agreed, prescribing a three-year limitation period beginning from the date of delivery of the goods. The Operational Creditor had included invoices dating back to 2015-2016 and sought to compute limitation from a later part-payment date (24.12.2018). The Tribunal observed that the limitation for each invoice runs from its respective date of delivery and that the Operational Creditor cannot re cast the date of default to cut off earlier defaults when the demand notice crystallizes the debt based on all invoices. Reliance was placed on the principle in Next Education India (as cited in the order) that an Operational Creditor cannot confine the date of default to later invoices when the demand notice includes all earlier invoices used to arrive at the claimed amount. Applying Article 14 and the stated precedent, the Tribunal concluded that the petition was hopelessly barred by limitation in respect of the invoices relied upon and, in consequence, the petition as filed could not be admitted.

The company petition is dismissed as barred by limitation.

Final Conclusion: The Tribunal dismissed the Section 9 company petition filed by the Operational Creditor for recovery of the claimed operational debt on the ground of limitation; the contention of a pre existing dispute was not adjudicated as the petition was disposed of on limitation grounds.

Limitation - admission of debt and acknowledgement - estoppel against raising pre-existing disputes - exclusion of time spent in prior proceedings under Article 14 of the Limitation Act - initiation of Corporate Insolvency Resolution Process and moratorium

Limitation - admission of debt and acknowledgement - exclusion of time spent in prior proceedings under Article 14 of the Limitation Act - Whether the company petition filed on 06.03.2018 was barred by limitation. - HELD THAT: - The Tribunal found that the Corporate Debtor had acknowledged the debt by an e-mail dated 02.02.2015 and that the cause of action for limitation could be computed from that acknowledgment; consequently the petition could be filed within three years from 02.02.2015. Further, the time spent by the Petitioner prosecuting the earlier winding up petition before the High Court (which was transferred and subsequently abated) is to be excluded under Article 14 of the Limitation Act, as applied by the Tribunal in light of the cited Supreme Court authority. The earlier dismissal/abatement with liberty to file a fresh petition also meant that the petitioner was not precluded from filing within the prescribed period. Applying these principles, the Tribunal held the petition filed on 06.03.2018 to be within limitation. [Paras 8, 11, 12, 13]

Limitation plea rejected; petition held to be within limitation.

Pre-existence of dispute - estoppel against raising pre-existing disputes - admission of debt and acknowledgement - Whether a pre-existing dispute barred admission of the company petition. - HELD THAT: - The Tribunal examined the Corporate Debtor's plea of pre-existing disputes and noted the absence of any reply to the legal notice sent prior to filing the winding up petition. The Tribunal relied on the minutes of meeting dated 07.12.2012 and the e-mail of 02.02.2015 as clear admissions of liability by the Corporate Debtor. In view of those acknowledgements, the bench concluded that the Corporate Debtor was estopped from raising a defence on quality of goods and that the asserted pre-existing disputes did not constitute a plausible defence requiring further investigation. [Paras 9, 10, 14]

Pre-existing dispute plea rejected; no bar to admission.

Initiation of Corporate Insolvency Resolution Process and moratorium - Whether the company petition should be admitted and CIRP be initiated against the Corporate Debtor. - HELD THAT: - Having rejected the pleas of limitation and pre-existing dispute, the Tribunal admitted the petition and ordered initiation of the Corporate Insolvency Resolution Process. The Tribunal appointed an Interim Resolution Professional from the IBBI list, directed deposit towards initial CIRP costs, and declared the statutory moratorium with attendant prohibitions on suits, transfers and enforcement actions. The Tribunal also directed public announcement of the CIRP, vesting of management in the IRP/RP, and communication of the order to the Registrar of Companies and the parties. [Paras 15]

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

Final Conclusion: The Tribunal admitted the company petition, held it to be within limitation and not barred by a pre-existing dispute, ordered initiation of CIRP against the Corporate Debtor, appointed an Interim Resolution Professional and declared the statutory moratorium with directions for public announcement and related steps.

Financial Debt - Default - Admission under Section 7 of the IBC - Estoppel by consent terms - Appointment of Interim Resolution Professional - Moratorium under Section 14 of the IBC

Financial Debt - Default - Existence of a financial debt due to the Petitioner and occurrence of default by the Corporate Debtor. - HELD THAT: - On perusal of the petition and materials on record, the Tribunal found that the Petitioner holds debentures issued by the Corporate Debtor and that payments fell into arrears. The documents, including the Debenture Trust Deed, Supplemental DTD, promissory note, consent terms and correspondence from the Debenture Trustee, establish the existence of an enforceable debt and that the Corporate Debtor failed to make the payments as agreed. The Tribunal applied the statutory definitions and concluded that the debt falls within the definition of Financial Debt and that there is a Default as defined under the Code. [Paras 21]

The Tribunal held that both existence of debt and occurrence of default are established.

Estoppel by consent terms - Effect of earlier Consent Terms and estoppel against the Corporate Debtor disputing debt and default. - HELD THAT: - The Tribunal noted that in an earlier petition the Corporate Debtor had executed Consent Terms which expressly recorded its liability and default. Having accepted liability in Clause 3 of the Consent Terms, the Corporate Debtor is estopped from disputing the existence of the same debt and default in the present petition, which concerns the identical debt and default. The Tribunal relied on the admitted terms and subsequent communications from the Debenture Trustee acknowledging default and approved instructions to proceed. [Paras 6, 22, 24]

The Tribunal held that the Corporate Debtor is estopped from disputing the existence of debt and default recorded in the Consent Terms.

Admission under Section 7 of the IBC - Maintainability and admission of the Company Petition under Section 7 of the Code. - HELD THAT: - Having concluded that a financial debt exists and a default has occurred, and that the petition is within limitation, the Tribunal applied the requirements for admission under Section 7. Considering the documentation, admissions in the Consent Terms and acknowledgement by the Debenture Trustee, the Tribunal found that the Petitioner has complied with the formalities prescribed under the Code and that the petition is maintainable. The Tribunal additionally observed that the Petition is not a barred relitigation but a continuation regarding the same debt where liability had been admitted earlier. [Paras 21, 23, 25]

The Tribunal admitted the petition under Section 7 and ordered initiation of the CIRP.

Appointment of Interim Resolution Professional - Appointment of the proposed Interim Resolution Professional and acceptance of Form 2. - HELD THAT: - The Tribunal examined the written consent (Form 2) of the proposed Interim Resolution Professional and the record to ascertain there was no disciplinary proceeding against him. Satisfied on these points, the Tribunal appointed the proposed insolvency professional as Interim Resolution Professional to conduct the CIRP and directed the petitioner to deposit initial CIRP costs. [Paras 26, 27, 28]

The Tribunal appointed the named Insolvency Professional as Interim Resolution Professional and directed payment of initial CIRP costs.

Moratorium under Section 14 of the IBC - Imposition of moratorium and ancillary directions consequent to admission of the petition. - HELD THAT: - Upon admission, the Tribunal directed the imposition of the statutory moratorium with the consequences set out in the order: prohibition on institution or continuation of suits, preservation of the Corporate Debtor's assets from transfer or enforcement, and continuation of supply of essential goods and services. The Tribunal also directed public announcement of the CIRP and communication to the Registrar of Companies, and vested management in the IRP for the CIRP duration. [Paras 28]

The Tribunal ordered the moratorium and issued the consequential directions enumerated in the order.

Final Conclusion: The Company Petition is admitted, CIRP is ordered against Rajesh Landmark Projects Private Limited, Mr. Bhrugesh Amin is appointed as Interim Resolution Professional, the petitioner directed to deposit initial CIRP costs, and a moratorium as provided under the Code is imposed with the attendant directions.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process (CIRP) - default on operational debt and settlement agreement admitted - appointment of Interim Resolution Professional (IRP) - public announcement by the IRP - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - duty of corporate debtor's management to extend assistance to the IRP

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - default on operational debt and settlement agreement admitted - initiation of Corporate Insolvency Resolution Process (CIRP) - The application under Section 9 was admitted and CIRP was initiated against the corporate debtor. - HELD THAT: - The Tribunal examined the contractual documents, correspondence and the settlement Memorandum dated 30.09.2019 and found that the operational creditor's claim was substantiated. The corporate debtor had admitted liability before the Bench and earlier appellate directions restoring the petition were noted. On appreciation of the record and the parties' admissions, the Tribunal concluded that default on the operational debt was established and accordingly admitted the Section 9 petition and ordered initiation of CIRP. [Paras 8, 9]

Petition under Section 9 admitted and CIRP initiated against the corporate debtor with immediate effect.

Appointment of Interim Resolution Professional (IRP) - public announcement by the IRP - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - duty of corporate debtor's management to extend assistance to the IRP - An IRP was appointed and directions issued regarding deposit for IRP expenses, public announcement, moratorium prohibitions and the IRP's duties. - HELD THAT: - Following admission, the Tribunal appointed the proposed IRP and recorded the IRP's authority and timeframe to act under the Code. The operational creditor was directed to deposit funds to meet immediate IRP expenses with accounting and reimbursement mechanisms. The IRP was directed to make the public announcement within the prescribed period. The Tribunal declared the moratorium and specified the statutory prohibitions flowing therefrom, and reiterated the legal obligation of the corporate debtor's management to cooperate with the IRP and the IRP's duty to protect corporate debtor's assets and take steps under the Code. [Paras 12, 13, 14, 15, 16]

Mr. Atul Mittal appointed as IRP; deposit ordered; public announcement and moratorium to operate; IRP to perform statutory functions and management to cooperate.

Final Conclusion: The Tribunal admitted the Section 9 petition, initiated CIRP against the corporate debtor, appointed the named IRP with directions for deposit and public announcement, declared the moratorium and directed cooperation of the corporate debtor's management with the IRP.

Pre-existing dispute under the Insolvency and Bankruptcy Code - test in Mobilox Innovations for existence of a dispute - adjudicating authority's limited inquiry under Section 9 of the IBC - Section 13(2) of the Sale of Goods Act - acceptance and compelled treatment of condition as warranty - Section 59 of the Sale of Goods Act - buyer's remedy of diminution or extinction of price - acceptance of goods under Section 42 of the Sale of Goods Act - plausible contention versus patently feeble or spurious dispute

Pre-existing dispute under the Insolvency and Bankruptcy Code - test in Mobilox Innovations for existence of a dispute - adjudicating authority's limited inquiry under Section 9 of the IBC - There existed a pre-existing dispute within the meaning of the IBC and the NCLAT erred in holding otherwise. - HELD THAT: - The Court examined the contemporaneous correspondence (notably emails of 30.10.2016 and 03.11.2016) and supporting laboratory reports and applied the standard laid down in Mobilox Innovations. Under Mobilox the adjudicating authority's task in a Section 9 inquiry is limited: it must reject plainly feeble or spurious defences but need only be satisfied that a plausible contention exists which requires further investigation; it need not be satisfied that the defence will likely succeed. The 30.10.2016 email (though sent by the sister concern) expressly referred to quality complaints in relation to the corporate debtor and included pictorial material; the 03.11.2016 email by the corporate debtor complained of GCV, moisture and boiler damage and sought stoppage of delivery; the seller's reply of 04.11.2016 shows acknowledgement and cessation of further supply. These materials, taken together with the lab reports, meet the Mobilox threshold of a plausible pre-existing dispute which is neither patently feeble nor purely illusory. The NCLAT's reasons for discounting the 30.10.2016 communication and for treating the corporate debtor's conduct (consumption of supplied coal) as conclusively negativing any dispute were incorrect, because under the limited scope of scrutiny in Section 9 the existence of a plausible dispute cannot be defeated merely by acceptance/consumption where, as here, the buyer invokes statutory provisions permitting treatment of breached conditions as warranties and seeks remedies under the Sale of Goods Act. Consequently the NCLAT's conclusion that no pre-existing dispute existed was unsustainable. [Paras 53, 54, 59, 61, 63]

The NCLAT's finding was set aside; the appeal allowed and the Section 9 application dismissed for want of admissibility in view of a pre-existing dispute.

Section 13(2) of the Sale of Goods Act - acceptance and compelled treatment of condition as warranty - Section 59 of the Sale of Goods Act - buyer's remedy of diminution or extinction of price - acceptance of goods under Section 42 of the Sale of Goods Act - Acceptance or consumption of delivered goods does not necessarily defeat the buyer's statutory remedies; Section 13(2) and Section 59 of the Sale of Goods Act can apply and enable the buyer to set up diminution or extinction of the price even after acceptance. - HELD THAT: - The Court analysed the Sale of Goods Act provisions and held that while acceptance of goods (Section 42) may operate to compel treatment of a breached condition as a warranty under Section 13(2) where the contract is not severable and part or all of the goods have been accepted, that situation does not deprive the buyer of remedies under Section 59. Section 59 permits the buyer to set up breach of warranty to diminish or extinguish the price and to sue for damages; acceptance therefore does not automatically extinguish a buyer's right to resist payment on the ground of a breach of condition treated as a warranty. The Court emphasised that these principles are material to the limited inquiry under Section 9 of the IBC and that consumption of goods does not, without more, render a quality complaint a sham. [Paras 24, 36, 42, 55]

Section 13(2) and Section 59 are applicable; acceptance/consumption is not necessarily fatal to a buyer's right to set up breach of warranty and seek diminution or extinction of the price.

Plausible contention versus patently feeble or spurious dispute - adjudicating authority's limited inquiry under Section 9 of the IBC - The NCLAT erred in treating the corporate debtor's pre-notice communications as insufficient to demonstrate a plausible dispute; the material could not be dismissed as patently feeble or merely a device to avoid liability. - HELD THAT: - The impugned order rejected the relevance of the 30.10.2016 email and relied upon absence of explicit reference to that communication in the statutory-reply and on the buyer's subsequent consumption of supplied coal. The Supreme Court found that the 30.10.2016 email did refer to the corporate debtor and articulated quality concerns (with attachments) and that the 03.11.2016 communication by the corporate debtor specifically complained of inferior quality, potential boiler damage and sought stoppage of delivery. Under Mobilox the adjudicating authority must determine whether the dispute is a plausible one requiring investigation and must discard only patently feeble or spurious defences; it should not undertake a full merits inquiry. On that standard the NCLAT's dismissal of the contemporaneous complaints as irrelevant or as evidence of mere bluster was incorrect. [Paras 52, 53, 54, 59, 60]

The NCLAT's rejection of the pre-notice communications as constituting no dispute was reversed.

Final Conclusion: The appeal is allowed. The NCLAT's order is set aside; the application filed under Section 9 of the IBC is rejected on the ground of a pre-existing dispute. The Supreme Court left open all other remedies available to the operational creditor and directed parties to bear their own costs.

Exemption from personal appearance under Section 205 CrPC - Judicial discretion to dispense with personal attendance in summons cases - Non-bailable and cognizable nature of offences under Section 45 of the PMLA Act - Proviso to Section 45 PMLA permitting bail where proceeds alleged are less than one crore and the accused is sick or infirm - Protection against abuse or delay of trial when personal attendance is dispensed with

Exemption from personal appearance under Section 205 CrPC - Non-bailable and cognizable nature of offences under Section 45 of the PMLA Act - Proviso to Section 45 PMLA permitting bail where proceeds alleged are less than one crore and the accused is sick or infirm - Judicial discretion to dispense with personal attendance in summons cases - Protection against abuse or delay of trial when personal attendance is dispensed with - The order rejecting the petition under Section 205 Cr.P.C. for exemption from personal attendance in ECIR 05/2021 was set aside and exemption was granted subject to conditions. - HELD THAT: - The Court examined the interplay between the learned Special Court's duty under Section 45 of the PMLA Act and the magistrate's discretionary power under Section 205 Cr.P.C. Noting the proviso to Section 45 which permits release where the proceeds are alleged to be less than one crore and the accused is sick or infirm, and having regard to the petitioner's medical condition, cooperation during investigation (statement under Section 50 PMLA) and undertakings given in the petition, the High Court held that the learned trial court's refusal to dispense with personal attendance required reconsideration. The Court applied the principle in Bhaskar Industries Ltd. that personal attendance may be dispensed with where insisting upon it would inflict undue hardship and the progress of trial would not be prejudiced, while reiterating that such exemption must not be used to obstruct or delay proceedings. Balancing these considerations, the Court found no material to show the petitioner had caused delay or non-cooperation and observed that the proviso to Section 45 is engaged on the facts pleaded. Exercising supervisory jurisdiction, the Court set aside the impugned order and allowed exemption on specific conditions designed to safeguard the trial - including disclosure of the representing advocate, undertakings as to identity and non-obstruction, attendance for framing of charge or when specifically directed, and a fresh affidavit petition before the trial court - while preserving the trial court's power under Section 205(2) Cr.P.C. to require personal attendance if abuse or delay is perceived. [Paras 8, 9, 10, 11]

Impugned order dated 09.05.2022 is set aside; petitioner is permitted exemption from personal appearance in ECIR 05/2021 on the conditions specified by the High Court.

Final Conclusion: The petition is allowed: the Special Judge's refusal to grant exemption under Section 205 Cr.P.C. is quashed and the petitioner is permitted to be represented by his advocate on all dates subject to undertakings and conditions safeguarding identity, attendance when required, and prevention of abuse or delay of the trial.

Principles of natural justice - relegation to appellate forum - appeal under Section 85 of the Finance Act, 1994 - extended period of limitation - proviso to Section 73(2) of the Finance Act, 1994 read with Section 174 of the Central Goods and Services Tax Act, 2017

Principles of natural justice - service of show-cause notice and notices for personal hearing - Whether the writ court should interfere under Article 226 on the ground of violation of principles of natural justice in respect of the order-in-original dated 30.03.2022 confirming demand of service tax for assessment period 2016-17. - HELD THAT: - The petitioner contended that he did not receive notice for personal hearing and, consequently, was denied opportunity to be heard; further that COVID-19 prevented response to the show-cause notice. The respondents placed on record that multiple notices were issued to the address furnished by the petitioner, four were served and two were returned undelivered, and that the petitioner did not file any reply to the show-cause notice. The Court held that the petitioner's plea of non-receipt and COVID-19 disruption did not establish a breach of the principles of natural justice sufficient to invoke extraordinary writ jurisdiction. Given that the order under challenge is appealable, the Court declined to exercise its discretionary writ jurisdiction to decide merits or to set aside the order on natural justice grounds and instead directed the petitioner to pursue remedy by way of statutory appeal. [Paras 5, 6, 7]

Writ petition not entertained on grounds of alleged violation of natural justice; contention rejected and matter relegated to appellate forum.

Relegation to appellate forum - appeal under Section 85 of the Finance Act, 1994 - Appropriate forum for redress of grievances against the order-in-original dated 30.03.2022 confirming service tax demand. - HELD THAT: - The Court observed that the order-in-original is an appealable order under the statutory appeal provision and therefore it was appropriate to require the petitioner to seek relief before the statutory appellate authority. The Court expressly declined to express any opinion on the merits of the demand, kept all contentions open for the appellate forum, and directed relegation to the appeal provision without adjudicating substantive issues including the availability of the extended limitation period. [Paras 8]

Petitioner relegated to file appeal under Section 85 of the Finance Act, 1994; merits left open for the appellate forum.

Final Conclusion: Writ petition dismissed with directions that the petitioner shall pursue statutory appeal against the order-in-original dated 30.03.2022 under Section 85 of the Finance Act, 1994; no opinion expressed on merits and all contentions are kept open; no costs.

Computation of limitation period for refund claims - time-barred refund - date of original submission versus date of resubmission - refund of service tax on input services used for export of manufactured goods

Computation of limitation period for refund claims - time-barred refund - date of original submission versus date of resubmission - Whether the one year period for filing a refund claim is to be computed from the date of original submission of the claim or from the date of resubmission after the claim was returned for rectification. - HELD THAT: - The Tribunal held that the relevant one year period must be computed from the date on which the claimant originally filed the refund claim. A claim returned to the appellant for rectification is not a rejection or final disposal; it merely permits the appellant to cure defects and resubmit. Treating the period as commencing from the date of resubmission would render claims returned for correction time barred unfairly and is therefore erroneous. The Tribunal applied this principle to the refund claim relating to service tax on input services used for export, finding that rejection on the ground of time bar computed from the resubmission date could not be sustained and must be set aside. [Paras 6, 7]

The one year period is to be computed from the date of original submission of the refund claim; the orders rejecting the refund on the basis that limitation ran from the date of resubmission are set aside.

Final Conclusion: The impugned orders were set aside and the appeals allowed; the refund rejection as time barred when limitation was computed from the resubmission date is quashed, with consequential relief as may be applicable.

Place of Provision of Services Rules, 2012 - applicability of rule 3 versus rule 4 - Requirement of supply of goods to invoke rule 4 - Export of services and refund under notification no. 27/2012-Central Excise Act, 1944 - Necessity of demand before denial of refund - Binding effect of a reference for constitution of a Larger Bench

Place of Provision of Services Rules, 2012 - applicability of rule 3 versus rule 4 - Requirement of supply of goods to invoke rule 4 - Whether denial of refund was justified by treating the appellant's activity as taxable within rule 4 of the Place of Provision of Services Rules, 2012. - HELD THAT: - The Tribunal held that rule 4 is a deviation from the default principle in rule 3 and that invocation of rule 4 requires a finding that goods were provided upon which the service was rendered. There were no records, findings or allegations in the show cause notice or the lower authorities' orders that goods had been furnished to the appellant for rendering any service to the overseas entity. Mere description of invoices as 'clinical trial expenses' was insufficient to establish that goods were supplied and therefore insufficient to displace rule 3. In the absence of any material showing supply of goods, the presumption of taxability under rule 4 could not be sustained and the denial of refund on that basis was improper. [Paras 6]

The denial of refund based on application of rule 4 was set aside and the finding recorded that rule 3 applies.

Necessity of demand before denial of refund - Export of services and refund under notification no. 27/2012-Central Excise Act, 1944 - Whether taxability could be asserted for purposes of denying the refund without a demand having been raised. - HELD THAT: - The Tribunal noted that no demand had been raised in relation to the alleged taxable service; it observed that taxability for the purpose of denying an export-based refund can only be asserted by raising a demand. Since no demand existed, the basis for treating the transactions as non-exports and denying the refund was unsustainable. [Paras 5]

Absence of any demand precluded asserting taxability to deny the refund.

Binding effect of a reference for constitution of a Larger Bench - Whether a pending reference for constitution of a Larger Bench justified departing from or refusing to follow an existing binding precedent. - HELD THAT: - The Tribunal explained that a bench making a reference to a Larger Bench remains bound by the precedent it has disagreed with until that precedent is set aside. A reference constitutes an interim procedural step and does not bind coordinate benches or permit a contrary decision in the meantime. [Paras 4]

The submission based on the reference to a Larger Bench was not tenable and did not permit disagreement with the binding precedent.

Export of services and refund under notification no. 27/2012-Central Excise Act, 1944 - Remand for further proceedings by the original authority in respect of the refund claim. - HELD THAT: - Because the Tribunal found that rule 3 applied and that denial of refund lacked a proper basis, it set aside the impugned order and restored the refund application to the original authority for reconsideration. The original authority was directed to proceed in accordance with the provisions of the notification, applying the correct place-of-provision rule and addressing any relevant factual or legal issues within the scope of the show cause notice. [Paras 6]

Refund application restored to the original authority for fresh proceedings consistent with the Tribunal's findings.

Final Conclusion: The impugned order denying refund was set aside: the Tribunal held that rule 3 of the Place of Provision of Services Rules, 2012 applies in the absence of any finding that goods were supplied to the appellant (so rule 4 could not be invoked), observed that no demand had been raised to support denial of the refund, rejected the reliance on a pending reference to a Larger Bench, and restored the refund application to the original authority for fresh proceedings in accordance with the notification.

Cenvat credit admissibility - components, spares and accessories - disallowance of cenvat credit - reliance on Tribunal Larger Bench decision - judicial distinction of precedent

Cenvat credit admissibility - components, spares and accessories - disallowance of cenvat credit - reliance on Tribunal Larger Bench decision - judicial distinction of precedent - Set aside of demand for alleged wrongful availment of cenvat credit in respect of goods used in manufacture of storage tanks and Bulk Mobile Delivery (BMD) vehicle systems for the period January, 2013 to December, 2013. - HELD THAT: - The Adjudicating Authority disallowed cenvat credit and imposed penalty relying on the Tribunal's Larger Bench decision in Vandana Global Limited. The Tribunal held that the Larger Bench decision relied upon was not applicable to the facts of the present case and noted that the Hon'ble Chhattisgarh High Court has distinguished that Larger Bench decision and characterized it as not being good law. Applying the High Court's view, the Tribunal concluded that the impugned demand could not be sustained and therefore set aside the demand. The Commissioner (Appeals) had earlier set aside the penalty; the Tribunal's decision annulled the demand for credit recovery on the stated grounds and allowed the appeal with consequential relief. [Paras 4, 5]

Demand for recovery of cenvat credit set aside and appeal allowed; consequential relief granted.

Final Conclusion: The Tribunal allowed the appeal, set aside the demand for alleged wrongful availment of cenvat credit for the specified period by finding the Larger Bench precedent relied upon inapplicable and following the Chhattisgarh High Court's distinction, and granted consequential relief.

Cenvat credit on inputs consumed in the manufacturing process - consumable forming part of raw material as distinct from manufacturing apparatus - availability of credit where goods are consumed or melted and mix with final product - interpretation of 'input' under the Cenvat Credit Rules, 2004 - essentiality test for qualification as raw-material

Cenvat credit on inputs consumed in the manufacturing process - consumable forming part of raw material as distinct from manufacturing apparatus - availability of credit where goods are consumed or melted and mix with final product - Cenvat credit is admissible on HR sheets/plates and MS rods used to fabricate Steel Formers which are consumed in the appellant's induction furnace and melt into the final billets. - HELD THAT: - The Tribunal accepted the uncontroverted factual position that HR sheets/plates and MS rods are used to fabricate Steel Formers (liners) which are placed in the induction furnace and get consumed-melting and mixing with the molten metal during manufacture of billets. The adjudicating authorities disallowed credit only on the ground that Steel Formers fall under Chapter 73 of the Tariff and thus were treated as excisable goods or manufacturing apparatus. Relying on the principles laid down by the Supreme Court in Eastern Electro Chemical Industries (and the decision in Ballarpur Industries referred therein), the Tribunal applied the test that an ingredient consumed or burnt up in a manufacturing process may nevertheless qualify as a raw-material (and hence an input) if it is essential and indispensable to the manufacturing process and its consumption is in the nature of contributing to the end-product rather than being merely part of the manufacturing apparatus. The Tribunal also noted earlier analogous tribunal authority where MS components used similarly were held to constitute inputs. Given that the authorities below conceded the usage and consumption of the impugned goods in the production process, the legal principle from the cited precedents squarely supports allowing Cenvat credit, and the impugned orders disallowing credit could not be sustained.

Impugned orders disallowing Cenvat credit are set aside; appeal allowed and Cenvat credit in respect of the specified HR sheets/plates and MS rods is held admissible.

Final Conclusion: The Tribunal allowed the appeal, holding that HR sheets/plates and MS rods used to fabricate Steel Formers which are consumed in the induction furnace qualify as inputs for the purposes of Cenvat credit under the Cenvat Credit Rules, 2004, set aside the orders of disallowance and granted consequential relief.

Transaction value as component of assessable value - inclusion of forfeited earnest money/security deposit in transaction value - distinction between penalty/forfeiture and contractual liquidated damages - liability to interest and penalty for undisclosed additional consideration

Transaction value as component of assessable value - inclusion of forfeited earnest money/security deposit in transaction value - Forfeiture of earnest money/security deposit consequent to auction-sale default is not includable in the transaction value/assessable value of the scrap sold. - HELD THAT: - The Tribunal examined the definition of "transaction value" and applied the settled principle that only amounts which are charged by the seller or which the buyer is liable to pay to the seller by reason of or in connection with the sale fall within transaction value. In the facts of this case the earnest money deposit was taken as a security/earnest to secure performance of the auction contract and, where forfeited, constituted a consequence of breach rather than an amount charged as part of the sale consideration. The Department's reliance on authorities and circulars that treat amounts recovered from a buyer as part of transaction value was found misplaced on these facts, and the observations in TVS Motors and other precedents were distinguished as not supporting inclusion where the manufacturer/seller does not recover the amount as a part of the price or by virtue of a contractual term making the buyer liable to pay that amount as consideration. Larger Bench and other decisions recognising that contractually stipulated liquidated damages may adjust the eventual transaction value were noted, but the Tribunal held those authorities inapplicable where the forfeiture operates as a penal consequence of default in an auction sale and is not part of the sale price or a contractual reduction/addition to the price. Consequently the demand for duty on the forfeited earnest money was unsustainable.

Demand for duty by including forfeited earnest money in transaction value set aside; appeal allowed.

Liability to interest and penalty for undisclosed additional consideration - Interest and penalty levied on the demand founded on inclusion of forfeited earnest money were not attracted once the addition itself was held unsustainable. - HELD THAT: - The Commissioner (Appeals) sustained the original order charging interest and penalty on the premise that the assessee failed to disclose additional consideration. The Tribunal, having concluded that the forfeited earnest money did not form part of transaction value, held that there was no recoverable duty on that head and, therefore, the consequential imposition of interest and penalty could not be sustained. The Tribunal observed that invocation of interest and penalty flows from the existence of a recoverable duty, which is absent when the underlying addition is invalid.

Interest and penalty imposed in respect of the invalid addition set aside.

Final Conclusion: The appellate order is set aside; the demand, interest and penalty premised on inclusion of forfeited earnest money/security deposit in the transaction value of auctioned scrap are quashed and the appeal is allowed.

Computation of depreciation for part of a quarter - Precedence of notification over departmental circular - Binding character of CBEC/CBIC circulars on departmental officers - Depreciation admissible on debonding of 100% EOU - Validity of demand and penalty based on circular contrary to notification

Computation of depreciation for part of a quarter - Depreciation admissible on debonding of 100% EOU - Whether depreciation for a part of a quarter must be treated as a full quarter when computing duty on debonding of a 100% EOU. - HELD THAT: - The Court noted that the explanations to paragraph 8 of the Central Excise notification and paragraph 4 of the Customs notification expressly provide that "for the purpose of computing rate of depreciation for any part of a quarter, a full such quarter shall be taken into account." The show cause notice and the orders below relied on CBEC Circular No.14/2004-Cus. (13.2.2004) to restrict depreciation to the actual part of the quarter. The Tribunal held that the circular does not in terms direct that a part of a quarter cannot be treated as a full quarter and, in any event, an administrative circular cannot override or curtail the scope of a delegated legislative instrument (the notifications) which itself permits taking a part-quarter as a full quarter. Applying this principle to the facts, the demand and penalty premised on treating part of the quarter proportionally were unsustainable as they conflicted with the notification's explicit explanation permitting a full quarter to be taken into account. [Paras 8, 9]

Depreciation for any part of a quarter can be taken as a full quarter under the notifications; the demand and penalty founded on the contrary reading of the circular cannot be sustained.

Precedence of notification over departmental circular - Binding character of CBEC/CBIC circulars on departmental officers - Validity of demand and penalty based on circular contrary to notification - Whether CBEC Circular No.14/2004-Cus. can be applied to override or restrict the effect of the notifications permitting full-quarter depreciation, thereby sustaining the demand and penalty. - HELD THAT: - The Tribunal reiterated that while departmental circulars are administrative instructions binding on departmental officers, they cannot prevail over or modify the terms of a statutory or delegated legislative instrument. The circular in question does not expressly negate the explanation in the notifications and cannot be read to curtail the notifications' allowance of treating a part-quarter as a full quarter. Consequently, reliance upon the circular to sustain the duty demand, invocation of extended limitation, and imposition of penalty was held to be incorrect. [Paras 8]

The circular cannot override the notifications; therefore the demand and penalty based on the circular's contrary reading are set aside.

Final Conclusion: Appeal allowed; the orders confirming the demand and penalty are set aside because the notifications permitting treatment of any part of a quarter as a full quarter for depreciation prevail over the departmental circular relied upon by the revenue.

Quashing of demand - effect of a common appellate judgment on similarly situated assessees - suo motu review of appellate orders - pursuit of recovery proceedings despite appellate relief - delay and laches in seeking statutory remedy - award of costs for procrastination

Effect of a common appellate judgment on similarly situated assessees - quashing of demand - pursuit of recovery proceedings despite appellate relief - Impugned order dismissing review applications was set aside and the demand created against the petitioner quashed in view of the Court's earlier common judgment in favour of assessees and the Supreme Court's dismissal of the revenue's SLP. - HELD THAT: - The Court found that the legal question decided by this Court in the common judgment (which was sustained by the Supreme Court on dismissal of the SLP) was determinative for the petitioner who was similarly circumstanced. Although the petitioner had not filed a statutory appeal like other assessees and the revenue had proceeded with recovery (including an attachment order), the assessment and demand had to be viewed against the backdrop of the common appellate judgment and the SLP dismissal. The Court concluded that the facts of the petitioner's case could not reasonably produce a different result from that reached in the common judgment; accordingly the Tribunal's dismissal of the review applications was set aside and the demand quashed. [Paras 15, 16, 17, 18]

Impugned order set aside; demand against the petitioner quashed.

Delay and laches in seeking statutory remedy - award of costs for procrastination - Petitioner's delay and laches did not preclude relief, but petitioner was directed to pay costs for procrastination. - HELD THAT: - The Court rejected the contention that delay and laches alone should bar relief given the peculiar facts and the determinative common legal finding in favour of assessees. Nonetheless, having regard to the petitioner's procrastination which necessitated the proceedings, the Court imposed a monetary cost as a consequence. The petitioner was directed to deposit costs with the designated legal services authority. [Paras 19]

Delay and laches not a bar to relief; petitioner directed to deposit costs.

Final Conclusion: The petition succeeds: the Tribunal's order dismissing the review applications is set aside, the demand created against the petitioner is quashed in light of the common judgment and the SLP dismissal, and the petitioner is directed to pay costs to the Delhi State Legal Services Authority for its procrastination.

Natural justice - departmental inquiry - procedure for imposing major penalties under Rule 9(13) of the Gujarat Civil Services (Discipline and Appeal) Rules - production and examination of oral and documentary evidence in disciplinary proceedings - inadmissibility of mere investigatory material or FIR as substitute for evidence in departmental proceedings - reinstatement with consequential benefits

Natural justice - departmental inquiry - production and examination of oral and documentary evidence in disciplinary proceedings - inadmissibility of mere investigatory material or FIR as substitute for evidence in departmental proceedings - Validity of the order of dismissal dated 30.03.2022 in light of the inquiry proceedings and compliance with Rule 9(13) and principles of natural justice. - HELD THAT: - The inquiry report reproduces the charges, the delinquent's replies and the Presenting Officer's submissions but does not show that witnesses were produced or that documentary exhibits were formally tendered and proved before the Inquiry Officer as required by the Rules. Reliance in the inquiry on statements and investigation materials from the criminal FIR, without producing or examining the witnesses or tendering the documents in the departmental inquiry, is impermissible. The court applied the principle that investigatory material or an FIR cannot substitute for evidence led and tested in the departmental proceedings and that the enquiry officer must reach findings based on evidence produced and considered in the inquiry. The inquiry process was hurried to comply with a timeline fixed by this Court, resulting in a procedure that violated the rules and principles of natural justice. [Paras 7, 8, 9]

The dismissal order dated 30.03.2022 is quashed as it was founded on a departmental inquiry that did not comply with Rule 9(13) and principles of natural justice.

Reinstatement with consequential benefits - departmental inquiry - procedure for imposing major penalties under Rule 9(13) of the Gujarat Civil Services (Discipline and Appeal) Rules - Relief to be granted and further course of action after quashing of the dismissal order. - HELD THAT: - Having quashed the dismissal for procedural infirmity, the court directed reinstatement of the petitioner with all consequential benefits as if the dismissal had never been passed. The respondents were permitted to undertake a fresh departmental inquiry in accordance with law, to commence from the stage immediately after the petitioner's defence statement dated 11.12.2020, thereby allowing the disciplinary process to be conducted afresh with compliance to the statutory procedure for adducing oral and documentary evidence and observing principles of natural justice. [Paras 10]

Petitioner to be reinstated with consequential benefits; respondents may hold a fresh inquiry in accordance with law from the stage post the defence statement dated 11.12.2020.

Final Conclusion: The court quashed the dismissal dated 30.03.2022 for failure to conduct a proper departmental inquiry in accordance with Rule 9(13) and principles of natural justice, ordered reinstatement of the petitioner with consequential benefits, and permitted a fresh inquiry to be conducted lawfully from the stage after the defence statement.

Valuation of unquoted shares - valuation of quoted shares - mandatory application of Rule 11, Part C, Schedule III of the W.T. Act for unquoted equity shares - prohibition on hybrid valuation or ad hoc depreciation from quoted price under the rules - scope and effect of Rule 21, Part H, Schedule III of the W.T. Act (restrictive covenants to be ignored) - interaction of Schedule II of the G.T. Act with Schedule III of the W.T. Act - role of stock-exchange certificate under Explanation to sub-rule (9) of Rule 2, Part A, Schedule III of the W.T. Act

Valuation of unquoted shares - quoted shares - lock-in period and marketability - Equity shares under statutory lock-in period are not "quoted shares" and must be treated as "unquoted shares" for valuation purposes. - HELD THAT: - The Court held that shares subject to a lock-in period are not quoted with regularity on a recognised stock exchange and there are no current transactions in the ordinary course of business in respect of such shares. The lock-in imposes a bar on transferability (including inscription of "not transferable"), and the possibility of restricted private transfers inter se promoters does not convert such shares into "quoted shares" under the definition in sub-rule (9) of Rule 2, Part A of Schedule III of the W.T. Act. Accordingly, the shares in lock-in must be categorised as unquoted for the purpose of valuation under the applicable rules. [Paras 5, 6]

Shares under lock-in are unquoted and must be valued as unquoted shares.

Mandatory application of Rule 11, Part C, Schedule III of the W.T. Act for unquoted equity shares - Valuation of unquoted equity shares (other than investment companies) must be determined strictly by the formula in Rule 11, Part C, Schedule III of the W.T. Act; no alternative method is permissible. - HELD THAT: - Rule 11 prescribes a statutory, mandatory formula for valuing unquoted equity shares (break-up value and application of eighty per cent rule). The Court emphasised that Schedule II of the G.T. Act makes Schedule III of the W.T. Act applicable and that the machinery provision is mandatory; hence unquoted shares must be valued pursuant to Rule 11 alone. Deviating from or applying any other method is not permitted under the statutory scheme. [Paras 7, 9]

Unquoted shares must be valued by applying Rule 11; alternative or hybrid valuation methods are not allowed.

Prohibition on hybrid valuation or ad hoc depreciation from quoted price under the rules - valuation of quoted shares - Ad hoc depreciation from the market (quoted) price or adoption of a hybrid valuation (mixing quoted valuation with downward adjustment to account for restrictions) is not permissible under Rule 9 or Rule 11. - HELD THAT: - The Court explained that Rule 9 governs quoted shares (value taken as market quotation) and Rule 11 governs unquoted shares (formulaic break-up approach). The rules do not permit a hybrid approach where a quoted market price is taken and then an ad hoc reduction applied to account for transfer restrictions. Where shares are unquoted because of restrictions, they must be valued under Rule 11 as a standalone method; ad hoc downward adjustments to quoted prices are inconsistent with the statutory scheme. [Paras 8, 9]

Neither Rule 9 nor Rule 11 permits application of a hybrid valuation or ad hoc depreciation from quoted market price.

Scope and effect of Rule 21, Part H, Schedule III of the W.T. Act (restrictive covenants to be ignored) - Rule 21 permits assuming an open market for valuation despite restrictive covenants but does not authorize ignoring the restrictions; valuation must account for rights and limitations attached to the property. - HELD THAT: - Rule 21 was construed as a clarificatory provision allowing valuation even when transfer is forbidden, restricted or contingent by assuming a hypothetical sale in an open market. However, the Court held that Rule 21 does not mandate ignoring the limitations; instead the market value must be ascertained while taking into account the restrictions, because rights and limitations form ingredients of value. The provision therefore permits valuation but not by enhancing rights or disregarding restrictions. [Paras 10, 11, 13, 14]

Rule 21 enables valuation despite restrictive covenants but requires the valuation to reflect the restrictions; it does not permit ignoring them.

Role of stock-exchange certificate under Explanation to sub-rule (9) of Rule 2, Part A, Schedule III of the W.T. Act - A stock-exchange certificate on whether a share is quoted is a relevant conclusive statement under the Explanation, but the authority, tribunal or court retains the power to examine and decide the quoted/unquoted character when challenged. - HELD THAT: - While the Explanation provides that a certificate from the concerned stock exchange furnished in the prescribed form shall be accepted as conclusive on whether a share is "quoted", the Court clarified that this does not oust the power of the statutory authorities or judicial forums to examine the question. The Explanation does not delegate exclusive adjudicatory power to the stock exchange; decisions by the authority are reviewable on appeal. [Paras 4, 15]

The stock-exchange certificate is to be accepted as conclusive in form, but authorities and courts can examine the question and their decisions are subject to appeal.

Final Conclusion: Revenue's appeal is dismissed. The shares under lock-in are unquoted and must be valued under Rule 11, Part C, Schedule III of the W.T. Act; Rule 21 does not permit ignoring restrictions when valuing property. The assessee's separate ground was not pressed. No order as to costs.

Definition of "payment system" - power to authorise payment systems - requirement of minimum net worth for payment aggregators - escrow accounts and protection under Section 23A - updating principle in statutory interpretation - scope of judicial review in economic policy

Definition of "payment system" - updating principle in statutory interpretation - Whether payment aggregators performing collection, clearing and settlement functions fall within the statutory definition of a "payment system" under the Payment and Settlement Systems Act, 2007. - HELD THAT: - The Court examined the statutory definition in Section 2(1)(i) of the 2007 Act and the functional role of payment aggregators (PAs) as described in the RBI Discussion Paper. Recognising that PAs collect funds from payers and effect transfers to beneficiaries, and may be involved in clearing, payment or settlement services, the Court applied the updating principle of statutory interpretation to account for technological and market developments. Given that PAs both provide the integration interface and handle customer funds (including under Clause 8 the placement of funds in escrow accounts), their work functions fall within the meaning of "payment system". The Court rejected the contention that intermediaries or system participants cannot be payment systems when their functions effectively enable payments between payer and beneficiary. [Paras 16, 17]

PAs that perform the described collection and settlement functions fall within the statutory definition of a "payment system".

Power to authorise payment systems - Whether the Reserve Bank of India had the statutory power to require non-bank payment aggregators to obtain authorisation to operate and to frame criteria for such authorisation (Clause 3 of the 2020 Guidelines). - HELD THAT: - Once the activities of PAs are held to fall within the definition of a payment system, the Court traced RBI's power to regulate such systems to Sections 10(2) and 18 of the 2007 Act and to the authorisation regime under Section 4. The impugned requirement that PAs obtain authorisation and comply with criteria in Clause 3 was within the regulatory scheme of the Act. The Court therefore found no overreach in RBI prescribing authorisation requirements for entities performing payment system functions. [Paras 17]

RBI was empowered under the 2007 Act to require authorisation of PAs and to lay down criteria for such authorisation.

Requirement of minimum net worth for payment aggregators - scope of judicial review in economic policy - Whether the minimum net worth thresholds in Clause 4 (initial Rs.15 crores, scaling to Rs.25 crores) are arbitrary, unreasonable or violative of Articles 14 and 19(1)(g). - HELD THAT: - The Court reviewed the process by which RBI arrived at the net worth requirement, including publication of a Discussion Paper, stakeholder responses, and subsequent moderation of the originally proposed higher threshold. The Court emphasised that regulatory eligibility criteria involve an element of approximation and that judicial interference is limited where the authority demonstrates deliberation and application of mind. Given RBI's consultation process, the reduction from the initially proposed figure and the stated objectives of customer protection and operational safety for entities handling customer funds, the net worth requirement was not found to be arbitrary or disproportionate. The Court also noted the narrow scope of review for economic policy measures. [Paras 17, 18]

The minimum net worth requirements in Clause 4 are not arbitrary or violative of Articles 14 or 19(1)(g) and are within RBI's regulatory competence.

Escrow accounts and protection under Section 23A - Whether Clause 8's requirement that non-bank PAs place customer funds in escrow accounts and treating their operations as "designated payment systems" under Section 23A is legally sustainable. - HELD THAT: - The Court held that Section 23A empowers RBI, in public interest and for customer protection, to require system providers to deposit monies in specified accounts and restrict their utilisation. Treating PAs as designated payment systems for the purposes of Section 23A was consistent with their fund-handling role. The statutory protections in subsections (2) and (3) - limiting use of balances to discharging customer liabilities and granting a first and paramount charge to entitled persons, despite other laws - provide a robust firewall for customer funds. The Court also noted RBI's subsequent easing (allowing an additional escrow account) addressed concerns about concentration of risk. On balance, Clause 8 was found legally tenable as a protective regulatory measure. [Paras 4, 15, 19]

Clause 8's escrow-account requirement and the treatment of PAs as designated payment systems under Section 23A are sustainable as valid exercises of RBI's statutory power to protect customer funds.

Final Conclusion: The writ petition challenging Clauses 3, 4 and 8 of the RBI's 2020 Guidelines is dismissed. The Court upholds (i) that payment aggregators performing collection and settlement functions fall within the definition of a "payment system", (ii) RBI's power to require authorisation, (iii) the minimum net worth criteria as a reasonable regulatory measure, and (iv) the escrow-account regime and protections under Section 23A; parties to bear their own costs.