TaxTMI Updates e-Newsletter
Oct 19,2022

Doctrine of promissory estoppel - promissory estoppel against the State - estoppel vis-a -vis legislative change - proviso to Section 174(2)(c) of the CGST Act - rescission of tax exemption notifications - writ of mandamus - requirement of statutory duty - legitimate expectation - GST Council recommendations and budgetary support mechanism

Proviso to Section 174(2)(c) of the CGST Act - rescission of tax exemption notifications - estoppel vis-a -vis legislative change - Whether the Union of India can be compelled to adhere to the representation made in the Office Memorandum of 2003 after enactment of the CGST Act - HELD THAT: - The Court held that Section 174(2)(c) of the CGST Act preserves rights accrued under repealed enactments but its proviso explicitly provides that any tax exemption granted as an incentive through a notification shall not continue as a privilege if the notification is rescinded on or after the appointed day. Notification No.21/2017 rescinded earlier area based exemption notifications in exercise of that statutory mandate. To permit enforcement of the 2003 representation would render the statutory proviso otiose and operate as an estoppel against the legislative function of Parliament. Established precedents (including Constitution Bench and subsequent authorities) consistently hold that promissory estoppel cannot be made to operate so as to frustrate valid legislative change or to override a statutory rescission made in the public interest. Applying those principles, the claim to compel the Union to continue the 2003 exemption after the CGST enactment was rejected. [Paras 30, 31, 55, 56, 58]

The Union cannot be compelled to adhere to the 2003 Office Memorandum in lieu of the statutory rescission effected under the proviso to Section 174(2)(c) of the CGST Act; the estoppel claim fails.

Doctrine of promissory estoppel - promissory estoppel against the State - Whether the doctrine of promissory estoppel can operate against a change in law or statute enacted in public interest (i.e., whether estoppel can be invoked to prevent withdrawal of an exemption following legislative or policy change) - HELD THAT: - Surveying the Court's jurisprudence, including Constitution Bench and multi judge decisions, the Court reiterates the settled principle that promissory estoppel cannot be applied to fetter the legislative power of the State or to prevent the State from changing policy where such change is in the larger public interest. While representations made by public authorities may bind officers acting within their authority and may be enforced where equity requires, that equitable principle yields when the State validly exercises legislative power or when a statutory provision expressly rescinds earlier privileges. The Court applied these authorities to conclude that promissory estoppel will not rescue the appellants' claim in the face of a valid statutory scheme and public interest considerations underlying GST reform. [Paras 36, 38, 54, 56, 57]

Promissory estoppel cannot be invoked to restrain or negate a valid legislative change or rescission of exemptions enacted in public interest; the appellants' estoppel-based claims fail.

Writ of mandamus - requirement of statutory duty - Whether a writ of mandamus can be issued against the Union to direct reimbursement of 100% of CGST in place of the 58% budgetary support - HELD THAT: - A writ of mandamus issues to compel performance of a public duty imposed by statute or to correct failure or mala fide exercise of statutory discretion. The Court found no statutory obligation on the Union to reimburse 100% of CGST; the decision to reimburse (and its quantum) is a policy choice made after GST implementation and under recommendations of the GST Council. In absence of a legal duty cast on the Union to provide the full reimbursement, mandamus would not lie. The Court further noted established authorities that mandamus cannot be used to compel exercise of discretionary policy power in a particular manner unless that discretion is shown to be exercised unlawfully. [Paras 60, 61, 62, 63, 64]

A writ of mandamus compelling the Union to reimburse 100% of CGST cannot be issued because no statutory duty to that effect is shown to exist.

Legitimate expectation - GST Council recommendations and budgetary support mechanism - Whether the appellants' reliance on the 2003 policy gives rise to any relief or remedial avenue despite legal rejection of estoppel and mandamus claims - HELD THAT: - The Court acknowledged that the appellants established units in reliance on the 2003 policy and, although their legal claims failed, they possess a legitimate expectation deserving consideration. The GST Council had deliberated on treatment of earlier incentives and resolved that continuance would be by way of budgetary reimbursement, with Centre's share at 58% and States expected to consider corresponding reimbursement out of devolved shares. In light of this, the Court declined to grant the substantive relief sought but permitted the appellants to make representations to their respective State Governments and to the GST Council, and requested that those representations be considered expeditiously and in accordance with the Court's observations. [Paras 76, 77, 78, 79, 80]

While no legal entitlement to 100% reimbursement was recognised, the appellants have a legitimate expectation; they are permitted to make representations to State Governments and the GST Council, which are requested to consider them expeditiously.

Final Conclusion: The appeals are dismissed. The Court held that the representation in the 2003 Office Memorandum cannot be enforced against the Union by promissory estoppel or by mandamus after the statutory rescission effected under the proviso to Section 174(2)(c) of the CGST Act and in the light of GST related public interest considerations; however, the appellants' legitimate expectation is recognised and they are permitted to make representations to the State Governments and the GST Council for consideration of reimbursement in accordance with the Court's observations.

Revocation of cancellation of registration - extension and exclusion of limitation on account of COVID-19 (Cognizance for Extension of Limitation) - condonation of delay for filing application for revocation - facility of amnesty schemes/notifications to enable restoration of registration - writ jurisdiction under Article 226 where no efficacious alternative remedy exists - principle of natural justice - requirement to record reasons

Extension and exclusion of limitation on account of COVID-19 (Cognizance for Extension of Limitation) - condonation of delay for filing application for revocation - Whether the Appellate Authority erred in rejecting the appeal as time barred without taking into account the Supreme Court orders and Government notifications extending/excluding limitation arising from the COVID 19 pandemic - HELD THAT: - The Court held that the Appellate Authority failed to take into account the orders of the Hon'ble Supreme Court extending/excluding the period of limitation during the COVID 19 pandemic and the Central Government/CBIC notifications which extended timelines for filing applications for revocation of cancellation of registration. Having regard to those orders and notifications (including the exclusion of the period from 15.03.2020 till 28.02.2022 and the Notification extending time where the due date for revocation fell between 1.3.2020 and 31.8.2021), the Appellate Authority's common order rejecting appeals as barred by limitation dated 07.10.2021 was not correct. The Court therefore set aside the Appellate Order. The Court emphasised that the scheme of the Act and the amnesty measures were intended to facilitate taxpayers returning to the GST fold, and that denial of restoration where taxpayers are willing to comply would be counterproductive to revenue collection.

Appellate Order dated 07.10.2021 rejecting the appeal as time barred set aside; relief granted to petitioner in light of extension/exclusion of limitation and relevant notifications.

Revocation of cancellation of registration - facility of amnesty schemes/notifications to enable restoration of registration - Whether the petitioner should be permitted to file outstanding returns, pay dues and seek revocation of the cancellation of registration despite earlier non compliance - HELD THAT: - The Court, exercising writ jurisdiction, directed that the petitioner be permitted to file returns for the period prior to cancellation (if not already filed) and to deposit tax, interest, penalty and late fee within sixty days from receipt of the judgment. On such compliance, the petitioner may file an application for revocation of cancellation of registration within seven days along with petition for condonation of delay; the proper officer is directed to consider the application favourably and condone delay where appropriate. The Court made clear that payments cannot be met by adjusting any Input Tax Credit lying unutilised, and the authority may verify the veracity of claims in accordance with law after affording an opportunity of hearing.

Petitioner permitted to file returns and make requisite payments within 60 days; thereafter allowed to apply for revocation and the authority directed to condone delay and revoke cancellation subject to verification and hearing.

Writ jurisdiction under Article 226 where no efficacious alternative remedy exists - principle of natural justice - requirement to record reasons - Whether the writ petition was maintainable despite the existence of statutory appellate remedies - HELD THAT: - The Court held the writ petition maintainable on the facts: the Appellate Tribunal under Section 109 is not yet constituted (removing an effective alternative remedy), and the petitioner would suffer irreparable prejudice (inability to carry on business and raise e invoices) if relief were denied. The Court observed that where alternative remedies are illusory or unavailable and fundamental rights (such as right to livelihood and to carry on trade) are affected, extraordinary jurisdiction under Article 226 can be exercised. The Court also noted the importance of reasoned orders and principles of natural justice where cancellation was effected and reasons were not communicated.

Writ petition entertained and allowed on merits to prevent grave injustice and to protect petitioner's fundamental rights.

Facility of amnesty schemes/notifications to enable restoration of registration - Direction to administrative authorities to implement technical and procedural facilitation to enable compliance - HELD THAT: - The Court directed the respondents to instruct GSTN or other agencies to modify the GST web portal as necessary to enable the petitioner to file returns and make payments, ensuring no technical glitches during the specified period, and fixed timelines for completion of these steps. The authority was also permitted to verify claims and take action in accordance with law after affording opportunity of hearing. These administrative directions were issued to give effect to the substantive relief ordered and to avoid further delay in restoration.

Authorities directed to make technical/procedural changes and complete the exercise within the stipulated period to facilitate filing of returns and revocation process.

Final Conclusion: The Appellate Order dated 07.10.2021 rejecting the appeal as time barred is set aside. The petitioner is permitted to file outstanding returns and pay tax, interest, penalty and late fee within sixty days, thereafter to apply for revocation of cancellation within seven days; the proper officer is directed to condone delay and consider revocation favourably subject to verification and opportunity of hearing. Administrative steps to enable filing on the GST portal are directed to be completed within the timelines fixed by the Court.

Cancellation of GST registration - limitation for filing appeal - exclusion of limitation bar in adjudication of appeal - right to livelihood under Article 21 - liberty to file belated appeal

Cancellation of GST registration - limitation for filing appeal - liberty to file belated appeal - right to livelihood under Article 21 - exclusion of limitation bar in adjudication of appeal - Whether the order dismissing the appeal against cancellation of GST registration as time-barred should be set aside and the petitioner permitted to file the appeal for fresh consideration excluding the bar of limitation. - HELD THAT: - The petitioner's GST registration was cancelled and an appeal filed electronically after the prescribed period; the hard copy could not be submitted within the limitation period and the appeal was dismissed as time-barred. The High Court noted precedents of various High Courts addressing similar hyper-technical rejections and observed that cancellation of registration prevents the petitioner from carrying on business, thereby affecting livelihood protected by Article 21. Having regard to the circumstances and the legal position laid down in the cited authorities, the Court set aside the order dismissing the appeal as time-barred, granted the petitioner liberty to file the appeal within ten days and directed the competent authority to consider and decide the appeal on all merits in accordance with law while excluding the limitation bar from operating against the petitioner.

Order dismissing the appeal as time-barred is set aside; petitioner permitted to file the appeal within ten days and competent authority directed to adjudicate the appeal on merits excluding the limitation bar.

Final Conclusion: Writ petition allowed to the extent that the order dated 21.09.2022 dismissing the appeal as time-barred is set aside; petitioner granted ten days' liberty to file the appeal and the competent authority is directed to decide the same on merits excluding limitation.

Provisional attachment under Section 83(2) of the CGST Act - lifting of provisional attachment - reversal of input tax credit including interest - power of revenue to recover penalty

Provisional attachment under Section 83(2) of the CGST Act - reversal of input tax credit including interest - lifting of provisional attachment - Provisional attachment issued under Section 83 was to be lifted where the alleged wrongly availed input tax credit (with interest) had been reversed and the attachment had continued beyond the period prescribed under Section 83(2). - HELD THAT: - The Court recorded that an attachment had been made on 18.03.2020 in exercise of powers under Section 83. The petitioner informed the Court that the input tax credit alleged to have been fraudulently availed had been reversed and that the reversal included the interest component. The Court observed that the provisional attachment had continued beyond the timeframe prescribed by Section 83(2) and that the respondents had not taken requisite steps to prosecute recovery or conclude proceedings despite notice of the petition. In view of the reversal of the ITC (including interest) and the continuation of the provisional attachment beyond the statutory period, the Court directed that the provisional attachment be lifted, while leaving the respondents free to take further action in accordance with law. [Paras 2, 3, 7, 8]

Provisional attachment lifted; respondents permitted to take further steps as per law.

Power of revenue to recover penalty - Claim of entitlement of the revenue to recover penalty was noted but not determined; respondents indicated intention to recover penalty. - HELD THAT: - The Court recorded the revenue's contention that a penalty required recovery from the petitioner. However, no adjudication on the imposition or quantum of penalty is reflected in the order. The Court observed delay in the revenue taking requisite steps in relation to the matter and confined its directions to lifting the provisional attachment while expressly leaving open the respondents' right to proceed in accordance with law. [Paras 5, 6, 8]

Right to pursue recovery of penalty preserved; no determination on penalty in this order.

Quashing of order - The challenge to the order dated 10.06.2020 was not pressed and therefore not adjudicated. - HELD THAT: - The Court noted that in view of the direction to lift the provisional attachment, the petitioner did not press the prayer seeking quashing of the order dated 10.06.2020. Consequently, the Court did not decide on that prayer. [Paras 9]

Prayer to quash order dated 10.06.2020 not pressed and not decided.

Final Conclusion: Writ petition disposed by directing the lifting of the provisional attachment given that the alleged input tax credit (with interest) has been reversed and the attachment had continued beyond the period under Section 83(2); the respondents' entitlement to recover penalty is preserved and the challenge to order dated 10.06.2020 was not pressed.

Release of seized goods on furnishing bank guarantee - Provisional release of goods under CGST Rules - Requirement to update Part B of the e-way bill - Independence of proviso to Rule 138(2A) from the main rule - Availability of statutory remedy and exercise of writ jurisdiction

Release of seized goods on furnishing bank guarantee - Provisional release of goods under CGST Rules - Whether the goods detained under the e-way bill proceedings could be released to the appellant on the facts of the case. - HELD THAT: - The Court found that on the material facts the tax component claimed had already been remitted by the consignor and the appellant had furnished (or undertaken to furnish) a bank guarantee equivalent to the penalty amount. In these circumstances the High Court exercised its discretionary relief and directed release of the goods on the condition that the appellant furnish the bank guarantee for the penalty within two weeks. The Court emphasised that this direction was given on the particular facts and did not purport to interpret Rule 138 of the CGST Rules; the question of interpretation of the e-way bill provisions was left open for determination in an appropriate case. The Court also observed that Rule 140 (relating to provisional release) and the requirement of bank guarantee for tax/penalty were considered in light of the factual matrix, and the earlier interim order requiring a bank guarantee for the penalty had been complied with. [Paras 11, 12, 13]

Writ appeal allowed to the extent that respondents are directed to release the goods upon the appellant furnishing a bank guarantee for the penalty amount within two weeks; no interpretation of Rule 138 is made and the order is confined to the facts of the case.

Final Conclusion: The Writ Appeal is allowed in part: the impugned order is modified to direct release of the detained goods upon furnishing of a bank guarantee for the penalty within two weeks; the Court expressly refrained from interpreting Rule 138(2A) of the CGST Rules and confined its order to the facts of this case.

Cancellation of GST registration - show cause notice - opportunity to be heard - natural justice - reliance on undisclosed material - remand for fresh consideration

Show cause notice - opportunity to be heard - natural justice - reliance on undisclosed material - Validity of the cancellation order in view of deficiencies in the show cause notices and absence of opportunity to respond to material purportedly relied upon - HELD THAT: - The Court found that the first show cause notice did not specify the provisions of the GST law alleged to have been violated and therefore was deficient. A further show cause notice containing detailed allegations regarding alleged fake invoices and reliance on documents was placed on record by the respondents, but the petitioner contended that this second notice was not served and no opportunity was given to respond to the material which appears to have formed the basis for the cancellation. Having regard to these defects - a notice lacking the relevant statutory provisions and a subsequent notice containing substantive particulars to which the petitioner had no opportunity to reply - the Court held that the impugned cancellation order could not be sustained. The appropriate remedy, in the circumstances, was to set aside the order and remit the matter for fresh adjudication, with directions to issue a fresh notice affording adequate time to the petitioner to respond and thereafter decide in accordance with law. [Paras 6, 7, 8, 9]

Impugned cancellation order dated 06.07.2022 set aside and the matter remanded to the 3rd respondent for issuance of fresh notice, adequate opportunity to the petitioner to respond, and fresh decision in accordance with law; no order as to costs.

Final Conclusion: Writ petition allowed; cancellation order quashed and matter remanded for fresh notice and adjudication after affording the petitioner adequate opportunity to respond.

Mandatory show cause notice under Section 74 of the JGST Act - summary adjudication under Rule 142 of the JGST Rules (DRC 01/DRC 02/DRC 07) - principles of natural justice and right to personal hearing - service of adjudication order and disclosure of relied upon materials - quashing of orders for failure to follow statutory procedure - remand for fresh adjudication in accordance with law

Mandatory show cause notice under Section 74 of the JGST Act - summary adjudication under Rule 142 of the JGST Rules (DRC 07) - quashing of orders for failure to follow statutory procedure - Validity of summary orders (DRC 07) and related adjudication where no statutory show cause notice under Section 73/74 was issued and no detailed adjudication order was passed - HELD THAT: - The Court found that in the matters before it no show cause notice as mandated by Sections 73/74 of the JGST Act was issued and, in several cases, only summary forms (DRC 01/DRC 02/DRC 07) were employed without issuance of the requisite detailed notice or provision of relied upon materials. The procedure mandated by the Act was not followed, and several petitioners were not shown to have been served with the detailed adjudication orders. The Court held that failure to issue the mandatory show cause notice and to pass a detailed order goes to the root of the proceedings and vitiates the same. Consequently the summary orders and consequential adjudication orders were set aside. The Court expressly did not go into the merits of the departmental allegations and confined its decision to the procedural infirmity arising from non compliance with mandatory statutory procedure. [Paras 8, 9, 10, 11, 12]

Summary orders (DRC 07) and adjudication/penalty orders are quashed where no show cause notice under Sections 73/74 was issued and no detailed order was passed; the Court set aside the impugned summary/adjudication orders.

Principles of natural justice and right to personal hearing - service of adjudication order and disclosure of relied upon materials - Whether principles of natural justice were complied with, including furnishing of relied upon materials and affording personal hearing - HELD THAT: - The Court concluded that principles of natural justice were violated: DRC 01 forms issued in several matters were vague, lacked details of relied upon material, and did not furnish documents or particulars on which adverse findings were based. Opportunity of hearing, as required by the Act, was not afforded and it was not demonstrated that adjudication orders were served on the petitioners. Reliance on third party statements without confronting parties and without making relied upon material available was noted as inconsistent with fair adjudication. For these reasons the impugned orders were held to be vitiated by breach of natural justice. [Paras 6, 8, 9, 10, 11]

Proceedings and orders were invalid for failure to comply with principles of natural justice, including non disclosure of relied upon materials and absence of personal hearing.

Remand for fresh adjudication in accordance with law - Disposition of matters following quashing of impugned orders - HELD THAT: - Having quashed the summary and adjudication orders for procedural defects and non compliance with natural justice, the Court remitted the matters to the concerned respondents for fresh adjudication strictly in accordance with the statutory provisions of the JGST Act and Rules and after affording the petitioners requisite opportunity of hearing. The Court clarified that it has not considered the merits of the departmental claims and left open the question of invocation of revisional jurisdiction under Section 108. [Paras 11, 12, 13]

Matters remitted to respondents to pass fresh orders in accordance with law after complying with statutory procedure and principles of natural justice; merits left open.

Final Conclusion: The High Court quashed and set aside the summary show cause notices, DRC 07 summary orders, adjudication and penalty orders in the listed writ petitions for failure to issue mandatory show cause notices and for breach of principles of natural justice, and remitted the matters to the respondents for fresh adjudication in accordance with the JGST Act and Rules after affording opportunity of hearing; merits were not decided.

Levy of GST on seigniorage/royalty for quarrying rights - Reverse charge mechanism for services rendered by Government authorities - Assessment of unregistered person under Section 63 - Stay on payment of GST in respect of mining lease/royalty - Status quo pending adjudication

Levy of GST on seigniorage/royalty for quarrying rights - Assessment of unregistered person under Section 63 - Validity of the impugned notice dated 11.08.2022 issued to the petitioner and whether it should be quashed at the admission stage. - HELD THAT: - The writ petition seeking quashing of the notice was considered. The Court recorded that the notice relates to assessment proceedings under the GST law, including potential assessment of an unregistered person under Section 63 and invocation of reverse charge principles in respect of seigniorage/royalty. The Court noted that the Apex Court in M/s Lakhwinder Singh v. Union of India had granted stay for payment of GST in respect of grant of mining lease/royalty and that this position has been followed by various courts. Applying that position, the Court declined to quash the notice at the admission stage because the notice is procedural in character and the petitioner has the opportunity to file objections and supporting documents. The Court therefore directed the petitioner to present objections and preserved the status quo on payment pending further consideration in accordance with law and the Apex Court's judgment. [Paras 5]

Notice not quashed; petitioner directed to file objections and produce documents; status quo maintained pending adjudication.

Stay on payment of GST in respect of mining lease/royalty - Status quo pending adjudication - Direction to respondents to consider the petitioner's objections afresh and applicability of the Apex Court's stay to the payment obligation. - HELD THAT: - The Court remitted the matter to the second respondent for consideration of the petitioner's objections. The petitioner was directed to approach the second respondent within 30 days from receipt of the order and to file objections with supporting documents. The second respondent was directed to consider and dispose of those objections in accordance with law and while following the Apex Court's decision granting stay on payment of GST for grant of mining lease/royalty. Until such disposal, the respondents are restrained from disturbing the status quo in relation to payment. [Paras 5, 6]

Matter remitted for fresh consideration; petitioner to file objections within 30 days; respondents to decide in accordance with law and the Apex Court's judgment; status quo to be maintained meanwhile.

Final Conclusion: Writ petition disposed by refusing to quash the notice; petitioner directed to file objections within 30 days and respondents directed to consider and dispose them in accordance with law and the Apex Court's stay on payment of GST for mining lease/royalty, with status quo maintained until disposal.

Tender evaluation and competitive bidding - treatment of GST in bid evaluation - interim injunction restraining performance under LOI - pre-bid clarification and estoppel - public interest in procurement

Interim injunction restraining performance under LOI - tender evaluation and competitive bidding - public interest in procurement - Grant of interim restraint on further action under the Letter of Intent and on advancement of the work awarded to respondent no.3 pending disposal of the writ petition. - HELD THAT: - The Court, after hearing rival submissions and balancing equities, concluded that the interest of justice and public interest required an interim order. Though the Letter of Intent had been issued and mobilization undertaken, the petitioner's grievance regarding the evaluation methodology (specifically inclusion of differing GST rates in comparative bid evaluation) raised a matter affecting competitive bidding and public funds. Exercising its discretionary jurisdiction, the Court directed that no further action be taken by the respondents in furtherance of the LOI dated 01.07.2022 and restrained respondent no.3 from advancing with the subject work until the returnable date. The Court also directed production of records by the Oil India Limited to facilitate early disposal on the returnable date, indicating the interim order is without prejudice to the final adjudication on the merits. [Paras 11, 12]

No further action in furtherance of the LOI dated 01.07.2022 and restraint on respondent no.3 from advancing the work till the returnable date; records to be produced for early disposal.

Final Conclusion: Interim relief granted restraining further action on the LOI and progress of the awarded work pending adjudication on the writ petition; matter listed after four weeks for disposal and production of records by the Oil India Limited.

Review jurisdiction - error apparent on the face of the record - review not a rehearing or an appeal in disguise - mistake apparent versus detailed re examination - opportunity of hearing under Section 107(4) and 107(8) of the SGST Act - erroneous view of law not a ground for review

Review jurisdiction - error apparent on the face of the record - review not a rehearing or an appeal in disguise - opportunity of hearing under Section 107(4) and 107(8) of the SGST Act - erroneous view of law not a ground for review - Whether the review petition challenging the High Court's dismissal of the writ petition merits interference under the limited scope of review. - HELD THAT: - The Court applied settled principles of review jurisdiction as expounded in Kamlesh Verma and reaffirmed that review lies only for discovery of new evidence, mistake apparent on the face of the record or any other analogous sufficient reason and not as an occasion for rehearing or re-appreciation. A mistake apparent must be prima facie visible and not require detailed examination; an erroneous view of law does not, by itself, justify review. The petitioner had earlier raised the plea regarding denial of opportunity of hearing and reliance was placed on Section 107(4) and 107(8) of the SGST Act, but the Court found that those contentions had already been considered in the earlier proceedings. The record, including correspondence and emails between the appellate authority and the petitioner, indicated that sufficient opportunity had been afforded and there was no manifest error on the face of the order that would undermine its soundness or cause a miscarriage of justice. In the absence of any new ground or patent error that could be remedied in review, the petition amounted to a seeking of re examination of matters already argued and decided, which review jurisdiction does not permit. [Paras 5, 6, 7, 8, 9]

Review petition dismissed for lack of merit; no error apparent on the face of the record and no ground for review under the limited scope of review jurisdiction.

Final Conclusion: The High Court dismissed the review petition, holding that the petitioner raised no new matter or error apparent on the face of the record, that opportunity of hearing under the cited SGST provisions had been afforded, and that review cannot be used to re open or rehear issues previously considered.

Correction and filing of Form TRAN-1 and Form TRAN-2 - mandatory time-limit under the Central Goods and Services Tax regime (Section 140 and Rule 117) - remand to the jurisdictional assessing authority for simultaneous consideration of merits and precedential effect - reconciliation of conflicting Division Bench precedents - manual filing where online facility is not available

Correction and filing of Form TRAN-1 and Form TRAN-2 - mandatory time-limit under the Central Goods and Services Tax regime (Section 140 and Rule 117) - Petitioners who could not file or could not obtain amendment/revision of Form TRAN-1 because of technical glitches or other difficulties were permitted to file and correct Form TRAN-1 and to file Form TRAN-2 notwithstanding the prescribed time limits. - HELD THAT: - The Court disposed of the writ petitions by following the approach in the Division Bench order delivered at Aurangabad dated 13th April, 2022, and directed that the petitioners be allowed to file and correct Form TRAN-1 and to file Form TRAN-2. The Court recorded the competing contentions that the period prescribed under the CGST provisions is mandatory (relying on NELCO) and that human errors or technical glitches may warrant permitting corrections (relying on Heritage Lifestyles), and resolved the present petitions by permitting filing/correction subject to adjudicatory scrutiny by the assessing authority. The permission to file or correct was framed as being without prejudice to the rights and contentions of the parties and to the statutory scheme; the authority is to consider the applications in accordance with the provisions applicable to claims of transitional credit.

Petitioners allowed to file and correct TRAN-1 and to file TRAN-2; if online filing is not possible, manual filing permitted.

Remand to the jurisdictional assessing authority for simultaneous consideration of merits and precedential effect - reconciliation of conflicting Division Bench precedents - The jurisdictional assessing authority was directed to consider all issues raised by the petitioners, including merits and the effect of the Division Bench judgments relied upon by the parties, and to decide the matter within the time prescribed by the Court. - HELD THAT: - The Court remitted the matters to the jurisdictional assessing authority to examine the corrected or newly filed TRAN-1/TRAN-2, to consider all legal and factual issues including the applicability and effect of the Court's earlier decisions (including Heritage Lifestyles and NELCO), and to determine the entitlement to transitional credit. The authority was directed to also take into account any show cause notices issued during adjudication and to decide the matters on merits. The directions mirror the Aurangabad Division Bench order in mandating comprehensive and simultaneous adjudication so that the authority reaches a reasoned conclusion on both the legal and factual contentions.

Matters remitted to the jurisdictional assessing authority to decide on merits and precedential effect within the timelines directed by the High Court.

Manual filing where online facility is not available - Where online filing is not possible, the petitioners were permitted to file TRAN-1/TRAN-2 manually. - HELD THAT: - Recognising practical difficulties in electronic filing, the Court expressly authorised manual filing as an alternative, ensuring that technical non-availability of the online facility would not preclude the petitioners from seeking adjudication of their transitional credit claims. The permission to file manually is tied to the same substantive adjudicatory process and timelines provided by the Court.

Manual filing permitted if online filing is not possible; such filings to be considered by the authority along with other submissions.

Specified timelines for filing and disposal - The Court provided procedural timelines for submission and adjudication of the corrected or newly filed forms. - HELD THAT: - The Court directed that the petitioners should preferably file and/or correct the TRAN-1 and TRAN-2 within three weeks, and that the jurisdictional authority should preferably pass orders on the same within six weeks, thereby imposing a limited timetable to ensure expeditious resolution while preserving the authority's power to examine merits and legal contentions.

Petitioners to file/correct preferably within three weeks; authority to decide preferably within six weeks.

Final Conclusion: Writ petitions disposed by permitting filing and correction of Forms TRAN-1 and TRAN-2 (including manual filing where necessary), and by remitting the matters to the jurisdictional assessing authority to consider all issues including merits and the effect of competing precedents; petitioners to file preferably within three weeks and authority to decide preferably within six weeks.

Renewal of approval of the appellant trust under Section 80G - HELD THAT:- We do not find any reason to interfere with the Judgment and order passed by the High Court of Karnataka at Bengaluru [2018 (11) TMI 1919 - KARNATAKA HIGH COURT] In our opinion, the High Court’s decision on conditions to be considered for renewal of approval of the appellant trust under Section 80G of the Income Tax Act, 1961 is correct. The appeal is accordingly, dismissed.

Transfer within meaning of Section 2(47) - registered sale deed supersedes prior unregistered or oral documents - assessment of long term capital gains - reliance on pending civil/criminal proceedings for admission of evidence - Rule 34(5) of the Income Tax (Appellate Tribunal) Rules and extension of limitation during COVID

Transfer within meaning of Section 2(47) - registered sale deed supersedes prior unregistered or oral documents - assessment of long term capital gains - Whether the registered sale deed dated 20/04/2009 constituted a transfer giving rise to long term capital gains which justified the addition made in assessment. - HELD THAT: - The Tribunal and the first appellate authority found that the registered sale deed recorded receipt of consideration and handing over of possession, and thus constituted a transfer within the meaning of Section 2(47). Prior or subsequent unregistered or oral documents and inter se arrangements regarding distribution of sale proceeds were held to be superseded by the registered transfer. The Tribunal declined to base the assessment on pleadings or evidence in pending civil/criminal proceedings, treating those as not determinative for the assessment of capital gains. The High Court, on review of the record and the orders of the authorities below, regarded those determinations as findings of fact and held that they do not disclose any substantial question of law warranting interference. [Paras 6, 8, 9, 11]

Findings that the registered sale deed amounted to a transfer giving rise to long term capital gains are upheld as factual conclusions not calling for interference.

Reliance on pending civil/criminal proceedings for admission of evidence - Rule 34(5) of the Income Tax (Appellate Tribunal) Rules and extension of limitation during COVID - Whether the Tribunal's refusal to admit additional evidence and its decision rendered after 90 days from hearing (with reliance on COVID-related extension of limitation) gave rise to a substantial question of law. - HELD THAT: - The Tribunal recorded that documents sought to be filed amounted to pleadings in pending civil and criminal proceedings and were not suitable to determine the assessment of capital gains; it therefore declined to admit them. The Tribunal also explained that the delay in pronouncement beyond 90 days was on account of COVID-19 limitations as per directions of the Supreme Court. The High Court found these to be factual and procedural conclusions of the Tribunal and did not find any legal infirmity or substantial question of law in the Tribunal's treatment of additional evidence or its reliance on the COVID-related extension of limitation. [Paras 9, 10, 11]

Tribunal's refusal to admit the additional material and its reliance on COVID-related limitation extension are treated as unexceptionable factual/procedural findings; no substantial question of law arises.

Final Conclusion: The appeal is dismissed for lack of any substantial question of law arising from the Tribunal's factual findings; the application for condonation of delay is also dismissed and the orders below are left undisturbed.

Revenue expenditure - capital expenditure - enduring benefit test - commercial advantage test - ownership and capital accretion

Revenue expenditure - enduring benefit test - ownership and capital accretion - The expenditure incurred by the assessee for construction and handing over of transmission lines/substation to the Government/State Electricity Board is to be treated as revenue expenditure and allowable as deduction. - HELD THAT: - The Court accepted the reasoning in the referred Division Bench decision that where the transmission lines, towers and ancillary works, upon completion, vest in the Electricity Board (or Government) and the assessee does not acquire ownership or block capital thereby, the payment is made to facilitate the assessee's trading operations rather than to create an enduring capital asset for the assessee. Applying the principle in British Insulated and Helsby Cables Ltd and the commercial-nature test in Empire Jute Co Ltd, the determinative inquiry is whether the advantage obtained is in the capital field. If the expenditure merely facilitates the conduct of business and leaves the assessee's fixed capital untouched, it is revenue in nature even if the advantage endures. Precedents including L H Sugar Factory, Gujarat Mineral Development Corporation, Coats Viyella India Ltd and others where similar contributions for public infrastructure or transmission lines were held to be revenue expenditure were applied. On these grounds the Tribunal's affirmation of the Commissioner (Appeals) that the expenditure is of revenue nature was accepted and followed.

Appeals dismissed; expenditure held to be revenue expenditure and allowable; no costs.

Final Conclusion: The appeals preferred by the Revenue are dismissed as the Court followed earlier authoritative decisions holding that payments for erection of transmission lines and related works which vest in the State electricity authority are revenue expenditure and not capital accretions to the assessee.

Reassessment under Section 148A requiring information which suggests escapement of income - distinction between contract of service and contract for services - test of control and economic reality for employer-employee relationship - show cause notice and opportunity to be heard under Section 148A(b)-(d) - finality of judicial decisions and not re litigating settled issues in reassessment

Reassessment under Section 148A requiring information which suggests escapement of income - show cause notice and opportunity to be heard under Section 148A(b)-(d) - finality of judicial decisions and not re litigating settled issues in reassessment - Whether the material in possession of the Revenue constituted 'information' which prima facie suggested escapement of income and justified issuance of notice under Section 148A/148. - HELD THAT: - The Court examined the post 2021 statutory scheme which requires the Assessing Officer to have 'information' that suggests escapement of income before issuing a notice under Section 148A/148, and to decide whether it is a 'fit case' after considering the material and the assessee's reply. While the definition of 'information' is wide, it must prima facie enable a suggestion of escapement and bear a live and robust nexus to the alleged escapement; mere tenuous or administrative material is insufficient. The Court held that sufficiency in the strict sense need not be gone into in writ jurisdiction, but whether the material could at least suggest escapement can be ascertained. Applying settled precedents and the statutory standard, the Court found that the information gathered from the hospital (KMCH) - being documents and standardised clauses and regulations - did not, in light of the legal principles and consistent judicial authorities, lead to a prima facie suggestion of escapement of tax in the petitioners' cases. The Court noted that many issues raised were matters of settled jurisprudence and that re assessment cannot be used to re open issues conclusively decided by courts where the material does not reasonably suggest escapement. Consequently, the assumption of jurisdiction to initiate reassessment was unjustified and the impugned orders were set aside. [Paras 31, 32, 33, 84, 85]

The material in the Department's possession did not prima facie suggest escapement of income for AY 2018-19 and did not justify issuance of re assessment notices; the impugned orders under Section 148/148A are set aside.

Distinction between contract of service and contract for services - test of control and economic reality for employer-employee relationship - Whether the contractual terms, rules and regulations extracted from KMCH established an employer-employee relationship such that the petitioners' receipts should be taxed as salary rather than professional income. - HELD THAT: - The Court analysed the clauses relied upon by the Revenue (working hours, leave rules, restrictions on outside practice, billing/collection norms and certain administrative controls) against the established legal tests - including control over manner of work, economic reality, opportunity for profit/loss, permanency, and intention of the parties as revealed by contract terms. The Court emphasised that administrative and logistical regulations necessary for orderly functioning (stipulated timings, leave procedures, guidelines) do not, by themselves, establish control over the professional exercise of skill. The decisive factor is whether the hospital controlled the doctors' professional decisions and bore responsibility for those decisions; here the record showed that the doctors retained independent professional discretion and sole responsibility for clinical decisions and professional indemnity. The agreements also showed variable remuneration aspects and absence of statutory service benefits, pointing away from a master servant relationship. In view of consistent precedents treating similar arrangements as professional engagement rather than employment, the impugned conclusion that the petitioners were employees and their receipts were salary was not sustainable at the threshold of Section 148A. [Paras 38, 79, 80, 81, 84]

The contractual terms and hospital regulations did not establish a contract of service as a matter of prima facie evaluation; the doctors are to be regarded as professionals/consultants for AY 2018-19 and the Revenue's conclusion to treat receipts as salary was not justified.

Final Conclusion: Writ petitions allowed. The impugned orders rejecting the objections to initiation of reassessment under Section 148/148A (for AY 2018-19) are set aside because the information relied upon did not prima facie suggest escapement of income and the contractual/regulatory terms did not establish an employer-employee relationship warranting taxation as salary.

Disallowance under Section 68 for unexplained credits - Requirement that the sum be credited in the relevant year for Section 68 to apply - Addition under Section 41(1) for remission or cessation of trading liabilities - Writing off of liabilities in the books as prerequisite for invoking Section 41(1) - Effect of acknowledgement/continuing balance on cessation of liability

Disallowance under Section 68 for unexplained credits - Requirement that the sum be credited in the relevant year for Section 68 to apply - Deletion of addition made under Section 68 in respect of unsecured loans from directors and promoters. - HELD THAT: - The Assessing Officer treated unsecured loans from directors and promoters as unexplained credits and added them under Section 68. The Tribunal upheld the CIT(A)'s finding that the balances in question were opening balances as on 01.04.2012, remained unchanged during FY 2012-13 and were repaid on 12.04.2013. Since no fresh amount was credited to the books in the year under consideration, the fundamental requirement for invoking Section 68-that a sum be found credited in the books in the relevant previous year-was absent. Consequently, the addition could not be sustained under Section 68 and the deletion by the CIT(A) was upheld. [Paras 3, 4, 5]

Addition of Rs.1,39,51,852/- under Section 68 deleted; Revenue grounds on this issue rejected.

Addition under Section 41(1) for remission or cessation of trading liabilities - Writing off of liabilities in the books as prerequisite for invoking Section 41(1) - Effect of acknowledgement/continuing balance on cessation of liability - Deletion of addition made under Section 41(1) in respect of long-outstanding sundry creditors. - HELD THAT: - The Assessing Officer added outstanding sundry creditors as income under Section 41(1) on the view that liabilities outstanding for more than three years indicated cessation/remission. The CIT(A) followed the jurisdictional High Court authority holding that Section 41(1) applies only when there is a remission or cessation of liability, ordinarily evidenced by writing off the liability in the assessee's books. Mere non-payment over time, without writing off or other evidence of remission by the creditor, does not constitute cessation. The Tribunal found no infirmity in the CIT(A)'s application of that legal position and accordingly sustained deletion of the addition. [Paras 6, 7]

Addition of Rs.15,81,908/- under Section 41(1) deleted; Revenue grounds on this issue rejected.

Final Conclusion: Both additions-under Section 68 in respect of unsecured loans from directors and promoters, and under Section 41(1) in respect of long-outstanding sundry creditors-were deleted by the CIT(A) and the Tribunal dismissed the Revenue's appeal, upholding those deletions.

Rejection of books of account under section 145(3) - addition by estimation on account of bogus accommodation entries - remand for verification and admissibility of additional evidence - disallowance of deduction under Chapter VIA for want of documentary proof - treatment of unexplained cash credits under section 68 - right to copies of third party evidence and opportunity to rebut

Rejection of books of account under section 145(3) - Validity of rejection of the assessee's books of account and consequent assessment under section 144/145. - HELD THAT: - The Assessing Officer rejected the books on the ground of improper maintenance and other irregularities and framed assessment invoking provisions of section 144 after applying section 145, a conclusion affirmed by the Commissioner (Appeals). The Tribunal found no infirmity in the concurrent conclusion that the books were unreliable in view of absence of proper records and corroborative material, and therefore upheld the rejection of the books by the lower authorities. [Paras 13]

Upheld the rejection of books of account; ground challenging that rejection dismissed.

Addition by estimation on account of bogus accommodation entries - remand for verification and admissibility of additional evidence - Validity of the addition of 2% of alleged bogus sales as deemed income and whether the assessee's claim of 1% commission could be accepted. - HELD THAT: - The Assessing Officer estimated income by applying 2% on the impugned transactions after rejecting books and treating many suppliers as hawala/bogus parties. The assessee produced confirmation letters and sought to prove commission at 1%. The Tribunal observed deficiencies in the confirmation letters (lack of identifying details, apparent signature repetition) and considered that the newly produced documents required thorough enquiry as to genuineness. Consequently, the Tribunal remanded the matter to the Assessing Officer to admit and examine the additional evidence, to test authenticity of persons signing confirmations and to record reasons and computation if the 2% estimation is to be sustained in absence of satisfactory proof. [Paras 14]

Issue remanded to the Assessing Officer for admission and verification of additional evidence and for fresh decision on the estimation of income.

Disallowance of deduction under Chapter VIA for want of documentary proof - Allowability of the Chapter VIA deduction claimed by the assessee (donation) in absence of supporting documentary evidence. - HELD THAT: - The assessee relied only on ledger entries to substantiate the claimed donation. The Tribunal observed absence of supporting documents to establish the donation and therefore found no basis to interfere with the rejection by the Assessing Officer and confirmation by the Commissioner (Appeals). [Paras 15, 16]

Claim for deduction under Chapter VIA dismissed for lack of evidence.

Treatment of unexplained cash credits under section 68 - remand for verification and admissibility of additional evidence - Whether unsecured loans and share capital/share premium were to be treated as unexplained cash credits under section 68 and whether the assessee could substantiate identity and financial capacity of creditors/subscribers. - HELD THAT: - The Commissioner (Appeals) sustained the additions under section 68 for unsecured loans and for monies shown as share capital and share premium on the ground that the assessee failed to furnish confirmations, bank account details and income-tax returns of the concerned parties and failed to prove identity and financial capacity of numerous subscribers. The Tribunal granted the assessee a final opportunity and remanded these issues to the Assessing Officer for fresh consideration upon production of relevant documentary evidence by the assessee. [Paras 19, 20, 21]

Remanded to the Assessing Officer for admission and verification of documents and fresh decision on the additions under section 68.

Right to copies of third party evidence and opportunity to rebut - Whether the assessee is entitled to copies of third party evidences relied upon by the department and an opportunity to rebut them. - HELD THAT: - Given that several issues were remanded to the Assessing Officer for fresh consideration and admission of evidence, the Tribunal directed the Assessing Officer to furnish the assessee with copies of third party evidence relied upon by the lower authorities and to provide the assessee an opportunity to counter such material before adjudication. [Paras 29]

Directed supply of copies of third party evidence to the assessee and to afford opportunity to rebut; additional ground upheld in part.

Final Conclusion: Appeals partly allowed. The Tribunal upheld the rejection of books of account and dismissed the Chapter VIA deduction claim for lack of proof; remanded the estimation of income at 2% and the additions under section 68 (unsecured loans and share capital/share premium) to the Assessing Officer for admission and verification of additional evidence and fresh decision; directed furnishing of copies of third party evidence and opportunity to the assessee to rebut.

Wholly and exclusively for the purpose of business - business expenditure - disallowance on conjecture, suspicion and surmise - adhoc disallowance - reimbursement of expenses to directors - depreciation where asset used for business though registered in director's name - recomputation / verification by assessing officer - TDS credit - MAT credit set off

Wholly and exclusively for the purpose of business - business expenditure - disallowance on conjecture, suspicion and surmise - Disallowance of foreign travel expenses of Rs 11,55,326/- confirmed by lower authorities - HELD THAT: - The assessee furnished detailed particulars and supporting documents showing foreign travel undertaken by directors together with the architect and advocate and explained the business purpose - study of international construction trends, material quality, and marketing. The revenue did not controvert the factual claim that architect and advocate accompanied the directors. The Tribunal held that the presence of professional persons on the trips negates a finding of personal travel and that the assessing officer cannot substitute his judgment for the business decision of the assessee. Reliance was placed on precedent that bona fide business expenditure incurred wholly and exclusively for business must be allowed and that disallowance cannot rest on mere suspicion or conjecture. In these circumstances the disallowance was unsustainable.

Disallowance deleted and ground allowed.

Adhoc disallowance - disallowance on conjecture, suspicion and surmise - business expenditure - Adhoc 25% disallowance of domestic travel expenses confirmed by lower authorities - HELD THAT: - The assessee produced comprehensive details and supporting evidence for domestic travel (purpose, travellers, fuel and ticket break up). The Tribunal noted there was no rejection of books of account or specific defects in the evidence and that domestic trips related to business (including relocation related regulatory visits). The assessing officer's blanket adhoc disallowance without appreciating the evidence was held contrary to law and the reasoning applied for foreign travel disallowance was held to apply here as well.

Adhoc disallowance deleted and ground allowed.

Business expenditure - reimbursement of expenses to directors - disallowance on conjecture, suspicion and surmise - Disallowance of business promotion expenses of Rs 2,42,514/- confirmed by lower authorities - HELD THAT: - The assessee produced vendor bills, bank payment evidence (cheque) and explained that directors incurred expenses on credit card which were reimbursed by the company for marketing and promotion of real estate projects. The assessing officer ignored documentary evidence and made disallowance on mere suspicion. The Tribunal held that such expenses had prima facie business nexus and the lower authorities' wholesale disallowance was unsustainable, applying the same reasoning as for travel expenditures.

Disallowance deleted and ground allowed.

Depreciation where asset used for business though registered in director's name - Disallowance of depreciation on car because the vehicle was registered in the name of a director - HELD THAT: - It was undisputed that the car, though registered in the director's name, was used by the company for business and formed part of the company's fixed assets for official use by directors. The Tribunal observed that registration in the director's name is not a prerequisite for claiming depreciation; what matters is use for business. Reliance was placed on authority upholding depreciation where the asset is used for business purposes.

Depreciation allowed and ground allowed.

Recomputation / verification by assessing officer - Direction to assessing officer to verify and recompute income to allow short term capital loss of Rs 11,11,636/- - HELD THAT: - The CIT(A) had directed the assessing officer to verify the computation because of a discrepancy between the loss claimed in the return and the figure adopted in assessment. The Tribunal recorded that the CIT(A) only directed verification and recomputation and that the matter is pending consideration by the assessing officer; accordingly there is no controversy remaining before the Tribunal requiring further relief.

Matter remitted to assessing officer for verification and recomputation; ground dismissed before the Tribunal.

TDS credit - recomputation / verification by assessing officer - Claim for TDS credit of Rs 6,31,863/- remitted to assessing officer - HELD THAT: - The CIT(A) set aside the issue to the file of the assessing officer to decide in accordance with law. The Tribunal noted the matter remains pending before the assessing officer and therefore no substantive relief was granted by the Tribunal itself.

Matter remitted to assessing officer for decision in accordance with law; ground dismissed before the Tribunal.

MAT credit set off - recomputation / verification by assessing officer - Claim for set off of MAT credit under section 115JAA remitted to assessing officer - HELD THAT: - The CIT(A) directed the assessing officer to decide the MAT credit claim in accordance with law. The Tribunal recorded that the issue is pending before the assessing officer and did not entertain further relief on this ground.

Matter remitted to assessing officer for decision in accordance with law; ground dismissed before the Tribunal.

Final Conclusion: The appeal is partly allowed: the disallowances in respect of foreign travel expenses, domestic travel (adhoc 25%), business promotion expenses and depreciation on the car are deleted/allowed in favour of the assessee; issues regarding recomputation to allow short term capital loss, TDS credit and MAT credit are remitted to the assessing officer for verification and decision in accordance with law.

Disallowance of interest expenditure under business expediency test and section 36(1)(iii) - depreciation claim on assets post-amalgamation - requirement of use/ deployment in assessee's business - deductibility of expenses for foreign travel - nexus with assessee's business - re-opening of assessment u/s.147 - requirement of fresh tangible material / live nexus for formation of belief - disallowance under section 14A read with Rule 8D - effect of absence of exempt income and limitation of disallowance to exempt income - treatment of expenditure where business not commenced - capitalization to project work-in-progress

Disallowance of interest expenditure under business expediency test and section 36(1)(iii) - Disallowance of interest expenditure for AY 2009-10 upheld. - HELD THAT: - The Tribunal found that the assessee had borrowed large funds and advanced them interest-free to subsidiaries/associate concerns while itself showing no operating business income. The assessee failed to produce evidence of commercial expediency or any business activity of the recipient entities that would justify deployment of the borrowed funds for the assessee's business. Reliance on SA Builders was held to be inapplicable absent supporting material showing commercial expediency. Accordingly, the additions disallowing interest under the principles governing section 36(1)(iii) were sustained. [Paras 7, 8]

Addition disallowing interest sustained and assessee's ground rejected.

Depreciation claim on assets post-amalgamation - requirement of use/ deployment in assessee's business - Disallowance of depreciation on plant & machinery for AY 2009-10 upheld. - HELD THAT: - Although depreciation on a block of assets may generally continue where assets are used in business, the Tribunal accepted the AO's finding that the assets in question originated on amalgamation from an entity engaged in business different from the assessee's real-estate activities and that the assessee did not demonstrate use of those assets in its own business. The assessee failed to substantiate deployment of the claimed assets in its operations; consequently the depreciation claim was held not allowable. [Paras 10, 11]

Depreciation claim rejected and the CIT(A)'s order upheld.

Deductibility of expenses for foreign travel - nexus with assessee's business - Disallowance of foreign travel expenses for AY 2009-10 upheld. - HELD THAT: - The assessee could not establish with evidence that the foreign travel expenditure was incurred for the assessee's business; the Tribunal observed that if the travel related to the parent company's business, that cost ought to have been borne by the parent. In absence of proof of nexus to the assessee's business, deduction was rightly refused. [Paras 13]

Foreign travel expenditure disallowed and the assessee's ground rejected.

Re-opening of assessment u/s.147 - requirement of fresh tangible material / live nexus for formation of belief - Re-opening of assessment for AY 2009-10 quashed. - HELD THAT: - The Tribunal held that the Assessing Officer relied solely on the financial statements and the same material that was available at the time of the original assessment to form the belief of escapement of income. There was no fresh tangible material brought to the AO's notice post completion of the original assessment to establish a live nexus with the belief required under section 147. Re-opening on the same set of materials amounted to impermissible change of opinion and was quashed following precedent requiring fresh material for re-opening. [Paras 21]

Re-opening quashed and reassessment order under section 143(3) r.w.s.147 set aside.

Disallowance under section 14A read with Rule 8D - effect of absence of exempt income and limitation of disallowance to exempt income - treatment of expenditure where business not commenced - capitalization to project work-in-progress - Disallowance under section 14A r.w.r.8D for AY 2009-10 deleted; direction to disallow interest/finance charges relating to non-commencement of business upheld. - HELD THAT: - The Tribunal followed judicial authorities holding that section 14A does not apply where no exempt income is earned in the relevant year; consequently the AO's disallowance under Rule 8D was deleted. Separately, because the assessee had not commenced its real-estate operations (admitted revenue recognition began in later years), the CIT(A)'s direction to disallow interest and finance charges (to be capitalised to project work-in-progress and claimed in appropriate year) was held to be correct and was upheld. [Paras 27, 28]

Section 14A disallowance deleted; disallowance of interest/finance charges for non-commencement of business upheld.

Re-opening of assessment u/s.147 - requirement of fresh tangible material / live nexus for formation of belief - Re-opening of assessment for AY 2010-11 quashed. - HELD THAT: - The AO relied on financial statements and material available at the time of the original assessment to form belief of escapement (regarding depreciation and other matters) without any fresh material arising thereafter. The Tribunal reiterated that re-opening within four years still requires fresh tangible material and a live nexus to the belief; absence thereof renders re-opening impermissible as a change of opinion. The reassessment was therefore quashed. [Paras 35]

Re-opening quashed and reassessment order under section 143(3) r.w.s.147 set aside.

Disallowance under section 14A read with Rule 8D - effect of absence of exempt income and limitation of disallowance to exempt income - Disallowance under section 14A r.w.r.8D for AY 2012-13 restricted to the amount of exempt income earned. - HELD THAT: - The Tribunal noted settled law that section 14A cannot be invoked where no exempt income is earned, and that any disallowance under section 14A cannot exceed the exempt income. As the assessee had earned exempt dividend income of the stated amount, the AO's higher disallowance was contrary to that principle. The Tribunal directed the AO to restrict the disallowance to the extent of the exempt income for the year. [Paras 40]

Disallowance under section 14A reduced and directed to be limited to the exempt income earned in the year.

Final Conclusion: The Tribunal dismissed the assessee's appeal on merits in respect of interest, depreciation and foreign travel for AY 2009-10; quashed the re-openings and reassessments for AYs 2009-10 and 2010-11 for lack of fresh tangible material; deleted disallowance under section 14A r.w.r.8D where no exempt income arose (and directed restriction to exempt income for AY 2012-13); and upheld the direction to disallow interest/finance charges for non-commencement of the asserted business (to be capitalised to project work-in-progress).

Condonation of delay - full value of consideration for transfer of immovable property under Sec.43CA - nullification of taxable income by corresponding book entries - burden of proof for deduction of business expenses - disallowance under Sec.40(a)(ia) for non-deduction of tax at source

Condonation of delay - Admissibility of Revenue's appeal despite delay - HELD THAT: - The Tribunal examined the petition for condonation of delay and the reasons advanced by the Revenue for late filing. The assessee did not oppose condonation. Applying the statutory test for reasonable cause, the Tribunal found the explanations sufficient to bring the delay within the scope of the Act's provision for condonation and therefore admitted the appeal for adjudication. [Paras 2]

Delay in filing the appeal is condoned and the appeal is admitted for adjudication.

Full value of consideration for transfer of immovable property under Sec.43CA - nullification of taxable income by corresponding book entries - burden of proof for deduction of business expenses - Allowability of business development on sales expenses debited to offset income booked under Sec.43CA - HELD THAT: - The assessee had credited the difference between guideline value and actual consideration as income under Sec.43CA and simultaneously debited an equal amount to 'business development on sales expenses', producing a nil net tax effect. The Tribunal acknowledged that the assessee claims these entries represent expenses incurred on behalf of purchasers (stamp duty, registration, incidental expenses) under oral arrangements. However, the Tribunal found no documentary evidence on record substantiating the claimed expenses and observed that the accounting treatment appeared to be a mechanism to neutralise the operation of Sec.43CA. Given that the Assessing Officer's disallowance was founded on lack of substantiation, the Tribunal did not decide the issue on merits but set aside the CIT(A)'s deletion and remitted the matter to the Assessing Officer for re-examination, directing the assessee to produce necessary evidence to justify the claimed expenditures. [Paras 9]

Order of CIT(A) deleting the disallowance is set aside; issue restored to the file of the Assessing Officer for fresh verification and decision on merits upon production of evidence by the assessee.

Disallowance under Sec.40(a)(ia) for non-deduction of tax at source - burden of proof for deduction of business expenses - Deductibility of gift/prize expenditure where TDS was not deducted - HELD THAT: - The Assessing Officer disallowed expenditures on prizes (gold coins) under Sec.40(a)(ia) for failure to deduct tax at source. The CIT(A) directed verification, noting that some prize payments may be below the threshold for TDS while others (in respect of certain plots) may exceed the threshold and thus would require TDS; if tax was not suffered, disallowance would follow. The Tribunal observed that the matter has already been remitted to the Assessing Officer for verification and, consequently, held there is no substantive grievance for the Revenue to pursue regarding the CIT(A)'s course of action. [Paras 10, 11]

Ground raised by the Revenue is rejected as the issue has been remitted to the Assessing Officer for verification and appropriate decision.

Final Conclusion: The Revenue's appeal was admitted upon condonation of delay; the Tribunal set aside the CIT(A)'s deletion of the disallowance relating to business development expenses and remitted that issue to the Assessing Officer for fresh verification and decision after the assessee produces supporting evidence; the challenge to deletion of disallowance under Sec.40(a)(ia) was rejected as the matter has been remitted for verification. Appeal is partly allowed for statistical purposes.

Cessation of liability under section 41(1) of the Income-tax Act, 1961 - unexplained cash credit and explanation of source - identification of creditor and transfer through banking channel as explanation - benefit not belonging to the assessee by reason of a court order

Cessation of liability under section 41(1) of the Income-tax Act, 1961 - benefit not belonging to the assessee by reason of a court order - Whether the sum of Rs. 25 crores received from M/s. Cheran Holdings Pvt. Ltd. amounted to income by way of cessation of liability under section 41(1) and was rightly added by the Assessing Officer. - HELD THAT: - The Tribunal accepted the factual matrix that the amount traced to Data Access (India) Ltd., which had received funds from its parent abroad, was transferred via Cheran Holdings Pvt. Ltd. to the assessee. The Delhi High Court had passed orders restraining dealings with those funds and later directed repayment to Canara Bank, which demonstrated that the sums did not belong to the assessee. On these facts the Tribunal held that the amount could not be treated as the assessee's unexplained income by way of cessation of liability under section 41(1), since the assessee had identified the source and the funds were subject to judicial orders indicating they were not the assessee's benefit. Consequently the CIT(A)'s deletion of the addition was upheld. [Paras 6]

Addition treating the amount as income by cessation of liability under section 41(1) deleted; CIT(A)'s order upheld.

Unexplained cash credit and explanation of source - identification of creditor and transfer through banking channel as explanation - Whether the Assessing Officer was justified in making an addition under the head of unexplained cash credit on the ground that the source of Rs. 25 crores was not explained. - HELD THAT: - The Tribunal recorded that the assessee had produced documentary evidence tracing the funds to Data Access (India) Ltd. via Cheran Holdings Pvt. Ltd., and that transfers were effected by banking channels. The Tribunal relied on the identification of the original creditor and the existence of court orders concerning the funds to conclude that the source and genuineness of the payment were explained. On these findings the unexplained cash credit addition was correctly deleted by the CIT(A). [Paras 6]

Addition on account of unexplained cash credit deleted; CIT(A)'s order sustained.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upheld the CIT(A)'s deletion of the additions treating the Rs. 25 crores as income (whether by cessation of liability under section 41(1) or as unexplained cash credit), and restored the view that the source of the funds was explained and the sums did not belong to the assessee in view of court orders.

Income from house property vs Income from other sources - Separable components of composite rent - Assessment of maintenance charges as part of annual value of property - Receipts from services rendered constituting independent income - Application of lease deed terms to determine character of receipts

Income from house property vs Income from other sources - Separable components of composite rent - Application of lease deed terms to determine character of receipts - Characterisation of maintenance charges received from the premises as taxable under the head 'income from house property' or as 'income from other sources'. - HELD THAT: - The Tribunal found the facts undisputed and examined the lease deeds and surrounding circumstances. Clause 2.2 of the lease deed expressly charged maintenance separately and provided for direct payment/adjustment of maintenance to the Association/Company maintaining common amenities. The maintenance receipts related to services and common facilities (parking, security, central AC, DG, lifts, pest control, water management, etc.) which are distinct from the rent fixed for occupation of floor area. Where the composite consideration is separable, the portion referable to services does not partake the character of rental income and need not be brought to tax as income from house property. The Tribunal applied the principle in Karani Properties Ltd. and the Madras High Court decision in A.R. Complex to hold that organized, systematic provision of services (or separable service charges fixed in the lease) may constitute an independent source of income and should be assessed under the appropriate head claimed by the assessee. On the facts, maintenance charges were fixed separately (Rs. 7 per sq. ft.) and were attributable to services provided to all occupiers; the cost of maintaining common areas was not directly attributable to the assessee's two floors alone and the maintenance receipts therefore did not form part of rental annual value liable under the head 'income from house property'. The Tribunal accordingly reversed the findings of the lower authorities and treated the maintenance receipts as income of the nature claimed by the assessee. [Paras 11, 14]

Maintenance charges received are separable from rent and constitute income from other sources as claimed by the assessee; the addition treating them as income from house property is reversed.

Final Conclusion: The appeal is allowed: the assessment treating maintenance charges as income from house property is set aside and the maintenance receipts are to be treated as income in the nature claimed by the assessee.

Revival of income on remission or cessation under section 41(1) - bad debt write-off by creditor not automatically attracting section 41(1)

Revival of income on remission or cessation under section 41(1) - deduction previously allowed - Whether section 41(1) is attracted in the hands of the assessee where the creditor has written off interest receivable as bad debt but the assessee had not claimed any deduction earlier in respect of that expenditure or trading liability. - HELD THAT: - The Assessing Officer invoked section 41(1) solely because M/s. V.S. Net Ltd. wrote off interest receivable from the assessee as bad and doubtful debt. Section 41(1) applies where an allowance or deduction had been made in an earlier year in respect of a loss, expenditure or trading liability and subsequently an amount is obtained or a benefit accrues by way of remission or cessation. In the present case the Department did not contend, and the record does not show, that the assessee had earlier claimed or been allowed any deduction in respect of the interest or related liability. The mere unilateral write-off by the creditor in its books does not, by itself, result in the assessee having previously obtained a deduction or having a benefit that requires revival under section 41(1). The CIT(A) confirmed the addition without addressing the threshold requirement of a prior deduction having been allowed to the assessee. Given that the statutory precondition for invoking section 41(1) is absent, the provision is not applicable and the addition cannot be sustained. [Paras 6, 7]

Section 41(1) does not apply where the assessee had not taken or been allowed any deduction earlier; the addition under section 41(1) is reversed.

Final Conclusion: The Tribunal allowed the appeal, holding that section 41(1) cannot be invoked merely because the creditor wrote off interest receivable where the assessee had not claimed any deduction earlier; the addition of the amount was deleted.

Assessment under Section 41(1) - deduction under Section 43B - refund of turnover tax assessable as income - finality of refund order not determinative - verification and rectification of assessment - As per HC [2010 (1) TMI 1295 - KERALA HIGH COURT] Tribunal's order reversed and assessment restored holding the refund of turnover tax assessable under Section 41(1) where earlier deduction on payment basis was taken, subject to verification and possible rectification by the Assessing Officer if the assessee proves no such earlier deduction was claimed.

HELD THAT:- An order of remand to the High Court is required, however, we are not inclined to pass remit order, as the issue, in our opinion, has been correctly decided. Remand in the present appeal will only entail extra expenditure on the part of the assessee and would not be in the interest of justice. Hence, we decline to exercise our power under Article 136 of the Constitution of India and dismiss the present appeal.

TDS u/s 195 - Royalty - amounts paid by the concerned persons resident in India to non-resident, foreign software suppliers - Royalty paid to foreign software Supplier - Double Tax Avoidance Agreement - HELD THAT:- The impugned judgment(s) passed by the High Court [2011 (10) TMI 370 - KARNATAKA HIGH COURT] had relied on the earlier judgment of the High Court in the case of Samsung Electronics Co. Ltd.’ [2011 (10) TMI 195 - KARNATAKA HIGH COURT] which judgment has been set aside and overruled by this Court in the decision reported as Engineering Analysis Centre of Excellence Private Limited[2021 (3) TMI 138 - SUPREME COURT]

Before us, learned counsel for both parties have rightly stated that the facts, as found by the Income Tax Appellate Tribunal and the authorities have not been analyzed by the High Court.

We set aside the impugned judgment with an order of remand to the High Court to re-examine the issue and the question of law. Parties would be entitled to raise all pleas and contentions, in accordance with law including reliance on the judgment in the case of Engineering Analysis Centre of Excellence Private Limited (supra), and the contention of the Revenue that notwithstanding the said judgment, the payments would be covered under the head ‘Royalty’ etc.

We are informed that the Review Petition titled “The Commissioner of Income Tax International Taxation & Another v. Engineering Analysis Centre of Excellence Private Limited Etc.,” is pending. In case any order is passed, it will be open to the parties to rely upon the said order. The appeals are disposed of in the aforesaid terms.

Taxability of compensation as income - capital receipt versus revenue receipt - characterisation of receipts - treatment of refunded amounts and compensation - deference to findings of fact affirmed on appeal

Capital receipt versus revenue receipt - taxability of compensation as income - characterisation of receipts - Whether the amount oreceived by the assessee could be held to be a capital receipt and therefore not chargeable to tax? - HELD THAT: - The Court accepted the factual findings recorded by the assessing officer and affirmed through the High Court that the appellant had entered into MOUs with a developer, had collected funds from prospective society members which were transferred to the developer, and that a subsequent MOU provided for refund of amounts when the developer failed to procure clear title and permissions. Against that factual backdrop the Court found no justification to hold that the amount stated to have been received as compensation was a capital receipt not chargeable to tax. The Court expressly refrained from deciding whether the amount would alternatively qualify as income from business or as income from other sources, holding only that it could not be characterised as a non-taxable capital receipt on the material before it.

The receipt was not to be treated as a non taxable capital receipt; appeal dismissed.

Final Conclusion: The appeal is dismissed; the Court upheld the factual findings regarding the MOUs, transfer and refund of monies and held that there was no basis to treat the stated compensation as a non taxable capital receipt, without deciding its classification between business income and income from other sources.

Provisional release - bond and bank guarantee as security for provisional release - deportation of prohibited goods - segregated cargo and unloading without contamination - release of seized vessel conditional on compliance - customs adjudication and penalty security

Segregated cargo and unloading without contamination - provisional release - Release and unloading of the pigeon peas cargo (non genetically modified) while related proceedings concerning other cargo continue - HELD THAT: - The court found on the material on record, including samples tested and communications from the Plant Quarantine Station, that the pigeon peas consignment was non genetically modified and that pigeon peas and soybean were stowed in structurally independent holds. The parties agreed that the cargos were segregated and could be handled without cross exposure. In view of these facts, the court directed the Customs authorities to permit berthing and unloading of the pigeon peas consignment under strict supervision, in the presence of the petitioner's representative, Customs, Plant Quarantine Station and FSSAI representatives, with videography, and directed that Customs undertake the process of assessing and clearing the bills of entry for those consignments and place the clearance report on record. [Paras 3, 4, 6]

Pigeon peas cargo to be released and unloaded under the prescribed supervisory and videographed procedure and be assessed for clearance pending further proceedings.

Provisional release - bond and bank guarantee as security for provisional release - deportation of prohibited goods - customs adjudication and penalty security - Provisional release of the allegedly genetically modified soybean for deportation subject to specified security and undertaking - HELD THAT: - The court considered the authorities' proposal permitting deportation as a feasible remedy and the conditions proposed by Customs (full bond, a 25% bank guarantee and undertaking regarding unloading at the destination). Having regard to precedent and the equities of the case, the court held that requiring a bond for the entire value of the cargo was justified but that a bank guarantee equal to 25% would be harsh; accordingly the bank guarantee requirement was moderated to Rs.10 crores. The court also required an undertaking that the cargo will be taken back to Mozambique and unloaded there, with production of the unloading certificate within four weeks of sailing. The petitioners had agreed to abide by these conditions, and the court recorded that the provisional release could be granted on compliance with these preconditions, while noting that adjudication on confiscation/penalty would continue. [Paras 3, 5]

Allegedly genetically modified soybean may be provisionally released for deportation provided the petitioners furnish a bond for the entire value, furnish a bank guarantee of Rs.10 crores, and give an undertaking to unload at Mozambique with production of the unloading certificate within four weeks.

Release of seized vessel conditional on compliance - provisional release - Release of the vessel detained for carrying the allegedly prohibited cargo conditional on compliance with the security and undertaking imposed for provisional release of the cargo - HELD THAT: - The court noted that the vessel was detained solely because it carried the allegedly prohibited soybean cargo and that the cargo would have to return to Mozambique in the same vessel. Consequently, the court directed that the vessel be released only on satisfaction of identical conditions imposed for the provisional release of the soybean cargo (bond, bank guarantee and undertaking regarding unloading and production of certificate). The court also required the petitioners to file undertakings for authorised Indian representatives who will cooperate in adjudication proceedings. [Paras 5]

Vessel to be released only upon satisfaction of the same bond, bank guarantee and undertaking conditions applicable to the provisional release of the soybean cargo; petitioners to file undertakings regarding authorised representatives.

Final Conclusion: The petitions are disposed of by directing (a) immediate supervised unloading, assessment and clearance procedure for the non GM pigeon peas cargo; (b) provisional release of the allegedly genetically modified soybean for deportation subject to furnishing a bond for the entire value, a bank guarantee of Rs.10 crores and an undertaking to unload at Mozambique with production of the unloading certificate within four weeks; and (c) release of the vessel only upon compliance with the identical conditions and filing of undertakings for authorised representatives to cooperate in adjudication.

Directions beyond the scope of the show cause notice - Appellate authority exceeding jurisdiction - Doctrine of unjust enrichment - CENVAT/MODVAT credit on rejected/returned goods

Directions beyond the scope of the show cause notice - Appellate authority exceeding jurisdiction - Doctrine of unjust enrichment - Validity of directions issued by the Commissioner (Appeals) and affirmed by the Tribunal which raised issues (extent of credit eligibility and unjust enrichment) not adverted to in the show cause notice - HELD THAT: - The Court held that an appellate authority cannot issue directions or sustain a case on grounds which traverse beyond the case made out in the show cause notice. The Commissioner (Appeals) allowed CENVAT credit but conditioned allowance on verification of duty paid nature and imposed a requirement that subsequent duty paid on clearance not be less than credit availed, effectively raising the issue of a cap on credit and unjust enrichment which was not the subject of the show cause notice. The Tribunal affirmed those directions as incidental to relief, but the High Court found that raising and directing inquiry into the extent of admissible credit and unjust enrichment were matters never canvassed by the Revenue in the notice and therefore beyond the jurisdiction of the appellate authorities. Reliance was placed on settled precedents that each show cause notice must be confined to the case made therein and that the appellate forum cannot make out a case on behalf of the Revenue on grounds not pleaded. For these reasons the directions of the Commissioner (Appeals), insofar as they traverse beyond the show cause notice by introducing the extraneous issues of limiting credit and applying unjust enrichment, and the Tribunal's affirmation of those directions, are invalid and set aside. [Paras 5, 6]

Directions of the Commissioner (Appeals) and the Tribunal that traverse beyond the show cause notice (raising extent of credit eligibility and unjust enrichment) are without jurisdiction and are set aside; the appeal is allowed.

Final Conclusion: The Tribunal's order affirming the Commissioner (Appeals)'s directions is set aside insofar as those directions traverse beyond the show cause notice by introducing issues of the extent of CENVAT credit and unjust enrichment; the appeal is allowed and connected petitions are closed.

Validity of importer as IEC holder and actual importer - Customs Broker obligations and due diligence including KYC verification - Penalty under section 112(a) & (b)(iii) of the Customs Act, 1962 for over-valuation - Penalty under section 114A / 114AA of the Customs Act, 1962 for use of false or incorrect material - Confiscation and redetermination of value

Validity of importer as IEC holder and actual importer - Customs Broker obligations and due diligence including KYC verification - Whether M/s. Rishipushp Trading LLP was the actual importer and IEC holder and whether the appellant knowingly ignored the identity of the actual importer - HELD THAT: - The Tribunal examined the IEC copy, GST registration, the Deed of Admission cum Retirement and the authority letter which authorised Shri Pukhraj R. Padiyar to negotiate with the Customs Broker and deal with import parcels on behalf of M/s. Rishipushp Trading LLP. The documentary and oral evidence establish that the LLP remained the importer on record and held a valid IEC; Shri Pukhraj acted as authorised signatory/power of attorney holder and there is no material to hold that he was the actual importer in place of the LLP. The Adjudicating Authority's contrary conclusion proceeded from assumption rather than the record and ignored the documents placed on file and the appellant's statement regarding compliance with KYC and reliance on the LLP's IEC. [Paras 5, 6, 7]

The LLP is the importer and IEC holder on record; the appellant did not knowingly ignore the identity of the actual importer.

Penalty under section 114A / 114AA of the Customs Act, 1962 for use of false or incorrect material - Customs Broker obligations and due diligence including KYC verification - Whether penalty under section 114A/114AA was rightly imposed on the appellant for knowingly making, signing or using false or incorrect material - HELD THAT: - Section 114AA penalises a person who knowingly or intentionally makes or uses any declaration or document which is false or incorrect in a material particular. The Tribunal found no evidence that the appellant knowingly or intentionally provided false information or used false documents. The documentary record and the appellant's statement show he acted for the IEC-holder LLP and carried out KYC and followed accepted practice regarding power of attorney holders. In absence of material proving deliberate or intentional misstatement by the appellant, imposition of penalty under section 114AA is unsustainable. [Paras 9]

Penalty under section 114A/114AA set aside.

Penalty under section 112(a) & (b)(iii) of the Customs Act, 1962 for over-valuation - Customs Broker obligations and due diligence including KYC verification - Whether penalty under section 112(a) & (b)(iii) was rightly imposed on the appellant for the over-valuation declared in the Bill of Entry - HELD THAT: - Section 112 penalises over-declaration of value in the Bill of Entry. The Tribunal noted that Bills of Entry were filed by the appellant and that it was incumbent upon him, in processing the consignment, to have supporting documents showing the value of the imported goods. The appellant did not produce invoice or valuation documents showing he had verified the declared value at the time of clearance. On that basis the Tribunal concluded that the penalty under section 112, being the statutory consequence of a wrongful declaration of value, was properly attracted and correctly imposed on the appellant. [Paras 10]

Penalty under section 112(a) & (b)(iii) is confirmed.

Final Conclusion: The appeal is partly allowed: the penalty imposed under section 114A/114AA is set aside, while the penalty under section 112(a) & (b)(iii) is confirmed.

Deactivation or cancellation of DIN - Disqualification under Section 164(2) of the Companies Act, 2013 - Vacation of office under Section 167(1) of the Companies Act, 2013 - Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014 - Scope of statutory power to suo motu deactivate DIN - Prospective application of penal/disqualificatory provisions - Principles of natural justice - opportunity of hearing - Invalidity of invoking Sections 164/167 as source for DIN cancellation

Deactivation or cancellation of DIN - Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014 - Scope of statutory power to suo motu deactivate DIN - Validity of Registrar's cancellation/deactivation of DIN and the correct statutory source for such deactivation. - HELD THAT: - The Court held that Rule 11 of the Rules of 2014 prescribes the contingencies and procedure for cancellation, surrender or deactivation of a DIN and is the proper source for such action. Deactivation/cancellation under Sections 164 or 167 of the Act of 2013 is not provided for by those sections and therefore relying upon Sections 164/167 as authority for cancelling or deactivating DIN would be arbitrary and illegal. Rule 11 contemplates deactivation on specified grounds and, in many cases, requires an application and/or verification of e-records and, where applicable, an opportunity of hearing before deactivation. The Registrar could not validly proceed to deactivate DIN suo motu in the absence of the procedural preconditions under Rule 11 having been followed.

Impugned orders cancelling/deactivating DIN under the impugned exercise were set aside; deactivation/cancellation must conform to Rule 11 and its procedural safeguards.

Disqualification under Section 164(2) of the Companies Act, 2013 - Vacation of office under Section 167(1) of the Companies Act, 2013 - Invalidity of invoking Sections 164/167 as source for DIN cancellation - Whether disqualification under Section 164(2) operates across all companies of which a person is a director or only in relation to the defaulting company, and whether Sections 164/167 can be used to cancel/deactivate DIN. - HELD THAT: - The Court noted that Section 164(2) addresses disqualification arising from conduct of a company in which a person is a director, and Section 167 deals with vacation of office; neither provision, however, provides for cancellation or deactivation of DIN. Applying Sections 164/167 as a basis for cancelling or deactivating DIN would be improper since Rule 11 is the specific provision regulating DIN cancellation/deactivation. The Court accepted the distinction between the grounds and effects envisaged by Section 164(2)/Section 167 and the separate regulatory regime under Rule 11, and rejected resort to Sections 164/167 as the legal source for DIN cancellation.

Deactivation/cancellation of DIN cannot be sustained by invoking Sections 164(2) or 167(1); the Registrar's action on that basis was set aside.

Prospective application of penal/disqualificatory provisions - Temporal operation of Section 164(2) and Section 167(1) - whether they can be applied retrospectively to earlier defaults. - HELD THAT: - The Court observed that Section 164 was made applicable from 1 May 2014 and Section 167 from 7 May 2018, and applied the settled principle that penal or disqualificatory provisions are to be applied prospectively unless expressly made retrospective. Where the three-year default period required to trigger Section 164(2) had not lapsed prior to the operative date, the provision could not be applied retrospectively to create disqualification. The Court relied on the consistent view of several High Courts that Section 164(2) is to be applied prospectively.

Where retrospective application was attempted, such application was not sustainable; Section 164(2) and Section 167(1) are to be applied prospectively in the circumstances indicated.

Principles of natural justice - opportunity of hearing - Deactivation or cancellation of DIN - Whether the Registrar's proceedings violated principles of natural justice by deactivating DIN without appropriate notice or hearing. - HELD THAT: - The Court found that in cases where the Registrar issued a show-cause notice on a different statutory ground (for example, alleged non-filing under Section 137) but the final order deactivated DIN under a different legal premise, the proceedings suffered from a mis-match between the foundation (show-cause) and the penalty imposed. Rule 11 requires, in specified contingencies, that an opportunity of hearing be afforded before deactivation; taking implied deactivation measures prior to or independent of such procedure and then issuing a show-cause on a different ground undermines the procedural fairness demanded by law. The Court treated such divergence as violative of the principles laid down in the authorities relied upon by petitioners.

Where deactivation was effected without following the procedural safeguards or where the show-cause and final order were founded on different legal bases, the action was contrary to principles of natural justice and set aside.

Final Conclusion: Having regard to the statutory scheme and the reasoning of other High Courts, the writ petitions were allowed: the impugned orders of the Registrar cancelling/deactivating DIN and declaring disqualification were set aside, and consequential follow-up action, if any, to be taken only in accordance with the proper statutory procedure (notably Rule 11 and the prospective operation of Sections 164/167) and after observing required procedural safeguards.

Restoration of company name under Section 252(1) of the Companies Act, 2013 - Strike off and dissolution from Register of Companies - Restoration of DIN and effect of disqualification under Section 164(2) of the Companies Act, 2013 - Requirement to file pending financial statements and annual returns as condition of restoration - Payment of costs as condition precedent to restoration - Registrar of Companies' authority to take action for prior violations

Restoration of company name under Section 252(1) of the Companies Act, 2013 - Strike off and dissolution from Register of Companies - Application for restoration of the Company's name in the Register of Companies was allowed and the RoC's order striking off the Company was set aside. - HELD THAT: - The Tribunal examined the record and found that the Company's failure to file statutory returns was not intentional and that the Company has been carrying on business as evidenced by audited financial statements. The Registrar of Companies had itself reported facts of identification and strike-off but raised no objection to consideration of restoration under Section 252(1) and Rule 87A, and recommended statutory compliance. Restoration was considered necessary to prevent prejudice to the Company, its shareholders and directors and to enable continued business and investments. The Tribunal therefore set aside the impugned STK orders and directed restoration of the Company's name, subject to specific conditions to ensure compliance with statutory requirements.

The application is allowed; the RoC order dated 31.03.2022 is set aside and the Company's name is restored in the Register of Companies subject to conditions.

Requirement to file pending financial statements and annual returns as condition of restoration - Payment of costs as condition precedent to restoration - Restoration was made conditional on filing all pending financial statements and annual returns and on payment of costs within specified time frames. - HELD THAT: - The Tribunal imposed conditions to secure statutory compliance: the Applicant must, within two months, file all pending financial statements and annual/ statutory returns with the RoC; deliver a certified copy of the order to the RoC within 30 days; and pay prescribed costs through the MCA portal within 10 days of receipt of the order. The Tribunal linked restoration to these steps and to operational consequences (defreezing of bank accounts) upon compliance, thereby balancing restoration with enforcement of statutory obligations.

Restoration is subject to the Applicant filing all pending returns and financial statements within prescribed time, delivering the certified order to the RoC, and paying the directed costs within the stipulated period.

Restoration of DIN and effect of disqualification under Section 164(2) of the Companies Act, 2013 - Registrar of Companies' authority to take action for prior violations - Directors' status and DINs are to be restored to their prior positions upon compliance, but the RoC's power to take action for any earlier or interregnum violations remains unfettered. - HELD THAT: - The Tribunal directed that the status of directors be restored as nearly as possible to the position had the Company not been struck off, and that any disqualification of DINs under Section 164(2) be accordingly restored. Simultaneously, the Tribunal preserved the Registrar's statutory authority to initiate appropriate action against the Company for any violations occurring prior to or during the strike-off period, thus making restoration subject to potential future regulatory steps by the RoC.

On compliance, directors' positions and DINs shall be restored, but the RoC retains the right to pursue action for any prior or interregnum violations.

Final Conclusion: The Tribunal allowed the application and set aside the RoC's strike-off order dated 31.03.2022, restoring the Company's name in the Register of Companies subject to filing all pending financial statements and annual returns, delivery of a certified copy of the order to the RoC, payment of the directed costs, restoration of directors' status (including DINs), and without prejudice to the RoC's power to take action for any prior or interregnum violations.

Continuing offence - limitation under Section 468(2) Cr.P.C. - locus standi of SEBI under the second proviso to Section 621 of the Companies Act - power of SEBI under Section 55A to secure payment of dividend

Continuing offence - limitation under Section 468(2) Cr.P.C. - Complaint was barred by limitation under Section 468(2) Cr.P.C. or not in view of the amended Section 207 being a continuing offence - HELD THAT: - The Court examined Section 207 as substituted by Act 53 of 2000 and noted that the amended provision imposes a fine for every day's default and interest, which indicates that the offence under Section 207 continues until dividends are paid. The earlier unamended provision (which prescribed an offence for failure within forty-two days) did not impose daily fines and therefore was not a continuing offence; decisions rendered with reference to the unamended provision are not applicable to the present case. Since the amended Section 207 constitutes a continuing offence, the complaint cannot be said to be barred by limitation under Section 468(2) Cr.P.C.

Complaint not barred by limitation because the offence under the amended Section 207 is a continuing offence.

Locus standi of SEBI under the second proviso to Section 621 of the Companies Act - power of SEBI under Section 55A to secure payment of dividend - Whether SEBI had locus standi to maintain the complaint when dividends had been paid to shareholders before the complaint was filed - HELD THAT: - Section 621 allows cognizance on complaint by the Registrar, a shareholder, or a person authorized by the Central Government, and the second proviso to Section 621 specifically permits a person authorized by the Securities and Exchange Board of India to file a complaint relating to non-payment of dividend. Section 55A vests certain powers in SEBI with respect to securing payment of dividends. However, a combined reading of Section 55A and Section 207 led the Court to conclude that once dividends have been paid, SEBI lacks power to initiate action under Section 207 for non-payment occurring prior to payment; criminality for delayed payment remains available to complainants expressly allowed by Section 621, but SEBI cannot maintain the complaint after dividends have been paid as on the date of filing.

SEBI did not have locus standi to file the complaint in the circumstances where dividends had already been paid on the date of filing; the cognizance taken on the complaint was vitiated.

Final Conclusion: The petition was allowed: the court held that (i) the offence under the amended Section 207 is a continuing offence and the complaint is not barred by limitation, but (ii) SEBI lacked locus standi to maintain the complaint after the dividends had been paid as on the date of filing; accordingly the criminal proceedings were quashed.

Eligibility for registration as an Insolvency Professional - managerial experience requirement for grant of Certificate of Registration - assessment of managerial experience of self employed/consultant applicants - quashing of administrative order and remand for fresh decision - requirement of a reasoned and speaking order on administrative decisions

Managerial experience requirement for grant of Certificate of Registration - assessment of managerial experience of self employed/consultant applicants - eligibility for registration as an Insolvency Professional - Impugned rejection of the petitioner's application for registration as an Insolvency Professional on the ground that he lacked managerial experience was not finally adjudicated on merits and required fresh consideration. - HELD THAT: - The Whole Time Member rejected the application on the basis that the petitioner, being self employed and engaged in consultancy and valuation, did not possess the requisite managerial experience, relying upon documentary indicators such as income tax treatment and the nature of prior engagements. The High Court observed that the Regulations, 2016 do not define 'management' and that consultancy or proprietorship can involve managerial functions. Given that the petitioner had passed the Insolvency Professional Examination and completed the pre registration education, the Court found that the application should be reconsidered if the petitioner files additional documents demonstrating that he managed a team and possessed the management expertise contemplated by Regulation 5(3)(c)(iii)(b) or (c) (and had requisite educational qualifications). The Court therefore quashed the impugned order without deciding the substantive merits and remanded the matter for fresh decision on eligibility after taking relevant material into account. [Paras 7, 8, 9, 10]

Impugned order dated 18.11.2021 is quashed and the matter is remanded for fresh consideration of the petitioner's eligibility for registration as an Insolvency Professional.

Quashing of administrative order and remand for fresh decision - requirement of a reasoned and speaking order on administrative decisions - Procedure and timetable for fresh decision on remand including opportunity to file additional documents and requirement for a reasoned order. - HELD THAT: - The Court granted the petitioner liberty to file additional documents within two weeks to substantiate managerial experience and educational qualifications relevant under the Regulations. The respondent (Whole Time Member, IBBI) was directed to decide the application afresh, in accordance with law, and to pass a reasoned and speaking order within six weeks from receipt of the certified copy of this judgment. The Court expressly refrained from expressing any opinion on the merits, limiting its intervention to quashing the earlier order and prescribing the procedure and timeline for reconsideration. [Paras 9, 10, 11]

Petitioner permitted to file additional documents within two weeks; respondent to reconsider and pass a reasoned, speaking order within six weeks; matter disposed of subject to these directions.

Final Conclusion: The writ petition is allowed: the order dated 18.11.2021 rejecting the petitioner's application for registration as an Insolvency Professional is quashed and the matter remanded for fresh, reasoned consideration after permitting the petitioner to file additional documents; the respondent to decide the application in accordance with law within the stipulated time.

Maintainability of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - status as financial creditor - identity of the corporate debtor - legal effect of an order passed by District Magistrate under the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 - attachment as distinct from a decree or recovery certificate - availability of a fresh cause of action under Section 7 arising from a recovery certificate or money decree

Status as financial creditor - identity of the corporate debtor - maintainability of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Applicants are not financial creditors of the respondent and have failed to establish that the respondent is the corporate debtor for the sums claimed, rendering the Section 7 application not maintainable. - HELD THAT: - The Tribunal found that the Memorandum of Understanding (MOU) was executed between the Applicants and M/s. ABW Infrastructure Limited (the Developer) and that the respondent company was neither a party to nor connected with that MOU. The Applicants produced no documentary evidence that the disputed monies were ever paid to the respondent or that the respondent stood liable under the MOU. In these circumstances the Applicants have not established the foundational relationship of creditor-debtor necessary to invoke proceedings under Section 7 of the Code, and therefore have failed to make out a prima facie case for issuance of notice under Section 7. [Paras 8, 12]

Application under Section 7 dismissed as not maintainable for want of status as financial creditor and absence of liability of the respondent as corporate debtor.

Legal effect of an order passed by District Magistrate under the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 - attachment as distinct from a decree or recovery certificate - availability of a fresh cause of action under Section 7 arising from a recovery certificate or money decree - The District Magistrate's order under the Haryana Act constitutes an order of attachment and not a decree or recovery certificate which would, by itself, create a fresh cause of action under Section 7 in favour of the Applicants against the respondent. - HELD THAT: - The Tribunal examined the relevant provision of the Haryana Act and the District Magistrate's order and concluded that Section 4 empowers the District Magistrate to issue orders of attachment to protect depositors; it does not operate as a money decree or standalone recovery certificate against a person who was not party to the underlying transactional arrangement. The Tribunal applied the reasoning in the tribunal and appellate authority decisions dealing with identical facts, which held that an order of attachment and attendant observations do not convert a disbursement or claim relating to a developer into a financial debt against a third party that was not a party to the underlying contract. Consequently, the Applicants could not rely on the District Magistrate's attachment order to found a Section 7 claim against the respondent. [Paras 9, 11]

Order of attachment under the Haryana Act does not operate as a recovery certificate or decree creating a fresh cause of action under Section 7 against the respondent; reliance on such order is therefore insufficient for maintainability.

Final Conclusion: In light of the absence of any evidence that the respondent received the disputed sums or was liable under the MOU, and because the District Magistrate's order under the Haryana Act is an order of attachment and not a money decree or recovery certificate capable of creating a fresh Section 7 cause of action against a non-party, the Section 7 application was dismissed in limine as not maintainable.

Initiation of Corporate Insolvency Resolution Process - operational creditor - corporate debtor - demand notice in Form 3 - dispute as to existence of debt or default - credit note and GSTR-1 as evidence of adjustment and acknowledgement - admission of company petition and appointment of Interim Resolution Professional - moratorium

Dispute as to existence of debt or default - credit note and GSTR-1 as evidence of adjustment and acknowledgement - demand notice in Form 3 - Maintainability of the petition under the Code in the face of the Corporate Debtor's plea of defective goods and resultant dispute as to liability for the claimed amount. - HELD THAT: - The Tribunal found that the Corporate Debtor's allegation of rejection of goods was not supported by contemporaneous evidence and that the only defect alleged (size) was remedied by the Operational Creditor. A credit note dated 06.09.2018 reflected on the GST portal and produced by the Operational Creditor showed adjustment for defective material and was not included in the claim. Further, a cheque issued by the Corporate Debtor and produced by the Operational Creditor evidenced acknowledgement of the debt. The Corporate Debtor did not appear to contest these contentions at the hearing despite opportunities to do so. On these facts the limited dispute pleaded by the Corporate Debtor did not preclude admission of the petition under the Code. [Paras 5, 8]

The petition is maintainable and is admitted; the dispute raised by the Corporate Debtor did not displace the claim or bar initiation of CIRP.

Admission of company petition and appointment of Interim Resolution Professional - moratorium - Reliefs to follow upon admission including appointment of Interim Resolution Professional and declaration of moratorium. - HELD THAT: - Upon admitting the Company Petition, the Tribunal appointed an Interim Resolution Professional by reference to the details recorded in the order, directed him to assume management and to proceed with the CIRP in accordance with the Code and Rules, and declared the moratorium under the Code. The Tribunal also directed cooperation by the management of the Corporate Debtor and administrative communications to the parties and the IRP for compliance. [Paras 8]

IRP appointed and moratorium declared; CIRP commenced to be completed within the statutory period directed by the Tribunal.

Final Conclusion: The Company Petition filed by the Operational Creditor is admitted; the Tribunal held that the alleged dispute was not substantiated so as to defeat admission, appointed an Interim Resolution Professional and declared moratorium, directing the IRP to proceed with the CIRP in accordance with the Code.

Default under insolvency proceedings - maturity of debt and exigibility of payment - call option to convert loan into equity - requirement of specific due dates for interest and repayment - Record of Financial Information and Status of Authentication on National E-Governance Services Limited

Maturity of debt and exigibility of payment - default under insolvency proceedings - call option to convert loan into equity - The application under Section 7 was premature because the loan tenor had not expired and no default had occurred under the loan agreement dated 31.12.2014. - HELD THAT: - The Tribunal found that the loan agreement fixed the tenor at ten years from 31.03.2015 to 31.03.2025. Since the tenor had not expired, the debt had not met maturity and therefore payments had not become exigible. The contractual scheme contemplated a call option to convert the loan into equity within the stipulated period; absence of exercise of the call option by the Financial Creditor did not, by itself, render the debt payable prior to the contractual maturity. The loan agreement did not contain agreed dates on which interest payments became due such that non-payment could be categorised as a default prior to the contractual maturity. Applying these conclusions, the Tribunal held there was no legally cognisable default under the Code warranting initiation of CIRP.

Application dismissed as premature on the ground that the loan had not matured and no default under the agreement was established.

Record of Financial Information and Status of Authentication on National E-Governance Services Limited - default under insolvency proceedings - The evidence furnished by the Financial Creditor was inadequate because the Record of Financial Information lacked the requisite 'Status of Authentication' on the National E-Governance Services Limited platform and therefore did not establish default. - HELD THAT: - The Tribunal observed that the Resolution Professional produced the Record of Financial Information but failed to produce the corresponding 'Status of Authentication' from the National E-Governance Services Limited. In the absence of authenticated status on the public financial information platform, the material relied upon did not conclusively reflect the debt and its default. Consequently, the evidentiary requirement to demonstrate a default for the purposes of Section 7 was not satisfied.

Application dismissed for want of adequate authenticated financial information demonstrating default.

Final Conclusion: The Section 7 petition was dismissed as premature and inadequately supported: the loan tenor had not expired so no default was made out, and the Record of Financial Information lacked the required authentication on the National E-Governance Services Limited portal.

Service of notice in Form-3 under Section 8 - Burden of proof on Operational Creditor to establish existence of debt and default - Admissibility and probative value of invoices, ledgers and balance sheets - Monetary threshold for initiation of CIRP

Service of notice in Form-3 under Section 8 - Form-3 notice was duly served on the Corporate Debtor. - HELD THAT: - The Tribunal examined the postal track record and the chronology of the Corporate Debtor's change of registered office. Although typographical errors were made in dates in earlier filings and an interlocutory order relied upon those incorrect dates, the track record establishes delivery of the notice before the office shift. The Corporate Debtor did not contend that the office had been shifted prior to delivery, but only that management had changed; accordingly the Tribunal accepted that the notice was delivered to the Corporate Debtor and held service to be effective, observing that any oversight thereafter may have resulted from office shifting activity.

Service of Form-3 on the Corporate Debtor held to be valid.

Burden of proof on Operational Creditor to establish existence of debt and default - Admissibility and probative value of invoices, ledgers and balance sheets - Monetary threshold for initiation of CIRP - Operational Creditor failed to prove the debt and default sufficiently; the claim is below the threshold for initiating CIRP and the petition is dismissed. - HELD THAT: - The Tribunal found that the claim rested on invoices not supported by purchase orders, acknowledgements, delivery challans or admissible supporting evidence of cash transactions; ledgers and balance sheets filed by both parties were mutually inconsistent and not filed in a manner to render them admissible as conclusive proof. The burden to prove the existence of debt and default lay on the Operational Creditor (here the Resolution Professional acting for the Operational Creditor), which was not discharged. The Tribunal noted an admitted liability of approximately Rs. 18.68 lakhs and accepted the Corporate Debtor's contention that the amount is below the prevailing threshold for initiation of CIRP, concluding that the petition therefore fails on merits and maintainability.

Claim not established; petition dismissed for failure to prove debt/default and for being below the threshold for CIRP.

Final Conclusion: The Tribunal held that Form-3 was duly served but the Operational Creditor failed to prove the asserted debt and default by admissible evidence, the admitted liability being below the threshold for initiating CIRP; CP(IB) No. 52/9/AMR/2021 is dismissed.

Article 226(2) of the Constitution of India - cause of action - territorial jurisdiction - forum conveniens - supervisory jurisdiction over the jurisdictional criminal court

Article 226(2) of the Constitution of India - cause of action - territorial jurisdiction - supervisory jurisdiction over the jurisdictional criminal court - forum conveniens - Maintainability of the writ petition under Article 226(2) of the Constitution of India in respect of cognizance taken by a criminal court situated outside the territorial jurisdiction of this High Court - HELD THAT: - The Court examined the legislative history and jurisprudence governing Article 226(2), the meaning of 'cause of action' and the limits of a High Court's territorial jurisdiction to issue writs against authorities or courts located outside its territorial limits. Applying the principles distilled from the cited decisions, the Court held that where a criminal investigation has culminated in filing of the charge sheet and the competent Court outside the State has taken cognizance, the High Court which does not have supervisory jurisdiction over that jurisdictional criminal Court should not call for the records or exercise writ jurisdiction. The Court further considered the relevance of 'part of cause of action' and the doctrine of forum conveniens as discussed in precedent: although accrual of part of cause of action within the State can, in principle, confer jurisdiction under Article 226(2), such jurisdiction is discretionary and may be declined where the investigation and cognizance are concluded outside the State and the High Court lacks supervisory control over the trial court. Applying these principles to the facts pleaded in the petition, the Court concluded that despite some alleged connections to this State, the investigation was completed and cognizance was taken by a competent Court situated outside this State, and therefore the writ petition was not maintainable here. Consequently the Court declined to consider the merits of the challenge to cognizance. [Paras 11, 12, 13]

Petition dismissed for want of territorial jurisdiction; writ under Article 226(2) not maintainable in this High Court and merits not decided.

Final Conclusion: Writ petition dismissed for lack of territorial jurisdiction; petitioner is directed to approach the appropriate court having supervisory jurisdiction over the trial court. Miscellaneous petitions, if any, closed; no costs.

Statutory/default bail under Section 167(2) Cr.P.C. - indefeasible right to default bail - completion of investigation within statutory period - charge-sheet/final report under Section 173 Cr.P.C. - technical/formal defect in filing and return of charge-sheet - Article 21 - right to personal liberty

Statutory/default bail under Section 167(2) Cr.P.C. - completion of investigation within statutory period - charge-sheet/final report under Section 173 Cr.P.C. - technical/formal defect in filing and return of charge-sheet - indefeasible right to default bail - Whether the petitioner was entitled to statutory bail under Section 167(2) Cr.P.C. where a charge-sheet was filed and returned within the statutory period and re-presented after delay, and whether investigation was completed within the statutory period. - HELD THAT: - The court found that the petitioner was arrested on 18.01.2022; a charge-sheet was filed on 17.03.2022 (58th day) but returned the same day; the petitioner filed an application for statutory bail on 19.03.2022 (60th day); the bail application was dismissed on 30.05.2022 and the charge-sheet was re-presented on 31.05.2022 (paras 7, 20). The Court held that mere filing of papers titled "charge-sheet" within the statutory period does not establish completion of investigation under Section 173 Cr.P.C.; the investigating agency must file the final report in the prescribed form and within the prescribed time (paras 22-23). Where the charge-sheet was returned and subsequently re-presented after an unexplained delay of more than two months, and where the later charge-sheet itself recorded that further investigation was pending, the Court concluded that investigation had not been completed within the 60-day period applicable to the offences alleged (paras 21-24). The respondent did not place any endorsement or record before the Court showing the grounds on which the charge-sheet was returned nor satisfactorily explain the delay in re-presentation; the circumstances indicated that a formal or incomplete filing was used to defeat the accused's statutory right to default bail (paras 23-24). Relying on the constitutional protection of personal liberty under Article 21 and the principles laid down by higher courts on the indefeasible nature of default bail, the Court held that an indefeasible right to statutory bail accrued to the petitioner and that the trial Court erred in dismissing the bail application (paras 15, 25). [Paras 21, 22, 23, 24, 25]

The petitioner is entitled to statutory bail under Section 167(2) Cr.P.C. because the investigation was not completed within the statutory period and the charge-sheet filing did not constitute a final report; the order dismissing the bail application is set aside and the petitioner is to be enlarged on bail subject to bond and usual conditions.

Final Conclusion: Criminal Petition allowed. The order dismissing the petitioner's statutory bail application is set aside and the Metropolitan Sessions Judge cum Special Court is directed to enlarge the petitioner on bail on his executing a bond and subject to such conditions (appearance, surrender of passport, etc.) as the Court may specify.

Attachment/Freezing under Section 17(1-A) of the Prevention of Money Laundering Act, 2002 - Provisional attachment under Section 5 of the Prevention of Money Laundering Act, 2002 - Adjudication and notice procedure under Section 8 of the Prevention of Money Laundering Act, 2002 - Prematurity of writ petition challenging provisional freezing/attachment - Right to be heard / filing of objections to notice before Adjudicating Authority

Attachment/Freezing under Section 17(1-A) of the Prevention of Money Laundering Act, 2002 - Prematurity of writ petition challenging provisional freezing/attachment - Adjudication and notice procedure under Section 8 of the Prevention of Money Laundering Act, 2002 - Right to be heard / filing of objections to notice before Adjudicating Authority - Validity and justiciability at interlocutory stage of challenge to the freezing/attachment order and consequent notices issued under the Act, 2002. - HELD THAT: - The document at Annexure 8 is a provisional freezing/attachment order issued under Section 17(1 A) (and consequential action under Section 5) based on recorded reasons and material in possession of the authorized officer. The statutory scheme contemplates further steps - forwarding of reasons/material to the Adjudicating Authority, filing of complaint/application within prescribed time and initiation of adjudication under Section 8 where the affected person is to be served notice and given opportunity to reply. At the present stage, proceedings are at the freezing/17(1 A) stage and the petitioners have not filed objections or availed the statutory adjudicatory remedy. Given this stage and statutory framework, the writ petition challenging the provisional action is premature and not maintainable for adjudication on merits in these proceedings. Consequently the Court declined to entertain a claim for quashing the Annexure 8 freezing/attachment or to direct immediate de freezing in this writ petition, noting the petitioners remain free to pursue appropriate remedies before the competent authority or forum under the Act.

Writ petition held premature and not maintainable at this interlocutory stage; challenge to the freezing/attachment under Annexure 8 (and consequential notices) not adjudicated on merits in this proceeding.

Final Conclusion: Writ petition disposed of as premature; the Court declined to quash the provisional freezing/attachment or order de freezing in this proceeding and left the petitioners free to pursue appropriate statutory or other remedies.

Service tax on insurance premium for future period - effect of revised tax rates during currency of an issued policy - liability where tax was discharged before rate change

Service tax on insurance premium for future period - liability where tax was discharged before rate change - effect of revised tax rates during currency of an issued policy - Assessee not liable to pay the enhanced rate of service tax where the entire premium was paid and service tax discharged prior to the change in tax rate, although the insurance policy covered a future period during which the rate was revised. - HELD THAT: - The Tribunal found, on the material that the entire premium had been paid before 10.09.2004 (the date of change in the rate of tax), that no liability to pay the enhanced rate could be fastened on the assessee for the future period covered by the policy. The Supreme Court agreed with the Tribunal's conclusion, accepting that where tax on the premium had been discharged prior to the revision of rates, the enhanced rate could not be imposed retrospectively for the period of the policy that commenced after the rate change. The Court endorsed the Tribunal's reasoning and outcome without disturbing its finding of fact that payment and discharge of tax occurred before the rate revision.

Tribunal's conclusion upheld; assessee not liable to pay the enhanced rate.

Final Conclusion: Appeal dismissed. The judgment and order of the Tribunal holding that no enhanced service tax was payable on the premium (which was paid and taxed prior to the change in rate on 10.09.2004) is affirmed.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - electronic payment requirement under section 127(5) - bona fide attempt to pay - relief during COVID-19 pandemic and extension of time - Article 226 writ jurisdiction - interest at 9% per annum for delayed payment

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - electronic payment requirement under section 127(5) - bona fide attempt to pay - relief during COVID-19 pandemic and extension of time - interest at 9% per annum for delayed payment - Article 226 writ jurisdiction - Entitlement of the petitioner to have the payment indicated in Form SVLDRS-3 accepted despite failure of electronic payment due to technical glitches and to be granted benefit of the Scheme upon payment with interest. - HELD THAT: - The petitioner filed a declaration under the Scheme and respondent No.2 issued Form SVLDRS-3 determining the amount payable which was required to be paid electronically within thirty days under section 127(5). The petitioner attempted payment by NEFT on 30.06.2020 which was returned due to a technical failure of the receiving bank and made further attempts thereafter; records and bank statements support the attempt. In view of the Scheme's object to reduce legacy litigation and the exceptional conditions caused by the COVID-19 pandemic (including administrative extensions and instructions), a bona fide attempt to make the electronic payment and demonstrable impediment caused by technical glitches disentitles the authorities from denying substantive relief on mere procedural grounds. Reliance on contrary authority that refused extensions is distinguishable where the taxpayer has shown bona fides and attempted payment within the prescribed period. Exercising jurisdiction under Article 226, the Court directed acceptance of the Scheme payment subject to payment of interest at 9% per annum from 30.06.2020 until actual payment, observing that such relief aligns with the Scheme's purpose and compensates revenue for the delay. [Paras 8, 9, 10, 11, 12]

Payment as specified in SVLDRS-3 to be accepted and petitioner granted benefit of the Scheme on deposit of the determined amount with interest at 9% per annum from 30.06.2020 until payment; impugned adjudication order quashed and set aside.

Final Conclusion: Writ petition allowed: respondent authorities directed to accept payment as per SVLDRS-3 with interest at 9% per annum from 30.06.2020 until payment and to grant the petitioner the benefit of the Sabka Vishwas Scheme; the original adjudication order is quashed and set aside.

Condonation of delay under Section 5 of the Limitation Act - inordinate delay and laches - maintainability of excise appeal under Section 35G/35L of the Central Excise Act, 1944 - challenge to taxability of services and forum competence

Condonation of delay under Section 5 of the Limitation Act - inordinate delay and laches - Application for condonation of delay of 545 days in filing the excise appeal is rejected. - HELD THAT: - The Tribunal's order was dated 11.09.2015 and the certified copy was received on 04.01.2016. The appellant filed a review before the Tribunal (dismissed 14.02.2017), then a writ petition which was withdrawn on 04.09.2017 with liberty to file an excise appeal, and thereafter filed this appeal on 12.02.2019. The Court found the explanation for delay inadequate, noting successive proceedings taken on erroneous advice and a long unexplained gap before filing the appeal. Even if limitation were reckoned from the date of withdrawal of the writ petition, the appeal remained hopelessly time barred. The appeal suffers from inordinate delay and laches; therefore the petition under Section 5 is not entitled to relief. [Paras 10]

Delay of 545 days is not condoned and the appeal is time barred.

Maintainability of excise appeal under Section 35G/35L of the Central Excise Act, 1944 - challenge to taxability of services and forum competence - Appeal before the High Court is not maintainable because the challenge is to the taxability of services and the remedy lies before the Apex Court under Section 35L. - HELD THAT: - The Court observed that the appellant is contesting the taxability of services rendered and not merely the quantum of tax or valuation. In such cases the statutory scheme indicates that the appeal does not lie before the High Court under Section 35G but before the Supreme Court under Section 35L of the Central Excise Act, 1944. Hence, aside from the limitation bar, the appeal is also not maintainable before this Court on jurisdictional grounds. [Paras 11]

The excise appeal is not maintainable before the High Court; the proper forum is the Apex Court under Section 35L.

Final Conclusion: The appeal is dismissed: the delay in filing is not condoned (appeal time barred) and, in any event, the matter challenging taxability of services is not maintainable before this Court as the remedy lies before the Apex Court under the statutory scheme.

Exemption from service tax for services in relation to management, maintenance or repair of roads - strict interpretation of exemption notifications - service tax on maintenance of street lights - liability of recipient to reimburse service tax paid by service provider

Service tax on maintenance of street lights - exemption from service tax for services in relation to management, maintenance or repair of roads - strict interpretation of exemption notifications - Whether service tax was exempted, during the relevant period, in respect of maintenance of street lights. - HELD THAT: - The Court examined Notification No.24/2009 (exempting services "in relation to management, maintenance or repair of roads") and found no explicit reference to maintenance of street lights. The affidavit filed on behalf of the tax department (and the opinion recorded therein) and other material established that maintenance of street lights was not covered by that notification or by Notification No.32/2010 or the later entries relied upon. Applying the settled principle that exemption notifications are to be construed strictly and ambiguity, if any, is resolved in favour of the Revenue, the Court rejected the contention that street-light maintenance falls within the ambit of the road-maintenance exemption. Consequently, there was no exemption available for the maintenance of street lights during the relevant period. [Paras 11, 13]

During the relevant period there was no exemption from payment of service tax in respect of maintenance of street lights.

Liability of recipient to reimburse service tax paid by service provider - service provider's payment of self-assessed service tax - Whether the petitioners, having paid service tax, could recover the same from respondent no.1 (MCD). - HELD THAT: - The Court noted the admitted fact that the petitioners had discharged the service tax liability as service providers. It accepted the uncontested legal position - supported by authority relied upon by petitioners and not disputed by MCD - that where service tax is payable the ultimate burden rests on the recipient and that reimbursement to the service provider is appropriate. On that basis, and having held that no exemption operated, the Court concluded that the recipient (MCD) must reimburse the service tax paid by the petitioners. [Paras 14, 15, 16]

The petitioners, having paid the service tax, are entitled to reimbursement from respondent no.1 (MCD).

Final Conclusion: Writ petitions disposed of: service tax was payable on maintenance of street lights during the relevant period and, since the petitioners paid the tax, MCD, as recipient, must reimburse the amounts paid; the petitioners are to be reimbursed expeditiously.

Liability for payment of service tax on freight charged by supplier - taxability of goods transport service rendered by individual truck owners/operators versus goods transport agency - recipient liability for service tax in transportation services - invoice indication that freight is to be billed by consignor as allocative evidence of payment liability

Invoice indication that freight is to be billed by consignor as allocative evidence of payment liability - liability for payment of service tax on freight charged by supplier - The freight/delivery charges shown in the supplier's invoice for M/s. Jindal Steel & Power Limited where the invoice states 'to be billed Raigarh' do not give rise to a service tax liability on the appellant. - HELD THAT: - On examination of the supplier's invoice it is recorded that the freight charges were to be borne by the consignor. The Tribunal held that where the invoice itself categorically states that freight is to be billed by/borne by the consignor, the calculated freight delivery charges attributed to the appellant in Annexure-A cannot be sustained. Consequently the demand in respect of M/s. Jindal Steel & Power Limited was set aside. [Paras 3]

Demand in respect of M/s. Jindal Steel & Power Limited set aside.

Taxability of goods transport service rendered by individual truck owners/operators versus goods transport agency - recipient liability for service tax in transportation services - No service tax liability was fastened on the appellant as recipient in respect of transportation services performed by individual truck owners/operators (or goods transport operators) where the appellant did not directly pay transporters and the consignor arranged and bore freight. - HELD THAT: - The appellant consistently maintained that the transportation was effected by individual truck owners/operators (goods transport operators) and not by a goods transport agency, and that it did not directly pay any transporter but only paid the supplier's invoice which included delivery charges borne by the consignor. Applying the Tribunal's earlier decision in CCE & C, Guntur v. Kanaka Durga Agro Oil Products Pvt. Ltd., which held that recipient liability does not arise when transport is by individual truck owners/operators and not by a goods transport agency, the Tribunal found that this ratio is squarely attracted. On that basis the demand (and related penalties) in respect of the other three suppliers was set aside. [Paras 5]

Demands in respect of the other three suppliers set aside following the precedent that recipient is not liable where transport is by individual truck owners/operators and freight was borne/arranged by consignor.

Final Conclusion: The Tribunal allowed the appeal, setting aside the confirmed service-tax demands and penalties: the demand relating to M/s. Jindal Steel & Power Limited was set aside on the invoice allocation, and the demands relating to the other suppliers were set aside applying the ratio that recipients are not liable where transportation is by individual truck owners/operators and consignors bore/arranged the freight; consequential relief granted.

Preliminary issue under Order XIV, Rule 2(2)(b) CPC - limitation as a question of law where foundational facts are admitted - Order VII, Rule 11(d) CPC - rejection of plaint - declaratory suit - accrual of cause of action / right to sue - Article 136 of the Limitation Act - application confined to execution proceedings - concurrent findings of fact and the perversity test for interference under Article 136 of the Constitution

Preliminary issue under Order XIV, Rule 2(2)(b) CPC - limitation as a question of law where foundational facts are admitted - The question whether limitation can be determined as a preliminary issue under Order XIV, Rule 2(2)(b) CPC. - HELD THAT: - The Court held that where the foundational facts that determine the starting point of limitation are specifically and vividly averred or otherwise admitted in the plaint, the mixed question of law and fact sheds its factual character and becomes amenable to decision as a preliminary question under Order XIV, Rule 2(2)(b). Reliance was placed on Nusli Neville Wadia and subsequent authorities to the effect that a limitation issue may be decided preliminarily if it depends on admitted facts; conversely, where determination of limitation requires resolution of disputed facts, it cannot be decided as a preliminary issue. Applying that principle, the Trial Court legitimately framed and decided limitation as a preliminary issue because the plaint itself disclosed the dates and events (including representations and letters) which, in the view of the courts below, fixed the accrual of cause of action and the running of limitation. The concurrent courts therefore lawfully dismissed the suit on the basis of that preliminary finding. [Paras 17, 18, 19, 22, 26]

Limitation could be framed and decided as a preliminary issue under Order XIV, Rule 2(2)(b) CPC on the admitted/plaintiff-pleaded facts; the suit was barred by limitation and dismissed.

Article 136 of the Limitation Act - application confined to execution proceedings - declaratory suit - accrual of cause of action / right to sue - Whether Article 136 of the Limitation Act entitled the plaintiffs to a longer period of twelve years in the facts of this case. - HELD THAT: - The Court held that Article 136 of the Limitation Act applies only in proceedings for execution of a decree (other than one granting a mandatory injunction) and is therefore inapplicable where the dispute relates to the time-limit for instituting original civil proceedings for declaration. The present proceedings were at the stage of determining the time to initiate suit to assert title and obtain declaratory relief; no execution-application contingency had arisen. Accordingly, Article 136 did not extend the period of limitation for the plaintiffs and could not be invoked to salvage the suit. [Paras 20, 21]

Article 136 of the Limitation Act did not apply; the plaintiffs were not entitled to a 12-year limitation period under that provision.

Order VII, Rule 11(d) CPC - rejection of plaint - declaratory suit - accrual of cause of action / right to sue - Whether the suit ought to have been rejected under Order VII, Rule 11(d) CPC instead of being dismissed on a preliminary issue of limitation, and whether Articles 17 or 65 of the Limitation Act applied. - HELD THAT: - The Court explained that Order VII, Rule 11(d) operates where, taking the plaint's averments at face value, the suit appears to be barred by law; in contrast, Order XIV, Rule 2(2)(b) permits disposal on a preliminary issue of law where facts are admitted and the issue of limitation can be decided forthwith. Given the admitted/pleaded dates and events in the plaint, the courts below permissibly proceeded under Order XIV to decide limitation. The Court found no merit in the appellants' reliance on Articles 17 and 65 of the Limitation Act in the circumstances, holding those contentions to be irrelevant or insubstantial once the preliminary limitation determination was correctly made. [Paras 12, 23, 24, 25, 26]

It was not incumbent to reject the plaint under Order VII, Rule 11(d) rather than decide the preliminary issue; Articles 17 and 65 did not avail the plaintiffs in the facts of this case.

Concurrent findings of fact and the perversity test for interference under Article 136 of the Constitution - Whether the concurrent findings of the three courts below warranted interference in this appeal under Article 136 of the Constitution. - HELD THAT: - The Court reiterated that concurrent findings of fact are binding and can be interfered with under Article 136 only sparingly and where the findings are perverse or unsupported by evidence. Applying that standard to the present record, the Court found no perversity in the Trial Court's, First Appellate Court's and High Court's conclusions that the suit was barred by limitation on the pleadings; the impugned concurrent decisions were therefore not susceptible to interference under Article 136. [Paras 3, 4, 27]

No interference warranted; concurrent findings are not perverse and appeal dismissed.

Final Conclusion: The appeal is dismissed with costs: the limitation issue was correctly decided as a preliminary issue on the plaint's admitted averments; Article 136 of the Limitation Act did not apply; Articles 17 and 65 were inapplicable on the facts; and there was no perversity in the concurrent findings warranting interference under Article 136 of the Constitution.

Concurrent findings of fact - scope of second appeal under Section 100 of the Code of Civil Procedure - substantial question of law - burden of proof regarding title and boundaries - production of witnesses and best evidence

Production of witnesses and best evidence - burden of proof regarding title and boundaries - Whether the plaintiff was obliged to produce the vendors as witnesses and whether non-production warranted setting aside the trial court's finding. - HELD THAT: - The High Court held that the question whether the vendors should have been produced is not a substantial question of law. The plaintiff chose the manner of leading evidence; production of the sellers was not a precondition to prove title or rights in the raasta. The trial court independently examined the sale deed and other evidence and found that the 10 ft. raasta on the east was described in the sale deed as a raasta abutting the property, and the plaintiff failed to prove that the raasta had been left out of the vendible area by the original sellers. The trial court's observation that the best evidence would have been the sellers was a passing remark and did not form the sole basis for dismissal; the substantive finding rested on analysis of the sale deed and evidence on record. [Paras 10, 11, 12]

Non-production of the vendors did not constitute a ground to interfere with the concurrent finding that the plaintiff failed to prove rights in the 10 ft. raasta.

Concurrent findings of fact - scope of second appeal under Section 100 of the Code of Civil Procedure - substantial question of law - Whether the High Court should interfere with the concurrent findings of fact recorded by the trial court and the first appellate court in exercise of jurisdiction under Section 100 CPC. - HELD THAT: - Relying on established precedent, the Court reiterated that the jurisdiction in a second appeal is narrowly confined to questions of law; concurrent findings of fact cannot be routinely reappreciated unless shown to be perverse or unsupported by material on record. The High Court examined the judgments below, including the trial court's consideration of the sale deed and the appellate court's rejection of plaintiff's evidence, and found no compelling reason to disturb the concurrent factual conclusions. The Court noted that even if another view were possible, that does not justify interference where the view taken by the courts below is based on material. [Paras 12, 13, 14]

No substantial question of law arose; the concurrent findings of fact were upheld and interference in the second appeal was refused.

Final Conclusion: The second appeal is dismissed; the concurrent factual findings of the trial and first appellate courts that the plaintiff failed to prove rights in the 10 ft. raasta are maintained and no substantial question of law is found to warrant interference.