TaxTMI Updates e-Newsletter
Oct 25,2021

Correction of clerical/transcriptional error in court order - Bail during trial - Conditions of bail - Verification of sureties - Article 21 - liberty and reformative theory of punishment - Application of Dataram Singh principle - Power to modify or recall bail order - Authentication of computerized court orders

Correction of clerical/transcriptional error in court order - Correction application to rectify a wrongly transcribed order dated 7.10.2021 - HELD THAT: - The Court found that, due to inadvertence, the wrong order had been transcribed and substituted the scored-out order dated 7.10.2021 with the order reproduced in the correction application. The correction was allowed and the substituted order is declared to be the operative order in place of the earlier transcription. The Court confined its observations to disposal of the bail application and clarified that such observations do not reflect on the ultimate merits of the criminal proceedings.

Correction application allowed and the transcribed order dated 7.10.2021 is replaced by the order reproduced in the correction application.

Bail during trial - Conditions of bail - Verification of sureties - Article 21 - liberty and reformative theory of punishment - Application of Dataram Singh principle - Power to modify or recall bail order - Authentication of computerized court orders - Grant of bail to the applicant in the pending criminal trial and the terms on which bail is to be granted - HELD THAT: - Applying the principles governing grant of bail during trial, including considerations of nature of accusation, severity of punishment, supporting evidence, prima facie satisfaction on the charge, the reformative theory of punishment and the protection of personal liberty under Article 21, and having regard to the dictum in Dataram Singh v. State of U.P., the Court concluded that the case merited bail without expressing any opinion on the merits. The Court directed release on furnishing a personal bond and two sureties each of like amount to the satisfaction of the concerned court, subject to verification of sureties before issuing release. Specific conditions imposed include prohibition on inducement or threat to witnesses, requirement to attend hearings or seek prior permission for absence, not disputing identity as accused, surrender of passport or affidavit to that effect, and undertaking that the GST authority may apply for modification or recall of the bail order if conditions are violated. The Court also directed procedural safeguards for the authenticated transmission of the order: filing of a computer-generated copy downloaded from the High Court website, self-attestation by counsel, and written verification of authenticity by the concerned court/authority/official.

Applicant released on bail during trial on furnishing bond and sureties, subject to the enumerated conditions, verification of sureties and authentication procedures; liberty reserved to GST to move for modification or recall if conditions are breached.

Final Conclusion: The correction application is allowed to substitute the wrongly transcribed order of 7.10.2021; on reconsideration the Court granted bail to the applicant during trial subject to specified bonds, surety verification, enumerated conditions and authentication of the order, while reserving liberty to the GST authority to seek modification or recall.

Maintainability of writ petition where appellate tribunal under Section 109 has not been constituted - claim to input tax credit under Section 16 of the U.P. Goods and Services Tax Act, 2017 - interim stay of recovery subject to deposit of a percentage of disputed tax - interim deposit under Section 107(6) as condition for grant of stay

Maintainability of writ petition where appellate tribunal under Section 109 has not been constituted - Writ petition against assessment and appellate orders is maintainable because the Appellate Tribunal under Section 109 of the Act has not been constituted. - HELD THAT: - The Court recorded that no Appellate Tribunal under Section 109 of the U.P. GST Act, 2017 has been constituted by the Central Government. In those circumstances, the statutory appellate forum is unavailable, and the petitioner is entitled to invoke writ jurisdiction. The State did not dispute this factual position, and the petition is therefore maintainable for judicial review of the assessment and appellate orders impugned by the petitioner.

Writ petition entertained as maintainable in view of non-constitution of the Appellate Tribunal.

Interim stay of recovery subject to deposit of a percentage of disputed tax - interim deposit under Section 107(6) as condition for grant of stay - claim to input tax credit under Section 16 of the U.P. Goods and Services Tax Act, 2017 - Interim relief in the form of stay of recovery of the balance disputed tax was granted subject to a condition of deposit. - HELD THAT: - The Court noted that the petitioner had already deposited 10% of the disputed tax in terms of Section 107(6) of the Act and was willing to make a further deposit. Exercising interlocutory jurisdiction, the Court directed that, provided the petitioner deposits 20% of the amount of tax in dispute within three weeks, recovery of the balance amount shall remain stayed. The order is an interim administrative measure and does not decide the merits of the petitioner's entitlement to input tax credit under Section 16, which remains open for adjudication. The Court also permitted the State four weeks to file a counter affidavit and afforded the petitioner time for rejoinder, thereby keeping the substantive controversy for further consideration on merits.

Stay of recovery of the balance disputed tax granted on condition that the petitioner deposits 20% of the disputed tax within three weeks; substantive entitlement to input tax credit remains undecided.

Final Conclusion: The High Court held the writ petition concerning Assessment Year 2019-20 to be maintainable because the statutory Appellate Tribunal under Section 109 had not been constituted, granted interim stay of recovery of the balance disputed tax subject to the petitioner depositing 20% of the disputed tax within three weeks, and directed exchange of pleadings for adjudication on merits.

Requirement of pre-deposit for filing appeal under Section 107(6) of the CGST Act - classification as works contract service v. manufacture and sale-consequence for levy and composition - abeyance of recovery proceedings under Section 73(5) pending disposal of statutory appeal - time-bound disposal of statutory appeal by the appellate authority

Requirement of pre-deposit for filing appeal under Section 107(6) of the CGST Act - Whether the appeal under Section 107 against Ext.P1 could be considered without deposit as contemplated by Section 107(6) of the Act. - HELD THAT: - Ext.P1 did not contemplate any payment of tax, penalty or default; it recorded a conclusion that the petitioner was engaged in supply of works contract service and denied option of composition for the specified period, but did not itself impose a tax liability or demand. In these circumstances the court held that the statutory requirement of deposit under Section 107(6) did not apply so as to preclude consideration of Ext.P2 appeal, and the appeal could be entertained without a pre-deposit. [Paras 3]

The appeal under Section 107 can be considered without the deposit contemplated by Section 107(6) because Ext.P1 did not contemplate any payment, fine or default.

Abeyance of recovery proceedings under Section 73(5) pending disposal of statutory appeal - time-bound disposal of statutory appeal by the appellate authority - Whether proceedings initiated by intimations under Section 73(5) (Exts.P3 and P4) should be deferred pending disposal of the appeal and the appellate authority should be directed to decide the appeal within a time bound period. - HELD THAT: - Noting that the Section 73(5) intimations flow from the order under challenge and that simultaneous continuation of those proceedings may cause unnecessary complications, the court exercised its supervisory jurisdiction to preserve the status quo and avert prejudice. In the interest of justice the court directed that the appeal be considered and decided at the earliest and that the proceedings pursuant to Exts.P3 and P4 be kept in abeyance until the appellate authority renders its decision. The appellate authority was directed to pass appropriate orders within two months from receipt of a certified copy of the judgment. [Paras 4, 6, 7]

Proceedings pursuant to Exts.P3 and P4 are to be kept in abeyance until the appellate authority decides the appeal, and the appellate authority is directed to decide the appeal within two months of receipt of a certified copy of this judgment.

Final Conclusion: The petition is disposed directing the appellate authority to decide the appeal in a time bound manner (within two months of receipt of certified copy) and directing that all proceedings pursuant to the Section 73(5) intimations (Exts.P3 and P4) shall remain in abeyance until such decision; the appeal may be entertained without the pre-deposit contemplated under Section 107(6) because the impugned order did not contemplate any payment.

Detention, seizure and release of goods and conveyances in transit - confiscation of goods or conveyances and levy of penalty - provisional release on furnishing security or payment of penalty - non obstante clause and overriding effect - jurisdiction of criminal court to order supurdnama where GST confiscation proceedings are initiated

Jurisdiction of criminal court to order supurdnama where GST confiscation proceedings are initiated - The learned Judicial Magistrate and the Sessions Judge had no jurisdiction to entertain or grant supurdnama of the vehicle once the GST Department had initiated confiscation proceedings. - HELD THAT: - The Court found on the record that the GST Department had already initiated proceedings for confiscation of the vehicle, as communicated to the police by the GST Officer (paras 11). Given that Sections 129 and 130 of the GST Act provide a statutory scheme for detention, seizure, release and confiscation of goods and conveyances, and that the GST authorities had invoked that scheme, the trial Magistrate had no jurisdiction to override or pre-empt the statutory regime by ordering supurdnama. The courts below were held to have correctly concluded that the vehicle was being transported in violation of the GST Act and that the statutory proceedings supplanted the Magistrate's power to grant possession (paras 7, 8, 9, 11, 15). [Paras 7, 8, 9, 11, 15]

Rejection of the application for supurdnama was legal and justified; the Magistrate lacked jurisdiction to order supurdnama in view of pending GST confiscation proceedings.

Detention, seizure and release of goods and conveyances in transit - confiscation of goods or conveyances and levy of penalty - provisional release on furnishing security or payment of penalty - non obstante clause and overriding effect - Sections 129 and 130 of the GST Act empower detention/seizure, prescribe modes and conditions for release (including payment of tax/penalty or furnishing security), and the non-obstante openings give those provisions overriding effect. - HELD THAT: - The Court examined Sections 129 and 130 and held that Section 129 is the special provision for detention, seizure and conditional release of goods and conveyances in transit, including release on payment of specified penalties or on furnishing security (paras 6, 8, 9). Section 130 deals with confiscation and provides for option to pay fine in lieu of confiscation, vesting of title in Government, and disposal where fine is not paid (paras 6, 9). Both sections begin with non-obstante clauses, which the Court explained operate to give the enacted provisions overriding effect over contrary provisions and thus govern situations where they apply (para 10). The statutory scheme contemplates provisional release subject to bond/security and payment, and empowers the proper officer to proceed with adjudication and confiscation under the GST Act (paras 8, 9, 10). [Paras 6, 8, 9, 10]

The GST Act authorises detention, seizure, conditional/provisional release and confiscation as set out in Sections 129 and 130, and the non-obstante clauses confer overriding effect to those procedures where invoked.

Final Conclusion: The petition is dismissed. The orders of the Magistrate and Sessions Judge refusing supurdnama are upheld because GST confiscation proceedings had been lawfully initiated and the statutory scheme under Sections 129-130 governs detention, release and confiscation; liberty is reserved to the petitioner to apply to the concerned GST authorities for release of the vehicle in accordance with the GST Act.

Violation of principles of natural justice - assessment completed without considering request for further time to produce evidence - personal hearing - remand for de novo consideration - transfer of assessment to different Assessing Officer - selection for scrutiny under Section 147 of the Income Tax Act read with Rule 12E

Violation of principles of natural justice - assessment completed without considering request for further time to produce evidence - personal hearing - remand for de novo consideration - transfer of assessment to different Assessing Officer - Assessment order set aside for breach of natural justice and matter remanded for fresh consideration before a different Assessing Officer with opportunity for personal hearing. - HELD THAT: - The petitioner received a show cause notice and a time-limited opportunity to respond; she submitted a partial reply on 17th September, 2021 explaining difficulty in obtaining a bank statement and expressly requested that the reply be treated as partial pending production of the statement. The impugned assessment order records that the assessee's submissions were examined but found untenable and notes absence of documentary corroboration, yet there is no mention in the order of the petitioner's request for additional time or any consideration of the pending documentary evidence. The Court found that proceeding to finalise the assessment without addressing the request for time and without affording an effective personal hearing amounted to a breach of principles of natural justice. For remedy, the order was quashed and the matter remanded for de novo consideration, to be completed after giving a personal hearing and not to be placed before the same Assessing Officer, with a limited time-frame for completion. [Paras 5, 6, 8, 9]

Impugned order dated 20th September, 2021 quashed; matter remanded for de novo assessment after personal hearing before a different Assessing Officer to be completed within six weeks.

Final Conclusion: The High Court held that the assessment was vitiated by denial of an effective opportunity to produce material and proceeded without addressing the petitioner's request for time; the assessment order was set aside and remanded for fresh adjudication before a different Assessing Officer with a direction to afford personal hearing and complete the assessment within six weeks.

Deduction under Section 80HHE - genuineness of software development and software development charges - supporting manufacturer and disclaimer certificate - admissibility of evidence and opportunity for cross-examination - questions of fact versus substantial question of law

Deduction under Section 80HHE - supporting manufacturer and disclaimer certificate - genuineness of software development and software development charges - admissibility of evidence and opportunity for cross-examination - Validity of the claim of deduction under Section 80HHE in respect of software supplied to LNSEL and related additions disallowing software development charges. - HELD THAT: - The High Court approved ITAT's factual findings that the assessee was a supporting manufacturer and that exports were effected by LNSEL, which had been accepted by the designated authority and had claimed exemption under Section 10B. ITAT found that source code had been provided, TDS and book entries corroborated payments for job work, and affidavits supporting the assessee's case existed but were not considered by the Assessing Officer. ITAT also noted that five declarants whose statements were relied upon by the AO were not made available for cross-examination and that the AO had not rejected the books of account. On these factual findings, the Tribunal upheld CIT(A)'s deletion of additions and allowance of the deduction under Section 80HHE. The High Court held that these conclusions are based on material on record and correct application of the relevant tests, and that no perversity or misapplication of law warranted interference. [Paras 15, 16, 17, 18, 19]

ITAT's factual conclusion upholding the allowance under Section 80HHE and deletions of additions was approved; the claim was held to be in order on the materials on record.

Questions of fact versus substantial question of law - Whether the grounds raised by the Revenue constitute substantial questions of law warranting interference with the Tribunal's order. - HELD THAT: - The Court examined the substantial questions framed by the Revenue and concluded that they were essentially questions of fact, dealt with by ITAT after elaborated factual analysis. The High Court observed that ITAT addressed each reason given by the Assessing Officer and applied correct principles; therefore the matters did not amount to substantial questions of law. The Court found no error of law or perversity in ITAT's approach that would justify admitting the appeal on substantial legal questions. [Paras 14, 20, 21]

The proposed substantial questions of law were rejected as being questions of fact; no substantial question of law arises and the appeals fail.

Final Conclusion: The High Court dismissed the Revenue's appeals, holding that ITAT's factual findings upholding the assessee's claim under Section 80HHE were justified and that the matters raised were questions of fact not giving rise to substantial questions of law; appeals dismissed with no order as to costs.

Foreign exchange loss as business expenditure - nexus between funds raised and business purpose - presumption where interest free funds suffice for investments - bad debts deduction and requirement to adjust loans/advances per Vijaya Bank - research and development expenditure - proof of nexus to business - remand for reconsideration in light of binding precedent

Bad debts deduction and requirement to adjust loans/advances per Vijaya Bank - Claim for deduction of bad debts/advances in assessment year 2005-06 remitted to Tribunal for reconsideration in light of Vijaya Bank. - HELD THAT: - The Court found force in the Revenue's submission that earlier fora had not examined the claim against the requirement (post Finance Act 2001 explanation to Section 36(1)(vii)) that a bad debt claimed in profit and loss must be reflected by a corresponding reduction of loans and advances/debtors in the balance sheet. As no authority below addressed the matter from that perspective, the Court remanded the issue to the Tribunal to reconsider the claim in the light of the Apex Court's decision in Vijaya Bank. [Paras 10]

Matter remanded to the Tribunal for fresh consideration in light of Vijaya Bank.

Foreign exchange loss as business expenditure - nexus between funds raised and business purpose - presumption where interest free funds suffice for investments - Allowability of foreign exchange loss claimed for assessment year 2005-06. - HELD THAT: - The Court upheld the Tribunal's conclusion that the foreign exchange loss arose in relation to working capital borrowings and was thus allowable as business expenditure. The authorities below had relied on a speculative presumption that FNCR loans were used to make investments, but that view lacked supporting material. The Court applied the principle that where interest free funds available to an assessee are sufficient to meet investments a presumption arises that investments were made from such funds and not from borrowings; having regard to the Tribunal's findings and binding precedents (including Woodward Governor India and other authorities cited), the foreign exchange loss was held to be deductible. [Paras 11, 15, 16, 17]

Finding in favour of the assessee; foreign exchange loss allowed as deductible business expenditure.

Research and development expenditure - proof of nexus to business - Claim for deduction of research and development expenses in assessment year 2005-06 remitted to the Tribunal for reconsideration. - HELD THAT: - The Assessing Officer and the CIT(A) had disallowed the R&D expenses for want of documentary proof linking the expenditure to the business; the Tribunal allowed the claim but did not supply adequate reasoning or material basis. The High Court was not persuaded by the Tribunal's reasoning and, noting the lack of material evidence and insufficient articulation of findings, remanded the matter to the Tribunal for fresh consideration without answering the substantial question on the merits. [Paras 21]

Matter remanded to the Tribunal for reconsideration and appropriate decision in accordance with law.

Foreign exchange loss as business expenditure - nexus between funds raised and business purpose - Challenge to disallowance of foreign exchange loss in assessment year 2008-09 (revenue appeal ITA No.548/2015). - HELD THAT: - The 2008-09 appeal was determined by reference to the Court's decision on the identical legal question in ITA No.37/2010 (substantial question No.2). Since that question was answered in favour of the assessee, the revenue's challenge for 2008-09 failed and the appeal was dismissed. [Paras 22]

Revenue's appeal dismissed; foreign exchange loss challenge answered in favour of the assessee.

Final Conclusion: The Court allowed the revenue appeal in part (Assessment Year 2005-06): it answered in favour of the assessee on the foreign exchange loss issue, but remanded the bad debts and R&D expense claims to the Tribunal for reconsideration (the Tribunal to decide in accordance with law and binding precedent). In the related 2008-09 appeal the Court dismissed the revenue's challenge, answering the question in favour of the assessee.

Computation of profits of life insurance business under Section 44 read with the First Schedule - Actuarial valuation surplus and consolidation of policy holders' and shareholders' accounts - Exclusion of pension fund income under Section 10(23AAB) and treatment of resultant losses - Non obstante clause in Section 44 overriding Sections 28 to 43 and other heads of income - Distinction between deduction/exemption regimes (Section 10(23AAB)) and special computation rules for insurance business

Actuarial valuation surplus and consolidation of policy holders' and shareholders' accounts - Computation of profits of life insurance business under Section 44 read with the First Schedule - Surplus available in policy holders' account and shareholders' account is to be consolidated and only the net surplus is taxable under the insurance business computation governed by Section 44 read with the First Schedule. - HELD THAT: - The Court applied its earlier decision in Pr. Commissioner of Income Tax-5 v. M/s. PNB Metlife India (reported D.D.30.08.2021) to hold that Rule 2 of the First Schedule (actuarial valuation and annual average of surplus) applies to life insurance business. The Tribunal's approach of consolidating surplus from policy holders' and shareholders' accounts and taxing only the net surplus as income from insurance business was sustained. The Court treated the computation under Section 44 read with the First Schedule as the appropriate and exclusive method for determining profits and gains of life insurance business, thereby answering the substantial question in favour of the assessee. [Paras 10]

Substantial question No.1 answered in favour of the assessee and against the revenue.

Exclusion of pension fund income under Section 10(23AAB) and treatment of resultant losses - Non obstante clause in Section 44 overriding Sections 28 to 43 and other heads of income - Distinction between deduction/exemption regimes (Section 10(23AAB)) and special computation rules for insurance business - Losses arising in an exempt pension fund (Section 10(23AAB)) are to be considered in actuarial valuation and may be excluded or accounted for in computing surplus under Section 44 read with the First Schedule; exemption of income under Section 10(23AAB) does not, by itself, place the pension fund outside the insurance business for purposes of Section 44. - HELD THAT: - The Court examined Section 44 (with its non obstante clause) and the rules in the First Schedule (notably R.1 and R.2) and held that profits and losses of insurance business are to be computed on actuarial valuation as a self contained code. Relying on the reasoning in Life Insurance Corporation of India Ltd. (Bombay High Court), the Court accepted that the parliamentary intent in inserting Section 10(23AAB) was to exempt income of certain pension funds without treating those funds as outside the insurance business. Consequently, Harprasad (on carry forward where the subsequent income is non taxable) was distinguished because Section 44 expressly overrides general provisions and prescribes actuarial computation. The Court therefore held that losses from the pension fund, though the fund's income may be exempt under Section 10(23AAB), are not excluded ab initio from consideration in computing the surplus under Section 44 and the First Schedule. [Paras 11, 16, 19]

Substantial question No.2 answered in favour of the assessee and against the revenue.

Final Conclusion: Both substantial questions of law were answered in favour of the assessee; the Tribunal's orders dismissing the revenue's appeals were upheld and the appeals are dismissed.

Restoration of administrative certificate without repetitive procedural compliance - modification of government software to give effect to judicial directions - duty to test and validate public-facing tax software on a sufficiently large sample - mechanism for escalation of unresolved software tickets to policy decision-makers - judicial supervision through status reports

Restoration of administrative certificate without repetitive procedural compliance - The petitioner should not be required to re-file Form-4 and the original Form-5 dated 28th December, 2020 should be restored without further procedural formalities. - HELD THAT: - The Court recorded that where a subsequent computerized action produced a photocopy of an earlier certificate and the revenue conceded the new certificate would be identical to the original, the assessee ought not to be harassed into repeating procedural filings merely because of a portal constraint. Technology cannot be allowed to create procedural impediments contrary to law; where the only impediment to restoring the earlier administrative certificate is software limitation, the software must be suitably modified rather than the petitioner being compelled to repeat an unnecessary process.

Original Form-5 restored and petitioner not required to file Form-4 again.

Modification of government software to give effect to judicial directions - duty to test and validate public-facing tax software on a sufficiently large sample - The DGIT (Systems) was directed to ensure the software is capable of implementing lawful directions of the Court and to take steps for improvement, including testing the programme on a sufficiently large sample before public rollout. - HELD THAT: - Recognising rapid digitisation and reduction of human interface in direct tax administration, the Court emphasised that computer programmes must be flexible enough to incorporate court orders and lawful directions. The Court recorded that software should be tested in advance on a sufficiently large sample of assessees so as to avoid systemic glitches and unintended consequences. To facilitate suitable modification, the DGIT (Systems) was directed to engage with the proceedings and take up any necessary policy initiatives with the Board.

DGIT (Systems) to take steps to modify and improve the software and ensure adequate pre-release testing.

Mechanism for escalation of unresolved software tickets to policy decision-makers - A mechanism must be put in place whereby tickets that cannot be resolved by existing verticals are flagged and escalated for policy decision-making by DGIT (Systems). - HELD THAT: - The Court noted the existing ticket-resolution process and suggested that where constraints in the system prevent resolution by any vertical, there should be a clear escalation path to enable DGIT (Systems) to refer the matter for policy consideration. DGIT (Systems) accepted the need for improved coordination and feedback and undertook to enhance processes and, where necessary, implement improvements.

DGIT (Systems) to establish and implement an escalation mechanism for unresolved system tickets to secure policy decisions when required.

Judicial supervision through status reports - Respondents were directed to file a status report within two weeks and the matters were listed for further hearing. - HELD THAT: - To ensure follow-up and accountability for the improvements and resolutions undertaken by DGIT (Systems) and the revenue, the Court required respondents to file a status report within two weeks and calendared the matter for a subsequent listing. The Court dispensed with personal appearance given DGIT (Systems) assurances but retained judicial oversight through the status report and future hearing.

Respondents to file status report within two weeks; matter listed for further hearing.

Final Conclusion: The Court directed restoration of the original administrative certificate without requiring repeated procedural filings, required DGIT (Systems) to modify and adequately test tax software to give effect to lawful directions, mandated an escalation mechanism for unresolved system tickets to policy decision-makers, and ordered respondents to file a status report within two weeks for further judicial supervision.

Withholding of refund under Section 241A - Requirement to record reasons and obtain prior approval before withholding refund - Interplay between assessment under Section 143 and withholding of refunds - Application of mind, audi alteram partem and judicial review of withholding of statutory refund

Withholding of refund under Section 241A - Requirement to record reasons and obtain prior approval - Application of mind before exercising withholding power - Withholding of the refund declared on completion of assessment under Section 143(1) without recording reasons and obtaining prior approval was unlawful where no demand existed on the date refund was notified. - HELD THAT: - The Court held that Section 241A permits withholding of refunds only after the officer forms an opinion that the grant of refund is likely to adversely affect the revenue, and such withholding must be supported by reasons recorded in writing and prior approval of the Principal Commissioner/Commissioner. A combined reading of Section 143 and Section 241A requires processing the return under Section 143(1) and granting the refund determined therein unless prima facie reasons under Section 241A demonstrate that refund would adversely affect revenue, as observed in the judgment referred to by the petitioner, Maple Logistics Pvt. Ltd. . The scope of Section 241A is narrow and mandates a speaking order that links materials considered to the conclusion reached; reasons must show how grant of refund would impede recovery of revenue (see Union of India vs. Mohan Lal Capoor ). The Assessing Officer withheld the refund after the assessment was completed without assigning any reasons and although no demand existed on the date the refund was notified. The Court found that this amounted to mechanical exercise of power without application of mind; the officer could not withhold the declared refund to graze at subsequent demands that did not exist when refund was notified. Prior opportunity of hearing and recording of reasons are necessary preconditions, failing which the action is amenable to judicial review (noting Vodafone idea Ltd. vs. DCIT ). [Paras 8, 9, 10, 11, 12]

Withholding the refund without recording reasons and obtaining requisite approval, when no demand existed at the time of notification of refund, was arbitrary and unsustainable in law.

Entitlement to refund and direction for payment with interest - Remedial relief by writ under Article 226 for unlawful withholding - The assessee was entitled to a mandatory order for refund (including interest) because the withholding was set aside as unlawful. - HELD THAT: - Applying the foregoing legal conclusions, the Court quashed the respondents' action in withholding the refund for AY 2017-18. The assessee became entitled to the refund upon completion of assessment and notification on 15th March, 2019; in the absence of valid reasons or pending demand at that time, the statutory prerequisites for withholding were not met. Consequently, the writ petition was allowed and the respondents were directed to refund the computed amount with interest as per the Income Tax Act, 1961, within a stipulated period; the respondents were further directed to act on a server copy without insisting on a certified copy. [Paras 13]

The respondents' withholding of the refund is quashed and the assessee is directed to be paid the refund with interest within the time prescribed by the Court.

Final Conclusion: The writ petition is allowed: the assessment-year 2017-18 refund withheld under Section 241A is quashed for failure to record reasons and obtain requisite approval when no demand existed on the date of notification; the respondents are directed to pay the refund with interest within the period ordered.

Condonation of delay - inordinate delay - adequacy of explanation for delay - discretionary power to condone delay - maintainability of belated appeals

Condonation of delay - inordinate delay - adequacy of explanation for delay - maintainability of belated appeals - Whether the Income Tax Appellate Tribunal was justified in refusing to condone a delay of 2554 days in filing the appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2009-10. - HELD THAT: - The Court upheld the ITAT's conclusion that the petitioner failed to furnish a sufficient and convincing explanation for the extraordinary delay of 2554 days. The petitioner relied on awaiting a decision of the CIT (Appeals), Mysore, on whether NCERT employees are to be treated at par with Central Government employees, but the Court found that as long as a grievance on merits existed against the CIT(A)'s order, the petitioner ought to have instituted the appeal within a reasonable time instead of awaiting the other Bench's decision. The Court noted that the ITAT had considered the justification in detail and that the Supreme Court has repeatedly deprecated governmental departments approaching courts belatedly for redress; on this basis and applying the discretionary standard for condoning delay, the Court found no error in ITAT's refusal to condone the delay.

The ITAT's refusal to condone the 2554-day delay was upheld and the condonation application dismissed.

Final Conclusion: Writ petition dismissed; the High Court found no error in the ITAT's refusal to condone the inordinate delay in filing the appeal for Assessment Year 2009-10.

Deduction under Section 80P(2)(i)(a) - Primary Agricultural Credit Society - deduction under Section 80P(2)(d) for dividends from a co-operative society - treatment of disallowed expenditure vis-a -vis taxable income and applicability of Section 68 - applicability of administrative Circular dated 02.11.2016 to treatment of disallowed items - finality of assessment order in absence of appeal

Deduction under Section 80P(2)(i)(a) - Primary Agricultural Credit Society - Entitlement of the assessee, a registered Primary Agricultural Credit Society, to deduction under Section 80P(2)(i)(a) for Assessment Year 2012-13. - HELD THAT: - In view of the binding Supreme Court precedent in Mavilayi Service Co-operative Bank Ltd., the assessee qualifies as a society under the relevant law and its primary business of accepting deposits and advancing loans to members generates interest income. The Court held that, on the facts accepted by the authorities, the assessee is entitled to claim deduction under Section 80P(2)(i)(a) for the assessment year under consideration. The Tribunal and the Commissioner of Income Tax (Appeals) correctly treated the assessee as eligible for the deduction and their conclusions are upheld. [Paras 4, 13]

Assessee entitled to deduction under Section 80P(2)(i)(a).

Deduction under Section 80P(2)(d) for dividends from a co-operative society - Allowability of deduction under Section 80P(2)(d) for dividends received by the assessee from Indian Farmers Co-operative Society Ltd. (IFFCO). - HELD THAT: - The Commissioner of Income Tax (Appeals) had observed that dividends shown under other sources represent receipts from IFFCO, which fall within the scope of Section 80P(2)(d). The Court recorded and endorsed that such dividend receipts squarely qualify for the exemption under the specified clause and are allowable as claimed. [Paras 2]

Dividend from IFFCO allowed as deduction under Section 80P(2)(d).

Treatment of disallowed expenditure vis-a -vis taxable income and applicability of Section 68 - deduction under Section 80P(2)(i)(a) - Whether the five per cent disallowance of interest paid to depositors (made by the Assessing Officer) should be treated as income from other sources or as business income eligible for deduction under Section 80P(2)(i)(a), and whether Section 68 applies to that entry. - HELD THAT: - The Court examined the character of the 5% disallowance. It found that once the 5% portion of interest expenditure was disallowed by the Assessing Officer and accepted as such by the authorities, that amount effectively accrues to the assessee in the context of its business of lending to members and therefore forms part of business income. Consequently the disallowed portion is eligible for deduction under Section 80P(2)(i)(a). The Court held that Section 68 is not in terms applicable to an entry arising from a disallowed expenditure in these circumstances and rejected the Department's contention that the amount should be treated as income from other sources or as an unexplained credit under Section 68. [Paras 11, 13]

The 5% disallowance is business income and eligible for deduction under Section 80P(2)(i)(a); Section 68 not applicable to that entry.

Applicability of administrative Circular dated 02.11.2016 to treatment of disallowed items - Whether the Circular dated 02.11.2016 relied upon by the Tribunal is inapplicable because it mentions specific sections. - HELD THAT: - The Court rejected the Revenue's narrow reading that the Circular applies only to the enumerated sections. Noting the use of the term 'etc.' in the Circular, the Court held the Circular comprehensively sets out procedures for treating such items of expenditure and that the Tribunal's reliance on the Circular was not misplaced. [Paras 12]

Circular dated 02.11.2016 is applicable for treatment of the disallowed items and the Tribunal's reliance on it is appropriate.

Finality of assessment order in absence of appeal - Whether Revenue can, at this stage, challenge the deduction of interest earned from Treasury and Laxmi Vilas Bank which the Assessing Officer had allowed and which the Department did not appeal earlier. - HELD THAT: - The Court observed that the Revenue had not challenged the Assessing Officer's allowance of a deduction (small amount) in earlier proceedings before the Commissioner (Appeals) or the Tribunal. Having accepted the assessment order to that extent and omitted to raise the issue in prior appeals, the Revenue cannot now agitate that ground before the High Court. The Court treated the omission as producing finality in respect of that particular allowance. [Paras 6, 7]

Revenue barred from raising the unappealed objection to deduction of interest from Treasury and Laxmi Vilas Bank.

Final Conclusion: All departmental grounds raised were rejected; the assessee, a Primary Agricultural Credit Society, is entitled to deductions under Section 80P(2) (including 80P(2)(i)(a) and 80P(2)(d)), the 5% disallowance is treated as business income eligible for 80P relief and Section 68 does not apply to that entry, the Circular dated 02.11.2016 is applicable, and the Revenue's appeal is dismissed.

Entitlement to deduction under Section 80P(2) of the Income tax Act for a co operative society registered under a State Cooperative Societies Act - scope and operation of Section 80P(4) as excluding only co operative banks licensed by the RBI - assessing officer's factual enquiry into whether a society is 'engaged in' providing credit facilities to its members - burden on the assessee to prove entitlement to deduction and to produce books of account - apportionability of profits between activities attributable to members and non members - remand for fresh assessment and verification of accounts within the four corners of Supreme Court precedent

Entitlement to deduction under Section 80P(2) of the Income tax Act for a co operative society registered under a State Cooperative Societies Act - scope and operation of Section 80P(4) as excluding only co operative banks licensed by the RBI - assessing officer's factual enquiry into whether a society is 'engaged in' providing credit facilities to its members - Application of Supreme Court precedent on Section 80P(2) and Section 80P(4) to the assessee's claim for deduction. - HELD THAT: - The Court applied the ratio of the Supreme Court in Mavilayi Service Co operative Bank Ltd. (and related authorities) to hold that a society registered under the State cooperative statute is entitled to claim deduction under Section 80P(2) if it is, as a matter of fact, engaged in providing credit facilities to its members. Section 80P(4) must be read narrowly as excluding only those co operative banks that function as banks licensed by the RBI; it does not automatically disentitle a registered society. However, entitlement is fact based: the assessing officer is entitled to engage in a factual enquiry into the activities of the society to determine whether the society is indeed providing credit facilities to members and to ascertain what portion of income, if any, is attributable to activities covered by Section 80P(2). The burden to prove entitlement and to produce books and records rests on the assessee. [Paras 5, 6]

The legal principles as stated by the Supreme Court govern this case: the assessee may be entitled to deduction under Section 80P(2) subject to factual verification by the assessing officer and the narrow reading of Section 80P(4).

Burden on the assessee to prove entitlement to deduction and to produce books of account - apportionability of profits between activities attributable to members and non members - remand for fresh assessment and verification of accounts within the four corners of Supreme Court precedent - Whether the matter should be remitted to the assessing officer for verification of books, apportionment of income and fresh assessment in light of the binding Supreme Court guidance. - HELD THAT: - The Court found that the assessing officer's observation that books were not produced had not been expressly considered by the appellate authorities. Given the Supreme Court's directions that entitlement under Section 80P(2) requires fact finding, the High Court held that the proper course is to set aside the impugned orders and remit the matters to the Income tax Officer. On remand the assessing officer must examine the books of account produced by the assessee, allow the assessee to file fresh replies if so advised, verify the return, and determine the portion of income attributable to credit facilities to members (which may be deductible) and the portion attributable to loans to non members (which is not deductible), all strictly in accordance with the Supreme Court's dictum. [Paras 9]

Orders set aside and the matters remitted to the Income tax Officer for fresh examination and assessment in accordance with the Supreme Court's guidance, with opportunity to the assessee to produce records and submissions.

Final Conclusion: Appeals allowed in part; the impugned orders are set aside and the matters remitted to the assessing officer for fresh scrutiny of books, factual verification and re assessment for the stated assessment years strictly in accordance with the Supreme Court's rulings on Section 80P(2) and Section 80P(4).

Set-off of current year loss against income taxed under section 115BBD - non allowance of deductions or allowances in computing dividend income under section 115BBD(2) - rectification under section 154 for mistake apparent from record versus debatable question of law

Set-off of current year loss against income taxed under section 115BBD - non allowance of deductions or allowances in computing dividend income under section 115BBD(2) - rectification under section 154 for mistake apparent from record versus debatable question of law - Whether the assessee's claimed adjustment of current year loss against income declared under section 115BBD could be allowed by rectification under section 154 or on merits. - HELD THAT: - The Tribunal noted that the intimation under section 143(1) recorded the current year loss, and the assessee had declared dividend income chargeable under the special scheme of section 115BBD. Section 115BBD(2) provides that no deduction in respect of any expenditure or allowance shall be allowed in computing the dividend income referred to in subsection (1). Whether the words "expenditure" or "allowance" in that provision extend to permit set off of a current year loss is a matter of interpretation. The Tribunal found this interpretive question to be "highly debatable" and observed that no precedents were placed before it to resolve the point conclusively. Because the claim involved a debatable question of law rather than a plain mistake apparent from the record, it was not amenable to rectification under section 154. On this basis the Tribunal upheld the Commissioner (Appeals) and dismissed the assessee's ground for adjustment of the loss. [Paras 11, 12]

Claim for set off of current year loss against income under section 115BBD dismissed; rectification under section 154 not available as the question is debatable.

Final Conclusion: The appeal is dismissed and the finding of the Commissioner (Appeals) upholding denial of set off of the current year loss against income returned under section 115BBD is affirmed.

Unexplained cash credit under section 68 - identity, creditworthiness and genuineness of lender/transaction - deeming nature of credit under section 68 - banking channel transactions not determinative of genuineness - admission of additional evidence under Rule 46A of the Income tax Rules

Admission of additional evidence under Rule 46A of the Income tax Rules - unexplained cash credit under section 68 - Deletion of the addition of Rs. 10,00,000 received from Mr. Suraj Pal Bhatia was justified and ordered by the Commissioner (Appeals) and not interfered with. - HELD THAT: - The Commissioner (Appeals) considered the additional evidence filed under Rule 46A, obtained the Assessing Officer's remand report which found the affidavit and bank records satisfactory, and concluded that the source and creditworthiness of the lender for the Rs. 10,00,000 loan were satisfactorily established. The Tribunal noted these findings, observed that the Assessing Officer had accepted the transaction as genuine on review, and declined to disturb the deletion of the addition in respect of this amount.

The deletion of the Rs. 10,00,000 addition is sustained.

Unexplained cash credit under section 68 - identity, creditworthiness and genuineness of lender/transaction - banking channel transactions not determinative of genuineness - deeming nature of credit under section 68 - Addition of Rs. 29,00,000 received from Sh. Balaji Timber and Plywood (aka M/s Sai Kripa) as unexplained cash credit under section 68 is confirmed. - HELD THAT: - The appellant failed to produce confirmation, source of funds or any evidence to establish the identity, creditworthiness or genuineness of the lender for the Rs. 29,00,000. The Commissioner (Appeals) applied the principle that mere routing of transactions through banking channels does not dispense with the need to prove creditworthiness and genuineness, and that repayment subsequent to credit does not negate the deeming fiction under section 68. The Tribunal agreed with the factual findings and legal position relied upon by the Revenue, including precedents holding banking channel evidence alone is insufficient, and found no reason to interfere as the assessee was afforded adequate opportunities but did not produce requisite evidence.

The addition of Rs. 29,00,000 is confirmed and the grounds challenging it are dismissed.

Final Conclusion: The appeal is dismissed: the Tribunal upheld the deletion of the Rs. 10,00,000 addition based on admitted additional evidence and AO's corroboration, but confirmed the addition of Rs. 29,00,000 under section 68 for lack of proof of identity, creditworthiness and genuineness of the lender.

Penalty under section 271D - Prohibition on cash loans under section 269SS - Reasonable cause under section 273B - Genuine family transactions - Registration and documentary evidence as justification

Penalty under section 271D - Reasonable cause under section 273B - Genuine family transactions - Levy of penalty under section 271D for receipt of cash from husband for purchase of family property. - HELD THAT: - The Tribunal examined the documentary record of the registered sale deed showing part payment by demand draft and part payment in cash, the circumstance that the property was registered in the assessee's name for family/residential reasons, and the explanation that the seller insisted on cash payment at registry. The Tribunal accepted that the cash formed part of known family funds contributed by the husband, was used for family residence and construction expenses (including cash payments to labour/suppliers), and there was no mala fide or tax-evasion motive. On these facts the Tribunal held that the assessee furnished a reasonable and plausible explanation amounting to a reasonable cause within the meaning of section 273B and that penalising the assessee under section 271D was not justified. The levy of penalty was therefore deleted. [Paras 17]

Penalty levied under section 271D is deleted.

Prohibition on cash loans under section 269SS - Genuine family transactions - Registration and documentary evidence as justification - Applicability of section 269SS to the cash transaction between husband and wife and whether the transaction falls outside its prohibition. - HELD THAT: - The Tribunal considered submissions on the scope of section 269SS and precedents cited concerning close/family transactions. Applying the material facts - registration in the wife's name, part payment by demand draft, known source from the husband, seller's insistence on some cash at registry and cash requirements for construction - the Tribunal concluded that the transaction was a genuine family arrangement and not a clandestine loan intended to evade tax. Having regard to the documentary evidence and family context, the Tribunal treated the transaction as falling outside the mischief targeted by section 269SS in this case and/or as justified by reasonable cause, and therefore not attracting penalty under section 271D. [Paras 17]

Section 269SS was not held to attract penalty on the facts; the transaction was treated as a genuine family transaction justified by reasonable cause.

Final Conclusion: Appeal allowed; the Tribunal deleted the penalty under section 271D for A.Y. 2009-10, holding that the cash payments from the husband for purchase and construction of family property were satisfactorily explained as genuine family transactions documented by the sale deed and payments, and justified by reasonable cause under section 273B.

Rejection of books of account - estimation of income on best judgment - gross profit rate based on past history - addition on alleged bogus purchases - lump sum disallowance - personal/non-business expenses - adhoc disallowance

Rejection of books of account - estimation of income on best judgment - gross profit rate based on past history - addition on alleged bogus purchases - Whether the addition made by treating certain purchases as bogus and applying 25% profit thereon was sustainable after rejection of books, and if the addition should be limited to the differential between average past GP rate and declared GP. - HELD THAT: - The Tribunal noted that the Assessing Officer had rejected the books of account under section 145(3) (not pressed before the Tribunal) and, once books are rejected, the AO must estimate income on a reasonable basis by adopting a gross profit rate as a guide for best judgment assessment. Reliance was placed on the coordinate-bench reasoning that where books are rejected and verification of suppliers is incomplete, the appropriate course is to apply an average GP rate based on past history rather than make an ad hoc addition to book results. Applying this principle to the present facts, the Tribunal computed the average gross profit for the past two assessment years at 25.18% against the assessee's declared 24.80% and held that only the differential (0.38%) could be sustained. The remainder of the addition, which arose from treating purchases as wholly bogus and applying a 25% addition, was not upheld because the AO's approach conflicted with the requirement to estimate by reference to a reasonable GP rate when books are rejected. [Paras 7]

Addition partly upheld only to the extent of 0.38% differential between average past GP and declared GP; the remaining addition deleted.

Lump sum disallowance - personal/non-business expenses - adhoc disallowance - Whether the lump sum disallowance of Rs. 20,000 made on account of possible personal/non-business element in certain expenses was sustainable. - HELD THAT: - The Tribunal observed that the Assessing Officer made the disallowance on an ad hoc basis after noting the tax auditor's remark that it was not possible to identify any personal element in telephone and running & maintenance expenses. The assessee contended that the expenses were reasonable and wholly for business purposes and that no specific non-business expenditure was identified. In the absence of identification of particular non-business items and given the adject nature of the disallowance, the Tribunal found the adhoc deduction unjustified and directed deletion of the disallowance. [Paras 10]

Lump sum disallowance deleted; ground of appeal allowed.

Final Conclusion: The assessee's appeal is partly allowed: the addition on alleged bogus purchases is sustained only to the extent of the 0.38% differential in gross profit computed from past years and the balance deleted; the lump sum disallowance of Rs. 20,000 is deleted.

Penalty under section 271(1)(c) - Principles of natural justice - Requirement of recording satisfaction for levy of penalty - Effect of quantum being set aside on penalty proceedings - Remand for fresh adjudication by Assessing Officer with opportunity of hearing

Effect of quantum being set aside on penalty proceedings - Penalty under section 271(1)(c) - Whether the impugned penalty orders under section 271(1)(c) survive where the quantum assessments have been set aside by the Tribunal. - HELD THAT: - The Tribunal noted that the appeals in respect of the quantum for the three assessment years were set aside and the matter restored to the file of the Assessing Officer for fresh adjudication after permitting the assessee to produce evidence regarding source of household expenditure. Relying on that factual and adjudicatory outcome, the Appellate Tribunal held that the impugned ex-parte penalty orders could not stand at this stage and accordingly set aside those penalty orders. The Tribunal clarified that its order is procedural/statistical in nature in relation to the penalty and that, if on fresh adjudication the additions are sustained, the Assessing Officer would be at liberty to consider and decide the question of levy of penalty in accordance with law. [Paras 4, 5]

Impugned penalty orders set aside in view of quantum being set aside; penalties remitted for fresh consideration and adjudication by the Assessing Officer if additions are ultimately sustained.

Remand for fresh adjudication by Assessing Officer with opportunity of hearing - Principles of natural justice - Requirement of recording satisfaction for levy of penalty - Whether the matter should be remanded to the Assessing Officer for fresh adjudication and what directions are required in respect of opportunity to the assessee and future penalty proceedings. - HELD THAT: - The Tribunal reproduced its earlier view in the quantum appeals that the Assessing Officer had made additions based on seized material and that the Assessing Officer and the CIT(A) had not appreciated all evidence furnished by the assessee. Consequently, the Tribunal directed that the issue in dispute be restored to the file of the Assessing Officer and that the assessee be permitted to file necessary evidence regarding sources of household expenditure and related withdrawals; the Assessing Officer was directed to adjudicate the issue in accordance with law after allowing adequate opportunity of being heard. The Appellate Tribunal applied the same view mutatis mutandis to all three assessment years and expressly left open the question of levy of penalty to be decided by the Assessing Officer if additions are sustained on fresh adjudication. [Paras 4, 9]

Matter remanded to the Assessing Officer for fresh adjudication on the quantum after permitting the assessee to file evidence and for the Assessing Officer to decide penalty afresh, after affording adequate opportunity of hearing.

Final Conclusion: All appeals are partly allowed for statistical purposes: the impugned penalty orders under section 271(1)(c) for Assessment Years 2005-06, 2008-09 and 2010-11 are set aside and the matters remanded to the Assessing Officer for fresh adjudication on the quantum (with opportunity to the assessee to produce evidence); the Assessing Officer remains free to consider levy of penalty in accordance with law if the additions are sustained on fresh adjudication.

Allowability of depreciation on composite purchase price - requirement of segregation of land and building for depreciation disallowance - interpretation of "building" under section 32(1) of the Income tax Act - precedent of coordinate bench on composite consideration

Allowability of depreciation on composite purchase price - requirement of segregation of land and building for depreciation disallowance - interpretation of "building" under section 32(1) of the Income tax Act - precedent of coordinate bench on composite consideration - Whether the disallowance of depreciation of Rs. 33,98,755/- could be sustained where the assessee paid a composite price for premises and had no segregation of value between land and building. - HELD THAT: - The Tribunal held that, following the coordinate bench decisions relied upon by the assessee, where the purchase consideration is composite and the sale deed does not segregate the price between land and building, the Assessing Officer cannot sever the composite consideration and disallow depreciation on the ground that part of the consideration relates to land. The Tribunal extracted the operative ratio that the word "building" under section 32(1) is to be understood as the superstructure and not land, but that where the consideration paid is composite without distinct allocation, no distinction in the consideration paid can be made for the purpose of denying depreciation on the entire amount paid. Applying those precedents to the facts, and noting that no contrary binding precedent was placed before it, the Tribunal concluded that the addition sustained by the Assessing Officer and the CIT(A) was not sustainable and directed deletion of the addition. [Paras 10, 11, 12]

Addition of Rs. 33,98,755/- on account of disallowance of depreciation deleted and appeal allowed.

Final Conclusion: Appeal allowed; addition on account of disallowance of depreciation deleted and Assessing Officer directed to give effect to this order.

Appointment of High Court Judges - judicial vacancies affecting adjudication - failure to adhere to timelines for judicial appointments - reluctance of Supreme Court to intervene at interlocutory stage - duty of the Government to facilitate timely adjudication

Reluctance of Supreme Court to intervene at interlocutory stage - appointment of High Court Judges - Whether the Supreme Court should entertain the special leave petitions at the interlocutory stage where the High Court has issued notice and called for responses. - HELD THAT: - The Court held that the impugned order of the High Court merely issued notice and directed responses; that stage does not ordinarily warrant intervention by this Court. The petitions seeking to impugn such an early procedural order and to seek the Supreme Court's intervention were therefore unsuitable for grant of special leave. The Court emphasised that interlocutory notices and directions to file responses are matters to be pursued before the High Court unless there are exceptional circumstances warranting immediate intervention. [Paras 3]

Special leave petitions dismissed insofar as they seek intervention from this Court at that interlocutory stage

Judicial vacancies affecting adjudication - failure to adhere to timelines for judicial appointments - duty of the Government to facilitate timely adjudication - Whether systemic shortage of High Court judges and delay in appointments by the Government justify Supreme Court intervention or relief. - HELD THAT: - The Court found that the principal difficulty in obtaining early adjudication in the High Court stems from prolonged vacancies and delays in implementing Collegium recommendations. The Court noted the Government's apparent inaction despite timelines laid down in this Court's earlier order in M/s. PLR Projects Pvt. Ltd. v. Mahanadi Coalfields Limited & Ors., and observed that inadequate judicial strength directly impedes prompt disposal of matters. While expressing strong concern and admonishing the Government to follow prescribed timelines so as to ensure early adjudication of commercial and other disputes, the Court treated this as a systemic problem to be remedied by the executive and not as a ground for bypassing High Court proceedings in these petitions. [Paras 4, 5, 6]

Court admonished the Government to follow timelines for appointments and recognised that judicial vacancies materially impair early adjudication, but declined to grant extraordinary relief on that basis in these petitions

Duty of the Government to facilitate timely adjudication - Whether the Government's delay in filing counter-affidavits and prosecuting its matter in the High Court justified urgent intervention by this Court. - HELD THAT: - The Court recorded facts showing the Government's delay in filing counter-affidavits despite earlier urgency, observing the incongruity of the Government seeking urgent relief before this Court while not diligently prosecuting its case in the High Court. That conduct was noted with disapproval, reinforcing the Court's view that parties should pursue remedies before the High Court, and that the Government must not rely on this Court to cure delays resulting from its own inaction. [Paras 7]

Court recorded displeasure at the Government's delay in High Court proceedings and refused to grant relief on that ground

Final Conclusion: The special leave petitions are dismissed. The Court declined to intervene at the interlocutory notice stage, recorded serious concern at systemic judicial vacancies and the Government's delays in appointments and prosecution of High Court proceedings, and disposed of pending applications.

Classification of goods - Whey protein - Valuation under Customs Act - Reliance on Section 14 of the Customs Act, 1962 for valuation - Effect of Section 3 of the Customs Tariff Act, 1975 and Section 4A of the Central Excise Act, 1944 on valuation

Classification of goods - Whey protein - Classification of the imported product described as 'whey protein' - HELD THAT: - The Court examined the classification placed by the Commissioner as recorded in paragraphs Nos. 106 to 109 of the Commissioner's order and noted that the Tribunal had endorsed that position. The Supreme Court found the view taken by the Commissioner to be correct and not requiring interference. Although the Tribunal ought to have elaborated on the aspects dealt with by the Commissioner, that deficiency did not justify disturbing the classification. The Court therefore upheld the factual finding and legal conclusion of both the Commissioner and the Tribunal on classification. [Paras 3, 4]

Finding of the Commissioner and the Tribunal on classification of 'whey protein' is upheld.

Valuation under Customs Act - Reliance on Section 14 of the Customs Act, 1962 for valuation - Effect of Section 3 of the Customs Tariff Act, 1975 and Section 4A of the Central Excise Act, 1944 on valuation - Validity of the Tribunal's conclusion on valuation and the need for reconsideration in light of other valuation provisions - HELD THAT: - The Court observed that the Tribunal decided the valuation issue solely with reference to Section 14 of the Customs Act, 1962 and did not advert to the applicability or efficacy of Section 3 of the Customs Tariff Act, 1975 and Section 4A of the Central Excise Act, 1944. Given this omission, the Supreme Court set aside the Tribunal's finding and remitted the limited issue of valuation to the Tribunal for fresh consideration. All contentions of the parties on valuation were left open for the Tribunal to examine on merits and in accordance with law. [Paras 5, 6, 7]

Tribunal's finding and conclusion on valuation set aside; matter remitted to the Tribunal for fresh consideration of the valuation issue.

Final Conclusion: The appeal is partly allowed: the classification of the imported product as 'whey protein' upheld; the Tribunal's valuation finding is set aside and remitted for fresh consideration, with all parties' contentions left open; no order as to costs.

Entitlement to EPCG benefits - Verification of export obligation under EPCG Scheme - Procedural lapse versus substantial non-fulfilment of policy conditions - Authority of the Director General of Foreign Trade to decide entitlement - Remand for fresh adjudication - Invocation of bank guarantee in absence of Export Obligation Discharge Certificate

Entitlement to EPCG benefits - Verification of export obligation under EPCG Scheme - Procedural lapse versus substantial non-fulfilment of policy conditions - The petitioner is not entitled to EPCG benefits merely on assertion; entitlement requires documentary verification that export obligations have been fulfilled and that exports satisfy the scheme's specifications. - HELD THAT: - The Court held that entitlement under the EPCG Scheme is not automatic and cannot be granted 'for the mere asking.' The claim that export obligations are fulfilled must be supported by documentary evidence and all material required under the Scheme; mere omission such as non mention of EPCG licence numbers on free shipping bills may not be treated as a trivial technical lapse without verification. The authority must satisfy itself, on the basis of documents and other evidence produced by the exporter, that the exports undertaken qualify for the benefit under the Scheme. The Court therefore rejected the proposition that the petitioner's claim could be accepted without proper examination and verification of records. [Paras 12, 13]

Entitlement to EPCG benefits requires verification of documents and evidence; non mention of licence numbers cannot be accepted as excusing the need for such verification.

Authority of the Director General of Foreign Trade to decide entitlement - Remand for fresh adjudication - Invocation of bank guarantee in absence of Export Obligation Discharge Certificate - Proceedings on the show cause notices are to be continued by the ADGFT/DGFT, the petitioner to be heard and a decision on entitlement in respect of all eight licences is to be taken afresh; the PRC order is to be kept in abeyance pending that decision. - HELD THAT: - The Court recorded that determination of entitlement under the EPCG Scheme lies with the DGFT (the licence issuing authority). Given that the show cause proceedings remained pending, the Court directed the ADGFT to proceed with the show cause notices dated 26.03.2019, afford the petitioner a hearing, and pass appropriate orders on the petitioner's entitlement in respect of all eight licences within two weeks. Pending the outcome of that adjudicatory exercise, the impugned PRC order dated 26.07.2019 is to be kept in abeyance. The Court noted that invocation of the bank guarantee by Customs arose from the absence of an EODC and that a no objection by the licence issuing authority would obviate further action by Customs. [Paras 11, 12, 15]

ADGFT/DGFT to continue and conclude show cause proceedings, hear the petitioner and decide entitlement for all eight licences within two weeks; PRC order kept in abeyance until that decision.

Final Conclusion: Writ petition disposed by directing the ADGFT/DGFT to proceed with and conclude the pending show cause proceedings, hearing the petitioner and deciding entitlement in respect of all eight EPCG licences within two weeks; meanwhile the PRC order dated 26.07.2019 is kept in abeyance. No costs.

Computation of customs duty on sale proceeds - Priority of payments under Section 150(2) of the Customs Act, 1962 - Application of Associated Container Terminal Limited ratio - Referral to competent authority for factual determination

Computation of customs duty on sale proceeds - Application of Associated Container Terminal Limited ratio - Referral to competent authority for factual determination - Computation of customs duty payable under the priority of payments in Section 150(2)(c) is to be carried out in accordance with the ratio in Associated Container Terminal Limited and relegated to the competent authority for factual determination. - HELD THAT: - The applicants sought encashment of fixed deposits of sale proceeds of unclaimed/uncleared goods and adjustment of customs duty in terms of the payment priority under Section 150(2) of the Customs Act, 1962. Relying on paragraphs 17 and 18 of Associated Container Terminal Limited, the applicants contended that duty must be computed on the sale price. The Court observed that the computation involves factual aspects which are more appropriately examined by the competent customs authority. Consequently, the writ petition/application were disposed of by directing that the issue of computation of customs duty to be adjusted from the sale proceeds in terms of Section 150(2)(c) and the ratio of Associated Container Terminal Limited be made known to the Court so the matter can be referred to the competent authority. The respondents identified the Deputy Commissioner of Customs, Special Disposal Cell as the competent authority; the applicants suggested the Chief Commissioner could be made the nodal authority. The department was directed to inform the Court of the appropriate competent authority so that the computation can be undertaken.

Writ petition/application disposed of by directing the department to identify the competent authority to compute customs duty on the sale proceeds in accordance with the Associated Container Terminal Limited ratio, and the matter was listed for further direction.

Final Conclusion: The Court disposed of the petition by directing the department to inform the Court which customs authority is competent to compute the customs duty payable from the sale proceeds; the computation is to be carried out by that authority applying the ratio in Associated Container Terminal Limited, after which the matter will proceed on the listed date.

Scheme of Amalgamation - sanction of scheme under Sections 230-232 of the Companies Act, 2013 - vesting of assets and liabilities on amalgamation - transfer of employees on amalgamation - no issue of shares where transferor is wholly owned subsidiary - statutory notice and role of Regional Director, Registrar of Companies, Income Tax Department and Official Liquidator - verification by Official Liquidator's appointed auditors - compliance of accounting treatment with applicable Indian Accounting Standards - sanction not to impede subsequent action for statutory violations - filing of certified copy of sanction order with Registrar of Companies and consequent dissolution

Scheme of Amalgamation - statutory notice and role of Regional Director, Registrar of Companies, Income Tax Department and Official Liquidator - compliance of accounting treatment with applicable Indian Accounting Standards - sanction not to impede subsequent action for statutory violations - Sanction of the Scheme of Amalgamation between the Transferor and Transferee companies. - HELD THAT: - The Tribunal, after considering the Scheme appended as Annexure A, the report of the Regional Director (which raised no objection), the Official Liquidator's process of appointing accountants to verify the Transferor Company's affairs, the Statutory Auditors' certificates on accounting treatment and compliance with the proviso to the relevant statutory provision, and the absence of objections from other statutory authorities, held that the Scheme is prima facie beneficial and not detrimental to shareholders. The Tribunal recorded that statutory compliances have been fulfilled and sanctioned the Scheme. The Tribunal also clarified that sanction does not confer immunity from future action for any statutory deficiency or violation and does not relieve the parties from payment of any stamp duty, taxes or other charges as required by law.

The Scheme of Amalgamation is sanctioned; statutory reports and certificates considered; sanction subject to law and not a bar to subsequent action or tax/stamp obligations.

Vesting of assets and liabilities on amalgamation - sanction of scheme under Sections 230-232 of the Companies Act, 2013 - Effect of the sanction on transfer and vesting of the Transferor Company's properties, rights and liabilities. - HELD THAT: - The Tribunal ordered that, pursuant to the statutory provisions invoked in the petition, all properties, rights and interests of the Transferor Company shall, without any further act or deed, be transferred to and vested in the Transferee Company, and that all liabilities, powers, engagements, obligations and duties of the Transferor Company shall stand transferred and become the liabilities and duties of the Transferee Company. The Tribunal further directed that proceedings pending by or against the Transferor Company shall continue by or against the Transferee Company.

Assets, rights and liabilities of the Transferor Company stand transferred and vested in the Transferee Company, and pending proceedings shall continue against the Transferee Company.

Transfer of employees on amalgamation - Continuation of employment of the Transferor Company's employees after the Scheme takes effect. - HELD THAT: - The Tribunal directed that all employees of the Transferor Company in service immediately prior to the Scheme taking effect shall become employees of the Transferee Company without any break or interruption in their service, thereby protecting employee continuity as provided in the Scheme.

Employees of the Transferor Company in service immediately before the Scheme's effective date shall be absorbed into the Transferee Company without break.

No issue of shares where transferor is wholly owned subsidiary - Scheme of Amalgamation - Consideration payable on amalgamation where the Transferor is a wholly owned subsidiary of the Transferee. - HELD THAT: - The Tribunal recorded the petitioners' submission and the Scheme's provision that, because the Transferor Company is a wholly owned subsidiary of the Transferee Company, no issue of shares is required as consideration for the amalgamation, and accordingly no share allotment will follow the sanction.

No shares shall be issued as consideration for the amalgamation since the Transferor is a wholly owned subsidiary of the Transferee.

Filing of certified copy of sanction order with Registrar of Companies and consequent dissolution - verification by Official Liquidator's appointed auditors - Post-sanction procedural directions including payment to Official Liquidator's appointed auditors and filing with Registrar of Companies leading to dissolution of the Transferor Company. - HELD THAT: - The Tribunal recorded the Official Liquidator's appointment of auditors who verified the Transferor Company's affairs and, on the auditors' report, directed the petitioners to pay the remuneration due to the Official Liquidator for that process. The Tribunal further directed that the parties shall, within thirty days of receipt of the order, deliver a certified copy of the sanction order to the Registrar of Companies for registration, upon which the Transferor Company shall be dissolved and the Registrar shall consolidate the files of both companies.

Remuneration to Official Liquidator's investigating auditors is to be paid and a certified copy of the order shall be filed with the Registrar of Companies, after which the Transferor Company shall be dissolved and records consolidated.

Appointed date - Scheme of Amalgamation - Appointed date for the Scheme. - HELD THAT: - The Tribunal recorded and confirmed the Scheme's appointed date as 1st April 2020 as specified in the Scheme, which will govern the operative effect of the amalgamation.

The appointed date of the Scheme is 1st April 2020.

Final Conclusion: The Company Petition for sanction of the Scheme of Amalgamation is allowed; the Scheme is sanctioned subject to compliance with law, assets and liabilities vest in the Transferee, employees continue without break, no shares are to be issued as consideration (being a wholly owned subsidiary), post-sanction filings with the Registrar of Companies shall be made and the Transferor shall be dissolved, and payment as directed to the Official Liquidator's investigators shall be effected.

Limitation for appeals under the Insolvency and Bankruptcy Code (IBC) - certified copy requirement for filing an appeal before the NCLAT - right to receive a free certified copy under Section 420(3) of the Companies Act - exclusion of time for obtaining a certified copy under Section 12 of the Limitation Act - IBC as a complete code with overriding effect - Rule 14 of the NCLAT Rules - discretionary power to exempt procedural compliance

Limitation for appeals under the Insolvency and Bankruptcy Code (IBC) - IBC as a complete code with overriding effect - exclusion of time for obtaining a certified copy under Section 12 of the Limitation Act - Computation of the period of limitation for appeals filed under Section 61(1) of the IBC - HELD THAT: - The IBC prescribes a self-contained regime for appeals under Section 61(2), providing a thirty day limitation period with a discretionary extension not exceeding fifteen days. The omission of the phrase 'from the date on which a copy of the order of the Tribunal is made available to the person aggrieved' (as appears in Section 421(3) of the Companies Act) is deliberate and cannot be supplemented by importing the Companies Act provision into the IBC. The IBC is a complete code with overriding effect; timelines under it are of essence to achieve expeditious resolution and liquidation. While Section 12 of the Limitation Act allows exclusion of the time requisite for obtaining a certified copy once an application for such copy is made within the limitation period, the obligation to apply for a certified copy lies on the aggrieved party. A litigant under the IBC cannot await receipt of a free certified copy under Section 420(3) of the Companies Act to stop limitation from running; failure to apply for a certified copy does not suspend the running of the thirty day period and the discretionary fifteen day extension. [Paras 11, 15, 17, 21]

Limitation for an appeal under Section 61(1) of the IBC runs from pronouncement of the order; an aggrieved party must exercise due diligence (including applying for a certified copy) and cannot indefinitely await a free copy to postpone commencement of limitation.

Certified copy requirement for filing an appeal before the NCLAT - right to receive a free certified copy under Section 420(3) of the Companies Act - Rule 14 of the NCLAT Rules - discretionary power to exempt procedural compliance - Whether annexing a certified copy of the impugned order is mandatory when filing an appeal to the NCLAT under the IBC - HELD THAT: - Rule 22(2) of the NCLAT Rules mandates that every appeal be accompanied by a certified copy of the impugned order. Section 420(3) of the Companies Act and Rule 50 require the registry to send a free certified copy to parties, but that statutory right does not absolve the appellant of the duty to apply for a certified copy or otherwise demonstrate diligence. The tribunal's power under Rule 14 to exempt procedural compliance is discretionary and may be exercised to accept downloaded copies, but such waiver is not automatic and does not permit a litigant who makes no effort to secure a certified copy to evade the limitation regime prescribed by the IBC. The time taken to obtain a copy is excluded under Section 12 of the Limitation Act only if an application for the copy is filed within the limitation period. [Paras 18, 19, 22]

Annexation of a certified copy is a mandatory requirement in ordinary course; discretionary exemption under Rule 14 may be granted in the interests of justice, but failure to apply for a certified copy renders an appeal susceptible to being time-barred under the IBC.

Final Conclusion: The appeal under Section 62 of the IBC is dismissed as barred by limitation. The NCLAT correctly held that the appellant failed to apply for a certified copy and the statutory thirty day period (with the limited fifteen day extension) under Section 61(2) of the IBC had expired; discretionary waiver of the certified copy requirement does not excuse lack of diligence and cannot be used to defeat the IBC's time-bound scheme.

Special resolution requirement for corporate applicant under Section 10(3)(c) of the Insolvency and Bankruptcy Code, 2016 - Admission of corporate insolvency resolution process under Section 10 of the IBC - Validity of Form-6 signed by authorised director pursuant to shareholders' resolution - Intervention by operational creditor and obligation to file claim with the Interim Resolution Professional - Doctrine of clean hands in seeking equitable/interlocutory relief

Special resolution requirement for corporate applicant under Section 10(3)(c) of the Insolvency and Bankruptcy Code, 2016 - Validity of Form-6 signed by authorised director pursuant to shareholders' resolution - Whether the Adjudicating Authority erred in admitting the Corporate Debtor's Section 10 application on the ground that the mandatory special resolution under Section 10(3)(c) was not filed or was fabricated. - HELD THAT: - The Tribunal found on the record that an EGM resolution dated 31.10.2018 authorised any one of the directors to sign and execute documents to give effect to the special resolution to make an application for initiating CIRP. The Section 10 application was presented in the prescribed Form-6 and was signed by Respondent No.3, a director. The Appellant did not produce affirmative proof that the EGM did not take place; the Adjudicating Authority recorded absence of an attendance sheet but accepted the Form-6 and admitted the Section 10 petition. On these factual findings the Tribunal held there was no illegality in admitting the petition: the corporate applicant had produced a shareholders' resolution vesting authority in a director and the Form-6 bore the director's signature, and the Appellant's challenge fell short of rebutting those records. [Paras 31, 32]

The admission of the Section 10 petition was upheld; there was no error in treating the Form-6 signed by the authorised director and the shareholders' resolution as satisfying the requirement.

Intervention by operational creditor and obligation to file claim with the Interim Resolution Professional - Doctrine of clean hands in seeking equitable/interlocutory relief - Whether the Appellant's intervention and challenge warranted setting aside the impugned order given that the Appellant had an arbitration award but did not file a claim before the IRP and had initiated separate execution/Section 34 proceedings. - HELD THAT: - The Tribunal recorded that the Adjudicating Authority had directed the intervenor to file its claim before the IRP and that the Appellant did not file any claim during the CIRP as reflected in the status report; meanwhile the Appellant had initiated execution proceedings under the arbitration award and a Section 34 challenge to the award was pending. Having regard to these facts, the Tribunal concluded that the Appellant had not come with clean hands and had failed to comply with the direction to participate in the CIRP by lodging a claim. On that basis the Tribunal found no merit in the contention that the admission should be set aside for alleged fabrication of documents or procedural irregularity. [Paras 31, 32]

The intervention did not warrant upsetting the impugned order; the Appellant's challenge was rejected for want of compliance with the direction to file a claim and for lack of clean hands.

Final Conclusion: The Tribunal found no illegality in the NCLT's admission of the Section 10 petition or in rejecting the Appellant's intervention; the impugned order dated 29.05.2020 is affirmed and the appeal is dismissed.

Rejection of claim for belated filing - power of the liquidator to admit or reject claims under the Liquidation Regulations - appeal against liquidator's decision under Section 42 of the Insolvency and Bankruptcy Code, 2016 - limitation for filing appeal and requirement of showing sufficient cause for condonation of delay - knowledge of CIRP by related party

Rejection of claim for belated filing - power of the liquidator to admit or reject claims under the Liquidation Regulations - Validity of the liquidator's rejection of the creditor's claim as time-barred. - HELD THAT: - The claim was filed in Form D on 29.10.2020 and received on 31.10.2020, after the last date for submission of claims fixed by the liquidator following the public announcement. The liquidator declined to entertain the belated claim on the ground that he was not authorised to collect claims after the last date and in view of the regulatory timeline for verification and filing of the list of stakeholders. The Tribunal noted precedents relied upon by the liquidator which recognise that there is no provision enabling the liquidator to condone delay in receiving claims beyond the stipulated last date in the public announcement. The appellant's explanation for delay (lack of knowledge of liquidation and Covid-19 constraints) was considered but held insufficient to override the time bar and the regulatory framework that governs admission of claims in liquidation. [Paras 5, 6, 12]

The liquidator's rejection of the belated claim was upheld.

Appeal against liquidator's decision under Section 42 of the Insolvency and Bankruptcy Code, 2016 - limitation for filing appeal and requirement of showing sufficient cause for condonation of delay - knowledge of CIRP by related party - Maintainability of the appeal under Section 42 of the IBC given the delay in filing the appeal and adequacy of the appellant's explanation. - HELD THAT: - Section 42 permits a creditor to appeal the liquidator's decision within fourteen days of receipt of the decision. The Tribunal found that the appellant received the rejection dated 09.12.2020 but filed the appeal on 31.12.2020, i.e., after twenty-two days, thus exceeding the statutory period. The appellant failed to establish sufficient cause to condone the delay; additionally, the Tribunal observed there was no rebuttal to the contention that the appellant, being related to a suspended director of the corporate debtor, had knowledge of the CIRP proceedings. Applying settled principles on condonation of delay, the Tribunal held that the delay in filing the appeal was not satisfactorily explained and therefore the appeal was time-barred. [Paras 10, 11, 12]

The appeal under Section 42 was held to be barred by delay and was dismissed for want of sufficient cause to condone the delay.

Final Conclusion: The Tribunal dismissed the appeal: the liquidator's rejection of the belated claim was sustained and the appeal under Section 42 IBC was held time barred as filed beyond fourteen days without sufficient cause for condonation.

Financial debt and default under the Insolvency and Bankruptcy Code - treatment of amounts as operational expenses versus financial debt - admission of application under Section 7 of the Code - moratorium under Section 14 of the Code - appointment of Interim Resolution Professional and supersession of board - inapplicability of COVID-19 respite under Section 10A to the present default

Treatment of amounts as operational expenses versus financial debt - financial debt and default under the Insolvency and Bankruptcy Code - Certain historical disbursement (Rs. 1,63,80,162) is not a financial debt, but the remaining disbursements under the loan agreement constitute financial debt and the corporate debtor committed default. - HELD THAT: - The Tribunal found that the sum reflected as outstanding in the books of the predecessor company (amounting to Rs. 1,63,80,162) had been disbursed towards operational expenses and therefore could not be treated as a 'financial debt'. However, the Loan Agreement dated 05.07.2013 sanctioned an aggregate unsecured facility (up to the stated limit) and subsequent disbursements made thereunder, after excluding the operational expense amount, fall within the definition of 'financial debt'. The corporate debtor acknowledged the unsecured loan and repeatedly confirmed outstanding balances in balance-confirmation documents for financial years 2013-14 to 2018-19; those acknowledgements and the documentary record establish existence of a financial debt and a default in repayment to the financial creditor. [Paras 9, 10, 11]

The Tribunal held that the historical operational disbursement is not a financial debt, but the remaining disbursed amounts under the loan agreement constitute financial debt and there is a proved default.

Inapplicability of COVID-19 respite under Section 10A - admission of application under Section 7 of the Code - The corporate debtor cannot take shelter under Section 10A in respect of the default in this case; consequently the Section 7 application is maintainable and admitted. - HELD THAT: - The Tribunal observed that the default giving rise to the present petition occurred well before the advent of Covid-19 and therefore the protections or deferrals contemplated by Section 10A do not apply. On the material before it (loan agreement, acknowledgements, reminder and demand letters), and having found a financial debt and default, the Tribunal admitted the application filed under Section 7 of the Code and proceeded to initiate the CIRP. [Paras 9, 11, 12]

Section 10A protection is not available; the Section 7 petition is maintainable and is admitted.

Appointment of Interim Resolution Professional and supersession of board - moratorium under Section 14 of the Code - An Interim Resolution Professional was appointed, the board's powers were superseded, and moratorium under Section 14 was declared upon admission of the petition. - HELD THAT: - The financial creditor proposed an IRP who filed consent and whose authorization was verified on the IBBI website. The Tribunal appointed the proposed IRP to carry out duties under the Code (including filing reports within statutory timelines) and directed that the powers of the board of directors stand superseded. Consequent upon admission of the Section 7 petition, the statutory moratorium under Section 14(1) (with clarifications and exceptions under Sections 14(2), 14(2A) and 14(3)) was declared to operate from the date of the order until completion of the CIRP or earlier cessation as provided by the Code; the Registry was directed to communicate the order to the parties, IBBI and ROC. [Paras 13, 14, 15, 16, 17]

The Tribunal appointed the proposed IRP, superseded the board, and declared the moratorium in terms of Section 14 from the date of the order.

Final Conclusion: The Section 7 petition by the financial creditor was admitted: the Tribunal held that, except for the specified historical amount treated as operational expenditure, the loan disbursements constitute financial debt and there was default; Section 10A relief was held inapplicable; the proposed IRP was appointed, the board was superseded and moratorium under Section 14 was imposed.

Withdrawal under section 12A of the Insolvency and Bankruptcy Code, 2016 - Form-FA requirement under Regulation 30A of the IBBI (IRP) Regulations - Constitution of Committee of Creditors (CoC) - Maintainability of Section 12A application after constitution of CoC - Requirement of 90% CoC approval for settlement post-constitution - Effect of stay on constitution of CoC

Constitution of Committee of Creditors (CoC) - Effect of stay on constitution of CoC - Whether constitution of the CoC by the IRP on 12.04.2021 was in violation of the orders of this Tribunal or the Hon'ble NCLAT. - HELD THAT: - The Hon'ble NCLAT had granted the Corporate Debtor ten days to file a Section 12A withdrawal application and observed that, until the time granted, constitution of the CoC shall be stayed if not already constituted. The Tribunal examined the chronology and found that by 12.04.2021 there was no operative stay in effect preventing constitution of the CoC. The IRP constituted the CoC in the absence of any subsisting stay; the subsequent settlement between the parties occurred only after constitution of the CoC. On these facts, constitution of the CoC on 12.04.2021 did not contravene any binding order of this Tribunal or of the Appellate Tribunal. [Paras 8, 10, 11, 12, 15]

Constitution of the CoC on 12.04.2021 was not illegal or unconstitutional; no violation of the orders was made out.

Withdrawal under section 12A of the Insolvency and Bankruptcy Code, 2016 - Form-FA requirement under Regulation 30A of the IBBI (IRP) Regulations - Maintainability of Section 12A application after constitution of CoC - Requirement of 90% CoC approval for settlement post-constitution - Whether the Section 12A applications filed by the Corporate Debtor and the Operational Creditor were maintainable and required to be allowed. - HELD THAT: - Regulation 30A requires withdrawal by submission of Form-FA to the IRP and, where applicable, adherence to procedural requirements. The Tribunal noted that the Corporate Debtor's Section 12A application was not accompanied by Form-FA, and that the settlement with the Operational Creditor was effected after the CoC had been constituted. Once the CoC stood constituted, any settlement impacting the CIRP would require compliance with the statutory regime, including requisite approval thresholds of the CoC (90% where applicable). Given that the purported settlement occurred post-constitution and without securing the requisite CoC approval or filing the prescribed Form-FA, the applications seeking withdrawal were held to be an attempt to delay the CIRP and were therefore not maintainable. [Paras 12, 13, 14, 15]

Both IA/298/CHE/2021 and IA/601/CHE/2021 are not maintainable and are dismissed.

Final Conclusion: The Tribunal found no illegality in the IRP constituting the CoC on 12.04.2021 and held that Section 12A withdrawal applications filed without the prescribed Form-FA and involving a post constitution settlement-without securing requisite CoC approval-are not maintainable; both applications are dismissed.

Supply of ECIR - ECIR as internal document and not equivalent to FIR - Quashing of ECIRs and summons for abuse of process or malafide - Standard for alleging malafide in initiation of investigation - Anticipatory bail and protection from arrest - Relegation to statutory remedy under Section 438 Cr.P.C.

Supply of ECIR - ECIR as internal document and not equivalent to FIR - Whether the petitioner is entitled to be supplied copies of the ECIRs relied upon by the Enforcement Directorate. - HELD THAT: - The Division Bench follows the earlier decision of this Court in Charu Kishor Mehta that the ECIR is an internal document of the Enforcement Directorate and is not to be equated with an FIR as a public document. The Apex Court decision in Ashok Jain was considered to be confined to a different question and does not imply that Charu Kishor Mehta is overruled. Consequently, the petitioner's prayer for direction to furnish copies of the ECIRs is rejected. [Paras 10, 11]

Prayer for supply of copies of the ECIRs denied; ECIRs held to be internal documents and not equivalent to FIR.

Quashing of ECIRs and summons for abuse of process or malafide - Standard for alleging malafide in initiation of investigation - Whether the ECIRs and summons issued to the petitioner can be quashed on the ground of malafide, political vendetta or abuse of process. - HELD THAT: - The petitioner alleged that proceedings were actuated by political rivalry and amounted to malafide or abuse of process. The Court examined the factual matrix, including that others had challenged the same caste certificate and that any person may set criminal law in motion. The burden to prove malafide is heavy and requires material showing officers acted at the behest of a rival; mere suspicion, temporal coincidences or hints are insufficient. Reliance on precedents establishes that courts should not ordinarily interfere with investigations absent exceptional circumstances showing miscarriage of justice. On the material before the Court, malafide and abuse of process were not established, and therefore there was no basis to quash the ECIRs or summons. [Paras 12, 13, 15, 16]

Prayer to quash the ECIRs and summons on grounds of malafide and abuse of process rejected; no exceptional circumstances shown to warrant interference with the investigation.

Anticipatory bail and protection from arrest - Relegation to statutory remedy under Section 438 Cr.P.C. - Whether the High Court should grant interim protection from arrest (akin to anticipatory bail) in exercise of its writ or inherent jurisdiction. - HELD THAT: - The Court treated the petitioner's prayer for protection from arrest as essentially a request for anticipatory bail. Having regard to precedents that caution High Courts against restraining investigations when full material is not before them, the proper course is to avail statutory remedy under Section 438 Cr.P.C. The Court noted material on file indicating there is prima facie material against the petitioner and that adjudication on anticipatory bail ought to be by the competent court on merits. In view of this, extraordinary writ or inherent jurisdiction was not exercised to grant protection from arrest. [Paras 17, 18, 19]

Request for protection from arrest refused; petitioner directed to seek relief, if any, under Section 438 Cr.P.C. from the competent court.

Final Conclusion: Writ petition under Article 226 and Section 482 Cr.P.C. dismissed. The petitioner is not entitled to copies of the ECIRs, the ECIRs and summons are not quashed for malafide or abuse of process on the material before the Court, and any prayer for protection from arrest must be pursued by the petitioner under Section 438 Cr.P.C. before the competent forum.

Summary order. Listed for further hearing and conclusion of submissions on 13th September, 2021 at 2:30 P.M.

Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 - quantified - personal hearing where departmental estimate exceeds declaration (Form-2) - non-speaking order - limitation bar to departmental demand - tax dues quantified for pending enquiry/investigation as on 30.04.2019

Quantified - Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 - personal hearing where departmental estimate exceeds declaration (Form-2) - non-speaking order - Validity of rejection of the declaration in Form 3 without affording opportunity under the Scheme where departmental computation differed from the declarant's quantified communication. - HELD THAT: - The Court found that the impugned Form 3 rejecting the petitioner's declaration was non-speaking and failed to afford opportunity to the petitioner to support the declaration or to respond to any alternative quantification. The scheme mandates that where there is a variation between the amount stated in the declaration and the estimate arrived at by the Department, Form-2 shall be issued accompanied by a personal hearing notice. The petitioner based the declaration on the Department's written communication dated 29.12.2017, which satisfies the statutory meaning of 'quantified' under the Scheme. In these circumstances the petitioner ought to have been given an opportunity to be heard and to understand the reasons for rejection; absence of such a hearing rendered the order unsustainable. The Court therefore quashed the Form 3 and directed the respondent to issue Form 3 afresh accepting the declaration within a stipulated period. [Paras 3, 10, 11, 12]

Form 3 quashed for being non-speaking and for failure to afford the hearing mandated by the Scheme; respondent directed to issue Form 3 afresh accepting the petitioner's declaration.

Limitation bar to departmental demand - tax dues quantified for pending enquiry/investigation as on 30.04.2019 - Validity of the departmental unilateral computation filed later (computation dated nil) as the basis for quantification where a substantial portion of that demand was barred by limitation and no demand had been raised. - HELD THAT: - The Court rejected the unilateral quantification produced by the revenue on the ground that it was not supported by any demand of equal amount and was essentially adhoc. The revenue itself admitted that significant parts of the alternate computation related to periods for which proceedings were barred by limitation and that no formal demand had been raised for those prior periods. A demand so barred cannot be enforced and, consequently, cannot form the basis for quantification of arrears under the Scheme. Therefore the later computation could not justify rejection of the declaration or substitute for a proper quantified communication issued earlier. [Paras 4, 8, 9, 11]

The departmental unilateral computation was held invalid as a basis for quantification because it lacked a corresponding demand and included amounts barred by limitation.

Final Conclusion: Writ allowed; impugned Form 3 quashed and respondent directed to issue Form 3 afresh accepting the petitioner's declaration based on the quantified communication dated 29.12.2017, within four weeks of uploading of the order on the Court website; no costs.

Refund under Rule 5 of CENVAT Credit Rules, 2004 - recrediting of CENVAT credit via journal voucher - nexus with output service - evidentiary requirement / burden of proof for refund claims - finality of adjudicated refund amount - remand for verification and speaking order

Recrediting of CENVAT credit via journal voucher - evidentiary requirement / burden of proof for refund claims - refund under Rule 5 of CENVAT Credit Rules, 2004 - Whether the recredit of CENVAT credit of Rs. 30,95,815/- (via master journal voucher No.611 dt. 30/09/2016) can be taken into account for the refund claim for July 2016 to September 2016 and whether the appellant has discharged the evidentiary burden to establish the same. - HELD THAT: - The Tribunal recorded that the appellant asserts the differential amount was recredited to the CENVAT account by voucher No.611 dated 30.09.2016 and accordingly included that amount in the refund claim for July 2016 to September 2016. The adjudicating and appellate authorities found no documentary evidence on record to support the recrediting contention. Given the absence of supporting documents, the Tribunal held that the appellant must furnish necessary evidence before the lower authority. The matter was not finally adjudicated on merits by the Tribunal; instead the Tribunal remanded the issue to the adjudicating authority for fresh examination of the documentary proof and directed that a speaking order be passed after verification in accordance with law. [Paras 3, 4]

Remanded to the adjudicating authority for verification of supporting documents and for passing a speaking order on whether the recredit can be considered for the refund claim for July 2016 to September 2016.

Finality of adjudicated refund amount - refund under Rule 5 of CENVAT Credit Rules, 2004 - Whether the refund amount finally adjudicated in respect of the earlier claim for April 2014 to June 2014 is conclusive. - HELD THAT: - The Tribunal noted that the appellant's earlier refund claim for April 2014 to June 2014 had been adjudicated and the learned adjudicating authority adopted a certified amount based on the statutory auditor's certification. That adjudicated figure was recorded as final in the Order-in-Original and the Tribunal observed that the position has become final as the appellant had filed an appeal against that order. The Tribunal treated the earlier adjudication as final for the purposes of the present controversy. [Paras 3]

The adjudicated refund amount for April 2014 to June 2014, as recorded in the earlier Order-in-Original, stands as final.

Final Conclusion: Appeal allowed in part by way of remand: the impugned order is set aside and the matter is remitted to the adjudicating authority to examine the appellant's supporting documents regarding the alleged recredit and to pass a speaking order in accordance with law; earlier adjudication for April 2014 to June 2014 is recorded as final.

Definition of "manufacture" under Section 2(f) - inclusion of processes incidental or ancillary - Deeming fiction in Chapter Note 3 to Chapter 24 - labeling, relabeling or repacking from bulk to retail amounting to manufacture - Marketability test for deemed manufacture - Masking and repacking of bought-out excisable goods for testing not amounting to manufacture

Definition of "manufacture" under Section 2(f) - inclusion of processes incidental or ancillary - Deeming fiction in Chapter Note 3 to Chapter 24 - labeling, relabeling or repacking from bulk to retail amounting to manufacture - Marketability test for deemed manufacture - Masking and repacking of bought-out excisable goods for testing not amounting to manufacture - Whether masking, coding and repacking of duty-paid competitor's cigarettes for testing by the appellant amounted to "manufacture" under Section 2(f) read with Note 3 to Chapter 24 of the CETA, 1985, attracting excise duty and penalty. - HELD THAT: - The Tribunal examined the statutory definition of "manufacture" under Section 2(f), which includes any process incidental or ancillary to completion of a manufactured product. It was found that the appellant procured duty-paid cigarettes, masked the competitors' brand, repacked them into new retail packs bearing only a code number and removed them for testing. The Tribunal held that these activities did not alter the name, character or use of the cigarettes; the product remained cigarettes as originally bought. Note 3 to Chapter 24 creates a deeming fiction that labeling, relabeling or repacking from bulk to retail or any other treatment to render the product marketable amounts to manufacture, but such deeming provisions must be strictly construed according to their plain language. The Tribunal observed that the appellant did not engage in labeling/relabeling as envisaged by Note 3, nor repack from bulk to retail; the repacking was from one retail pack to another and the purpose was internal testing, not to render the product marketable to consumers. Consequently, the marketability test in Note 3 was not satisfied and the processes undertaken did not fall within the scope of deemed manufacture for goods under Chapter 24. On these findings the demands and penalty based on classification as manufacture were not sustainable. [Paras 6, 7, 8]

The activities of masking, coding and repacking the bought-out cigarettes for testing do not constitute "manufacture" under Section 2(f) read with Note 3 to Chapter 24; the adjudged duty demand and penalty are unsustainable and are set aside.

Final Conclusion: The appeal is allowed; the impugned order confirming excise duty demand and penalty is set aside in respect of the goods/period under dispute (2004-05 to 2008-09).

Challenge to Tax Recovery Notice - finality of unchallenged assessment - remedy of appeal as exclusive forum - preclusion of collateral attack on assessment - non justiciability of Tax Recovery Officer's verification under Rule 2(3) of Schedule E

Challenge to Tax Recovery Notice - finality of unchallenged assessment - remedy of appeal as exclusive forum - preclusion of collateral attack on assessment - Whether the petitioner can challenge the assessment order and the consequent Tax Recovery Notice before the High Court when no appeal was preferred against the assessment order. - HELD THAT: - The Court observed that the assessment order dated 24th October, 2017 remained unchallenged by the petitioner; the petitioner had not availed the statutory remedy of appeal despite service of the assessment order. The Court held that, even if the assessment order were said to be without jurisdiction, the petitioner, having failed to file an appeal, cannot assail the assessment collaterally at the stage of challenging the Tax Recovery Notice. The departmental contention that under Rule 2(3) of Schedule E Part I the certificate sent to the Tax Recovery Officer is not open to challenge and that the TRO cannot entertain objections was noted, but the determinative ground for refusing relief was the petitioner's failure to pursue the appellate remedy and the consequent finality of the unchallenged assessment. Having reached this conclusion, the Court declined to entertain a challenge to the assessment order or to the TRN. [Paras 5, 6]

Writ petition dismissed; challenge to the assessment order/TRN not entertained because the statutory appellate remedy was not pursued.

Final Conclusion: The High Court dismissed the petition and declined to entertain a collateral challenge to the assessment order or the Tax Recovery Notice on the ground that the petitioner did not avail the remedy of appeal against the assessment, rendering the assessment final for present purposes.

Input tax credit on capital goods used in manufacture or processing - goods vehicle as capital goods - Fifth Schedule restriction on motor vehicles - integral connection of transport operations with manufacture/processing - distinction between incidental/ancillary use and exclusion under restrictive provision

Input tax credit on capital goods used in manufacture or processing - goods vehicle as capital goods - Fifth Schedule restriction on motor vehicles - Entitlement to input tax credit in respect of mining tippers purchased and used within the mining area. - HELD THAT: - The Court held that goods vehicles fall within the definition of capital goods under Section 2(7) of the KVAT Act and that the Fifth Schedule restriction on motor vehicles does not automatically deprive a goods vehicle of its character as capital goods where it is purchased and put to use for manufacture or processing. The EPCG conditions attached to the import and use of the tippers - requiring registration in the name of the authorization holder, exclusive use in mining activities within the mining area, non-registration as public vehicles and non-usage on public roads - support the conclusion that the tippers were used for production-related activities within the mining area. Where such vehicles are capital goods used in the course of manufacture/processing (or mining) for sale, the input tax restriction in Section 11 read with the Fifth Schedule is not attracted and input tax credit is allowable. [Paras 17, 18, 19, 20, 21]

Mining tippers used within the mining area as capital goods for production-related activities are entitled to input tax credit; denial was unjustified.

Integral connection of transport operations with manufacture/processing - distinction between incidental/ancillary use and exclusion under restrictive provision - Applicability of precedents (Chowgule, Suma Oil, Canara Overseas) to determine whether transportation operations using tippers are part of manufacture/processing and whether the revisional authority was justified in applying Canara Overseas. - HELD THAT: - The Court analysed authorities: Chowgule establishes that certain post-extraction operations may form part of the processing for sale depending on their integral character; Suma Oil was held directly applicable where vehicles used for transporting taxable goods were held to qualify for input tax credit; Canara Overseas involved facts where chassis purchase was held not to be for manufacturing/processing. Applying these principles to the facts - notably the EPCG restrictions and exclusive in-mine use - the Court found Suma Oil and Chowgule supportive and that Canara Overseas was distinguishable on facts and context. Reliance by the revisional authority on Canara Overseas was therefore misplaced. Incidental or multiple uses of an item do not defeat its character as integral to the manufacturing process if its primary use is production-related. [Paras 13, 14, 15, 20, 21]

Precedents in Chowgule and Suma Oil apply to uphold the assessee's claim; Canara Overseas is distinguishable and could not justify denial by the revisional authority.

Final Conclusion: The appeal is allowed; the revisional order dated 26.09.2017 is set aside, the order of the First Appellate Authority is restored, and the questions of law are answered in favour of the assessee.

Reversal of input tax credit - Availability of input tax credit for manufacturers for inputs specified in the First Schedule - Proviso to Section 19(2)(v) of the TNVAT Act, 2006 and Rule 10(9)(a) of the TNVAT Rules, 2007 - non-application where tax-paid inputs in First Schedule are used in manufacturing

Reversal of input tax credit - Availability of input tax credit for manufacturers for inputs specified in the First Schedule - Proviso to Section 19(2)(v) of the TNVAT Act, 2006 and Rule 10(9)(a) of the TNVAT Rules, 2007 - non-application where tax-paid inputs in First Schedule are used in manufacturing - Validity of pre revision notice proposing reversal of input tax credit in respect of alleged interstate sales for which 'C' forms were not produced. - HELD THAT: - The Court held that the pre revision notice which seeks reversal of input tax credit under the proviso to Section 19(2)(v) read with the relevant rule cannot be sustained where the dealer is a manufacturer who has purchased inputs specified in the First Schedule, has paid tax on those inputs and has used the tax paid inputs in the manufacture or processing of goods. The Court followed the reasoning in Everest Industries Limited v. State of Tamil Nadu (reported decision of this Court) which concluded after exhaustive discussion that such manufacturers are entitled to full credit of tax paid on those inputs and the proviso does not apply to them. The existence of any further appeal against the Everest decision was noted but not treated as a ground to refuse relief in the present petition; the petitioner must, however, meet the same fate if the Everest decision is thereafter set aside on appeal.

Impugned pre revision notice dated 07.06.2012 quashed insofar as it sought reversal of input tax credit; writ petition allowed; no order as to costs.

Final Conclusion: The Court quashed the pre revision notice seeking reversal of input tax credit for Assessment Year 2010 2011 and allowed the writ petition, following the decision in Everest Industries Limited that manufacturers who have paid tax on First Schedule inputs used in manufacture are entitled to full input tax credit; no order as to costs.