TaxTMI Updates e-Newsletter
Oct 26,2021

Anticipatory bail under Section 438 Cr.P.C. - economic offences as a class apart - investigation into alleged GST evasion by manipulation of e-way bills and fraudulent input tax credit - power of CGST authorities to search, seize and summon for investigation - non-interference with ongoing investigation absent clear misuse of authority - requirement of cooperation with investigating officer

Anticipatory bail under Section 438 Cr.P.C. - economic offences as a class apart - investigation into alleged GST evasion by manipulation of e-way bills and fraudulent input tax credit - non-interference with ongoing investigation absent clear misuse of authority - requirement of cooperation with investigating officer - Petitioner not entitled to anticipatory bail under Section 438 Cr.P.C. - HELD THAT: - The Court found on the material on record that credible information prompted searches at the petitioner's premises, incriminating documents were recovered, and the petitioner made statements admitting involvement in unlawful transportation of goods without compliance with CGST requirements. There is specific suspicion of manipulation of e-way bills and fraudulent claims of input tax credit, supported by recovered electronic communications, and the prosecution has not yet quantified the revenue loss. Given the gravity and socio economic nature of the alleged offences and the settled approach that economic offences are to be viewed seriously, granting pre arrest protection at this stage would unduly interfere with the statutory investigatory functions of the CGST authorities. The petitioner's partial cooperation followed by avoidance of further questioning weighs against exercise of extraordinary relief under Section 438. In the absence of demonstrable misuse of authority by the respondents or absence of any need for further investigation, interference to grant anticipatory bail is premature. [Paras 22, 23, 27, 28, 31]

Petition dismissed; anticipatory bail refused.

Final Conclusion: On the facts and having regard to the seriousness of the allegations of GST evasion, recovered materials and the petitioner's conduct in the investigation, interlocutory relief in the form of anticipatory bail under Section 438 Cr.P.C. is refused and the petition is dismissed.

Summary order. As the cancellation of registration had already been revoked by the departmental order placed before the Court, the writ petition was disposed of as closed and the connected miscellaneous petitions were also closed.

Permanent establishment - Business connection - Attribution of profits to permanent establishment - Reasonable attribution of revenue - Nil taxability after deduction of India related expenses

Permanent establishment - Business connection - Whether the appellant has a business connection and a permanent establishment in India - HELD THAT: - The tribunal recorded that the question of the appellant having a business connection / PE in India is covered by earlier decisions in respect of the appellant's predecessor entities. The detailed findings of the Delhi ITAT and Delhi High Court in the predecessor cases (GII/TGDSBV/GNBV) were applied to the facts before the tribunal, and it was noted that those authorities have upheld existence of PE/BC (including fixed place PE and dependent agent PE) or treated the issue as covered by earlier rulings. Accordingly, the tribunal treated the PE/BC aspect as covered against the appellant by earlier precedents and did not reopen the factual matrix afresh in contradiction of those decisions. [Paras 26, 27, 29, 30, 31]

The tribunal treated the existence of business connection and permanent establishment in India as covered against the appellant by the cited predecessor decisions.

Attribution of profits to permanent establishment - Reasonable attribution of revenue - Nil taxability after deduction of India related expenses - Whether the income attributable to the alleged India PE for AY 2017-18 should be determined at 15% of gross booking fees and whether, after allowing India related deductions, no taxable income remains - HELD THAT: - The tribunal applied the approach adopted in the predecessor decisions: first attribute a portion of the gross revenue to the Indian operations and then allow India related expenses against that attributed revenue. The earlier tribunal and High Court decisions on the predecessor entities had held that, on a functions, assets and risks analysis, 15% of the gross booking revenue can reasonably be attributed to the India operations and that, after allowing the distributor/subscriber payments and other India related expenses, the attributed revenue is entirely consumed leaving no taxable income in India. Applying the same principle to AY 2017 18, the tribunal held that attribution at 15% of gross booking fees and allowance of India related expenses reduces the taxable income to nil for the year under consideration. [Paras 34, 35, 36, 37, 38]

For AY 2017-18, attribution at 15% of gross booking fees and allowance of India related expenses results in nil taxable income in India.

Reasonable attribution of revenue - Whether the general and consequential grounds (including interest and other contested adjustments) require separate adjudication - HELD THAT: - The tribunal observed that once the principal question of attribution and resulting nil taxability is decided in favour of the appellant for the relevant year, the remaining general and consequential grounds become academic. Accordingly, the tribunal did not pursue separate adjudication of those ancillary grounds where their determination would not affect the concluded outcome for the year. [Paras 39, 40]

General and consequential grounds are rendered academic in view of the decision on attribution and nil taxability for AY 2017 18.

Final Conclusion: The appeal is partly allowed: while the existence of PE/BC in India is treated as covered by earlier precedents against the appellant, the tribunal held that for AY 2017 18 attributing 15% of gross booking fees to Indian operations and allowing India related expenses reduces the taxable income to nil; consequential and general grounds are treated as academic.

Remand to Assessing Officer for speaking order - treating writ petition as representation/application - direction to hear and pass speaking order within fixed time - prior written notice and opportunity of hearing (including video-conferencing) - liberty to challenge adverse order by appropriate remedy

Treating writ petition as representation/application - remand to Assessing Officer for speaking order - direction to hear and pass speaking order within fixed time - prior written notice and opportunity of hearing (including video-conferencing) - liberty to challenge adverse order by appropriate remedy - The writ petition is treated as the petitioner's representation and the matter is remitted to the Assessing Officer for fresh consideration by way of a speaking order within a fixed time frame. - HELD THAT: - The Court directed that the writ petition shall be treated as the petitioner's representation/application and remitted the grievance to the Assessing Officer (AO) for fresh consideration. The AO is required to hear the petitioner and/or his authorised representative and pass a speaking order addressing the grievances raised; this exercise must be completed as early as possible and in any event within six weeks from receipt of a copy of the order. The petitioner is to file a copy of the writ petition with annexures before the AO. The AO must issue a prior written notice indicating the date and time for hearing and has the discretion to conduct the hearing via video-conferencing. Finally, the petitioner is afforded the liberty to pursue appropriate remedies if the AO's order is adverse to his interests. [Paras 5]

Writ petition treated as representation and remitted to the AO with directions to hear the petitioner and pass a speaking order within six weeks; petitioner to file the writ and AO to issue notice and may hear via video-conference; liberty to challenge any adverse order.

Final Conclusion: Writ petition disposed of by treating it as a representation and remanding the matter to the Assessing Officer for a speaking order within six weeks after hearing the petitioner; petitioner may challenge any adverse order by invoking appropriate remedies.

Violation of principles of natural justice - admissibility of electronic records in evidence under Section 65B of the Indian Evidence Act - assessment under Section 153A must be founded on incriminating material seized at the time of search - proceedings under Section 153C required where tax liability is sought to be fixed on the basis of materials seized from premises of another person - right to cross-examine persons whose statements recorded under Section 132(4) are relied upon - duty to furnish copies of panchanama and seized materials to the assessee

Violation of principles of natural justice - duty to furnish copies of panchanama and seized materials to the assessee - Non-furnishing of panchanamas and seized materials to the petitioners amounted to violation of principles of natural justice and vitiated the assessment orders. - HELD THAT: - The Court found that the department had not furnished all panchanamas and seized materials despite admitting entitlement in earlier pleadings and despite specific requests by the petitioners, and that the department's subsequent justification in its counter was not communicated prior to passing the assessments. Denial of copies deprived the petitioners of knowledge of the seized materials and of the opportunity to identify and challenge the materials relied upon; this constituted a breach of natural justice. The Department's contention that voluminous materials made furnishing impractical was rejected; where seized materials are relied upon in framing assessments, copies must be furnished or specific reasons communicated and recorded before conclusion of the assessment. The assessments framed in these circumstances were therefore set aside and remitted for fresh consideration. [Paras 18, 19, 20, 21, 26]

Assessment orders set aside and remanded for de novo assessment; respondent to furnish details of all seized materials and provide copies as directed and explain any refusal before reassessment.

Right to cross-examine persons whose statements recorded under Section 132(4) are relied upon - violation of principles of natural justice - Denial of opportunity to cross-examine persons whose statements recorded under Section 132(4) were relied upon vitiated the assessments. - HELD THAT: - The Court held that when an authority proposes to rely upon statements recorded under Section 132(4), the person against whom such statements are used must be afforded an opportunity to controvert them, including by seeking cross-examination of the declarant. The fact that declarants were employees did not deprive the assessee of the right to seek cross-examination. Relying upon such statements without offering cross-examination amounted to a breach of the fundamental principles of evidence and natural justice; accordingly the assessing officer must afford opportunity for cross-examination when the statements are to be used in the reassessment. [Paras 22, 23, 26]

On remand, respondent shall afford opportunity for cross-examination of persons whose statements under Section 132(4) are relied upon.

Admissibility of electronic records in evidence under Section 65B of the Indian Evidence Act - Electronic records relied upon by the department as secondary evidence were inadmissible in the absence of compliance with Section 65B and therefore could not sustain the assessments. - HELD THAT: - The Court applied the principles laid down in Anvar P.V. and subsequent authorities: electronic records sought to be produced as secondary evidence must satisfy the conditions of Section 65B(2) and be accompanied by a certificate as required by Section 65B(4). Absent such compliance, computer-generated materials like Excel sheets, emails, and chats cannot be admitted in evidence. Because the impugned assessments were framed based on such electronic records without compliance with Section 65B, the assessments could not stand. The assessing officer, if intending to rely on electronic records in the fresh proceedings, must strictly comply with Section 65B. [Paras 24, 26]

Assessments set aside; on remand respondent must comply with Section 65B before relying on electronic records.

Assessment under Section 153A must be founded on incriminating material seized at the time of search - proceedings under Section 153C required where tax liability is sought to be fixed on the basis of materials seized from premises of another person - Assessments under Section 153A cannot be premised on incriminating materials seized from premises of other persons/groups; where liability is to be fixed on such basis, proceedings under Section 153C are the proper remedy. - HELD THAT: - The Court noted that materials seized from premises of another group were used in framing assessments against the petitioners without adequate justification or notice. It held that materials found in premises of other persons cannot be used to fix tax liability on the petitioners in assessments under Section 153A; if the department intends to fix liability on that basis, proceedings must be initiated under Section 153C. The Court directed that none of the statements or materials belonging to the other group be taken into account while framing assessments on the petitioners; if the department persists in using such materials, the petitioners must be given an opportunity to cross-examine the declarants and the department must initiate Section 153C proceedings where appropriate, with limitation periods running afresh from such proceedings. [Paras 4, 23, 26]

Assessing officer shall not base assessments under Section 153A on materials/statements seized from other group; if reliance is necessary, proceed under Section 153C and afford prescribed opportunities, otherwise exclude such materials on remand.

Final Conclusion: The High Court set aside the impugned assessment orders for the specified Assessment Years and remanded the matters for de novo assessment, directing the assessing officer to (a) furnish seized materials and panchanama copies or record and communicate specific reasons for refusal, (b) permit cross-examination of persons whose Section 132(4) statements are relied upon, (c) comply strictly with Section 65B before relying on electronic records, and (d) refrain from using materials/statements of other groups in Section 153A proceedings (proceed under Section 153C if necessary).

Disallowance of business loss for want of substantiation - Sauda settlement and forward contract evidentiary requirements - speculative transaction under section 43(5) - non availability of set off against profits of regular business - necessity of contemporaneous trade records/contract notes - acceptance of audited accounts not conclusive on a specific disallowance

Disallowance of business loss for want of substantiation - Sauda settlement and forward contract evidentiary requirements - necessity of contemporaneous trade records/contract notes - acceptance of audited accounts not conclusive on a specific disallowance - Whether the claimed loss of Rs. 10,43,274 on account of a 'Sauda Settlement' was sufficiently substantiated and admissible as a business loss. - HELD THAT: - The Tribunal found that the assessee failed to furnish any contemporaneous details of the alleged bargain - what was sold, rates, delivery terms, market rates at contract and delivery, sauda book or contract notes - despite opportunities to do so. Oral bargains, while legally permissible, are ordinarily reduced to contemporaneous records in trade practice to enable performance and resolution of disputes; their absence rendered the transaction opaque. Contradictions in the assessee's account (e.g., freight entries, absence of corresponding ledger entries in the counterparty's account, large unexplained debit/credit balances and financing from the counterparty) further undermined the truth of the asserted transaction. The fact that the assessee's accounts were audited or broadly accepted by Revenue did not preclude disallowance of a specific item unsupported by evidence. On these findings the Tribunal concluded the loss was not proved as a genuine business loss and rightly disallowed it. [Paras 3, 4]

The claimed loss for the Sauda settlement is not substantiated and cannot be allowed as a business loss; the disallowance is upheld.

Speculative transaction under section 43(5) - non availability of set off against profits of regular business - Whether, even on the assessee's assertion that the transaction was an open ended sauda reversed on account of adverse price movement, the loss would be non allowable or restricted by the doctrine of speculative transactions and rules on set off. - HELD THAT: - The Tribunal observed that the assessee's pleaded alternative - that the transaction was an open ended bargain discharged by bearing the difference - if accepted, would render the transaction speculative within the meaning of section 43(5). Speculative business profits and losses are to be treated as a separate business (Explanation 2 to section 28) and cannot be set off against profits of the assessee's regular trading business. Given that the transaction was unsupported by details and materials, it could not be saved by any proviso and in any event would not be available for set off against the regular wholesale trading business or alleged commission/brokerage activity. The Tribunal therefore affirmed that the loss could not be admitted even on the speculative transaction footing. [Paras 3, 4]

Even if treated as an open ended reversed sauda, the loss falls within the ambit of speculative transactions and is not eligible for set off against the assessee's regular business profits; it is therefore not allowable.

Final Conclusion: The appeal is dismissed; the disallowance of the claimed Sauda settlement loss for AY 2013 14 is confirmed on grounds of non substantiation and, alternatively, because the transaction would be speculative and not available for set off against the assessee's regular business profits.

Reopening of assessment - reasons to believe under section 147 - audit objection as basis for reopening - first proviso to section 147 - non disclosure of material facts - validity of partnership deed / compliance with section 184 - distinction between reason to suspect and reason to believe

Audit objection as basis for reopening - reasons to believe under section 147 - distinction between reason to suspect and reason to believe - Whether information arising from a revenue/audit objection can constitute a valid basis for recording reasons to believe for reopening assessment under section 147. - HELD THAT: - The Tribunal followed the principle in Indian & Eastern Newspaper Society v. CIT and held that an audit objection which brings relevant facts to the notice of the Assessing Officer is not, by itself, infirm. The opinion of the auditor on a point of law cannot create a reason to believe, but communication of facts by the audit that may bear on s.147 can validly inform the AO's reasons. However, a distinction remains between mere suspicion and a formed reason to believe; where the record only shows the AO's guess or need for further examination, that amounts to a reason to suspect and is insufficient. Applying these principles, the Tribunal accepted that reliance on an audit objection is not per se invalid, but emphasized that the material must amount to a reason to believe, not merely a suspicion requiring further inquiry. [Paras 4]

An audit objection may validly supply facts for forming a reason to believe under s.147, but the material must constitute a reason to believe and not merely a reason to suspect.

First proviso to section 147 - non disclosure of material facts - validity of partnership deed / compliance with section 184 - reopening of assessment - Whether the reassessment was validly initiated in the present case having regard to alleged non disclosure of material facts relating to the revised partnership deed and compliance with section 184. - HELD THAT: - The Tribunal examined the reasons recorded, including the asserted non signing of front pages, the notarization/purchase dates of the stamp paper, and delay in filing the return. While noting that the assessee had not filed a certified copy of the revised deed with the return and had delayed filing, the Tribunal found that the specific reasons recorded in the reopening (non signing of front pages and the long interval before notarization) did not amount to a formed reason to believe escapement of income. The first two reasons mentioned in the reasons recorded (late return, and the interest paid to a senior citizen) were held legally and factually infirm. The Tribunal concluded that the recorded material, in effect, amounted to suspicion and an admission that further examination was required, rather than providing definite information constituting a reason to believe. The Tribunal also observed that arguments about the validity of a plain paper deed, signatures on pages, and other documentary issues went beyond the scope of the recorded reasons and could not be resorted to to sustain reopening. [Paras 4]

Reopening under section 147/148 was not validly initiated on the basis of the reasons recorded; the reassessment is therefore set aside.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that although an audit objection may furnish facts for consideration, the reasons recorded in this case did not constitute a settled reason to believe for reopening under section 147/148; the reassessment for AY 2008-09 was therefore invalidly initiated and set aside.

Revision under section 263 - erroneous and prejudicial to the interests of the Revenue - verification of share application money - application of mind by the Assessing Officer - reassessment under section 147 r.w. section 143(3)

Revision under section 263 - erroneous and prejudicial to the interests of the Revenue - verification of share application money - application of mind by the Assessing Officer - Validity of the Commissioner's revision under section 263 in setting aside the reassessment order to examine genuineness of share application money received from Maxius Ventures Ltd. - HELD THAT: - The Tribunal examined whether the ld. Principal Commissioner of Income Tax was justified in holding that the assessing officer's order under section 143(3) r.w. section 147 was erroneous and prejudicial to the Revenue for failure to verify the share application money of Rs. 45 lakhs received from Maxius Ventures Ltd. The reassessment had been opened to examine share application money from four entities and, during reassessment, the Assessing Officer called for information (including under section 133(6)), examined the investor's documents and treated three investments as genuine while making an addition in respect of the fourth. The ld. PCIT's conclusion rested on two contentions: (i) bank records showed only Rs. 20 lakhs instead of Rs. 45 lakhs, and (ii) a decrease in the investor's aggregate investments in its balance sheet cast doubt on the genuineness/creditworthiness. The Tribunal found that the ld. PCIT misconstrued the material on record - the investor's bank statement, corroborated by the assessee's bank statement and transaction enquiry, reflected two entries of Rs. 20 lakhs and Rs. 25 lakhs totaling Rs. 45 lakhs, and the investment in the assessee was also reflected and confirmed in the investor's balance sheet and by direct enquiry. The assessee had produced corroborative material including bank statements, confirmation, ITR, balance sheet and MCA data, and the Assessing Officer independently called for and cross verified information from the investor company. Given these enquiries and verifications, the Tribunal concluded that the Assessing Officer had applied his mind and taken a prudent view on the material available; the factual discrepancies relied upon by the ld. PCIT did not render the assessment order erroneous in a manner prejudicial to Revenue. Consequently, there was no justified basis to set aside the entire reassessment order; if any revision were necessary it would be confined to the specific investor entry, but on facts even that was unnecessary. [Paras 10, 11, 12, 13, 14]

The ld. PCIT's revision under section 263 is without basis; the assessment order under section 143(3) r.w. 147 is not erroneous or prejudicial to Revenue in respect of the share application money from Maxius Ventures Ltd and the order under section 263 is set aside.

Final Conclusion: The appeal is allowed; the order of the Principal Commissioner under section 263 setting aside the reassessment is quashed and the Assessing Officer's order under section 143(3) r.w. 147 for A.Y 2011-12 is sustained insofar as it relates to the share application money from Maxius Ventures Ltd.

Rectification under section 154 of the Income-tax Act - mistake apparent from record - change of opinion - TDS credit adjustment - appeal rendered infructuous by subsequent orders

Rectification under section 154 of the Income-tax Act - mistake apparent from record - change of opinion - TDS credit adjustment - Whether the Revenue's appeal against the CIT(A)'s direction quashing the A.O.'s rectification order reducing TDS credit remains subsisting or is rendered infructuous by subsequent appellate directions and consequential compliance. - HELD THAT: - The ITAT recorded that in the assessment under the return the assessee had claimed TDS credit which was partly restricted by the A.O. The A.O. thereafter passed an order under section 154 further reducing the TDS credit. The CIT(A) held that the A.O.'s action under section 154 constituted a change of opinion and was not a "mistake apparent from record", and directed the A.O. to verify and allow the claim after due verification. The A.O., while giving effect to the CIT(A)'s direction, allowed the TDS credit as originally claimed. On this factual and procedural matrix the Tribunal found that the present appeal by the Revenue, which arises out of the A.O.'s section 154 order, has been subsumed by the later appellate order of the CIT(A) and the consequential compliance by the A.O. Since the appellate direction has been implemented and the TDS credit granted, there remains no effective relief that can be granted to the Revenue in the present appeal, rendering it infructuous. [Paras 7, 8]

The appeal is dismissed as infructuous because the CIT(A)'s subsequent order and the A.O.'s giving effect thereto have restored and granted the TDS credit.

Final Conclusion: The Revenue's appeal against the order arising from the A.O.'s section 154 proceedings is dismissed as infructuous since the CIT(A) restored the assessee's claim and the A.O. subsequently gave effect to that direction, resulting in the grant of the claimed TDS credit.

Rectification under Section 254(2) of the Income Tax Act - mistake apparent from the record - power to review versus power to rectify - service and issuance of notice under Section 148 - time limit under Section 149 - tribunal's lack of inherent review power

Rectification under Section 254(2) of the Income Tax Act - mistake apparent from the record - Whether the Miscellaneous application under Section 254(2) seeking recall of the Tribunal's order is maintainable on the ground of an apparent error. - HELD THAT: - The Tribunal held that Section 254(2) authorises rectification only of a mistake apparent from the record and does not permit re-opening questions of fact or re-appreciation of evidence decided on merits. The Revenue's challenge sought reconsideration of the merits of the earlier decision (particularly the correctness of findings on issuance and service of notice), which is not a permissible ground for rectification. Reliance was placed on authorities establishing that review is a creature of statute and that non-consideration or a difference of opinion on merits is not an "apparent mistake" warranting rectification. Consequently, the application did not disclose a mistake apparent from the record and was not maintainable under Section 254(2). [Paras 6]

Miscellaneous application under Section 254(2) dismissed as not disclosing any mistake apparent from the record.

Service and issuance of notice under Section 148 - time limit under Section 149 - Whether the Tribunal failed to appreciate facts regarding issuance and service of notice under Section 148 and the relevance of the time limit under Section 149 such that its order requires recall. - HELD THAT: - The Bench observed that the issue of issuance and service of the notice was fully considered and adjudicated on merits in the original order (operative discussion in paras 7-14 of that order). The present application merely challenges the Tribunal's factual and legal conclusion; it does not point to any manifest, self evident error on the face of the record. As the matter was decided after detailed consideration of submissions and precedents, the Revenue's plea that the Tribunal erred on this point amounts to seeking a review on merits, not rectification for an apparent mistake. [Paras 4]

The contention regarding issuance and service of the Section 148 notice was held to have been dealt with on merits and does not justify recalling the Tribunal's order.

Tribunal's lack of inherent review power - power to review versus power to rectify - Whether the Tribunal possesses an inherent power to review or recall its own orders adjudicated on merits. - HELD THAT: - The Tribunal reiterated that it has no inherent jurisdiction to review its own orders unless such power is expressly conferred by statute. Section 254(2) confers a limited discretionary power to rectify mistakes apparent from the record and does not equate to a right of review or a forum for re adjudicating merits. Authorities were cited to support that courts and tribunals of limited statutory jurisdiction cannot exercise review unless permitted by law; hence the Tribunal cannot recall an order to re open merits absent a clear, apparent error. [Paras 5]

The Tribunal has no inherent power to review its merits adjudicated order; rectification under Section 254(2) is limited and discretionary.

Final Conclusion: The Miscellaneous application by the Revenue seeking recall of the Tribunal's order was dismissed: the challenges raised involved re opening merits and did not disclose any mistake apparent from the record amenable to rectification under Section 254(2), and the Tribunal has no inherent power to review its merits adjudicated order.

Genuineness, identity and creditworthiness under section 68 of the Income-tax Act, 1961 - Allowability of expenditure under section 37 where loans are disbursed in violation of RBI norms - Disallowance of excessive or unsupported business expenditure based on Reserve Bank of India inspection findings - Rule of consistency in recurring assessment adjustments

Genuineness, identity and creditworthiness under section 68 of the Income-tax Act, 1961 - Onus on assessee to produce alleged shareholders or evidence to discharge section 68 - Addition of share capital received during the year (aggregating Rs. 3,02,27,000/-) treated as unexplained cash credit under section 68 was sustained. - HELD THAT: - The Tribunal upheld the finding that the assessee failed to discharge the primary burden under section 68 to establish identity, genuineness and creditworthiness of the four alleged contributors. Two alleged shareholders were not produced and summons issued could not be served; two others, when summoned, disclaimed being shareholders and stated they had only made fixed deposits. The cheques produced did not support the claimed source of funds (land compensation) and the assessee neither produced affidavits nor sought cross-examination during assessment proceedings. The Tribunal also noted prior year findings and the RBI inspection report recording violations, and applied the principle that the assessee could not shift the burden to the department by seeking cross-examination belatedly before the first appellate authority. On these facts the addition under section 68 was justified and upheld. [Paras 12, 13]

Addition under section 68 upheld and ground dismissed.

Allowability of expenditure under section 37 where loans are disbursed in violation of RBI norms - Application of consistency where identical disallowance was admitted in preceding year - Disallowance of proportionate expenditure of Rs. 44,71,618/- on account of diversion/irregular loans was sustained. - HELD THAT: - The Tribunal agreed with the Assessing Officer and the CIT(A) that expenditure incurred was not shown to be wholly and exclusively for business where loans and advances had been extended in violation of RBI guidelines and to related parties (including advances to a director). The assessee had admitted that claimed expenditure related to grant of loans and advances. The Tribunal also relied on the rule of consistency, observing that the assessee had accepted identical disallowances in the immediately preceding assessment year; accordingly the disallowance was maintained. [Paras 14, 21, 22]

Disallowance under section 37 confirmed and ground dismissed.

Disallowance of excessive or unsupported business expenditure based on Reserve Bank of India inspection findings - Application of consistency in recurring assessment adjustments - Additions disallowing various expenses (repairs, generator, travelling and conveyance, food and beverages, and professional charges) were upheld in the measure sustained by the CIT(A). - HELD THAT: - The Tribunal found that the disallowances were warranted by deficiencies and irregularities recorded in the RBI inspection report and by the assessee's failure to rebut those observations or produce supporting vouchers. The Tribunal noted that similar disallowances had been admitted or not contested in the immediately preceding year, invoking the rule of consistency. The CIT(A)'s moderation of the AO's 30% disallowance to 20% for certain heads was accepted and the balance disallowance as determined by the CIT(A) was sustained. [Paras 23, 25]

Disallowances confirmed in the measure upheld by the CIT(A); ground dismissed.

Final Conclusion: The Tribunal dismissed the assessee's appeal for AY 2014-15, upholding the additions under section 68 and the disallowances of expenditure grounded on RBI inspection findings and prior-year consistency, with the measure of disallowance as determined by the first appellate authority being accepted.

Sanction for reopening under section 151 - Validity of notice under section 148 - Reason to believe versus mere reason to suspect / borrowed satisfaction - Communication of reasons for reopening - Addition as unexplained income under section 69A - Peak credit / inter-play of deposits and withdrawals

Sanction for reopening under section 151 - Validity of notice under section 148 - Whether the notice issued under section 148 of the Act was invalid for want of sanction under section 151. - HELD THAT: - The notice under section 148 was issued on 18.03.2015 for AY 2008-09. The unamended law applicable on that date prescribed prior approval of the Joint Commissioner for issuance of notice where no assessment under section 143(3) or section 147 existed and the notice was issued after four years; that is, section 151(2) applied. The record (report of the AO dated 12.04.2021) shows that approval was obtained from the Joint Commissioner, Range-6, Jaipur. The Tribunal held that the amended provision (substituted by Finance Act, 2015 w.e.f. 01.06.2015) which requires sanction of Principal CIT/CCIT/CIT is not retrospective and is not applicable to a notice issued before that amendment. Distinguishing decisions where proviso to section 151(1) applied, the Tribunal found no infirmity in the sanction obtained from the JCIT in the instant facts and rejected the contention of invalidity of the notice for want of competent sanction. [Paras 10, 11, 12, 14, 19]

Assessee's challenge to assumption of jurisdiction and validity of notice under section 148 for want of sanction is dismissed; sanction by JCIT was valid in the facts.

Communication of reasons for reopening - Whether the AO failed to communicate the reasons for reopening to the assessee rendering the proceedings invalid. - HELD THAT: - The AO recorded in the assessment order that the reasons for reopening were duly conveyed to the assessee. The assessee requested a copy of the reasons by letter dated 10.01.2017 only after completion of assessment on 23.10.2015 and did not seek the reasons or object during the assessment proceedings. The Tribunal found no prejudice to the assessee and no violation of judicial directions warranting invalidation of proceedings. [Paras 15, 16, 17]

Objection regarding non-supply of reasons for reopening is rejected.

Reason to believe versus mere reason to suspect / borrowed satisfaction - Whether the AO had only a mere suspicion (or a borrowed satisfaction) and lacked honest application of mind to form a reason to believe that income had escaped assessment. - HELD THAT: - The Tribunal examined the reasons recorded by the AO and found that sufficient material was in the possession of the AO to form a prima facie belief that income had escaped assessment. The contention that the satisfaction was borrowed or amounted to mere suspicion was rejected on the basis of the material on record. [Paras 18, 19]

Challenge that AO had only suspicion / borrowed satisfaction is rejected.

Addition as unexplained income under section 69A - Peak credit / inter-play of deposits and withdrawals - Whether the addition of Rs. 14,97,600 as unexplained income under section 69A is sustainable and whether specific sources claimed (opening cash/gift, wife's tuition receipts, past savings, peak credit) are proved. - HELD THAT: - The Tribunal considered the explanations and evidence. On the claim that Rs. 3.20 lakhs arose from opening cash (allegedly representing a Rs. 3 lakh gift from the assessee's mother in earlier years), the Tribunal observed that copies of cheques and bank statements were asserted to have been filed before the AO and remanded the matter to the AO to verify that claim and decide after giving the assessee opportunity. The Tribunal found the explanation for the wife's Rs. 6 lakhs (tuition and gifts) to be uncorroborated: the submitted list of students, even on generous calculation, did not account for the full amount and no balanced year-wise corroboration was furnished; this head was rejected. The claim that Rs. 5.77 lakhs were past savings was rejected as it impermissibly double-counted opening cash and no credible evidence of such past savings was produced. The alternate plea based on peak credit and inter-play of deposits and withdrawals was not adjudicated on merits by the AO; the Tribunal set aside this aspect to the AO to examine after affording opportunity to the assessee. [Paras 32, 33, 34, 35, 36]

Matter partly remanded: AO to verify and decide claim of opening cash/gift from mother and to examine the peak-credit/withdrawal interplay after giving the assessee opportunity; claims regarding wife's tuition receipts and asserted past savings are rejected.

Final Conclusion: Appeal partly allowed for statistical purposes. Challenges to jurisdictional validity of reopening, communication of reasons and alleged borrowed satisfaction are dismissed; additions under section 69A are upheld in part but the Tribunal remands specific aspects (verification of earlier gift/opening cash and examination of peak-credit/withdrawal interplay) to the Assessing Officer for fresh decision after affording the assessee an opportunity.

Exclusive jurisdiction of the Settlement Commission - vesting of powers in the Settlement Commission under section 245F - cancellation of registration under section 12A - use of seized material in multiple proceedings - pendency of settlement application ousts concurrent action by income-tax authorities

Vesting of powers in the Settlement Commission under section 245F - exclusive jurisdiction of the Settlement Commission - cancellation of registration under section 12A - Whether the Commissioner (Exemptions) could validly cancel the trust's registration under section 12A after the Settlement Commission had admitted the trust's application. - HELD THAT: - The Tribunal examined section 245F and the admitted facts that the assessee's settlement application was filed on 05/01/2017 and admitted by the Settlement Commission on 17/01/2017. Section 245F(1) and (2) vest in the Settlement Commission the powers of an income-tax authority and, once the application is admitted, the Commission has exclusive jurisdiction in relation to the case unless and until the application is disposed of. Applying the reasoning of the Delhi High Court in Tahiliani Design (which recognises that matters arising from the same search/seizure may fall within the Commission's jurisdiction and that the Commission may examine related matters), the Tribunal held that the proceedings for cancellation under section 12A arose out of the same search that gave rise to the settlement application. Because the Settlement Commission was seized of the matter when the Commissioner (Exemptions) passed the cancellation order on 26/03/2019, the Commissioner lacked jurisdiction to cancel the registration; the power to deal with matters connected to the search and settlement was exclusively with the Settlement Commission. The Revenue's arguments on the merits of cancellation were held to be irrelevant to this jurisdictional conclusion. [Paras 6, 8, 9]

The cancellation of registration under section 12A by the Commissioner (Exemptions) is quashed as the Settlement Commission had exclusive jurisdiction after admitting the settlement application.

Condonation of delay - Whether the Tribunal should condone the delay in filing the appeal to the Tribunal. - HELD THAT: - The assessee explained the delay by showing that, on professional advice, it had first filed writ proceedings and pursued the Settlement Commission process, which led to a belated filing before the Tribunal. The Revenue raised no objection to the condonation application. Finding the explanation plausible, the Tribunal exercised its discretion to condone the delay and directed that the appeal be heard on merits. [Paras 3]

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

Final Conclusion: The appeal is allowed: the Tribunal condoned the delay in filing the appeal and set aside the order of the Commissioner (Exemptions) cancelling the trust's registration under section 12A on the ground that the Settlement Commission had exclusive jurisdiction after admitting the settlement application; other grounds were rendered academic.

Foreign tax credit under DTAA - Double taxation relief where exempt income is chargeable but exempt under domestic law - Interpretation of Section 90(1)(a)(ii) in relation to exempt income - Precedence of specific treaty provision over general provisions of the Income-tax Act - Minimum Alternate Tax computation - Application of the correct MAT rate under section 115JB

Foreign tax credit under DTAA - Double taxation relief where exempt income is chargeable but exempt under domestic law - Interpretation of Section 90(1)(a)(ii) in relation to exempt income - Precedence of specific treaty provision over general provisions of the Income-tax Act - Whether the assessee is entitled to claim credit for tax deducted in Japan on income from sale of software despite exemption under Section 10A of the Act, and the manner in which the Assessing Officer should adjudicate that claim. - HELD THAT: - The Tribunal held that the India-Japan DTAA is worded along lines similar to the Indo-US DTAA considered by the Karnataka High Court in Wipro and followed by this Tribunal in HCL Comet. The decision explains that income falling within Section 10A is chargeable under the Act but exempted from payment for a limited period; such exemption suspends collection of tax but does not render the income non-leviable. By virtue of Section 90(1)(a)(ii) and the relevant treaty provision, where the treaty provides for relief in respect of income-tax chargeable under the Act and under the corresponding law in the other country to promote trade and investment, the assessee may be entitled to credit of foreign tax even though the income enjoys domestic exemption for the limited period. The Tribunal observed that when a specific provision in a DTAA governs relief, that provision prevails over the general provisions of the Act and directed that the Assessing Officer consider the claim of foreign tax credit in accordance with the directions of the Karnataka High Court and the approach adopted in the coordinate decisions, on the basis of material to be furnished by the assessee.

Directed the Assessing Officer to consider the assessee's claim for foreign tax credit for taxes withheld in Japan in accordance with the traty-based approach as explained by the Karnataka High Court and adopted by this Tribunal; claim allowed for consideration and the AO to call for necessary evidence.

Minimum Alternate Tax computation - Application of the correct MAT rate under section 115JB - Whether the Assessing Officer applied the correct rate of MAT in computing the assessee's liability. - HELD THAT: - The Tribunal found that in the remand/rectification proceedings the Assessing Officer had applied an incorrect MAT rate (not in conformity with the statutory rate). The Tribunal did not adjudicate detailed computation but directed the Assessing Officer to determine the applicable rate of MAT for the year under consideration in accordance with the provisions of law.

Directed the Assessing Officer to apply the correct MAT rate as provided by law while recomputing the tax liability.

Final Conclusion: Appeal allowed; the Tribunal directed the Assessing Officer to reconsider the assessee's claim for foreign tax credit in accordance with the treaty-based approach as explained by the Karnataka High Court and applied by this Tribunal, and to compute MAT applying the correct statutory rate.

Deductibility of Employee Stock Option Scheme compensation as revenue expenditure under section 37(1) - Disallowance under section 14A read with Rule 8D - Computation under Rule 8D - treatment of investments made for acquiring or retaining controlling stake - Exclusion from Rule 8D computation of investments whose income forms part of total income (growth funds)

Deductibility of Employee Stock Option Scheme compensation as revenue expenditure under section 37(1) - Allowability of ESOP compensation as a revenue expenditure deductible under section 37(1) for the assessment years in dispute. - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the disallowance of ESOP compensation, following binding precedents of the jurisdictional High Court and the Special Bench decision relied upon by the assessee. The CIT(A) accepted that the appellant, a listed company, recognized the ESOP cost in accordance with SEBI guidelines and on mercantile accounting the liability to pay/compensate employees by way of options gave rise to an ascertainable liability. The Tribunal found no infirmity in CIT(A)'s conclusion that the difference between market price and grant price constitutes employee cost/expense and may be revenue in nature under section 37(1), particularly in light of judicial pronouncements holding that 'expenditure' can in appropriate circumstances include a loss or an ascertained liability even if not an outgo of cash. Accordingly, the Revenue's grounds challenging deletion of the ESOP disallowance were dismissed.

The disallowance of ESOP compensation was deleted and the Revenue's appeals on this ground are dismissed.

Disallowance under section 14A read with Rule 8D - Computation under Rule 8D - treatment of investments made for acquiring or retaining controlling stake - Exclusion from Rule 8D computation of investments whose income forms part of total income (growth funds) - Correct approach to computation of disallowance under section 14A read with Rule 8D and the extent to which investments should be excluded or included (growth funds; strategic investments for control). - HELD THAT: - The CIT(A) deleted the disallowance under section 14A/Rule 8D principally on two bases: (i) investments in growth funds (whose income is taxable and thus forms part of total income) should be excluded from the average value of investments for computing the one-half percent provision under Rule 8D(2)(iii); and (ii) certain investments in subsidiaries were treated by the CIT(A) as strategic/control investments which the CIT(A) excluded from the Rule 8D computation. On appeal the Tribunal accepted the principle that investments whose income is included in taxable income (such as growth funds, if so found on verification) should be excluded from the Rule 8D(2)(iii) computation, but recalled that the Supreme Court's decision in the Maxxop line of cases treats strategic investments made for acquiring or retaining control as within the scope of Rule 8D computation. Consequently the Tribunal set aside the CIT(A)'s exclusion to the extent it treated controlling stake investments as outside Rule 8D and restored the matter to the Assessing Officer for recomputation; the AO was directed to verify whether income from the growth funds had been included in taxable income and, if so, exclude those investments when computing disallowance in terms of Rule 8D(2)(iii). For the subsequent year, the Tribunal upheld CIT(A)'s conclusion to delete the disallowance subject to the same verification and consistency with the decision to remit computation to the AO.

CIT(A)'s deletion of Rule 8D disallowance is set aside in part and the matter is restored to the Assessing Officer for recomputation: AO to verify inclusion of growth fund income in taxable income (and exclude such investments if so included) and to compute disallowance treating strategic/controlling stake investments in accordance with Supreme Court authority; Revenue's appeals are allowed partly for statistical purposes and the assessee's cross objection is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's challenges to the deletion of the ESOP compensation disallowance, allowed in part the Revenue's challenge to the Rule 8A/Rule 8D disallowance by restoring the matter to the Assessing Officer for recomputation in light of Supreme Court authority and verification of whether growth fund income was included in taxable income; the Revenue appeals are thus allowed partly for statistical purposes and the assessee's cross objection is dismissed.

Computation of book profit under section 115JB - provision for doubtful debts - bad debts written off - Explanation 1 to section 115JB - limited power to adjust book profit - ratio in Apollo Tyres on book profit

Computation of book profit under section 115JB - provision for doubtful debts - bad debts written off - Explanation 1 to section 115JB - limited power to adjust book profit - Whether the amount of bad debts written off during the year, adjusted against provisions created in earlier years, should be reflected in the book profit for the purpose of section 115JB and allowed/reduced as per clause (i) to Explanation 1. - HELD THAT: - The Assessing Officer disallowed reduction claimed by the assessee in book profit on the ground that the assessee had not placed sufficient substantiation; the Commissioner (Appeals) accepted the deduction for regular income-tax purposes but rejected its effect on book profit under section 115JB on the ground that the write off did not appear as a credit to the profit and loss account. The CIT(A) applied the Supreme Court decisions (Apollo Tyres and Malayalam Manorama) holding that book profit is to be taken as shown in the profit and loss account and adjustments are limited to those provided in Explanation 1 to section 115JB; neither the assessee nor the AO may make adjustments beyond those expressly permitted. The Tribunal observed that the central question - whether the bad debts written off during the year have in fact been reflected in the books (profit & loss account or by way of withdrawal from provision credited to profit & loss) so as to attract clause (i) to Explanation 1 - requires verification of the books and financial statements. In view of the documentary material placed on record, the Tribunal found it appropriate to remit the matter to the Assessing Officer to verify the accounting treatment in the books, determine whether the write back/withdrawal was credited to the profit & loss account within the meaning of clause (i) to Explanation 1, and compute book profit accordingly, affording the assessee an opportunity of being heard. [Paras 4, 5]

Issue remitted to the Assessing Officer for verification of the books and recomputation of book profit under Explanation 1 to section 115JB; assessee to be heard and AO to decide afresh.

Final Conclusion: The Tribunal has not decided the substantive entitlement of the assessee to reduce book profit by the bad debts written off; applying the settled principle that book profit can be adjusted only as provided in Explanation 1 to section 115JB, the Tribunal remanded the question to the Assessing Officer to verify the accounting entries in the books and recompute book profit accordingly; appeal allowed for statistical purposes.

Non-compete fee - capital receipt - negative covenant - taxability prior to amendment of section 28(va) w.e.f. 1.4.2003 - binding precedent of the Supreme Court

Non-compete fee - capital receipt - negative covenant - taxability prior to amendment of section 28(va) w.e.f. 1.4.2003 - Guffic Chem principle - Whether the amount received by the assessee as non-compete fee under the sale agreement is a capital receipt and not taxable for the assessment year 1998-99. - HELD THAT: - The Tribunal held that the payment was received pursuant to a clear negative covenant in the sale and purchase agreement whereby the vendor agreed not to carry on or be concerned in the transferred business for two years; that such payment was for refraining from carrying on a competitive business and therefore falls within the category of compensation attributable to a negative/restrictive covenant. Reliance was placed on the binding principle laid down by the Hon'ble Supreme Court in Guffic Chem (and followed in Shiv Raj Gupta) that until the amendment effected by Finance Act, 2002 w.e.f. 1-4-2003, compensation received under a non competition agreement constituted a capital receipt and was not taxable. No challenge was made to the genuineness of the transaction, and the factual matrix necessary to apply the Guffic Chem dichotomy was present on the record. The Tribunal therefore applied the settled law that such non compete consideration is a capital receipt and not assessable as income for the year in question. [Paras 6, 8, 9]

The non compete fee received by the assessee is a capital receipt and not liable to tax for AY 1998-99; the cross objection is allowed.

Final Conclusion: Following the Supreme Court precedents (notably Guffic Chem and Shiv Raj Gupta) and on the facts recorded, the Tribunal allowed the assessee's cross objection and held the non compete consideration to be a capital receipt not chargeable to tax for AY 1998 99.

Conversion of Zero Duty EPCG licence to 10% duty scheme - compliance with condition for concessional import - payment of duty and interest to Customs

Conversion of Zero Duty EPCG licence to 10% duty scheme - compliance with condition for concessional import - Whether the Zero Duty EPCG licence could be converted to a 10% duty licence and whether the appellant had complied with the relevant concessional import condition. - HELD THAT: - The Policy Relaxation Committee (PRC) considered the appellant's request and decided to allow conversion of Zero Duty EPCG licence No. 01500538 dated 11-10-1996 to a 10% duty licence in relaxation of the applicable Foreign Trade Policy provision, subject to payment of 10% duty with interest to Customs (letter recording PRC decision quoted). The appellant thereafter deposited the duty on 16-4-2014 and subsequently deposited the interest when called upon to do so, with communication of such payment on 31-3-2018. Given the PRC's decision permitting conversion subject to the stated payment obligation, and the appellant's compliance by making the required payments, the controversy regarding compliance with the concessional import condition and the appropriate duty treatment stands resolved. [Paras 2, 3, 4]

PRC allowed conversion of the licence to the 10% duty scheme subject to payment of duty with interest, the appellant paid duty and interest, and accordingly the dispute is resolved.

Payment of duty and interest to Customs - Whether payment of the duty and interest by the appellant cured the dispute between the parties. - HELD THAT: - The record shows the appellant deposited the duty and later the interest as required by the PRC's relaxation order and communicated the same to the authority. The Court records that in view of these events the subject matter of dispute stands resolved in the terms stated and no further directions are necessary. [Paras 3, 4]

The appellant's payment of duty and interest resolved the dispute and the appeal is disposed of.

Final Conclusion: The PRC permitted conversion of the Zero Duty EPCG licence to the 10% duty scheme subject to payment of duty with interest; the appellant paid the duty and interest, the dispute is thereby resolved, and the appeal is disposed of.

Penalty - statutory interest - limited notice - reopening of factual findings - withdrawal from market and cessation of operations - no precedential value

Penalty - withdrawal from market and cessation of operations - no precedential value - Validity of the penalty imposed by the Tribunal on the appellant - HELD THAT: - The Court confined its consideration to penalty and found the order imposing penalty insufficiently reasoned in light of the defence that the appellant had worldwide operations and employees worked under the supervision of a joint venture partner. The Court also took into account the appellant's affidavit stating that it had withdrawn from the Indian market and had deposited Rs. 38 crores covering the principal and part statutory interest. In the peculiar facts of the case, and because of lack of in-depth discussion of the defence, the Court set aside the penalty. The Court expressly stated that this decision is not to be treated as a precedent in other cases. [Paras 6, 7]

Penalty set aside in the peculiar facts of the case; order has no precedential effect.

Reopening of factual findings - limited notice - Whether the Court should reopen the entire case beyond the limited notice issued on penalty - HELD THAT: - The Court refused the appellant's request to reopen the entire matter. It observed that a limited notice on penalty had been issued after hearing the parties and accepted by the appellant, and therefore it was not open to challenge that procedural limitation at a belated stage. The Court also declined to re-examine factual findings and recorded deviations which reflected clear infraction of statutory mandate. [Paras 4]

Request to reopen the entire case declined; proceedings confined to question of penalty as per limited notice.

Statutory interest - penalty - Whether the Department may recover statutory interest despite setting aside the penalty - HELD THAT: - Although the penalty was set aside, the Court clarified that the Department remained free to recover any statutory interest component if a deficit remained after account of the Rs. 38 crores deposited by the appellant. Any such demand is to be complied with by the appellant within the time frame specified in the Department's demand notice. [Paras 8]

Department entitled to recover statutory interest, if any deficit remains, subject to the demand notice time frame.

Final Conclusion: Appeals partly allowed by setting aside the penalty in the peculiar facts of the case; the request to reopen the entire matter was refused; Department may recover any remaining statutory interest despite the penalty being set aside; order not to be treated as precedent.

Exclusive jurisdiction of the Principal Bench of the NCLT - ouster clause - absence of jurisdiction versus error of jurisdiction - writ jurisdiction under Article 226 - alternative statutory remedy before specialized tribunals (NCLT/NCLAT) - maintainability of writ petition - judicial discretion in exercise of writ jurisdiction

Maintainability of writ petition - exclusive jurisdiction of the Principal Bench of the NCLT - alternative statutory remedy before specialized tribunals (NCLT/NCLAT) - absence of jurisdiction versus error of jurisdiction - writ jurisdiction under Article 226 - Whether the writ petition under Article 226 was maintainable despite the petitioner's plea that the NCLT, Mumbai Bench had no jurisdiction under the proviso to Section 241(2) and that therefore the proceedings before it were a nullity. - HELD THAT: - The Court confined its consideration to maintainability and held that the mere allegation that the Mumbai Bench lacked jurisdiction under the proviso to Section 241(2) did not, on the facts presented, justify bypassing the alternate statutory remedies created by the Companies Act. The Court acknowledged the established principle that absence of jurisdiction (as opposed to mere error) can justify invocation of writ jurisdiction, but observed that whether the proviso ousted the Mumbai Bench's jurisdiction required interpretation of the Companies Act and could prejudice parties if decided by this Court at the interlocutory stage. The availability of efficacious remedies before the NCLT/NCLAT, including existing appeals pending in the NCLAT against the same order, and the completeness of the statutory scheme under the Companies Act weighed in favour of relegation to the specialized forums. Exercising its discretion, the Court declined to entertain the writ petition, refrained from expressing any view on the interpretation of the proviso to Section 241(2) or on merits (including alleged non-application of mind), and observed that the petitioner remained free to raise all grounds before the NCLT or NCLAT. [Paras 33, 34, 35, 36, 38]

Writ petition dismissed as not maintainable; petitioner relegated to raise all contentions before the NCLT/NCLAT and Court refrained from deciding on jurisdictional interpretation or merits.

Final Conclusion: The writ petition under Article 226 was dismissed on the ground that adequate statutory remedies exist before the NCLT/NCLAT; the Court did not adjudicate the merits or interpret the proviso to Section 241(2), and the petitioner is at liberty to pursue all grounds before the appropriate tribunals.

Extension of time to restore a dismissed original-side application - exercise of judicial discretion in restoration applications - right of a third party to seek intervention in proceedings to challenge affidavits - abatement of an appeal and deferral of decision on abatement - appeal under Section 10(F) of the Companies Act, 1956 - no interference unless order is perverse

Extension of time to restore a dismissed original-side application - exercise of judicial discretion in restoration applications - no interference unless order is perverse - Validity of the Impugned Order extending time to restore Company Application (L) No.3 of 2017 and consequential restoration of Company Appeal No.102 of 2015. - HELD THAT: - The High Court held that the Learned Single Judge exercised his discretion in extending time to take steps to restore Company Application (L) No.3 of 2017 up to 10th June 2021 (paragraph 5 of the Impugned Order). The court found nothing perverse in that exercise of discretion and there was no warrant to interfere with the order. The extension was a limited procedural relief to permit restoration steps; the discretion to grant such extension lies with the court hearing the restoration application and the appellate court will not disturb it absent perversity or demonstrable prejudice (paras 14, 17, 19). [Paras 14, 17, 19]

The extension of time to restore the application and consequential restoration of the Section 10(F) appeal was upheld and not interfered with.

Abatement of an appeal and deferral of decision on abatement - appeal under Section 10(F) of the Companies Act, 1956 - Whether the Impugned Order set aside the abatement of Company Appeal No.102 of 2015 or prejudiced the Appellant's rights as executor. - HELD THAT: - The court observed that paragraph 6 of the Impugned Order expressly preserves the Appellant's right to raise all contentions, including allegations of falsehood in affidavits, before the Company Court and therefore does not set aside the abatement; the decision on abatement was deferred to an appropriate stage (paras 6, 16). The High Court agreed that permitting restoration steps did not equate to obliterating challenges to wills/codicils or to the executor's status, and accepting the Appellant's submissions at this interlocutory stage would expand the scope of the appeal improperly (para 17). [Paras 6, 16, 17]

The Impugned Order did not set aside the abatement; decision on abatement was deferred and the Appellant's rights were reserved.

Right of a third party to seek intervention in proceedings to challenge affidavits - no interference unless order is perverse - Whether the Appellant was precluded from intervening or from seeking to have the affidavits impugned in the Company Court and interim amendment applications. - HELD THAT: - The court recorded that restoration proceedings are between the applicant and the court but nevertheless preserved the Appellant's right to file and prosecute an intervention application and to urge all points, including allegations that affidavits contain falsehoods; the Learned Single Judge's paragraph 6 explicitly leaves open the Appellant's right to seek dismissal on those grounds (para 6). The High Court also directed that the Appellant be permitted to intervene in the pending Interim Applications for amendments to the Company Applications so that the Appellant can raise the alleged falsehoods at the appropriate stage (para 18). These directions were held to adequately protect the Appellant's grievances and removed any prejudice alleged (paras 18, 19). [Paras 6, 18, 19]

The Appellant's right to intervene and to press allegations regarding falsehoods in affidavits was preserved; the Appellant is permitted to intervene in the stated Interim Applications.

Final Conclusion: The High Court found no perversity in the Impugned Order extending time to restore the dismissed Company Application and restoring the Section 10(F) appeal, kept the Appellant's rights expressly open to press all contentions including by intervention, directed that the Appellant be permitted to intervene in the interim amendment applications, and dismissed the appeal with no order as to costs.

Appointment of Government Directors under Section 408 as remedial and preventive measure - Burden to establish repayment and genuineness of fixed deposit claims - Finality of orders upheld by the Supreme Court and effect on power to modify - Power of Tribunal to entertain modification of earlier judicial orders - Contempt proceedings under Section 425 and maintainability before Tribunal - Requirement of specific facts to displace earlier directions appointing nominee directors

Appointment of Government Directors under Section 408 as remedial and preventive measure - Burden to establish repayment and genuineness of fixed deposit claims - Finality of orders upheld by the Supreme Court and effect on power to modify - Whether the order dated 01.07.2005 directing appointment of two Government directors can be modified in view of subsequent events relied upon by the company - HELD THAT: - The Tribunal examined the CLB order of 01.07.2005 directing appointment of two Government nominees under Section 408 in light of the company's present contentions that it has become profitable and has repaid a substantial number of fixed deposit claims. The Tribunal found the CLB and High Court had addressed the company's precarious financial position as of the date of petition and that the Supreme Court had upheld those conclusions. The company failed to furnish details or satisfactory evidence concerning (a) the reconciliation between the earlier aggregate claims and the amounts now purportedly paid, (b) the identities and genuineness of outstanding fixed deposit holders, and (c) particulars of interest payments. The Tribunal held that the precedent relied upon by the company was distinguishable on facts. Because the CLB order had been affirmed through the High Court and Supreme Court and the company did not establish the specific factual basis required to displace those directions, the Tribunal could not modify or recall the order. [Paras 15, 16, 17, 18, 19]

CA No. 785/2019 dismissed; the CLB order of 01.07.2005 remains unmodified.

Contempt proceedings under Section 425 and maintainability before Tribunal - Finality of orders upheld by the Supreme Court and effect on power to modify - Requirement of specific facts to displace earlier directions appointing nominee directors - Whether the application under Section 425 seeking initiation of contempt proceedings for non-compliance of the CLB order of 01.07.2005 is maintainable and what preliminary step should follow - HELD THAT: - The Tribunal considered the Union of India's application under Section 425 alleging willful non-compliance of the CLB order which was upheld by higher courts. The contemnors contended the CLB order had merged in the Supreme Court's disposal and thus contempt proceedings were not maintainable before this Tribunal. The Tribunal rejected that contention, observing that the Supreme Court neither modified the operative directions nor issued fresh directions that would preclude contempt action. On this basis the Tribunal found the submissions unsustainable and that the matter merited further adjudication; consequently, notice was ordered to be issued to the respondents for the contempt application. [Paras 21, 22, 23, 24, 25]

Notice issued to the respondents in CA No. 1207/2020; the contemnors' preliminary objection as to non-maintainability is rejected and the matter is listed for further hearing.

Final Conclusion: The company's application to modify the CLB order of 01.07.2005 is dismissed for failure to establish facts sufficient to displace directions affirmed by the High Court and Supreme Court; separately, the Union of India's contempt application for non-compliance of that order is held to be maintainable and notice has been issued to the respondents for further proceedings.

Initiation of Corporate Insolvency Resolution Process under Section 9 - Admission of petition on proof of debt and default - Appointment of Interim Resolution Professional - Moratorium and its prohibitions under Section 14 - Public announcement of admission under Section 13(2) - Duty of Interim Resolution Professional to manage affairs and preserve assets - Obligation of management and personnel to cooperate with the IRP

Initiation of Corporate Insolvency Resolution Process under Section 9 - Admission of petition on proof of debt and default - The application under Section 9 for initiation of CIRP was admitted and the petition was held maintainable. - HELD THAT: - The Tribunal found that the Operational Creditor proved existence of debt and default by filing invoices, reminder communications and a certificate under Section 9(3)(c) showing no credits in the relevant account. Notices were issued by all modes and the Corporate Debtor did not appear, leading to ex-parte consideration. On appreciation of the documents and submissions, the petition met the conditions under Section 9 and was admitted, thereby initiating CIRP against the Corporate Debtor with immediate effect. [Paras 3, 4]

Petition under Section 9 admitted and CIRP initiated against the Corporate Debtor.

Appointment of Interim Resolution Professional - Duty of Interim Resolution Professional to manage affairs and preserve assets - An Interim Resolution Professional was appointed and directed to perform statutory functions under the Code. - HELD THAT: - The Tribunal appointed the named insolvency professional to act as IRP and directed him to undertake steps required under the Code including functions specified by Sections 15, 17 and 18 and to file his report within 30 days. The IRP was instructed to take all necessary measures to manage the corporate debtor's affairs and to protect and preserve its assets in accordance with the statutory duties imposed on the IRP. [Paras 5, 11]

Mr. Sunil Kumar Gupta appointed as IRP; directed to perform statutory duties and file report within 30 days.

Moratorium and its prohibitions under Section 14 - Moratorium under Section 14 was declared and the statutory prohibitions were imposed. - HELD THAT: - The Tribunal declared the moratorium consequent on admission of the Section 9 petition and specified the statutory prohibitions flowing from Section 14(1)(a)-(d), including restraint on institution or continuation of suits, transfer or disposal of assets by the corporate debtor, enforcement of security interest and recovery of property occupied by the corporate debtor. Exceptions and clarifications were also recorded regarding non-suspension of certain licences and supplies subject to payment of current dues, and the non-application of moratorium to specified transactions and to sureties as per amended provisions. [Paras 8, 9, 10]

Moratorium imposed with specified prohibitions and clarifications as to exceptions.

Public announcement of admission under Section 13(2) - The IRP was directed to make the public announcement of admission within the prescribed period. - HELD THAT: - In accordance with Section 13(2) and the Explanation to Regulation 6(1) of the IBBI Regulations, the Tribunal directed the Interim Resolution Professional to make the public announcement of admission immediately (within three days as prescribed) to inform stakeholders about the initiation of CIRP. [Paras 7]

IRP to make public announcement of admission within the prescribed period.

Interim funding for CIRP expenses - Applicant was directed to deposit an amount to meet immediate IRP expenses, to be accounted for and treated as recoverable CIRP cost. - HELD THAT: - The Tribunal directed the applicant to deposit a specified sum to enable the IRP to meet immediate expenses. The amount was ordered to be accounted for by the IRP and to be reimbursed to the applicant as costs recoverable in the CIRP, thus ensuring immediate funding for the IRP to discharge statutory functions. [Paras 6]

Applicant directed to deposit funds for immediate IRP expenses to be accounted for and reimbursed as CIRP costs.

Obligation of management and personnel to cooperate with the IRP - Directives issued that the corporate debtor's management and personnel must cooperate with the IRP and that violations may invite appropriate applications. - HELD THAT: - The Tribunal reminded that persons connected with the corporate debtor, including promoters and personnel, are under a statutory obligation to extend cooperation to the IRP in managing day-to-day affairs as per Section 19. It was also made clear that if the ex-management commits violations or participates in tainted transactions, the IRP may move the Tribunal for appropriate reliefs. The IRP must transact proceedings in accordance with the Code, Rules and Regulations. [Paras 11]

Management and personnel are obliged to assist the IRP; IRP may approach Tribunal for violations or tainted transactions.

Communication of order and statutory filing obligations - Registry was directed to circulate the order to concerned parties and the Registrar of Companies to update records. - HELD THAT: - The Tribunal directed its office to send copies of the order to the financial creditor, corporate debtor, IRP and the Registrar of Companies and instructed the ROC to update the status of the corporate debtor on its website and notify the public regarding admission of the petition, ensuring statutory and public notice of the CIRP initiation. [Paras 12]

Order to be communicated to stakeholders and Registrar of Companies to update public records.

Final Conclusion: The Tribunal admitted the Section 9 petition, initiated CIRP against the corporate debtor, appointed an Interim Resolution Professional with directions as to his duties and reporting, declared the moratorium with statutory prohibitions and exceptions, ordered immediate funding for IRP expenses, directed public announcement and communication of the order, and mandated cooperation by the corporate debtor's management.

Liquidation estate - liquidator's right to take possession of assets - assets in possession of third parties - fiduciary for the benefit of all creditors - requirement to value assets before sale - power to recall or review orders - NCLT lacks power to recall or review its own orders

Power to recall or review orders - NCLT lacks power to recall or review its own orders - Maintainability of the application seeking recall/set aside of the Tribunal's order dated 11.03.2021. - HELD THAT: - The application filed by the respondent to recall/set aside the Tribunal's order dated 11.03.2021 was considered in light of the authority of the Appellate Tribunal holding that review power is not an inherent power but must be conferred by statute or necessary implication. The NCLT Rules do not provide an express power of review/recall and Rule 11 is not a substantive source of jurisdiction to exercise such power. Consequently, the Tribunal has no jurisdiction to recall or review its own order and an application for that relief is not maintainable. The Tribunal relied on the precedent extracted from the NCLAT decision which explains that review cannot be used as a substitute for appellate jurisdiction or for rehearing on merits. [Paras 5, 6]

IA/507/CHE/2021 seeking recall/set aside of the order dated 11.03.2021 is not maintainable and is dismissed.

Liquidation estate - liquidator's right to take possession of assets - assets in possession of third parties - fiduciary for the benefit of all creditors - requirement to value assets before sale - Whether the liquidator is entitled to possession of movable assets of the corporate debtor held by the respondent and the appropriate directions in relation thereto. - HELD THAT: - The Tribunal examined the scope of the liquidation estate as set out in the IBC, observing that movable assets over which the corporate debtor has ownership rights form part of the liquidation estate which the liquidator holds as a fiduciary for all creditors. Although certain categories of third party assets are excluded from the liquidation estate, the assets in question were found to be movable assets of the corporate debtor kept at the old premises and in the respondent's custody. Once the respondent filed a claim in Form C, she could not retain those movable assets as security for the claim in a manner inconsistent with the Code. The Tribunal noted the liquidator's obligation to value assets before sale but concluded that possession must be restored to the liquidator to enable valuation and realization for the benefit of creditors. [Paras 17, 18, 19, 20, 21]

MA/54/2020 is allowed to the extent that the respondent is directed to hand over the movable assets listed in the typed set within 15 days, failing which coercive steps will follow; MA/54/2020 stands disposed of.

Final Conclusion: The application to recall the Tribunal's order dated 11.03.2021 is dismissed as not maintainable; separately, the liquidator's application for directions is allowed and the respondent is directed to deliver possession of the corporate debtor's movable assets to the liquidator within 15 days, failing which coercive action will be taken.

Permission to travel abroad during criminal trial - Right to travel versus court's discretionary power - Risk of flight assessed on seriousness of allegation and overseas assets - Vagueness of travel application as basis for refusal

Permission to travel abroad during criminal trial - Risk of flight assessed on seriousness of allegation and overseas assets - Vagueness of travel application as basis for refusal - Petition seeking setting-aside of trial Court's order refusing permission to travel abroad was dismissed and the impugned order upheld. - HELD THAT: - The Court upheld the trial Court's refusal to permit the petitioner to travel abroad because the charge-sheet contains serious allegations of a large-scale fraud and the trial is imminent after substantial delay. The petitioner's application for travel was held to be vague and devoid of specific business particulars: no companies with whom meetings were required, no creditors or invitations identified, and no clear need demonstrated for overseas travel. The Court noted that a co-accused had fled and been declared a proclaimed offender, and that properties allegedly purchased from proceeds of the crime in the UAE stand attached. In these circumstances the trial Court reasonably concluded there was a real possibility of the petitioner absconding if permitted to travel; merely asserting a right to travel does not outweigh the risk to the judicial process. Having found no illegality in the impugned order, the petition was dismissed.

Petition dismissed; impugned order refusing permission to travel abroad upheld.

Final Conclusion: The High Court dismissed the petition and upheld the trial Court's order refusing the petitioner permission to travel abroad, primarily on the basis of serious charge-sheet allegations, vagueness of the travel request, risk of flight in light of overseas assets and a co-accused having absconded.

Written communication of quantification - quantified - eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - admission of tax liability during audit/enquiry/investigation - cut-off date of June 30, 2019 - Audit communication seeking clarifications is not quantification - liberal construction of a beneficial scheme limited by statutory definition

Written communication of quantification - quantified - Audit communication seeking clarifications is not quantification - cut-off date of June 30, 2019 - Whether pre cut off emails and letters from the Audit Commissionerate constituted a written communication of quantification of duty payable for eligibility under the Scheme - HELD THAT: - The Court examined the communications (emails of March/April 2018, letter dated September 4, 2018 and email dated October 31, 2018) in light of Section 121(r) (definition of "quantified") and the Board's circular/FAQ clarifying that "quantified" means a written communication of the amount of duty payable. The Court found that the impugned pre cut off communications were requests for information/clarifications and spreadsheets prepared from details furnished by the petitioner, not final intimations of duty demand. The final quantification by the Audit Raigad Commissionerate occurred by letter dated August 29, 2019, which is after the statutory cut off of June 30, 2019. Mere matching of departmental quantification with calculations that could be made from invoices supplied during audit does not convert those supply stage communications into departmental "quantification" under the Scheme. Consequently, the earlier correspondence could not be treated as written communication of quantification for the purpose of availing the Scheme. [Paras 11, 18, 20, 22]

The pre cut off emails and audit letters do not amount to a written communication of quantification; final quantification was on August 29, 2019, after June 30, 2019, rendering the declaration ineligible under the Scheme on this ground.

Admission of tax liability during audit/enquiry/investigation - written communication of quantification - liberal construction of a beneficial scheme limited by statutory definition - Whether the petitioner had admitted the duty liability prior to June 30, 2019 so as to constitute a written communication of quantification - HELD THAT: - The Court applied the statutory definition and the Board's clarifications and reviewed the factual matrix and authorities. It found no document or contemporaneous admission by the petitioner accepting the duty liability prior to the cut off. On the contrary, subsequent communications (including an email of November 16, 2019) showed the petitioner still disputing or processing reversal of credit. Precedents relied upon by the petitioner were distinguished on their facts where there were clear admissions (oral or written) before the cut off. Absent an admission of liability by the declarant before June 30, 2019, there is no written communication of quantification within the meaning of the Scheme. [Paras 22, 24]

There was no admission of tax liability by the petitioner prior to June 30, 2019; hence the petitioner cannot rely on admission to claim quantification and eligibility under the Scheme.

Final Conclusion: The writ petitions are dismissed. The Court held that the communications before June 30, 2019 did not amount to departmental quantification and there was no admission of liability by the petitioner before the cut off; final quantification occurred on August 29, 2019, after the Scheme's statutory cut off, rendering the declarations ineligible.

Quantification of tax dues for eligibility under SVLDRS - eligibility for declaration under SVLDRS where audit quantification predates cutoff - interpretation of eligibility under Section 125(1)(e) of SVLDRS (quantification before 30.06.2019) - definition of tax dues for Scheme purposes under Section 123(c) of SVLDRS - reconsideration of application on remand

Quantification of tax dues for eligibility under SVLDRS - interpretation of eligibility under Section 125(1)(e) of SVLDRS (quantification before 30.06.2019) - definition of tax dues for Scheme purposes under Section 123(c) of SVLDRS - The petitioner's entitlement to be treated as eligible under the SVLDRS on the ground that the amount involved in the audit was quantified on or before 30.06.2019. - HELD THAT: - The Court examined the Scheme provisions and observed that eligibility turns on whether the amount of duty involved in an audit or investigation was quantified on or before 30.06.2019. The Audit Report produced by the petitioner bears the date 04.06.2019 and records quantification of the Service Tax involved. The Department did not controvert this factual position. On that basis the petitioner's case prima facie satisfies the requirement of quantification before 30.06.2019 and therefore falls within the class of persons eligible to make a declaration under the Scheme. [Paras 5, 6, 7]

Petitioner's case prima facie satisfies the quantification requirement under the Scheme and is within the class eligible to make a declaration.

Reconsideration of application on remand - Whether the impugned endorsement rejecting the SVLDRS application should be set aside and the application reconsidered. - HELD THAT: - In view of the finding that quantification was made on 04.06.2019, the Court found the endorsement dated 05.05.2020 to be unsustainable. Rather than entering final adjudication on entitlement, the Court directed that the earlier order rejecting eligibility be set aside and that the competent officer reconsider the petitioner's SVLDRS-1 application afresh in light of the observations and applicable law. [Paras 8]

Annexure-A dated 05.05.2020 is set aside and respondent No.3 is directed to reconsider the Form SVLDRS-1 application afresh in light of the observations and law.

Final Conclusion: The endorsement rejecting the SVLDRS application was set aside because the audit quantification predates 30.06.2019; the matter is remitted to the respondent for fresh consideration of the application in accordance with the Court's observations and law.

Vires of Rule 17(2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - challenge to rule as ultra vires Section 3A of the Central Excise Act - remand for fresh decision - continuation of interim stay on penalty - no stay on recovery of duty and interest

Vires of Rule 17(2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - challenge to rule as ultra vires Section 3A of the Central Excise Act - remand for fresh decision - Whether the High Court had addressed the vires of Rule 17(2) on merits and whether the matter should be remanded for fresh consideration. - HELD THAT: - The Supreme Court found that the High Court, although noting that the challenge to the vires of Rule 17(2) appeared to be without substance, did not address the question of vires on the merits. The Court held that the question of vires was not finally adjudicated by the High Court and could not properly be decided in an appeal against the order-in-original. For that reason alone the impugned order of the High Court was set aside and the matter remanded to the High Court for fresh decision on the vires of Rule 17(2) of the Pan Masala Rules in relation to Section 3A of the Central Excise Act. [Paras 5, 6]

Impugned High Court order set aside and matter remanded to the High Court for fresh consideration of the vires of Rule 17(2).

Continuation of interim stay on penalty - no stay on recovery of duty and interest - Whether the interim orders previously granted should be continued and the scope of any stay. - HELD THAT: - The Court recorded that on issuance of notice in the Special Leave Petition an interim order had stayed penalty only. The Supreme Court directed that the interim stay on penalty shall continue until the High Court takes up the matter on remand. The Court clarified that there shall be no stay on recovery of duty and interest and that the Department is free to proceed with recovery of duty and interest in accordance with law. [Paras 6]

Interim stay on penalty continued; no stay on recovery of duty and interest, and recovery may proceed in accordance with law.

Final Conclusion: The appeal is disposed of by setting aside the High Court order and remanding the case to the High Court for fresh decision on the vires of Rule 17(2); the interim stay on penalty is continued pending that hearing, while recovery of duty and interest is not stayed.

Condonation of delay - Delay due to departmental inefficiency - Ignorance of proper appellate remedy - Costs as condition for condonation - Exemption from filing certified copy - Issue of notice

Condonation of delay - Delay due to departmental inefficiency - Ignorance of proper appellate remedy - Costs as condition for condonation - Applications for condonation of delay in filing special leave petitions were allowed subject to conditions. - HELD THAT: - The Court examined the affidavit of the respondent and noted two explanations for a six-month delay: administrative inefficiency in establishing a different Commissionerate and lack of awareness regarding the correct appellate remedy and its limitation period. The Court observed that these explanations were not proper justifications but were attributable to departmental inefficiency and lack of legal knowledge. Taking into account that similar matters were pending consideration, the Court exercised discretion to condone the delay. The condonation was made subject to a payment of costs of Rs. 10,000 in each special leave petition to the Supreme Court Group 'C' (Non-Clerical Employees Welfare Association), to be deposited within three weeks. [Paras 1, 2, 3, 4]

Condonation applications allowed on payment of specified costs within three weeks.

Exemption from filing certified copy - Application for exemption from filing certified copy of the impugned judgment was allowed. - HELD THAT: - The Court granted the petitioners' applications for exemption from filing the certified copy of the impugned judgment, thereby permitting the proceedings to continue without the certified copy being filed as ordinarily required. [Paras 5]

Exemption from filing certified copy allowed.

Issue of notice - Notice was issued and the matters were directed to be tagged with a related civil appeal. - HELD THAT: - Following allowance of the procedural applications, the Court issued notice in the special leave petitions and directed that the matters be tagged with Civil Appeal No. 6550/2015 (Diary No. 23247/2015), for appropriate judicial administration and listing. [Paras 6, 7]

Notice issued and matters tagged with Civil Appeal No. 6550/2015.

Final Conclusion: The Supreme Court condoned the delay in filing the special leave petitions on payment of costs, allowed exemption from filing the certified copy, issued notice in the petitions and directed them to be tagged with the specified civil appeal.

Alternate remedy rule - reversal of input tax credit - reasonable opportunity to show cause - application of alternate remedy rule in revenue matters with greater rigour - excess of jurisdiction - Whirlpool exception - Section 27(2) and Section 19(4) of the TNVAT Act

Alternate remedy rule - application of alternate remedy rule in revenue matters with greater rigour - Maintainability of writ petition in presence of alternate statutory remedy. - HELD THAT: - The Court held that an effective alternate statutory remedy (appeal under Section 51 or revision under Section 54 of the TNVAT Act, depending on the provision under which the impugned order is construed) was available to the petitioner. Reliance was placed on Supreme Court precedents establishing that in revenue matters the alternate remedy rule must be applied with particular rigour. None of the narrow exceptions permitting bypass of alternate remedies (breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or challenge to vires) were found to be attracted on the facts of the case. Consequently, the writ jurisdiction was not to be invoked in lieu of the statutory appellate/revisional remedy. [Paras 11, 12, 16, 18]

Writ petition is not maintainable in view of available alternate statutory remedies; petitioner relegated to statutory appeal or revision.

Reasonable opportunity to show cause - reversal of input tax credit - Section 27(2) and Section 19(4) of the TNVAT Act - Whether the petitioner was denied a reasonable opportunity of being heard before reversal of input tax credit. - HELD THAT: - The Court examined the procedural history (show cause notice, replies, explanations, further notices and a request for personal hearing) and concluded that ample opportunity was given to the petitioner to show cause against the proposed order. The Court noted the differing statutory expressions regarding opportunity to show cause in Section 27 but found no shortcoming in the opportunity afforded in the present case. [Paras 5, 7, 9]

No violation of the requirement to give a reasonable opportunity to show cause; procedural fairness satisfied.

Reversal of input tax credit - excess of jurisdiction - Whirlpool exception - Whether the petitioner's contention that reversal of ITC is permissible only for tax in excess of 5% of turnover (or similar 5% threshold) amounted to an exception justifying exercise of writ jurisdiction. - HELD THAT: - The Court treated the 5% threshold contention as a challenge to the correctness of the impugned order rather than a question of excess of jurisdiction or breach of fundamental procedural rights. It observed that such a contention, even if accepted, would at best disclose an error of computation or law fit for appellate or revisional adjudication and not a ground to invoke extraordinary writ relief. Accordingly, the contention did not fall within established exceptions (including the Whirlpool principle) to the alternate remedy rule. [Paras 6, 10, 16]

The 5% threshold contention does not constitute excess of jurisdiction or other exception to the alternate remedy rule; it is a matter for appeal or revision.

Final Conclusion: The writ petition is dismissed on the ground of available alternate statutory remedies; the petitioner is relegated to pursue appeal under Section 51 or revision under Section 54 of the TNVAT Act (as appropriate), with the appellate/revisional authority free to decide the matter on its merits.

Competency of advance ruling authority - finality of advance ruling - remedy under Section 24 - prohibition on departmental proceedings while advance ruling application is pending - exemption under Entry 6(a) of the Fifth Schedule - remand limited to second sales - finality of tribunal's finding - scope of revisional powers under Section 21(2) - reliance on advance ruling in revisional proceedings

Competency of advance ruling authority - finality of advance ruling - remedy under Section 24 - Advance Ruling Authority's clarification cannot be challenged in revision under Section 23(1) once it has attained finality; the proper remedy is an appeal under Section 24. - HELD THAT: - The High Court held that where an applicant allows the Advance Ruling Authority's clarification to attain finality, the correctness or validity of that clarification cannot be reopened in a revision petition under Section 23(1). Section 4(5)(i) and Section 4(8) indicate limitations on the Authority's jurisdiction and bar parallel departmental adjudication while an advance ruling application is pending, but an aggrieved party must challenge the Authority's order under Section 24. Consequently, the challenge to the Advance Ruling Authority's competency and the retrospective/prospective character of its clarification are not entertainable in the present revision; those points would have been open only in the statutory appeal under Section 24. The Court also observed that the revisional proceedings were initiated by issuance of SMR notice prior to the clarification, and the revisional authority did not base its order solely on the Advance Ruling Authority's clarification. [Paras 8, 11]

The objection to the Advance Ruling Authority's competency and its clarification cannot be entertained in this revision; the statutory remedy is appeal under Section 24.

Exemption under Entry 6(a) of the Fifth Schedule - finality of tribunal's finding - remand limited to second sales - The Tribunal correctly held that the assessee's sales of food and drinks to the canteen do not fall under Entry 6(a) of the Fifth Schedule and are taxable; the remand was limited to verification of second sales of bakery items and the Tribunal's primary finding attained finality. - HELD THAT: - On merits the Tribunal examined the contract, commercial arrangement and factual matrix and found the assessee to be a catering contractor making supplies on profit basis with no contractual provision showing no-profit sale to employees; accordingly the supplies were held not to be exempt under Entry 6(a) and liable to tax under Section 5. The Tribunal remanded only the question of exemption for second sales (bakery items purchased from local registered dealers) for verification and quantification. That remand was restricted and, after the revisional authority examined and granted relief on certain second sales, the Tribunal dismissed the subsequent appeal as re adjudication of a matter which had attained finality. Rehearing of the decided issue was therefore impermissible. [Paras 12, 13]

Tribunal's finding that primary sales are taxable and remand restricted to second sales was correct; the Tribunal rightly dismissed re-litigation once its finding had attained finality.

Scope of revisional powers under Section 21(2) - reliance on advance ruling in revisional proceedings - The revisional authority's exercise of powers under Section 21(2) and its reliance on the Advance Ruling Authority's clarification did not render the revisional order invalid, since the revisional proceedings were initiated prior to the clarification and the revisional authority examined the matter on merits. - HELD THAT: - The Court noted the SMR notice was issued in 2003 before the Advance Ruling Authority's clarification of January 2004, indicating that the revisional authority initiated proceedings on satisfaction that the assessing authority's order was erroneous and prejudicial to revenue. Although the revisional authority referred to the advance ruling, it did not rely solely upon it but examined the matter independently on merits. Therefore the revisional order cannot be characterised as being improperly founded only on the Advance Ruling Authority's clarification or as an unlawful exercise of suo-moto powers. [Paras 11]

Revisional authority's order under Section 21(2) is maintainable; reliance on the advance ruling did not vitiate the revisional decision.

Final Conclusion: The High Court found no substantive question of law necessitating interference: the Tribunal's conclusion that the assessee's primary supplies of food and drinks were taxable was upheld; the remand was limited to second sales of certain bakery items; challenges to the Advance Ruling Authority's clarification are not maintainable in this revision and the revisional order under Section 21(2) was not invalid. The revision petition is dismissed.

Application for execution by transferee of decree - Explanation to Order XXI Rule 16 of the Code of Civil Procedure - Section 146 CPC - Proceedings by or against representatives - Section 47 CPC - Questions to be determined by the Court executing the decree - Equitable assignment vs statutory assignment - Transfer of actionable claim

Application for execution by transferee of decree - Explanation to Order XXI Rule 16 of the Code of Civil Procedure - Section 146 CPC - Proceedings by or against representatives - Section 47 CPC - Questions to be determined by the Court executing the decree - Equitable assignment vs statutory assignment - Whether the Explanation inserted in Order XXI Rule 16 by the 1976 amendment enables a transferee who acquired rights in the subject-matter prior to the decree to apply for execution of the decree under Order XXI Rule 16 read with Section 146 and have the question of assignment determined in execution proceedings. - HELD THAT: - The Court held that the statutory Explanation to Order XXI Rule 16, inserted pursuant to the Law Commission's recommendation, was intended to remove the earlier distinction between assignments made before a decree and assignments made after the decree, and to enable persons claiming under the decree-holder to seek execution without being compelled to bring a separate suit. The legislative purpose, as noted by the Court, was to harmonise conflicting High Court views and to provide that nothing in Order XXI Rule 16 shall affect the provisions of Section 146, thereby permitting a transferee of rights in the property which is the subject-matter of the suit to apply for execution of the decree without a separate assignment of the decree. Consequently, the pre-amendment dictum in Jugalkishore Saraf (which treated assignment as requiring the decree to be in existence at the time of transfer) does not override the post amendment position; the amendment incorporated the equitable principle into the statutory framework and allows the executing court to determine title/assignment within execution proceedings under Section 47. The Court limited its conclusion to the legal question of admissibility of the appellants' objection at the threshold and did not decide on the factual or evidentiary validity of the asserted assignment documents. [Paras 23, 24, 25, 26, 27]

The Explanation to Order XXI Rule 16 (as amended in 1976) permits a transferee who acquired rights prior to the passing of the decree to apply for execution under Order XXI Rule 16 read with Section 146, and the executing court is empowered to determine the question of assignment under Section 47.

Section 47 CPC - Questions to be determined by the Court executing the decree - Explanation to Order XXI Rule 16 of the Code of Civil Procedure - Whether the validity and evidentiary weight of the Assignment Deed and related documents should be decided by this Court or remitted for decision by the executing court. - HELD THAT: - The Supreme Court expressly refrained from adjudicating the factual validity of the Assignment Deed and the cheque relied upon by the appellants, noting that such matters of proof and fact are for the executing court to determine in proceedings under Section 47. Given the considerable lapse of time and the nature of the dispute, the Court set aside the impugned orders and remitted the matter to the executing court for expeditious determination of the factual questions relating to assignment and any contested documentary evidence. The remit was directed for decision in terms of the legal position declared by this Court regarding the applicability of the Explanation to Order XXI Rule 16. [Paras 28]

The factual questions concerning the validity of the Assignment Deed and the cheque are remitted to the executing court for fresh and expeditious determination; this Court will not decide those factual issues.

Final Conclusion: The appeals are allowed; the impugned judgments are set aside and the matter is remitted to the executing court to determine, in accordance with the Explanation to Order XXI Rule 16 and Section 47 read with Section 146 CPC, the validity and effect of the claimed assignment and related documentary evidence; parties shall bear their own costs.

Right to cross-examination as part of right to fair trial under Article 21 - Power under section 311 Cr.P.C. to summon, recall and re-examine witnesses - Court's duty to elicit evidence and discover the truth for just decision - Orders passed in violation of principles of natural justice are a nullity

Right to cross-examination as part of right to fair trial under Article 21 - Orders passed in violation of principles of natural justice are a nullity - Validity of impugned orders closing cross-examination of P.W.1 and rejecting the petition under section 311 Cr.P.C. - HELD THAT: - The High Court held that the order dated 03.05.2018, by which the trial court closed the evidence of P.W.1, was passed behind the petitioners and their counsel when both were absent and therefore amounted to denial of fair hearing and infringement of the petitioners' right to a fair trial. The court reiterated that the right to cross-examine is integral to a fair criminal trial and that an order made in breach of fundamental principles of natural justice is vitiated. Although ample opportunities had earlier been afforded, the fact that the decisive order was passed in the absence of the petitioners and their counsel rendered the order illegal and unsustainable. Applying these principles, the Court set aside the impugned orders as recorded in the judgment. [Paras 9, 10, 11, 16, 17]

Impugned orders dated 03.05.2018 and 06.04.2018 are set aside as having infringed the petitioners' right to fair trial; they are nullified to the extent indicated.

Power under section 311 Cr.P.C. to summon, recall and re-examine witnesses - Court's duty to elicit evidence and discover the truth for just decision - Direction to the trial court on further proceedings and exercise of jurisdiction under section 311 Cr.P.C. - HELD THAT: - The Court explained the scope of section 311 Cr.P.C., noting the provision empowers the court to summon, recall or re-examine witnesses when their evidence appears essential to a just decision. While exercising that power must be cautious to avoid prejudice or fishing expeditions, where an order had been passed in the absence of the accused and their counsel, the trial court ought to have entertained the petition under section 311 Cr.P.C. The High Court therefore directed the trial court to afford the petitioners an opportunity to cross-examine P.W.1 on the date fixed, and, if they fail to do so, to proceed to the next stage of the trial in accordance with law. [Paras 13, 14, 15, 16, 17]

Matter remitted to the trial court with direction to permit the petitioners to cross-examine P.W.1 on appearance on the fixed date and thereafter proceed with the trial; if petitioners fail to cross-examine, the trial court shall move to the next stage.

Final Conclusion: The revision petition is allowed; the impugned orders setting aside the cross-examination and rejecting the section 311 petition are quashed. The matter is remitted to the trial court which is directed to afford the petitioners an opportunity to cross-examine P.W.1 on the date fixed and thereafter continue the trial; parties shall bear their own costs.