TaxTMI Updates e-Newsletter
Oct 27,2021

Valuation of seized goods - recording of satisfaction - adjudication before reassessment of valuation - release of goods on deposit under Section 129(1)(a) of the U.P. GST Act, 2017 - security for balance amount

Release of goods on deposit under Section 129(1)(a) of the U.P. GST Act, 2017 - security for balance amount - Interim release of seized goods subject to deposit and furnishing of security - HELD THAT: - The Court granted an interim direction permitting the goods to be released in favour of the petitioners on the condition that the petitioners deposit the amount under Section 129(1)(a) of the U.P. GST Act, 2017 in cash and furnish security, other than cash or bank guarantee, to the satisfaction of the authority for the balance amount as assessed by the authority. The deposit and security must be furnished within three weeks from the date of the order. The direction is interlocutory and limited to securing the State's assessed claim while the matter is placed on the cause list for consideration by the court after filing of counter and rejoinder affidavits.

Goods released on furnishing the specified deposit and security within three weeks; matter listed for further hearing.

Valuation of seized goods - recording of satisfaction - adjudication before reassessment of valuation - Legality of enhanced valuation and procedural compliance remanded for consideration - HELD THAT: - Petitioners challenged the enhanced valuation imposed by revenue authorities, contending that goods were duly accounted and accompanied by valid documents, that necessary satisfaction to doubt valuation was not recorded, and that valuation could be altered only in proper adjudication proceedings which were not followed. The Court did not adjudicate these substantive contentions on merits; instead it recorded that the matter requires consideration and directed respondents to file a counter affidavit and permitted petitioners to file a rejoinder. Accordingly, the questions regarding the correctness of the valuation, the sufficiency of recorded satisfaction by authorities, and the requirement of adjudicatory process for reassessment were remanded to be decided after exchange of affidavits and further hearing.

Substantive issues on valuation and procedural compliance remanded for fresh consideration after filing of counter and rejoinder affidavits.

Final Conclusion: Interim relief granted: goods to be released on specified deposit and security within three weeks; substantive challenges to the enhanced valuation and alleged procedural lapses were not decided on merits and have been remanded for fresh consideration after exchange of affidavits.

Validity of E-way bill - extension of validity of E-way bill under Rule 138(10) of the Central Goods and Services Tax Rules, 2017 - physical verification at destination as distinct from interception in transit - quashing of appellate order by writ court

Validity of E-way bill - extension of validity of E-way bill under Rule 138(10) of the Central Goods and Services Tax Rules, 2017 - physical verification at destination as distinct from interception in transit - Whether the E-way bills were valid when the conveyance reached destination and whether action by tax authorities at destination justified cancellation of the bill and consequential appellate dismissal. - HELD THAT: - The Single Judge found on the material on record that the conveyance carrying the motor vehicles reached the place of destination on 1.1.2019 at 11.00 p.m., which was within the period of validity of the E-way bills generated on 31.12.2018. The Court emphasised the distinction between action taken during transit and action taken at the destination; the materials indicate that the authorities' action occurred at the destination while unloading was underway on 2.1.2019. Given that arrival occurred while the E-way bills remained subsisting, the appellate authority ought to have considered the matter in light of the validity provisions (including the facility for extension under Rule 138(10) of the CGST Rules) instead of sustaining detention/penal consequences. On these facts the High Court concluded there was no basis to treat the bills as invalid for want of extension, and the writ court's view quashing the appellate order was unimpeachable. The High Court declined to interfere with the Single Judge's factual finding that arrival took place before expiry of the E-way bills and accepted the legal consequence that actions taken at destination did not convert the transport into unauthorized carriage beyond the bill's validity. [Paras 3, 4, 6]

The appellate order was unsustainable insofar as it treated the E-way bills as invalid; the Single Judge's order quashing the impugned appellate order is affirmed.

Final Conclusion: The State's writ appeal is dismissed; the Single Judge's order quashing the appellate order is upheld on the finding that the conveyance reached destination within the period of validity of the E-way bills and the authorities' action arose at destination rather than during transit.

Supply of immovable property as supply of services - Sale of land falling under Entry 5 of Schedule III - exclusion from supply - Works contract as composite supply involving transfer of property in goods - Deeming fiction under section 7(2) excluding certain activities from levy

Sale of land falling under Entry 5 of Schedule III - exclusion from supply - Supply of immovable property as supply of services - Whether sale of developed plots by the applicant is within the purview of GST or falls outside Entry 5 of Schedule III - HELD THAT: - The Authority examined the contractual scheme in which TSIIC enters into an agreement for sale with the applicant and conditions the execution of the sale deed on completion of development of infrastructure, and the applicant in turn enters into agreements with industrial allottees subject to similar conditions for transfer of title. The AAR applied the statutory classification that supply of immovable property is treated as supply of services but noted the deeming fiction in section 7(2) / Schedule III which excludes pure sale of land (paragraph 5 of Schedule III) from supply, except where the land is sold along with a constructed complex, building or civil structure (paragraph 5 of Schedule II). Applying these principles to the documents, the Authority held that mere sale of land, without transfer of a constructed building or civil structure, falls within paragraph 5 of Schedule III and is therefore outside the levy of GST. Conversely, sale of land together with development that results in a building, complex or civil structure would attract GST as a taxable supply.

Sale of land without any development involving a building, complex or civil structure is exempt under Entry 5 of Schedule III; sale of land together with such development is taxable.

Works contract as composite supply involving transfer of property in goods - Determination of transaction value for supply - Whether the infrastructure development undertaken by the applicant qualifies as a taxable "works contract"/supply under GST - HELD THAT: - The Authority applied the statutory definition of "works contract" as a contract for construction or similar activities wherein transfer of property in goods is involved, and noted that for a works contract to be taxable the essential elements are: (i) existence of an agreement or contract; (ii) transfer of property in goods in execution of the contract from contractor to contractee; and (iii) consideration paid by the contractee. On examining the agreements, the AAR found that where the development activity is undertaken without the requisite transfer of property in goods to the contractee and without the consideration structure envisaged for a works contract, the elements of a works contract are not fulfilled and such activity would not be liable to GST as a works contract. However, where the applicant executes works after transfer of title or undertakes development in terms that involve transfer of property in goods for a consideration under an agreement, those works will qualify as a works contract and the consideration received will be taxable; valuation of such supply must follow the statutory rules.

Infrastructure development amounts to a taxable works contract only if the contract entails transfer of property in goods and consideration in the manner required for a works contract; absent those elements, the execution of construction does not attract GST, while post-sale works undertaken for consideration do qualify as taxable works contracts.

Final Conclusion: The Advance Ruling holds that (a) pure sale of land without any development involving a building, complex or civil structure is outside the levy of GST under Entry 5 of Schedule III, and (b) infrastructure development will be taxable as a works contract only where the contractual elements of a works contract including transfer of property in goods and consideration are present; otherwise such development is not taxable, though post-sale works for consideration will attract GST.

Extraordinary writ jurisdiction under Article 226 - Election of remedies and prohibition of multiplicity of proceedings - Availability of alternative efficacious statutory remedy - Appellate powers under Section 251 to set aside assessment

Extraordinary writ jurisdiction under Article 226 - Election of remedies and prohibition of multiplicity of proceedings - Availability of alternative efficacious statutory remedy - Appellate powers under Section 251 to set aside assessment - Maintainability of writ petition challenging assessment order when statutory appeal under Section 246(A) is pending - HELD THAT: - The Court held that writ jurisdiction under Article 226 is extraordinary and discretionary and a party must not pursue multiplicity of proceedings when an alternative efficacious statutory remedy is available. Noting that the petitioner had filed a statutory appeal under Section 246(A) and that the Appellate Authority has plenary powers under Section 251 to consider and set aside the assessment if mandatory statutory procedure was not followed, the High Court declined to exercise writ jurisdiction. The Court relied on the principle that where a statutory remedy exists and is being availed, parallel writ proceedings challenging the same order are not maintainable and should be refused in exercise of discretionary equitable relief. [Paras 5, 6, 7]

Writ petition dismissed as not maintainable.

Appellate powers under Section 251 to set aside assessment - Availability of alternative efficacious statutory remedy - Direction to Appellate Authority to consider and decide the statutory appeal expeditiously - HELD THAT: - Although the writ was dismissed for want of maintainability, the Court observed the appellant's grievance about delay in prosecution of the statutory appeal filed on 13.08.21. Having regard to the pendency and the fact that the Appellate Authority is empowered to examine the grounds raised, the High Court directed the Appellate Authority to consider and decide the appeal expeditiously in accordance with law. [Paras 9, 10]

Appellate Authority directed to consider and decide the appeal filed by the petitioner expeditiously.

Final Conclusion: Writ petition challenging the assessment order dismissed as not maintainable because a statutory appeal under Section 246(A) was pending; the Appellate Authority is directed to decide the statutory appeal expeditiously.

Disallowance of deduction on account of extraction/rescreening charges - appellate tribunal's factual findings are final - substantial question of law under Section 260A

Disallowance of deduction on account of extraction/rescreening charges - appellate tribunal's factual findings are final - Validity of the Tribunal's upholding of the Assessing Officer's estimate and disallowance of extraction/rescreening charges claimed by the assessee - HELD THAT: - The Court examined whether the Tribunal was justified in sustaining the Assessing Officer's disallowance of extraction/rescreening expenses which the assessee claimed were higher due to purchase of lower grade iron ore. The High Court held that the challenge amounted to reappraisal of facts: the Tribunal, as the final fact-finding authority, had considered the invoices and quantitative material and found that both low and high grade material were purchased and that the assessee had not placed on record satisfactory quantitative evidence to show a substantially higher proportion of low grade material. The Tribunal also noted that the Assessing Officer had allowed extraction/rescreening charges at a rate higher than that claimed in the preceding year, and the Commissioner (Appeals) had reduced the disallowance without furnishing cogent reasons. The High Court found no substantial question of law arising from these fact-based findings and declined to interfere with the Tribunal's conclusions. [Paras 10, 11, 12]

Tribunal's factual conclusion upholding the Assessing Officer's disallowance is sustained; the appeal is dismissed.

Final Conclusion: The appeal under Section 260A is dismissed - the High Court declines to disturb the Tribunal's factual findings and upholds the Assessing Officer's disallowance of extraction/rescreening charges for AY 2009-10.

Section 153C - jurisdictional defect - void ab initio - transfer of assessment under Section 127 - substantive illegality versus procedural defect - prospective operation of amendment affecting jurisdictional challenge

Section 153C - jurisdictional defect - transfer of assessment under Section 127 - void ab initio - substantive illegality versus procedural defect - Notices under Section 153C dated 11.05.2009 issued by DCIT, Central Circle-1(1), Bengaluru, prior to conferring jurisdiction by order under Section 127 dated 20.07.2009, are without jurisdiction and therefore void ab initio for the assessment years 2003-04 to 2008-09. - HELD THAT: - The Court found on the record that the notices under Section 153C were issued on 11.05.2009 while the order transferring the assessee's case and thereby conferring jurisdiction upon DCIT, Central Circle-1(1), was dated 20.07.2009; consequently the officer who issued the notices lacked jurisdiction. Reliance was placed on controlling authorities which hold that actions taken without jurisdiction are substantive illegalities and cannot be treated as mere procedural defects remedied by provisions addressing mistakes or service irregularities. The Court rejected the contention that provisions dealing with mistake/defect or service could validate the impugned notices, and observed that the later statutory amendment precluding jurisdictional challenges operates prospectively and is inapplicable. In view of these conclusions, all proceedings consequent to the impugned notices stand vitiated. As the substantial question framed (H) was answered in favour of the assessee, the remaining substantial questions were rendered academic and were left open. [Paras 16, 19, 21, 22, 23]

The notices under Section 153C dated 11.05.2009 are without jurisdiction and void ab initio; appeal allowed in favour of the assessee and revenue appeals dismissed.

Final Conclusion: The High Court answered the substantial question H in favour of the assessee, holding that the Section 153C notices issued before the transfer conferring jurisdiction were without jurisdiction and void ab initio for assessment years 2003-04 to 2008-09; consequently the appeal of the assessee is allowed and the revenue appeals are dismissed, the other substantial questions being rendered academic.

Deduction under section 80IA(4) - Set-off of pre-initial year losses against qualifying unit income - Mercantile system of accounting - Deductibility of wage revision liability on accrual basis - Effect of Wage Board recommendations and consequential notification

Deduction under section 80IA(4) - Set-off of pre-initial year losses against qualifying unit income - Whether losses of the eligible windmill unit incurred in years prior to the initial year can be set off against the assessee's claim of deduction under section 80IA(4) for the assessment years under appeal. - HELD THAT: - The Tribunal found that the losses relied upon by the Assessing Officer related to years prior to the initial year of the eligible unit and therefore could not be set off against the income qualifying for deduction on or after the initial year. The Tribunal noted that a similar contention in respect of earlier assessment years of the assessee had been considered and accepted in the assessee's favour by the Tribunal (order dated 25-06-2019 in ITA No. 1364/PUN/2011 etc.), and the Revenue's representative accepted the position. Applying that precedent and the principle that pre-initial year losses are not available to set off against post-initial year qualifying income, the Tribunal upheld the deletion of the disallowance and sustained the allowance of the deduction under section 80IA(4).

Disallowance deleted; deduction under section 80IA(4) upheld.

Mercantile system of accounting - Deductibility of wage revision liability on accrual basis - Effect of Wage Board recommendations and consequential notification - Whether additional liability on account of Wage Board revision, recomputed and claimed by the assessee by filing a revised return for the year though paid in subsequent years, is deductible for the assessment year under the mercantile system of accounting. - HELD THAT: - The Tribunal recorded that the Wage Board for working journalists submitted its report and the Central Government issued a consequential notification accepting the recommendations. The assessee, following the mercantile system of accounting, recomputed and claimed additional wages pertaining to the year under consideration by a revised return. The Tribunal held that where the additional liability arose and became payable during the year by reason of the government notification, the deduction was allowable in that year despite actual payment occurring in a later year. The Tribunal therefore accepted the assessee's claim that the recomputed wage liability was deductible on an accrual basis under the mercantile system and sustained the deletion of the Assessing Officer's addition.

Addition disallowed; wage revision liability allowed as deduction in the relevant assessment year.

Final Conclusion: Both appeals by the Revenue were dismissed: the Tribunal upheld the allowance of the section 80IA(4) deductions by rejecting set-off of pre-initial year losses, and upheld the deletion of additions by allowing the wage revision liability as deductible in the relevant assessment years under the mercantile system.

Revisionary jurisdiction under section 263 of the Income tax Act - Assessment order erroneous and prejudicial to the interests of the revenue - Requirement of inquiry and verification by the Assessing Officer before completion of assessment - Explanation 2 to section 263 - application of four clauses as sine qua non for enlarged revisionary power - Post assessment settlement scheme (Vivad se Vishwas) not a ground to render an assessment order erroneous

Revisionary jurisdiction under section 263 of the Income tax Act - Requirement of inquiry and verification by the Assessing Officer before completion of assessment - Erroneous and prejudicial to the interests of the revenue - Validity of the Pr. CIT's exercise of revisionary jurisdiction under section 263 on the ground that the Assessing Officer failed to conduct inquiries and verification (notably regarding large foreign exchange loss and domestic transaction expenses) rendering the assessment order erroneous and prejudicial to revenue. - HELD THAT: - The Tribunal examined the material placed before the Assessing Officer and the replies filed by the assessee during assessment proceedings, including specific working of foreign exchange difference, correspondence explaining other expenses and purchase registers, and Form 3CEB entries. The Tribunal found that queries were raised by the Assessing Officer and the assessee furnished detailed explanations and documents addressing the increase in foreign exchange loss and the nature of domestic payments. The Tribunal noted that the assessee had not claimed a tax deduction for the forex loss (it was added back in computation) and that profits excluding forex loss showed an increase; those particulars were on record and were not specifically negatived by the Pr. CIT. In these circumstances, the Tribunal held that the Pr. CIT failed to point to objective factual evidence showing that the Assessing Officer did not make necessary inquiries or that the order was erroneous so as to be prejudicial to revenue; the assumption of jurisdiction under section 263 on this ground was therefore not justified. [Paras 5, 6, 10, 13, 16]

Assumption of revisionary jurisdiction by the Pr. CIT under section 263 on the ground of absence of inquiry/verification (as alleged) is not valid; the impugned order is quashed on this ground.

Explanation 2 to section 263 - application of four clauses as sine qua non for enlarged revisionary power - Objective and tenable opinion required under Explanation 2 - Whether the Pr. CIT could validly invoke Explanation 2 to section 263 by showing that the assessment order fell within any of the four clauses that deem an order erroneous and prejudicial. - HELD THAT: - Relying on precedents considered by the Tribunal, the Tribunal observed that Explanation 2 requires an objective, supportable satisfaction that one or more of the four specified situations exist. On the facts, the Assessing Officer had made inquiries and carried out verification; the alleged allowances or payments were not accepted as unexplained or unexamined, and the specific clauses of Explanation 2 (a)-(d) were not attracted. The Tribunal endorsed the approach that invocation of Explanation 2 demands demonstration that one or more of the enumerated situations actually exist on the record, which was not done here. [Paras 15, 16]

Explanation 2 to section 263 does not apply on the present facts; the Pr. CIT's recourse to enlarged revisionary power was not legally sustainable.

Post assessment settlement scheme (Vivad se Vishwas) not a ground to render an assessment order erroneous - Irrelevance of subsequent voluntary payment under a settlement scheme to validity of earlier assessment - Whether payment (or non payment) under the Vivad se Vishwas scheme after completion of assessment can render the earlier assessment order erroneous and prejudicial for purposes of section 263. - HELD THAT: - The Tribunal found that availing or not availing the Vivad se Vishwas scheme after the assessment cannot be the basis to hold the originally passed assessment order to be erroneous or prejudicial to revenue. The fact that a taxpayer later seeks immunity or pays amounts under a settlement scheme does not retroactively make the assessment order defective so as to attract revisional jurisdiction under section 263. [Paras 12, 16]

The Pr. CIT's reliance on Vivad se Vishwas payments (or lack thereof) does not furnish a valid ground for revision under section 263.

Final Conclusion: Taking the totality of facts and judicial precedents, the Tribunal held that the Pr. Commissioner of Income Tax had not shown objective, tenable grounds to conclude that the assessment for Assessment Year 2014 15 was erroneous and prejudicial to revenue; the revisionary order under section 263 was quashed and the assessee's appeal was allowed.

Charitable purpose as defined in the proviso to section 2(15) of the Income Tax Act - dominant purpose / profit motive test - incidental commercial activity doctrine - principle of consistency in appellate orders - 15% statutory exemption under section 11 and application of income - principles of natural justice / right to be heard - remand for fresh hearing on deemed income under section 11(3)

Charitable purpose as defined in the proviso to section 2(15) of the Income Tax Act - dominant purpose / profit motive test - incidental commercial activity doctrine - principle of consistency in appellate orders - 15% statutory exemption under section 11 and application of income - Whether the activities of the Assessee Society for the assessment years under appeal are charitable and hence eligible for exemption under sections 11/12 having regard to the proviso to section 2(15). - HELD THAT: - On the facts found and recorded by the CIT(A) and having regard to the assessee's long history and the factual material showing that receipts from renting galleries and sale of paintings were incidental and materially lower than the society's overall expenditure, the Tribunal found no infirmity in the CIT(A)'s conclusion that the society is not primarily driven by a profit motive. The Tribunal applied the dominant purpose or profit motive test and the principle that incidental or ancillary commercial receipts do not convert an institution into a non charitable entity where the prime object remains charitable. The Tribunal placed weight on consistent earlier appellate decisions in the assessee's case and the coordinate and High Court precedents which limit the proviso to section 2(15) to institutions primarily engaged in trade, commerce or business. Consequently, the CIT(A)'s allowance of exemption under section 11 (including direction to allow the 15% statutory exemption and application of income) was upheld and the Revenue's appeals were dismissed. [Paras 6, 7, 10]

Revenue's appeals dismissed; the Assessee Society held to be eligible for exemption under sections 11/12 for the years under appeal with consequential reliefs upheld.

Principles of natural justice / right to be heard - remand for fresh hearing on deemed income under section 11(3) - Whether the CIT(A)'s direction to include unspent amounts as deemed income under section 11(3) could be sustained without affording the assessee a specific opportunity to be heard on that conclusion. - HELD THAT: - The Tribunal found that the CIT(A) had reached an adverse conclusion on the taxability of the unspent amount without confronting the assessee with that specific conclusion and without giving a reasonable and effective opportunity of being heard. Even if the statutory consequences were apparent, principles of natural justice require that an administrative authority afford notice and an opportunity before taking an adverse view affecting the assessee. For this procedural shortcoming the Tribunal did not decide the correctness of the tax conclusion on merits but set aside that portion of the CIT(A)'s order and directed restoration to the file of the CIT(A) with directions to give the assessee a specific opportunity to make submissions and thereafter pass a speaking order in accordance with law. [Paras 11]

Impugned appellate treatment of the unspent amount set aside and remitted to the CIT(A) for fresh consideration after giving the assessee a reasonable opportunity of hearing.

Final Conclusion: The Revenue appeals for AYs 2013-14 and 2014-15 are dismissed on the finding that the society's activities are charitable; the assessee's appeals are allowed for statistical purposes in so far as the CIT(A)'s treatment of the unspent amount is set aside and remitted for fresh, speaking consideration after affording the assessee a specific opportunity to be heard.

Tax withholding under section 192 - Leave travel concession exemption under section 10(5) and Rule 2B - Bona fide estimate of taxable salary by employer - Liability as assessee in default and deletion of demand under section 201(1) and 201(1A)

Tax withholding under section 192 - Leave travel concession exemption under section 10(5) and Rule 2B - Bona fide estimate of taxable salary by employer - Liability as assessee in default and deletion of demand under section 201(1) and 201(1A) - Whether demands raised under section 201(1) and 201(1A) for non-deduction of tax on leave fare concession (LFC) paid by the employer in assessment years 2010-11 and 2011-12 are sustainable. - HELD THAT: - The Tribunal followed a coordinate-bench decision in the assessee's own case and examined the distinction between the employer's obligation to deduct tax on the estimated income of employees under section 192 and the actual taxability of payments in the hands of employees under the head 'income from salaries'. Applying section 10(5) read with Rule 2B, the Tribunal observed that Rule 2B limits the amount exemptible (by reference to air/rail fares by the shortest route) but does not prohibit a journey that includes a foreign sector; the employer reasonably allowed exemption to the extent of the fare for the Indian sector by the shortest route. In those circumstances the employer's estimation and bonafide conduct in not deducting tax on the LFC could not be faulted. The Tribunal held that once the employer's estimation was bona fide and reasonable, the foundation for demands under section 201 r.w.s. 192 collapsed and the impugned demands had to be vacated. The Tribunal therefore directed deletion of the demands raised by the Assessing Officer and upheld that approach even where travel involved en-route foreign travel or circuitous routes, as the factual matrix and legal principle were identical to the coordinate-bench ruling.

Impugned demands under section 201(1) and 201(1A) for AYs 2010-11 and 2011-12 deleted; appeals allowed.

Final Conclusion: Following and applying the coordinate-bench decision in the assessee's own case, the Tribunal held the employer's bona fide estimation under section 192 to be reasonable; the demands in respect of non-deduction of TDS on LFC for AY 2010-11 and AY 2011-12 were vacated and the appeals were allowed.

Deduction under section 10A for income from training activities - deduction under section 10A for interest earned on temporary parking of surplus funds - transfer pricing adjustment for notional interest on delayed receivables - transfer pricing adjustment on customization fees and application of CUP method - allowability of guarantee commission on intra-group loans - interest under section 234D

Deduction under section 10A for income from training activities - Income derived from training activity is includible in total turnover and export turnover for computing deduction under section 10A and qualifies for the deduction. - HELD THAT: - The Tribunal followed its earlier decision in the assessee's own case for assessment year 2002-03, which was affirmed by the jurisdictional High Court. Applying that precedent to the identical facts, the Tribunal held that training provided to customers for use of the software is intricately connected to the export of software and therefore forms part of the undertaking's turnover for section 10A purposes. Consequent direction was given to the Assessing Officer to allow the claim by including the training income in both total and export turnover. [Paras 7, 23]

Allow claim; direct AO to include training income in total and export turnover for section 10A.

Deduction under section 10A for interest earned on temporary parking of surplus funds - Interest earned on temporary parking of surplus funds that is integrally connected to the export business can qualify for deduction under section 10A, but the quantification and attribution to the 10A units must be verified by the Assessing Officer. - HELD THAT: - Differentiating section 10A/10B (a self-contained code) from Chapter VI-A jurisprudence, the Tribunal accepted the line of authority (including the Karnataka Full Bench and the jurisdictional High Court) that interest from temporary parking of surplus export funds is part of the profits and gains of the undertaking and cannot be treated as unrelated income from other sources. The Tribunal, however, made clear that the factual apportionment of the claimed interest to the 10A units requires examination; hence the assessee was directed to produce evidence and the AO was tasked to verify the attribution of the apportioned amount. [Paras 14, 15, 35]

Allow claim in principle; remit to AO for factual verification and quantification of the interest attributable to 10A units.

Transfer pricing adjustment for notional interest on delayed receivables - Notional transfer pricing adjustment on account of interest for delayed remittance by overseas associated enterprises is deleted where evidence shows delays were due to end-customer payment timing and the AEs did not benefit. - HELD THAT: - The Tribunal examined the reconciliation statements, subsidiary bank statements and other evidence furnished by the assessee, and the appreciation by the Commissioner (Appeals) that remittances by AEs depended on end-customer payments. Finding that the AEs were not end customers and that delays were attributable to end-customer payment cycles (and some AEs were loss-making), the Tribunal concluded that the AEs did not obtain a benefit meriting an interest-based adjustment. On facts, therefore, the TPO's notional interest adjustment was set aside. [Paras 16, 17, 20, 21, 38]

Delete the transfer pricing adjustment relating to notional interest on delayed receivables.

Transfer pricing adjustment on customization fees and application of CUP method - Adjustment disallowing customization fees retained by overseas subsidiaries (applying CUP to hold such services rendered by subsidiaries at nil) is not sustained where the arrangement and factual matrix match prior decisions in the assessee's own case which were affirmed by the High Court. - HELD THAT: - The Tribunal relied on its earlier decision in the assessee's own case for assessment year 2002-03 (affirmed by the jurisdictional High Court) which found that subsidiaries performed market and data-collection functions that justified retention of a portion of revenue. Given identical facts and absence of contradicting material from Revenue, the Tribunal upheld the Commissioner (Appeals)'s deletion of the TPO's adjustment and rejected the application of CUP to treat subsidiary contribution as nil. [Paras 25, 26, 27, 28, 37]

Uphold deletion of customization-fee adjustment; dismiss Revenue's challenge.

Allowability of guarantee commission on intra-group loans - No separate guarantee commission is exigible where the assessee itself has advanced loans to associated enterprises and charged interest at an appropriate arm's length rate; therefore the TPO's addition for notional guarantee commission is deleted. - HELD THAT: - The Tribunal agreed with the Commissioner (Appeals) that the concept of charging a guarantee commission arises where a borrower obtains funds from a third-party lender subject to a corporate guarantee. Here the assessee was the lender and had charged LIBOR plus basis points; the TPO produced no material to show the charged rate was not arm's length. Consequently, there was no basis to impose an additional guarantee commission. [Paras 40, 41]

Dismiss adjustment for guarantee commission; uphold deletion by Commissioner (Appeals).

Interest under section 234D - The Tribunal allowed Revenue's appeal on the issue and reversed the Commissioner (Appeals) by sustaining interest under section 234D in accordance with prevailing legal position. - HELD THAT: - Counsel for the assessee conceded that the Revenue's ground on section 234D must be allowed in view of current law. The Tribunal, on that admission and the applicable legal position, reversed the Commissioner (Appeals) and allowed the Revenue's challenge. [Paras 30, 31, 32]

Allow Revenue's ground; reverse Commissioner (Appeals) on section 234D interest.

Final Conclusion: Appeals disposed with mixed results: the Tribunal allowed the assessee's claims that training income and qualifying interest income (subject to AO's factual verification) fall within section 10A; deleted transfer pricing adjustments relating to notional interest on delayed receivables and to guarantee commission on intra-group loans; upheld deletion of customization-fee adjustment; but allowed the Revenue's challenge on interest under section 234D. Orders remitted to AO where factual quantification was required.

Section 68 - primary onus of the assessee - genuineness of transactions and creditworthiness of lenders - reliance on third-party information without independent inquiry - facilitator transactions and third party RTGS treatment

Section 68 - primary onus of the assessee - genuineness of transactions and creditworthiness of lenders - reliance on third-party information without independent inquiry - facilitator transactions and third party RTGS treatment - Validity of addition of amounts treated as unexplained cash credit under section 68 where assessee produced confirmations, bank statements and income tax returns of alleged lenders but Assessing Officer relied on information from another office without independent inquiry. - HELD THAT: - The Tribunal found that the assessee furnished confirmations from the lenders, copies of bank statements and their income tax returns, and the assessee's bank statements, thereby discharging the primary onus to prove identity, genuineness of the transactions and creditworthiness of the lenders. The Assessing Officer made the addition solely on the basis of information received from DCIT Circle 2(4), Ahmedabad, but did not comment on or rebut the documentary evidence produced by the assessee and did not conduct any independent inquiry or issue summons to the lenders. The CIT(A) upheld the addition without specifying what further evidence was required. The Tribunal also relied on the decision in the proceedings concerning the facilitator (Dhirajlal Sanghvi), where transactions evidenced by RTGS particulars and supporting documents were held to pertain to third parties and additions were deleted. Absent any adverse evidence or independent findings by the Revenue, the mere existence of information from another office was insufficient to sustain an addition under section 68 where the assessee had met the primary evidentiary burden. [Paras 7, 8, 9]

Addition under section 68 of Rs.1.65 crores deleted; assessee's appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y. 2011-12, deleting the addition made under section 68 on the ground that the assessee had discharged the primary onus by producing confirmations, bank statements and returns of the lenders and that the Assessing Officer/CIT(A) had neither rebutted that evidence nor conducted any independent inquiry; reliance solely on third party information was held insufficient to sustain the addition.

Predominant object test - advancement of any other object of general public utility - proviso to Section 2(15) - applicability to incidental commercial receipts - exemption under sections 11 and 12 - incidental or ancillary receipts for sustenance - registration under section 12AA

Predominant object test - advancement of any other object of general public utility - proviso to Section 2(15) - applicability to incidental commercial receipts - exemption under sections 11 and 12 - incidental or ancillary receipts for sustenance - Assessee entitled to exemption under sections 11 and 12 as its predominant object was charitable and the proviso to Section 2(15) did not apply despite collection of maintenance and other charges. - HELD THAT: - The Tribunal concurred with the Commissioner (Appeals) that the assessee was constituted as a Special Purpose Vehicle to develop and maintain industrial infrastructure under a government-initiated scheme, received government grants and contributions, and was governed by objects and constitutional restrictions (including application of surplus on winding up) inconsistent with a profit motive. Applying the predominant object test, the collection of maintenance/user charges was held to be incidental and ancillary to the primary charitable objective of providing general public utility (roads, water, drainage, electricity) for a defined class of beneficiaries. Reliance was placed on settled precedent that the proviso to Section 2(15) is directed at entities whose dominant objective is profit-making and does not exclude organisations essentially established for charitable purposes merely because they collect fees for sustenance. Having examined the nature, control, funding and audit/accountability aspects, the Tribunal found no element of profiteering and agreed that the proviso did not attract, entitling the assessee to exemption under sections 11 and 12 for the years in question. [Paras 5, 7]

Revenue's appeals dismissed; assessee held entitled to exemption under sections 11 and 12 as proviso to Section 2(15) is not attracted.

Final Conclusion: The Tribunal dismissed the revenue appeals for AY 2009-10, 2010-11 and 2011-12, upholding the CIT(A)'s finding that the assessee's predominant object was charitable and that the proviso to Section 2(15) did not apply; the cross-objections became academic and the appeals and cross-objections were dismissed.

Measurement of distance for classification of agricultural land as capital asset - definition of capital asset under section 2(14) - prospective application of CBDT Circular No.17/2015 - aerial distance - road distance

Measurement of distance for classification of agricultural land as capital asset - aerial distance - road distance - prospective application of CBDT Circular No.17/2015 - definition of capital asset under section 2(14) - Whether distance between the agricultural land and the municipal limits for the purpose of exclusion from the definition of capital asset is to be measured aerially or by road for AY 2013-14 and whether the land in question falls beyond the 8 km limit. - HELD THAT: - The Tribunal examined the applicability of CBDT Circular No.17/2015 (which accepted the aerial-measurement approach post the Bombay High Court decision) and noted that the Circular itself clarified the aerial-distance concept is to be applied prospectively with effect from AY 2014-15. Accordingly, for AY 2013-14 the tribunal treated the pre-existing approach as governing measurement. The CIT(A) had directed a remand to the Assessing Officer to have an inspector measure the road distance in the presence of the assessee; the inspector reported the road distance as 8.8 kms. Having considered the Deputy Executive Engineer's certificate, the inspector's on site measurement and the retrospective scope of the CBDT Circular, the Tribunal upheld the finding that the land is situated beyond 8 kms from the municipal limit and therefore does not fall within the definition of capital asset under section 2(14) for AY 2013-14. [Paras 6, 7]

The Tribunal affirmed the CIT(A)'s conclusion that for AY 2013-14 road measurement governs, the road distance as measured on remand is 8.8 kms, and the land is not a capital asset; the Revenue's appeal is dismissed.

Final Conclusion: The appeals filed by the Revenue are dismissed; the CIT(A)'s order holding that the agricultural land is situated beyond 8 kms (and hence outside the definition of capital asset for AY 2013-14) is affirmed.

Bogus purchase / accommodation entries - Addition under Section 69 (unexplained purchases) - Reliance on investigation report without independent inquiry - Token disallowance to tax taxable element

Bogus purchase / accommodation entries - Reliance on investigation report without independent inquiry - Token disallowance to tax taxable element - Whether the addition of Rs. 3,50,000 on account of alleged bogus purchase from Nazar Impex Pvt. Ltd. should be sustained in full or reduced. - HELD THAT: - The Tribunal examined the material placed before the Assessing Officer and the Commissioner (Appeals), noting that the assessee had produced confirmations, invoices, bank statements, purchase and sale registers and stock records to substantiate the purchases. It was also an undisputed fact that Nazar Impex Pvt. Ltd. was managed by the Rajinder Jain group and that the investigation into that group showed use of paper concerns to provide accommodation entries. The AO however made a 100% disallowance relying primarily on the Investigation Wing's report without conducting an independent inquiry on the assessee's documentary evidence. The CIT(A) upheld the AO's conclusion based on circumstantial evidence. The Tribunal recognised that while the Investigation Wing's findings cast doubt on the genuineness of the entry provider, the assessee's turnover, declared gross and net profit margins and one-to-one correlation of the disputed purchases with exports indicated commercial activity consistent with the trade. Given that the disputed purchases formed less than 10% of the assessee's transactions and documentary evidence was not wholly discarded, the Tribunal held that a complete disallowance was excessive. Applying the principle that where the taxable element alone should be targeted, a token disallowance is appropriate to safeguard revenue without nullifying the assessee's declared business results, the Tribunal reduced the addition to a token amount. [Paras 8, 9]

Addition of Rs. 3,50,000 sustained in part; reduced to a token disallowance of Rs. 20,000 and the appeal is partly allowed.

Final Conclusion: The Tribunal set aside the 100% disallowance sustained by the lower authorities and substituted a token disallowance of Rs. 20,000, partly allowing the assessee's appeal for AY 2009-10.

Rectification under section 254(2) of the Income Tax Act - mistake apparent on the face of the record - giving effect to appellate order - order passed under section 154 withdrawing relief - opportunity of hearing before passing a consequential/rectificatory order

Rectification under section 254(2) of the Income Tax Act - mistake apparent on the face of the record - Whether the Tribunal should rectify its order dated 10.12.2020 under section 254(2) of the Act on the ground of a mistake apparent on the face of the record. - HELD THAT: - The assessee sought rectification of the Tribunal's order of 10.12.2020 after the Assessing Officer, while initially giving effect in terms of that order, withdrew the relief by a subsequent order purportedly under section 154. The Revenue correctly submitted that rectification requires a mistake apparent on the face of the record. On being invited to point out any such mistake, the authorised representative conceded that no mistake appears in the Tribunal's order dated 10.12.2020. The Tribunal therefore found no basis to invoke rectification jurisdiction under section 254(2) and declined to exercise that power.

Application for rectification dismissed for want of any mistake apparent on the face of the record.

Giving effect to appellate order - order passed under section 154 withdrawing relief - opportunity of hearing before passing a consequential/rectificatory order - Whether the Tribunal should direct the Assessing Officer to restore relief or otherwise intervene because the AO withdrew relief without affording opportunity of hearing. - HELD THAT: - The Tribunal examined the sequence: AO initially complied with the Tribunal's direction and granted relief, but the AO thereafter issued an order withdrawing that relief without giving the assessee an opportunity of hearing. While noting this factual finding, the Tribunal emphasised that the present application under section 254(2) cannot be used to correct an absence of hearing or to re open the Assessing Officer's exercise of power under section 154 in these proceedings when no mistake in the Tribunal's order exists. Consequently, the Tribunal declined to pass any supervisory direction to restore relief in these proceedings but left the assessee free to pursue available remedies under the Act.

No direction issued to the Assessing Officer; assessee granted liberty to seek appropriate application/appeal/representation in accordance with the Income Tax Act.

Final Conclusion: Miscellaneous Application under section 254(2) dismissed: no mistake apparent in the Tribunal's order dated 10.12.2020 to warrant rectification; factual finding recorded that AO withdrew relief without hearing, but no direction issued and the assessee is at liberty to pursue remedies provided under the Income Tax Act.

Allowability of deduction under section 36(1)(viia) - power of appellate authority to entertain additional claims or grounds - assessing officer cannot entertain a fresh claim without a revised return - remand for factual verification and opportunity of hearing

Allowability of deduction under section 36(1)(viia) - power of appellate authority to admit additional claim - revised return principle (Goetze India Ltd.) - remand for factual verification - Admission of assessee's enhanced claim for deduction under section 36(1)(viia) and the appropriate course of action where the assessing officer rejected the enhanced claim for lack of a revised return. - HELD THAT: - The Tribunal held that while an assessing officer is not empowered to entertain a fresh claim in the absence of a revised return (as recognised in Goetze (India) Ltd.), the restriction does not bind the first appellate authority or the Tribunal. Where the material necessary to examine the claim is on record or the claim arises from a mistake in calculation, the appellate authority has discretion to admit the additional claim. The Assessing Officer wrongly rejected the enhanced deduction as a legal objection without examining the factual position; the claim for deduction @7.5% of interest earned on advances flowed from the assessee's assertion of a calculation error and was not a fresh claim beyond the scope of the appeal. Accordingly, the Tribunal admitted the additional claim and remitted the matter to the Assessing Officer to ascertain, on evidence and after giving the assessee an opportunity of hearing, the quantum of interest attributable to rural advances and to allow the deduction in accordance with law. [Paras 6, 7, 8, 9]

Additional claim for deduction under section 36(1)(viia) admitted; matter remanded to the Assessing Officer for factual examination and grant of relief in accordance with law after affording hearing.

Final Conclusion: The Tribunal allowed the assessee's ground (for statistical purposes), admitted the enhanced deduction claim under section 36(1)(viia) and remanded the matter to the Assessing Officer to verify the interest on rural advances and grant relief as per law after an opportunity of hearing.

Disallowance of bogus purchases - Estimation of profit element on alleged non genuine purchases - Weighted deduction under section 35(2AB) - Effect of DSIR recognition/approval date on eligibility for deduction under section 35(2AB) - Requirement and role of Forms 3CK, 3CM and 3CL in claiming deduction under section 35(2AB) - Application of binding precedents on retrospective effect of approval for R&D deduction - Disallowance under section 14A read with Rule 8D(2)(ii)

Disallowance of bogus purchases - Estimation of profit element on alleged non genuine purchases - Whether the disallowance in respect of alleged non genuine purchases for A.Y.2011 12 should be sustained and, if so, at what percentage. - HELD THAT: - The Tribunal examined the remand report and material placed before the authorities and found that the Assessing Officer did not draw any adverse inference on the factual records (purchase invoices, consumption, sales and stock reconciliations) submitted during remand proceedings. While the Tribunal noted an earlier Tribunal order for A.Y.2010 11 that had applied a 10% estimate, the facts for the year under consideration differed because a remand report was obtained and no adverse comments were recorded thereon. Considering the totality of facts and in the interest of justice, the Tribunal held that a flat estimate of 10% was excessive and directed the Assessing Officer to restrict the disallowance to 6% of the alleged bogus purchases. [Paras 8]

Disallowance in respect of alleged non genuine purchases for A.Y.2011 12 is restricted to 6% of the alleged bogus purchases.

Weighted deduction under section 35(2AB) - Effect of DSIR recognition/approval date on eligibility for deduction under section 35(2AB) - Requirement and role of Forms 3CK, 3CM and 3CL in claiming deduction under section 35(2AB) - Application of binding precedents on retrospective effect of approval for R&D deduction - Whether the assessee is entitled to weighted deduction under section 35(2AB) for expenditure incurred in the previous year relevant to A.Y.2011 12 despite DSIR approval being effective after the close of that previous year, and whether the assessee's compliance with related procedural requirements was sufficient. - HELD THAT: - The Tribunal reviewed authorities of several High Courts and this Tribunal which establish that once a facility is recognised/approved by DSIR the approval operates so as to permit allowance of weighted deduction in respect of expenditure already incurred in developing the R&D facility; the cut off date mentioned in DSIR certificate or the date on Form 3CM is not decisive where recognition exists. The Tribunal found the facts covered by those precedents and that the assessee had applied for recognition and obtained DSIR recognition and related documentation; reliance on procedural timings (date of filing Form 3CK or effective date stated in certificate) could not defeat the legislative purpose of encouraging R&D. Applying these precedents and the material on record, the Tribunal allowed the assessee's claim for deduction under section 35(2AB) and reversed the orders below. [Paras 26]

The claim for weighted deduction under section 35(2AB) for A.Y.2011 12 is allowed and the orders of the Assessing Officer and CIT(A) are set aside.

Disallowance of bogus purchases - Estimation of profit element on alleged non genuine purchases - Whether the disallowance in respect of alleged non genuine purchases for A.Y.2009 10 should be sustained and at what percentage. - HELD THAT: - The Tribunal considered the remand report and the evidence furnished by the assessee during remand proceedings (party/item wise charts, invoices, GRNs, POs, transport receipts, confirmations and explanations on use of packing material). The Assessing Officer's remand report did not find the documentary evidence to be substantively defective and only treated the material as an afterthought. In absence of adverse findings on the evidence, the Tribunal held it was inappropriate to treat the entire purchases as non genuine. Applying the approach adopted for A.Y.2011 12, the Tribunal estimated the profit element at 6% to meet the ends of justice and directed recomputation accordingly. [Paras 38]

Disallowance in respect of alleged non genuine purchases for A.Y.2009 10 is restricted to 6% of the alleged non genuine purchases and income is to be recomputed.

Disallowance under section 14A read with Rule 8D(2)(ii) - Whether disallowance under section 14A read with Rule 8D(2)(ii) should be sustained in respect of interest attributable to exempt income for A.Y.2011 12. - HELD THAT: - The CIT(A) found from the assessee's financial statements that sufficient own funds (share capital and reserves) were available to make the investments earning exempt income and, following jurisdictional High Court authority, concluded there was no case for interest disallowance under Rule 8D(2)(ii). The Revenue did not controvert these findings before the Tribunal. The Tribunal found no infirmity in the CIT(A)'s reasoning and affirmed deletion of the Rule 8D(2)(ii) disallowance and the direction to restrict any section 14A disallowance to the amount of exempt income, subject to verification. [Paras 31]

The CIT(A)'s deletion of interest disallowance under Rule 8D(2)(ii) and restriction of any section 14A disallowance to exempt income is affirmed.

Final Conclusion: Appeals disposed: assessee's claims partly allowed. For A.Y.2011 12 disallowance for alleged bogus purchases restricted to 6%; weighted deduction under section 35(2AB) of Rs.4,98,89,829/ allowed and orders below set aside; section 14A/Rule 8D(2)(ii) deletion affirmed. For A.Y.2009 10 disallowance for alleged non genuine purchases restricted to 6% and income recomputed; revenue appeal dismissed.

Sanction of Scheme of Amalgamation - Compliance with notice and publication requirements - Transfer and vesting of assets and liabilities - Employee transfer on amalgamation - Share allotment pursuant to scheme - Set-off of filing fees on authorised capital - Protection of revenue; scheme not an exemption from tax - Filing, registration and dissolution on production of certified copy

Compliance with notice and publication requirements - Statutory notice, service and publication requirements under the Rules and Section 230 were complied with. - HELD THAT: - The petitioners filed affidavits of compliance attaching original copies of the prescribed newspaper publications and proofs of service on the specified statutory authorities. The Registry reported that no objections had been received. The Tribunal heard the authorised representatives and perused the compliance affidavit and accompanying proofs and records and found that the publication and service requirements directed in the First Motion order had been satisfied. [Paras 4, 11]

Notice and publication requirements were met and there was no procedural impediment to proceeding with the sanction of the Scheme.

Sanction of Scheme of Amalgamation - Protection of revenue; scheme not an exemption from tax - Whether the objections/observations raised by the Regional Director, Registrar of Companies, Official Liquidator, Stock Exchange/SEBI and Income Tax Department precluded sanction of the Scheme. - HELD THAT: - The RD and RoC reports were on record and their observations (including the position on filing fees) were answered by the applicants through provisions in the Scheme. The Official Liquidator made no adverse observations. BSE/SEBI raised no objection and BSE communicated compliance requirements which the companies had addressed. The Income Tax Department drew attention to carried forward losses and unabsorbed depreciation which might be utilised post-amalgamation; the applicants filed a joint affidavit undertaking that the interest of the revenue would be protected and that losses/unabsorbed depreciation of the Transferor would not be adjusted against the Transferee's income. Having considered the reports and the applicants' responses, the Tribunal found that the observations had been adequately replied to and there was no impediment to the sanction of the Scheme, while expressly recording that sanction does not operate as an exemption from tax or other statutory obligations. [Paras 16, 17, 18, 21, 22]

Objections and observations were satisfactorily addressed; sanction of the Scheme could be granted subject to the caveat that the order does not confer tax exemptions or relieve statutory compliance.

Transfer and vesting of assets and liabilities - Employee transfer on amalgamation - Share allotment pursuant to scheme - Set-off of filing fees on authorised capital - Filing, registration and dissolution on production of certified copy - Sanctioned consequences of the Scheme including vesting of assets and liabilities, transfer of pending proceedings, employee continuation, share allotment, alteration of authorised capital, set-off of fees and procedural steps for registration and dissolution. - HELD THAT: - The Tribunal approved the Scheme, declared it binding on shareholders and creditors and recorded specific consequential directions: (i) all property, rights and powers of the Transferor to vest in the Transferee; (ii) all liabilities and duties to transfer to the Transferee; (iii) pending proceedings to continue by/against the Transferee; (iv) employees of the Transferor to become employees of the Transferee on continuity terms provided in the Scheme; (v) allotment of Transferee shares to Transferor members per the exchange ratio; (vi) authorised share capital of the Transferee to be increased and that of the Transferor cancelled, with provision for set-off of any filing fees paid by the Transferor against fees payable by the Transferee; (vii) direction to file a certified copy with the Registrar of Companies for registration upon which the Transferor shall be dissolved; and (viii) specified deposits to the Regional Director and Company Law Bar Association. The Tribunal also reiterated that sanction does not imply exemption from stamp duty, taxes or other statutory charges. [Paras 22, 23]

Scheme sanctioned and consequential orders (vesting, transfer of liabilities, employee transfer, share allotment, capital adjustment and procedural filings including dissolution of Transferor on registration) were directed, with tax and statutory compliance caveats.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the Transferor and Transferee companies after finding that statutory notices and publications were complied with and that the observations of RD, RoC, OL, stock exchanges and the Income Tax Department had been addressed; consequential directions for vesting of assets and liabilities, employee transfer, share allotment, capital adjustments, registration and dissolution were issued, subject to the express qualification that the order does not confer any exemption from taxes, stamp duty or other statutory obligations.

Inherent powers - power of review - power to recall - finality of tribunal orders - re-agitation of decided contentions - limitations on re-appraisal of evidence in review - absence of statutory review provision under NCLAT Rules

Inherent powers - power to recall - finality of tribunal orders - Maintainability of IA No.265/2019 seeking recall of the Tribunal's judgment dated 16.10.2019 by invoking inherent powers. - HELD THAT: - The Tribunal held that an application framed as a recall/review of its final order cannot be entertained by invoking its inherent powers. The power of review is a creature of statute and is distinct from inherent jurisdiction; re-opening concluded adjudications by the Tribunal where no statutory provision permits review or recall is impermissible. The application was essentially a disguised review seeking re appraisal of matters already adjudicated, which the Tribunal lacked jurisdiction to entertain under Rule 11 or otherwise. [Paras 25, 27, 32]

IA No.265/2019 is not maintainable as a recall/review of the Tribunal's order and is therefore liable to be dismissed.

Absence of statutory review provision under NCLAT Rules - limitations on re-appraisal of evidence in review - re-agitation of decided contentions - Whether Rule 11 of the NCLAT Rules, 2016 confers power to rehear or recall the Tribunal's own final orders. - HELD THAT: - The Tribunal observed that Rule 11, which recognizes inherent powers to meet ends of justice, is not a substantive provision conferring a power to perform acts prohibited by law, including re hearing or recalling a final order. Citing authorities and established principles, the Tribunal reiterated that review does not permit a re appraisal of evidence or a fresh hearing; accordingly, the applicant cannot circumvent the absence of a statutory review remedy by invoking Rule 11. [Paras 31]

Rule 11 does not empower the Tribunal to recall or rehear its final judgment; the applicant cannot rely on inherent powers to obtain review or recall.

Finality of tribunal orders - power of review - Appropriate remedy available to the Applicant against the Tribunal's order dated 16.10.2019. - HELD THAT: - The Tribunal noted that the order dated 16.10.2019 had become final and binding as no appeal was preferred to the Supreme Court under the relevant statutory provision. Given the absence of a permissible recall/review mechanism before the Tribunal, the only appropriate course for the applicant to challenge the final order is to approach the Hon'ble Supreme Court in accordance with the Code and applicable law. [Paras 29, 32]

The applicant should approach the Hon'ble Supreme Court if it seeks further redress; the Tribunal will not entertain the recall/review application.

Final Conclusion: IA No.265/2019 seeking recall/review of the Tribunal's order dated 16.10.2019 is dismissed as not maintainable; no order as to costs.

Demand notice under the Insolvency and Bankruptcy Code, 2016 (Section 8) duly served - pre-existing dispute - limitation and acknowledgment of debt - operational debt and default exceeding statutory threshold - admission under the Insolvency and Bankruptcy Code, 2016 (Section 9) and declaration of moratorium (Section 14) - appointment of Interim Resolution Professional and duties of IRP

Demand notice under the Insolvency and Bankruptcy Code, 2016 (Section 8) duly served - Service of the demand notice dated 21.06.2018 on the corporate debtor - HELD THAT: - The Tribunal examined the record and noted that the corporate debtor replied to the Demand Notice on 29.06.2018, and the operational creditor responded to that reply on 11.07.2018. On this basis the Bench held that the contention of non-delivery of the Demand Notice was untenable and that the demand notice had been duly served on the corporate debtor. [Paras 12]

Demand notice dated 21.06.2018 was properly served.

Pre-existing dispute - Whether the operational debt was a pre-existing dispute precluding admission - HELD THAT: - The corporate debtor raised objections regarding quality of supplied raw material and debit notes, but these objections were first asserted only after issuance of the Demand Notice dated 21.06.2018. The corporate debtor failed to demonstrate that any dispute had been raised prior to the demand notice. Consequently, the Tribunal held that the objections did not amount to a pre-existing dispute sufficient to defeat the petition under the Code. [Paras 13]

No pre-existing dispute was established; the dispute raised post-demand notice cannot defeat the petition.

Limitation and acknowledgment of debt - Whether the petition was filed within time having regard to invoices and acknowledgement of debt - HELD THAT: - Although many invoices related to 2014-2015, the corporate debtor issued a balance confirmation letter dated 31.03.2016 acknowledging a debt of Rs. 93,05,491/-. The Tribunal found that this acknowledgment brought the claim within limitation for the purposes of initiation of insolvency proceedings and therefore the petition was within the period of limitation. [Paras 14]

The petition is within limitation owing to the corporate debtor's acknowledgment of debt.

Operational debt and default exceeding statutory threshold - admission under the Insolvency and Bankruptcy Code, 2016 (Section 9) and declaration of moratorium (Section 14) - appointment of Interim Resolution Professional and duties of IRP - Whether the petition established default of operational debt above the statutory threshold and the resultant admission, moratorium and appointment of IRP - HELD THAT: - The Tribunal reviewed the application in Form 1, accompanying invoices, ledger, dishonoured cheques and a computation summary showing an unpaid operational debt. It concluded that the petitioner had proved the existence of operational debt and default exceeding Rs. 1 lakh. Consequent upon these findings and the completeness of the petition, the Bench admitted the petition under Section 9 of the IBC, directed declaration of moratorium under Section 14 and appointed Mr. Alok Kaushik as Interim Resolution Professional, subject to filing of Form 2 within one week, directing the IRP to perform statutory functions including collation of claims and constitution of the Committee of Creditors. [Paras 15, 16, 17]

Petition admitted under Section 9; moratorium declared under Section 14; Mr. Alok Kaushik appointed as Interim Resolution Professional with directions to perform IRP duties.

Final Conclusion: The Tribunal admitted the Section 9 petition after finding the demand notice duly served, no pre-existing dispute, and a timely acknowledged operational debt with default exceeding the statutory threshold; moratorium was declared and an Interim Resolution Professional was appointed to proceed with the CIRP.

Liquidation upon expiry of CIRP period in absence of an approved resolution plan - Commercial wisdom of the Committee of Creditors - Appointment of Liquidator under Section 34(1) of the Code - Liquidator's duty to issue public announcement and to conduct liquidation process - Discharge of officers, employees and workmen on commencement of liquidation - Ceasing of CIRP moratorium and commencement of liquidation moratorium under Section 33(5)

Liquidation upon expiry of CIRP period in absence of an approved resolution plan - Commercial wisdom of the Committee of Creditors - Corporate Debtor ordered to be liquidated as CIRP period expired without any IBC compliant resolution plan and the CoC, in its commercial wisdom, resolved liquidation. - HELD THAT: - The Tribunal found that despite publicity, invitation of EOIs, issuance of RFRP and multiple opportunities, no resolution plan was received or approved before the end of the CIRP period. The Committee of Creditors, after deliberations and having regard to the elapsed CIRP timeline and absence of any viable plan, unanimously advised the Resolution Professional to move for liquidation. The Adjudicating Authority declined to interfere with the commercial decision of the CoC and held that the endeavours to obtain a resolution had failed, warranting liquidation of the corporate debtor. [Paras 11, 12]

KK Milk Fresh India Ltd. is ordered to be liquidated with effect from the date of the order.

Appointment of Liquidator under Section 34(1) of the Code - The Resolution Professional, who conducted the CIRP, is appointed as Liquidator upon his consent in the prescribed form. - HELD THAT: - The Committee of Creditors confirmed the incumbent Resolution Professional as liquidator and the RP gave consent in the prescribed form. On that basis the Tribunal appointed the same person as Liquidator in terms of the Code, thereby effecting the statutory requirement for appointment of a liquidator when liquidation is ordered. [Paras 13]

Chanchal Dua is appointed as Liquidator in terms of Section 34(1) of the Code.

Liquidator's duty to issue public announcement and to conduct liquidation process - Discharge of officers, employees and workmen on commencement of liquidation - Ceasing of CIRP moratorium and commencement of liquidation moratorium under Section 33(5) - Directions issued to the Liquidator regarding public announcement, conduct of liquidation, deemed discharge of personnel, submission of preliminary report, and effect on moratorium. - HELD THAT: - The Tribunal directed the Liquidator to issue a public announcement of liquidation and to carry out the liquidation in accordance with the Code and the Insolvency and Bankruptcy (Liquidation Process) Regulations. The order is treated as notice of discharge to officers, employees and workmen as provided by the Code. The Liquidator was mandated to submit a preliminary report to the Adjudicating Authority within seventy five days from the liquidation commencement date. Consequentially, the moratorium under Section 14 ceases and a fresh moratorium under Section 33(5) commences upon liquidation. [Paras 13, 14]

Liquidator to issue public announcement, proceed with liquidation as per law, treat the order as discharge notice to personnel, submit a preliminary report within seventy five days, and the CIRP moratorium ceded to the liquidation moratorium.

Final Conclusion: The Tribunal allowed the application under Section 33(1) of the Code, ordered liquidation of KK Milk Fresh India Ltd. on account of failure to secure an approved resolution plan within the CIRP period, appointed the incumbent Resolution Professional as Liquidator, and issued consequential directions governing the liquidation process and moratorium.

Approval of Resolution Plan under Section 31 - Compliance with Section 30(2) and Regulation 38 - Committee of Creditors' approval by requisite majority under Section 30(4) - Eligibility of Resolution Applicant under Section 29A and Form-H certification - Monitoring Agency for implementation of the Resolution Plan - Binding effect of an approved Resolution Plan on stakeholders - Cessation of moratorium on approval of Resolution Plan

Compliance with Section 30(2) and Regulation 38 - Approval of Resolution Plan under Section 31 - The Resolution Plan submitted by IM+ Capitals Limited complies with the requirements of Section 30(2) of the IBC and Regulation 38 of the CIRP Regulations and is approved under Section 31 of the Code. - HELD THAT: - The Resolution Professional examined the Resolution Plan and certified compliance with Section 30(2) read with Regulation 38. The Tribunal recorded that the plan provides for payment priorities, treatment of financial and operational creditors, includes required implementation and monitoring mechanisms, and does not contravene any law. On that basis, and having regard to the RP's certification, the Tribunal approved the Resolution Plan under Section 31(1). [Paras 15, 16, 18, 21]

Resolution Plan of IM+ Capitals Limited is approved under Section 31 of the IBC as meeting the statutory requirements.

Committee of Creditors' approval by requisite majority under Section 30(4) - Eligibility of Resolution Applicant under Section 29A and Form-H certification - The Committee of Creditors approved the Final Resolution Plan by the requisite voting share and the Resolution Applicant was certified eligible under Section 29A in Form-H. - HELD THAT: - The record shows e-voting was conducted and the Final Resolution Plan obtained 74.61% of the CoC voting share, satisfying the majority requirement of Section 30(4). The RP submitted a compliance certificate in Form-H certifying eligibility of the Successful Resolution Applicant under Section 29A and feasibility and viability of the plan. The Tribunal accepted these certifications as part of the statutory compliance necessary for approval. [Paras 12, 15, 16]

CoC approval by 74.61% is valid and the Resolution Applicant is certified eligible; these certifications support the Tribunal's approval of the plan.

Monitoring Agency for implementation of the Resolution Plan - Binding effect of an approved Resolution Plan on stakeholders - Cessation of moratorium on approval of Resolution Plan - A Monitoring Agency is appointed to supervise implementation; the approved Resolution Plan is declared binding on the corporate debtor and its stakeholders; and the moratorium under Section 14 ceases from the date of the order. - HELD THAT: - The Tribunal confirmed the Monitoring Agency composition as proposed by the CoC and permitted substitution of the Monitoring Agency with prior judicial approval if it fails to perform. Upon approval, the plan was declared binding on the corporate debtor, its members, employees, creditors and other stakeholders. Consequent to approval, the moratorium previously in force under Section 14 ceases to have effect from the date of the order. The Tribunal directed filing of records with the IBBI and made the plan effective from the date of the order. [Paras 21, 22, 23, 24, 25]

Monitoring Agency appointed; approved Resolution Plan is binding on stakeholders; moratorium imposed under Section 14 ceases from the date of this order and the plan becomes effective forthwith.

Final Conclusion: The Tribunal approved the Resolution Plan submitted by IM+ Capitals Limited as compliant with statutory requirements, accepted the CoC's 74.61% approval and the RP's certifications, appointed a Monitoring Agency for implementation, declared the plan binding on all stakeholders, directed filing of records with IBBI, and ordered that the moratorium under Section 14 shall cease from the date of this order.

Initiation of liquidation - Liquidation order on intimation of Committee of Creditors' decision - Commercial wisdom of the Committee of Creditors - Appointment of Liquidator from approved panel - Removal/exclusion of Resolution Professional as Liquidator for lackadaisical conduct - Liquidation costs and Liquidator's fees - Sale as a going concern and assessment of assets - Public announcement and submission of claims

Initiation of liquidation - Liquidation order on intimation of Committee of Creditors' decision - Commercial wisdom of the Committee of Creditors - Whether the corporate debtor should be directed to be liquidated under the Code and on what basis the Adjudicating Authority should treat the application under Section 33(1) instead of Section 33(2). - HELD THAT: - The CoC, at its 5th meeting on 07.03.2020, passed a resolution to liquidate the corporate debtor with 100% voting share after no eligible resolution applicant was available. The Tribunal noted the settled principle that a decision of the CoC to recommend liquidation after evaluation and absence of a resolution plan is a business decision within the CoC's commercial wisdom. Although Section 33(2) permits liquidation on intimation by the RP where such intimation is made during CIRP before confirmation of a plan, the RP filed the application after the prescribed period and without explanation for the delay; the application is therefore treated under Section 33(1). On satisfaction of the conditions under Section 33(1), the Tribunal directed that the corporate debtor be liquidated in accordance with Chapter III of the Code and issued consequential directions regarding the liquidation process. [Paras 5, 8, 16]

The corporate debtor is ordered to be liquidated under Section 33(1) of the Code and the liquidation shall proceed in accordance with Chapter III with the specified directions.

Removal/exclusion of Resolution Professional as Liquidator for lackadaisical conduct - Appointment of Liquidator from approved panel - Whether the incumbent Resolution Professional should be continued as Liquidator and, if not, who is to be appointed as Liquidator. - HELD THAT: - Section 34(1) provides that the RP shall act as Liquidator subject to written consent. The Tribunal found that the RP had unexplained and inordinate delay in filing the liquidation application after the CoC resolution and prior to lockdown, reflecting lackadaisical conduct; on that basis the RP should not be continued as Liquidator. Pursuant to Section 34(7) and having received the IBBI-approved panel forwarded by the NCLT, New Delhi, the Tribunal selected a member of the panel (Mr. Sawinder Singh Chug as appearing at Serial No. 6 on the panel) to be appointed as Liquidator. [Paras 9, 10]

The RP is not continued as Liquidator; Mr. Sawinder Singh Chug from the approved panel is appointed as Liquidator.

Liquidation costs and Liquidator's fees - Sale as a going concern and assessment of assets - Public announcement and submission of claims - Directions governing the conduct of the liquidation process including costs, fees, sale of assets and claims procedure. - HELD THAT: - The Tribunal recorded relevant regulatory framework: Regulation 39B (liquidation cost) to be met as per the Liquidation Process Regulations, Regulation 39C (assessment of sale as going concern) requires the liquidator to follow regulation 32 of the Liquidation Process Regulations if sale as going concern fails, and Regulation 39D (fees of the liquidator) contemplates fees as specified by the Board and as provided in Rule 4 of the Liquidation Process Regulations. The Tribunal directed the Liquidator to publish the public announcement in Form B within five days calling stakeholders to submit claims with the last date 30 days from the liquidation commencement date, to file a preliminary report within 75 days and fortnightly progress reports thereafter, and applied the statutory consequences in relation to suits, powers of directors and assistance by personnel as set out in Section 33 and related provisions. [Paras 11, 12, 13, 14, 16]

The liquidation shall be conducted in accordance with the cited IBBI regulations and the Liquidation Process Regulations, including meeting liquidation costs, following procedures for sale as a going concern, paying liquidator's fees as prescribed, publishing the statutory announcement and processing claims within the prescribed timelines.

Final Conclusion: The Tribunal held that, on satisfaction of the conditions of Section 33(1), Addinath Rubbers Private Limited is ordered to be liquidated; the incumbent RP is not continued as Liquidator for want of timely conduct and Mr. Sawinder Singh Chug is appointed as Liquidator, with the liquidation to proceed under the applicable IBBI and Liquidation Process Regulations and the directions specified in the order.

Approval of resolution plan under Section 31 - Compliance with Section 30(2) and CIRP Regulations - Binding effect of approved resolution plan on stakeholders - Extinguishment of pre-plan claims including government/statutory authorities - Extinguishment of existing share capital on the effective date - Deemed shareholder/member approvals for restructuring - Resolution applicant to obtain statutory approvals from competent authorities - Cessation of moratorium upon approval of resolution plan

Approval of resolution plan under Section 31 - Compliance with Section 30(2) and CIRP Regulations - Resolution Plan approved under Section 31 of the IBC as complying with Section 30(2) and relevant CIRP Regulations. - HELD THAT: - The Tribunal examined the Resolution Plan submitted by the Resolution Professional and the certificate that the plan meets the requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 read with the CIRP Regulations. The Committee of Creditors had approved the plan with 100% voting share. The Tribunal observed that the Plan addresses settlement of claims, feasibility, viability, implementation procedure, appointment of person(s) to oversee implementation and contains an affidavit under Section 29A. On satisfaction that the plan complies with applicable statutory requirements, the Tribunal approved the Resolution Plan annexed to IA 197 of 2021. [Paras 18, 19]

Resolution Plan approved and held to comply with Section 30(2) and relevant CIRP Regulations; IA 197 of 2021 allowed.

Binding effect of approved resolution plan on stakeholders - Extinguishment of pre-plan claims including government/statutory authorities - Extinguishment of contingent/unconfirmed dues - Approved plan is binding on the corporate debtor and all stakeholders and extinguishes pre-plan claims, including those of government/statutory authorities and contingent/unconfirmed dues, to the extent provided in the plan. - HELD THAT: - The Tribunal held that upon approval the Resolution Plan becomes binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders. It declared that after payment as per the plan, liabilities of stakeholders as provided in the plan shall stand permanently extinguished. The Tribunal further held that other claims, including those of Government/Statutory Authorities whether lodged during CIRP or not, and contingent or unconfirmed dues, shall stand extinguished to the extent covered by the approved plan. [Paras 21]

Approved plan is binding and extinguishes pre-plan and contingent claims as provided in the plan.

Extinguishment of existing share capital on the effective date - Deemed shareholder/member approvals for restructuring - Existing share capital of the corporate debtor shall stand extinguished on the effective date and the order deems that shareholder/member approvals required for restructuring have been obtained. - HELD THAT: - The Tribunal directed that on the effective date and with effect from the appointed date the entire existing share capital shall stand extinguished without any payment to existing shareholders, and the Resolution Applicant may issue new equity in accordance with the Companies Act, 2013. The Tribunal further held that all approvals of shareholders/members for restructuring as provided in the plan shall be deemed to have been obtained and this order will serve as evidence of required formalities under the Companies Act for such restructuring. [Paras 21]

Existing share capital extinguished on effective date; shareholder approvals for restructuring deemed obtained.

Resolution applicant to obtain statutory approvals from competent authorities - Cessation of moratorium upon approval of resolution plan - Implementation and procedural directions - Directions regarding statutory reliefs, procedural implementation and cessation of moratorium: applicants must approach competent authorities for reliefs; moratorium ceases from date of order; procedural steps for implementation to be carried out. - HELD THAT: - The Tribunal refused to grant blanket statutory waivers itself but granted liberty to the Resolution Applicant to approach competent authorities for concessions or reliefs, including tax authorities, who shall decide applications in accordance with applicable laws. The Tribunal directed that notwithstanding claims in the plan, the Resolution Applicant must obtain necessary approvals under law within prescribed periods. The order further provided procedural directions: on effectiveness the moratorium under Section 14 ceases, the RP must send copies of the order to participants and forward records to the IBBI, accounting entries shall be completed in accordance with accounting standards and the Companies Act, and management shall be handed to the Board nominated by the Resolution Applicant. [Paras 20, 21]

Resolution Applicant to seek statutory approvals from competent authorities; moratorium ceases from date of this order; procedural directions for implementation issued.

Final Conclusion: The Tribunal approved the Resolution Plan as compliant with the IBC and CIRP Regulations, held the approved plan binding on all stakeholders with specified extinguishment of claims and share capital, directed that statutory reliefs must be sought from competent authorities, ordered cessation of moratorium from the date of the order and issued procedural directions for implementation.

Extension of liquidation period - powers under section 35(1)(n) of the Insolvency and Bankruptcy Code, 2016 - effect of national lockdown on liquidation timelines - pending avoidance applications and completion of liquidation - compliance with model timelines under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

Extension of liquidation period - effect of national lockdown on liquidation timelines - pending avoidance applications and completion of liquidation - compliance with model timelines under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Grant of extension of the liquidation period for the Corporate Debtor and directions governing completion of the liquidation process. - HELD THAT: - The Liquidator, appointed pursuant to the order dated 27.08.2019, sought an extension of the liquidation period on account of delays including failed e-auctions caused by the national lockdown and the pendency of avoidance proceedings filed by the Liquidator. The Tribunal noted that liquidation was required to be completed on or before 27.08.2020 but that assets remained unsold and avoidance applications remained undetermined, preventing completion of the liquidation process. In light of these circumstances and the disruptions caused by the lockdown, the Tribunal considered it just and proper to grant an extension. The Tribunal extended the liquidation period for a further period of one year and directed the Liquidator to endeavour to complete the process within the extended period, to comply with the model timelines prescribed under the Liquidation Process Regulations, 2016, and to file the requisite reports with the Tribunal. The Tribunal also recorded that no further extension should be sought and required the Liquidator to proceed with handing over assets sold to successful bidders and pursue pending proceedings necessary for completion of liquidation. [Paras 6, 7]

IA/659/CHE/2021 is allowed; the liquidation period is extended for one year and the Liquidator is directed to complete the liquidation on or before 20.12.2021 while complying with the IBBI model timelines.

Final Conclusion: The application for extension is allowed: the liquidation period of the Corporate Debtor is extended for one year, to be completed on or before 20.12.2021, subject to compliance with the Liquidation Process Regulations and the Tribunal's directions.

Liquidation process - duty to hand over books and records to the liquidator - ownership of assets: corporate assets versus personal property - cooperation with the liquidator for completion of liquidation - wilful disobedience and contempt proceedings under Section 429 of Companies Act, 2013

Duty to hand over books and records to the liquidator - ownership of assets: corporate assets versus personal property - Whether the respondents had complied with the Tribunal's earlier directions to hand over books, records and title deeds and whether the properties at Guduvancherry and Thiruvallur formed part of the corporate debtor's assets. - HELD THAT: - The Tribunal examined the pleadings and counter and noted that documents relating to the corporate debtor had been handed over to the liquidator and that the records pertaining to Guduvancherry and Thiruvallur were asserted to belong to the first and second respondents personally. The respondents explained loss of pre-November 2015 records due to the 2015 flood and the sealing of the office after the arrest of a respondent. Having considered the totality of circumstances and the respondents' averments, the Tribunal recorded that documents relating to the corporate debtor had already been delivered and that the Guduvancherry and Thiruvallur properties were held by the respondents in their personal capacity rather than as corporate assets. [Paras 10]

Found that documents relating to the corporate debtor had been handed over and that Guduvancherry and Thiruvallur belong to the first and second respondents personally.

Cooperation with the liquidator for completion of liquidation - wilful disobedience and contempt proceedings under Section 429 of Companies Act, 2013 - Whether relief should be granted directing compliance with earlier orders and whether proceedings for wilful disobedience under Section 429 of the Companies Act, 2013 should be initiated. - HELD THAT: - The applicant sought directions to compel compliance with earlier MA orders and a direction under Section 429 for wilful disobedience. The Tribunal, after hearing parties and assessing the material, did not record wilful non compliance; instead, balancing the factual assertions of delivery of documents and the respondents' explanations about ownership and loss of older records, it directed the respondents to extend full cooperation to the liquidator in future if any documents are sought for completion of the liquidation process. The order thus provides a prospective duty of cooperation rather than imposing contempt or penal consequences at this stage. [Paras 10, 11]

Directed the respondents to extend full cooperation to the liquidator for any future documents required for completion of the liquidation process; disposed IA/246/IB/2020 without initiating Section 429 proceedings.

Final Conclusion: The application was disposed of by recording that documents in relation to the corporate debtor had been handed over, that certain properties belonged to the respondents personally, and by directing the respondents to extend full cooperation to the liquidator for any future documents necessary to complete the liquidation; the interlocutory application stands disposed.

Summary order. Delay condoned; appeal dismissed for want of merit as Tribunal's factual finding upheld; pending applications disposed of.

Excisable goods - exclusions under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - marketability test for excisability - effect of a blank or nil rate in the Fourth Schedule on excisability - concurrent levy of central excise and GST - liberal construction of dispute settlement scheme in favour of taxpayers

Excisable goods - effect of a blank or nil rate in the Fourth Schedule on excisability - exclusions under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Whether supplies of lubricants that appear in the Fourth Schedule with the rate column blank are excluded from the SVLDRS Scheme as "excisable goods" for the purposes of Section 125(h). - HELD THAT: - The Court held that the term "excisable goods" in Section 125(h) of the SVLDRS Scheme must be given a purposive meaning and cannot be treated as merely cosmetic. Applying the guidance in Moti Laminates regarding the need for a practical marketability inquiry to attract excise, the Court observed that where no positive rate of duty is stipulated in the Fourth Schedule (the rate column being blank or indicated as nil), there is, in practical terms, no levy of central excise duty that can operate on the transaction. The Court accepted the categorisation of goods which includes goods excisable at a nil rate, but distinguished such exempt/nil rated excisable goods from goods where the rate column is blank such that no operative excise levy exists for the purposes of exclusion under the Scheme. The departmental clarification (OSD) and Circular No.1071/4/2019 - CX 8 were considered to support a narrow application of the exclusion, limited to those goods which continue to be subject to central excise levy (for example, specified petroleum products and tobacco) after the GST transition. The Court rejected a purely literal exclusion that would disqualify taxpayers from the Scheme merely because a commodity is described in the Fourth Schedule when no applicable positive rate is provided, and directed that the Scheme should be construed in line with its object of reducing pending litigation and benefitting taxpayers. [Paras 26, 28, 30, 31, 32]

Lubricants listed in the Fourth Schedule with the rate column blank are not to be treated as "excisable goods" for the limited purpose of excluding declarations under Section 125(h) of the SVLDRS Scheme; the petition succeeds.

Final Conclusion: Writ petition allowed: the petitioner's SVLDRS application could not be rejected merely because lubricants appear in the Fourth Schedule with the rate column blank; the Scheme's exclusion under Section 125(h) applies only to goods that continue to be subject to central excise levy and the Scheme must be construed to further its object of reducing litigation.

Manufacture - assembly of prescription lenses in spectacle frames - levy of excise duty on manufacture - marketable commodity - binding precedent under Article 141 of the Constitution

Manufacture - assembly of prescription lenses in spectacle frames - marketable commodity - Whether the activity of fitting or assembling prescription lenses into spectacle frames in showroom premises amounts to 'manufacture' attracting excise duty. - HELD THAT: - The Court applied the settled principle that not every change or combination of components amounts to manufacture; there must be a transformation producing a new and distinct article having a distinctive name, character or use. While the assembly process in the showrooms involved skilled adjustments, edging, grooving and mounting of lenses into frames, the end result was an assembly of components (frames and lenses) previously manufactured and, therefore, did not create a new commodity distinct in character or use. The Court relied on the decisions in Mehta Opticians and Bholanath Sreemany, and the Authority for Advance Rulings decision in Amazon, which treat fitting/assembly of lenses into frames as not constituting manufacture for the purposes of excise duty. The Court also observed that manufacture of lens blanks into prescription lenses and manufacture/import of frames are separately excisable events, but the subsequent assembly at showrooms is legally different and not an excisable manufacture.

Assembly/fitting of prescription lenses into spectacle frames in the showrooms does not amount to 'manufacture' for levy of excise duty.

Levy of excise duty on manufacture - binding precedent under Article 141 of the Constitution - quashing of show cause notices - Whether the show cause notices issued to the petitioners insofar as they treat the showroom assembly as manufacture are legally sustainable. - HELD THAT: - Given that binding judicial precedent holds that fitting/assembly of lenses into frames is not manufacture, issuance and pursuit of show cause notices treating such assembly as an excisable manufacture involved a legal error. The Court noted authorities advising the Revenue to apply settled law before issuing SCNs and that the Revenue had accepted the non-manufacture stance in earlier rulings. Consequently, to the extent the SCNs equate showroom assembly with manufacture and seek duty on that basis, they are founded on a misunderstanding of settled law and must be set aside.

The show cause notices are quashed insofar as they treat the showroom assembly/fitting activity as manufacture attracting excise duty.

Final Conclusion: Writ petitions allowed; show cause notices are quashed to the extent they treat the fitting/assembly of prescription lenses into spectacle frames at showroom premises as a 'manufacture' liable to excise duty, while leaving intact liability (where applicable) for manufacture of lenses or frames carried out in factories.

Rebate of central excise duty - export - Rule 18 of the Central Excise Rules, 2002 - Notification No. 19/2004-C.E. (N.T.) - transitional provision - Section 142(1) of the CGST Act, 2017 - refund in accordance with existing law - reimport - credit note - double benefit

Rebate of central excise duty - export - Rule 18 of the Central Excise Rules, 2002 - Notification No. 19/2004-C.E. (N.T.) - reimport - credit note - Admissibility of rebate of Central Excise duty where goods exported on payment of duty were subsequently reimported and a credit note was issued. - HELD THAT: - The Government held that the factual export - taking goods out of India to a place outside India - having occurred, was not negated by subsequent reimportation. There is no condition in Rule 18 or Notification No. 19/2004-C.E. (N.T.) making realisation of export proceeds or absence of a credit note a prerequisite for treating an export as complete or for grant of rebate. Consequently, the conclusion of the lower authorities that the export was not complete because the goods were reimported and a credit note was issued is unsustainable.

Rebate claim cannot be denied merely because goods were reimported or because a credit note was issued; the export in June 2017 was a completed export for the purposes of Rule 18 and the Notification.

Transitional provision - Section 142(1) of the CGST Act, 2017 - refund in accordance with existing law - double benefit - IGST - Whether the transitional provision under Section 142(1) CGST Act, 2017 permits refund/rebate under Central Excise law for goods removed on payment of Central Excise duty shortly prior to the appointed day and returned within the statutory period, and whether sanctioning rebate would result in double benefit. - HELD THAT: - Section 142(1) provides that where Central Excise duty was paid on goods removed not earlier than six months before the appointed day (1-7-2017), refund shall be in accordance with the existing Central Excise law if the goods are returned within six months from the appointed day and are identifiable to the satisfaction of the proper officer. The facts show removal for export on 22-6-2017 (i.e., within six months prior to 1-7-2017) and import/return within the six-month post-appointed-day period; identity of goods is not disputed. Further, IGST was paid upon import and no refund of that IGST has been claimed; therefore grant of rebate of the Central Excise duty would not confer a double benefit.

Section 142(1) applies and entitles the applicant to rebate under Central Excise law; sanctioning the rebate does not result in double benefit in the present facts.

Final Conclusion: The revision application is allowed; the rebate claim of Central Excise duty paid on the goods exported on 22-6-2017 is admissible under Rule 18 and in terms of Section 142(1) of the CGST Act, 2017, and the matter is remitted to give consequential relief accordingly.

Interpretation of amendment to Section 8(5) of the CST Act as confined to clause (5)(a) and not clause (5)(b) - Notification making furnishing of Form 'C'/'D' a condition for exemption under Section 8(5) - Doctrine that promissory estoppel cannot be invoked to override a statutory provision - Deference to co ordinate Bench decisions and limits on revisiting those decisions - Decision rendered subject to outcome of pending appeals before the Hon'ble Supreme Court

Interpretation of amendment to Section 8(5) of the CST Act as confined to clause (5)(a) and not clause (5)(b) - Notification making furnishing of Form 'C'/'D' a condition for exemption under Section 8(5) - Deference to co ordinate Bench decisions and limits on revisiting those decisions - Amendment to Section 8(5) of the CST Act and the effect of the notification dated 31.05.2002 as construed by the Division Bench in Adeshwar Granites governs the legal question in favour of the assessee. - HELD THAT: - The Division Bench followed the co ordinate Bench decision in Adeshwar Granites which held that the amendments to sub sections (4) and (5) of Section 8 do not alter the manner in which Section 8(5) operates. The notifications and subsequent Division Bench authorities relied upon indicate that the Revenue's challenge cannot prevail in view of that precedent. The court noted that Special Leave Petitions against Adeshwar Granites are pending before the Supreme Court but no interim order has been granted; accordingly the High Court answered the question of law in favour of the assessee while keeping the matter subject to the result of the pending appeals. The court also clarified that the decision does not preclude consequential adjustments where inter state sales are not supported by production of Form 'C'/'D', and preserved the Revenue's right to proceed as may be necessary after disposal of the appeals before the Supreme Court. [Paras 10, 11, 14]

Question of law No. (1) is answered in favour of the assessee and against the Revenue; the appeal is dismissed subject to the outcome of the pending Civil Appeals before the Supreme Court.

Deference to co ordinate Bench decisions and limits on revisiting those decisions - Whether the Division Bench should reconsider its earlier treatment of Notification No.FD:119 CSL 2002(4) is not a matter for the present Bench to decide. - HELD THAT: - The Division Bench held that question of law No. (2) was not properly framed and that this Bench cannot sit in judgment over a co ordinate Bench. The subject matter is covered by the decision in Adeshwar Granites; accordingly the court declined to answer question No. (2). [Paras 12]

Question of law No. (2) does not arise for consideration.

Final Conclusion: Revision petition dismissed; question of law No. (1) answered in favour of the assessee and against the Revenue; question No. (2) not considered; the High Court's decision is subject to the outcome of Civil Appeal Nos. 473 480/2016 pending before the Supreme Court and the Revenue is at liberty to act in accordance with law after disposal of those appeals.

Confessional statements recorded to police inadmissible against co-accused - identification evidence after long delay and absence of Test Identification Parade - failure to produce RTO records and vehicle identity undermines proof of ownership - conviction cannot rest on no evidence - concurrent findings of fact subject to interference where there is no evidence

Confessional statements recorded to police inadmissible against co-accused - failure to produce RTO records and vehicle identity undermines proof of ownership - conviction cannot rest on no evidence - Whether there was legally admissible and sufficient evidence to convict the accused No.1 as owner of the offending truck and thereby for the offence under the Abkari Act. - HELD THAT: - The mahazar recorded statements of accused No.2 attributing ownership of the truck to accused No.1; such statements made to police are inadmissible as confessional evidence and therefore cannot be relied upon to convict accused No.1. PW3, who was alleged to have sold the truck to accused No.1, did not support the prosecution and disavowed his reply to the notice; crucial witnesses claiming prior ownership were not examined. The prosecution likewise failed to produce the photocopy of the R.C. book said to have been found in the truck and did not place on record the RTO register or otherwise verify the chassis/engine numbers to establish the correct registration and identity of the vehicle. In the absence of any admissible documentary or oral evidence linking accused No.1 to ownership of the truck or to the seized goods, the conviction of accused No.1 rests on no evidence and cannot be sustained. [Paras 11, 12, 13]

Conviction of accused No.1 set aside for want of any admissible evidence proving his ownership of the truck; acquitted.

Identification evidence after long delay and absence of Test Identification Parade - conviction cannot rest on no evidence - concurrent findings of fact subject to interference where there is no evidence - Whether the evidence was sufficient and reliable to sustain the convictions of accused Nos.2 and 4 for transporting spirit without licence. - HELD THAT: - An independent witness (PW13) purported to identify accused Nos.2 and 4 in court more than eleven years after the incident though he admitted he had not known them before and T.I. Parade was not held; such delayed in-court identification without prior acquaintance is a weak form of evidence. Official witnesses identified accused Nos.2 and 4 but did not state that they actually saw accused No.2 driving the truck; the key government servant said to have climbed onto the truck to inspect the goods was not examined. The investigation also omitted to prove the correct registration and ownership of the vehicle by producing RTO records or verifying chassis/engine particulars. Considering the prolonged delay in recording testimony, the absence of T.I. Parade, the non-examination of critical witnesses, and the gaps in vehicle identification, the evidence against accused Nos.2 and 4 is rendered doubtful and insufficient to sustain conviction. [Paras 16, 17, 18, 19, 20]

Convictions of accused Nos.2 and 4 cannot be sustained on the available evidence and are set aside; acquitted.

Final Conclusion: Both appeals are allowed. The impugned convictions and sentences are set aside; the appellants are acquitted of the offences alleged, their bail bonds stand discharged/cancelled and any fine paid shall be refunded.

Offence under Section 138 of the Negotiable Instruments Act - rebuttable presumption under Section 139 of the Negotiable Instruments Act - admission of signature and statutory presumption - onus on accused to rebut presumption by preponderance of probabilities - failure to produce contemporaneous documentary evidence to substantiate defence

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - admission of signature and statutory presumption - onus on accused to rebut presumption by preponderance of probabilities - Whether the statutory presumption in favour of the cheque-holder stood rebutted and whether the cheques were issued for discharge of a legally enforceable debt. - HELD THAT: - The Court recorded that the accused did not dispute the signatures on the cheques, which activates the statutory presumption that the cheques were issued for discharge of a debt or liability. That presumption is rebuttable but the onus lies on the accused to adduce credible evidence on a preponderance of probabilities to show the cheques were given for some other purpose. The accused claimed that delay and defect in delivery by the complainant caused rejection of orders by a third party and consequent loss, and that the cheques were conditional until acceptance by that third party. However, the accused failed to produce contemporaneous account entries, rejection orders or other documentary material to substantiate that defence despite admitting maintenance of accounts; his case therefore remained unsubstantiated. The appellate court erred in treating non-production by the complainant as fatal, rather than evaluating whether the accused had discharged his burden to rebut the presumption. On the evidence and circumstances, the Court concluded the presumption was not successfully rebutted and the cheques were issued to discharge a legally enforceable debt. [Paras 24, 25, 26, 27, 28]

The presumption under Section 139 was not rebutted; the cheques pertained to a legally enforceable debt and the accused is guilty of the offence under Section 138.

Failure to produce contemporaneous documentary evidence to substantiate defence - onus on accused to rebut presumption by preponderance of probabilities - Whether the first appellate Court correctly set aside the conviction by misappreciating the onus and evidence. - HELD THAT: - The High Court found that the first appellate Court misapplied the onus of proof by construing the accused's admissions and the complainant's evidence in a manner that absolved the accused despite absence of corroborative documents that the accused himself admitted were available. The appellate Court's conclusion that non-production of accounts by the complainant was fatal overlooked that it was the accused who failed to substantiate his contrary plea with the relevant documents and records. Because the appellate Court did not properly assess whether the accused had discharged the burden to create a probable defence on the preponderance standard, its setting aside of conviction was held to be erroneous. [Paras 14, 25, 28]

The first appellate Court's judgment setting aside the conviction is set aside and the conviction by the trial Court is restored.

Final Conclusion: Criminal appeals allowed; convictions under Section 138 restored. Sentence reduced from that awarded by the trial Court to imprisonment for three months and the fine imposed by the trial Court is confirmed.

Quashing of complaint under inherent jurisdiction of High Court (Section 482 Cr.P.C.) - Scope of inquiry under Section 482 Cr.P.C. - limits on re-appreciation of evidence - Prima facie sufficiency of allegations in complaints under Section 138 of the Negotiable Instruments Act - Arbitration clause in employment agreement and forum for resolution of employment disputes

Quashing of complaint under inherent jurisdiction of High Court (Section 482 Cr.P.C.) - Scope of inquiry under Section 482 Cr.P.C. - limits on re-appreciation of evidence - Prima facie sufficiency of allegations in complaints under Section 138 of the Negotiable Instruments Act - Whether the Criminal Original Petition under Section 482 Cr.P.C. to quash the complaint in C.C. No. 4965 of 2014 (Section 138 N.I. Act) should be allowed - HELD THAT: - The High Court declined to embark upon a re appreciation of evidence or resolve disputed factual contentions in proceedings under Section 482 Cr.P.C. Reliance was placed on Supreme Court authorities holding that the High Court's power under Section 482 does not extend to deciding factual disputes or probing the veracity or inconsistencies of witness statements which are matters for trial or appeal. The court examined the complaint and records and concluded that the allegations set out the ingredients of the offence sought to be prosecuted; therefore, quashing at this stage was inappropriate. The petitioner may raise all factual and legal contentions before the trial court, but the Court will not conduct a roving inquiry into disputed facts in a Section 482 petition. [Paras 15, 16, 17]

Criminal Original Petition filed under Section 482 Cr.P.C. to quash C.C. No. 4965 of 2014 is dismissed; complaint is restored to proceed on merits before the trial court.

Arbitration clause in employment agreement and forum for resolution of employment disputes - Interplay between arbitration agreement and criminal complaint under Section 138 N.I. Act - Whether the arbitration clause in the employment agreement bars initiation or continuation of the criminal complaint proceedings and requires referral to arbitration at this stage - HELD THAT: - The court noted the existence of Clause 19 (Arbitration) in the employment agreement which provides for resolution of disputes by arbitration and contains a three month notice requirement. However, the Court held that the question of applicability of the arbitration clause, and whether the cheque was issued by the individual in his personal capacity or as an agent/servant of the company, are factual and legal issues that must be determined by the trial court. The High Court refrained from exercising its inherent jurisdiction to decide the scope or applicability of the arbitration clause in the context of the present complaint and directed that such aspects be adjudicated during trial. [Paras 8, 12, 16]

Contentions regarding the arbitration clause and related employment aspects are not adjudicated in this petition and are left open for decision by the trial court; these matters must be considered in the course of trial.

Final Conclusion: The petition to quash the complaint under Section 138 N.I. Act was dismissed: the High Court declined to re appreciate disputed factual matters or decide the applicability of the arbitration clause in exercise of Section 482 Cr.P.C., and left all such issues to be raised and adjudicated before the trial court in C.C. No. 4965 of 2014.