TaxTMI Updates e-Newsletter
Nov 09,2021

Legality of a State Government notification in relation to GST - restitution of tax benefit claimed on contracts estimated under pre-GST law - calculation of GST on contracts where estimates were prepared under VAT - treatment of embedded taxes in valuation for GST - application of precedent where identical points have been decided

Legality of a State Government notification in relation to GST - application of precedent where identical points have been decided - Challenge to the Office Memorandum dated 10.12.2018 (Annexure-1) on the ground that it is illegal, arbitrary and unconstitutional. - HELD THAT: - The Court examined the grounds urged against the impugned Office Memorandum and compared them with issues already considered and decided in W.P.(C) No.14924 of 2020 (Harish Chandra Majhi). The petitioner sought to distinguish that precedent by pointing to differences between the Central Government notification and the State notification and by raising valuation points. The Court found that the earlier judgment dealt with substantially similar grounds and that no new ground has been made out warranting reconsideration. In consequence, the challenge to the impugned notification was not accepted and the petition was dismissed for the reasons recorded in Harish Chandra Majhi. [Paras 3, 4]

Challenge to Annexure-1 dismissed on the basis that the points raised were substantially addressed in Harish Chandra Majhi; no ground for interference.

Restitution of tax benefit claimed on contracts estimated under pre-GST law - calculation of GST on contracts where estimates were prepared under VAT - Petitioner's request for restitution of GST benefit with interest and for direction to calculate differential GST on contracts estimated under VAT. - HELD THAT: - The Court noted the petitioner's claim for restitution and for a direction to compute differential GST on contracts where estimates were made under the erstwhile VAT regime. It observed that the reliefs sought had been answered adversely to the petitioner in the earlier decision in Harish Chandra Majhi, and that the petitioner failed to demonstrate any distinguishable point that would require departure from that precedent. Consequently, the Court declined to grant the directions sought for restitution or fresh computation. [Paras 3, 4]

Prayer for restitution and direction to prepare fresh schedule and calculate differential GST refused; petition dismissed following the precedent.

Final Conclusion: The petition is dismissed for the reasons recorded in Harish Chandra Majhi (W.P.(C) No.14924 of 2020); no costs awarded.

Release of perishable goods on payment under Rule 141 of the CGST Rules, 2017 - applicability of Rule 140 vis-a -vis Rule 141 for release of seized goods - validity of e-way bill under sub-rule (10) of Rule 138 of the GST Rules - seizure and levy of tax and penalty under Section 129(3) of the UPGST Act

Release of perishable goods on payment under Rule 141 of the CGST Rules, 2017 - applicability of Rule 140 vis-a -vis Rule 141 for release of seized goods - validity of e-way bill under sub-rule (10) of Rule 138 of the GST Rules - Interim release of goods seized on a finding of tax evasion and the procedure applicable for release of perishable goods. - HELD THAT: - The High Court considered rival submissions on whether the e-way bill generated under sub-rule (10) of Rule 138 was valid at the time of interception and whether release of seized perishable goods should follow the procedure in Rule 140 or Rule 141. While the petition challenges the finding of evasion and the appellate rejection, the Court granted interim relief by directing that if the petitioner pays the amount in terms of Rule 141 of the CGST Rules, 2017 to the authorities concerned, the seized goods shall be released forthwith. The order reflects the Court's exercise of interim discretion without finally resolving the merits of the contested findings on evasion or the ultimate applicability of Rules 140 and 141.

Upon payment in terms of Rule 141 of the CGST Rules, 2017, the seized goods shall be released forthwith as interim relief.

Final Conclusion: Interim order directing release of seized goods on payment under Rule 141 of the CGST Rules, 2017; other contentions including the validity of the e-way bill and the merits of the evasion finding remain for adjudication in the main proceedings.

Show-cause notice in Form GST DRC-01 - input tax credit (ITC) reversal with interest and penalty - investigation and issuance of summons - failure to appear and its consequences in administrative investigation - right to be heard / audi alteram partem - reasoned order

Show-cause notice in Form GST DRC-01 - investigation and issuance of summons - failure to appear and its consequences in administrative investigation - Validity of issuance of Form GST DRC-01 against the petitioner in the circumstances of the investigation and reliance on media reports - HELD THAT: - The Court noted that the Form GST DRC-01 was issued under Rule 142(1)(a) after investigation records showed that the petitioner had utilized ITC from firms described as dubious and after a summon dated 10.09.2021 was issued. The petitioner had appeared on 23.09.2021, sought an adjournment to 30.09.2021 and did not appear on the adjourned date; the authorities record this failure and state that the show-cause notice was issued on 08.10.2021. Having regard to these facts, the Court did not quash the impugned Form GST DRC-01 solely on the ground that media reports were relied upon; instead, the Court treated the issuance as a consequence of the investigation and the petitioner's non-appearance and proceeded to secure an opportunity for further investigation and hearing. [Paras 4, 6, 8]

The issuance of Form GST DRC-01 is not set aside on the basis of the media reports alone; the matter shall proceed for fresh consideration following an opportunity to the petitioner.

Right to be heard / audi alteram partem - reasoned order - input tax credit (ITC) reversal with interest and penalty - Whether the petitioner is entitled to a further opportunity to produce materials and to have a reasoned decision before the show-cause notice takes effect - HELD THAT: - The Court directed that the petitioner be given an opportunity to appear before the Joint Commissioner of State Taxes, Guwahati on the fixed date and time and to produce all relevant materials and contentions in response to the investigation and the Form GST DRC-01. Thereafter the authority is required to consider the materials and pass a reasoned order either accepting or rejecting the petitioner's contentions. Pending that reasoned order, the Form GST DRC-01 dated 08.10.2021 shall be kept in abeyance. If the reasoned order favours the petitioner, the Form shall cease to be effective; if adverse, a fresh Form GST DRC-01 may be issued subject to giving adequate time required under law. [Paras 9, 10, 11]

The petitioner shall be heard and the authority shall pass a reasoned order after considering the materials; the existing Form GST DRC-01 is kept in abeyance until such order is passed.

Final Conclusion: Writ petition disposed by directing the petitioner to appear before the Joint Commissioner for fresh hearing and production of materials; authority to pass a reasoned order thereafter; the impugned Form GST DRC-01s dated 08.10.2021 are kept in abeyance pending that order and the interim order is vacated.

Tax wrongfully collected and paid - Interpretation of the term "subsequently held" - Refund available where taxpayer subsequently finds supply to be inter State or intra State - Condition of payment under the correct head as prerequisite for refund - Refund of CGST and SGST where IGST paid on respondents' requirement

Tax wrongfully collected and paid - Interpretation of the term "subsequently held" - Refund of CGST and SGST where IGST paid on respondents' requirement - Whether the petitioner was entitled to refund of CGST and SGST wrongly paid for the period April 2018 to December 2018, having thereafter paid the IGST as required by the respondents and in light of the CBIC clarification on the meaning of "subsequently held". - HELD THAT: - The court accepted the CBIC clarification that the phrase "subsequently held" in section 77 of the CGST Act covers cases where the taxpayer himself subsequently finds that a supply treated as intra State is in fact inter State, as well as cases where a tax officer so holds. The circular, however, conditions availability of refund on payment of tax under the correct head. In the present case there was no dispute as to the quantum of tax; the petitioner had initially paid CGST and SGST treating the supplies as intra State and, at the respondents' request, paid the corresponding IGST. Given that the petitioner complied with the requirement to pay tax under the correct head as demanded by the revenue, the respondents' liability to refund the amount wrongly deposited under CGST and SGST stands established. The court also noted the delay during which the funds remained with the respondents and directed refund with applicable interest. [Paras 9, 10]

Petition allowed; respondents directed to refund the amount earlier deposited towards CGST and SGST (approximately Rs. 108 crores) with applicable interest within one month.

Final Conclusion: The petition succeeds; because the petitioner paid the IGST as required by the respondents and the CBIC clarification recognises taxpayer found reclassification within "subsequently held", the respondents are directed to refund the CGST and SGST amount wrongly deposited for April 2018 to December 2018 with interest within one month.

Violation of natural justice - appreciation of disputed questions of fact not permissible in writ jurisdiction - alternative statutory remedy bars invocation of Article 226 - appeal under Section 107

Violation of natural justice - appreciation of disputed questions of fact not permissible in writ jurisdiction - Whether the writ petition under Article 226 is maintainable on the ground that documents relied upon by the assessing officer were not supplied and principles of natural justice were violated. - HELD THAT: - The Court found that the contention alleging non-supply of documents and breach of natural justice had been raised before the assessing officer and was expressly considered in the assessment order (see paragraph 37 of Ext.P9). The assessing officer recorded that the mahazar dated 26.11.2019 specified the data period as 14.01.2013 to 01.09.2019 and that the dealer had signed without objection. Determination of those contentions requires appreciation of evidence and documents. Where the challenge turns on disputed factual determinations and evaluation of evidence already gone into by the authority, it is not appropriate to resolve such disputes in writ proceedings under Article 226. In such circumstances, the remedy is to pursue the statutory route rather than seek relief by way of writ. [Paras 5]

Writ petition not maintainable on the pleaded ground of violation of natural justice; factual disputes require appreciation by the appropriate forum and cannot be adjudicated in writ jurisdiction.

Appeal under Section 107 - alternative statutory remedy bars invocation of Article 226 - Whether Ext.P10 (the earlier decision) is amenable to writ challenge in this petition or whether a statutory appeal lies. - HELD THAT: - Although initially the petitioner contended that Ext.P10 had no appellate remedy, the Court observed that no specific relief was sought in the petition against Ext.P10. Moreover, Ext.P10 is a decision against which an appeal is available under Section 107. The Court reiterated the established principle that where an alternate remedy exists under the statute, writ jurisdiction will not ordinarily be exercised unless exceptional circumstances are shown. Applying that principle, the Court held that this was not a fit case for invoking Article 226 in respect of Ext.P10. [Paras 6]

Challenge to Ext.P10 not maintainable in writ; petitioner must pursue the statutory appeal under Section 107 and other available remedies.

Final Conclusion: Writ petition dismissed; petitioner granted liberty to pursue statutory remedies in accordance with law.

Interpretation of exemption notification - distinction between inputs and prepared animal feed - power to issue instructions or directions under Section 168 - substantive effect of exemption/amendment by Central Government or Parliament - reliance on Dilip Kumar regarding ambiguity in exemption notifications

Interpretation of exemption notification - distinction between inputs and prepared animal feed - Fish meal falling under tariff headings 2301 and 2309, when produced as a finished powdered product for use as feed, is covered by Sl.No.102 of Exemption Notification No.2/2017 and is exempt from GST; its incidental use as an input by other manufacturers does not remove the finished product from the exemption. - HELD THAT: - A coherent reading of Notification No.1/17 and Exemption Notification No.2/17, as amended (including the corrigendum and subsequent amendment substituting entries to include 2301 and 2309), shows that goods falling under those headings are included in the exemption. The grammatical construction of the entries (flours, meals and pellets of fish; fish meal in powdered form) embraces fish meal as a finished product. The fact that the same finished fish meal may incidentally be purchased and used as an input by other manufacturers does not strip it of its character as a finished product exempted under the entries. The Court held that the notification, as finally framed by the Central Government, exempts the goods covered under entries 2301 and 2309 and that no distinction can be judicially read into the entries to exclude fish meal manufactured and sold as a finished product.

Impugned Circular's clarification excluding fish meal manufactured as finished product from the exemption is set aside; petitioners making finished fish meal can claim exemption under Sl.No.102 of Notification No.2/2017.

Power to issue instructions or directions under Section 168 - substantive effect of exemption/amendment by Central Government or Parliament - A Board circular issued under the power to give instructions/directions for uniformity (Section 168) cannot override or nullify a substantive exemption conferred by a notification issued by the Central Government or by legislative action. - HELD THAT: - Section 168 confers on the Board power to issue orders, instructions or directions for uniformity in implementation and is primarily procedural in character. Exemption notifications issued under the statutory powers of the Central Government (and any amendment thereto or legislative alteration) create substantive rights. The Court held that the Board, by issuing a clarificatory circular under Section 168, cannot take away an exemption conferred by a notification; any change to the scope of an exemption must be effected by appropriate amendment to the exemption notification by the Central Government or by legislation by Parliament.

Impugned Circular cannot override the exemption notification; any change to exemption must be by amendment of the notification or by statute.

Reliance on Dilip Kumar regarding ambiguity in exemption notifications - The Board's reliance on the Supreme Court's decision in Dilip Kumar to justify treating fish meal as an input (and thereby not exempt) is misplaced; Dilip Kumar does not decide that inputs for animal feed are different from animal feed in the manner asserted in the Circular. - HELD THAT: - The Court examined the scope of the Dilip Kumar judgment and found that it addressed the rule of interpretation of exemption notifications (favoring strict interpretation and placing burden on the assessee) but did not pronounce the factual or classificatory point that inputs for animal feed are categorically distinct from prepared animal feed for the purposes advanced in the Circular. Therefore, paragraph 4.2 of the impugned Circular, which relies on that proposition, rests on an incorrect premise and cannot sustain the Circular's exclusionary clarification.

The Circular's reliance on Dilip Kumar to deny exemption to fish meal is untenable; that ground for the Circular is rejected.

Final Conclusion: The impugned Board Circular (Circular No.80/54/2018-GST dated 31.12.2018) insofar as it seeks to exclude fish meal manufactured and sold as a finished powdered product from the exemption under Sl.No.102 of Exemption Notification No.2/2017 is set aside; petitioners manufacturing finished fish meal are entitled to the exemption and consequential actions taken pursuant to the Circular are declared invalid.

Exemption under Notification No. 12/2017-CT(R) (Entry No. 3) - pure services - renting of immovable property treated as supply of service - functions entrusted under Article 243G and Article 243W of the Constitution - Tax Deducted at Source under section 51 of the CGST Act - TDS deduction from payments to unregistered suppliers

Renting of immovable property treated as supply of service - pure services - exemption under Notification No. 12/2017-CT(R) (Entry No. 3) - functions entrusted under Article 243G and Article 243W of the Constitution - Whether the applicant's supply of residential accommodation to the State Government for underprivileged girls is exempt from GST under Entry No. (3) of Notification No. 12/2017-CT(R) dated 28.06.2017. - HELD THAT: - Schedule II of the CGST Act treats renting of immovable property as a supply of service; the applicant's leasing of the building therefore constitutes a supply of services and, on the applicant's case, a pure service (no goods supplied). Entry No. (3) of Notification No. 12/2017-CT(R) grants exemption to "pure services" provided to government entities by way of any activity in relation to functions entrusted to Panchayats or Municipalities under Articles 243G/243W. The exemption therefore requires (i) the supply to be a pure service, (ii) supplied to a government entity, and (iii) supplied by way of an activity in relation to a function entrusted under Article 243G/243W. While conditions (i) and (ii) are satisfied on the material before the Authority, the applicant failed to place sufficient evidence or submissions demonstrating that his supply is made by way of an activity in relation to a function entrusted to a Panchayat or Municipality under the cited constitutional provisions. In absence of necessary material linking the supply to an entrusted function, the Authority cannot extend the Notification exemption to the facts of this case. [Paras 5]

The supply is not exempt under Entry No. (3) of Notification No. 12/2017-CT(R); answer in the negative.

Tax Deducted at Source under section 51 of the CGST Act - TDS deduction from payments to unregistered suppliers - Whether TDS provisions under section 51 of the CGST Act are applicable in the subject case. - HELD THAT: - Section 51 requires deduction of TDS on payments for taxable goods or services where the contract value exceeds the prescribed threshold. Having concluded that the impugned supply is not exempt under the Notification, the services remain taxable under GST. On that basis, the TDS provisions under section 51 apply to the payments made by the government department in the present case. The Authority therefore answers the question of applicability of TDS in the subject proceedings by reference to the legal character of the supply as taxable rather than exempt. [Paras 5]

TDS under section 51 is applicable in the subject case.

TDS deduction from payments to unregistered suppliers - Tax Deducted at Source under section 51 of the CGST Act - Whether the TDS notification issued under section 51 would be applicable for deduction of TDS where the applicant is not registered under GST. - HELD THAT: - The Authority, having determined that the impugned supply is taxable, held that the TDS notification under section 51 is applicable for deduction of TDS in the subject case notwithstanding the applicant's unregistered status. The Authority did not accept the contention that absence of GST registration or threshold exemption absolves the deductor from obligation to deduct TDS once the supply is not found to be exempt. [Paras 5]

TDS notification under section 51 is applicable and TDS is liable to be deducted in the subject case.

Entitlement to refund of TDS - scope of advance ruling under Section 97 - Whether the applicant would be entitled to refund of TDS deducted. - HELD THAT: - The question of entitlement to refund of TDS raises matters of refund adjudication and is not within the scope of questions answerable under Section 97 of the CGST Act (advance ruling jurisdiction). The Authority therefore refrained from answering this question in the present ruling. [Paras 5]

Not answered by the Authority as being outside the scope of advance ruling.

Final Conclusion: The Authority ruled that the applicant's leasing of immovable property to the State Government is not exempt under Entry No. (3) of Notification No. 12/2017-CT(R) for want of material showing the supply is by way of an activity in relation to functions entrusted under Articles 243G/243W; accordingly, TDS under section 51 is applicable and the TDS notification applies even though the applicant is not GST-registered. The question of refund of any TDS deducted was not answered as outside the advance ruling scope.

Tax exemption under Notification No. 12/2017-C.T. (Rate) - renting of immovable property as supply of service - TDS under Section 51 of the CGST Act - applicability of an advance ruling on a notification

Tax exemption under Notification No. 12/2017-C.T. (Rate) - renting of immovable property as supply of service - Whether the services rendered by the applicant to the State Government department for residential accommodation are exempt under Entry No. (3) of Notification No. 12/2017-C.T. (R) dated 28.06.2017. - HELD THAT: - The Authority examined the three conditions of Entry No. (3): (a) the supply must be a pure service; (b) it must be provided to a government entity; and (c) it must be by way of an activity in relation to functions entrusted to Panchayats/Municipalities under Articles 243G/243W. Applying Schedule II, leasing of immovable property is a service and the applicant's leasing to a State Government department satisfies the 'provided to government' requirement. However, the applicant failed to produce sufficient material to demonstrate that the supply was made by way of an activity in relation to functions entrusted under Article 243G or 243W. In the absence of any evidence or submissions linking the leased accommodation to a function devolved under the Eleventh/Twelfth Schedule, the Authority could not hold that the third condition was satisfied. Consequently, the Authority concluded that the supply does not qualify for exemption under Entry No. (3). [Paras 5]

Answered in the negative - the impugned renting of immovable property is not exempt under Entry No. (3) of Notification No. 12/2017-C.T. (R).

TDS under Section 51 of the CGST Act - Whether TDS provisions under Section 51 are applicable where the supply is exempt. - HELD THAT: - The Authority noted that its earlier conclusion establishes that the applicant's supply is taxable and not exempt. Section 51 relates to deduction of tax at source on payments for taxable supplies made by specified government authorities. Because the impugned supply is held not to be exempt, the TDS provisions apply to the subject transactions. The Authority therefore answered the applicability of TDS in the light of its finding on taxability of the supply. [Paras 5]

TDS provisions will be applicable in the subject case.

TDS under Section 51 of the CGST Act - treatment of unregistered suppliers under TDS mechanism - Whether the TDS notification issued under Section 51 would be applicable for deduction of TDS where the supplier is not registered under GST and supplies to a State Government department. - HELD THAT: - Having held the supply to be taxable, the Authority considered whether the TDS notification under Section 51 applies to the payments in question. The Authority observed that Section 51 mandates deduction of tax at source by specified government departments on payments for taxable supplies and, on the facts before it, concluded that the TDS notification is applicable and TDS is liable to be deducted even though the applicant is not registered. The Authority relied on its taxability finding rather than the applicant's submissions about registration thresholds or SOP guidance. [Paras 5]

Answered in the affirmative - the TDS notification under Section 51 is applicable and TDS is liable to be deducted.

Entitlement to refund of TDS - Whether the applicant would be entitled to refund of TDS if deducted. - HELD THAT: - The Authority recorded that the question of entitlement to refund pertains to the law and procedure for refunds and does not fall within the ambit of matters on which an advance ruling may be given under Section 97. Consequently, the Authority refrained from adjudicating the refund question and did not decide it on merits. [Paras 5]

Not answered by the Authority in view of limitations on advance ruling jurisdiction; question left open.

Final Conclusion: The Authority held that the applicant's leasing of immovable property to the State Government department is not exempt under Entry No. (3) of Notification No. 12/2017-C.T. (R); accordingly, TDS under Section 51 is applicable and the TDS notification applies even though the applicant is unregistered. The question of entitlement to refund of any TDS was not decided as it falls outside the scope of the advance ruling.

Penalty under Section 271(1)(c) - defective notice under Section 274 - applicability of Section 271AAA in search cases - search and seizure proceedings

Penalty under Section 271(1)(c) - defective notice under Section 274 - Penalty under Section 271(1)(c) could not be sustained as the notice did not specify which limb of Section 271(1)(c) was invoked and the initiation was not recorded in the assessment order. - HELD THAT: - The Tribunal agreed with the CIT(A) that the notice issued under Section 271(1)(c) read with Section 274 was defective because it failed to specify whether proceedings were initiated for concealment of particulars of income or for furnishing inaccurate particulars of income, and that the initiation of penalty was not reflected in the assessment order. Reliance was placed on the ratio in the decisions referred to in the order (including the SSA's Emerald Meadows line of authorities and the Sahara line of authorities as accepted by the CIT(A) and reproduced in the order) holding that a notice which does not specify the limb of Section 271(1)(c) renders the penalty proceedings bad in law. Applying that principle to the present facts, the Tribunal held that the defect vitiated the penalty proceedings and therefore the penalty levied under Section 271(1)(c) was not sustainable. [Paras 7]

Penalty under Section 271(1)(c) deleted; revenue appeal dismissed on this ground.

Applicability of Section 271AAA in search cases - search and seizure proceedings - Provisions of Section 271AAA are attracted in case of search, and thus are the relevant provisions governing penalty for search-based disclosures. - HELD THAT: - The Tribunal recorded the CIT(A)'s view that where undisclosed income is detected as a result of search, Section 271AAA will be attracted and would govern imposition of penalty in such search cases. Although the Tribunal agreed that Section 271AAA is the appropriate provision in the context of searches conducted in the relevant period, the Tribunal did not remit or re-impose penalty under that provision because the defective notice under Section 271(1)(c) rendered the existing penalty proceedings invalid. The finding on applicability of Section 271AAA was therefore accepted but did not lead to upholding the penalty imposed under Section 271(1)(c). [Paras 7]

Section 271AAA is applicable to search-detected undisclosed income, but the penalty imposed under Section 271(1)(c) was quashed on account of the defective notice.

Final Conclusion: The Tribunal upheld the CIT(A)'s deletion of the penalty imposed under Section 271(1)(c) for Assessment Year 2006-07 because the notice under Section 271(1)(c) read with Section 274 was defective for not specifying the applicable limb and the initiation was not recorded; the Tribunal also accepted that Section 271AAA is the appropriate provision in search cases, but dismissed the revenue appeal and did not sustain the penalty.

Hostel facility incidental to education - not business under section 11(4A) - allowance of depreciation on assets of registered charitable institution despite application of income - consistency principle - revenue bound by treatment in preceding and succeeding assessment years

Hostel facility incidental to education - not business under section 11(4A) - consistency principle - revenue bound by treatment in preceding and succeeding assessment years - Whether surplus from hostel receipts is business income or part of charitable educational activity and therefore exempt from inclusion in total income. - HELD THAT: - The Tribunal found that the assessee is a society running an engineering college and that hostel facilities were provided to students and staff in implementation of the educational object. Reliance was placed on earlier coordinate decisions, and on the view of the Karnataka High Court in CIT v. Karnataka Lingayat Education Society that providing hostel accommodation and transport to students and staff is incidental and subservient to the principal educational object and cannot be treated as a business. The Tribunal noted absence of any material showing hostels were let out to non-students or that the assessee's primary activity was providing hostels. It also observed that Revenue had treated similar receipts as non-taxable for the assessee in preceding and subsequent years, and that the principle of consistency militated against a contrary view for the year under appeal. Applying these considerations, the Tribunal held that the AO and CIT(A) erred in treating the hostel surplus as business income liable to be included in total income. [Paras 8]

Addition of hostel surplus as business income set aside; surplus treated as part of charitable educational activity and not includible in total income.

Allowance of depreciation on assets of registered charitable institution despite application of income - Whether depreciation on hostel assets is allowable although capital expenditure had been treated as application of income by the charitable institution. - HELD THAT: - The Tribunal followed the settled law as expounded by the Supreme Court in CIT v. Rajasthani & Gujarati Charitable Foundation Poona and allied High Court authorities which hold that depreciation is allowable even where the cost of capital assets was treated as application of income in the year of acquisition. The Tribunal observed that Revenue had consistently allowed depreciation for the assessee in other assessment years and that the AO's disallowance for the year in question was contrary to the controlling precedent. In view of these authorities and the consistency in Revenue's own treatment, the Tribunal held the disallowance unsustainable. [Paras 9]

Disallowance of depreciation deleted and depreciation claim allowed.

Final Conclusion: The appeal is allowed: the addition of hostel surplus as business income is set aside and the disallowance of depreciation is deleted; the income from hostel activity is treated as part of the charitable educational activity for AY 2011-12.

Registration under section 12AA - charitable purpose - definition of charitable purpose under section 2(15) - company registered under section 8 of the Companies Act, 2013 - compliance of other law as material under section 12AA(a)(ii) - commercial/business element and its relevance to registration - assessment stage examination of applicability of sections 11, 12 and 13 (including section 13(8)) - condonation of delay due to COVID-19 pandemic

Condonation of delay due to COVID-19 pandemic - Admission of the appeal despite a 27-day delay in filing - HELD THAT: - The Tribunal examined the explanation that the delay in filing the appeal resulted from restrictions and lockdown arising from the second wave of the COVID-19 pandemic and relied on the Supreme Court direction extending limitation from 14 March 2021. The Revenue raised no specific objection. On the material on record the Bench found the cause of delay to be reasonable and beyond the control of the assessee and therefore condoned the delay and admitted the appeal for adjudication on merits. [Paras 4]

Delay of 27 days is condoned and the appeal is admitted for hearing on merits.

Registration under section 12AA - charitable purpose - definition of charitable purpose under section 2(15) - commercial/business element and its relevance to registration - company registered under section 8 of the Companies Act, 2013 - compliance of other law as material under section 12AA(a)(ii) - assessment stage examination of applicability of sections 11, 12 and 13 (including section 13(8)) - Whether the assessee's objects qualify as charitable under section 2(15) and whether the CIT(E) erred in rejecting registration under section 12AA on the ground of alleged commercial/business elements - HELD THAT: - The Tribunal considered the memorandum of association read as a whole, noting objects to set up training and research centres for skill development in the garment and textile industry, business incubators, testing laboratories, conference/meeting halls to promote trade and preservation/promotion of traditional techniques. The MOA contains express prohibitions against carrying on objects on a commercial basis, application of income to objects, prohibition on distribution of profits and restrictions on alteration and winding up, reflecting the commitments attendant to registration as a section 8 company. The Bench held that the objects, read harmoniously, fall within "advancement of any other object of general public utility" under section 2(15) and that the CIT(E) failed to take into account the explanation filed by the assessee and the assurances inherent in section 8 registration. The Tribunal emphasised that registration under section 8 of the Companies Act is a material compliance under section 12AA(a)(ii) which the CIT(E) ought to have considered. It also clarified that allegations of commercial/business character or the question of allowability of benefits under sections 11 and 12 and consequences under section 13(8) can be examined by the Assessing Officer in year-to-year assessments and do not justify refusal of registration under section 12AA where the objects prima facie constitute charitable purpose. [Paras 15, 16, 17, 18, 19]

The assessee's objects are charitable in nature within section 2(15); the rejection of registration under section 12AA is set aside and the CIT(E) is directed to grant registration. Questions of commercial activity and entitlement to exemptions under sections 11, 12 and 13 are left open for examination in regular assessment proceedings.

Final Conclusion: The Tribunal condoned the delay and allowed the appeal on merits, directing grant of registration under section 12AA on the ground that the assessee's objects, read in entirety and having the safeguards in its memorandum as a section 8 company, qualify as charitable under section 2(15); issues relating to commercial character and entitlement to exemptions under sections 11, 12 and 13 are to be examined, if necessary, by the Assessing Officer during assessments.

Long-term capital gains exemption under section 10(38) - unexplained cash credit under section 68 - requirement of cogent evidence linking the assessee to a rigging/entry operator - modus operandi of penny stocks - preponderance of human probabilities - onus on the assessee to prove genuineness of transactions - reliability of investigation wing reports and the need for independent inquiry - opportunity of cross examination of third party statements

Long-term capital gains exemption under section 10(38) - unexplained cash credit under section 68 - requirement of cogent evidence linking the assessee to a rigging/entry operator - Capital gains claimed as exempt under section 10(38) cannot be treated as unexplained cash credit under section 68 merely on the basis of general reports or suspicious price movement unless cogent material links the particular assessee to the alleged scam. - HELD THAT: - The Tribunal examined whether the long term capital gains claimed by the assessee on sale of shares could be treated as bogus and added as unexplained cash credit. While noting the extraordinary rise in share prices and the investigation wing's report about a wider modus operandi, the Tribunal held that such circumstances and the theory of human probabilities may generate suspicion but cannot substitute for evidence specific to the assessee. The Revenue must establish, by cogent material, that the assessee participated in the scheme (for example, proof that cash changed hands or a live link connecting the assessee to the entry operator). Where documents of sale/purchase, contract notes, demat transfers, STT payment and receipt of sale proceeds through banking channels are on record and no specific incriminating mention of the assessee exists in the investigation report, the addition cannot be sustained merely on generalized findings about penny stock manipulation. Applying authoritative precedents, the Tribunal concluded that in absence of specific evidence against the assessee the addition under section 68 was not justified and must be deleted. [Paras 8]

Capital gains held not to be bogus for purposes of section 68; addition deleted.

Reliability of investigation wing reports and the need for independent inquiry - opportunity of cross examination of third party statements - onus on the assessee to prove genuineness of transactions - Reliance solely on statements or reports of the investigation wing concerning third parties, without independent inquiry or provision of opportunity for cross examination and without evidence directly implicating the assessee, is insufficient to sustain an addition. - HELD THAT: - The Tribunal observed that the AO primarily relied on the investigation wing's findings and trade pattern analysis but did not conduct independent enquiries (for example, from SEBI/BSE) nor produced material showing the assessee's name in the investigation. The assessee had produced contract notes, demat records, proof of STT payment and bank receipts for sale proceeds; there was no material showing payment of cash by the assessee to effect accommodation entries. The Tribunal reiterated that while cross examination of distant third parties may be impracticable, the lack of an independent corroborative enquiry by the AO and absence of specific adverse material against the assessee mean that third party statements alone cannot override the documentary evidence produced by the assessee. Precedents were followed to the effect that documents relied upon by the AO must be confronted with the assessee and independent corroboration is necessary where the allegation is one of a concerted accommodation racket. [Paras 3, 4, 8]

AO's reliance on investigation reports and third party statements without independent corroboration and without implicating the assessee was held inadequate; the addition was set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the assessee's claimed long term capital gains for Assessment Year 2015 16 could not be treated as unexplained cash credit under section 68 in absence of cogent material linking the assessee to the alleged penny stock rigging; reliance solely on investigation wing reports and generalized probabilities was insufficient and the addition was deleted.

Employee's contribution to PF/ESI deductible if deposited before filing of return under section 139(1) - Section 14A and Rule 8D(2)(iii) - computation of disallowance in relation to investments yielding exempt dividend - Comparable Uncontrolled Price (CUP) Method - Arm's length price in specified domestic transactions - Section 80-IA(8) - valuation of intra-unit transfers for deduction under Section 80-IA - Internal CUP versus external CUP and product comparability - Judicial consistency / estoppel by prior Tribunal orders

Employee's contribution to PF/ESI deductible if deposited before filing of return under section 139(1) - Judicial consistency / estoppel by prior Tribunal orders - Deletion of addition made for delayed deposit of employees' contribution to PF and ESI where such contributions were remitted before the due date of filing of return under section 139(1). - HELD THAT: - The Tribunal, following binding decisions of the Hon'ble Calcutta High Court and its own precedent, held that where employees' contribution to PF/ESI, though paid after statutory due-dates under respective Acts, was deposited with statutory authorities on or before the due date for filing the return of income under section 139(1), such amounts are allowable as deduction and the AO's addition is unsustainable. The Tribunal relied on the Calcutta High Court decisions (including Vijayshree Ltd. and Akzo Nobel India Ltd.) and consistent coordinate-bench jurisprudence of the Tribunal, and found no infirmity in the CIT(A)'s deletion of the addition. [Paras 6]

Order of the CIT(A) deleting the addition is confirmed and the Revenue's ground is dismissed.

Discounts and brokerage - treatment of trade (upfront) discounts and post-sale conditional discounts - Judicial consistency / estoppel by prior Tribunal orders - Deletion of AO's disallowance of discount & brokerage debited to Profit & Loss Account where post sale conditional discounts are shown separately and historically accepted in earlier assessment years. - HELD THAT: - On identical facts, this Tribunal had earlier held that trade discounts (netted against sales) are distinct from conditional/post sale discounts (prompt payment, turnover, slab discounts etc.) which are debited separately to P&L and accepted in prior scrutiny assessments; in absence of any change in material facts or rejection of books under section 145(3), the AO cannot adopt a contrary stand in a later year. Applying the principle of judicial consistency (RadhasoamiSatsang), the Tribunal followed its own prior order in the assessee's case and upheld the CIT(A)'s deletion of the disallowance. [Paras 10]

CIT(A)'s deletion of the disallowance of discount & brokerage is upheld and Revenue's ground dismissed.

Section 14A and Rule 8D(2)(iii) - computation of disallowance in relation to investments yielding exempt dividend - Validity of CIT(A)'s direction to restrict Rule 8D(2)(iii) computation to those investments which actually yielded dividend in the relevant year and to limit disallowance to the lesser of recomputed amount and sum voluntarily disallowed. - HELD THAT: - Following this Tribunal's earlier lead order in the assessee's own case, the CIT(A) directed recomputation of Rule 8D disallowance by considering only those investments that actually yielded dividend during the year (opening and closing balances) and, after recomputation, to restrict addition to the voluntary disallowance if the recomputed figure is lower. The Tribunal found the facts analogous to earlier years and endorsed the CIT(A)'s approach, remitting computation to the AO in accordance with those directions. [Paras 15, 35]

CIT(A)'s order is upheld; matter remitted to AO for recomputation as directed by CIT(A), with disallowance capped as stated.

Comparable Uncontrolled Price (CUP) Method - Arm's length price in specified domestic transactions - Section 80-IA(8) - valuation of intra-unit transfers for deduction under Section 80-IA - Internal CUP versus external CUP and product comparability - Whether the transfer price (ALP) of electricity supplied by the assessee's captive power plants (CPPs) to its non-eligible units should be determined by internal CUP (landed cost at which non-eligible unit purchased from SEB or rates at which CPP sold to unrelated parties) or by external CUP based on tariff orders for sale to distribution companies. - HELD THAT: - The Tribunal held that the CUP Method requires high product comparability and, where reliable internal comparable data exists, internal CUP is the most appropriate method. On facts, reliable internal data existed: (a) in Karnataka (Vasavdatta) the CPPs sold substantial power to unrelated parties at rates comparable to the assessee's intra-unit transfer rates; (b) in Hooghly the non eligible unit procured power from SEB throughout the year so its landed cost from SEB satisfied internal CUP parameters. The TPO's reliance on tariff rates applicable to sale by generating companies to distribution companies (external data) was rejected because market conditions and participant functions (generation-to-distributor rates) differ from the consumer-facing market; prior Tribunal and High Court decisions bearing on valuation under Section 80-IA(8) and post Electricity Act, 2003 factual changes were followed. Consequently, the TPO's transfer pricing adjustments were held unsustainable and deleted. [Paras 26, 31, 32]

CIT(A)'s deletion of TPO/AO transfer pricing adjustments in respect of the CPPs at Vasavdatta and Hooghly is upheld and the Revenue's grounds are dismissed.

Miscellaneous departmental grounds lacking nexus to lower authorities' orders - Relevance and admissibility of grounds raised by Revenue that did not emanate from or correspond to any disallowance or finding by the AO or CIT(A). - HELD THAT: - The Bench queried the provenance of certain grounds (e.g., share dealing losses) and the Department conceded that those grounds were not rooted in the orders of lower authorities. Such grounds are therefore irrelevant and cannot be entertained on appeal. [Paras 38]

Irrelevant grounds not emanating from lower authorities' orders are dismissed.

Final Conclusion: All Revenue appeals for A.Y. 2012-13, 2014-15 and 2015-16 are dismissed. The assessee's appeal for A.Y. 2014-15 is dismissed; the assessee's appeal for A.Y. 2015-16 is allowed for statistical purposes. Specific directions: deductions for employees' PF/ESI contributions deposited on or before filing due date are upheld; discount & brokerage disallowances are deleted; Rule 8D disallowance is to be recomputed by the AO limited to investments yielding dividend (with cap as directed); and all transfer pricing adjustments to intra unit power transfers under Section 80 IA(8) are deleted in accordance with the Tribunal's reasoning.

Validity of reference to special audit under Section 142(2A) - Requirement of 'nature and complexity of accounts' and 'interest of Revenue' as conjunctive preconditions - Challenge to special audit reference when assessment is alleged to be time barred - Admission of additional legal ground raising limitation bar plea - Assessment order void for being barred by limitation consequent to invalid statutory reference

Admission of additional legal ground raising limitation bar plea - The additional ground challenging the validity of the reference to special audit as rendering the assessment time barred was admitted for adjudication. - HELD THAT: - The assessee sought to admit an additional ground contending that the assessment order was void as the reference to special audit was illegal and caused the assessment to be time barred. The Tribunal applied the test for admission of a legal ground where facts are on record and no further investigation is required, and having regard to precedents including the Apex Court's decision in National Thermal Power Corporation, admitted the additional ground. The Revenue's reliance on Rajesh Kumar (to contend non appealability of the special audit direction) was considered but the Tribunal noted authorities permitting examination of the validity of a special audit reference when limitation is in issue. The objection to admission was therefore rejected and the additional ground admitted for hearing. [Paras 5, 6, 8, 9, 10]

Additional ground admitted and taken up for adjudication.

Validity of reference to special audit under Section 142(2A) - Requirement of 'nature and complexity of accounts' and 'interest of Revenue' as conjunctive preconditions - The reference made by the Assessing Officer to special audit under Section 142(2A) was invalid as it was not founded on objective satisfaction of the conjunctive preconditions and was made merely to obtain information and to extend time for assessment. - HELD THAT: - Section 142(2A) mandates that the AO's opinion to refer for special audit must be formed with regard to the nature and complexity of the assessee's accounts and the interests of the Revenue, and such opinion must be based on objective criteria. The Tribunal reviewed the show cause notice, order sheet entries and the timeline: substantive queries were raised at the fag end of the limitation period, the show cause essentially noted missing explanations or workings rather than any intrinsic complexity of accounts, and the AO proceeded to seek approval and appoint a special auditor immediately after receiving the assessee's reply. The Tribunal concluded that the AO had not identified any complexity in the accounts and was effectively shifting his duty of scrutiny to a special auditor to secure extended time. On these facts the AO's reference lacked the requisite objective application of mind and was therefore contrary to law and invalid. [Paras 21, 30, 31, 32, 33]

Reference to special audit under Section 142(2A) held invalid.

Challenge to special audit reference when assessment is alleged to be time barred - Assessment order void for being barred by limitation consequent to invalid statutory reference - The assessment framed in the extended period consequent to the invalid special audit reference was held to be barred by limitation and therefore void. - HELD THAT: - The Tribunal identified the limitation date for AY 2014 15 and traced the assessment chronology showing initiation of substantive queries only shortly before the limitation date and the subsequent show cause and appointment of special auditor which led to completion of assessment after the original limitation. Since the reference to special audit was found invalid (not based on objective criteria of complexity and interest of Revenue but to obtain further information and buy time), the extension of the assessment period could not be availed. Consequently the assessment order passed in the extended period was barred by limitation. Having reached this legal conclusion, the Tribunal declined to decide remaining merits and allowed the additional ground. [Paras 19, 20, 33, 34, 35]

Assessment order set aside as void being barred by limitation.

Final Conclusion: The Tribunal admitted the additional ground challenging the special audit reference, held that the AO's reference under Section 142(2A) was invalid as it was not based on the requisite objective satisfaction of 'nature and complexity' and 'interest of Revenue' but was used to procure information and extend time, and consequently held the assessment for A.Y. 2014 15 to be barred by limitation and void; the appeal of the assessee is allowed on that ground.

Enhancement of assessment by first appellate authority without notice is invalid - scope of power of Commissioner (Appeals) to enhance income limited to subject assessment and source as considered by assessing officer - limitation on appellate directions to reopen assessments of other years under s.251 read with s.150(2) - findings or directions in appeal are permissible only if necessary for disposal of the appeal - claim for deduction under raison d'etre of payment may be allowed despite original return if actual payments are proved - remand to assessing officer for verification of factual entitlement to deduction - estimation of disallowances subject to judicial moderation where appropriate

Enhancement of assessment by first appellate authority without notice is invalid - scope of power of Commissioner (Appeals) to enhance income limited to subject assessment and source as considered by assessing officer - Whether the enhancement of total income by the CIT(A) by Rs. 32,96,000/- in AY 2012-13 made without giving notice to the assessee is sustainable. - HELD THAT: - The Tribunal found that the CIT(A) enhanced the assessed income without giving the assessee any formal intimation or confronting the assessee with the material and reasoning on which the enhancement was based. Enhancement under appellate jurisdiction is a serious exercise and, as held by precedent and by reference to the statutory scheme, can be undertaken only after observance of due process. The power under s.251(1) is confined to matters that were considered by the AO expressly or by clear implication; the appellate authority cannot make adverse findings on unverified facts without giving the assessee an opportunity. Reliance on authorities including Gedore Tools was noted to underscore that enhancement requires opportunity to the assessee. For these reasons the impugned enhancement was held unsustainable and was quashed. [Paras 8]

Enhancement of income by Rs. 32,96,000/- for AY 2012-13 set aside; grounds 1 and 2 allowed.

Limitation on appellate directions to reopen assessments of other years under s.251 read with s.150(2) - findings or directions in appeal are permissible only if necessary for disposal of the appeal - Whether the CIT(A) could issue directions to the AO to revisit and enhance assessments of earlier assessment years not before the appellate authority. - HELD THAT: - The Tribunal held that the CIT(A)'s directions to the AO to examine and reopen earlier assessment years went beyond the scope of appellate power. Section 251 confines the appellate authority to the appeal before it and s.150(2) restricts the use of s.150(1) so that only assessments not finally barred by limitation at the time of the assessment order in appeal may be the subject of such directions; further, any finding or direction must be necessary for disposal of the present appeal. The appellate order in the instant case sought to displace completed assessments of other years, including time-barred years, without demonstrating necessity for such findings in adjudicating the year in appeal. The Tribunal therefore quashed and expunged the directions to the AO relating to other years. [Paras 9]

Directions of the CIT(A) to the AO to reopen/examine earlier assessment years quashed; Ground No. 3 allowed.

Claim for deduction under raison d'etre of payment may be allowed despite original return if actual payments are proved - remand to assessing officer for verification of factual entitlement to deduction - Whether the assessee's enhanced claim for deduction of service tax (on actual payment basis before the due date of return) though not reflected in the original return can be allowed. - HELD THAT: - The Tribunal reaffirmed that an assessee should not be prevented from claiming a legitimate deduction merely because the original return did not reflect the correct figure, especially where the omission arose from mistake. Judicial precedents establish that estoppel arising from the return does not preclude correction if the tax is not legitimately due. Since the AO had not verified the factual matrix of actual payments, the Tribunal remitted the issue to the AO for fresh examination and verification of evidence supporting the higher service tax claim; the AO was directed to allow the higher claim in accordance with law if satisfied by the proofs produced by the assessee. [Paras 10]

Claim for enhanced service tax deduction set aside to the file of the AO for verification and determination; Ground No. 4 (AY 2012-13) and Ground No. 1 (AY 2013-14) allowed for statistical purposes and remanded.

Estimation of disallowances subject to judicial moderation where appropriate - Whether the estimated lump-sum disallowances made by the authorities under heads 'wages' and 'transportation charges & site expenses' should be sustained in full. - HELD THAT: - The Tribunal noted that some estimation of disallowance may be warranted on the facts, and the assessee did not seriously contest the need for estimation. However, having regard to the nature of the business and the totality of circumstances, the Tribunal considered it just to moderate the estimations by granting additional relief. Consequently, the Tribunal directed further relief of Rs. 1 lakh each from the disallowances under wages and under transportation/site expenses for each relevant assessment year and directed revision of the disallowance accordingly. [Paras 12, 19]

Estimated disallowances partly reduced by granting Rs. 1 lakh relief in each of the two expense heads; Grounds Nos. 5 & 6 (AY 2012-13) and corresponding grounds in AY 2013-14 partly allowed.

Final Conclusion: Both appeals are partly allowed: the appellate enhancement for AY 2012-13 is quashed for want of notice; directions to reopen other years are expunged; the assessee's enhanced service tax claims for AY 2012-13 and AY 2013-14 are remitted to the AO for verification and determination in accordance with law; and estimated disallowances are moderated by allowing specified reliefs.

Royalty - Use or right to use copyright - Distinction between a copyrighted article and the copyright - Subscription fees for access to databases and e journals - Article 12(3) of the India US DTAA - Section 9(1)(vi) of the Income tax Act

Royalty - Use or right to use copyright - Subscription fees for access to databases and e journals - Distinction between a copyrighted article and the copyright - Article 12(3) of the India US DTAA - Section 9(1)(vi) of the Income tax Act - Whether subscription receipts from the CAS and PUBS divisions are taxable in India as royalty under Article 12(3) of the India US DTAA and section 9(1)(vi) of the Act - HELD THAT: - The Tribunal found that the assessee's business model and streams of revenue for AY 2017 18 were identical to those in earlier years where the Tribunal had held in favour of the assessee. Applying the determinative reasoning from those earlier decisions, the Tribunal recorded that customers were granted only online access to databases and e journals and did not acquire any right to exploit the underlying copyright. Mere access or permission to view/search content does not amount to acquisition of a copyright or a 'right to use' the copyright; the right to commercially exploit (reproduce, sub licence, create derivative works) was not transferred. The agreements retained copyright with the assessee, restricted usage to specified users/sites, and prohibited reproduction or exploitation beyond personal use; the information resided on servers outside India over which customers had no control. On these factual and legal premises the receipts were held to be consideration for supply of a product/service (access), not consideration for use or right to use a copyright. Consequently, the subscription fees did not qualify as 'royalty' under section 9(1)(vi) or Article 12(3) and are not taxable as such in India. [Paras 5]

Receipts from CAS and PUBS divisions are not taxable as royalty under Article 12(3) of the India US DTAA and section 9(1)(vi) of the Act; grounds 1 to 2.4 allowed and assessment on that basis set aside.

Final Conclusion: The assessee's appeal is allowed for AY 2017 18 on the ground that subscription receipts from CAS and PUBS are not taxable as royalty; consequential grounds pertaining to rate and interest were rendered infructuous. The stay application was dismissed.

Treatment of on site development receipts in export turnover - exclusion from total turnover for deduction under section 10A of the Income tax Act - repatriation requirement under Explanation 2 to section 10A(3) - consequential computation on remand

Treatment of on site development receipts in export turnover - exclusion from total turnover for deduction under section 10A of the Income tax Act - consequential computation on remand - Whether on site development receipts excluded from "export turnover" must also be excluded from "total turnover" for computing deduction under section 10A and consequential relief to be given. - HELD THAT: - The Tribunal accepted the assessee's contention that an item excluded from export turnover cannot be retained in total turnover for the purpose of computing deduction under section 10A. The Tribunal noted that the issue is settled by higher authority and administrative instruction, and that the same principle requires consequential adjustment in the total turnover when the item is excluded from export turnover. In view of this, the Tribunal directed the Assessing Officer to make consequential computation in accordance with law and the accepted precedent/administrative guidance, thereby giving the assessee the benefit claimed. The Tribunal observed that no other grounds were pressed and accordingly decided the matter by directing recomputation rather than finally quantifying the deduction itself.

Appeal partly allowed for statistical purposes; directed Assessing Officer to make consequential computation excluding the on site development receipts from total turnover in accordance with law.

Final Conclusion: The appeal is partly allowed for statistical purposes and the Assessing Officer is directed to recompute the deduction under section 10A for AY. 2009-10 by excluding the on site development receipts from total turnover in accordance with the legal precedent and administrative guidance noted by the Tribunal.

Retrospective recognition under section 12AA - entitlement to exemption under section 10(22), section 10(23C) and section 11 - assessment to stand under normal provisions where retrospective registration not granted

Retrospective recognition under section 12AA - entitlement to exemption under section 11 - Whether the assessee is entitled to retrospective effect of registration under section 12AA and corresponding exemption for the assessment years in dispute - HELD THAT: - The Tribunal examined the claim that recognition granted by the Commissioner (Exemptions) with effect from AY 2002-03 should be treated as effective retrospectively for the assessment years 1999-2000 and 2000-01 so as to avail exemption under the relevant provisions. The Tribunal noted that the assessee had prior entitlement under section 10(22) only up to AY 1998-99 and had not held registration for the interregnum; a later order granted recognition with effect from AY 2002-03. The Tribunal concluded that seeking retrospective recognition for earlier assessment years was a contention that could not be entertained by that forum and that there was no error in the CIT(A)'s conclusion to deny exemption for the years under consideration. The Tribunal therefore upheld the view that the assessments must stand under the normal provisions of the Act where retrospective registration and exemption were not available.

Claim for retrospective effect of registration under section 12AA and for exemption under section 11 for the assessed years is rejected; the CIT(A)'s denial is affirmed.

Final Conclusion: Appeals for assessment years 1999-2000 and 2000-01 are dismissed; the Tribunal affirms the CIT(A)'s refusal to treat the later grant of registration as retrospective and to allow exemption for the years in issue, leaving the assessments to operate under the normal provisions of the Act.

Disallowance under section 14A read with Rule 8D - No disallowance under section 14A where no exempt income is received - Unexplained cash credits under section 68 - Onus on assessee to prove genuineness and creditworthiness of share application money - Remand for verification of genuineness and creditworthiness of specific share application receipt

Disallowance under section 14A read with Rule 8D - No disallowance under section 14A where no exempt income is received - Deletion of disallowance under section 14A read with Rule 8D - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the disallowance made by the AO under section 14A read with Rule 8D on the basis that the assessee did not receive any exempt income (no dividend income) in the relevant year. The Tribunal noted that the AO himself accepted the assessee's explanation regarding non-utilisation of borrowed funds for investments but proceeded to disallow expenditure under Rule 8D(2)(iii). Relying on the settled position that where there is no exempt income, no disallowance under section 14A can be made, the Tribunal held the AO's disallowance to be incorrect and dismissed the Revenue's grounds in respect of section 14A. [Paras 5]

Order of CIT(A) deleting the disallowance under section 14A r.w. Rule 8D is upheld and revenue's grounds on this issue are dismissed.

Unexplained cash credits under section 68 - Onus on assessee to prove genuineness and creditworthiness of share application money - Remand for verification of genuineness and creditworthiness of specific share application receipt - Addition of share application money as unexplained credits under section 68 and partial remand for one investor - HELD THAT: - The Tribunal examined the AO's addition of Rs. 3,65,55,496 as unexplained cash credits under section 68. On review of the ledger, opening balances and receipts, the Tribunal concluded that for several entries the AO had erred: (a) where receipts and subsequent repayments appeared in the accounts the AO improperly taxed only the closing balance; (b) amounts received in earlier years were wrongly sought to be taxed in the impugned year. Accordingly, the Tribunal deleted the addition in respect of the amounts shown at Sl. Nos. i-ii and Sl. Nos. iv-vii on the stated grounds. However, as to the receipt of Rs. 60,00,000 from Yashoda Energy Pvt. Ltd., the Tribunal found that the assessee had only filed a confirmation with a vague address and had not otherwise substantiated the identity, genuineness or creditworthiness as required under section 68. The Tribunal therefore remitted the matter to the AO for fresh adjudication and directed the assessee to substantiate the claim before the AO. [Paras 6, 10]

Additions under section 68 were deleted in part; the issue relating to the receipt from Yashoda Energy Pvt. Ltd. is remitted to the AO for fresh verification of genuineness and creditworthiness.

Final Conclusion: The appeal is partly allowed: the deletion of the section 14A disallowance is upheld; the section 68 additions are largely set aside but the receipt from Yashoda Energy Pvt. Ltd. is remitted to the Assessing Officer for fresh examination and verification.

Condonation of delay for filing appeal on grounds of accountant's failure and pandemic-related disruption - Preference for substantial justice over technical bar in condonation of delay - Sufficient cause doctrine for condoning delay - liberal construction to advance substantial justice - Allowability of deduction for employers' PF/ESI contributions paid before the due date of filing return under section 139(1) despite delayed deposit under PF/ESI enactments (interaction of deduction proviso and Explanation to clause) - Non-retrospective application of Finance Act, 2021 amendments to prior assessment years

Condonation of delay for filing appeal on grounds of accountant's failure and pandemic-related disruption - Sufficient cause doctrine for condoning delay - liberal construction to advance substantial justice - Preference for substantial justice over technical bar in condonation of delay - Whether the delay of 508 days in filing the appeal before the CIT(A), NFAC, should be condoned. - HELD THAT: - The Tribunal considered the assessee's affidavit attributing non-filing to the accountant's failure and noted absence of any counter-affidavit from the Revenue. Reliance was placed on authorities treating 'sufficient cause' liberally to advance substantial justice and on principles in Collector, Land Acquisition v. Katiji that delay must be viewed pragmatically and substantial justice favoured over technicality. The Tribunal held that non-deliberate failure by the accountant, coupled with no opposition from Revenue, constituted sufficient cause. The Tribunal further observed that the duration of delay is not determinative where a reasonable cause exists and that refusal to condone would perpetuate an unjust order and result in wrongful retention of tax by the State. Applying these principles, the Tribunal exercised its discretion to condone the 508 day delay and admit the appeal for adjudication on merits. [Paras 7, 8, 9, 16, 18]

Delay of 508 days is condoned and the appeal is admitted for adjudication on merits.

Allowability of deduction for employers' PF/ESI contributions paid before the due date of filing return under section 139(1) despite delayed deposit under PF/ESI enactments (interaction of deduction proviso and Explanation to clause) - Non-retrospective application of Finance Act, 2021 amendments to prior assessment years - Whether the disallowance of employees' PF and ESI contributions paid beyond statutory due dates but deposited before the due date for filing return under section 139(1) is sustainable under the proviso/Explanation to clause governing deduction. - HELD THAT: - On merits the Tribunal followed its earlier reasoning and Karnataka High Court decisions holding that clause allowing deduction if payment is made on or before the due date for filing return under section 139(1) entitles the employer to deduction even if the deposit was beyond the time prescribed under the PF/ESI enactments, provided payment was made before the return filing due date. The Tribunal rejected Revenue's contention that the 2021 Finance Act explanatory amendments should be applied retrospectively; those amendments operate from 1/4/2021 and cannot be invoked for AY 2018 19. Applying settled precedents, the Tribunal held that PF/ESI contributions deposited before the due date of filing the return are allowable and the addition/disallowance made by the AO and confirmed by the CIT(A) was not sustainable. [Paras 19, 20]

The disallowance of PF/ESI contributions is set aside and the claim of deduction is allowed for AY 2018-19.

Final Conclusion: The Tribunal condoned the 508 day delay in filing the appeal and, on merits, allowed the assessee's claim for deduction of PF and ESI contributions deposited before the due date for filing the return for AY 2018 19, setting aside the disallowance made by the lower authorities.

Validity of notice u/s 148 and jurisdiction to reopen assessment - Service of notice by Speed Post and by affixture at PAN database address - Requirement to effect service at residential address reflected in PAN database when office address service fails - Notice u/s 148 as a jurisdictional prerequisite and consequences of non-service (void ab initio) - Protective assessment and effect of substantive confirmation in third party's assessment

Validity of notice u/s 148 and jurisdiction to reopen assessment - Service of notice by Speed Post and by affixture at PAN database address - Requirement to effect service at residential address reflected in PAN database when office address service fails - Notice u/s 148 as a jurisdictional prerequisite and consequences of non-service (void ab initio) - Assessment framed under section 147/148 is void for want of valid service of the notice u/s 148. - HELD THAT: - The record shows that the notice u/s 148 issued on 29.03.2017 by Speed Post to the assessee's office address was returned unserved with the remark "no such person in this address" and there is no evidence that the notice was ever served at the residential address appearing in the PAN database. The assessment file does not establish valid service by affixture; the notice-server only carried a letter which the assessee refused to accept and did not effect service of the section 148 notice. Because notice u/s 148 is a jurisdictional notice necessary to assume jurisdiction to reopen assessments under section 147, absence of its valid service meant that the Assessing Officer lacked jurisdiction and the assessment is void ab initio. The Tribunal therefore allowed the grounds challenging service and set aside the assessment on that basis. [Paras 10, 11, 12, 13]

Grounds challenging service of notice sustained; assessment framed under section 147/148 set aside as void ab initio for want of valid service.

Protective assessment and effect of substantive confirmation in third party's assessment - Protective addition rendered unsustainable where substantive addition confirmed against third party - Protective addition made in the assessee's case did not survive once the substantive addition was confirmed in the hands of the third party who had routed the deposits. - HELD THAT: - The addition of cash deposits in the assessee's bank account was made on a protective basis while the substantive assessment and addition were directed against Shri Atam Parkash. The record (as explained to the Sr. DR) showed that the substantive addition against Shri Atam Parkash stood confirmed and no appeal had been filed by him; consequently the protective addition in the assessee's assessment could not be sustained. The Tribunal treated the merits of the addition as academic after setting aside the assessment for lack of jurisdiction, and additionally observed that the protective addition falls away in view of the confirmation in the third party's assessment. [Paras 14]

Protective addition deleted because substantive addition was confirmed in the case of the third party; merits rendered academic in view of the assessment being void.

Final Conclusion: The assessee's appeal is allowed: the assessment for AY 2010-11 is set aside as void ab initio for want of valid service of notice u/s 148, and the protective addition in the assessee's case does not survive in view of the substantive confirmation against the third party.

Penalty under section 271(1)(c) - Concealment and furnishing of inaccurate particulars of income - Bonafide mistake / inadvertent error - Disclosure in tax audit report - Disallowance under section 43B - Materiality of additions

Penalty under section 271(1)(c) - Disallowance under section 43B - Disclosure in tax audit report - Bonafide mistake / inadvertent error - Materiality of additions - Levy of penalty u/s 271(1)(c) on additions/disallowances (bonus and ex-gratia disallowable under section 43B; interest on TDS/income-tax penalty; difference in reconciliation of interest as per books and Form 26AS; ESI penalty; interest on refund) for Assessment Year 2013-14. - HELD THAT: - The Tribunal examined whether the additions/disallowances made by the AO attracted penalty under section 271(1)(c). It found that the particulars in respect of employers' contributions disallowable under section 43B, interest on TDS, interest on income-tax refund, ESI/Income-tax penalty and the reconciliation difference were disclosed by the assessee (including in the tax audit report) and that omissions in computing the income were inadvertent and bonafide. The Tribunal applied the settled principle that mere disallowance of a claim or invocation of a specific provision (such as section 43B) does not of itself justify levy of penalty where particulars were disclosed; a bonafide inadvertent error in computation will not attract penalty, as recognised by the higher judiciary (see Reliance Petroproducts Pvt. Ltd. and Price Waterhouse Coopers Pvt. Ltd. Vs. CIT , relied upon in the order). Further, the Tribunal took into account the immateriality of the aggregate additions relative to the assessee's substantial current and brought forward losses, treating the remaining additions as patently immaterial and bonafide mistakes. On these grounds the Tribunal concluded that the conditions for treating the added amounts as concealed particulars or for invoking penalty were not satisfied and that the levy of penalty was not justified. [Paras 8, 9]

Penalty u/s 271(1)(c) not leviable on the listed additions/disallowances; the penalty levied is to be deleted.

Final Conclusion: The appeal is allowed; the Tribunal set aside the order upholding penalty and directed the Assessing Officer to delete the penalty levied under section 271(1)(c) for Assessment Year 2013-14.

Registration under section 12AA of the Income Tax Act - genuineness of charitable objects and activities - furnishing documentary evidence in support of objects and activities - tribunal's power to set aside and remit for fresh consideration - procedural compliance with Tribunal/ITAT rules for filing documents

Registration under section 12AA of the Income Tax Act - genuineness of charitable objects and activities - furnishing documentary evidence in support of objects and activities - Whether the Principal Commissioner (Exemptions) was justified in rejecting the trust's application for registration under section 12AA for failure to furnish documentary evidence proving the genuineness of its objects and activities. - HELD THAT: - The Tribunal found that the assessee submitted the application under section 12AA and furnished detailed replies and documentary material in response to the initial notice, which were acknowledged by the Principal Commissioner (Exemptions). Although a subsequent show-cause notice sought further particulars, the assessee's concise reply was received and the file contained earlier documentary material which the Authority did not adequately consider. The Tribunal noted a procedural irregularity in how documents were tendered with the appeal but declined to allow that technicality to preclude examination on merits. On the facts, the Principal Commissioner decided the matter on the basis that the assessee had not established intention or carried out charitable activities, but did so without referring to or verifying the documentary material already on record. In these circumstances the Tribunal exercised its power to set aside the order and remit the matter for fresh consideration, directing the Principal Commissioner to consider the application afresh and permitting the assessee to furnish complete explanatory details to substantiate its objects and activities. [Paras 6]

Impugned order of the Principal Commissioner (Exemptions) is set aside and the matter is remitted for fresh consideration; the assessee is directed to provide complete details and explanatory note and the Principal Commissioner shall decide the application in accordance with law.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the refusal of registration, and remitted the application to the Principal Commissioner (Exemptions) for fresh consideration of the documentary evidence and explanations tendered by the assessee.

Extraordinary writ jurisdiction - release of seized container - disposal of hazardous goods - direction to complete disposal within a stipulated timeline - without prejudice to ongoing show cause proceedings

Disposal of hazardous goods - direction to complete disposal within a stipulated timeline - release of seized container - without prejudice to ongoing show cause proceedings - Direction to the respondent authority to complete the process for disposal/discharge of the seized hazardous cargo and deal with the container within an approximate timeline, without adjudicating the merits of the show-cause proceedings. - HELD THAT: - The Court, exercising its extraordinary writ jurisdiction, declined to enter into merits of the show-cause notice or the question of liability but addressed the limited procedural question of timely disposal of hazardous material. Having regard to the hazardous and flammable nature of the seized goods and the respondents' representation about necessary precautions and requirements for storage/transport, the Court directed the respondents to complete the process for disposal/discharge strictly in accordance with applicable rules and regulations. The Court observed that an attempt shall be made to dispose of the goods as far as possible within three months, while noting the respondents' submission that additional time may be necessary; the direction is therefore procedural and limited and does not decide or prejudice the substantive show-cause proceedings already initiated against the petitioner and others. The Court further permitted either party to approach it in case of difficulties and recorded that certain prayers earlier sought by the petitioner (paras 23(B) and 23(C)) were not pressed. [Paras 9, 11]

Respondents directed to complete disposal/discharge of the seized hazardous cargo by following applicable rules and regulations, with an endeavour to do so within three months; the order is procedural and without prejudice to the pending show-cause proceedings; petition disposed accordingly.

Final Conclusion: The petition is disposed by directing the authority to complete the disposal/discharge of the seized hazardous container in accordance with law, endeavouring to do so within three months, without touching the merits of or prejudicing the pending show-cause proceedings; parties may approach the Court in case of difficulties.

Dismissal of writ petition as withdrawn - provisional release under section 110A of the Customs Act, 1962 - no order as to costs - contentions left open - discharge of show-cause notice against notary on tender of apology - advice to notary to exercise due care

Dismissal of writ petition as withdrawn - provisional release under section 110A of the Customs Act, 1962 - no order as to costs - contentions left open - Writ petition dismissed as withdrawn in view of provisional release; no order as to costs and all contentions left open with liberty to pursue remedies. - HELD THAT: - The petitioner informed the Court that a provisional release order under section 110A of the Customs Act, 1962 had been passed during the pendency of the writ petition and, on that basis, elected not to proceed further. Having recorded that submission, the Court dismissed the writ petition as withdrawn and directed that there shall be no order as to costs. The Court expressly left all contentions open and clarified that dismissal will not preclude the petitioner from pursuing available legal remedies in accordance with law. The dismissal thus rests on the petitioner's election in light of the provisional release and is not a decision on the merits of the disputed contentions. [Paras 1, 2, 3]

Writ petition dismissed as withdrawn; no order as to costs; contentions left open; petitioner permitted to pursue remedies.

Discharge of show-cause notice against notary on tender of apology - advice to notary to exercise due care - Show-cause notice issued to the notary for signing a petition with blank portions discharged after the notary tendered an unconditional apology and assurance of future care. - HELD THAT: - A coordinate Bench had issued a show-cause notice to the notary for having signed the writ petition when certain portions, including the verification clause, were left blank. The notary appeared in person, filed an affidavit explaining the omission, and tendered an unconditional apology before the Court, together with an assurance of exercising greater care in future. The Court accepted the apology, discharged the show-cause notice and recorded an advisory instruction that the notary must be careful in future while performing notarial duties. The discharge was therefore ordered on the basis of the notary's apology and undertaking, rather than on a substantive inquiry or disciplinary finding. [Paras 4, 5, 6, 7]

Show-cause notice discharged on acceptance of apology; notary advised to exercise due care in future.

Final Conclusion: The writ petition is dismissed as withdrawn in view of a provisional release under section 110A of the Customs Act, 1962, with no order as to costs and all contentions left open; separately, the show-cause notice issued to the notary is discharged on acceptance of his apology and assurance, with admonition to be careful in future.

Condonation of delay - waiver of the late filing penalty - duty to consider representations under the second proviso to sub-section (3) of Section 46 of the Customs Act, 1962 - suspension of period of limitation - consider representations independently and with an open mind - opportunity of personal hearing

Condonation of delay - waiver of the late filing penalty - consider representations independently and with an open mind - suspension of period of limitation - opportunity of personal hearing - Representations dated July 14, 2020 in respect of two delayed Bills of Entry are to be considered afresh by the Deputy Commissioner of Customs taking into account the lockdown-related circumstances and the suspension of limitation. - HELD THAT: - The High Court noted that although the Customs House asserted it was functional during the lockdown and Bills of Entry could be filed online, the respondents did not show why the petitioner's representations received on July 15, 2020 were not disposed of in accordance with the statutory obligation under the second proviso to sub section (3) of Section 46 of the Customs Act, 1962. In the interest of justice the Court directed that the Deputy Commissioner, to whom the representations are addressed, must consider them independently and with an open mind, bearing in mind that the shipments arrived shortly after the national lockdown and that normalcy remained affected for an extended period. The Court emphasised that the representations should be considered in the factual context prevailing when the shipments arrived and when the representations were made, including the fact that the Supreme Court had ordered suspension of the period of limitation in the suo motu PIL. The Deputy Commissioner is to grant an opportunity of personal hearing to the petitioner's authorised representative and to pass an appropriate order promptly; if relief is refused, it must be by a reasoned order communicated immediately. [Paras 3, 4, 5, 6]

Deputy Commissioner of Customs to consider the petitioner's representations afresh, grant personal hearing within a fortnight of receipt of this order, and pass a reasoned order taking into account lockdown circumstances and suspension of limitation; communicate the decision immediately.

Final Conclusion: Writ petition disposed of by directing the Deputy Commissioner of Customs to independently consider the representations dated July 14, 2020 in respect of the two Bills of Entry, grant a personal hearing within a fortnight of receipt of this order, and pass and communicate a reasoned order; no costs.

Invocation of bank guarantee without adjudication - requirement of show cause notice before enforcement - principles of natural justice - redemption letter evidencing discharge of export obligation - adjudication under Section 28

Invocation of bank guarantee without adjudication - requirement of show cause notice before enforcement - adjudication under Section 28 - Legality of the recovery notice and the invocation of bank guarantee effected without prior adjudication. - HELD THAT: - The Court found that no show cause notice was issued as the first step in the adjudication process contemplated under Section 28 and that the enforcement of the bank guarantee and communication to the bank were carried out without prior adjudication. Such enforcement, absent issuance of a show cause notice and opportunity for adjudication, is illegal. Accordingly, the recovery notice dated 18.09.2018 and the letter to the bank of the same date were set aside and the action of invocation of the bank guarantee was quashed. [Paras 9, 11]

Recovery notice and bank guarantee invocation set aside for lack of prior show cause/adjudication; communication to the bank declared illegal.

Principles of natural justice - redemption letter evidencing discharge of export obligation - Requirement to afford the petitioner an opportunity of personal hearing before revoking benefit conferred by the redemption letter. - HELD THAT: - The Court noted that the petitioner received a redemption letter indicating discharge of export obligation and that no personal hearing was afforded before the authorities sought to revoke that benefit. Where a benefit conferred by a redemption is sought to be revoked, strict adherence to the principles of natural justice is required. The authorities were directed to issue a show cause notice and decide the matter after affording the petitioner a personal hearing. [Paras 10, 11]

Authorities directed to issue a show cause notice and afford personal hearing before any adjudication to revoke the redemption benefit.

Invocation of bank guarantee without adjudication - requirement of show cause notice before enforcement - Consequential relief regarding refund of the amount realized from the bank guarantee pending fresh adjudication. - HELD THAT: - Having set aside the invocation of the bank guarantee and directed fresh adjudication by issuance of a show cause notice, the Court further provided that if the adjudication is not completed within six months from the date of release of this order, the amount realised (the encashed bank guarantee) shall be refunded to the petitioner. This direction is incidental to the quashing of the enforcement action and intended to protect the petitioner pending completion of the statutory adjudication. [Paras 11]

If adjudication after issuance of the show cause notice is not completed within six months, the amount realised from the bank guarantee is to be refunded.

Final Conclusion: The recovery notice and the bank guarantee enforcement were set aside for lack of prior show cause and personal hearing; authorities directed to issue show cause notice and decide after affording personal hearing, and if adjudication is not completed within six months, the amount realised from the bank guarantee is to be refunded.

Limitation and time barred appeals - condonation of delay - service of assessment order and postal acknowledgement - appellate and tribunal fact finding on service - scope of writ jurisdiction to override statutory limitation

Service of assessment order and postal acknowledgement - appellate and tribunal fact finding on service - Non mentioning of the departmental reference number in the postal acknowledgment did not vitiate service of the assessment order and did not assist the assessee. - HELD THAT: - The Tribunal and the Appellate Authority, as fact finding bodies, examined the records and the postal report and held that the O.C.No.4066/2011 was an internal reference in the assessing officer's register and its absence from the postal acknowledgement did not render the dispatch or service invalid. The Post Master General's verification addressing the specific internal reference could not displace the finding that the acknowledgment bearing the postal reference was duly received by the company. It was therefore not open to the writ court to disregard the concurrent factual conclusion reached by the authorities that service had been effected. [Paras 9]

Finding that omission of the internal reference number in the postal acknowledgment is not fatal to service was affirmed.

Limitation and time barred appeals - condonation of delay - scope of writ jurisdiction to override statutory limitation - The appeal was time barred and neither the Appellate Authority, the Tribunal nor the High Court could condone the delay in the absence of sufficient cause. - HELD THAT: - Relying on the settled principle that statutory limitation periods cannot be disregarded and on the authority of the Apex Court, the High Court held that the law of limitation serves public interest and prevents indefinite litigation. The petitioner's plea that the assessment order was only known on a later date was not accepted as sufficient cause; the Court emphasised that neither the statutory appellate authorities nor the High Court, in exercise of writ jurisdiction, were empowered to condone delay beyond the period prescribed by the statute in the absence of adequate justification. The Appellate Authority and the Tribunal were therefore correct in rejecting the appeal on limitation grounds. [Paras 10]

Rejection of the appeal as barred by limitation and refusal to condone delay was upheld.

Final Conclusion: The concurrent findings of the Appellate Authority and the Tribunal that service was valid despite omission of an internal reference and that the appeal was time barred without sufficient cause to condone delay were unimpeachable; the writ petition is dismissed.

Penalty for use of false and incorrect material under section 114AA of the Customs Act, 1962 - Requirement of mens rea for imposition of penalty - Bonafide belief and absence of deliberate attempt as defence to penalty - Adjustment of IGST payment against amended bill of entry - Withdrawal of refund application and its effect on proceedings

Penalty for use of false and incorrect material under section 114AA of the Customs Act, 1962 - Requirement of mens rea for imposition of penalty - Bonafide belief and absence of deliberate attempt as defence to penalty - Whether the ingredients of section 114AA were attracted so as to sustain imposition of penalty on the appellant for attempting to obtain undue refund. - HELD THAT: - The appellant had paid IGST on import consignment and, being unable to obtain original documents, filed a refund claim; subsequently, on issuance of NOC and amendment of bills of entry in favour of a substitute purchaser, the department adjusted the earlier IGST payment against the goods cleared in the name of the substituted importer. The appellant withdrew its refund application upon learning of this adjustment. The adjudicating authority nonetheless issued a Show Cause Notice alleging an attempt to obtain undue refund and imposed penalty under section 114AA. The Tribunal found that the record shows the appellant filed a detailed reply to the SCN and attended personal hearing, contrary to the Commissioner (Appeals)'s finding that the appellant did not respond or appear. There is no evidence of knowingly or intentionally making, signing or using any false or incorrect declaration, statement or document; the conduct flowed from a bona fide belief and commercial circumstances (inability to clear goods for want of original documents and later substitution of importer). Reliance on the principle that penalties under section 114AA require proof of deliberate or fraudulent conduct, and that technical or venial breaches arising from bona fide belief should not attract such penalty, leads to the conclusion that the statutory ingredients are not satisfied. Consequently the imposition of penalty was unjustified and is to be set aside. [Paras 11, 12, 13, 14, 15]

Penalty under section 114AA was not attracted on the facts; the penalty order is set aside and the appeal is allowed.

Final Conclusion: The Tribunal held that the facts show no deliberate or knowing use of false or incorrect material; the penalty under section 114AA was therefore not sustainable, and the impugned order imposing penalty is set aside with consequential relief.

Finalization of duty assessment in absence of laboratory test report - acceptance of exporter's declaration or earlier test report where test report is not available - effect of issuance of Export Obligation Discharge Certificate and cancellation of bond on recovery of duty

Finalization of duty assessment in absence of laboratory test report - acceptance of exporter's declaration or earlier test report where test report is not available - Whether the claim of the appellant that duty free imported fabric was used in the export corresponding to the disputed shipping bill could be accepted and assessment finalized despite non availability of the Textile Committee test report, having regard to Board's Circular No.79/2002 Cus. - HELD THAT: - The Tribunal noted that samples had been drawn and that test reports were available for other shipping bills but the Textile Committee could not trace the test report relevant to the disputed shipping bill. The Board's Circular No.79/2002 Cus. provides that where samples were drawn but test report is not available, declaration by the exporter or an earlier test report, if any, may be accepted by Customs. The appellant had made efforts to obtain the missing report and relied on the circular to seek finalization on the basis of available evidence. The Tribunal observed this principle from the circular but proceeded to consider the commercial and administrative consequences in the specific facts of the case. [Paras 9]

The Tribunal accepted the relevance of the Board's circular as a permissible basis for finalization where the test report is unavailable, but proceeded to decide the matter on the basis of subsequent administrative actions taken in the case.

Effect of issuance of Export Obligation Discharge Certificate and cancellation of bond on recovery of duty - Whether, in view of issuance of the Export Obligation Discharge Certificate (EODC) and cancellation/return of the bond, any further demand or recovery of duty in respect of the disputed shipping bill could be maintained. - HELD THAT: - The record showed that the Export Obligation Discharge Certificate had been issued and the licence redeemed, and that the bond had been cancelled and returned to the appellant. The department itself had communicated that ADGFT had redeemed the licence and that recovery of duty with interest would not arise since the export obligation had been fulfilled. Given these administrative determinations and the cancellation of the bond, the Tribunal concluded that there remained no subsisting obligation warranting further demand or recovery in respect of the disputed shipping bill. [Paras 10, 11]

Nothing survives for recovery once the EODC is issued and the bond cancelled; the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.

Final Conclusion: The appeal is allowed. While the Board's circular permits acceptance of exporter's declaration or earlier test reports where a laboratory report is missing, the Tribunal found that issuance of the EODC and cancellation/return of the bond meant no further duty recovery could be pursued; the impugned order is set aside and consequential relief, if any, is granted as per law.

Appeal under section 9C of the Customs Tariff Act - Order of determination regarding existence, degree and effect of dumping - Discretion of the Central Government under Rule 18 of the Anti Dumping Rules - Requirement to record reasons by a quasi judicial authority - Remand for fresh consideration where reasons are absent

Appeal under section 9C of the Customs Tariff Act - Order of determination regarding existence, degree and effect of dumping - Maintainability of the appeal under section 9C against the Central Government's decision communicated by the Office Memorandum dated 14.12.2020 - HELD THAT: - Section 9C provides an appeal against an "order of determination or review thereof regarding the existence, degree and effect" of dumping. The Tribunal examined the statutory scheme in the 1995 Anti Dumping Rules (notably rules 4, 5, 6, 17 and 18) and precedents which interpret the scope of "order of determination." The Court held that the Central Government, by its Office Memorandum refusing to impose anti dumping duty, made a determination on the existence, degree and effect of dumping for the purpose of section 9C. The Tribunal relied on prior decisions which distinguish recommendatory acts of the designated authority from the determinative action by the Central Government and on authorities holding that a negative final finding or a governmental determination may attract the right to appeal. In light of this construction, an appeal lies to the Tribunal against the Central Government's determination reflected in the Office Memorandum. [Paras 14, 16, 18, 19, 21]

The appeal is maintainable under section 9C of the Tariff Act.

Discretion of the Central Government under Rule 18 of the Anti Dumping Rules - Requirement to record reasons by a quasi judicial authority - Remand for fresh consideration where reasons are absent - Validity of the Central Government's Office Memorandum dated 14.12.2020 declining to impose anti dumping duty without recording reasons - HELD THAT: - The Tribunal recognised that the Central Government has discretion under rule 18 to impose or not impose anti dumping duty. However, the function under section 9A and rule 18 is quasi judicial in nature and decisions of quasi judicial authorities must ordinarily record reasons. The designated authority had conducted the prescribed, detailed inquiry and recommended imposition of duty after analysing dumping, injury and causation. The Office Memorandum merely stated the decision not to impose duty without giving reasons and without indicating consideration of the designated authority's findings or relevant factors. Reliance on constitutional and Supreme Court authorities led to the conclusion that where a statute and rules envisage detailed inquiry and the decision maker departs from a reasoned recommendation, the Central Government must give clear and explicit reasons showing consideration of relevant factors; otherwise the exercise of discretion is vulnerable to challenge as arbitrary. Because no reasons were recorded, the Tribunal could not sustain the decision and remitted the matter to the Central Government to reconsider the recommendation and record reasons for whatever decision is taken. [Paras 32, 41, 43, 46, 48]

Office Memorandum dated 14.12.2020 set aside; matter remitted to the Central Government for fresh consideration and reasoned decision on the designated authority's recommendation.

Final Conclusion: The Tribunal holds that the appeal is maintainable under section 9C and sets aside the Central Government's Office Memorandum dated 14.12.2020 for failure to record reasons; the matter is remitted to the Central Government to reconsider the designated authority's recommendation and to pass a reasoned decision.

Refund of revenue deposit - refund application filed by customs house agent - provisional assessment security deposit - appropriation of deposit against demand - doctrine of unjust enrichment - remand to adjudicating authority for fresh decision

Refund of revenue deposit - refund application filed by customs house agent - Refund cannot be denied solely because the refund application was filed by the Customs House Agent; ultimate entitlement to refund lies with the importer who made the deposit. - HELD THAT: - The Tribunal observed that although the application for refund was submitted by the CHA, the substantive refund is payable to the appellant (importer) who furnished the revenue deposit. The mere fact that the CHA filed the refund application does not disentitle the appellant to the refund otherwise due to it. Accordingly, procedural irregularity in the applicant's identity alone cannot defeat a meritorious refund claim. [Paras 4]

Refund cannot be refused merely because the application was filed by the CHA; the appellant remains entitled to the refund if otherwise eligible.

Doctrine of unjust enrichment - appropriation of deposit against demand - remand to adjudicating authority for fresh decision - Doctrine of unjust enrichment applies to the refund of the revenue deposit where the deposit has been appropriated as duty; refund is therefore subject to the unjust enrichment test, but factual determination on passing on of incidence must be examined afresh. - HELD THAT: - The Tribunal followed the Supreme Court precedent that refunds must pass the test of unjust enrichment. It noted that the revenue deposit had been appropriated against a duty demand and thus converted into duty; consequently, refund is not automatic and must be subjected to the unjust enrichment inquiry. The Tribunal accepted the appellant's contention that the amount was shown as receivable in its balance sheet and that a Chartered Accountant certificate was produced indicating the burden was not passed on; however, it found that these factual assertions require fresh adjudication. In view of these considerations the matter was remitted to the Adjudicating Authority to examine the documentary evidence, the CA certificate and the passing-on issue, and to pass a fresh reasoned order. [Paras 4, 5]

Unjust enrichment is applicable; refund claim (including amount appropriated earlier) is to be considered afresh by the Adjudicating Authority with opportunity to the appellant to file evidence and submissions.

Final Conclusion: Appeal allowed by way of remand: the matter is sent back to the Adjudicating Authority for passing a fresh, reasoned order within three months, after affording the appellant opportunity of hearing and to place on record documents (including the CA certificate) for determination of the unjust enrichment/passing-on issue and consequent entitlement to refund.

Characterisation of payments as advance for booking of space v. deposits/loans - maintainability of company petition against respondent where funds were credited to a separate joint venture account - availability of alternate remedies against the entity to whom payments were actually credited

Characterisation of payments as advance for booking of space v. deposits/loans - Payments made by the petitioner were advances for booking of space in the Kerala Trade Centre and not deposits/loans to the respondent company. - HELD THAT: - The Tribunal examined documentary material including the Trial Balance for the Kerala Trade Centre year ending 31 March 2014 which records the relevant amounts under the heading 'Advance for Space (Booking Charges)'. The parties were unable initially to state into which bank account the amounts were credited; after production of bank records the amounts were shown to have been credited to the Kerala Trade Centre account. On these materials the Tribunal concluded that the payments were for booking space in the joint venture project rather than deposits or loans made to the respondent company. [Paras 11, 12]

The amounts are advances for booking of space in the Kerala Trade Centre and not deposits or loans owed by the respondent company.

Maintainability of company petition against respondent where funds were credited to a separate joint venture account - availability of alternate remedies against the entity to whom payments were actually credited - The Company Petition under Section 73(4) against Kerala Chamber of Commerce and Industry is not maintainable because the payments were credited to the Kerala Trade Centre joint venture account; petitioner remains free to pursue remedies against Kerala Trade Centre. - HELD THAT: - Having found that the monies were credited to a separate Kerala Trade Centre bank account maintained and handled for the joint venture, the Tribunal held that the petition directed against the respondent company does not withstand scrutiny. The Tribunal therefore dismissed the company petition while expressly noting that dismissal does not bar the petitioner from pursuing appropriate legal remedies against the Kerala Trade Centre. [Paras 12, 13, 14]

CP No.30 KOB 2020 dismissed as not maintainable against the Kerala Chamber of Commerce and Industry; petitioner may pursue remedies against Kerala Trade Centre.

Final Conclusion: The petition under Section 73(4) is dismissed: the impugned payments were advances for booking space credited to the Kerala Trade Centre joint venture account, not deposits to the respondent company, and the petitioner may pursue remedies against Kerala Trade Centre if so advised.

Just and equitable winding up - winding up under Section 271(a) of the Companies Act, 2013 - appointment of liquidator under Section 275(1) and Section 275(3) - declaration by liquidator under Section 275(6) - liquidator's reporting obligations under Section 281 - directors' duty to submit report under Section 274(3) - publication and updation of records with Registrar on dissolution - obligation to notify tax and other authorities before dissolution - prohibition on institution or continuation of suits without leave

Just and equitable winding up - winding up under Section 271(a) of the Companies Act, 2013 - Admission of the company petition and order for winding up of the petitioner company. - HELD THAT: - The Tribunal examined the company petition, the statement of affairs and the Registrar of Companies' report and found that the company had not carried on business for many years, had sustained heavy losses and had a negative net worth. The members had passed a special resolution for winding up dated 23.12.2019. In light of these facts and the RoC observations, the Bench concluded that it was just and equitable to wind up the company and therefore admitted the petition.

The petition for winding up is admitted and the company is ordered to be wound up with immediate effect.

Appointment of liquidator under Section 275(1) and Section 275(3) - declaration by liquidator under Section 275(6) - Appointment of a liquidator and related statutory formalities. - HELD THAT: - The Tribunal, exercising its power to appoint a liquidator under the Companies Act, selected a liquidator from the IBBI panel and directed him to take charge of the company's property and effects and to perform functions as specified under the Act and the winding up rules. The Bench further directed that the liquidator shall file the statutory declaration within seven days of appointment as required by the statute.

A named IBBI-registered liquidator is appointed and directed to take charge and file the declaration as required by law.

Liquidator's reporting obligations under Section 281 - publication and updation of records with Registrar on dissolution - directors' duty to submit report under Section 274(3) - prohibition on institution or continuation of suits without leave - Directions relating to the conduct of liquidation, statutory filings, publication of the winding up order, directors' compliance and moratorium on proceedings. - HELD THAT: - The Tribunal directed procedural steps to give effect to the winding up order: the liquidator must file the report under the Act within the prescribed period; the petitioner company must publish the winding up order in the specified English and vernacular newspapers within fourteen days; the Registrar is to send intimation to the liquidator and RoC; the directors and officers are directed to comply with their statutory duty to submit the report under the Act within thirty days and ensure books of account are audited up to the date of the liquidator's appointment. The Bench also imposed the statutory restraint that no suits or proceedings shall be commenced or continued against the company except with leave of the Tribunal.

The Tribunal issued directions for publication, Registrar intimation, directors' compliance, auditing of books, liquidator's report filing and imposed the requirement of leave of the Tribunal for commencement or continuation of proceedings against the company.

Obligation to notify tax and other authorities before dissolution - Assurance and direction regarding notice to tax and other authorities prior to dissolution. - HELD THAT: - The RoC had observed that notice may be given to the Income Tax Department and other appropriate authorities for any outstanding dues before dissolution. The petitioner gave an undertaking to serve notice on the Income Tax Department within thirty days of the liquidator's appointment and stated there were no outstanding dues to other authorities, while undertaking to give notice if any dues were found.

The petitioner is required to serve notice to the Income Tax Department within thirty days of the liquidator's appointment and to notify any other authority if dues are discovered.

Final Conclusion: The Tribunal admitted the petition and ordered the company to be wound up as just and equitable; appointed a named IBBI-registered liquidator and directed the required statutory filings, publications, directors' compliance and a moratorium on suits except with the Tribunal's leave, together with an undertaking to notify the Income Tax Department within the specified period.

Reduction of share capital - Confirmation of capital reduction under Section 66 - Special resolution - Approval of minutes for registration under Section 66(5) - Regional Director's observations on compliance with managerial personnel provisions - No objection by Regional Director to the scheme - Sanction not a bar to subsequent statutory or departmental action - Continuing obligation to comply with stamp duty, tax and regulatory requirements

Reduction of share capital - Confirmation of capital reduction under Section 66 - Special resolution - Confirmation of the scheme for reduction of the paid-up share capital of the applicant company as approved by its members by a special resolution. - HELD THAT: - The Tribunal examined the company's memoranda and articles, the special resolution passed by the shareholders approving reduction of capital, the statutory certificates from the chartered accountant regarding creditors and accounting treatment, and the publication and service of statutory notices. The Regional Director, after review, declined to object to the scheme while recording an observation about non-compliance on managerial appointment (see next issue). In view of the compliance steps taken and the absence of objection from the Regional Director, the Tribunal concluded that it is just and proper to confirm the reduction of paid-up share capital and allowed the application to that effect, also approving the form of minutes proposed to be registered pursuant to the reduction. [Paras 7, 10, 11, 12, 15]

The Tribunal confirmed and sanctioned the reduction of the paid-up share capital of the company as approved by the members and allowed the application.

Approval of minutes for registration under Section 66(5) - Approval of the form of minutes to be registered following the reduction of capital. - HELD THAT: - The Tribunal examined the proposed form of minutes accompanying the application and, having sanctioned the reduction, expressly approved the proposed form of minutes for registration under the statutory provision governing minutes registration consequent to capital reduction. [Paras 8, 12]

The proposed form of minutes for registration under Section 66(5) was approved.

Regional Director's observations on compliance with managerial personnel provisions - No objection by Regional Director to the scheme - Treatment of the Regional Director's observation regarding non-compliance with managerial personnel appointment and its effect on sanctioning the reduction. - HELD THAT: - The Regional Director reported non-compliance with the requirement to have a Company Secretary from 01.09.2019 but noted that a Company Secretary had been appointed with effect from 01.03.2021 and that the company filed an undertaking to regularise the delay. The Regional Director stated that it would not object to the scheme of reduction. The Tribunal recorded these observations and proceeded to confirm the reduction while noting the RD's report. [Paras 11, 12]

The Tribunal accepted the Regional Director's report and proceeded to sanction the reduction notwithstanding the recorded non-compliance, subject to the company regularising the matter as undertaken.

Sanction not a bar to subsequent statutory or departmental action - Continuing obligation to comply with stamp duty, tax and regulatory requirements - Whether the Tribunal's sanction operates as a bar to other statutory action or to payment of taxes, stamp duty or compliance with other regulatory requirements. - HELD THAT: - The Tribunal clarified that the grant of sanction for capital reduction does not preclude action being taken in accordance with law against any persons concerned for any deficiency or violation of enactments, rules or regulations. It further clarified that the order should not be construed as exempting the company from payment of stamp duty, taxes or other charges or from compliance under SEBI, FEMA, Income Tax or any other law; all such compliances must be duly completed by the company. [Paras 13, 14]

The sanction is without prejudice to lawful action by other authorities and does not exempt the company from payment of stamp duty, taxes or other statutory/regulatory compliances.

Final Conclusion: The Tribunal allowed the application and confirmed the reduction of the company's paid-up share capital as approved by a special resolution, approved the proposed minutes for registration, noted the Regional Director's observations (including the irregularity concerning the Company Secretary) without objection to the scheme, and clarified that the sanction does not bar subsequent statutory action or relieve the company of tax, stamp duty or other regulatory compliance obligations.

Power of Adjudicating Authority under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - Non-retroactivity of amendment to liquidation regulations - Schedule I Clause 12 - time for payment of balance sale consideration - Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 - Circular No. IBBI/LIQ/024/2019 regarding applicability of amendment regulations - Nullity of sale for non-compliance with applicable liquidation regulations

Non-retroactivity of amendment to liquidation regulations - Circular No. IBBI/LIQ/024/2019 regarding applicability of amendment regulations - Schedule I Clause 12 - time for payment of balance sale consideration - Amendment to Schedule I Clause 12 (providing 90 days for payment of balance sale consideration) is not applicable to a liquidation process which commenced before 25.07.2019. - HELD THAT: - The Tribunal accepted the IBBI Circular which reiterates that the Amendment Regulations notified on 25.07.2019 apply only to liquidation processes that commenced on or after that date. Since the liquidation commencement date in this matter is 30.07.2018, the Liquidation Regulations as at 01.04.2018, including the fifteen-day requirement in Schedule I Clause 12 for payment of balance sale consideration, govern the process. The change in law effected by the 2019 Amendment therefore cannot be invoked to extend the period for payment in a liquidation that had already commenced prior to 25.07.2019. [Paras 8, 12, 13]

Benefit of the amended Clause 12 (ninety days) cannot be granted; the earlier fifteen-day provision governs the present liquidation.

Nullity of sale for non-compliance with applicable liquidation regulations - Power of Adjudicating Authority under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - The e-auction held on 26.02.2021 and the consequent Letters of Intent relying on the amended ninety-day payment period are invalid and set aside; the matter is directed to be reprocessed under the applicable (old) regulations. - HELD THAT: - Having held that the amended regulation could not be applied to this liquidation, the Tribunal concluded that the e-auction conducted on 26.02.2021 and the LoIs issued on that basis are vitiated by non-compliance with the regulations applicable to this liquidation. Exercising its powers under Section 60(5) of the Code, the Tribunal declared the e-auction null and void, directed the liquidator to revalue the assets and to issue a fresh e-auction sale notice in accordance with the Liquidation Regulations as at 01.04.2018, and to complete the auction expeditiously. [Paras 13, 14, 15]

E-auction dated 26.02.2021 is null and void; liquidator directed to revalue assets and initiate fresh e-auction under the applicable regulations.

Final Conclusion: The Tribunal refused to apply the 2019 Amendment to a liquidation commenced on 30.07.2018, held the e-auction of 26.02.2021 invalid for that reason, set aside the sale and LoIs, and directed the liquidator to revalue the assets and conduct a fresh e-auction in accordance with the Liquidation Regulations as at 01.04.2018.

Limitation under Article 137 of the Limitation Act, 1963 - date of default as triggering accrual of right to apply - application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an operational creditor - demand notice and notice of dispute under Section 8 of the Insolvency and Bankruptcy Code, 2016

Date of default as triggering accrual of right to apply - limitation under Article 137 of the Limitation Act, 1963 - application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an operational creditor - Whether the Section 9 petition by the operational creditor is barred by limitation. - HELD THAT: - The invoices relied upon by the operational creditor relate to the period November 2013 to February 2014, the last invoice being dated 01.02.2014. The Agreement provided a 30 day payment term, fixing the due date as 03.03.2014. Article 137 of the Limitation Act, 1963 (three years from the date when the right to apply accrues) applies to applications under Section 9 of the IBC. The petition was filed on 30.01.2020 and no application for condonation of delay was filed. Although the corporate debtor referred to pre existing disputes in response to the Section 8 demand notice on 06.04.2019, those disputes were not supported by documents. Applying the Limitation Act to the stated due date, the right to invoke CIRP accrued in March 2014 and the three year limitation expired in 2017; accordingly the petition is time barred. The Tribunal dismissed the petition on the ground of limitation without considering the merits. [Paras 6, 7, 8, 9]

The Section 9 petition is barred by limitation and is dismissed without adjudicating the merits.

Final Conclusion: The petition under Section 9 of the IBC filed by the operational creditor is dismissed as time barred under Article 137 of the Limitation Act, 1963; the Tribunal declined to examine merits and directed communication of the order to the parties.

Purchase of corporate debtor as a going concern - liquidator's duty under Section 53 of the Code - extinguishment/non liability of purchaser for pre auction claims - no unilateral waiver of statutory dues except as permitted by law - right of purchaser to allot shares and reconstitute the board under Companies Act, 2013 - limits of the Adjudicating Authority to grant waivers or concessions

Liquidator's duty under Section 53 of the Code - extinguishment/non liability of purchaser for pre auction claims - Liability for claims arising prior to the e auction and the role of the liquidator in dealing with such claims. - HELD THAT: - The Tribunal held that claims arising prior to the auction purchase are to be collated and admitted by the Liquidator in accordance with law. Consequently, liabilities or claims in respect of periods before the e auction are to be dealt with under the mechanism provided by Section 53 of the Code, and the auction purchaser/Corporate Debtor shall not be held liable to pay those pre auction claims. [Paras 5]

Pre auction claims are to be dealt with by the Liquidator under Section 53 and the purchaser is not liable to pay them.

No unilateral waiver of statutory dues except as permitted by law - limits of the Adjudicating Authority to grant waivers or concessions - Whether the Adjudicating Authority can grant exemption or waiver of statutory dues, stamp duty or taxes post purchase. - HELD THAT: - The Tribunal noted that waiver or exemption of statutory dues, taxes or stamp duty is not available as a matter of course and cannot be granted by this Adjudicating Authority unless such relief is provided under the relevant law. Requests for waiver or exemption fall to be considered and decided by the competent statutory authorities in accordance with applicable law; the Adjudicating Authority has no power to grant such general waivers or concessions to the auction purchaser. [Paras 6, 8]

No exemption or waiver of statutory dues can be granted by the Adjudicating Authority unless permissible under law; such matters are to be addressed by the competent authorities.

Purchase of corporate debtor as a going concern - right to allot shares and reconstitute the board under Companies Act, 2013 - Rights of the auction purchaser to effect corporate changes after purchase as a going concern. - HELD THAT: - The Tribunal recorded that upon purchase of the Corporate Debtor as a going concern the auction purchaser is, by virtue of law, entitled to make allotment of shares and reconstitute the board in accordance with the procedures prescribed under the Companies Act, 2013. Those corporate actions are subject to compliance with the statutory procedure under the Companies Act. [Paras 7]

The purchaser may allot shares and reconstitute the board in accordance with the Companies Act, 2013 and applicable procedures.

Limits of the Adjudicating Authority to grant waivers or concessions - remedy to approach respective statutory authorities - Whether the Tribunal may direct other authorities to grant reliefs sought by the auction purchaser, and available remedy. - HELD THAT: - The Tribunal emphasised that, apart from the statutory effects inherent in purchase as a going concern, it is not empowered to grant the broad range of waivers and concessions sought by the auction purchaser. The appropriate course is for the auction purchaser to approach the respective statutory or regulatory authorities, who may consider the requests under their enabling statutes and rules. [Paras 8, 9]

The Adjudicating Authority will not grant the wide waivers/concessions sought; the auction purchaser must approach the relevant authorities for consideration of such reliefs.

Final Conclusion: The application is disposed of: pre auction claims are to be dealt with by the Liquidator under Section 53 and the purchaser is not liable for them; statutory waivers or exemptions cannot be granted by this Adjudicating Authority unless permitted by law; the purchaser may effect corporate changes in accordance with the Companies Act, 2013; and the purchaser must approach competent statutory/regulatory authorities for any other reliefs sought.

Liquidation under Section 33(1) of the Insolvency & Bankruptcy Code - failure of the Corporate Insolvency Resolution Process and absence of a resolution plan - limits on Adjudicating Authority's review of commercial decisions of the Committee of Creditors - appointment of a liquidator and vesting of management powers in the liquidator - effect of liquidation on moratorium and continuation of proceedings - claim for Resolution Professional / IRP fees and CIRP costs to be considered under Regulation 33 & 34

Liquidation under Section 33(1) of the Insolvency & Bankruptcy Code - failure of the Corporate Insolvency Resolution Process and absence of a resolution plan - limits on Adjudicating Authority's review of commercial decisions of the Committee of Creditors - Order of liquidation of the Corporate Debtor under Section 33(1) of the Code on account of failure of CIRP and absence of any resolution plan. - HELD THAT: - The Tribunal held that the CIRP had continued beyond the permissible period and no resolution plan was received despite steps taken during the CIRP. Reliance was placed on the principle that the Adjudicating Authority is not to re-examine the commercial decisions of the Committee of Creditors; where the process has failed and no viable resolution plan exists, the Authority is obliged to initiate liquidation under Section 33(1). In those circumstances the Tribunal found no material to take a contrary view and directed liquidation in accordance with Chapter III of the Code. [Paras 7, 8, 9, 10]

The Corporate Debtor is ordered to be liquidated in the manner laid down in Chapter-III of the Code.

Appointment of a liquidator and vesting of management powers in the liquidator - effect of liquidation on moratorium and continuation of proceedings - duties and powers of the liquidator under Sections 35 to 50 and 52 to 54 - Appointment of a liquidator and consequential directions regarding vesting of powers, cessation of moratorium and obligations on personnel and the Liquidator. - HELD THAT: - Having ordered liquidation, the Tribunal appointed a named insolvency professional from the IBBI panel as Liquidator and directed filing of consent. The order requires the Liquidator to issue public announcement in terms of the Liquidation Process Regulations, exercises the statutory powers and duties under the specified sections of the Code and relevant regulations, vests the Board and managerial powers in the Liquidator, provides that the moratorium shall cease to have effect, and prescribes customary administrative directions such as discharge notice, cooperation by personnel, and service of the order to statutory authorities. [Paras 7, 11]

A liquidator is appointed and the statutory consequences of liquidation (vesting of powers, cessation of moratorium, duties of the Liquidator and cooperation by personnel) are directed to follow as specified.

Claim for Resolution Professional and IRP fees and CIRP costs to be considered under Regulation 33 & 34 - Claim for payment of Resolution Professional fees, IRP fees and CIRP costs is not finally adjudicated; the Resolution Professional is directed to file a proper application under the Regulations for consideration. - HELD THAT: - The Tribunal did not adjudicate the monetary claim for the Resolution Professional/IRP fees and CIRP costs in the present application. Instead, the Tribunal recorded that such claim should be pursued by filing a proper application under Regulation 33 and 34 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, leaving the claim to be considered in accordance with the prescribed regulatory procedure. [Paras 5, 11]

The applicant / Resolution Professional may file a proper application under Regulation 33 & 34 for the claim for fees and CIRP costs; the claim is not finally decided in this order.

Final Conclusion: The Tribunal directed liquidation of M/s. Pro Young International Private Limited under Section 33(1) of the Code for failure of the CIRP and absence of any resolution plan, appointed a Liquidator with attendant statutory directions (including cessation of moratorium and vesting of managerial powers), and left the Resolution Professional's claim for fees and CIRP costs to be pursued by filing the appropriate application under Regulation 33 & 34.

Dissolution of corporate debtor - Early dissolution - Realizable properties insufficient to cover liquidation cost - Preliminary report - Final report prior to dissolution - Liquidation costs and reimbursement - Discharge of liquidator

Dissolution of corporate debtor - Early dissolution - Realizable properties insufficient to cover liquidation cost - Preliminary report - Final report prior to dissolution - Application for dissolution of the corporate debtor under Section 54 of the Code read with Regulation 14 of the Regulations - HELD THAT: - The Tribunal examined the preliminary report filed by the liquidator and the final report filed under Regulation 45. Having regard to the admitted position that the company has no tangible or saleable assets (save for a small cash/bank balance) and is not carrying on business, and that the liquidator does not propose further inquiry into the affairs of the company, the Tribunal held that the realizable properties are insufficient to cover liquidation costs and that affairs do not require further investigation. On that basis the Tribunal concluded that early dissolution is justified and permissible under Regulation 14 and that Section 54 requires the Adjudicating Authority to order dissolution when assets have been completely liquidated and dissolution is appropriate. The Tribunal therefore allowed the liquidator's application and ordered dissolution with immediate effect. [Paras 11, 12, 13]

Application for dissolution allowed; M/s. Ojasvi Agritech Pvt. Ltd. is dissolved with immediate effect.

Liquidation costs and reimbursement - Final report prior to dissolution - Discharge of liquidator - Ancillary directions concerning payment/reimbursement of costs, treatment of remaining cash balance, closure of liquidation bank account, forwarding of order and discharge of the liquidator - HELD THAT: - The Tribunal recorded that the financial creditor had been directed earlier to make payment and reimbursement of CIRP and liquidation costs and that such payment had been made and is reflected in the receipts annexed to the final report. The Tribunal noted that the liquidator had not specified treatment of the small cash/bank balance; consequently the Tribunal directed that any residual cash balance be handed over to the sole financial creditor against its admitted claim and that the liquidator file a receipt with the Registry. The Tribunal also permitted the liquidator to close the liquidation bank account within three weeks, directed forwarding copies of the order to statutory authorities and the Registrar of Companies, and discharged the liquidator. [Paras 9, 10, 13, 14]

Payment/reimbursement of costs recorded as complied with; any residual cash to be paid to the sole financial creditor and receipt filed; liquidation bank account may be closed; copies of order to be forwarded to statutory authorities and ROC; liquidator discharged; IA No. 82/JPR/2020 and CP No. (IB)-132/9/JPR/2019 disposed of.

Final Conclusion: The Tribunal allowed the liquidator's application for early dissolution under Regulation 14 read with Section 54, ordered immediate dissolution of the corporate debtor, recorded compliance with payment of CIRP and liquidation costs, directed payment of any residual cash to the sole financial creditor, permitted closure of the liquidation bank account, directed transmission of the order to statutory authorities and the ROC, discharged the liquidator and disposed of the related applications.

Operational debt - existence of pre-existing dispute - maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - requirement of demand notice and antecedent dispute - application of the Mobilox test for adjudication of Section 9 petitions

Operational debt - existence of pre-existing dispute - maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - application of the Mobilox test for adjudication of Section 9 petitions - Whether the Section 9 petition by the operational creditor was maintainable in view of a pre-existing dispute between the parties. - HELD THAT: - The Tribunal applied the tests laid down in Mobilox Innovations v. Kirusa (as restated in the order) to determine maintainability of a Section 9 petition: whether there is an operational debt, whether documentary evidence shows the debt is due and payable, and whether a dispute or pending proceeding existed prior to the demand notice. The record showed that disputes about measurements and amounts were in existence and were the subject of conciliation and earlier civil proceedings prior to issuance of the demand notice; part payments and reconciliations were also pleaded by the corporate debtor and an admitted lesser amount was tendered. The Bench noted that these pre-existing disputes and the pendency of reconciliation proceedings meant the debt was not a crystallized undisputed operational debt for the purposes of Section 9. Applying the Mobilox criteria, the Tribunal concluded that the existence of a pre-existing dispute deprived the petition of maintainability under Section 9. [Paras 6]

The Section 9 petition was not maintainable due to a pre-existing dispute and is dismissed.

Final Conclusion: The petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by the operational creditor was dismissed by the Tribunal on the ground that a pre-existing dispute between the parties existed prior to the demand notice, rendering the petition not maintainable.

Corporate Insolvency Resolution Process - Admission under Section 7 of the Insolvency and Bankruptcy Code - Financial debt and default - Effect of pending arbitration on Section 7 proceedings - Independence of remedies under the IBC and the Arbitration and Conciliation Act - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional

Admission under Section 7 of the Insolvency and Bankruptcy Code - Financial debt and default - Application under Section 7 was maintainable and liable to be admitted and CIRP initiated against the corporate debtor. - HELD THAT: - On the material placed before the Bench the financial creditor established that a sum exceeding the statutory threshold of Rs. 1,00,000/- was due from the corporate debtor and that a default had occurred. The Bench noted that the corporate debtor did not deny the default nor dispute the debt claimed. Having found that the petition was complete, in proper form and supported by documentation evidencing financial debt and default, the Bench concluded that the prerequisites for admission under Section 7 were satisfied and the application deserved admission. [Paras 7, 9, 10]

The Section 7 petition filed by the financial creditor is admitted and the corporate insolvency resolution process is initiated.

Effect of pending arbitration on Section 7 proceedings - Independence of remedies under the IBC and the Arbitration and Conciliation Act - Pending arbitration proceedings between the parties did not bar the admission of the Section 7 petition under the IBC. - HELD THAT: - The Bench observed that proceedings under the IBC and the Arbitration and Conciliation Act are distinct, each being a special statute operating in different fields-insolvency resolution and contractual/arbitral dispute-resolution respectively. Relying on settled principles that pendency of arbitration does not ipso facto prevent a creditor from invoking the IBC, and noting that no bona fide dispute on existence of debt or default was made out by the corporate debtor, the Bench held that the arbitration petition and interim orders thereunder did not affect maintainability or admission of the Section 7 application. [Paras 7, 8]

Pendency of arbitration proceedings does not preclude initiation of CIRP under Section 7 and is not a ground to dismiss the Section 7 petition in the facts of this case.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional - Moratorium was declared and an Interim Resolution Professional was appointed upon admission of the Section 7 application. - HELD THAT: - Following admission, the Bench declared the moratorium with the standard consequences specified under the Code, including prohibition on institution or continuation of suits, transfer or disposal of assets by the corporate debtor, and actions to enforce security interests. The Bench also directed public announcement of the CIRP and appointed the financial creditor's proposed registered insolvency professional as Interim Resolution Professional, subject to compliance with applicable regulations. [Paras 11]

Moratorium under Section 14 is declared and Ms. Sujata Chattopadhyay is appointed as Interim Resolution Professional.

Final Conclusion: The Tribunal admitted the Section 7 petition, held that pendency of arbitration did not bar initiation of CIRP, declared moratorium with consequential directions and appointed the named Interim Resolution Professional to conduct the corporate insolvency resolution process.

Admissibility of unstamped document - financial creditor standing - financial debt - refundable security deposit - default and cheque dishonour - admission of petition under section 7 of the IBC

Admissibility of unstamped document - admission of petition under section 7 of the IBC - Reliance on an undated, unstamped and unregistered Memorandum of Understanding (MOU) for initiating CIRP - HELD THAT: - The Tribunal held that the MOU in this case is undated, unstamped and unregistered and therefore cannot be acted upon by the Adjudicating Authority. Relying on the statutory bar in the Stamp Acts and on the ratio of the decisions of the Supreme Court (including N.N. Global and authorities cited), the Tribunal found that an unstamped instrument cannot form the foundation for proceeding under Section 7. The Tribunal distinguished authorities relied upon by the parties where facts differed, but concluded that, on the facts before it, the MOU could not be relied upon as a valid document to proceed against the respondent and therefore could not support the financial creditor's claim for initiation of CIRP. [Paras 7, 8]

The undated, unstamped and unregistered MOU cannot be relied upon by the Tribunal for initiation of CIRP.

Financial creditor standing - admission of petition under section 7 of the IBC - Whether the petitioner (Magnate Industries LLP) had locus as financial creditor when the payment was made by Sunteck Realty Ltd. - HELD THAT: - The Tribunal found as a factual and legal matter that the payment of Rs. 25 crore was made by Sunteck Realty Ltd., a separate corporate entity, and not by the petitioner Magnate Industries LLP. Since no disbursement was made by the petitioner itself, the petitioner could not be regarded as a person to whom a financial debt is owed under Section 5(7) of the Code. The Tribunal held that, if any party were entitled to file under Section 7 or Section 9, it would be the actual disbursing entity (Sunteck Realty Ltd.), subject to satisfying the creditor classification tests. [Paras 8]

Magnate Industries LLP is not entitled to file the Section 7 petition as a financial creditor because the payment was made by a distinct corporate entity.

Financial debt - refundable security deposit - admission of petition under section 7 of the IBC - Whether the refundable security deposit payable by the developer constituted a 'financial debt' under Section 5(8) of the Code - HELD THAT: - The Tribunal concluded that the refundable security deposit paid by a third party through a joint-developer arrangement, in the factual matrix before it, did not constitute a financial debt owed by the respondent to the petitioner. Having found the MOU inadmissible for being unstamped and the payment not made by the petitioner, the Tribunal further held that the arrangement did not satisfy the statutory tests for a financial debt against the petitioner. The Tribunal observed that the nature of the transaction, the identity of the actual disbursing party, and the absence of enforceable documentation precluded characterization of the claimed amount as a financial debt due to the petitioner. [Paras 8]

The refundable security deposit does not constitute a financial debt owed by the respondent to the petitioner for the purposes of Section 7.

Default and cheque dishonour - admission of petition under section 7 of the IBC - Whether dishonour of cheques and the dates claimed establish existence of default such as to admit the Section 7 petition - HELD THAT: - The Tribunal addressed the contentions on default and cheque dishonour and noted that even though cheques were issued and later dishonoured, the existence of a financial debt due to the petitioner remained unestablished for the reasons recorded (unstamped MOU; payment by a third party; petitioner not the disbursing entity). The Tribunal observed that cheque dishonour gives a remedy under the Negotiable Instruments Act but, standing alone and where the underlying debt is not established vis-a -vis the petitioner, dishonour cannot be the foundation for admission of a Section 7 application. The Tribunal also recorded inconsistent dates of default in the petition and NeSL record and treated default as inseparable from the threshold question of existence of debt. [Paras 8, 9]

Dishonour of cheques does not, by itself, establish a financial debt and default that would warrant admission of the Section 7 petition against the respondent.

Final Conclusion: The petition under Section 7 by Magnate Industries LLP was dismissed: the MOU relied upon was held undated, unstamped and inadmissible; the payment was made by a distinct corporate entity (Sunteck Realty Ltd.) so the petitioner lacked standing as financial creditor; the refundable security deposit was not found to be a financial debt owed to the petitioner; and cheque dishonour did not independently establish a default sufficient to admit the Section 7 application. No costs.

Limitation under the Limitation Act and its application to defaults for instalments - insufficiently stamped documents and curable defects in Section 7 petitions - authority to file a Section 7 petition and validity of power of attorney - financial debt and default under the Insolvency and Bankruptcy Code - admission of company petition and appointment of interim resolution professional

Limitation under the Limitation Act and its application to defaults for instalments - default as defined in the Code - Whether the Insolvency Application filed by the Financial Creditor is barred by limitation - HELD THAT: - The Tribunal examined the date of first default and the concept of 'default' under Section 3(12) of the Code, noting that default may relate to whole debt, part of the debt or an instalment. Relying on the principle that the right to sue accrues on each instalment's default, the Bench observed that the petitioner initiated CIRP with a default date of 30.11.2015 for amounts which became due thereafter. The petition filed on 29.11.2018 therefore fell within the applicable limitation as the Financial Creditor claimed amounts falling due on or after 30.11.2015. While the earlier instalment due on 30.06.2015 is time barred, that did not render subsequent instalment claims time barred. The Tribunal applied the reasoning in the cited authorities to hold that limitation did not preclude admission of the petition. [Paras 33, 36]

Limitation objection rejected; petition not barred by limitation insofar as claims falling due on or after 30.11.2015.

Insufficiently stamped documents and curable defects in Section 7 petitions - Whether insufficiency of stamp duty on facility and security documents precludes admission of the Section 7 petition - HELD THAT: - The Tribunal held that documents being insufficiently stamped amount to curable defects which cannot stall admission of a petition under Section 7 of the Code. Relying on precedent of this Tribunal, the Bench observed that admission cannot be denied merely because ancillary instruments are insufficiently stamped; such defects are curable and do not oust jurisdiction to admit the insolvency petition. [Paras 34]

Objection on account of insufficient stamping repelled; petition may be admitted despite curable stamp defects.

Authority to file a Section 7 petition and validity of power of attorney - Whether the Financial Creditor had valid authority to file the insolvency application - HELD THAT: - The Tribunal examined the petitioner's reliance on a power of attorney executed by authorised signatories and noted that a board resolution authorised execution of the power of attorney. On the material before it, the Bench found the petitioner possessed valid authority to present the petition and that the objection on this ground was misplaced. [Paras 35]

Objection on authority/validity of filing rejected; petitioner has requisite authority.

Financial debt and default under the Insolvency and Bankruptcy Code - admission of company petition and appointment of interim resolution professional - Whether there exists a financial debt and default entitling admission of the Company Petition and consequent initiation of CIRP - HELD THAT: - The Bench found that the External Commercial Borrowing, as evidenced by the Facility Agreement and its supplement, constituted a financial debt within the meaning of the Code and that the Corporate Debtor committed defaults (including non payment of interest and instalments) giving rise to an event of default. Having rejected the objections on limitation, stamping and authority, the Tribunal concluded that the petition satisfied the legal requirements for admission under Section 7. The Financial Creditor proposed an interim resolution professional with consent in Form II, and the Tribunal proceeded to admit the petition and appoint the IRP. [Paras 29, 30, 31, 36, 37]

Company Petition admitted; CIRP initiated and interim resolution professional appointed.

Final Conclusion: Company Petition No. (IB)-4468/(MB)/2018 filed by the Financial Creditor is admitted under Section 7 of the Code; objections on limitation, insufficient stamping and authority to file are rejected; M.A. 613/2019 dismissed; CIRP ordered and an interim resolution professional appointed.

Limitation for filing insolvency application - minimum amount of default as specified by the Central Government - suspension of initiation of corporate insolvency resolution process under Section 10A - statutory demand notice under Section 8

Limitation for filing insolvency application - Whether the application filed on 18.01.2021 was barred by limitation having regard to the last invoice dated 28.12.2017. - HELD THAT: - The Tribunal noted that, if the last invoice date of 28.12.2017 is taken as the relevant date, the period of three years would expire on 27.12.2020 and therefore the application filed on 18.01.2021 would be time-barred. This observation was recorded as part of the preliminary scrutiny of dates and limitation applicable to the present claim. [Paras 15]

The Tribunal observed that the application would be barred by limitation if the date of 28.12.2017 is taken as the relevant date.

Minimum amount of default as specified by the Central Government - statutory demand notice under Section 8 - Whether the application could be entertained despite the claimed default being below the minimum amount of default specified by Notification S.O. 1205(E) dated 24.03.2020. - HELD THAT: - The Tribunal examined Notification S.O. 1205(E) which, by exercise of the proviso to section 4 of the IBC, specified one crore rupees as the minimum amount of default for the purposes of section 4. Having regard to that Notification, the Tribunal held that an application alleging a default below that threshold could not be entertained. This finding was taken at the preliminary stage before considering the substantive merits of the claim. [Paras 16, 17]

The Tribunal held that because the amount claimed was below one crore rupees as specified in the Notification, the application could not be entertained on that ground.

Suspension of initiation of corporate insolvency resolution process under Section 10A - statutory demand notice under Section 8 - Whether Section 10A (suspension of filing of insolvency applications for defaults arising on or after 25.03.2020) applied to the present case and whether the application was consequently not maintainable. - HELD THAT: - The Tribunal set out the relevant chronological events including the last invoice, alleged date of default, insertion of Section 10A, the date of the statutory demand (05.08.2020) and a subsequent payment of Rs. 25,000 on 20.08.2020. Having analysed these dates, the Tribunal concluded that the payment on 20.08.2020 falls within the period governed by Section 10A and, in view of Section 10A's suspension of initiation of CIRP for defaults arising on or after 25.03.2020 (and the accompanying explanation), the application filed on 18.01.2021 claiming default as on 05.08.2020 could not be proceeded with. The Tribunal therefore dismissed the company petition on that ground. [Paras 19, 20, 21]

The Tribunal held that Section 10A applied to the facts (given the payment on 20.08.2020) and, consequently, the insolvency application was not maintainable and was dismissed.

Final Conclusion: The Tribunal dismissed the company petition. It found that the claim involved an amount below the minimum default specified by Notification S.O. 1205(E) and, more decisively, that Section 10A operated to suspend initiation of CIRP in respect of the relevant default period (including the payment of 20.08.2020), rendering the application not maintainable.

Service of demand notice in Form 3 - Existence of dispute on operational debt - Limitation and computation of limitation from due date under demand notice - Admission of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Declaration of moratorium under Section 14 of the Code - Appointment of Interim Resolution Professional and constitution of Committee of Creditors

Service of demand notice in Form 3 - Demand notice in Form 3 dated 25.04.2019 was duly served on the corporate debtor. - HELD THAT: - The petition records that the demand notice was dispatched by speed post and the tracking report with the original postal receipt indicates delivery to the registered address on 02.05.2019 with the remark "Item Delivered". On that basis the Tribunal found service to be complete and effective for the purposes of proceeding under the Code. [Paras 8]

Demand notice was held to have been duly served.

Existence of dispute on operational debt - No pre-existing dispute on the claimed operational debt was established by the corporate debtor. - HELD THAT: - The corporate debtor did not file any reply despite opportunities and did not respond to the demand notice. The operational creditor deposed that no reply to the demand notice or any pending dispute in any forum existed. In view of non-response and absence of any pleaded dispute, the Tribunal concluded there was no dispute preventing admission under Section 9. [Paras 6, 9]

There was no dispute on the unpaid operational debt.

Limitation and computation of limitation from due date under demand notice - The Section 9 application was filed within limitation, computed from the due date specified in the demand notice. - HELD THAT: - The demand notice served on 02.05.2019 fixed the due date to honor the debt as 12.05.2019. As no payment or reply was made, the period of limitation was held to commence from 12.05.2019. The petition was filed on 17.07.2019, which the Tribunal found to be within the limitation period. [Paras 10]

The application was admitted as filed within limitation.

Admission of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - The petition satisfied the requirements of Form 5 and the conditions for admission under Section 9 were met by proof of debt and default exceeding the statutory monetary threshold. - HELD THAT: - The Tribunal examined the invoices, ledger entries and interest calculation annexed to the petition and found a total unpaid operational debt in default as shown in Part IV of Form 5. The record established supply of goods, raising of invoices and failure to pay, and the default amount exceeded Rs. 1 lakh. On these findings the Tribunal held that the conditions for admission under Section 9 were satisfied and admitted the petition. [Paras 11, 12]

Petition under Section 9 was admitted.

Declaration of moratorium under Section 14 of the Code - Moratorium declared and the statutory prohibitions under Section 14 were imposed from the date of the order until completion of CIRP or earlier reliefs specified by the Code. - HELD THAT: - Upon admission, the Tribunal declared moratorium and set out the statutory prohibitions that operate during moratorium, including stay of suits and proceedings, prohibition on transfer or disposal of assets, and restraints on enforcement of security and recovery of property, and noted the exception and duration as provided in the Code. [Paras 12]

Moratorium under Section 14 was declared and the specified prohibitions imposed.

Appointment of Interim Resolution Professional and constitution of Committee of Creditors - Interim Resolution Professional was appointed from the approved panel and directed to undertake actions to collate claims, constitute the Committee of Creditors and convene its first meeting within statutory timelines. - HELD THAT: - The operational creditor did not nominate an IRP. The Tribunal relied on the panel forwarded for the Bench and selected Mr. Tarsem Chand Garg from the approved list, after verification of credentials. The IRP was directed to file Form 2 if not filed, to take steps mandated under the Code (including sections relating to duties and powers of IRP), collate claims, determine financial position, constitute the Committee of Creditors within thirty days and convene its first meeting within seven days of filing the constitution report, and to submit fortnightly progress reports. [Paras 14, 15, 16]

Mr. Tarsem Chand Garg was appointed as Interim Resolution Professional and directed to perform statutory duties including constitution of the Committee of Creditors.

Final Conclusion: The Section 9 petition filed by the operational creditor was admitted on proof of service, absence of any dispute, completeness of Form 5 and default within limitation; moratorium under the Code was declared and an Interim Resolution Professional was appointed to collate claims and constitute the Committee of Creditors as directed.

Operational Debt and Default - Service of Demand Notice in Form 3 - Pre-existing Dispute - Limitation for Filing Insolvency Petition - Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Appointment of Interim Resolution Professional

Service of Demand Notice in Form 3 - Demand notice in Form 3 dated 13.02.2019 was duly served on the corporate debtor at its registered office. - HELD THAT: - The Tribunal examined the postal receipt and tracking report placed at Annexure P-12 and the master data of the corporate debtor at Annexure P-6 showing the registered office address. On that basis the Tribunal concluded that the statutory demand notice was sent to and served at the registered address of the corporate debtor, satisfying the service requirement for a Section 9 application. [Paras 10]

Demand notice held properly served.

Operational Debt and Default - Pre-existing Dispute - There was no pre-existing dispute raised by the corporate debtor in respect of the operational debt after service of the demand notice. - HELD THAT: - Petitioner produced invoices (Annexures P-2 to P-4) and ledger (Annexure P-5) to prove the debt. Although the corporate debtor sent an e-mail dated 24.04.2019 stating inability to pay, it did not raise a substantive dispute to the demand notice dated 13.02.2019. The Tribunal therefore found absence of a pre-existing dispute that would bar admission under Section 9. [Paras 11]

No pre-existing dispute; debt not disputed.

Limitation for Filing Insolvency Petition - The petition under Section 9 was filed within the period of limitation. - HELD THAT: - All relevant invoices relate to 2018 and the petition was filed in 2019. The Tribunal found the petition to be within limitation, permitting adjudication on merit. [Paras 12]

Petition held within limitation.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Appointment of Interim Resolution Professional - The Section 9 application satisfied statutory conditions, was admitted; moratorium under Section 14 declared; and an Interim Resolution Professional was appointed. - HELD THAT: - The Tribunal found that the operational creditor had established debt and default exceeding the statutory threshold and had complied with Form 5 and the affidavit required by Section 9(3)(b). Consequently, the petition was admitted. In consequence the moratorium prohibitions specified by Section 14 were imposed. The Tribunal selected and appointed Mr. Harish Malhotra from the IBBI panel as Interim Resolution Professional, directed him to file statutory forms and take steps mandated by the Code, and recorded ancillary directions regarding constitution of the Committee of Creditors and reporting. The interim application for restraint (CA No. 716/2019) was disposed of as infructuous in view of the admitted petition. [Paras 14, 15, 16, 17, 19]

Section 9 petition admitted; moratorium declared; IRP appointed; interim application disposed.

Final Conclusion: The Tribunal admitted the Section 9 petition after finding proper service of demand notice, absence of a pre-existing dispute, and compliance with limitation and statutory requirements; moratorium under Section 14 was declared and an Interim Resolution Professional was appointed, and the related interim application was disposed of.

Service of demand notice - existence of operational debt and default - acknowledgement of debt - limitation for filing under Section 9 - compliance with Form 5 requirements - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional

Service of demand notice - The demand notice in Form 3 and Form 4 dated 23.09.2020 was duly served on the corporate debtor. - HELD THAT: - The Tribunal examined postal receipts and tracking reports for the consignment numbers and noted one delivery remark as "Item delivery confirmed" on 01.10.2020 while the e-mail sent on 24.09.2020 did not bounce. On the material before it the Tribunal held that the statutory demand notice was duly served on the registered address and by e-mail in accordance with the requirements for initiating a Section 9 proceeding. [Paras 8]

Demand notice held to be duly served.

Existence of operational debt and default - acknowledgement of debt - The operational creditor proved the existence of the unpaid operational debt and the corporate debtor had not disputed liability, with an acknowledgement by a payment made on 17.11.2017. - HELD THAT: - The Tribunal considered invoices, ledger accounts, bank statements and the reply of the corporate debtor. The corporate debtor admitted inability to pay due to financial distress and did not raise a substantive dispute on liability. The Tribunal found specific entries in the bank statement evidencing the last payment of Rs. 50,000 on 17.11.2017 which amounted to an acknowledgement of debt. On this basis the Tribunal concluded that debt and default were established. [Paras 9, 11]

Debt and default established; no genuine dispute as to liability; acknowledgement by payment recognised.

Limitation for filing under Section 9 - The Section 9 application was filed within the period of limitation. - HELD THAT: - Treating the last payment/acknowledgement on 17.11.2017 as the date from which limitation runs, the Tribunal noted that the demand notice was served on 01.10.2020 and the petition filed on 18.11.2020. On these dates the application fell within the limitation period applicable to proceedings under Section 9. [Paras 10]

Application held to be within limitation.

Compliance with Form 5 requirements - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - The petition under Section 9 was complete and, having established default, was admitted and moratorium declared under Section 14 of the Code. - HELD THAT: - The Tribunal reviewed the Form 5 filing and supporting annexures including invoices, computation of dues, demand notice and proof of service, and bank records. Finding that the conditions for admission under Section 9 were satisfied and that the default exceeded the statutory threshold, the Tribunal admitted the petition and declared the moratorium under Section 14, specifying the statutory prohibitions and their effect from the date of the order until completion of the CIRP or other specified terminal events. [Paras 11, 12]

Petition admitted under Section 9; moratorium declared under Section 14.

Appointment of Interim Resolution Professional - An Interim Resolution Professional was appointed from the approved panel. - HELD THAT: - Noting that the operational creditor had not recommended an IRP and after receipt of the Tribunal's approved panel for the Bench, the Tribunal selected Mr. Ashok Malik from the panel and appointed him as Interim Resolution Professional subject to his filing of Form 2 within one week and directed him to take steps mandated under the relevant provisions of the Code, including constitution of the Committee of Creditors and reporting requirements. [Paras 13, 14, 15]

Mr. Ashok Malik appointed as Interim Resolution Professional with directions to perform statutory duties.

Final Conclusion: The Section 9 petition by the operational creditor was admitted: the demand notice was held duly served, debt and default were established (with an acknowledging payment on 17.11.2017), the petition was within limitation, Form 5 compliance was found complete, moratorium under Section 14 was declared, and an Interim Resolution Professional was appointed to conduct the corporate insolvency resolution process.

Extension of CIRP period - consideration of going concern versus liquidation - direction to cooperate and furnish information to the resolution professional - approval of Committee of Creditors - amendment of application under Rule 11 of the NCLT Rules - deletion and restoration of parties from cause title - requirement to produce audited financial statements

Extension of CIRP period - approval of Committee of Creditors - Extension of the CIRP period by 90 days beyond the statutory 180-day period w.e.f. 24.03.2020 - HELD THAT: - The Tribunal recorded that a resolution dated 17.03.2020 had been approved by 77.83% of the voting share of the CoC and that the CIRP period had expired on 24.03.2020. In view of the CoC having approved extension beyond 180 days, the Tribunal extended the CIRP period by 90 days beyond the period of 180 days effective from 24.03.2020 and disposed of IA/3783/2021. [Paras 4]

Extension of 90 days beyond the period of 180 days w.e.f. 24.03.2020; IA/3783/2021 disposed of.

Direction to cooperate and furnish information to the resolution professional - Direction to respondents to cooperate with the resolution professional and furnish information - HELD THAT: - Noting that notices had been served and that some information was furnished but respondents did not appear at hearing, the Tribunal directed the respondents to meet with the RP and furnish the information required within two weeks from the date of the order. The Tribunal also directed that a copy of the order be handed to the RP to communicate with the respondents and listed the matter for further hearing. [Paras 9]

Respondents directed to sit with the RP and furnish information within two weeks; matter listed on 26.10.2021.

Amendment of application under Rule 11 of the NCLT Rules - deletion and restoration of parties from cause title - Amendment of IA-580/2021 and consequential deletion (and subsequent recall of deletion) of respondents from the cause title; service directions for amended application - HELD THAT: - The applicant sought amendment under Rule 11 to confine relief to respondent No.4 and sought deletion of respondent Nos.1-3 from the cause title. The Tribunal initially allowed the amendment and permitted deletion of respondent Nos.1-3, directing the applicant to file and serve the amended application within a week. When the applicant subsequently withdrew the deletion prayer, the Tribunal recalled its earlier order deleting those respondents and directed the applicant to serve the amended application on all respondents by all modes including email. [Paras 14, 16, 17]

Prayer to amend allowed; initial deletion of respondent Nos.1-3 recorded and thereafter recalled; applicant directed to file and serve the amended application on all respondents including by email.

Requirement to produce audited financial statements - consideration of going concern versus liquidation - Adjournment with directions in the liquidation petition requiring production of audited financials and response on viability as a going concern - HELD THAT: - Hearing on the liquidation petition proceeded with presence of ex-management and RP. The Tribunal directed the petitioner to submit audited financial statements for FY 2019-20 and 2020-21 and to respond to queries raised about the balance sheet and the possibility of keeping the corporate debtor as a going concern rather than liquidating it. The petitioner was given two weeks to respond and the matter was listed for further hearing. [Paras 21]

Petitioner directed to submit audited financials for FY 2019-20 and 2020-21 and to respond on going-concern queries within two weeks; matter listed on 26.10.2021.

Final Conclusion: The Tribunal extended the CIRP period by 90 days from 24.03.2020 in view of CoC approval; directed respondents to cooperate with and furnish information to the RP within two weeks; allowed amendment of IA-580/2021 but recalled the deletion of certain respondents and directed service of the amended application on all respondents; and directed the petitioner in the liquidation petition to produce audited financials for FY 2019-20 and 2020-21 and to address going concern issues, listing the matters for further hearing.

Withdrawal of company petition under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - Costs for withdrawal of petition - Condonation of delay in compliance with tribunal order

Withdrawal of company petition under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - Costs for withdrawal of petition - Application for withdrawal of CP(IB)/03/KOB/2021 by the Operational Creditor - HELD THAT: - The Operational Creditor sought withdrawal of the company petition after the Corporate Debtor raised preliminary objections relating to maintainability and after the Operational Creditor's proprietor issued a separate Section 8 notice. The Tribunal required as a condition for permitting withdrawal that the applicant pay costs of Rs. 25,000 through Bharatkosh and produce proof of payment along with an affidavit within the time directed. The applicant subsequently complied with the cost requirement (albeit belatedly, see next issue). Having received proof of payment and compliance with the condition imposed, the Tribunal allowed the interlocutory application and permitted withdrawal of CP(IB)/03/KOB/2021. The Tribunal did not adjudicate the maintainability objections on merits but accepted the applicant's request to withdraw subject to compliance with the cost condition imposed earlier. [Paras 4, 5, 8, 9]

IA(IBC)/110/KOB/2021 allowed and CP(IB)/03/KOB/2021 permitted to be withdrawn upon compliance with the Tribunal's cost direction.

Condonation of delay in compliance with tribunal order - Application to condone three days' delay in depositing the costs directed by the Tribunal - HELD THAT: - The Tribunal had directed payment of costs within a specified time and the applicant failed to produce proof within that time. The applicant thereafter filed IA(IBC)/132/KOB/2021 seeking condonation of the three-day delay and enclosed proof of payment showing that the costs were paid through Bharatkosh. The Tribunal considered the application and allowed IA(IBC)/132/KOB/2021 on 09.09.2021, thereby condoning the delay and treating the cost direction as complied with for the purpose of considering withdrawal. [Paras 8, 9]

IA(IBC)/132/KOB/2021 allowed and the three-day delay in depositing the costs condoned.

Final Conclusion: The Tribunal permitted the Operational Creditor to withdraw CP(IB)/03/KOB/2021 after the applicant complied with the Tribunal's direction to pay costs; the short delay in making that payment was condoned and the withdrawal application was allowed accordingly.

Proceeds of crime - reason to believe - provisional attachment under Section 5(1) of the PMLA - formation of opinion based on material in possession - likelihood of concealment, transfer or alienation of proceeds

Provisional attachment under Section 5(1) of the PMLA - reason to believe - formation of opinion based on material in possession - likelihood of concealment, transfer or alienation of proceeds - Validity of the provisional attachment order dated 30.06.2021 under Section 5(1) of the PMLA in respect of the petitioner's property - HELD THAT: - The Court examined whether the authority had recorded 'reason to believe' on the basis of material in its possession that (a) the petitioner was in possession of proceeds of crime and (b) such proceeds were likely to be concealed, transferred or dealt with so as to frustrate confiscation proceedings. The PMLA requires the formation of an opinion grounded in tangible material and a proximate live nexus between the need for attachment and the protection of the revenue. While the authority recorded that proceeds to the extent of the alleged forged invoices could not be directly linked to particular movable or immovable property because of numerous cash transactions, it failed to disclose material or reasoned findings establishing that the petitioner was inclined to alienate the mortgaged property or that provisional attachment was necessary to protect the revenue. The Court held that the statutory preconditions for a valid exercise of power under Section 5(1)(b) -specifically tangible material and reasoned satisfaction regarding likelihood of concealment/alienation-were not satisfied in the impugned order. [Paras 23, 25, 26, 27]

Provisional attachment order No.5 of 2021 dated 30.06.2021 is quashed for failure to record adequate material and reasoned satisfaction required by Section 5(1) of the PMLA.

Proceeds of crime - provisional attachment under Section 5(1) of the PMLA - formation of opinion based on material in possession - Whether the matter required remand for fresh consideration by the authority - HELD THAT: - Having quashed the impugned attachment for failure to meet statutory requirements, the Court remanded the matter to the concerned authority to pass a fresh order. The authority on fresh consideration must record reasons in writing, base any formation of opinion on tangible material showing a live nexus to the necessity of attachment, and address whether the property is derived or obtained as proceeds of crime or whether other assets of equivalent value should be attached, including specific findings on the likelihood of concealment or alienation. [Paras 27, 28]

Matter remanded to the concerned authority to pass a fresh order in accordance with the statutory tests and the principles articulated in the judgment.

Final Conclusion: The writ petition is allowed: the provisional attachment order dated 30.06.2021 is quashed and the matter is remanded to the authority to reconsider and, if appropriate, pass a fresh order after recording reasons and relying on tangible material as required by the PMLA.

Entertainability of writ under Article 226 despite alternative statutory remedy - exceptions to ouster: breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, challenge to vires - violation of principles of natural justice - requirement of reasons in quasi-judicial orders - error within jurisdiction versus excess of jurisdiction

Entertainability of writ under Article 226 despite alternative statutory remedy - exceptions to ouster: breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, challenge to vires - Whether the writ petition is maintainable notwithstanding the availability of a statutory appellate remedy. - HELD THAT: - The Court reiterated that Article 226 does not expressly oust the writ jurisdiction where an alternative statutory remedy exists, but recognised the settled discretionary limitation that writ petitions will not normally be entertained if an efficacious statutory appeal is available. The Court applied the exception framework reaffirmed in the cited Supreme Court decision - namely, where one of the exceptions (breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to vires) is established - and concluded that none of those exceptions were made out on the pleadings here. Given that the Finance Act provides a complete appellate machinery culminating in further appeal, the High Court held that the petitioner should be relegated to that statutory forum rather than have the writ court entertain the challenge. [Paras 9, 10, 13]

Writ not maintainable; petitioner relegated to statutory appellate remedy and writ petition dismissed.

Violation of principles of natural justice - requirement of reasons in quasi-judicial orders - error within jurisdiction versus excess of jurisdiction - Whether the omission by the Commissioner to state, separately and in express terms, why each authority cited by the petitioner was not applicable amounted to a violation of principles of natural justice warranting interference under Article 226. - HELD THAT: - The Court analysed the nature and shades of natural justice: (i) omission of notice/opportunity (most serious); (ii) wholly unreasoned orders; and (iii) failure to disclose reasons adequately where prejudice must be shown. It found the impugned order contained reasons for its conclusions and was not wholly unreasoned. The Court observed that a tax/assessment order by the Commissioner, while quasi-judicial in character, is not required to be authored like a judicial judgment dealing point-by-point with each cited authority. The omission to separately traverse every case relied on by the petitioner was characterised as an error within jurisdiction rather than an excess of jurisdiction or a breach of natural justice; such an error is ordinarily correctable by the appellate tribunal. Therefore, the alleged failure to state why each cited case was inapplicable did not, on the material before the Court, amount to a violation of natural justice justifying retention of the writ petition. [Paras 11, 15, 16]

Complaint of breach of natural justice on the stated ground rejected; omission to deal separately with each cited case held not to vitiate the order.

Final Conclusion: Writ petition dismissed; petitioner entitled to pursue the statutory appellate remedy in accordance with law and all contentions are left open for the appellate forum.

Business auxiliary service - air travel agent - classification rule under Section 65A - incentives not consideration - valuation under Section 67 - binding effect of Larger Bench - demand for service tax, interest and penalties

Business auxiliary service - air travel agent - classification rule under Section 65A - Classification of services provided by the appellant as 'air travel agent' service and not as 'business auxiliary service'. - HELD THAT: - The Larger Bench analysed whether activities of travel agents (including use of CRS and receipt of commissions/incentives) amount to promotion or marketing of the airlines/CRS companies and concluded they do not. The agent's activities were held to be services connected with booking of passage for travel by air, i.e., air travel agent services, and any incidental benefit to airlines/CRS companies does not convert the service into business auxiliary service. Applying the prioritisation under the classification rule, the more specific entry for air travel agent service prevails over the general description of BAS in terms of classification rule under Section 65A, so the services are classifiable as air travel agent services, not BAS. [Paras 70, 71, 84]

Services were classified as 'air travel agent' services and not as 'business auxiliary service'.

Incentives not consideration - valuation under Section 67 - consideration transaction specific - Whether target based incentives paid to travel agents constitute consideration subject to service tax valuation under Section 67. - HELD THAT: - The Larger Bench held that incentives paid for achieving overall targets are performance based payments unconnected to any specific transaction and therefore are not 'consideration' for a particular taxable service under the valuation provisions. Reliance was placed on the requirement in Section 67 that taxable consideration be transaction specific (the 'such' taxable service) and on precedent analysing target incentives. As incentives are general performance rewards rather than consideration attributable to particular supplies, they do not form part of the taxable value under valuation under Section 67 and so are not leviable to service tax. [Paras 72, 75, 77, 80, 84]

Target based incentives are not consideration for a particular taxable service and therefore are not taxable under Section 67.

Binding effect of Larger Bench - demand for service tax, interest and penalties - Effect of the Larger Bench's findings on the departmental demand, and the consequences for confirmed demands of service tax, interest and penalties in the impugned order. - HELD THAT: - This Bench applied the Larger Bench's determinations that the services are classifiable as air travel agent services and that target incentives are not taxable. Because the Larger Bench's conclusions foreclosed leviability under the BAS head and on incentives, the departmental demands confirmed by the adjudicating authority necessarily failed. Consequently, associated demands for interest and penalties founded on the same taxable basis could not be sustained. The Bench therefore set aside the impugned adjudication in light of the Larger Bench's binding findings. [Paras 4, 5]

In view of the Larger Bench's rulings, the confirmed demands of service tax, and the consequential interest and penalties, were disallowed and the impugned order set aside.

Final Conclusion: Appeal allowed; applying the Larger Bench's determinations that the services are 'air travel agent' services and that target based incentives are not taxable consideration, the impugned adjudication confirming demands of service tax, interest and penalties under the BAS classification is set aside.

Exclusion of construction of residential complex for personal use from taxable services - construction of residential complex versus works contract / composite contract - definition and scope of "residential complex" under Section 65(91a) - liability of sub-contractor where construction is for personal use - extended period of limitation and proviso to Section 73 (wilful suppression/intent) - applicability of Board circulars (including CBEC clarification dated 24.05.2010) in interpreting exclusion

Exclusion of construction of residential complex for personal use from taxable services - definition and scope of "residential complex" under Section 65(91a) - Construction of staff quarters meant for personal use by the service receiver falls within the exclusion in Section 65(91a) and is not taxable as construction of residential complex service. - HELD THAT: - The Tribunal held that the exclusion clause in Section 65(91a) applies where a person directly engages another for design/planning and construction and the complex is intended for that person's personal residential use; Explanation (a) clarifies that permitting use by another on rent or without consideration still amounts to "personal use." The facts show the appellant was engaged by Power Grid Corporation of India Ltd. to construct staff quarters to be used by PGCIL employees free of charge, with no element of commerce or industry. The majority found these facts satisfy the exclusion and relied on Board circulars of 2004/2007 and consistent precedents to interpret the exclusion broadly. Consequently, the construction activity was held not taxable under Section 65(30a) read with Section 65(91a) (and related clauses). [Paras 15, 26]

The construction of the staff quarters is excluded from taxable "construction of residential complex" and is not liable to service tax.

Liability of sub-contractor where construction is for personal use - construction of residential complex versus works contract / composite contract - The appellant is not a sub-contractor in the contractual matrix for the purposes of the exclusion and therefore cannot be treated as liable as a subcontractor; the appellant was directly engaged to provide construction services to PGCIL. - HELD THAT: - The Tribunal examined the Letter of Award and the contractual relationships: PGCIL acted as contracting agency on behalf of Bihar State Electricity Board but directly engaged the appellant to provide construction services for the benefit of PGCIL's staff. The majority concluded that PGCIL was a "person" who directly engaged the appellant within the meaning of the exclusion in Section 65(91a)(iii), and the appellant was not a subcontractor in the sense contemplated by the CBEC clarification of 24.05.2010 (which addresses cases where the service receiver itself sub-contracts the work). The factual matrix therefore distinguished precedents where sub-contracting made the sub-contractor taxable. [Paras 15, 21, 22]

On the facts the appellant is not a sub-contractor for purposes of attracting tax under the CBEC clarification and exclusion; the appellant was directly engaged and not taxable on that ground.

Extended period of limitation and proviso to Section 73 (wilful suppression/intent) - Extended period of limitation was not attracted in the facts of the case. - HELD THAT: - The Tribunal (majority) found no evidence of fraud, collusion, or wilful suppression with intent to evade tax. Given the conclusion that the service fell under the statutory exclusion and that the appellant was not liable to service tax, the conditions for invoking the proviso to Section 73 were not satisfied. The majority relied on authorities construing 'wilful suppression' and held that the department had no occasion to invoke extended limitation where the basic taxability was absent. [Paras 23, 26]

Extended period of limitation is not attracted; the demand for the period in dispute is time barred to the extent invoked on that basis.

Construction of residential complex for personal use is excluded under Explanation II to Section 65(91a) - appeal remedy and setting aside adjudication where taxability not established - The appeal was allowed and the adjudicating authority's order confirming demand, interest and penalties was set aside; consequential benefits were granted to the appellant. - HELD THAT: - Applying the conclusions on exclusion, contractual relationship and limitation, the Tribunal held that the original demand could not be sustained. The majority recorded that the appellant was entitled to relief and that the impugned adjudication confirming service tax and penalties should be set aside. The Tribunal therefore allowed the appeal and directed consequential relief in accordance with law. [Paras 15, 27]

The appeal is allowed; the impugned order confirming demand is set aside and consequential benefits granted to the appellant.

Final Conclusion: The Tribunal, by majority, held that the construction of staff quarters undertaken by the appellant for PGCIL falls within the exclusion for "personal use" under Section 65(91a) read with Section 65(30a) and related provisions and is not taxable; the appellant was not a subcontractor attracting tax under the CBEC clarification; extended limitation was not attracted; the appeal is allowed and the impugned order set aside with consequential benefits.

Extended period of limitation under Section 11A(4) of the Central Excise Act - Suppression of facts with intent to evade payment of duty - Burden on the Revenue to prove suppression - Self-assessment and duty of disclosure - Rule 6(3) of the CENVAT Credit Rules, 2004 - liability to pay 5% of value of exempted goods

Extended period of limitation under Section 11A(4) of the Central Excise Act - Suppression of facts with intent to evade payment of duty - Burden on the Revenue to prove suppression - Self-assessment and duty of disclosure - Validity of invoking the extended five-year limitation under Section 11A(4) for the show cause notice dated March 19, 2015. - HELD THAT: - The Tribunal examined whether the Department rightly invoked the proviso to Section 11A so as to extend the one-year limitation to five years on the ground of suppression, fraud, collusion or wilful mis-statement. Applying the settled principle that the proviso must be strictly construed, the Court relied on Supreme Court precedents which hold that 'suppression of facts' means a deliberate failure to disclose correct information with the intention to evade duty and that mere non-payment or omission does not constitute suppression unless accompanied by a positive act. The audit in June 2011 and the subsequent exchange of information with the Department were considered: the show cause notice referred to the audit and no independent allegation or finding established that the appellant deliberately concealed information required to be furnished in self-assessment. The Tribunal held that the Department, having raised audit objections and received replies, could not thereafter invoke the extended period merely because transaction details were not supplied beyond what is required in self-assessment; there was no finding of incorrect information in the prescribed return or a positive act of concealment. In view of the absence of any material showing deliberate suppression with intent to evade duty and the inordinate delay in issuing the notice until March 2015, the extended period under Section 11A(4) could not be invoked and the notice was time-barred. [Paras 23, 24, 25, 26, 27]

Invocation of the extended five-year limitation under Section 11A(4) was not justified; the show cause notice dated March 19, 2015 was time-barred and could not be sustained.

Final Conclusion: The Commissioner (Appeals) order confirming the demand was set aside on the sole ground that the extended period of limitation under Section 11A(4) was wrongly invoked; the appeal is allowed and it was unnecessary to decide the merits of the demand under Rule 6(3) of the CENVAT Credit Rules, 2004.

Treatment of by-products as "waste" under exemption Notification dated 18.05.1995 - manufacture for the purposes of excise under section 2(f) - excisable goods and the effect of the Explanation to section 2(d) - marketability of by-products and excisability

Manufacture for the purposes of excise under section 2(f) - treatment of by-products as "waste" under exemption Notification dated 18.05.1995 - Whether gums, wax and fatty acids arising during refining of vegetable oil are manufactured goods or arise as incidental removals and hence constitute "waste" covered by the exemption Notification. - HELD THAT: - The Tribunal accepted the reasoning of the Larger Bench in Ricela Health and Lohiya Industries that the refining process produces refined oil by removing unwanted materials; the removal of gums, waxes and fatty acids is incidental to manufacture of the refined oil and does not amount to a separate process of manufacture of those by-products under section 2(f). Consequently, such by-products qualify as waste products for the purpose of the exemption Notification dated 18.05.1995. The Larger Bench's conclusions on this point were applied to the present appeals for the periods prior to the amendment of section 2(d). [Paras 10, 11, 12]

Gums, wax and fatty acids recovered in refining are not manufactured goods but incidental removals and may be treated as "waste" within the scope of the exemption Notification.

Excisable goods and the effect of the Explanation to section 2(d) - marketability of by-products and excisability - treatment of by-products as "waste" under exemption Notification dated 18.05.1995 - Whether the insertion of the Explanation to section 2(d) (making 'goods' include marketable articles) deprives the by-products of the exemption when they are marketable. - HELD THAT: - The Larger Bench in Lohiya Industries held that even after insertion of the Explanation to section 2(d), a by-product which is marketable does not become exigible to excise duty if it is not a "manufactured" good within the meaning of section 2(f). The determinative test remains whether the item is a product of manufacture; mere marketability does not convert an incidental or waste by-product into excisable manufacture. The Tribunal applied this principle to the appeals covering periods after 10.05.2008 and concluded that the Notification's benefit continues to apply to such by-products. [Paras 13, 14, 15]

Insertion of the Explanation to section 2(d) does not render marketable by-products exigible to excise duty where they are not "manufactured" within section 2(f); the exemption therefore remains available.

Final Conclusion: The impugned orders denying benefit of Notification dated 18.05.1995 are set aside and the five appeals are allowed; the appellants are entitled to exemption for the by-products (gums, wax, fatty acids) produced during refining, both for periods before and after the insertion of the Explanation to section 2(d).

Exercise of discretionary power in grant of interim stay and direction to deposit a portion of demand - effect of challenge to constitutional validity on assessment and recovery - applicability of Section 53(8) on admission of second appeal - financial hardship plea in support of waiver of deposit in tax stay petitions

Exercise of discretionary power in grant of interim stay and direction to deposit a portion of demand - Validity of the Joint Commissioner's order staying 60% of the demand and directing deposit of 40%. - HELD THAT: - The Court held that the Joint Commissioner possessed and validly exercised discretionary power to determine the extent of interim stay and the quantum to be deposited. The discretion to fashion interim relief in an appeal, including directing a part-payment, is legally permissible and the Tribunal did not err in upholding the Joint Commissioner's exercise of that discretion. The fact that the Joint Commissioner directed deposit of 40% of the demand was within the scope of his discretionary authority and required no interference. [Paras 7]

The order staying 60% of the demand and directing deposit of 40% is valid and was rightly upheld by the Tribunal.

Effect of challenge to constitutional validity on assessment and recovery - Whether pendency of a challenge to the constitutional validity of the Act bars assessment or recovery or mandates a full stay of the demand. - HELD THAT: - The Court observed that mere pendency of a constitutional challenge does not stay assessment proceedings or bar recovery of the assessed amount unless this Court itself grants such relief. The constitutional challenge pending before the High Court did not prevent the Department from completing assessment or prevent the Joint Commissioner from directing partial deposit as a condition of interim relief. [Paras 3, 7]

Pendency of the constitutional validity challenge does not automatically stay assessment or recovery; it did not oblige the authorities to grant 100% stay.

Applicability of Section 53(8) on admission of second appeal - Whether the Tribunal erred in relying on Section 53(8) of the Act when deciding the second appeal. - HELD THAT: - The Court held that Section 53 of the Act, including subsection (8), became operative when the second appeal was filed and therefore could be relied upon by the Tribunal in adjudicating the stay application made in the second appeal. The Tribunal's reliance on Section 53(8) in assessing the legality of the Joint Commissioner's conditional stay was appropriate and sustainable. [Paras 8]

The Tribunal correctly relied upon Section 53(8) in upholding the Joint Commissioner's order.

Financial hardship plea in support of waiver of deposit in tax stay petitions - Sufficiency of the revisionist's plea of financial difficulty to avoid the deposit directed by the Joint Commissioner. - HELD THAT: - The Court noted that the revisionist's assertion of financial difficulty was not substantiated to show inability to make the directed deposit or that it was on the brink of liquidation. The Court treated the plea as insufficient to persuade it to interfere with the discretionary direction of deposit made by the Joint Commissioner and upheld by the Tribunal. [Paras 9]

The plea of financial hardship did not justify setting aside the deposit direction and was rejected.

Final Conclusion: The revision petition is dismissed. The Tribunal correctly upheld the Joint Commissioner's discretionary order staying 60% of the demand and directing deposit of 40%, Section 53(8) was rightly applied in the second appeal, the pendency of a constitutional challenge did not bar assessment or recovery, and the asserted financial hardship did not justify interference with the deposit direction; pending applications stand disposed of.

Legislative competence to impose excise duties post-101st Constitution Amendment - state excise on non-potable alcohol - quashing of executive notification/order as ultra vires - rule against unjust enrichment - refund of taxes/dues paid after loss of competence

Legislative competence to impose excise duties post-101st Constitution Amendment - state excise on non-potable alcohol - State legislature lacks competence to impose excise duty on Grain Extra Neutral Alcohol (ENA) after 01.07.2017 following the 101st Constitution Amendment. - HELD THAT: - The Court applied the reasoning adopted in Writ Tax No.378 of 2021 and connected matters and held that, upon enactment of the 101st Constitution Amendment and consequent GST enactments, the State lost legislative competence to impose any tax or duty of excise on commodities other than liquor for human consumption. Grain ENA, being alcohol with alcoholic content in excess of 95% and not potable liquor, falls outside the sphere on which State excise may be validly levied. The State cannot evade this constitutional limitation by relabeling the levy or by administrative instruments that seek to treat ENA as subject to State excise. The Court relied on precedent treating attempts to levy excise on rectified spirit (non-potable) as beyond State power and found that principle applicable here.

The challenge to imposition of excise duty on manufacture of Grain ENA after 01.07.2017 is upheld; such imposition is beyond State legislative competence and is quashed.

Quashing of executive notification/order as ultra vires - refund of taxes/dues paid after loss of competence - rule against unjust enrichment - Government Order dated 18.03.2016 authorising levy of excise duty/penalty on transit loss of Grain ENA and demands raised thereunder after 01.07.2017 are ultra vires and are quashed; amounts paid may be refunded subject to the rule against unjust enrichment. - HELD THAT: - Applying the conclusion that the State lacks competence to levy excise on Grain ENA after 01.07.2017, the Court specifically set aside the Government Order of 18.03.2016 insofar as it authorised State authorities to levy excise duty/penalty on transit loss of Grain ENA. Consequential demands and notices founded on that authorisation are quashed. The Court directed refund of amounts paid pursuant to such demands, subject to the applicability of the rule against unjust enrichment and confined to payments made after 01.07.2017, to be processed within one month.

The Government Order dated 18.03.2016 insofar as it authorises levy on transit loss of Grain ENA, and consequent demands of excise/penalty after 01.07.2017, are quashed; refunds directed subject to the rule against unjust enrichment.

Final Conclusion: The writ petition is allowed: the State's imposition of excise on Grain Extra Neutral Alcohol after 01.07.2017 is beyond legislative competence post-101st Amendment; the Government Order authorising levy on transit loss is quashed and amounts paid pursuant to such demands after 01.07.2017 shall be refunded subject to the rule against unjust enrichment.

Immovable property versus movable machinery - exigibility of sales tax on plant and machinery assembled or embedded at site - deemed sale by transfer of right to use goods (lease rentals) under the definition of sale - taxation of leasing transactions following prior taxation at the first point / Section 8 (interior stage) principle - concessional rate under declaration Form IV in leasing / deemed sale transactions

Immovable property versus movable machinery - exigibility of sales tax on plant and machinery assembled or embedded at site - Whether the flameless furnace permanently embedded to the earth is an immovable property and thus not exigible to Orissa Sales Tax as sale of machinery; and whether it falls within "machinery" under Entry-70 (List-C) of the Schedule of rates. - HELD THAT: - The Court applied the established line of Supreme Court decisions and the Board's circular distinguishing goods that acquire a new identity, marketability and remain movable from items which, by virtue of erection/assimilation with civil works, become integrated with the earth and lose movability. Where components and civil works result in an item that cannot be dismantled and reassembled without substantial damage, it ceases to be moveable goods and is not exigible to duty or sales tax. The factual finding is that the flameless furnace was never intended to be dismantled or moved and remained embedded in the assessee's premises. The Court thus held that on the facts the furnace is an immovable property, not machinery within Entry-70 List-C, and therefore not liable to Orissa Sales Tax as a sale of machinery. [Paras 29]

The furnace is an immovable property permanently embedded to the earth and is not exigible to Orissa Sales Tax as sale of machinery; it is not covered under "machinery" under Entry-70 (List-C).

Deemed sale by transfer of right to use goods (lease rentals) under the definition of sale - taxation of leasing transactions following prior taxation at the first point / Section 8 (interior stage) principle - concessional rate under declaration Form IV in leasing / deemed sale transactions - Whether lease rentals received for the flameless furnace constitute a sale or deemed sale within Section 2(g) of the OST Act; whether leasing can be taxed where the goods have already suffered Orissa Sales Tax at an interior stage; and whether concessional rate under Form IV is available. - HELD THAT: - Relying on the conclusion that the furnace is immovable and on the principle that where the lease arises in relation to goods that have been taxed at an interior stage the State's claim to tax cannot be sustained, the Court held that the receipt of lease rent for the embedded furnace does not constitute sale or deemed sale under Section 2(g). Consequently leasing of the flameless furnace cannot be subjected to Orissa Sales Tax in view of Section 8. Since taxation is negatived on these grounds, the question of entitlement to concessional rate under Form IV does not arise. [Paras 30]

Lease rentals for the flameless furnace do not constitute sale or deemed sale under Section 2(g); leasing cannot be taxed where the furnace has suffered Orissa Sales Tax at an interior stage; entitlement to concessional rate under Form IV is rendered irrelevant.

Final Conclusion: Impugned orders holding the furnace to be taxable machinery and taxing lease rentals are set aside. The Department is directed to issue consequential orders in accordance with law within eight weeks.

Reasonable opportunity to show-cause - pre-revision notice - revision under Section 27 of TNVAT Act - de novo reassessment - reconciliation of turnover between profit and loss account and monthly returns - setting aside impugned revision orders to permit reply

Reasonable opportunity to show-cause - pre-revision notice - revision under Section 27 of TNVAT Act - setting aside impugned revision orders to permit reply - Impugned revision orders dated 02.08.2021 were set aside solely to enable the writ petitioner to file replies to the 06.01.2021 pre-revision notices and for the respondent to re-do the revision exercise de novo. - HELD THAT: - The Court held that the common proviso to sub-sections (1) and (2) of Section 27 of the TNVAT Act makes it statutorily imperative to afford a reasonable opportunity to show-cause before passing a revision order. The respondent had issued the 06.01.2021 pre-revision notices, and the controversy involved reconciling differences in sales turnover between the profit and loss account and monthly returns - a reconciliation which could be addressed if the writ petitioner were permitted to respond. The Court declined to adjudicate merits (including the contention that the petitioner only provided services and that the TNVAT charge therefore does not apply), leaving such questions open for fresh consideration during the de novo exercise. Consequently, the impugned orders were set aside only to facilitate the filing of replies within a fixed timeframe and for the respondent to consider those replies and conclude the revision proceedings afresh. [Paras 5, 7, 11]

Set aside the impugned orders dated 02.08.2021 to permit the writ petitioner to file replies to the 06.01.2021 notices by 29.10.2021 and direct the respondent to re-do the revision under Section 27 de novo and conclude proceedings by 12.11.2021.

De novo reassessment - reconciliation of turnover between profit and loss account and monthly returns - The matter was remanded for de novo reassessment to enable reconciliation of turnover discrepancies after receipt of the writ petitioner's replies. - HELD THAT: - The Court observed that reconciliation between the profit and loss account and monthly returns formed part of the subject-matter of the revision and that such reconciliation can be carried out if the petitioner is permitted to respond. The Court therefore remanded the matter for a fresh revision exercise, directing the respondent to consider the petitioner's replies on merits and complete the Section 27 legal drill within the stipulated fortnight following receipt of the replies. The Court explicitly refrained from expressing views on merits that might affect the de novo assessment. [Paras 7, 9, 11]

Remand for de novo revision to permit reconciliation and fresh consideration of the replies, to be concluded within the stipulated period.

Failure to respond to pre-revision notices - terms for permitting reply - The writ petitioner was required to file its replies by 29.10.2021 and to pay specified costs as a condition for the respondent's obligation to consider those replies. - HELD THAT: - The Court, while accommodating the petitioner's opportunity to reply, imposed procedural terms: the petitioner must submit its replies under due acknowledgement by the prescribed date; and the petitioner must pay costs to a specified public charitable body within the same period. The Court made clear that non-compliance with the conditional payment would relieve the respondent of any obligation to consider the replies or to undertake the de novo exercise. [Paras 8, 11]

Petitioner to file replies by 29.10.2021 and to pay the directed costs within the same period; failure to comply vitiates the respondent's obligation to reconsider.

Final Conclusion: Impugned revision orders dated 02.08.2021 (for AYs 2013-14 and 2014-15) were set aside solely to permit the writ petitioner to file replies to the 06.01.2021 pre-revision notices by 29.10.2021; the respondent was directed to undertake a de novo revision under Section 27 and conclude proceedings by 12.11.2021, subject to the petitioner complying with the procedural condition of filing replies and the directed payment; merits of tax liability were left open for fresh adjudication.

Stay of coercive recovery - Interim relief pending constitution of adjudicatory forum - Absence of Presiding Officer as ground for exceptional intervention - Non-adjudication on merits while granting interim relief - Protection of litigants from prejudice pending constitution of Tribunal

Stay of coercive recovery - Interim relief pending constitution of adjudicatory forum - Absence of Presiding Officer as ground for exceptional intervention - Whether the recovery notice dated 11.06.2021 could be restrained pending constitution of the Gujarat Value Added Tax Tribunal by reason of absence of a presiding member. - HELD THAT: - The Court, on an exceptional basis and without examining the merits of the underlying tax classification dispute, intervened because the Tribunal lacked a presiding member and was therefore unable to adjudicate the petitioners' pending stay application. Noting that the petitioners had preferred second appeals and an application for stay before the Tribunal, and that coercive recovery had been initiated despite that pendency, the Court directed that no coercive recovery be pursued until a President or Member of the Tribunal is appointed. The Court made plain that this interim protection is granted solely due to absence of the adjudicatory forum, does not endorse or adjudicate past orders of the Tribunal (including remand or waiver of pre-deposit), and shall not bind or influence the Tribunal on merits when it takes up the matter. [Paras 6, 7, 9, 11, 12]

Impugned recovery notice dated 11.06.2021 stayed until appointment of either the President or a Member of the Tribunal; petitioners granted two weeks after such appointment to seek appropriate relief before the Tribunal; stay granted without adjudication on merits and without prejudice to the Tribunal's future consideration.

Final Conclusion: Petition disposed of by staying coercive recovery under the impugned notice until constitution of the Tribunal; petitioners afforded two weeks after appointment to pursue relief before the Tribunal; grant of interim protection is without deciding merits and shall not influence the Tribunal.

Reasonable opportunity to show cause - proviso to sub-sections (1) and (2) of Section 27 of TNVAT Act - revision under Section 27 of Tamil Nadu Value Added Tax Act, 2006 - absence of prior notice vitiates order

Reasonable opportunity to show cause - proviso to sub-sections (1) and (2) of Section 27 of TNVAT Act - absence of prior notice vitiates order - revision under Section 27 of Tamil Nadu Value Added Tax Act, 2006 - Validity of the impugned order dated 15.07.2021 made under Section 27 of TNVAT Act when no opportunity to show-cause was given to the writ petitioner. - HELD THAT: - The impugned order did not expressly state the statutory provision under which it was made, though Note No.1 referred to revision under Section 27 of the TNVAT Act read with Section 9(2) of the CST Act. State counsel conceded that the order was made under sub section (1) of Section 27 and that no prior notice was issued. The common proviso to sub sections (1) and (2) of Section 27 mandates that no order under those sub sections shall be passed without giving the dealer a reasonable opportunity to show cause. A careful perusal of the impugned order and the acceptance on instructions that no notice was issued establish a clear breach of that proviso. Consequently, the impugned order is vitiated for failure to afford the statutorily required opportunity to show cause. The Court expressly refrained from expressing any view on the merits of the underlying controversy and directed that the respondent undertake a de novo revision under Section 27 after giving a reasonable opportunity to show cause, to be completed expeditiously and within the time directed by the Court. [Paras 7, 8]

Impugned order dated 15.07.2021 is set aside for want of opportunity to show cause; matter remitted for de novo revision under Section 27 of the TNVAT Act with a direction to give a reasonable opportunity to show cause and to complete the exercise within the time fixed by the Court.

Final Conclusion: The writ petition is allowed solely on the ground that the impugned order was passed without affording the writ petitioner the reasonable opportunity to show cause mandated by the proviso to sub sections (1) and (2) of Section 27 of the TNVAT Act; the order is set aside and the respondent is directed to undertake a de novo revision after giving such opportunity, to be completed within the period specified by the Court.

Duty to give reasons for conditional stay - Conditional stay requiring deposit - Consent orders - Remand for fresh consideration

Consent orders - Validity of the Tribunal's stay order in Ext.P10 (assessment year 2014-15) which was recorded as passed on consent. - HELD THAT: - The order in Ext.P10 was recorded as passed on consent with the petitioner's agreement to deposit 20% of the demand and to execute a bond for the balance. The court held that where an order is passed on consent the petitioner cannot challenge it on the ground that reasons for the condition are absent, because the consent endorsed in the order removes the basis for such a challenge. Accordingly the Ext.P10 order (assessment year 2014-15) was not interfered with, subject to allowing two weeks for the petitioner to comply with the deposit direction. [Paras 7, 13]

Ext.P10 relating to assessment year 2014-15 upheld and not interfered with on the ground that it was passed with the petitioner's consent; two weeks granted for deposit.

Duty to give reasons for conditional stay - Conditional stay requiring deposit - Remand for fresh consideration - Validity of the Tribunal's conditional stay orders in Exts.P10(a), P10(b) and P10(c) imposing a condition of deposit of 20% of the demand without stating reasons. - HELD THAT: - The impugned orders in Exts.P10(a), P10(b) and P10(c) were issued by the Tribunal (not on consent) granting stay on the condition that the appellant deposit 20% of the demand and execute a bond for the balance. While the Supreme Court's decision in Ravi Gupta was distinguished on the ground that the deposit required was only 20% and not a substantial part of the demand, this Court observed that earlier decisions of this Court require at least minimal reasons to be recorded for imposing conditional deposits. In the absence of any stated reasons in the impugned orders, the court found them liable to be set aside and directed that the Tribunal hear the petitioners afresh and pass fresh orders, thereby remanding the matter for reconsideration. [Paras 8, 12, 13]

Exts.P10(a), P10(b) and P10(c) set aside for want of reasons and remitted to the Tribunal for fresh consideration after hearing the petitioners; recovery deferred till fresh orders are passed.

Final Conclusion: Writ petition allowed in part: the consent stay order for 2014-15 is left intact (with limited time to comply), while the non consent conditional stay orders for 2015-16, 2016-17 and 2017-18 are set aside and remitted to the Tribunal for fresh consideration with recovery deferred until further orders.

Classification of transactions as works contract - inter-state sale and deemed sale in the course of execution of works contract - movement of tailor-made/non-standard goods integrally connected with execution of contract - prohibition on vivisection of a single inter-state movement into separate local sale and purchase - application of Section 3(a), Section 3(b) and Section 5(2) of the Central Sales Tax Act, 1956 to subject sales/deemed sales - remand for fresh consideration in light of binding precedent

Inter-state sale and deemed sale in the course of execution of works contract - movement of tailor-made/non-standard goods integrally connected with execution of contract - application of Section 3(a), Section 3(b) and Section 5(2) of the Central Sales Tax Act, 1956 to subject sales/deemed sales - Whether purchases and movement of tailor-made goods from other States for use in execution of works contracts constitute inter-state sales/deemed sales under the CST Act and cannot be taxed as separate local sales under the VAT Act - HELD THAT: - The Court held that where the contract mandates procurement from nominated out of State suppliers and the goods are non standard and tailor made for the contract, the movement of such goods into the State is occasioned by and integrally connected with the execution of the works contract. Such movement cannot be artificially split into two transactions - an inter state purchase followed by a separate local sale/use - unless it is shown that the out of State movement was an independent transaction unconnected with the sales/deemed sales effected in the State. The respondents' admission that suppliers were nominated by the contractees and that the goods were non standard brings the facts within the principle laid down by this Court in M/s. Larsen and Toubro Limited, namely that such subject sales/deemed sales fall within the ambit of the provisions of the CST Act cited above. The revisional order failed to assign cogent reasons for departing from earlier appellate findings in the petitioner's own case and did not place material to demonstrate independence of the out of State movement. Consequently, the revisional treatment of the transactions as taxable local sales was unsustainable. [Paras 11, 12, 13]

The principle in M/s. Larsen and Toubro Limited applies; the revisional order treating the movements as taxable local transactions is set aside and the matter is remitted for fresh consideration in accordance with that precedent.

Remand for fresh consideration in light of binding precedent - opportunity of personal hearing before revisional authority - Whether the matter should be remitted to the revisional authority for fresh adjudication in accordance with the Larsen & Toubro precedent - HELD THAT: - Both parties accepted that the legal question is covered by the earlier decision of this Court. The respondents themselves invited remand for redetermination in conformity with that precedent. The Court found no need to re examine the issue on merits and directed that the impugned revisional order be set aside and the matter remitted to the revisional authority to pass orders afresh in the light of the law laid down in M/s. Larsen and Toubro Limited, after affording the petitioner a personal hearing. [Paras 9, 15]

Impugned revisional order set aside; matter remitted to the revisional authority to pass fresh orders in accordance with the Larsen & Toubro decision after giving the petitioner an opportunity of personal hearing.

Final Conclusion: Writ petition allowed; revisional order dated 21.04.2011 set aside and the matter remitted to the revisional authority to decide afresh in conformity with the precedent in M/s. Larsen and Toubro Limited, with an opportunity of personal hearing to the petitioner; pending matters closed, no order as to costs.

Stay of recovery - condition precedent of deposit - modification of stay conditions - instalment payment of deposited amount - furnishing simple bond for balance - vacation of stay on default - exercise of writ jurisdiction under Article 227

Stay of recovery - condition precedent of deposit - modification of stay conditions - instalment payment of deposited amount - furnishing simple bond for balance - vacation of stay on default - Validity and modification of the Appellate Tribunal's condition directing deposit of 30% of the modified demand as a condition for stay of recovery. - HELD THAT: - The Court upheld the Appellate Tribunal's discretion to grant stay of recovery subject to conditions but accepted the petitioner's plea of financial difficulty arising from the Covid-19 situation as a ground for moderating the operative condition. Rather than striking down the 30% deposit requirement, the Court exercised supervisory jurisdiction under Article 227 to modify the condition to permit payment of the 30% in three equal instalments, with the first instalment due by a specified date, and retained the requirement to furnish a simple bond for the balance by the same date. The Court emphasised that the stay would continue until disposal of the appeals only so long as the modified deposit schedule and bond requirement are complied with, and that failure to pay any instalment would result in vacation of the stay.

The Tribunal's stay was maintained but the condition was modified to allow the 30% deposit to be paid in three equal instalments with specified due dates and to require a simple bond for the balance; default of any instalment will vacate the stay.

Final Conclusion: Writ petition disposed by upholding the Tribunal's grant of stay subject to modified conditions: the petitioner to deposit 30% of the modified demand in three equal instalments by specified dates and furnish a simple bond for the balance; failure to pay any instalment will vacate the stay.

Section 138 of Negotiable Instruments Act - cause of action for filing complaint - service of legal notice - deemed service after 30 days of dispatch - 15 days period under the proviso to Section 138 - premature complaint - presumption under Section 139 of the Negotiable Instruments Act

Section 138 of Negotiable Instruments Act - service of legal notice - deemed service after 30 days of dispatch - 15 days period under the proviso to Section 138 - premature complaint - Complaint under Section 138 was premature as filed before expiry of the period required after service (actual or deemed) of the legal notice. - HELD THAT: - The Court found no evidence of actual service of the legal notice issued on 16.01.2003. In absence of proof of service, deemed service of a notice sent by registered cover can be taken only after expiry of 30 days from dispatch; only thereafter does the 15 day period prescribed by the proviso to Section 138 begin to run. Applying those timelines to the facts, deemed service could be taken on or about 15.02.2003 and the 15 day period for payment would expire thereafter. The complaint was filed on 11.02.2003, i.e., before even the deemed service date and therefore before the 15 days contemplated by the proviso had elapsed. Since the cause of action under Section 138 crystallises only after the prescribed notice period (including the 15 days) has expired, a complaint filed prior to that time is premature. The lower courts did not record any finding as to service or any presumption of service to justify the earlier filing and therefore erred in taking cognizance and sustaining conviction. [Paras 16, 17, 18]

Complaint held premature; conviction and sentence set aside.

Final Conclusion: Criminal revision allowed; impugned conviction and sentence under Section 138 are set aside as the complaint was filed before expiry of the statutory notice periods; bailors discharged; parties free to proceed in accordance with law.

Offence under Section 138 of the Negotiable Instruments Act - Proof of debt/loan - Dishonour of cheque for insufficiency of funds - Service and reply to statutory legal notice - Concurrent findings and scope of revisional interference - Conviction and sentence

Offence under Section 138 of the Negotiable Instruments Act - Proof of debt/loan - Dishonour of cheque for insufficiency of funds - Service and reply to statutory legal notice - Concurrent findings and scope of revisional interference - Whether the conviction and sentence under Section 138 of the Negotiable Instruments Act were sustainable on the materials on record, in particular whether the debt was proved and other statutory ingredients were established. - HELD THAT: - The trial court recorded that the complainant proved advancing a loan to the accused in specified instalments and that the accused subsequently issued the cheque in question as discharge of that loan. The cheque was presented and dishonoured with a memo indicating "insufficient fund". The complainant proved service of the statutory notice and the accused's written reply to the notice in which the loan was admitted and a request for time to pay was made. Other witnesses, including the bank branch manager, corroborated issuance and dishonour of the cheque. The accused denied the loan in her Section 313 statement, but the trial court relied on documentary admissions (reply to the notice) and oral evidence which were not successfully displaced by defence suggestions in cross-examination. The appellate court independently reviewed the record, reproduced the trial court's findings and upheld that the essential ingredients of Section 138-issuance of cheque in discharge of debt, presentation and dishonour, service of notice, and failure to make payment within the statutory period-were proved beyond reasonable doubt. Given the concurrent findings of fact by the trial and appellate courts and absence of any illegality, perversity or material irregularity in their reasoning, revisional interference was not warranted. [Paras 6, 9, 11, 12, 13]

The conviction and sentence under Section 138 of the Negotiable Instruments Act are sustainable; concurrent findings of trial and appellate courts are upheld and revisional jurisdiction will not interfere.

Final Conclusion: Criminal revision dismissed; conviction and sentence under Section 138 of the Negotiable Instruments Act affirmed; bail bond cancelled and records directed to be returned to the trial court.

Regular bail under the Criminal Procedure Code - multi-victim fraud affecting home buyers - siphoning of investor funds to unrelated entities - failure to cooperate with investigation as a bail-disfavouring factor - risk of tampering with evidence and influencing witnesses - risk of absconding based on past conduct and violated undertakings - concurrent criminal proceedings and insolvency proceedings (IRP/NCLT) and alleged collusion

Regular bail under the Criminal Procedure Code - multi-victim fraud affecting home buyers - risk of tampering with evidence and influencing witnesses - risk of absconding based on past conduct and violated undertakings - failure to cooperate with investigation as a bail-disfavouring factor - concurrent criminal proceedings and insolvency proceedings (IRP/NCLT) and alleged collusion - Whether the petitioner would be entitled to regular bail in FIR No.103/2019 registered for alleged cheating, criminal breach of trust and criminal conspiracy in relation to the housing project 'Amadeus'. - HELD THAT: - The Court considered the magnitude and multi-victim character of the allegations, the stage and progress of investigation and insolvency proceedings, and the conduct of the petitioner. The charges relate to a large-scale scheme involving numerous home buyers and alleged diversion of investor funds to other entities. The petitioner is implicated in multiple related criminal proceedings including NI Act matters and there are three other FIRs pending investigation. The petitioner is alleged to have not cooperated with investigation, shifted residences to evade arrest (arrested after issuance of NBWs), and engaged in conduct suggesting a real risk of absconding; undertakings by the accused entities to courts have allegedly been violated. The Court noted that the NCLT/IRP record indicates attempted collusion with the initial insolvency professional. Given the possibility of tampering with evidence or influencing witnesses, the large magnitude of the alleged fraud affecting many victims, and the petitioner's conduct during investigation and earlier proceedings, the Court concluded that bail cannot be granted at this stage. [Paras 10, 11, 13, 14, 15]

Bail plea dismissed and the petition is dismissed; pending applications, if any, are disposed of.

Final Conclusion: The High Court declined to grant regular bail to the petitioner in view of the serious, large scale, multi victim fraud allegations, the petitioner's non cooperative conduct and history suggesting risk of tampering and abscondence, and concurrent insolvency and criminal proceedings indicating potential collusion; the bail petition is dismissed and pending applications are disposed of.

Notice under Section 138 of the Negotiable Instruments Act - Demand for payment of the cheque amount - Reading the notice as a whole - Defective notice and non maintainability of complaint - Application of precedents on notice sufficiency

Notice under Section 138 of the Negotiable Instruments Act - Demand for payment of the cheque amount - Reading the notice as a whole - Defective notice and non maintainability of complaint - Application of precedents on notice sufficiency - Whether the notice dated 04.12.2004 (Ext. 7) complied with the statutory requirement for a demand of the cheque amount under Section 138 of the Negotiable Instruments Act and whether the appellate court was justified in holding the complaint non maintainable on that ground. - HELD THAT: - The High Court examined Ext. 7 and found that it mentioned particulars of only one cheque (Cheq. No. 794335 dated 17.10.2004 for Rs. 5,000) while the cheque that formed the basis of the complaint (Cheq. No. 0689316 dated 05.11.2004 for Rs. 1,84,370) was referred to only as having 'bounced' without furnishing requisite particulars or making a clear demand for payment of the cheque amount. The operative portion of the notice concluded by advising the addressee to 'meet my client within ten days' and did not state that payment of the said cheque amount was to be made within 15 days of receipt of the notice as contemplated by the proviso to Section 138. The Court applied the settled principle from the cited Supreme Court authorities that a notice must, read as a whole, make a demand for the 'said amount' (the cheque amount), and that absence of such demand renders the notice defective. On that basis the Court held that the appellate court correctly concluded that Ext. 7 did not satisfy the legal requirements and that the complaint under Section 138 was not maintainable. [Paras 11, 13, 15, 16]

The appellate court rightly held Ext. 7 to be defective for not making the statutory demand for the cheque amount; the complaint under Section 138 was non maintainable and the criminal revision is dismissed.

Final Conclusion: The High Court upheld the appellate court's finding that the demand notice (Ext. 7) did not conform to the requirements of Section 138 of the Negotiable Instruments Act for lack of a clear demand for the cheque amount, held the complaint non maintainable on that ground, and dismissed the criminal revision.

Compliance with statutory notice requirement under Section 138 of the Negotiable Instruments Act - service to the last known address - statutory presumption under Section 139 of the Negotiable Instruments Act - proof of execution of cheque and admissibility of signature

Compliance with statutory notice requirement under Section 138 of the Negotiable Instruments Act - service to the last known address - Whether the complainant complied with the statutory notice requirement under Section 138 by serving notice at the last known address of the accused. - HELD THAT: - The Court examined the evidence of PW1 (the complainant) and PW3 (the postman) and found that the complainant had knowledge that the accused was not residing at the Nadapuram address at the time the statutory notice was issued. PW1 admitted that he knew the accused was residing with her husband at Vanimel and that he had earlier sent a notice to that address, but he nevertheless issued the statutory notice to the former Nadapuram address and did not explain the omission in the complaint. PW1's subsequent attempts in re-examination to improve the case - claiming service at Nadapuram after receiving information of residence there and asserting return of notice as unserved because the accused was in Bangalore - did not cure the primary infirmity. On these findings the Court held there was a clear failure to comply with the statutory mandate to serve notice at the last known address of the accused as required for a complaint under Section 138. The Court further held that because service of the statutory notice is a precondition to maintain a Section 138 complaint, it was unnecessary to decide the contested questions relating to execution of the cheque, differences in handwriting/signature, or the applicability of the statutory presumption under Section 139.

The statutory notice requirement was not complied with as the notice was not issued to the accused's last known address; therefore the complaint under Section 138 is not maintainable.

Final Conclusion: The appeal is dismissed as the complainant failed to comply with the statutory notice requirement to the accused's last known address, rendering the Section 138 complaint untenable and obviating the need to decide on execution or signature issues.