TaxTMI Updates e-Newsletter
Nov 11,2020

Classification of services under SAC 9994 / Group 99943 (waste treatment and disposal) - Exemption of pure services to local authorities under entry Sl. No. 3 of Notification No.12/2017 (services in relation to functions entrusted to a Municipality under Article 243W) - Scope and applicability of advance ruling - binding effect limited to the applicant and concerned/jurisdictional officer

Classification of services under SAC 9994 / Group 99943 (waste treatment and disposal) - Activity of revamping existing dumped garbage in compost yards by bio-mining is classifiable under SAC 9994 and more appropriately under Group 99943. - HELD THAT: - The applicant was engaged under an agreement to set up processing facilities, excavate, sort, treat and dispose the dumped municipal solid waste and return reclaimed land to the municipal corporation. The Scheme of Classification of Services (Annexure to Notification No. 11/2017-C.T.(Rate)) and its Explanatory Notes identify consolidation, temporary storage, preparation, treatment and disposal of non-hazardous and hazardous waste and recovery/preparation of recyclable materials within Group 99943. The activities performed by the applicant - establishing processing facilities, pre-stabilisation, sorting/segregation, treatment and disposal in accordance with SWM Rules 2016, and recovery of land - fall within the scope of waste preparation, treatment and disposal services under Group 99943 and hence SAC 9994. The Authority records these findings after examining the agreement, invoices and factual steps undertaken by the applicant. [Paras 7, 10]

The activity is classifiable under SAC 9994 and Group 99943.

Exemption of pure services to local authorities under entry Sl. No. 3 of Notification No.12/2017 (services in relation to functions entrusted to a Municipality under Article 243W) - Function entrusted to Municipality under Article 243W - public health, sanitation and solid waste management - Services rendered by the applicant to Erode City Municipal Corporation are exempt under Sl. No. 3 of Notification No.12/2017 as amended. - HELD THAT: - The exemption at Sl. No. 3 requires (i) a pure service, (ii) provided to Central/State/Union territory/local authority/governmental authority, and (iii) by way of any activity in relation to a function entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W. The applicant's service is a pure service classifiable under SAC 9994. Erode City Municipal Corporation qualifies as a local authority within the meaning of Section 2(69) (Article 243P/243Q recognizing Municipal Corporations as Municipalities). Sl. No. 6 of the Twelfth Schedule to Article 243W expressly lists 'public health, sanitation conservancy and solid waste management' as a municipal function; SWM Rules 2016 further obligate local authorities to investigate and bio-mine/remediate dumpsites. As the applicant performed bio-mining and remediation of the dump yards under the municipal contract, the activity is an activity in relation to a function entrusted to a Municipality and meets the exemption criteria. The Authority accordingly applies the exemption to the services provided. [Paras 8, 10]

The services provided by the applicant to Erode City Municipal Corporation are exempt under Sl. No. 3 of Notification No.12/2017.

Scope and applicability of advance ruling - binding effect limited to the applicant and concerned/jurisdictional officer - Question on whether Erode City Municipal Corporation is liable to deduct tax at source under Section 51 is not admissible for advance ruling in respect of the present applicant. - HELD THAT: - Section 95-97 define matters admissible for advance ruling and Section 103 limits the binding effect of an advance ruling to the applicant and the concerned/jurisdictional officer in respect of the applicant. The question as formulated by the applicant pertains to the liability of the recipient (Erode City Municipal Corporation) to deduct TDS under Section 51 and not to the applicant's own liability or applicability of notifications to the applicant. Because the recipient is a distinct person and not the applicant, the Authority cannot pronounce a binding advance ruling on the recipient's liability under Section 51 in proceedings brought by this applicant. Reliance on other AAR decisions does not confer jurisdiction to rule for a non-applicant recipient. For these reasons the question is held not admissible under Section 97 read with Section 103 and is not admitted. [Paras 3, 9, 10]

The question on TDS liability of Erode City Municipal Corporation is not admitted for advance ruling.

Final Conclusion: The Authority rules that the bio-mining remediation services supplied by the applicant are classifiable under SAC 9994 (Group 99943) and are exempt under Sl. No. 3 of Notification No.12/2017 when supplied to Erode City Municipal Corporation; the question on the recipient's TDS liability under Section 51 is not admissible in these proceedings.

Detention and seizure under Section 129 - Validity of detention when consignment is accompanied by invoice and e-Way Bill - Circular CBEC/20/16/03/2017-GST dt.14.09.2018 - Distinction between serious/substantive violations and minor/procedural defects - Requirement of a reasoned order before invoking appellate remedy under Section 107 - Refund of tax and penalty collected under protest - Violation of Articles 14 and 265 of the Constitution

Requirement of a reasoned order before invoking appellate remedy under Section 107 - Whether the petitioner was obliged to pursue the statutory appeal under Section 107 of the TGST Act before approaching the High Court. - HELD THAT: - Section 107 affords an appellate remedy only against a decision or order of an adjudicatory authority. The 1st respondent did not produce any reasoned order communicated to the petitioner after considering the petitioner's explanation dated 28.01.2020. In the absence of any such communicated order, the petitioner could not be expected to invoke the appeal remedy under Section 107. The plea that the writ petition was not maintainable for failure to avail the statutory appeal is therefore rejected. [Paras 42, 43, 44, 45, 46]

Petitioner was not required to file an appeal under Section 107 because no reasoned order was communicated to it; the challenge by way of writ petition is maintainable.

Detention and seizure under Section 129 - Validity of detention when consignment is accompanied by invoice and e-Way Bill - Circular CBEC/20/16/03/2017-GST dt.14.09.2018 - Distinction between serious/substantive violations and minor/procedural defects - Whether detention of the vehicle and coercive recovery of tax and penalty were justified despite production of invoice and e-Way Bill and in view of the CBEC Circular. - HELD THAT: - Section 129 permits detention/seizure where goods are transported in contravention of the Act or rules. Rule 138A/138B and Rule 46(o) require certain documents and permit disclosure of delivery address. The CBEC Circular dated 14.09.2018 distinguishes between substantive violations and minor/documentary defects and advises that where a consignment is accompanied by an invoice and an e Way Bill, proceedings under Section 129 may not be initiated for minor errors, and nominal penalties under Section 125 are appropriate in listed situations. The court accepted the Gujarat High Court's approach that authorities must first examine the nature of the contravention and then whether there was an intent to evade tax; not all documentary discrepancies warrant harsh action. Here, at the time of inspection the vehicle was accompanied by the supplier's tax invoice and e Way Bill showing IGST paid. The petitioner's subsequent sale in transit and the delivery challan referring to the job work site corroborated its explanation that delivery to the job work site was at the buyer's request and to save transport costs. Mere noticing of the conveyance at a different location without more did not constitute a taxable contravention or demonstrate an intent to evade tax. The omission to disclose the job work unloading place in the e Way Bill was a procedural defect to be viewed in the light of the Circular rather than a ground for coercive collection of full tax and penalty. [Paras 72, 73, 74, 75, 76]

Detention and coercive recovery of tax and penalty were not justified; the defect in documentation was procedural/minor and did not evidence intent to evade tax.

Refund of tax and penalty collected under protest - Violation of Articles 14 and 265 of the Constitution - Relief to be granted for the coercive collection of tax and penalty and constitutional violations alleged. - HELD THAT: - The court concluded that the action of the 1st respondent in collecting the tax and penalty from the petitioner on 30.01.2020 was arbitrary and violative of Articles 14 and 265, the provisions of the CGST/TGST Acts, and the CBEC Circular. Having found the detention and collection unjustified, the appropriate remedy is refund of the amount collected with interest. The court directed refund with interest at 6% per annum from the date of payment until actual repayment and required compliance within a specified period. [Paras 80]

The amount collected from the petitioner on 30.01.2020 is to be refunded with interest at 6% per annum from 30.01.2020 until payment; respondents directed to refund within six weeks.

Final Conclusion: Writ petition allowed: in the absence of any reasoned order communicated to the petitioner the statutory appeal was not available; detention and coercive collection of tax and penalty were arbitrary in the facts and contrary to the CBEC Circular and statutory scheme; respondents directed to refund the amount collected with interest at 6% per annum within six weeks.

Interim bail pending trial - Default bail - Serious economic offence/revenue defalcation - Custodial delay and COVID-19 pandemic as ground for interim release - Judicial direction for expeditious conclusion of trial

Default bail - Serious economic offence/revenue defalcation - Entitlement to default bail was not accepted and regular bail was not granted on merits. - HELD THAT: - The petitioner contended that he was entitled to default bail because no final prosecution report had been filed. The Court noted the gravity of the offence, namely alleged stage managed invoices and resultant input tax credit claims causing a revenue loss of Rs. 19 crores, and the fact that the petitioner had earlier been refused bail by this Court. Taking these factors into account, the Court was not inclined to revisit its earlier rejection of bail on merits or to allow default bail as a ground for release in the circumstances of this case. [Paras 5, 7]

Prayer for regular/default bail rejected on merits.

Interim bail pending trial - Custodial delay and COVID-19 pandemic as ground for interim release - Judicial direction for expeditious conclusion of trial - Petitioner granted interim bail for a limited period despite earlier refusal of regular bail, with directions for conditions and expeditious trial completion. - HELD THAT: - Although the Court declined to reopen its earlier merits based refusal of bail in view of the serious economic offences alleged, it took into account that the petitioner had been in custody for over two years and that the COVID 19 pandemic made timely conclusion of trial unlikely. Balancing these factors, the Court directed that the trial court release the petitioner on interim bail for sixty days subject to surrender on the 61st day and such other conditions as the trial court deems fit to secure return to custody. The Court further directed the trial court to take effective steps to conclude the trial within six months and required the complainant to assist in expediting the proceedings. [Paras 7]

Interim bail granted for sixty days with conditions; trial court directed to impose conditions and to endeavour to conclude trial within six months.

Final Conclusion: The petition for regular/default bail is refused on merits, but the petitioner is released on interim bail for sixty days subject to conditions to be imposed by the trial court, which is directed to take effective steps to conclude the trial within six months.

Blocking of electronic ledger - Rule 86A of the GST Rules - recording of reasons for administrative action - consideration of representation within fixed time - remand for fresh administrative decision

Blocking of electronic ledger - Rule 86A of the GST Rules - recording of reasons for administrative action - Petition seeking direction to unblock the petitioner's electronic ledger was not decided on merits; administrative action is to be reconsidered by the jurisdictional officer. - HELD THAT: - The Court did not adjudicate the substantive legality of the ledger-blocking or the correctness of the respondent's view on belatedly availed input tax credit. Instead, the writ petition was disposed by directing that the petitioner file a representation with the Assistant Commissioner of Commercial Taxes - LGSTO-20, Bengaluru, enclosing this order, so that the jurisdictional officer may consider the representation afresh. The order recognises that Rule 86A (under which blocking may be effected) contains safeguards such as requirement to record reasons, but the Court expressly refrained from expressing any opinion on the merits of the contentions raised by the petitioner. The effect is a remand to the administrative authority for expedited consideration rather than a judicial determination on legality or entitlement. [Paras 3, 4]

Writ petition disposed by remitting the petitioner's representations for expedited consideration by the Assistant Commissioner, without expressing any opinion on merits.

Consideration of representation within fixed time - remand for fresh administrative decision - Time-bound direction for administrative reconsideration of the petitioner's representations. - HELD THAT: - Having permitted the petitioner to submit its representation to the jurisdictional officer, the Court imposed an outer time-limit to ensure expedited disposal. The Assistant Commissioner of Commercial Taxes - LGSTO-20 is directed to consider the petitioner's representations and take a suitable decision within six weeks from the date of receipt of such representation. The Court's direction is procedural and supervisory, providing an obligation on the authority to decide within the prescribed outer period; it does not constitute any adjudication on the substantive claims or relief sought by the petitioner. [Paras 4]

Assistant Commissioner - LGSTO-20 to consider the petitioner's representations and decide within six weeks; petition disposed accordingly.

Final Conclusion: The writ petition is disposed of by directing the petitioner to file its representation with the Assistant Commissioner - LGSTO-20, Bengaluru, and by directing that officer to consider and decide the representation within six weeks; no opinion is expressed on the merits of the challenge to the ledger-blocking.

Prematurity of challenge to show cause notice - Judicial review of show cause notice - Maintainability of writ against interlocutory/administrative notice - Duty to consider representations before passing final order - Notice issued under Section 74(5) of the Tamil Nadu Goods and Services Tax Act

Prematurity of challenge to show cause notice - Maintainability of writ against interlocutory/administrative notice - The challenge to the impugned show cause notices was premature and not maintainable at this stage as no final orders have been passed by the respondent. - HELD THAT: - The Court noted that a show cause notice may be subject to judicial review only if issued without authority of law; however, where no final order has been passed, challenging the notice itself is premature. The petitioner alleged non-application of mind by the respondent and reliance on a seller's statement, but since the respondent has yet to adjudicate, the objections raised in the petitioner's replies must be considered during final adjudication. Accordingly, the writ petitions seeking quashing of the notices at the interlocutory stage were held to be premature. [Paras 6, 7]

Challenge to the show cause notices dismissed as premature; writ petitions not entertained on merits at this stage.

Duty to consider representations before passing final order - Notice issued under Section 74(5) of the Tamil Nadu Goods and Services Tax Act - The respondent was directed to consider the petitioner's replies and supporting documents, including the seller's statement, and pass final orders on the impugned show cause notices on merits and in accordance with law within a stipulated time. - HELD THAT: - Although the challenge to the notices was premature, the Court required the respondent to examine the petitioner's written replies dated 05.06.2020 and 09.09.2020 along with the supporting documents and the seller's statement that he alone is liable to pay the tax. The Court mandated that the respondent apply his mind to these materials and decide the show cause notices on merits, ordering compliance within eight weeks from receipt of the order copy. [Paras 8]

Matter remitted to the respondent for fresh consideration and final adjudication on merits within eight weeks.

Final Conclusion: Writ petitions disposed of as premature; respondent directed to consider the petitioner's replies and supporting documents, including the seller's statement, and to pass final orders on the show cause notices (issued under Section 74(5) of the Tamil Nadu GST Act) on merits and in accordance with law within eight weeks.

Regular bail under Section 439 of the Code of Criminal Procedure, 1973 - Alleged wrongful claim of Input Tax Credit - Protection of revenue interest as a factor in bail adjudication - Threat to witnesses and interference with investigation - Conditions incident to grant of bail: personal bond, sureties, reporting to investigating officer, passport deposit, non-departure, cooperation, and non-interference

Regular bail under Section 439 of the Code of Criminal Procedure, 1973 - Alleged wrongful claim of Input Tax Credit - Protection of revenue interest as a factor in bail adjudication - Grant of regular bail to the accused charged under the Central Goods and Services Act, 2017 for alleged illegal claim of Input Tax Credit. - HELD THAT: - The Court examined the allegations that the petitioner wrongly availed Input Tax Credit of Rs. 14 crores on the basis of fake invoices and noted the respondents' contention about incorrect residential address and potential interference with investigation. The petitioner had been in judicial custody since 23-09-2020 and, during the custodial period, the respondents had examined only two witnesses; the counter did not explain the stage or completion of the investigation since 23-09-2020. The Court also took into account that the petitioner had already paid a substantial sum towards GST and that an interim order of the Division Bench had directed suspension on furnishing a bank guarantee and restrained utilisation of certain amounts in the credit ledger, which the Court found protected the revenue interest. Balancing the custodial period, the state of the investigation as recorded, and the measures already safeguarding revenue, the Court was satisfied to grant bail while imposing conditions to address the risk of interference and to preserve revenue interests. [Paras 5, 6, 7]

Criminal petition allowed and regular bail granted to the petitioner subject to conditions.

Conditions incident to grant of bail: personal bond, sureties, reporting to investigating officer, passport deposit, non-departure, cooperation, and non-interference - Liberty to move for cancellation of bail on breach of conditions - Imposition of specific conditions for bail and entitlement of respondent authorities to move for cancellation on breach. - HELD THAT: - The Court specified conditions to mitigate risks identified by the respondents and to protect the investigation and revenue: furnishing a personal bond with two sureties for the specified sum to the satisfaction of the Special Judge for Economic Offences; daily reporting to the investigating officer until completion of investigation and filing of the final report; deposit of passport and prohibition on leaving the country without court permission; obligation to cooperate by producing documents and information; and prohibition on the petitioner or his subordinates from threatening witnesses or otherwise interfering with the investigation. The Court further recorded that the respondent authorities retain liberty to apply for cancellation of bail if any condition is violated. [Paras 7]

Bail granted subject to the enumerated conditions; respondents may apply for cancellation of bail on any breach.

Final Conclusion: The High Court allowed the petition and granted regular bail to the petitioner accused of wrongful claim of Input Tax Credit, imposing specific conditions to safeguard the investigation and revenue, and permitting the respondents to seek cancellation of bail in case of any violation.

Deduction of interest expense against interest income - proportionate disallowance under section 14A and capitalization as cost of acquisition - re computation of interest under sections 234A, 234B and 234C excluding income subject to TDS - principle of consistency in assessment years / conclusiveness of earlier Tribunal orders

Deduction of interest expense against interest income - principle of consistency in assessment years / conclusiveness of earlier Tribunal orders - Assessee entitled to deduction of interest expenditure to the extent of interest income earned in the year. - HELD THAT: - The Tribunal, following consistent decisions in the assessee's group cases and earlier co ordinate benches, held that interest liability had accrued under the mercantile system and there was a nexus between borrowed funds and interest bearing term deposits. In view of earlier Tribunal findings accepted in prior assessment years and no material change of facts, the Tribunal allowed the claim of interest expenditure to the extent of interest income earned (after proportionate disallowance where applicable) and directed the AO to allow the interest accordingly. The Tribunal rejected the revenue's contention that absence of a written contract or non taxation of recipients precluded allowance, relying on prior orders and the settled principle that consistency in closely connected assessment years precludes re opening without material change. [Paras 11, 13]

Ground relating to allowance of interest expenditure is allowed and AO directed to allow interest expense to the extent of interest income earned.

Re computation of interest under sections 234A, 234B and 234C excluding income subject to TDS - Interest under sections 234A, 234B and 234C to be recomputed after excluding income which is subject to TDS. - HELD THAT: - Following the view taken in the assessee's group case (Sudhir S. Mehta), the Tribunal directed recomputation of interest under the delay and default provisions by excluding from computation those incomes which are subject to tax deducted at source. The Tribunal therefore allowed the grounds relating to levy of interest for statistical purposes and remitted the computation to the AO for adjustment in accordance with that principle. [Paras 16, 17, 18]

Grounds relating to levy and computation of interest under sections 234A, 234B and 234C are allowed for statistical purposes and AO directed to recompute interest excluding TDS subject income.

Proportionate disallowance under section 14A and capitalization as cost of acquisition - Revenue's plea to reverse CIT(A)'s treatment (and seek a different result) on capitalization/disallowance was dismissed; proportionate disallowance where applicable to be treated as part of cost of acquisition in line with co ordinate bench precedents. - HELD THAT: - The Tribunal, following the consistent view in the assessee's group and related cases, observed that to the extent interest related to investments (and disallowable under the applicable provision), such proportionate disallowance should be capitalised and treated as part of the cost of acquisition of shares/securities for computing profit on sale. Applying the same precedent to the present appeals, the Tribunal found no merit in the revenue's grounds and dismissed the revenue appeals. [Paras 22, 23]

Revenue appeals challenging the CIT(A)'s treatment are dismissed and the AO directed to follow the co ordinate bench view treating proportionate disallowance as part of cost of acquisition.

Final Conclusion: Following consistent decisions in the assessee's group cases, the Tribunal allowed the assessee's appeals by permitting interest deduction to the extent of interest income (subject to proportionate disallowance/capitalisation as cost of acquisition where applicable) and directed recomputation of interest under sections 234A/234B/234C excluding TDS subject income; the revenue appeals were dismissed.

Refund determined under Section 143(1) - mandatory language of Section 143(1)(e) - interest under Section 244A - undertaking accepted by the Court

Refund determined under Section 143(1) - mandatory language of Section 143(1)(e) - Petition seeking grant/release of refunds determined under Section 143(1) for the Assessment Years 2017-2018, 2018-19 and 2019-20. - HELD THAT: - Petitioner admitted in Court that the refunds sought in the petition have been received. The Court recorded this admission and treated the claim for release of the refunds as no longer live. There is no separate adjudication on the merits of any earlier non-release beyond the petitioner's admission of receipt. [Paras 5, 8]

Claim for release of refunds rendered infructuous; writ petition disposed insofar as it sought release of the refunds.

Interest under Section 244A - undertaking accepted by the Court - Claim for interest under Section 244A in respect of the refunds already paid. - HELD THAT: - Petitioner stated that no interest under Section 244A has been paid to date. Learned counsel for the respondent undertook in Court that the request for payment of interest would be processed by the respondent within eight weeks in accordance with law. The Court accepted the undertaking and held the respondent bound by it, thereby directing further action rather than finally adjudicating the interest claim on merits. [Paras 5, 6, 7, 8]

Respondent directed (by accepted undertaking) to process the petitioner's request for payment of interest under Section 244A within eight weeks; matter disposed on that basis.

Final Conclusion: Writ petition disposed: refunds for Assessment Years 2017-2018, 2018-19 and 2019-20 stood received by the petitioner; respondent has undertaken and the Court has accepted that the petitioner's claim for interest under Section 244A will be processed within eight weeks in accordance with law.

Social and community welfare expenses - Commercial expediency test - Allowability of business expenditure under section 37(1) - Sponsorship as business expenditure

Social and community welfare expenses - Commercial expediency test - Remittance of the question of allowability of social and community welfare expenses to the assessing officer for fresh adjudication on the touchstone of commercial expediency was appropriate and does not raise a substantial question of law. - HELD THAT: - The Tribunal had remitted the issue of allowability of social and community welfare expenses to the file of the Assessing Officer for fresh adjudication applying the test of commercial expediency (paragraph 44.1 of the Tribunal's order). On review, the High Court found that the Tribunal, upon appreciation of the factual position, rightly directed fresh adjudication and there was no error of law in that course. The Court concluded that no substantial question of law arises for consideration with regard to the community welfare expenses, thereby upholding the Tribunal's remand for factual reconsideration under the commercial expediency test. [Paras 5, 44]

Tribunal's remand for fresh adjudication on commercial expediency upheld; no substantial question of law arises.

Sponsorship as business expenditure - Allowability of business expenditure under section 37(1) - Disallowance of the sponsorship amount paid towards the Chennai Open Tennis Tournament was correctly confirmed by the Tribunal and does not give rise to a substantial question of law. - HELD THAT: - The Tribunal examined whether the sponsorship expenditure of Rs. 50 lakhs towards the tennis tournament bore a nexus to the appellant's business and whether the government letter amounted to a direction making the expenditure obligatory. The Tribunal concluded the Government letter was merely an invitation, not a mandatory direction, and that the assessee had not established the requisite nexus between the contribution and business benefit; reliance on precedent cited by the assessee was held inapplicable. The High Court, reviewing paragraph 13.5 of the Tribunal's order, found the Tribunal's factual appreciation and legal conclusion to be correct and therefore held that no substantial question of law was made out. [Paras 6, 9, 13]

Tribunal's disallowance of the sponsorship expense affirmed; no substantial question of law arises.

Final Conclusion: The High Court dismissed the appeal, upholding the Tribunal's remand of the community welfare expenditure issue for fresh adjudication on commercial expediency and affirming the Tribunal's disallowance of the Chennai Open sponsorship expenditure; no substantial question of law was found and the appeal is dismissed.

Stay of demand under Section 220(6) of the Income-tax Act - expeditious disposal of pending applications - judicial intervention for administrative delay

Stay of demand under Section 220(6) of the Income-tax Act - expeditious disposal of pending applications - administrative decision-making - Application dated 12-3-2020 addressed to the Principal Commissioner of Income Tax-2, Surat seeking stay of demand was pending without decision and was directed to be decided. - HELD THAT: - The writ court noted that the applicant had filed an application on 12-3-2020 under Section 220(6) seeking a stay of the demand and that no decision had been taken by the Principal Commissioner to date. Exercising supervisory jurisdiction to prevent undue administrative delay, the High Court directed the Principal Commissioner to take up and decide the pending application in accordance with law. The direction imposed a clear timelines requirement, namely disposal within 15 days from receipt of the writ order, but did not adjudicate the merits of the stay application itself. [Paras 2]

The application was remitted to the Principal Commissioner of Income Tax-2, Surat for fresh decision in accordance with law within 15 days; the writ petition disposed.

Final Conclusion: The High Court disposed of the writ by directing the Principal Commissioner of Income Tax-2, Surat to decide the applicant's pending stay application (filed 12-3-2020) in accordance with law within 15 days; no decision was recorded on the merits of the stay.

Wilful evasion of tax - Offence under Section 276C(2) of the Income Tax Act - Filing of returns and delay in payment - Requirement of positive act for criminal liability - Subsequent payment and abuse of legal process

Wilful evasion of tax - Offence under Section 276C(2) of the Income Tax Act - Filing of returns and delay in payment - Requirement of positive act for criminal liability - Whether delay in remittance of tax despite filing returns constitutes wilful evasion attracting criminal liability under Section 276C(2). - HELD THAT: - The Court accepted that the petitioners filed returns admitting liability but did not remit the tax in time for the financial years 2011-2012 to 2014-2015, and noted the settled principle that a positive act on the part of the accused is required to establish the offence under Section 276C(2). Relying on the reasoning in the cited Karnataka High Court decision, the Court held that mere filing of returns, even if accompanied by delay in payment, does not by itself constitute an attempt to evade tax; filing suggests an intention to declare liability rather than to conceal it. Having regard to that legal principle and the admitted fact (in the counter affidavit) that the outstanding tax has since been paid and as on date no tax dues remain for the said years, continuation of prosecution would amount to an abuse of the legal process. The Court therefore found no ground to permit the criminal proceedings to continue on the basis of wilful evasion where the requisite positive act was not shown and the liability has been extinguished by subsequent payment. [Paras 4, 6]

Proceedings in C.C.No.425 of 2019 quashed and criminal original petition allowed; prosecution found to be an abuse of process in the circumstances.

Final Conclusion: The High Court quashed the prosecution under Section 276C(2) in respect of financial years 2011-2012 to 2014-2015, holding that delay in payment despite filing returns did not establish wilful evasion and, given subsequent clearance of tax dues, continuation of the prosecution would be an abuse of process.

Reopening of assessment - assumption of jurisdiction under section 147 - notice issued under section 148 - application of mind in recording reasons for reopening - quashing of reassessment for lack of jurisdiction - reliance on Pr. CIT vs. RMG Polyvinyl

Assumption of jurisdiction under section 147 - notice issued under section 148 - application of mind in recording reasons for reopening - quashing of reassessment for lack of jurisdiction - reliance on Pr. CIT vs. RMG Polyvinyl - Reopening of assessment by issue of notice under section 148 and assumption of jurisdiction under section 147 was without jurisdiction and required to be quashed. - HELD THAT: - The Tribunal found that the reasons recorded for reopening proceeded on the incorrect premise that no return had been filed for the assessment year, despite documentary evidence on record (including the paper book placed before the authorities) establishing that the return was filed. The recorded reasons therefore reflected presumption and lack of application of mind. Applying the ratio of Pr. CIT vs. RMG Polyvinyl, where identical errors in the reasons vitiated the reassessment, the Tribunal held that reassessment founded on such defective reasons cannot stand. Because the Assessing Officer issued the notice and proceeded to reopen without properly considering material already available and thus failed to apply his mind, the reopening was void and liable to be quashed. [Paras 4, 5]

Reassessment under section 147/notice under section 148 quashed and the appeal of the assessee allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal, quashed the reassessment framed under section 147/notice issued under section 148 for assessment year 2011-12 due to lack of application of mind and reliance on erroneous reasons, and set aside the assessment.

Capital gains exemption under Section 54EC - Time limit of six months for investment - Financial year cap on investment under the proviso to Section 54EC - Prospective operation of the amendment to Section 54EC with effect from 1.4.2015

Capital gains exemption under Section 54EC - Time limit of six months for investment - Financial year cap on investment under the proviso to Section 54EC - Prospective operation of the amendment to Section 54EC with effect from 1.4.2015 - Whether investment of capital gains in specified bonds made in two instalments across two financial years but within six months of transfer is eligible for exemption under Section 54EC for Assessment Year 2013-14 despite the proviso limiting investment per financial year to Rs.50 lakhs. - HELD THAT: - The Tribunal held that Section 54EC(1) fixes the time limit for investment at six months from the date of transfer and, as the first proviso then stood, specified a quantum limit per financial year which, on a plain reading, did not negate the six month investment window. The apparent ambiguity in the first proviso was removed prospectively by insertion of a second proviso effective from 1.4.2015, which was declared applicable to assessment year 2015-16 and subsequent years. Relying on precedent including the Madras High Court and coordinate Tribunal decisions interpreting the proviso to permit investments made within six months even if falling in two financial years, the Tribunal concluded that for the Assessment Year 2013-14 the assessee's investments of capital gains in two instalments across two financial years but within six months of transfer were eligible for exemption under Section 54EC. The Tribunal therefore allowed the appeal. [Paras 5, 6]

Exemption under Section 54EC allowed in full for AY 2013-14; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that investments made within six months of transfer but split across two financial years qualify for exemption under Section 54EC for Assessment Year 2013-14; the legislative amendment clarifying the per financial year cap operates prospectively from 1.4.2015 (applicable to AY 2015-16 onwards).

Validity of reassessment proceedings initiated by notice under section 148 - Service of notice at wrong/incorrect address and its effect on jurisdiction - Principle of natural justice and audi alteram partem in reassessment - Consequential invalidity of penalty proceedings founded on invalid reassessment - Maintainability of appeal where reassessment and demand notices were not duly communicated

Validity of reassessment proceedings initiated by notice under section 148 - Service of notice at wrong/incorrect address and its effect on jurisdiction - Principle of natural justice and audi alteram partem in reassessment - Reassessment order dated 29/02/2016 passed after issuance of notice under section 148 at a wrong address is invalid and the consequential assessment is to be quashed. - HELD THAT: - The Tribunal found that the notice under section 148 was served at an address (No. 387, "Skanha", 4th Main, TK layout, Mysore) which was not the assessee's correct/resident address as shown on departmental records such as PAN and other identity documents (No. 723, 10th Cross, Siddarthanagar). The Assessing Officer issued the notice based on received information without verifying address details available with the department. Because the notice was issued to the wrong address, the reassessment proceeded without affording the assessee a proper opportunity of being heard. The Tribunal emphasised that the assumption of jurisdiction to reassess must comply with mandatory requirements, including service of notice and observance of the principles of natural justice (audi alteram partem). On these grounds the notice and the consequent reassessment were held invalid and set aside. [Paras 12, 13]

Impugned notice under section 148 and the reassessment order dated 29/02/2016 are quashed and set aside.

Consequential invalidity of penalty proceedings founded on invalid reassessment - Service of penalty notices at wrong address - Reliance of penalty under provisions for non-compliance where primary notices were not received - Penalty notices and orders (under section 271(1)(c), 271(1)(b) and 271E) issued and passed to the assessee at the wrong address and/or consequential to an invalid reassessment are unsustainable and are to be quashed. - HELD THAT: - The Tribunal recorded that notices under section 274 and the consequential penalty orders were issued to the assessee at the same wrong address as the reassessment notice. Because the reassessment notice and thereby the assessment proceedings were invalid for lack of proper service and denial of opportunity, the consequential initiation and imposition of penalties under section 271(1)(c) were vitiated. Further, penalties under section 271(1)(b) and section 271E were held unsustainable since those proceedings presupposed service of earlier notices (such as under section 148, and consequentially sections 143(2)/141(1)) which were not duly communicated; in that factual matrix the penalty proceedings could not stand and were quashed. [Paras 18, 19, 20]

Penalty notices and orders challenged are quashed and set aside; penalties founded on the invalid reassessment or issued on the basis of notices sent to the wrong address do not survive.

Effect of quashing foundational proceedings on merits and consequential claims - Addition to income and interest claims founded on the quashed reassessment become academic and are not adjudicated on merits. - HELD THAT: - Since the Tribunal has quashed the notice under section 148 and the consequent reassessment on jurisdictional and natural justice grounds, the basis for the addition of income (short-term capital gains) and any interest or consequential assessments falls away. The Tribunal therefore declined to decide the merits of the addition or interest claims as they are rendered academic by the primary ruling invalidating the reassessment. [Paras 17]

Merits of the addition and interest demand stand set aside as academic consequent to quashing of the reassessment.

Final Conclusion: Appeals are allowed: the notice under section 148 and the reassessment order dated 29/02/2016 are quashed for being issued to a wrong address and for denial of opportunity to the assessee; consequent penalty notices and orders (including under section 271(1)(c), 271(1)(b) and 271E) issued on that basis are also quashed; additions and interest demands founded on the reassessment are rendered academic.

Exemption under section 54F - substantive compliance versus procedural deposit under section 54F(4) - Purposive and beneficial construction of exemption provisions - Conflict of High Court decisions - rule of construction favouring assessee where two reasonable constructions exist

Exemption under section 54F - substantive compliance versus procedural deposit under section 54F(4) - Purposive and beneficial construction of exemption provisions - Conflict of High Court decisions - rule of construction favouring assessee where two reasonable constructions exist - Whether failure to deposit unutilised sale consideration in the notified Capital Gains Account before the due date of filing return under section 139(1) disentitles the assessee to deduction under section 54F when the assessee has, within the period prescribed by section 54F(1), actually invested the sale consideration in purchase of a new residential house. - HELD THAT: - The Tribunal examined section 54F(1) and the procedural requirement in section 54F(4). It noted conflicting High Court authorities: Karnataka High Court in CIT v. K. Ramachandra Rao and Madras High Court in Venkata Dilip Kumar which hold that sub-section (4) is not attracted where the assessee has, within the period stipulated in sub-section (1), invested the net consideration in purchase/construction of the new residential house; and Bombay High Court in Humayun Suleman Merchant which held to the contrary, treating the deposit requirement as mandatory. Applying the principle that where two reasonable constructions of a taxing provision are possible the construction favourable to the assessee should be adopted, the Tribunal followed the Karnataka/Madras line of decisions (and allied coordinate-bench tribunal decisions) rather than the Bombay High Court. The Tribunal also placed reliance on the purposive and liberal approach to exemption provisions endorsed by the Supreme Court in Sanjeev Lal, observing that section 54F is beneficial and should be construed to effectuate the legislative purpose of providing relief on long-term capital gains where substantive conditions are satisfied. On the facts the assessee had applied the entire sale consideration to acquire the new residential property within the two-year period and had shown bonafide steps (including earlier advances to another project and subsequent payment for the Thane flat). Given fulfillment of the substantive condition in section 54F(1), the Tribunal held that non-deposit in the notified account by the due date did not disentitle the assessee to the exemption, and directed allowance of deduction under section 54F. [Paras 21, 22, 28, 29, 31]

Assessee entitled to deduction under section 54F as he fulfilled the substantive conditions of section 54F(1); failure to deposit unutilised sale consideration in notified account by due date did not deprive assessee of exemption in the facts of the case; appeal allowed.

Final Conclusion: Appeal allowed: Tribunal held that where the assessee has, within the period prescribed by section 54F(1), utilized the net sale consideration for purchase of a new residential house, non deposit of unutilised sale consideration in the notified Capital Gains Account under section 54F(4) does not, in the circumstances of the case, disentitle the assessee to exemption under section 54F; deduction allowed and appeal disposed in favour of the assessee.

Survey under section 133A - addition on account of unexplained excess stock - recasted trading account and use of balancing figure for closing stock - prima facie documentary evidence (gate passes, toll receipts, Form 49) to show dispatch prior to survey - appellate deletion of assessment addition and scope for interference

Survey under section 133A - addition on account of unexplained excess stock - prima facie documentary evidence (gate passes, toll receipts, Form 49) to show dispatch prior to survey - Deletion of addition of Rs. 47,37,447/- made for alleged unaccounted cotton bales kept elsewhere (lot nos. 139, 143, 144). - HELD THAT: - The Assessing Officer treated certain lots as not included in closing stock and computed an addition. The assessee produced gate passes dated 24.01.2012, toll-weighment slips and Form 49 records together with invoices dated 25.01.2012 showing that the lots were outwarded from the factory on 24.01.2012 and invoiced the next day. The Tribunal accepted these contemporaneous documents as establishing that the alleged bales were part of book stock and had been dispatched on 24.01.2012, and thus were properly excluded from the physical stock taken during the survey. The AO's addition on this account was therefore unjustified and the CIT(A)'s deletion was upheld. [Paras 9]

Addition of Rs. 47,37,447/- deleted; finding of CIT(A) affirmed.

Addition on account of unexplained excess stock - documentary matching of purchases and subsequent outward sales - appellate deletion of assessment addition - Deletion of addition of Rs. 55,05,835/- made on account of alleged unaccounted stock at Phulambari, Aurangabad. - HELD THAT: - The AO treated a portion of purchases from M/s Pragati Cotton, Phulambari as remaining unsold and made an addition. The assessee produced sales invoices (including direct dispatches from Aurangabad to purchasers in Tamil Nadu and Maharashtra) and sales tax returns demonstrating that quantities purchased from Pragati Cotton were matched by outward sales from Aurangabad, albeit at a loss. The revenue did not adduce contrary evidence of quantity mismatch. The Tribunal found the assessee's documentary evidence sufficient to rebut the AO's presumption of unaccounted stock and sustained the CIT(A)'s deletion of the addition. [Paras 10]

Addition of Rs. 55,05,835/- deleted; finding of CIT(A) affirmed.

Recasted trading account and use of balancing figure for closing stock - addition on account of unrecorded sales - appellate deletion of assessment addition - Deletion of addition of Rs. 1,13,66,913/- computed by recasting the trading account and treating closing stock as a balancing figure (i.e., alleged unrecorded sales). - HELD THAT: - The AO recast the trading account, adopted a closing stock as a balancing figure and treated the difference as undisclosed sales. The Tribunal observed that the AO's recasted closing stock plus the alleged unrecorded sales together equaled the assessee's book stock figure as on the survey date, indicating that AO had mistakenly included certain post-survey invoices in the pre-survey period. Five invoices totalling the disputed amount related to dates after the survey and VAT/CST particulars demonstrated the incorrect inclusion. Given that the department had physically verified stock at survey and the assessee had offered surrendered stock in its accounts, the Tribunal held the AO's methodology (using a balancing figure despite physical stock verification) to be unsound and upheld the CIT(A)'s deletion. [Paras 11]

Addition of Rs. 1,13,66,913/- deleted; finding of CIT(A) affirmed.

Final Conclusion: The Tribunal found that the Assessing Officer's additions totaling Rs. 2,16,10,195/- on account of excess/unaccounted stock and recasted trading account were not justified in view of the assessee's contemporaneous documentary evidence and errors in AO's computation; the CIT(A)'s deletions were upheld and the revenue's appeal was dismissed.

Admission of respondent's plea under Rule 27 of the ITAT Rules - Jurisdictional validity of notice under section 143(2) - Effect of notice issued by non jurisdictional Assessing Officer - assessment void ab initio - Binding character of CBDT instructions under section 119 - Inapplicability of section 292BB to absence of jurisdictional notice

Admission of respondent's plea under Rule 27 of the ITAT Rules - Scope and purpose of Rule 27 - Admissibility of the assessee's application under Rule 27 of the ITAT Rules to raise preliminary legal pleas not decided by lower authorities. - HELD THAT: - The Tribunal examined the purpose and scope of Rule 27 (as explained in co ordinate decisions including AAA Paper Marketing Ltd. and Jubiliant Enpro Pvt. Ltd.) and adopted a pragmatic, liberal interpretation permitting a respondent to invoke legal aspects germane to an issue decided in his favour even if some aspects were not previously decided by the Assessing Officer or CIT(A). In the facts of this case the Tribunal found that the assessee's application raised legal grounds going to the root of the assessment and based on precedents admitted the application for adjudication before entertaining the Revenue's appeal. [Paras 5]

Application under Rule 27 admitted and the grounds raised by the assessee under that rule were allowed to be adjudicated.

Jurisdictional validity of notice under section 143(2) - Effect of notice issued by non jurisdictional Assessing Officer - assessment void ab initio - Binding character of CBDT instructions under section 119 - Inapplicability of section 292BB to absence of jurisdictional notice - Whether the assessment framed u/s 143(3) is valid where the statutory notice u/s 143(2) was not issued by the Assessing Officer who had jurisdiction to complete the assessment. - HELD THAT: - The Tribunal found the undisputed facts to be that the assessee, a corporate entity, returned income below the pecuniary limit fixed for ITOs by CBDT Instruction No.1/2011; notices u/s 143(2) were issued by two DCITs and the assessment was ultimately completed by the Income Tax Officer, Ward 6(1), who had not issued any notice u/s 143(2) nor was there any order u/s 127 transferring jurisdiction by the Commissioner. Relying on CBDT Instruction No.1/2011 and on coordinated Tribunal and High Court precedents, the Tribunal held that instructions under section 119 are binding on income tax authorities and that service of a notice by an officer who did not have jurisdiction to issue it (and in the absence of a proper transfer order under section 127) goes to the root of the assessment. The Tribunal also explained that section 292BB cures defects in service or manner of service of a notice but does not validate the complete absence of a notice issued by the competent authority; therefore section 292BB does not assist Revenue where the statutory notice did not emanate from the jurisdictional Assessing Officer. Applying these principles to the record, the Tribunal held the assessment to be bad in law and void ab initio. [Paras 9, 12]

Statutory notice u/s 143(2) was not issued by the jurisdictional Assessing Officer and, in consequence, the assessment order is void ab initio; Revenue's appeal dismissed.

Final Conclusion: The Tribunal admitted the assessee's Rule 27 application and, on the merits, held that because the statutory notice under section 143(2) was not issued by the Assessing Officer having jurisdiction (and no valid transfer under section 127 was shown), the assessment was void ab initio; accordingly the Revenue's appeal was dismissed and other grounds rendered academic.

Exemption u/s 10(23C)(iiiab) - wholly or substantially financed by the Government - interpretation of "substantially financed" prior to amendment - prospective amendment by Finance Act 2014 w.e.f. 01.04.2015 - claim not made in the return and revised return requirement - rectification under section 154 - prima facie adjustment under section 143(1) - deduction under section 57(iii)

Deduction under section 57(iii) - prima facie adjustment under section 143(1) - Allowability of expenses claimed by the educational society as deduction under section 57(iii) despite denial in the intimation under section 143(1). - HELD THAT: - Tribunal found that the assessee filed return showing the expenditure applied to charitable/educational purposes and that books of account were audited; no material was produced by revenue to show the expenses were bogus or excessive. The AO's adjustment under section 143(1) could not be used to deny a debatable or prima facie admissible claim where no further enquiry was made under section 143(2) and no scrutiny was initiated. Even if receipts were assessed under the residual head because exemption was denied, Section 57(iii) would permit deduction of expenditure wholly and exclusively laid out for earning such income. On these facts the Tribunal confirmed the CIT(A)'s allowance of the claimed expenses as deductible under section 57(iii). [Paras 10, 11]

Claimed expenses of the society allowed as deduction under section 57(iii); revenue's ground in this regard dismissed.

Exemption u/s 10(23C)(iiiab) - claim not made in the return and revised return requirement - rectification under section 154 - Whether the appellate process could recognise and allow the assessee's claim for exemption under section 10(23C)(iiiab) despite absence of a specific column in the return and the claim not being expressly made in row/column of the ITR. - HELD THAT: - Tribunal noted the return form lacked a specific column to claim exemption under clause (iiiab) and accepted that the assessee clearly intended to claim exemption by showing expenditures and filing ITR as an educational society. Having regard to precedents and the duty of authorities to give relief where prima facie entitlement is shown, the CIT(A) was justified in entertaining and allowing the claim notwithstanding that a revised return was not successfully uploaded and rectification proceedings under section 154 had been pursued. The Tribunal upheld the CIT(A)'s approach that denial of a rightful exemption merely because of the format of return or omission in a specific column would be inappropriate where the assessee has demonstrated entitlement on the record. [Paras 12, 23]

CIT(A) rightly entertained and allowed the exemption claim under section 10(23C)(iiiab) despite absence of an express entry in the return; revenue's challenge on this ground dismissed.

Wholly or substantially financed by the Government - interpretation of "substantially financed" prior to amendment - prospective amendment by Finance Act 2014 w.e.f. 01.04.2015 - Whether the assessee was "wholly or substantially financed by the Government" for AY 2014-15 (i.e. prior to the prospective Explanation fixing a 50% threshold) and therefore eligible for exemption under section 10(23C)(iiiab). - HELD THAT: - The Tribunal examined the constitution, objects and fund-management rules of the society, documentary evidence of recurring government grants and the composition of the governing body under state control. It reviewed judicial precedents which, before insertion of the Explanation effective 01.04.2015, held that institutions receiving substantial government finance below an automatic 50% threshold could qualify. For the year under appeal government grants constituted approximately 49.40% of receipts when non-grant incidental receipts were excluded and, together with the governmental control over funds and administration, the Tribunal found this constituted substantial financing on the facts. Applying the pre-amendment judicial standards, the Tribunal concluded the assessee satisfied the requirement of being wholly or substantially financed by the Government for AY 2014-15. [Paras 16, 21, 22, 23]

Assessee held to be substantially financed by the Government for AY 2014-15 and eligible for exemption under section 10(23C)(iiiab); revenue's grounds challenging eligibility dismissed.

Final Conclusion: Revenue's appeal for Assessment Year 2014-15 is dismissed: the Tribunal confirmed allowance of the claimed expenses as deductible under section 57(iii) and upheld the CIT(A)'s finding that the assessee was eligible for exemption under section 10(23C)(iiiab) on the factual matrix of the year prior to the prospective statutory amendment fixing a 50% threshold.

Deduction under section 54B for reinvestment of capital gains - Interpretation of due date for utilisation - section 139(4) read with section 139(1) - Remand for verification of investments and supporting evidence - Disallowance of expenditure for lack of corroborative evidence

Deduction under section 54B for reinvestment of capital gains - Interpretation of due date for utilisation - section 139(4) read with section 139(1) - Remand for verification of investments and supporting evidence - Whether the assessee was entitled to deduction under section 54B for amounts invested in purchase of agricultural land up to the extended date allowed under section 139(4) and whether the restriction adopted by the CIT(A) to the date of actual filing of the return was correct. - HELD THAT: - The Tribunal observed that the CIT(A) followed a view restricting the deduction to investments made up to the date of actual filing of the return, relying on his own decision in Vijay Choudhary and certain earlier authorities. The Tribunal noted conflicting authorities of the Punjab & Haryana High Court (Jagriti Agrawal) and other coordinate benches which treat the extended due date under section 139(4) as operative for the purpose of utilisation of capital gains for exemptions pari materia to section 54. In the circumstances, and because the exact amounts invested within the qualifying period could not be verified before the Tribunal, the Tribunal set aside the CIT(A)'s finding and remanded the issue to the Assessing Officer for fresh verification of investments made in purchase of agricultural land and for decision in accordance with law after affording the assessee an opportunity of being heard. The Tribunal further directed that the Assessing Officer shall not withdraw the deduction already granted by the CIT(A) nor put the assessee in a worse position than after the impugned order of the CIT(A). [Paras 5]

Finding of the CIT(A) restricted to date of actual filing set aside; issue remanded to the Assessing Officer for verification and fresh decision, with direction not to worsen assessee's position.

Disallowance of expenditure for lack of corroborative evidence - Remand for verification of investments and supporting evidence - Whether amounts claimed as fencing and commission expenses against capital gains were allowable in absence of sufficient corroborative evidence. - HELD THAT: - The Tribunal recorded that the Assessing Officer and the CIT(A) had found insufficient evidence to substantiate the claims, while the assessee relied on confirmations from the payees and contended that the onus lay on the revenue to examine those parties. Given the factual nature of the claim and the need for verification, and in light of the remand on the section 54B issue, the Tribunal considered it appropriate in the interests of justice to remit the claim for fencing and commission to the Assessing Officer for fresh verification, directing that the assessee be given adequate opportunity of being heard. [Paras 6]

Disallowance upheld for present but matter remanded to the Assessing Officer for fresh verification and decision after affording opportunity to the assessee.

Final Conclusion: The appeal is allowed for statistical purposes by setting aside the CIT(A)'s restricted finding on deduction under section 54B and remitting that matter to the Assessing Officer for verification and fresh decision in accordance with law; the claim for fencing and commission is likewise remitted for verification. The Assessing Officer is directed not to put the assessee in a worse position than after the CIT(A)'s order.

Validity of notice under section 143(2) and curability under section 292B - Deeming fiction of deposit in Capital Gains Account Scheme under section 54F(4) - Eligibility for exemption under section 54F based on deposit before due date of return - Treatment of amounts seized and kept in PD account under section 132B - Computation of interest under section 234B and non-adjustability of PD amounts as advance tax

Validity of notice under section 143(2) and curability under section 292B - Notice issued under section 143(2) containing wrong date of filing was a typographical mistake curable under section 292B and jurisdiction was validly assumed within limitation. - HELD THAT: - The assessee filed the return on 30/07/2013 and a notice dated 19/11/2013 referred to an incorrect return filing date (31/07/2012). The Tribunal held this to be a typographical error curable under section 292B. Further, a subsequent notice dated 04/09/2014 was issued within the statutory period and received by the assessee on 10/09/2014, satisfying the requirements for assuming jurisdiction. Reliance on Hotel Bluemoon was considered but the facts showed compliance with limitation and curability; accordingly the contentions challenging the assessment for want of a valid s.143(2) notice were dismissed. [Paras 20, 21]

Grounds challenging issuance of notice under section 143(2) on account of incorrect date are dismissed.

Deeming fiction of deposit in Capital Gains Account Scheme under section 54F(4) - Eligibility for exemption under section 54F based on deposit before due date of return - Amount of Rs. 44,00,000 deposited in Capital Gains Account Scheme before the due date of return qualifies for exemption under section 54F for assessment year 2013-14; utilisation for purchase/construction is to be examined after expiry of the prescribed period under section 54F(4). - HELD THAT: - The Tribunal explained that section 54F(4) creates a deeming fiction treating deposits into the Capital Gains Account Scheme made before the due date of filing as cost of the new asset for the purposes of exemption, and that the question whether such deposits were ultimately utilised arises only in the previous year when the statutory period for purchase/construction (three years for construction) expires. The assessee deposited Rs. 44,00,000 on 06/11/2012, i.e. before the due date for filing the return, and therefore that deposit is to be treated as eligible for exemption in AY 2013-14. The Assessing Officer's examination of interim withdrawals and transfers within the financial year was held not to be in accordance with section 54F(4). [Paras 31, 34, 35, 36]

Claim of exemption under section 54F is allowed to the extent of the amount actually deposited in the Capital Gains Account Scheme as on the end of the relevant financial year (Rs. 44,00,000).

Evidence of bona fide intention to invest arising from advance payments and refunds - Deeming fiction of deposit in Capital Gains Account Scheme under section 54F(4) - Advance payment refunded (Rs. 4,84,020) and payments made as advances for purchase that were later refunded may be accepted as evidence of bona fide intention to invest; claim on this aspect is partly allowed. - HELD THAT: - The assessee produced records showing payment of an advance to a housing society which was refunded, and further advances paid towards a purchase which was cancelled and refunded and redeposited into the CGAS prior to the relevant return filing deadline. Though the Commissioner(A) had rejected these contentions for lack of details at the appellate stage, the Tribunal found that the advance and subsequent refunds demonstrate a genuine intention to invest the capital gains in a new asset and therefore the related ground was allowed partly as corroborative of intention while noting limitations in proof. [Paras 27, 37]

Grounds concerning the deposit/advance of Rs. 4,84,020 and related payments are partly allowed as evidence of genuine intention to invest.

Treatment of amounts seized and kept in PD account under section 132B - Eligibility for exemption under section 54F based on deposit before due date of return - Cash amount seized and retained in the PD account (Rs. 55,00,000) cannot be treated as a deposit in the Capital Gains Account Scheme and is not eligible for exemption under section 54F for AY 2013-14. - HELD THAT: - The Tribunal noted that deposits in a Capital Gains Account Scheme remain under the control of the assessee while amounts seized and kept in the PD account are under the Department's control and governed by section 132B procedures. There is no statutory provision linking PD account balances with the Capital Gains Account Scheme. Though the sale agreement showed receipt of cash and the Tribunal rejected the characterisation of the Rs. 55 lakh as 'undisclosed' for that reason, it held that because the amount was seized and controlled by the Department it could not be treated as a CGAS deposit for claiming exemption under section 54F in the year under consideration. [Paras 42, 43, 44]

Claim for exemption under section 54F in respect of the Rs. 55,00,000 held in PD account is rejected.

Computation of interest under section 234B and non-adjustability of PD amounts as advance tax - Treatment of amounts seized and kept in PD account under section 132B - Amounts seized and kept in PD account cannot be treated as payments of advance tax for the purpose of computing interest under section 234B; interest levied under section 234B is correctly chargeable. - HELD THAT: - The Tribunal observed that utilisation of seized funds is governed by section 132B and such amounts are available for adjustment only after determination of tax liabilities; they cannot be equated with prepaid taxes for the purpose of computing section 234B interest. The Tribunal found no infirmity in the Commissioner(A)'s conclusion that the PD amount is not allowable as advance tax and upheld the levy of interest as per law. [Paras 46, 47]

Ground challenging levy of interest under section 234B on account of the PD amount is dismissed.

Final Conclusion: The appeal is partly allowed: the notice challenge under section 143(2) is dismissed; exemption under section 54F is allowed to the extent of the deposit actually made in the Capital Gains Account Scheme before the due date (Rs. 44,00,000) and certain advance-payment related contentions are partly accepted as evidence of intent; the amount seized and retained in PD account (Rs. 55,00,000) is not eligible for claim under section 54F and cannot be treated as advance tax for computing interest under section 234B, hence the interest claim is dismissed.

Reopening of assessment - deduction of interest expenditure and nexus with borrowed funds - treatment of disallowed interest as part of cost of acquisition of shares and securities - disallowance attributable to personal household expenses and its proportional reduction - computation and recomputation of interest for delayed payment (sections 234A/234B/234C) - bind by Coordinate Bench/precedent applied mutatis mutandis

Deduction of interest expenditure and nexus with borrowed funds - bind by Coordinate Bench/precedent applied mutatis mutandis - Allowability of interest expenditure disallowed by AO and sustained by CIT(A). - HELD THAT: - The Tribunal examined the disallowance of interest claimed by the assessee and noted that identical contention had been decided in the assessee's own earlier years and by Coordinate Benches on merits. Applying those decisions mutatis mutandis, the Tribunal found that the matter is covered in favour of the assessee and directed acceptance of the assessee's claim as per the approach in the said precedents. The Tribunal therefore set aside the disallowance and remitted the matter to the file of the Assessing Officer to compute the correct interest income/deduction in accordance with the directions in the Coordinate Bench decisions relied upon by the assessee. [Paras 9]

Disallowance of interest expenditure is set aside and the claim is allowed following Coordinate Bench precedents; AO directed to recalculcate in accordance with those decisions.

Treatment of disallowed interest as part of cost of acquisition of shares and securities - capitalization of interest to cost of shares and securities - bind by Coordinate Bench/precedent applied mutatis mutandis - Whether proportionate interest disallowed should be capitalized and treated as part of cost of shares and securities. - HELD THAT: - Relying on earlier Tribunal decisions in the assessee's own case and in related matters (including the Sudhir Mehta line of decisions), the Tribunal directed that the proportionate interest disallowed is to be treated as part of the cost of acquisition of shares and securities. The Tribunal followed the Coordinate Bench view and remitted directions to the AO to effect capitalization of the disallowed interest while disposing the assessment matters accordingly. [Paras 12]

Proportionate disallowed interest to be capitalized as part of cost of acquisition of shares and securities; direction to AO to give effect accordingly.

Disallowance attributable to personal household expenses and its proportional reduction - bind by Coordinate Bench/precedent applied mutatis mutandis - Sustainability and quantum of addition made by AO on account of personal household expenses. - HELD THAT: - The Tribunal noted that similar additions have been reduced by 50% in the relevant precedent (Sudhir Mehta and related decisions) and, applying those decisions to the facts, held that the addition on account of personal household expenses should be reduced to 50%. The Tribunal followed its Coordinate Bench practice in like cases and gave effect to the reduction while sustaining the residual addition as indicated in those decisions. [Paras 15]

Addition on account of personal household expenses reduced to 50% and sustained to the extent indicated by the Tribunal's precedent.

Computation and recomputation of interest for delayed payment (sections 234A/234B/234C) - bind by Coordinate Bench/precedent applied mutatis mutandis - Levy and computation of interest under the provisions for delayed payment as sustained by AO and CIT(A). - HELD THAT: - The Tribunal observed that the identical issue has been dealt with in the assessee's earlier years and in Coordinate Bench decisions (including Sudhir Mehta). Following those directions, the Tribunal dismissed the challenge to the methodology as presently framed and directed the Assessing Officer to recompute the interest (under the relevant provisions) in accordance with the directions given in the referenced Coordinate Bench decisions, so as to ensure correct computation consistent with the treatment of income and deductions ordered. [Paras 18]

Grounds on levy and computation of interest under the delayed payment provisions are remitted for recomputation by the AO in accordance with Tribunal directions in the cited precedents.

Final Conclusion: Following and applying Coordinate Bench precedents mutatis mutandis, the Tribunal allowed the appeals for AY 2012-13 and 2013-14: disallowance of interest was set aside with directions to the AO to recalculate, proportionate disallowed interest was directed to be capitalized as part of cost of shares and securities, the personal household expenses addition was reduced by 50%, and the computation of interest under the delayed payment provisions was remitted to the AO for recomputation in accordance with the Tribunal's earlier directions.

Closure under Section 26(2) of the Competition Act, 2002 - prima facie case - abuse of dominant position - relevant market and dominance assessment - intra brand competition - contractual dispute not amenable to competition law intervention

Closure under Section 26(2) of the Competition Act, 2002 - prima facie case - abuse of dominant position - relevant market and dominance assessment - contractual dispute not amenable to competition law intervention - Whether the Competition Commission of India was right in closing the information under Section 26(2) for lack of a prima facie case of abuse of dominant position, and in declining to direct investigation by the Director General. - HELD THAT: - The Tribunal upheld the reasoning recorded by the Commission. The Commission examined the dealership agreement and noted clause 7(a)(ii) which reserves the manufacturer's right to appoint additional dealers; the appointment of further dealers was held to tend to improve intra brand competition and provide wider choice to consumers. The Commission further recorded factual material that supplies were made by the manufacturer in November-December 2016 and that the manufacturer denied that the informant had suffered the alleged losses due to non supply. Although a table in the record showed the manufacturer's sizeable market presence in power tillers and reapers, the Commission observed there was no evidence that supply was confined to Andhra Pradesh so as to limit the relevant market to that State, and that no exclusionary abusive conduct had been established. The agreement was also characterised as a short term, terminable contract (90 days' notice), which did not amount to denial of market access. On these bases the Commission concluded there was no prima facie case to warrant a DG investigation and closed the information under Section 26(2). The Tribunal found no reason to interfere, treating the dispute as essentially contractual between manufacturer and dealer which had been improperly sought to be converted into a competition complaint. [Paras 26, 27, 28, 29, 30]

The Tribunal dismissed the appeal, holding that the CCI did not err in finding no prima facie case of abuse of dominance and in closing the information under Section 26(2); the matter amounted to a contractual dispute not requiring competition law intervention.

Final Conclusion: Appeal dismissed at the stage of admission; CCI's closure under Section 26(2) sustained and no investigation ordered. Compensation application declared not surviving.

Maintainability of company petition under Section 244(1)(a) of the Companies Act, 2013 - requirement of prior written consent under Section 244(2) and annexure under procedural rules - power of attorney holder giving consent on behalf of member - curability of procedural non-compliance under tribunal rules - preliminary demurrer analogy to Order VII Rule 11 CPC

Maintainability of company petition under Section 244(1)(a) of the Companies Act, 2013 - Joint petition by three members satisfies the threshold under Section 244(1)(a) and is maintainable. - HELD THAT: - Admitted fact shows nine members in the company and the Appellants, as three members, satisfy the numerical requirement of more than one-tenth of total members. Although the petition did not plead that basis, the Tribunal's dismissal on that ground was not sustainable. The Court applied the established principle that a preliminary objection to maintainability should succeed only where the petition is unarguable on demurrer; mixed questions of fact and law ordinarily require consideration on merits. Having regard to the role of pleadings and the record, the joint petition met the statutory threshold and is maintainable. [Paras 22, 41]

The joint petition fulfills the requirement under Section 244(1) and is maintainable.

Requirement of prior written consent under Section 244(2) and annexure under procedural rules - curability of procedural non-compliance under tribunal rules - Section 244(2) requires obtaining written consent but does not mandate that such consent must be filed with the petition; non compliance with Rule 81 is not ipso facto fatal and can be cured. - HELD THAT: - Sub section (2) of Section 244 speaks of obtaining written consent; it does not expressly require annexure to the petition. Rule 81 of the NCLT Rules prescribes annexure of consent letters, but Rule 58 empowers the Tribunal to hold that failure to comply does not invalidate proceedings unless miscarriage of justice results. Reliance on Supreme Court precedent (J.P. Srivastava and P. Punnaiah) establishes that regulatory requirements as to annexures are not mandatory in the sense of automatic dismissal, and the Tribunal may permit cure or consider evidence on the issue of consent. Hence the absence of consent annexed at filing did not mandate dismissal. [Paras 23, 25, 26]

Written consent must be obtained but omission to annex consent under Rule 81 does not ipso facto invalidate the petition and may be cured.

Power of attorney holder giving consent on behalf of member - Consent for filing a petition may be given by a member's power of attorney holder; such consent is valid in law. - HELD THAT: - Consistent with Supreme Court decisions cited, the statute does not require that consent be furnished personally by the member; consent may be given by the member's agent under a power of attorney. The validity of consent is to be assessed on substance (broad consensus approach) rather than mere form, and representative capacity can sustain the petition. Therefore the GPA holder's consent is legally effective for purposes of Section 244(2). [Paras 30, 37, 38]

A power of attorney holder can validly give consent on behalf of the member.

Curability of alleged defect in execution of power of attorney - The Tribunal's suspicion about the execution date or genuineness of the GPA was unsustainable in the absence of any finding of forgery; the GPA was held to be acceptable evidence of consent. - HELD THAT: - The Tribunal doubted execution merely because the GPA was not annexed with the petition and there was no pleading referring to it. The Appellants produced a notarized GPA dated 04.04.2019 and subsequently swore affidavits confirming authorization; there was no finding of forgery or factual denial of execution. Precedent indicates courts should not reject documents as forged without specific findings or conclusive proof. There is no requirement that reasons for executing a GPA be recited in the document. On these facts, the GPA cannot be rejected and cures the omission. [Paras 32, 33, 34, 35, 36]

There was no basis to doubt the GPA; it validly constituted consent and remedied the non annexure at filing.

Preliminary demurrer analogy to Order VII Rule 11 CPC - Preliminary objections to maintainability must be decided on the petition's averments alone unless the objection is clearly unarguable; mixed questions require adjudication on merits. - HELD THAT: - The Tribunal's power to reject a petition at threshold is analogous to rejection of a plaint under Order VII Rule 11 CPC; the court is generally confined to pleadings and annexed documents and should not consider disputed factual defenses. The established jurisprudence requires dismissal at an initial stage only where the petition is unarguable on demurrer. The present factual matrix involved contested facts (shareholding percentages and consent), which could not properly be resolved by rejecting the petition at threshold. [Paras 19, 21]

The objection to maintainability could not be finally decided at the threshold on the material before the Tribunal.

Remand for disposal on merits - The matter is remanded to the National Company Law Tribunal, Bengaluru for disposal of the company petition on merits. - HELD THAT: - Having held that the petition was maintainable and that procedural defects were curable, the Appellate Tribunal set aside the impugned order of dismissal and directed the Tribunal to proceed to decide the petition on substantive merits. Ancillary interlocutory reliefs sought before the Appellate Tribunal were left to be pursued before the Tribunal. [Paras 43, 45]

Impugned order set aside; petition remanded to the Tribunal for adjudication on merits.

Final Conclusion: Appeal allowed; the order dismissing the company petition for failure to meet threshold under Section 244 is set aside. The Appellants' joint petition is held maintainable, the alleged non annexure of written consents and reliance on GPAs did not ipso facto invalidate the petition, and the matter is remanded to the National Company Law Tribunal, Bengaluru for disposal on merits; no order as to costs.

Application of provisions of Companies Act, 1956 to Limited Liability Partnerships under section 67 of the LLP Act, 2008 - Restoration of struck-off LLP under section 560 of the Companies Act, 1956 and its correspondence with section 252 of the Companies Act, 2013 - Continuance of specified provisions of the Companies Act, 1956 by section 465 of the Companies Act, 2013 - Power of the Registrar to strike off defunct LLPs under section 75 of the LLP Act, 2008

Application of provisions of Companies Act, 1956 to Limited Liability Partnerships under section 67 of the LLP Act, 2008 - Restoration of struck-off LLP under section 560 of the Companies Act, 1956 and its correspondence with section 252 of the Companies Act, 2013 - Continuance of specified provisions of the Companies Act, 1956 by section 465 of the Companies Act, 2013 - Power of the Registrar to strike off defunct LLPs under section 75 of the LLP Act, 2008 - Whether an LLP struck off under section 75 of the LLP Act, 2008 can be restored by invoking provisions analogous to section 560 of the Companies Act, 1956 and ordering restoration under section 252 of the Companies Act, 2013 - HELD THAT: - The Tribunal examined section 67 of the LLP Act, 2008 which empowers the Central Government to notify specified provisions of the Companies Act, 1956 as applicable to LLPs. By Notification No. G.S.R. 6(E) dated 6.1.2010 the Central Government made section 560 of the Companies Act, 1956 (relating to restoration of struck-off companies) applicable to LLPs. Section 560(5)-(6) permits restoration of a company struck off the register, and the Notification brings that remedy into the LLP regime. The Tribunal further relied on the definition of "company" in section 2(20) of the Companies Act, 2013, which includes entities incorporated under previous company law (section 2(60)), and on section 465 of the Companies Act, 2013 which preserves specified provisions of the Companies Act, 1956 until corresponding provisions are applied to LLPs. No subsequent notification has applied the corresponding provisions of the Companies Act, 2013 to LLPs in place of the earlier notification. In the absence of any express restoration provision in the LLP Act, 2008 and having regard to the Notification and the saving under section 465, the Tribunal concluded that the remedy of restoration available under section 560 of the Companies Act, 1956 is available to LLPs and is analogous to restoration under section 252 of the Companies Act, 2013. Applying these principles, the Tribunal held that an LLP struck off under section 75 of the LLP Act may be restored and that the petition seeking restoration under section 252 of the Companies Act, 2013 is maintainable for the purposes of granting restoration. [Paras 14, 15, 16, 17, 19]

The Tribunal held that an LLP struck off under section 75 of the LLP Act, 2008 can be restored by applying the restoration principle of section 560 of the Companies Act, 1956 (preserved by section 465 of the Companies Act, 2013), and accordingly allowed the appeal and ordered restoration under section 252 of the Companies Act, 2013.

Final Conclusion: The appeal was allowed and the Registrar was directed to restore the name of the LLP to the register by applying the restoration remedy preserved by the notification making section 560 of the Companies Act, 1956 applicable to LLPs and read in conjunction with section 252 of the Companies Act, 2013.

Restoration of struck off company - striking off for failure to file statutory returns - reinstatement subject to filing of pending statutory documents - imposition of costs for non-compliance - publication of restoration order in Official Gazette

Restoration of struck off company - striking off for failure to file statutory returns - Restoration of the company's name on the Register of Companies despite striking off for non-filing of returns. - HELD THAT: - The Tribunal found that the Registrar of Companies had struck the company's name under the statutory procedure after the company failed to file annual returns for three financial years. The company, however, produced financial statements showing continuing business operations, assets and liabilities and substantial revenue for the years in question. The Tribunal observed that notice in Form STK-5 had been published as required, though personal service was contested. Balancing the ROC's compliance with the striking-off procedure against the material showing the company was carrying on business, the Tribunal concluded that the appropriate relief was to restore the company's name from the date of striking off, subject to conditions to secure compliance with statutory filings and costs for the defaults.

Company's name restored on the Register of Companies from the date of striking off, subject to compliance directions and payment of costs.

Reinstatement subject to filing of pending statutory documents - Conditions to restoration requiring filing of pending statutory documents and compliance with prescribed fees/additional fee/fine. - HELD THAT: - The Tribunal directed that the applicant must file all pending statutory documents, including annual accounts and annual returns for the financial years in default, along with prescribed fees/additional fees/fines as determined by the ROC within 45 days of restoration. The company's representative who prosecuted the appeal was directed to personally ensure compliance. This condition secures the statutory purpose of filings and ensures that restoration does not circumvent compliance obligations.

Restoration granted conditional upon filing of all pending statutory documents and payment of applicable fees/fines within 45 days, with personal responsibility placed on the company's representative.

Imposition of costs for non-compliance - publication of restoration order in Official Gazette - Imposition of costs for each year of default and subsequent publication of the restoration order by the ROC. - HELD THAT: - Noting the absence of a plausible explanation for non-filing despite substantial operations, the Tribunal imposed a cost to penalize non-compliance: payment online of the specified cost for each year of default within 30 days. The Tribunal further directed that upon delivery of a certified copy of the order and compliance with stated directions, the ROC shall publish the order in the Official Gazette under its seal. The Tribunal clarified that the order is confined to violations leading to striking off and does not preclude the ROC from initiating other lawful actions for any separate violations.

Costs imposed to be paid within the specified time and ROC directed to publish the restoration order in the Official Gazette after compliance; other enforcement actions by ROC not foreclosed.

Final Conclusion: The appeal is allowed: the company's name is restored as if not struck off, subject to filing of all pending statutory documents with prescribed fees/fines within 45 days, payment of costs for each year of default within 30 days, personal assurance of compliance by the company's representative, delivery of certified copy to ROC, and publication of the order by the ROC; the order is limited to grounds for striking off and does not preclude other lawful actions by the ROC.

Sanction of Scheme of Amalgamation under sections 230 to 232 of the Companies Act, 2013 - Appointed Date for a scheme of amalgamation - Extinguishment of share capital on amalgamation and consequent increase in authorised share capital - Compliance with statutory and regulatory objections and filings including representation of Regional Director and report of Official Liquidator - Tribunal's satisfaction as to fairness, reasonableness and public policy

Sanction of Scheme of Amalgamation under sections 230 to 232 of the Companies Act, 2013 - Tribunal's satisfaction as to fairness, reasonableness and public policy - Sanction of the Scheme of Amalgamation of Rosche Trading Private Limited with Fine Tech Corporation Private Limited - HELD THAT: - The Tribunal considered the Scheme, the material on record including the Official Liquidator's report and the Representation of the Regional Director, and concluded that the Scheme appears fair and reasonable, is not violative of any provisions of law and is not contrary to public policy. Having found that requisite statutory compliances have been fulfilled, the Company Scheme Petitions were directed to be made absolute in terms of the prayers specified in the petitions. [Paras 15, 16, 21]

Scheme sanctioned and petitions made absolute.

Extinguishment of share capital on amalgamation and consequent increase in authorised share capital - Effect of the Scheme on the issued, subscribed and paid-up share capital of the Transferor Company and the authorised share capital of the Transferee Company - HELD THAT: - The Scheme provides that upon amalgamation the entire issued, subscribed and paid-up equity and preference share capital of the Transferor Company shall stand extinguished and cancelled without any allotment by the Transferee Company to the shareholders of the Transferor Company. The Scheme also provides for an increase in the authorised share capital of the Transferee Company from the pre-scheme figure to a higher figure (including issuance of preference shares) which is within the combined authorised capitals of the two companies. Those provisions form part of the sanctioned Scheme and will take effect from the Appointed Date. [Paras 8, 9, 16]

Provisions concerning extinguishment of Transferor Company's share capital and increase in Transferee Company's authorised capital sanctioned and to take effect as per the Scheme.

Compliance with statutory and regulatory objections and filings including representation of Regional Director and report of Official Liquidator - Compliance with observations of the Regional Director, report of the Official Liquidator and other statutory filing requirements - HELD THAT: - The Official Liquidator reported that the affairs of the Transferor Company have been conducted properly. The Regional Director's Representation raised certain observations (accounting entries under applicable standards; effect and dating of the Appointed Date; set-off of fees under the statute; service of notices under section 230(5); confirmation of consistency of filed Scheme; and income-tax related observations). The petitioners filed affidavits undertaking to comply with applicable accounting standards, confirming the Appointed Date and compliance with the Circular, undertaking to avail statutory set-off of fees where applicable, confirming service of notices and identity of the filed Scheme, and undertaking to deal with tax matters in accordance with law. The Tribunal took these submissions and undertakings on record before sanctioning the Scheme. [Paras 12, 13, 14]

Regional Director's observations noted; petitioners' undertakings accepted and required compliances directed to be carried out.

Appointed Date for a scheme of amalgamation - Fixation of the Appointed Date for the Scheme - HELD THAT: - The Scheme specified the Appointed Date as 1st April 2018 and clarified that on sanction by the Tribunal the Scheme shall be effective from that date. The Tribunal sanctioned the Scheme and fixed the Appointed Date as 1st April 2018. [Paras 5, 21]

Appointed Date fixed as 1st April 2018.

Post-sanction filing and consequential directions - Directions concerning filing of the Tribunal order and Scheme with relevant authorities and consequential actions - HELD THAT: - As part of the sanctions and to give effect to the Scheme, the Transferee Company was directed to file a certified copy of the Order and the Scheme with the Superintendent of Stamps within sixty days for adjudication of stamp duty, and to file the Order and Scheme with the Registrar of Companies electronically in E-Form INC-28 in addition to the physical filing. All concerned regulatory authorities were directed to act on a certified copy of the Order and the Scheme. The Tribunal also left liberty to any interested person to apply for directions or modifications if necessary. [Paras 17, 18, 19, 20]

Specified filings and compliances directed to be carried out and regulatory authorities authorised to act on certified copies; liberty reserved for interested persons to seek modifications.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between Rosche Trading Private Limited and Fine Tech Corporation Private Limited, fixed the Appointed Date as 1st April 2018, accepted the petitioners' undertakings in response to the Regional Director's observations and the Official Liquidator's report, directed statutory filings and compliances, and made the Company Scheme Petitions absolute.

Restoration of struck off company - striking off of name from register of companies - representation under section 248(5) of the Companies Act, 2013 - filing of annual financial statements and annual returns - payment of prescribed fees, additional fee and costs for revival - publication of restoration order in the Official Gazette - company carrying on business / going concern

Restoration of struck off company - striking off of name from register of companies - company carrying on business / going concern - filing of annual financial statements and annual returns - payment of prescribed fees, additional fee and costs for revival - publication of restoration order in the Official Gazette - Restoration of the company's name on the register of companies and the conditions on which restoration is permitted. - HELD THAT: - The Tribunal found that although the company had defaulted in filing annual returns and financial statements for the years in question, the company produced audited financial statements and evidence of fixed assets and liabilities showing it was carrying on business. The applicant had also filed a representation under section 248(5) of the Companies Act, 2013 stating the company was a going concern and that non-filing was inadvertent; the Tribunal observed that the ROC ought to have considered that representation. In view of the company being operational, the Tribunal directed restoration of its name on the register as if it had not been struck off, subject to conditions. The conditions imposed require the company to file all pending statutory documents (including annual financial statements and annual returns) with prescribed fees/additional fees/fines within 45 days of restoration, payment of an aggregate cost for revival, personal assurance by the company's representative as to compliance, delivery of a certified copy of the order to the ROC, and publication of the order by the ROC in the Official Gazette. The Tribunal also clarified that restoration is confined to the violations that led to striking off and does not preclude the ROC from taking appropriate action for any other violations or offences committed prior to or during striking off. [Paras 5, 6, 7]

The company's name is restored on the Register of Companies; restoration is subject to filing outstanding statutory documents with prescribed fees/fines, payment of costs, delivery of the order to the ROC, publication in the Official Gazette and compliance as directed; the ROC remains free to take action for other violations.

Final Conclusion: The Tribunal allowed restoration of the company's name on the register, subject to specified compliance (filing of pending annual financial statements and returns with fees/late fees/fines, payment of revival cost, delivery of the order to the ROC and publication in the Official Gazette), and limited the order to the violations that resulted in striking off while leaving the ROC free to pursue other proceedings if warranted.

Restoration of company name to the Register - striking off under Section 248(1) of the Companies Act, 2013 - discretion under Section 252(1)/(3) to restore where company was carrying on business - failure to file statutory returns as ground for strike-off - dormant company status under Section 455 - conditional restoration subject to filing of outstanding documents and payment of fees - protection of revenue and directions for recovery proceedings

Restoration of company name to the Register - discretion under Section 252(1)/(3) to restore where company was carrying on business - striking off under Section 248(1) of the Companies Act, 2013 - failure to file statutory returns as ground for strike-off - The appellants' challenge to the strike-off was allowed and the company's name was ordered to be restored on the Register subject to conditions. - HELD THAT: - The Tribunal found that the company produced sufficient material demonstrating it was in operation and not a defunct entity despite non-filing of annual returns for the period leading to strike-off. Exercising the discretionary power under Section 252(1)/(3), the Tribunal held that where a company can show it was carrying on business at the time of striking off and where it is just to do so, restoration is appropriate. Accordingly the Public Notice striking off the company's name under Section 248(1) was declared illegal and set aside. Restoration was ordered to be subject to the company filing all outstanding statutory documents with proper filing fees, additional fees and any late fees or charges leviable for late filing, and payment of the specified cost to the Prime Minister's Relief Fund, after which the name would be restored as if not struck off (decision and remedial condition explained). [Paras 15, 17]

Appeal allowed; strike-off declared illegal and restoration ordered on compliance with filing of outstanding documents, payment of fees and costs.

Protection of revenue and directions for recovery proceedings - provisional measures in aid of tax demand - Directions were issued to protect the Revenue by requiring the company to cooperate with recovery/penalty proceedings and to furnish an undertaking regarding disposal of assets. - HELD THAT: - Having noted the Income Tax Department's contentions and demand, the Tribunal directed the appellant company to attend recovery and penalty proceedings before the concerned authority and to furnish details of all movable and immovable assets. The company was also directed to file an undertaking that no assets would be sold before payment of the tax demand. These directions were imposed as conditions ancillary to restoration to safeguard the interests of the Revenue. [Paras 16, 17]

Appellant directed to cooperate in recovery/penalty proceedings, disclose assets and file undertaking restraining sale of assets until tax demands are satisfied.

Final Conclusion: The Tribunal allowed the appeal, set aside the Registrar's notification striking off the company's name, and ordered restoration of the company's name on compliance with filing of outstanding statutory returns, payment of applicable fees and a specified cost to the Prime Minister's Relief Fund; ancillary directions were issued to protect the Revenue by requiring cooperation in recovery proceedings and an undertaking regarding disposal of assets.

Restoration of struck off company - Section 252 of the Companies Act, 2013 - carrying on business - mitigating circumstances - conditional restoration - statutory compliance and late filing consequences - non-restoration of disqualified directors - preservation of Registrar's enforcement powers

Restoration of struck off company - Section 252 of the Companies Act, 2013 - carrying on business - mitigating circumstances - Application under Section 252 for restoration of the company's name in the Register of Companies was allowed. - HELD THAT: - The Tribunal examined whether the applicant, whose name had been struck off under the Registrar's action, demonstrated that the company was carrying on business at the time of striking off and whether mitigation justified restoration under Section 252. The applicant produced bank statements, GST returns and income tax returns showing business activity and tax payments for the periods relied upon. The Tribunal held that, although non-filing of statutory returns did not absolve the company, the material furnished demonstrated sufficient running business and mitigating circumstances to exercise the discretionary power of restoration under Section 252 and that, in the interest of stakeholders, restoration was just and appropriate. [Paras 9, 10, 11]

Restoration of the applicant company's name ordered under Section 252 subject to conditions.

Conditional restoration - statutory compliance and late filing consequences - non-restoration of disqualified directors - preservation of Registrar's enforcement powers - Restoration was granted subject to specified conditions and with preservation of the Registrar's powers; restoration does not automatically revive directorships disqualified under the Act. - HELD THAT: - The Tribunal imposed conditions as part of the restoration: filing of outstanding annual returns and financial statements within a fixed time after restoration with requisite fees and additional fees; deposit of a specified amount to defray fees and ROC costs with provision for adjustment and return of any excess; prohibition on alienation of valuable assets until compliances are complete; filing of an affidavit of compliance; and submission by shareholders of an undertaking regarding non use of company accounts for tainted transactions during demonetisation. The Tribunal further clarified that restoration of the company's name does not automatically entitle any directors disqualified under Section 164 to be restored to directorship except in accordance with law, and that the ROC's power to proceed for alleged late filings and other non compliances remains unimpaired. [Paras 11]

Restoration allowed on the stipulated conditions; directors' disqualification not automatically removed; Registrar's enforcement rights preserved.

Final Conclusion: The Tribunal allowed the application for restoration of the company's name under Section 252 on the basis that the company demonstrated ongoing business and mitigating circumstances, subject to specific compliance conditions, safeguarding the Registrar's enforcement powers and without automatically reviving any disqualified directorships.

Restoration of company name struck off from the register - effect of non-filing of statutory returns leading to striking off - restoration under Section 252(3) of the Companies Act, 2013 - demonstration of carrying on business for the prescribed period prior to strike-off - conditions for restoration and compliance - directors' disqualification and non-automatic restoration of directorship - RoC's power to proceed for non-compliance and levy of fees/charges

Demonstration of carrying on business for the prescribed period prior to strike-off - restoration under Section 252(3) of the Companies Act, 2013 - The Company had been carrying on business/operations for the two-year period immediately prior to the date of strike-off and, on that basis, its name should be restored to the register. - HELD THAT: - The Tribunal accepted the Applicant's documentary evidence-Income Tax Returns and audited balance sheets for the relevant years and contemporaneous bank statements-which collectively established that the Company was operational during the two-year period preceding the strike-off. While the RoC had initiated strike-off proceedings in view of continuous non-filing of statutory Financial Statements and Annual Returns from 01.04.2015 to 31.03.2019, the material placed by the Applicant showed business activity and banking transactions immediately prior to the strike-off. Having regard to the requirement under Section 252(3) and the demonstration of active operations for the requisite period before strike-off, the Tribunal found it fit to order restoration of the Company's name to the register, subject to specified conditions to secure compliance and protect public interest. [Paras 16, 17]

The name of the Company is restored on the RoC register on the ground that it carried on business for the two years prior to strike-off, subject to the directions set out by the Tribunal.

Conditions for restoration and compliance - RoC's power to proceed for non-compliance and levy of fees/charges - directors' disqualification and non-automatic restoration of directorship - Restoration is granted subject to enumerated conditions including filing of outstanding returns and financial statements, deposit for fees/expenses, restrictions on alienation, affidavit/undertaking requirements, and preservation of RoC's enforcement powers; directors disqualified under law are not automatically reinstated. - HELD THAT: - The Tribunal specified conditional directions to be complied with following restoration: (i) within 15 days from restoration the Company must file all outstanding annual returns and balance sheets and make requisite statutory payments including additional and late fees; (ii) the Company must deposit a sum with the RoC from its funds to meet fees, charges and RoC's costs in striking off, with any shortfall payable by the Company and any surplus returned to it; (iii) until compliances are completed, the Company shall not alienate or dispose of valuable assets; (iv) restoration of the Company's name does not automatically reinstate any director disqualified under the relevant provisions of the Companies Act, 2013; (v) an affidavit of compliance must be filed within two months; (vi) shareholders must furnish an undertaking regarding use of accounts during demonetisation; and (vii) the order does not preclude the RoC from proceeding against the Company or its directors for alleged late filing or other statutory defaults. These conditions secure statutory compliance and preserve RoC's regulatory and enforcement rights. [Paras 17, 18]

Restoration is subject to the Tribunal's detailed directions which the Company must comply with within the timelines specified; RoC's enforcement powers and consequences for disqualified directors remain unaffected.

Final Conclusion: The Tribunal allowed the application and ordered restoration of the Company's name to the register under the statutory provision invoked, having found the Company to have been operational for the two years prior to strike-off, but conditioned restoration on prompt filing of outstanding statutory documents, payment/deposit to cover fees and RoC costs, restraints on asset disposition until compliance, filing of an affidavit and undertaking, and without prejudicing the RoC's power to take action for past non-compliance or affecting statutory disqualification of directors.

Performance guarantee - acceptance of scaled down bank guarantee - committee of creditors' commercial wisdom - direction to committee of creditors to reconsider terms of resolution process

Performance guarantee - acceptance of scaled down bank guarantee - direction to committee of creditors to reconsider terms of resolution process - Whether the Committee of Creditors may be directed to consider the Resolution Plan on the basis of a reduced bank performance guarantee offered by the Resolution Applicant. - HELD THAT: - The sole Resolution Applicant sought that the performance guarantee requirement in the RFRP, fixed at a higher amount than the proposed resolution outlay, be scaled down and that the CoC and the Resolution Professional be directed to accept a bank performance guarantee of Rs. 3 Crores. The Tribunal observed that the CoC could have, in its commercial wisdom, altered the requirement but had not done so and that awaiting the CoC's own decision would cause delay. In the interest of justice and considering the facts and circumstances, the Tribunal ordered that the CoC may consider the Resolution Plan by accepting the bank performance guarantee of Rs. 3 Crores as offered by the Resolution Applicant. The Application was disposed of accordingly.

The CoC is directed to consider the Resolution Plan accepting the bank performance guarantee of Rs. 3 Crores as offered by the Resolution Applicant; the application is disposed of.

Application rendered infructuous - Whether the second application with similar prayers is maintainable after the Tribunal's order in the earlier application. - HELD THAT: - The Tribunal noted that IA No. 1136 of 2020 presented identical reliefs to those granted in IA No. 1072 of 2020. In view of the order disposing of IA No. 1072, there was no live controversy left for adjudication in IA No. 1136. Consequently, the second application was dismissed as infructuous.

IA No. 1136 of 2020 is dismissed as infructuous.

Final Conclusion: The Tribunal directed the CoC to consider the Resolution Plan on the basis of the reduced bank performance guarantee of Rs. 3 Crores offered by the Resolution Applicant and disposed of IA No. 1072 of 2020; IA No. 1136 of 2020 was dismissed as infructuous.

Exclusion of lockdown period from CIRP under Regulation 40C of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Extension of Corporate Insolvency Resolution Process period - Effect of COVID-19 lockdown on timelines for CIRP - Committee of Creditors' approval for excluding lockdown period

Exclusion of lockdown period from CIRP under Regulation 40C of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Extension of Corporate Insolvency Resolution Process period - Effect of COVID-19 lockdown on timelines for CIRP - Committee of Creditors' approval for excluding lockdown period - Application to exclude the period of lockdown from the CIRP timeline and to extend the CIRP to 06.09.2020 was allowed. - HELD THAT: - The Resolution Professional sought exclusion of the lockdown period (22.03.2020 to 31.07.2020) from the CIRP timeline and consequential extension so that the balance of days available under the earlier judicially-extended CIRP (330 days) could be utilised, contending that foreign prospective resolution applicants (located in Singapore and Hong Kong) and key participants were affected by COVID-19 and could not complete or sign resolution plans. The Committee of Creditors considered Regulation 40C of the IBBI (IRP for Corporate Persons) Regulations, 2016 and resolved to exclude the lockdown period to facilitate submission and approval of plans. The Tribunal noted the prior extensions granted (leading to a 330-day timeline) and accepted the Resolution Professional's calculation that 37 days remained to be availed after exclusion of the lockdown period. In view of the COC's resolution, the practical difficulties caused by the lockdown on participants and reliance on Regulation 40C to exclude the period lost due to lockdown, the Tribunal found grounds to allow the application and direct completion of the CIRP by 06.09.2020.

IA allowed; CIRP to be completed by 06.09.2020.

Final Conclusion: The Tribunal allowed the interlocutory application, excluded the lockdown period for the purposes of the CIRP timeline under Regulation 40C, and directed that the Corporate Insolvency Resolution Process be completed by 06.09.2020.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - pending litigation category - arrears category - eligibility under the scheme (section 125) - tax dues and reliefs under the scheme (section 124) - pre-deposit adjustment under the scheme - liberal interpretation to effectuate scheme's object - remand for fresh consideration and consequential relief

Pending litigation category - arrears category - eligibility under the scheme (section 125) - tax dues and reliefs under the scheme (section 124) - Whether the petitioner's declaration under the SVLDRS should be treated as one under the 'pending litigation category' or under the 'arrears category'. - HELD THAT: - The statutory scheme requires only that an appeal be filed and that it be pending as on 30.06.2019 for classification under the 'pending litigation category'. The court noted the petitioner had filed an appeal against the order in original and that the appeal was pending as on 30.06.2019 (albeit defective and assigned a diary number). The scheme does not require that the appeal be admitted or assigned a regular number as a condition precedent to invoke relief under the 'pending litigation category'. Section 125(1)(a) disqualifies only those whose appeal had been finally heard on or before 30.06.2019; that disqualification did not apply. The alternative basis for treating the matter as 'arrears' under section 121(c) (no appeal filed or appeal having attained finality or admitted liability) did not obtain because an appeal had been filed within limitation and was pending as on 30.06.2019. Having regard also to the scheme's object to relieve legacy litigation and the direction in earlier decisions to interpret the scheme liberally to achieve that object, the court held the petitioner's declaration must be construed as made under the 'pending litigation category'. [Paras 17, 18]

Petitioner's declaration is to be treated as one under the 'pending litigation category' and not under the 'arrears category'.

Remand for fresh consideration and consequential relief - refund of amounts paid under scheme - opportunity of hearing - pre-deposit adjustment under the scheme - Whether the matter should be remanded to the Designated Committee to determine consequential relief (including refund) treating the declaration as under the 'pending litigation category'. - HELD THAT: - Given the conclusion that the declaration qualifies under the 'pending litigation category', the court directed that the Designated Committee reconsider and determine the consequential relief payable to the petitioner, including adjustment of pre deposits and refund of any excess amount collected. The court emphasised that the petitioner must be afforded a reasonable opportunity of hearing before the Designated Committee proceeds. The court fixed a timeline for this exercise to ensure finality and prompt disposal consistent with the scheme's purpose. [Paras 21]

Matter remanded to the Designated Committee to take a fresh decision as to consequential relief (including refund), after affording hearing to the petitioner, within four weeks from receipt of the judgment; writ petition allowed, no order as to costs.

Final Conclusion: Declaration filed by the petitioner under the SVLDRS is to be treated as under the 'pending litigation category'; the matter is remitted to the Designated Committee to determine consequential relief including any refund after hearing the petitioner within four weeks; writ petition allowed with no order as to costs.

Construction of residential complex service versus Works Contract Service - Voluntary Compliance Encouragement Scheme - Works Contract (Composition Scheme for payment of service tax) - option to assessee and non-imposability by department - Enhanced abatement available for construction of residential complex services - Remand to adjudicating authority for fresh examination and natural justice

Construction of residential complex service versus Works Contract Service - Voluntary Compliance Encouragement Scheme - Remand for fresh examination of liability to pay service tax on the land owner's share of flats declared under VCES and whether separate service tax is exigible. - HELD THAT: - The Tribunal did not decide the substantive question whether service tax is payable separately on the land owner's share of flats declared under the VCES. Instead, after noting the appellant's contention and earlier orders of this Bench holding that the builder's share subsumes the entire value of the project, the Tribunal directed the adjudicating authority to re-examine the matter in the light of those decisions. The remand requires the authority to consider whether the declaration under VCES was correctly treated and whether separate tax can be levied on the land owner's portion when no consideration was received by the builder. The Tribunal expressly left all issues open and declined to express any opinion on the merits, returning the matter for fresh adjudication and for compliance with principles of natural justice. [Paras 9, 10, 11]

Matter remanded to the adjudicating authority to examine afresh the question of service tax on the land owner's share declared under VCES.

Classification of service - Construction of residential complex service versus Works Contract Service - TRU letter F.No.332/22/2015-TRU dt.05.09.2016 - Remand to examine classification of the activity and applicability of the TRU clarification on appropriate classification. - HELD THAT: - The Tribunal directed that the adjudicating authority should reconsider classification in light of the TRU communication dated 05.09.2016 which, according to the appellant, clarifies that 'Construction of Complex Service' is the appropriate classification and not 'Works Contract Service'. The Tribunal did not rule on the bindingness or applicability of that letter, but required the adjudicating authority to examine the issue afresh and apply principles of natural justice before passing a fresh order. [Paras 9, 10, 11]

Adjudicating authority to re-examine classification of services with reference to the TRU letter and decide after giving parties an opportunity of being heard.

Works Contract (Composition Scheme for payment of service tax) - option to assessee and non-imposability by department - Remand to verify whether the composition scheme can be imposed by the department in absence of an option exercised by the assessee and whether valuation under that scheme was correctly applied. - HELD THAT: - The Tribunal noted the appellant's submission that the composition scheme under the Works Contract Rules is optional and cannot be unilaterally imposed by the department, and directed the adjudicating authority to examine whether any provision permits the department to apply the composition scheme without the assessee opting for it. The Tribunal did not decide this legal question on merits but required the authority to consider the contention and decide afresh after following natural justice. [Paras 9, 10, 11]

Adjudicating authority to examine whether the composition scheme could be applied in absence of an assessee's option and determine valuation accordingly.

Final Conclusion: The impugned order is set aside and the appeal is allowed by way of remand: the matter is restored to the adjudicating authority to re-consider (i) the question of taxability of the land owner's share declared under VCES, (ii) the appropriate classification in light of the TRU letter, and (iii) whether the Works Contract composition scheme could be imposed without the assessee's option, with all issues to be decided afresh after affording opportunity of hearing.

Constitutional validity of levy of service tax on renting of immovable property - refund under Section 11B of the Central Excise Act made applicable to service tax under Section 83 of the Finance Act, 1994 - sub-judice doctrine and deference to Constitutional Bench - remand for re-adjudication after disposal of Special Leave Petitions

Constitutional validity of levy of service tax on renting of immovable property - refund under Section 11B of the Central Excise Act made applicable to service tax under Section 83 of the Finance Act, 1994 - remand for re-adjudication after disposal of Special Leave Petitions - The appeal could not be adjudicated on merits because the constitutional validity of levy of service tax on the disputed service was sub-judice before the Hon'ble Supreme Court; the matter was remanded to the original authority for fresh decision after disposal of the SLPs by the Constitutional Bench. - HELD THAT: - The Tribunal noted that the legislative competence to levy service tax on renting of immovable property had been challenged before the Supreme Court and that the Supreme Court, by reference to a Constitutional Bench (following Mineral Area Development Authority & ors.), had deferred similar matters until the issues before that Bench were disposed of. In view of the pendency of the SLPs raising the constitutional question, the Tribunal held that it was not appropriate to decide the appellant's refund claim on merits at this stage. Consequently the impugned appellate order was set aside and the matter remitted to the original authority for re-adjudication of leviability and related issues in light of the decision of the Hon'ble Supreme Court.

Impugned order set aside; appeal remitted to the original authority for re-adjudication of leviability of service tax and the refund claim after disposal of the SLPs by the Constitutional Bench of the Hon'ble Supreme Court.

Final Conclusion: Because the constitutional question on levy of service tax on renting of immovable property was pending before the Constitutional Bench of the Hon'ble Supreme Court, the Tribunal set aside the appellate order and remanded the matter to the original authority for fresh adjudication on leviability and the refund claim after the Supreme Court decides the pending SLPs.

Priority of secured creditor under SARFAESI Act - Crown debt / preferential right of the State vis-a -vis unsecured creditors - liability of auction purchaser versus successor in business - absence of a statutory first charge in the Central Excise framework - detention under excise/customs rules versus creation of a charge - demand notice issued without jurisdiction to third party purchaser

Liability of auction purchaser versus successor in business - demand notice issued without jurisdiction to third party purchaser - Auction purchaser is not liable to pay the excise/customs dues of the previous licensee where the purchaser has acquired only the properties and has not purchased the entire unit as a continuing business. - HELD THAT: - The Court held that concessions and exemptions granted to an assessee under the EOU scheme are personal to the licensee and are not transferable to a third party purchaser absent statutory provision or permission. A distinction is drawn between (a) purchase of an ongoing concern (where business, goodwill, employees and continuity are taken over and the purchaser may be a successor in business and liable for liabilities) and (b) purchase of properties alone (land, buildings, plant and machinery) where the business is not continued. In the latter situation liabilities of the previous owner remain personal to the previous owner and do not bind the auction purchaser. Applying these principles to the facts, the petitioner purchased the properties and commenced a new business; there is no continuance of the previous business or succession in business; accordingly the excise/customs demand made against the petitioner is without jurisdiction. [Paras 9, 21, 27, 31, 32]

The notice(s) and demand(s) directed at the auction purchaser in respect of arrears of excise/customs duty of the previous owner are without jurisdiction and cannot be enforced against the petitioner.

Priority of secured creditor under SARFAESI Act - Crown debt / preferential right of the State vis-a -vis unsecured creditors - absence of a statutory first charge in the Central Excise framework - detention under excise/customs rules versus creation of a charge - A secured creditor enforcing security under SARFAESI has priority to recovery from sale proceeds; Crown's preferential right does not displace a prior secured debt where no statutory first charge in the Central Excise or Customs enactments exists. - HELD THAT: - The Court reviewed authority establishing that the common law doctrine of Crown debt preference applies to unsecured creditors but does not override prior perfected security interests. The SARFAESI regime accords a secured creditor preferential rights to realize secured debts by sale of assets; in the absence of a statutory provision creating a first charge in favour of the revenue (Section 11 of the Central Excise Act does not create such a charge), the secured creditor's claim is entitled to priority and the revenue is an unsecured creditor entitled to claim only from any surplus after satisfaction of secured debts. The fact that revenue authorities have powers of detention, seizure or confiscation does not by itself create a charge that ranks ahead of the secured creditor. The Court applied these principles to conclude that the bank (secured creditor) had priority and the department could have claimed any surplus but could not demand recovery from the auction purchaser. [Paras 7, 16, 17, 21, 25]

The secured creditor's priority to proceeds of sale under SARFAESI prevails over the departmental claim in the absence of a statutory first charge in favour of the revenue.

Demand notice issued without jurisdiction to third party purchaser - liability of auction purchaser versus successor in business - The impugned demand notices issued by Central Excise/Customs and by the Employees' State Insurance Corporation against the petitioner/auction purchaser were without jurisdiction and are liable to be quashed. - HELD THAT: - Having found that the petitioner was an auction purchaser of properties (not a successor in business) and that the secured creditor's priority precluded the revenue from enforcing its claim against the purchaser, the Court held that the departmental notices directed at the petitioner were issued without jurisdiction. The Court further observed that revenue could pursue the defaulter/beneficiary of the licence but could not validly demand payment from the third party purchaser; therefore the petitioner was not obliged to exhaust alternative remedies before approaching the writ court. Applying the same reasoning, the ESIC recovery notices addressed to the petitioner were also held to be without jurisdiction. [Paras 32, 39, 40]

Impugned demand notices of Central Excise/Customs dated 24.02.2011 and 24.05.2011 and ESIC notices dated 29.01.2013, 21.11.2014 and 05.12.2014 are quashed/set aside.

Final Conclusion: Writ petitions allowed: departmental demand notices addressed to the auction purchaser are without jurisdiction and are quashed; secured creditor's priority under the SARFAESI regime prevails in the absence of a statutory first charge in favour of the revenue; revenue may pursue the original defaulter but cannot attach liability to a third party purchaser who acquired only the properties and did not continue the business.

Interpretation of 'total CENVAT credit' under rule 6(3A)(b)(ii) - Proportionate reversal of CENVAT credit - Application of rule 6(1)-(3A) of the CENVAT Credit Rules, 2004 - Retrospective clarificatory effect of amendment to rule 6(3A) - Limited precedential value of interim tribunal orders

Interpretation of 'total CENVAT credit' under rule 6(3A)(b)(ii) - Proportionate reversal of CENVAT credit - Application of rule 6(1)-(3A) of the CENVAT Credit Rules, 2004 - Whether the phrase 'total CENVAT credit taken on input services' in rule 6(3A)(b)(ii) includes CENVAT credit on input services exclusively used for taxable output services or is confined to common input services (and input services used in exempted services). - HELD THAT: - The Court examined sub-rules (1), (2) and (3) of rule 6 and the formula in rule 6(3A). Rule 6(1) disallows credit for input services used for exempted services, and rule 6(2) contemplates separate accounts so that only credit on input services used for taxable services is availed. Rule 6(3)/(3A) prescribes a mechanism for proportionate reversal where separate accounts are not maintained. A conjoint reading of these sub-rules shows that the objective of the provision is to deny only that part of the total credit attributable to exempted services; consequently, the term 'total CENVAT credit' in the formula must be read as referring to total CENVAT credit of common input services (and input services used for exempted services) and must not include credit on input services exclusively used for taxable output services. The Court further relied on the amendment to rule 6(3A) by Notification dated March 1, 2016 and the accompanying Tax Research Unit Circular, which clarify and rationalize the calculation to consider only common input services for computing reversal, and on Tribunal authority holding similarly. The Court noted that interim orders express prima facie views and lack precedential value and, having found the interpretation advanced by the appellant consistent with the scheme and the amendment, held that the demand based on the broader interpretation could not be sustained. [Paras 19, 20, 21, 22, 23]

The phrase 'total CENVAT credit taken on input services' in rule 6(3A)(b)(ii) is confined to total CENVAT credit of common input services (and input services used in exempted services) and does not include credit on input services exclusively used for taxable output services; the demand confirmed on the broader interpretation is set aside.

Final Conclusion: The Commissioner (Appeals) order confirming the demand under rule 6(3A) is set aside and the appeal is allowed on the ground that the computation of reversal must consider only common input services (in line with the amended rule and explanatory circular), not input services exclusively used for taxable services.

Assessment of escaped turnover - period of limitation for re-opening assessments - re-opening of assessment - prospective operation of amendment extending limitation period - legislative competence of State Legislature to amend limitation after repeal

Assessment of escaped turnover - period of limitation for re-opening assessments - re-opening of assessment - Ext.P1 notice dated 18.01.2020 for assessment year 2013- 2014 is barred by limitation and the consequential assessment order Ext.P3 dated 21.03.2020 is liable to be set aside. - HELD THAT: - The Court found that under Section 25(1) of the KVAT Act the assessment for escaped turnover must be made within five years from the last date of the year to which the return relates. The amendment by the Finance Act, 2017 extending the period to six years operates prospectively from 01.04.2017. Relying on the decision in Baiju A.A. and others v. State Tax Officer and others, the Court noted that after the Constitutional Amendment and the repeal of the KVAT Act on 22.06.2017 the State Legislature lacked competence to rely upon later amendments to extend limitation for re-opening in cases where the unamended five-year period had already expired by 31.03.2017. In the present case the limitation for assessment year 2013- 2014 expired on 31.03.2019; therefore, issuance of Ext.P1 notice on 18.01.2020 for re-opening that assessment was barred by limitation. For these reasons the assessment order made pursuant to that notice was quashed.

Writ petition allowed; Ext.P3 order dated 21.03.2020 set aside and Ext.P1 notice held to be barred by limitation.

Final Conclusion: The petition is allowed: the assessment reopened by notice dated 18.01.2020 for assessment year 2013- 2014 was time-barred and the resulting assessment order is set aside.

Res integra - binding precedents - application of earlier Division Bench decisions - liberty to verify inclusion of goods in registration certificates - administrative verification

Binding precedents - application of earlier Division Bench decisions - Whether the controversy raised in the revision petition remains open or is governed by earlier Division Bench decisions. - HELD THAT: - The respondent conceded that the legal question raised was no longer res integra and relied on two Division Bench decisions of this Court. The Government Advocate did not dispute that those precedents cover the controversy. In view of the concession and the Court's recognition that the matter is squarely governed by the earlier Division Bench rulings, the petition cannot succeed on the merits where those binding precedents apply.

The petition is disposed of in accordance with the applicable Division Bench decisions; the controversy is not open for fresh adjudication.

Liberty to verify inclusion of goods in registration certificates - administrative verification - Whether the tax authorities should be permitted to verify if the goods purchased by the respondent are covered by its registration certificates. - HELD THAT: - Although the legal controversy is controlled by precedent, the Government Advocate sought and the Court granted liberty to the authorities under the Act to examine and verify the factual question of whether the goods purchased by the respondent are included within the respondent's registration certificates. That factual verification is administrative in nature and does not reopen the legal question resolved by the cited precedents.

Authorities are granted liberty to verify inclusion of the goods in the respondent's registration certificates; such verification is confined to factual/administrative inquiry.

Final Conclusion: The revision petition is disposed of in view of binding Division Bench decisions; however, the State's authorities are granted liberty to verify, by administrative inquiry, whether the goods purchased by the respondent are included in its registration certificates.

Limitation in assessment proceedings - meaning of "determination" in assessment - deemed assessment - pre-assessment notice and initiation of proceedings - compliance with Rule 10(6)(b)(i)(B) of the Tamil Nadu Value Added Tax Rules, 2007 - reconciliation of documents by the assessing officer - remand for de novo assessment

Limitation in assessment proceedings - meaning of "determination" in assessment - pre-assessment notice and initiation of proceedings - deemed assessment - Whether the impugned assessment orders for the periods 2009-10 to 2012-13 are barred by limitation in view of deemed assessment dates and the time for "determination" under the Act. - HELD THAT: - The Court examined the scope of the term "determination" in the context of assessment limitation and applied the principle that assessment proceedings are pending from initiation until termination by a final order. Reliance was placed on precedent establishing that the initiation of assessment proceedings prior to the expiry of limitation suffices; the word "determine" does not confine the concept to only the final order where the statutory context permits proceedings to be initiated within the limitation period. In the present case notices initiating revision of assessments were issued on 17.02.2017, which was prior to the expiry of the period of limitation computed from the deemed assessment dates; accordingly the initiation of proceedings fell within time and the limitation objection was rejected. [Paras 3, 4, 5]

Limitation objection rejected; proceedings were initiated before expiry of limitation and are not barred.

Compliance with Rule 10(6)(b)(i)(B) of the Tamil Nadu Value Added Tax Rules, 2007 - reconciliation of documents by the assessing officer - remand for de novo assessment - Whether the materials furnished by the petitioner satisfied the requirements for claiming sales returns and whether the Assessing Officer properly examined and reconciled those materials before rejecting the claim. - HELD THAT: - The Court found that the petitioner had furnished sales return statements, sample invoices, credit notes and later additional documents including a pen drive, and that these communications were received by the officers. The Assessing Officer, however, did not perform the mandatory exercise of tabulating and comparing the documents furnished with the requirements of Rule 10(6)(b)(i)(B) to determine if the Rule was satisfied; instead the officer rejected the claim on the basis of an assumed absence of documentary evidence. Because the reconciliation and verification required by law were not carried out, the assessments could not stand on the record as finally crystallised. [Paras 6, 7, 8, 9]

Impugned assessments set aside; matter remanded for de novo assessment limited to examination of the claim of sales returns after tabulation and reconciliation of the documents in accordance with law, with directions for the petitioner to appear with relevant particulars.

Final Conclusion: The Court rejected the limitation plea and set aside the impugned assessments on the ground of failure by the Assessing Officer to tabulate and reconcile documents as required; the petitioner was directed to appear with relevant particulars and fresh orders of assessment on the sales-returns issue were ordered to be passed de novo within the specified time.