TaxTMI Updates e-Newsletter
Nov 14,2024

Reimbursement of GST difference - Credit Cash Limit - obligation of Project Implementation Unit to disburse funds - judicial direction for payment

Reimbursement of GST difference - Credit Cash Limit - obligation of Project Implementation Unit to disburse funds - Respondents to pay the difference in GST to the petitioner where GST rate increased after contract and CCL has been issued to the PIU - HELD THAT: - The petitioner contended that GST at the time of contract was 12% but was subsequently enhanced to 18%, and that although the petitioner deposited the enhanced GST, the respondents have not reimbursed the difference. The Court noted the respondents' plea that a Credit Cash Limit (CCL) has been issued by respondent no.4 to the concerned Project Implementation Unit (PIU), and the PIU's counsel accepted that the requisite amount would be released if the CCL has been received. Having recorded these factual representations and the linkage between issuance of CCL and disbursement by the PIU, the Court directed release of the amount due to the petitioner without undertaking further adjudication on entitlement beyond the representations made by the respondents. [Paras 3, 4, 6]

Respondent no.6 (PIU) is directed to release the amount to the petitioner within one week from the date of the order.

Final Conclusion: Petitions disposed of with a direction to respondent no.6 to release the GST difference to the petitioner within one week; matter concluded by the Court's payment direction.

Mandatory personal hearing under Section 75(4) of the GST Act - violation of principles of natural justice - remand for readjudication - lifting of attachment on bank accounts / defreezing of cash credit account

Mandatory personal hearing under Section 75(4) of the GST Act - violation of principles of natural justice - Assessment order passed without affording the petitioner a personal hearing was in violation of Section 75(4) and principles of natural justice; the impugned order was set aside and remanded for fresh consideration. - HELD THAT: - The Court found as an admitted fact that no opportunity of personal hearing was afforded to the petitioner prior to passing the assessment order. Section 75(4) mandates that where an adverse order is proposed, a personal hearing must be provided. Because the respondent failed to provide such hearing, the assessment order confirmed the demand in contravention of principles of natural justice and the statutory requirement. The Court therefore set aside the impugned order and remanded the matter for readjudication, directing that the petitioner may file any additional reply within two weeks of receipt of the order and that the respondent shall, after considering such material, issue a clear 14 day notice fixing the date of personal hearing and thereafter pass appropriate orders on merits and in accordance with law, expeditiously. [Paras 5, 6, 7]

Impugned assessment order set aside and remanded for fresh adjudication after affording personal hearing in terms of Section 75(4); petitioner permitted to file additional reply.

Lifting of attachment on bank accounts / defreezing of cash credit account - Attachment on the petitioner's bank account consequent to the impugned order was not to survive; the attachment was ordered to be released and the cash credit account defrozen. - HELD THAT: - Having set aside the underlying assessment order, the Court held that the subsequent attachment of the petitioner's bank account could not continue. The Court directed the respondent to instruct the concerned bank to release the attachment and to defreeze the cash credit account immediately upon production of a copy of the order. [Paras 7]

Attachment on the bank account lifted and respondent directed to instruct the bank to release the attachment and defreeze the cash credit account on production of the order.

Final Conclusion: Writ petition allowed in part: the impugned assessment order dated 26.04.2024 is set aside and remanded for fresh adjudication after granting a personal hearing in accordance with Section 75(4); the attachment on the petitioner's bank account is lifted and the cash credit account ordered to be defrozen. No order as to costs.

Blocking of Electronic Credit Ledger under Rule 86A of the CGST Rules - requirement of reasons to believe based on independent material - pre-decisional hearing before taking coercive administrative action - impermissibility of borrowed satisfaction in formation of opinion - doctrine of proportionality in draconian fiscal measures

Blocking of Electronic Credit Ledger under Rule 86A of the CGST Rules - requirement of reasons to believe based on independent material - impermissibility of borrowed satisfaction in formation of opinion - Validity of the order blocking the petitioner's Electronic Credit Ledger under Rule 86A where no independent reasons to believe were recorded and action was taken on borrowed satisfaction. - HELD THAT: - The Court applied the Division Bench dictum in K-9-Enterprises to hold that Rule 86A empowers blocking of the Electronic Credit Ledger only upon the competent authority forming a subjective satisfaction of reasons to believe that ITC is fraudulently availed or ineligible, and such satisfaction must be grounded on objective material available to the authority itself. The power is drastic and must be exercised after proper application of mind; reliance upon communications or field reports of other officers without independent analysis amounts to borrowed satisfaction and is impermissible. The impugned order contained no independent or cogent reasons explaining why the authority itself had reasons to believe the ITC was ineligible, and no pre-decisional hearing was afforded to the petitioner. In these circumstances the order was held arbitrary, non-speaking and vitiated for failure to comply with the mandatory preconditions of Rule 86A.

Impugned order blocking the Electronic Credit Ledger quashed.

Pre-decisional hearing before taking coercive administrative action - doctrine of proportionality in draconian fiscal measures - Appropriate remedy where the impugned blocking order was quashed for non-compliance with procedural and substantive preconditions. - HELD THAT: - Given the invalidity of the order for want of independent reasons and absence of pre-decisional hearing, the Court directed immediate unblocking of the petitioner's Electronic Credit Ledger to enable filing of returns. The Court preserved the respondents' right to investigate and proceed in accordance with law, subject to the constraints and requirements identified in the Division Bench precedent, including forming independent reasons and respecting proportionality before invoking Rule 86A again.

Electronic Credit Ledger to be unblocked immediately; liberty reserved to respondents to proceed in accordance with law.

Final Conclusion: The petition is allowed; the order dated 06.05.2024 blocking the Electronic Credit Ledger is quashed, the ledger shall be unblocked forthwith, and the respondents may, if so advised, take fresh action in accordance with law after forming independent reasons and following the procedural safeguards indicated by the Division Bench in K-9-Enterprises.

Input Tax Credit - Delayed filing of returns - Extension of period for claiming ITC under Section 16(5) - Refund of interest and penalty

Input Tax Credit - Extension of period for claiming ITC under Section 16(5) - Delayed filing of returns - Petitioner entitled to claim Input Tax Credit for returns filed after original due date but within the period extended by Clause (5) of Section 16 as inserted by the Finance (No. 2) Act, 2024. - HELD THAT: - The Court examined the effect of Clause (5) of Section 16, inserted by the Finance (No. 2) Act, 2024 with retrospective effect from 01.07.2017, which extended the period for filing returns under Section 39 for specified years. Applying that provision, the Court held that returns filed by the petitioner for the Financial Year 2019-20 within the extended period fall within the enlarged statutory window for claiming Input Tax Credit. Relying on the operative effect of the newly inserted clause, the respondents were directed to permit the petitioner to avail the ITC that had earlier been disallowed solely on the ground of delayed filing of GSTR-3B returns.

Allow claim for Input Tax Credit for Financial Year 2019-20 as returns were filed within the period extended by Clause (5) of Section 16.

Refund of interest and penalty - Extension of period for claiming ITC under Section 16(5) - Interest and penalty levied on account of disallowance of ITC must be refunded, with statutory interest at 6% per annum from date of collection until repayment. - HELD THAT: - Having held that the petitioner was entitled to the Input Tax Credit by reason of the extension provided under Clause (5) of Section 16, the Court further addressed consequential relief. The Court directed that interest and penalty previously imposed and collected from the petitioner on account of the disallowed ITC be refunded. The refund was ordered to carry interest at the rate of 6% per annum computed from the date of collection of such amounts until the date of repayment, as the levy became unsustainable after allowing the ITC pursuant to the statutory amendment.

Refund interest and penalty collected in consequence of the disallowed ITC, with 6% p.a. interest from date of collection to date of repayment.

Final Conclusion: Writ petition disposed by directing respondents to allow the petitioner to take Input Tax Credit for Financial Year 2019-20 pursuant to Clause (5) of Section 16 inserted by the Finance (No. 2) Act, 2024, and to refund the interest and penalty collected with 6% p.a. interest from date of collection until repayment.

Detention and penalty under Section 129(1)(b) of the CGST Act - release of detained goods under Section 129(1)(a) of the CGST Act - deemed owner doctrine and applicability of circular dated 31.12.2018 - validity of documents (tax invoice and e-way bill) at the time of interception

Validity of documents (tax invoice and e-way bill) at the time of interception - release of detained goods under Section 129(1)(a) of the CGST Act - deemed owner doctrine and applicability of circular dated 31.12.2018 - Whether goods accompanied by proper tax invoice and e-way bill at the time of interception must be released under Section 129(1)(a) despite subsequent suspension of the consignor's registration - HELD THAT: - The Court found that at the time of interception the vehicle was accompanied by the requisite documents dated 01.10.2024 and physical verification disclosed no discrepancy. The impugned order imposed penalty under Section 129(1)(b) solely on the basis that the registration was suspended by the jurisdictional authority on 03.10.2024. Relying on the principle applied in Halder Enterprises and other coordinate decisions, and on the operation of the circular dated 31.12.2018 which treats a consignor in possession of proper documents as the deemed owner for the purpose of release, the Court held that where goods are accompanied by proper tax invoice and e-way bill at interception, Section 129(1)(a) mandates release rather than imposition of penalty. The subsequent suspension of registration did not justify continuing detention or imposing penalty when the statutory condition for release was otherwise satisfied.

Order imposing penalty and detaining goods under Section 129(1)(b) set aside; authorities directed to release goods in terms of Section 129(1)(a).

Final Conclusion: Writ petition allowed; impugned order dated 16.10.2024 set aside and authorities directed to release the goods in accordance with Section 129(1)(a) within two weeks.

Exhaustion of alternate remedies - writ jurisdiction under Article 226 - challenge to show cause notice - applicability of exemption / nil rate notification for services by local authority under Article 243W - pre-deposit requirement for statutory appeals

Exhaustion of alternate remedies - writ jurisdiction under Article 226 - Whether the writ petitions challenging the show cause notices can be entertained without the petitioners first exhausting the statutory alternate remedies - HELD THAT: - The Court held that petitioners have statutory remedies of adjudication and appeal and have not shown circumstances justifying bypassing those remedies. The authorities are not precluded from considering the contentions raised; factual inquiries and determinations as to applicability of exemption or nil-rate notifications are matters for the adjudicating and appellate authorities. Binding precedents require restraint in entertaining writs against show cause notices except where the notice is wholly without jurisdiction, there is violation of natural justice, enforcement of fundamental rights, or the vires of the statute is in question. The petitioners' general averments of inefficacy of alternate remedies and assertions of clarity of exemption do not satisfy the parameters to depart from the rule of exhaustion of alternate remedies. [Paras 23, 24, 27, 28, 47]

Petitions dismissed insofar as they seek to bypass statutory remedies; petitioners must pursue adjudication and appeals under the statute.

Challenge to show cause notice - applicability of exemption / nil rate notification for services by local authority under Article 243W - Whether the impugned show cause notices are wholly without jurisdiction because the services fall within the exemption/nil-rate notification for activities relating to functions entrusted to the Municipal Corporation under Article 243W - HELD THAT: - The Court found that determination whether particular demands relate to functions entrusted to the Municipal Corporation under Article 243W requires examination of factual aspects and individual scrutiny of each activity alleged in the show cause notices. The petitioners conceded that some demands may not pertain to Article 243W functions. Precedents relied upon permit writ relief only where facts are undisputed and the notice is wholly without jurisdiction; those exceptional facts are absent here. Consequently, the present matters involve arguable and disputed questions of fact unsuitable for summary adjudication under Article 226. [Paras 22, 25, 26, 27, 43]

Court will not quash the show cause notices on the ground of being wholly without jurisdiction; applicability of exemption/nil-rate notifications to each demand must be decided in adjudication and appeals.

Pre-deposit requirement for statutory appeals - relief by directions to facilitate pursuit of alternate remedies - Whether any interim relief should be granted to enable petitioners to respond to the show cause notices or to file appeals against adjudication orders - HELD THAT: - While declining to entertain the writ petitions on merits, the Court granted procedural liberties to avoid prejudice to petitioners: six weeks' time to file responses to show cause notices where replies have not yet been filed, and six weeks to institute appeals against adjudication orders (with observance of prescribed conditions including pre-deposit). The appellate authorities are directed to consider such appeals on merits in accordance with law. The Court left all substantive contentions open for adjudication in the statutory process. [Paras 48, 49, 50, 51]

Liberty granted to petitioners to respond to show cause notices and to file appeals within six weeks; interim orders vacated and substantive contentions left open for statutory adjudication.

Final Conclusion: Writ petitions challenging the show cause notices are dismissed for failure to establish grounds to bypass statutory adjudication and appellate remedies; petitioners granted limited time (six weeks) to respond to show cause notices and to file appeals, which appellate authorities must decide on merits after compliance with statutory conditions.

TRANS-1 claim for transaction credit - revision of TRANS-1 - availability of Central Excise Duty credit - delay in filing writ petition / limitation

Delay in filing writ petition / limitation - TRANS-1 claim for transaction credit - Petition admitted for consideration and notice issued to respondents notwithstanding objection as to delay - HELD THAT: - The High Court recorded respondents' objection to the long delay between the impugned order dated 24.02.2023 and the filing of the writ petition on 23.10.2024, but proceeded to issue notice to the respondents for adjudication of the petition. The Court noted the factual controversy concerning rejection of the petitioner's TRANS-1 claim (filed in an incorrect column) and the petitioner's attempt to seek revision or appellate remedy on the GST portal which was said to be unavailable or not entertained. The Court did not decide the substantive question on the availability of the claimed Central Excise Duty credit or on the correctness of the impugned order; instead it directed service and afforded the respondents an opportunity to file a counter affidavit within four weeks. The Court also recorded that because respondents were duly represented, no fresh process needed to be issued. [Paras 4, 5, 6, 7]

Notice issued to respondents; no fresh notice required; respondents to file counter affidavit within four weeks

Revision of TRANS-1 - availability of Central Excise Duty credit - Substantive dispute regarding rejection of TRANS-1 claim and relief of revision or appellate remedy left open for adjudication - HELD THAT: - The Court recorded that TRANS-1 filed in the wrong column led to rejection of the claim and that the impugned order suggested the petitioner could request the Commissioner to permit revision of TRANS-1. The petitioner, however, alleges inability to file an appeal on the GST portal and that a manual appeal was not accepted. The Court declined to pronounce on the merits of these contentions or on the entitlement to the claimed credit at this stage, and preserved these matters for determination after service and receipt of the respondents' counter affidavit. [Paras 1, 2, 3]

Substantive claims and the availability of revision or appellate remedy to be examined after notice and pleadings; no adjudication on merits at this stage

Final Conclusion: Writ petition admitted for adjudication; notice issued to respondents despite objection as to delay; no fresh notice required; respondents directed to file counter affidavit within four weeks; substantive questions regarding rejection of TRANS-1 and entitlement to credit left open for determination on pleadings.

Summoning of witness during prosecution's evidence - Right to cross-examination and production of documents - Admissibility of documentary evidence by defence at own evidence stage - Discretion of the trial Magistrate in summoning witnesses - Offence under Section 138 of the Negotiable Instruments Act, 1881

Summoning of witness during prosecution's evidence - Right to cross-examination and production of documents - Discretion of the trial Magistrate in summoning witnesses - Validity of the trial Magistrate's refusal to summon a GST official and GST 3B returns when the complainant was producing evidence - HELD THAT: - The complaint under Section 138 of the Negotiable Instruments Act was at the stage of the complainant producing evidence. While the petitioners have the right to cross-examine and to confront the complainant with documents, that right does not entitle them to summon a witness from the GST Department at the stage when the complainant is leading her evidence. The record sought (GST 3B return) is a document which the petitioners can produce and use to confront the complainant when they themselves produce evidence in defence. The petitioners were earlier directed to place a copy of the GST 3B return on record but failed to do so. The learned trial Magistrate applied judicial mind and passed a speaking order dismissing the application as unnecessary at that stage; there is no reason to interfere with the exercise of judicial discretion. [Paras 5, 6]

The trial Magistrate's order dismissing the application to summon the GST official and GST 3B returns is upheld; the petition is dismissed.

Final Conclusion: The High Court dismissed the petition and upheld the Magistrate's refusal to summon the GST official and records at the complainant's evidence stage, holding that the defence may produce and rely on the relevant GST returns when it leads its own evidence and that the Magistrate did not err in exercising judicial discretion.

Constitutional validity of Section 17(5)(c) and (d) of the CGST Act - availability of input tax credit on land and construction - interpretation of the expression "plant or machinery" - functionality test for classification of a building as a plant

Constitutional validity of Section 17(5)(c) and (d) of the CGST Act - Constitutional challenge to clauses (c) and (d) of Section 17(5) of the CGST Act - HELD THAT: - The petition's challenge to the vires of Section 17(5)(c) and (d) was held to be not sustainable in view of the Supreme Court's decision in Chief Commissioner, CGST v. Safari Retreats Pvt. Ltd., which upheld the constitutional validity of those clauses. The High Court recorded that the legal question is no longer res integra and that the Supreme Court negatived the constitutional attack on the specified clauses. [Paras 3, 5]

Challenge to the constitutional validity of Section 17(5)(c) and (d) dismissed; provisions upheld.

Interpretation of the expression "plant or machinery" - functionality test for classification of a building as a plant - Legal interpretation of "plant or machinery" and the test for treating a building as a plant - HELD THAT: - The court recorded the Supreme Court's exposition that the expression "plant or machinery" in Section 17(5)(d) cannot be equated with the expression "plant and machinery" appearing in the Explanation to Section 17. Whether a mall, warehouse or any building (other than hotel or cinema theatre) qualifies as a "plant" is a factual question to be determined by applying the functionality test - i.e., whether the construction was essential for carrying out the registered person's taxable activity and the role the building plays in the business. [Paras 3]

Principle settled: "plant or machinery" has a distinct meaning and the functionality test governs classification of buildings as plant.

Availability of input tax credit on land and construction - functionality test for classification of a building as a plant - Claim for input tax credit on GST paid for land and constructions thereon left for adjudication by authority applying settled law and facts - HELD THAT: - On the specific claims of the petitioners to avail ITC on GST paid on purchase of land and on constructions, the High Court declined to grant substantive relief but disposed the petitions by permitting the petitioners to submit their claims to the respondents. The court directed that such claims be considered in accordance with law, which includes applying the Supreme Court's guidance that factual determination (including the functionality test) is necessary to decide whether construction qualifies as a "plant" for ITC purposes. [Paras 4, 5]

Petitioners' claims for ITC on land and construction not decided on merits by this court; claims remitted to respondents for consideration in accordance with law (applying the functionality test and relevant precedent).

Final Conclusion: The constitutional challenge to Section 17(5)(c) and (d) of the CGST Act is dismissed in view of the Supreme Court's decision; the legal principles on the meaning of "plant or machinery" and the functionality test are recorded; petitioners' claims for input tax credit on land and constructions are not adjudicated on merits and are remitted to the respondents to be decided in accordance with law.

Cheating - Fraudulent or dishonest intention - Ingredients of offence under Section 415 of the Indian Penal Code - Cheating and personation by using computer resource - Abuse of process of court - Inherent powers under Section 482 Cr.P.C. to quash FIR - Quashing of criminal proceedings where only remedy is civil or tax proceedings

Cheating - Fraudulent or dishonest intention - Ingredients of offence under Section 415 of the Indian Penal Code - Allegations do not satisfy the ingredients of cheating under Section 415 IPC and therefore do not sustain an offence under Section 420 IPC. - HELD THAT: - The Court found no material in the complaint showing any person was deceived or induced to deliver property or to do/omit any act as required by Section 415 IPC. The complaint emanated from GST Intelligence alleging tax evasion and suspicious corporate activity, but no victim has come forward and no dishonest intention at the inception is attributable on the face of the complaint. Reliance on the settled principles in the cited precedents shows that mere civil or commercial disputes, or breaches that lack fraudulent intention at the outset, cannot be converted into criminal cheating under Section 420 IPC. On this foundation the Court concluded that the offence of cheating under Section 415/420 IPC was loosely or inadequately made out against the petitioners and therefore cannot be permitted to continue. [Paras 11, 13]

Allegations do not disclose offence of cheating punishable under Section 420 IPC; such charge is quashed as against the petitioners.

Cheating and personation by using computer resource - Fraudulent or dishonest intention - Allegations do not sustain an offence under Section 66D of the Information Technology Act, 2000. - HELD THAT: - Section 66D criminalises cheating by personation using communication devices or computer resources, which requires the elements of cheating and personation. The Court observed that the complaint contains no material indicating any person was cheated or that personation resulting in cheating occurred; the allegations are framed by GST Intelligence as a tax-evasion enquiry. Absent the requisite ingredient of cheating (dishonest inducement of a victim), the offence under Section 66D cannot be sustained on the face of the complaint. [Paras 14]

Offence under Section 66D IT Act not made out on the complaint; such charge is quashed as against the petitioners.

Criminal conspiracy - Dependent offences - Charge under Section 120B IPC cannot survive where the substantive charges (under Sections 420 IPC and 66D IT Act) are not made out. - HELD THAT: - Since the offence of criminal conspiracy under Section 120B hinges on the existence of substantive offences as alleged, the Court held that once the allegations for cheating and personation are found lacking on the face of the complaint, the conspiracy charge necessarily falls. The Court therefore treated the count of conspiracy as unsustainable in the absence of validly made substantive offences. [Paras 15]

Section 120B charge collapses and is quashed qua the petitioners.

Abuse of process of court - Inherent powers under Section 482 Cr.P.C. to quash FIR - Quashing of criminal proceedings where only remedy is civil or tax proceedings - Continuation of the criminal proceedings would amount to abuse of process; exercise of inherent jurisdiction under Section 482 Cr.P.C. justified to quash the FIR as against the petitioners. - HELD THAT: - The Court noted prolonged investigation (over 40 months), absence of any victim coming forward, and that parallel GST proceedings are pending before the tax authority. Applying the well established categories for exercise of the inherent power (including where allegations, taken at face value, do not prima facie constitute an offence, or where continuation would be an abuse of process), the Court concluded that allowing the criminal proceeding to continue would be oppressive and an abuse of judicial process. The observations of the State that investigation was ongoing and no victim had surfaced weighed in favour of quashing. The Court clarified its order is confined to the Section 482 petition and will not bind other proceedings. [Paras 16, 17]

FIR/Crime No. 125/2021 is quashed insofar as it relates to the petitioners to prevent abuse of process; criminal petition allowed.

Final Conclusion: The petition is allowed; Crime No. 125/2021 pending before the XXIX ACMM, Bengaluru, is quashed insofar as it relates to the petitioners, the allegations failing to disclose the ingredients of cheating (Section 415/420 IPC), personation cheating under Section 66D IT Act, and the conspiracy charge, and continuation would be an abuse of process under Section 482 Cr.P.C.

Dismissal as withdrawn - statutory remedy under the Central Goods and Services Act, 2017 - input tax credit blocked - Rule 86-A of the Central Goods and Services Rules, 2017 - direction to decide application within prescribed timeframe

Dismissal as withdrawn - statutory remedy under the Central Goods and Services Act, 2017 - Writ petition dismissed as withdrawn with liberty to pursue statutory remedies under the CGST Act, 2017. - HELD THAT: - The Court recorded the petitioner's concession that an appeal against the order of demand lies and accepted the petitioner's election to resort to the statutory remedy under the Central Goods and Services Act, 2017. Consequently the writ petition is dismissed as withdrawn, while preserving the petitioner's right to invoke the statutory remedy available under the GST law. [Paras 3]

Writ petition dismissed as withdrawn with liberty to take recourse to the statutory remedies under the CGST Act, 2017.

Input tax credit blocked - Rule 86-A of the Central Goods and Services Rules, 2017 - direction to decide application within prescribed timeframe - Petitioner granted liberty to move an application for decision on the presently blocked input tax credit; authority directed to decide it promptly within specified timelines. - HELD THAT: - The Court allowed the petitioner to file an application seeking a decision on the input tax credit which is presently blocked, noting the petitioner's contention (including reliance on Rule 86-A). The concerned authority is directed, in the first instance, to render a decision on such application. Where the application is filed within the next ten days, the authority shall decide it at the earliest but not later than ten days from receipt of the application. [Paras 3]

Liberty to move application regarding blocked ITC; if filed within ten days, authority to decide it within ten days of receipt; otherwise to decide at the earliest.

Final Conclusion: The writ petition is dismissed as withdrawn; petitioner is permitted to pursue statutory remedies under the CGST Act, 2017 and to move an application concerning the blocked input tax credit, which the authority is directed to decide promptly and within the timetable prescribed by the Court.

Show Cause Notice - Cancellation of registration - Requirement of reasons in administrative order - Suspension of registration - Quashing of administrative action

Show Cause Notice - Cancellation of registration - Requirement of reasons in administrative order - Suspension of registration - Impugned Show Cause Notice dated 20 September 2024 initiating cancellation of GST registration is legally unsustainable and is quashed. - HELD THAT: - The Show Cause Notice purported to initiate proceedings for cancellation of the petitioner's GST registration and recorded that the registration stood suspended from 20/09/2024. The only reason stated in the notice was the single word "others" and an internal reference to a letter; no specific or intelligible grounds were articulated on the basis of which cancellation proceedings were being commenced. The Court observed that a notice bereft of any reasons or intelligible material on which adverse action is proposed cannot be sustained. In light of the absence of any reasoned foundation in the notice, the Court quashed the impugned Show Cause Notice. The Court, however, permitted the respondents to initiate fresh proceedings if they so choose, subject to doing so in accordance with law and with appropriate reasons being recorded.

Impugned Show Cause Notice quashed; respondents granted liberty to initiate fresh proceedings in accordance with law.

Final Conclusion: Writ petition allowed; the Show Cause Notice dated 20 September 2024 is quashed for want of reasons, with liberty to the respondents to proceed afresh in accordance with law.

Blocking of Electronic Credit Ledger under Rule 86A - reasons to believe - pre-decisional hearing - borrowed satisfaction - independent application of mind - draconian nature of power - doctrine of proportionality - quashing of non-speaking orders

Blocking of Electronic Credit Ledger under Rule 86A - reasons to believe - borrowed satisfaction - independent application of mind - pre-decisional hearing - Validity of the impugned orders blocking the petitioner's Electronic Credit Ledger under Rule 86A - HELD THAT: - The Court applied the principles articulated by the Division Bench in K-9-Enterprises and held that Rule 86A entails twin pre-requisites: the authority must have objective material forming 'reasons to believe' and must record those reasons after proper application of mind. The power to block the ECL is draconian and cannot be exercised mechanically or on the basis of communication from another officer. The impugned orders did not record independent or cogent reasons to form a belief and proceeded on 'borrowed satisfaction' of enforcement officers; nor was a pre-decisional hearing afforded to the petitioner. For these reasons the orders were found to be bald, non-speaking and legally infirm and hence unsustainable.

Impugned orders blocking the Electronic Credit Ledger were quashed as issued without requisite reasons to believe, without independent application of mind and without a pre-decisional hearing.

Quashing of non-speaking orders - draconian nature of power - doctrine of proportionality - Relief to be granted consequent to the invalidation of the impugned orders - HELD THAT: - Having found the impugned orders legally defective for being non-speaking and based on borrowed satisfaction, the Court exercised remedial discretion to quash those orders and to restore the petitioner's position. The Court directed immediate unblocking of the petitioner's Electronic Credit Ledger to enable filing of returns, while preserving the respondents' right to proceed in accordance with law and consistent with the Division Bench's guidance in K-9-Enterprises.

The impugned orders dated 28.02.2024 and 16.02.2024 are quashed and the Electronic Credit Ledger of the petitioner is directed to be unblocked forthwith; liberty reserved to respondents to proceed in accordance with law.

Final Conclusion: The writ petition is allowed: the orders blocking the petitioner's Electronic Credit Ledger under Rule 86A are quashed for lack of recorded 'reasons to believe', independent application of mind and pre-decisional hearing; the ECL is to be unblocked immediately, with liberty to the revenue to take lawful steps in conformity with the Division Bench precedent.

Parallel proceedings - avoidance of multiplicity of proceedings - overlap of subject matter and period - transfer of proceedings to State Excise Authorities - Section 6(2)(b) of the Central Goods and Services Tax Act, 2017

Overlap of subject matter and period - parallel proceedings - avoidance of multiplicity of proceedings - Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 - Whether the impugned Show Cause cum Demand Notice and the State Excise summons relate to the same subject matter and period and require further examination for avoidance of multiplicity of proceedings - HELD THAT: - The Court observed that the subject matter of the impugned Show Cause cum Demand Notice-alleged input tax credit taken through fake invoices-overlaps with enquiries initiated by the State Excise Authorities, and that the periods covered by the notices and summons intersect. The Court took note of a CBEC circular on avoiding parallel investigations and recorded that prima facie the situation falls within that concern. The Court also considered the relevance of Section 6(2)(a)-(b) of the CGST Act, 2017, which, insofar as applicable, contemplates restraint on initiation of proceedings by a proper officer under the Central Act where State proceedings on the same subject matter have been initiated. Given these findings, the matter was directed to be further examined and the State/Central authorities were put on notice to consider whether proceedings should be transferred or otherwise regulated to avoid multiplicity. [Paras 11, 12, 13]

The Court directed further examination of the overlap and invited respondents to consider whether the proceedings covered by the impugned notice can be transferred to the State Excise Authorities; notice issued.

Interim stay of proceedings - avoidance of multiplicity of proceedings - Whether further proceedings pursuant to the impugned Show Cause cum Demand Notice should be stayed pending examination and reply - HELD THAT: - In order to preserve the status quo while the question of overlap and possible transfer is examined, the Court stayed further proceedings pursuant to the impugned Show Cause cum Demand Notice. The stay is interim and was made pending the respondent's instructions and the next hearing listed before the Court. [Paras 17]

Further proceedings under the impugned Show Cause cum Demand Notice shall remain stayed until the matter is listed for further hearing.

Final Conclusion: Notice issued; respondents directed to examine whether the central proceedings ought to be transferred to State Excise Authorities in light of overlapping subject matter and periods; interim stay of further action under the impugned Show Cause cum Demand Notice granted pending further consideration and listing.

Entitlement to take input tax credit under amended Section 16(5) - retrospective operation of insertion of Section 16(5) with effect from 1 July 2017 - direction to implement amended statutory provision after hearing and providing opportunity - quashing of order blocking Input Tax Credit ledger and immediate release of ITC balance

Entitlement to take input tax credit under amended Section 16(5) - retrospective operation of insertion of Section 16(5) with effect from 1 July 2017 - direction to implement amended statutory provision after hearing and providing opportunity - Implementation and application of Section 16(5) (inserted by Clause 118 of The Finance (No. 2) Act, 2024) to the petitioner and relegation to the original authority to give effect to the amendment. - HELD THAT: - The Court held that the controversy is squarely covered by this Court's earlier decision in M/s. Sadhana Enviro Engineering Services (W.P. No.6138/2020 dated 03.09.2024) and that Section 16(5), as inserted with retrospective effect from 1 July 2017, entitles a registered person to take input tax credit in any return under Section 39 filed up to 30.11.2021 for supplies pertaining to the financial years 2017-18 to 2020-21. The petition is disposed by directing the respondents to implement and give effect to the amended provision, after providing sufficient and reasonable opportunity and hearing the petitioner, and to proceed in accordance with law within one month from receipt of the order. [Paras 3, 5]

Respondents directed to give effect to and implement Section 16(5) as inserted by Clause 118 of The Finance (No. 2) Act, 2024, after affording opportunity and hearing, within one month.

Quashing of order blocking Input Tax Credit ledger and immediate release of ITC balance - Validity of the impugned adjudication order and the blocking of the petitioner's ITC ledger. - HELD THAT: - Relying on the principle that the amended Section 16(5) governs the entitlement to avail credit for the relevant periods, the Court quashed the impugned Order at Annexure-B dated 22.06.2022 and specifically quashed the earlier blocking of the petitioner's ITC ledger. The respondents were directed to unblock and release the petitioner's ITC balance forthwith upon receipt of a copy of the order. [Paras 5]

Impugned order dated 22.06.2022 quashed; blocking of ITC ledger quashed and respondents directed to release/unblock the ITC balance immediately.

Preservation of rival contentions and challenges to statutory provisions - Disposition of other reliefs and challenges raised by the petitioner. - HELD THAT: - The Court expressly left open all other rival contentions and prayers, including the challenge to the statutory provisions, without expressing any opinion. Those matters were neither decided on merits nor finally adjudicated and remain open for consideration by the authority in accordance with law. [Paras 5]

All other contentions and challenges retained and left open for adjudication; no opinion expressed by the Court.

Final Conclusion: Petition disposed in terms of this Court's earlier decision in M/s. Sadhana Enviro Engineering Services; impugned adjudication order quashed; respondents directed to implement amended Section 16(5) (Finance (No. 2) Act, 2024) after affording opportunity and to unblock and release the petitioner's ITC balance within the stipulated time; other challenges left open.

Exemption under section 11 of the Income-tax Act - proviso to section 2(15) concerning advancement of any other object of general public utility - charitable purpose: relief to the poor and medical relief - incidental commercial activity doctrine - binding effect of jurisdictional High Court precedent on interpretation of charitable purpose - principle of consistency in prior acceptance of charitable activities

Exemption under section 11 of the Income-tax Act - proviso to section 2(15) concerning advancement of any other object of general public utility - charitable purpose: relief to the poor and medical relief - incidental commercial activity doctrine - binding effect of jurisdictional High Court precedent on interpretation of charitable purpose - principle of consistency in prior acceptance of charitable activities - Income earned from kuri and finance business by the trust is eligible for exemption under section 11 as applied to its charitable objects and is not caught by the proviso to section 2(15). - HELD THAT: - The Tribunal found on the byelaws and financial statements that the trust's kuri and finance activities were carried out to enhance funds for, and were applied to, charitable objects falling within relief to the poor and medical relief, rather than undertaken with a predominant commercial profit motive. The income was ploughed back and spent for the charitable objects specified in the byelaws. The A.O. and CIT(A) misconstrued the proviso to section 2(15) by treating those receipts as business income, despite the activities being incidental to the trust's primary charitable objects. The decision of the Kerala High Court in Bharthashemam, which negatived the applicability of the proviso where chitty/kuri income was fully utilized for medical relief, was held to be binding and directly on point; the Tribunal also relied on the CBDT Circular No.11/2008 and consistent tribunal and court decisions recognising that charitable activities enumerated in the first limbs of section 2(15) are not deprived of charitable character merely because they incidentally involve commercial activity. The Tribunal noted prior acceptance by the department for other years, including assessment year 2020-21, and applied the principle of consistency to hold that a different view for the subject assessment years was not justified. On this basis the Tribunal set aside the orders of the A.O. and CIT(A) and allowed the appeals. [Paras 9, 11, 13, 15]

The Tribunal allowed the appeals and held the kuri and finance income to be exempt under section 11, not hit by the proviso to section 2(15).

Final Conclusion: Appeals allowed; incomes from kuri and finance business for the listed assessment years held to be charitable and eligible for deduction under section 11, the proviso to section 2(15) not attracted, and the orders of the A.O. and CIT(A) set aside.

Claim of depreciation - temporary structure - depreciation rates under Appendix I to the Income Tax Rules, 1962 - classification of expenditure as revenue or capital - reopening of assessment under Section 147 read with Section 148 - writ remedy under Article 226 and limitation - reasonableness of Assessing Officer's finding - delay of 344 days in filing this Special Leave Petition

Writ petition dismissed [2023 (7) TMI 1490 - PATNA HIGH COURT] - AO's order in respect of assessment year 2011-12 refusing the claim for 50% depreciation is sustained and there is no interference by the High Court in the writ proceedings.

HELD THAT:- The reasons assigned are neither satisfactory nor sufficient in law to be condoned.

Hence, the application seeking condonation of delay is dismissed. Consequently, the Special Leave Petition also stands dismissed.

At this stage, learned senior counsel for the petitioner submitted that the petitioner has also filed a statutory appeal in the year 2018.

It is needless to say that the petitioner is at liberty to prosecute the said appeal in accordance with law and on its own merits.

Revision under Section 263 of the Income-tax Act - Erroneous order prejudicial to the interests of revenue - Lack of inquiry versus inadequate inquiry - Reliance on administrative certificates (Tehsildar) in tax proceedings - Applicability of Explanation 2 to Section 263 (temporal scope) - Application of mind by the Assessing Officer

Revision under Section 263 of the Income-tax Act - Erroneous order prejudicial to the interests of revenue - Applicability of Explanation 2 to Section 263 (temporal scope) - Validity of the Principal Commissioner's exercise of jurisdiction under Section 263 in quashing/modifying the assessment order - HELD THAT: - The Court examined Section 263 as it stood for the assessment year in question and held that Explanation 2 (inserted by Finance Act 2015) is not applicable to proceedings initiated prior to its insertion; nonetheless, the twin requirements under Section 263-namely that the order is 'erroneous' and 'prejudicial to the interests of the revenue'-remain mandatory even pre-amendment. Applying established authorities, the Court found that an order passed without any effective inquiry or application of mind by the Assessing Officer falls within the scope of an 'erroneous' order prejudicial to revenue. On the facts, the Principal Commissioner had formed an opinion that the AO had not made necessary inquiries (including obtaining relevant verification from DTP, Gurugram) and that documentary material before the department contradicted the assessee's claim; these findings satisfied the statutory threshold for exercise of revisional power under Section 263. The ITAT erred in quashing the revisional order because it ignored the absence of requisite inquiry and the prejudicial consequence to revenue. [Paras 49, 52, 58, 59, 60]

The PCIT validly exercised jurisdiction under Section 263 and the ITAT's order setting aside the revisional order is set aside.

Lack of inquiry versus inadequate inquiry - Application of mind by the Assessing Officer - Reliance on administrative certificates (Tehsildar) in tax proceedings - Whether the Assessing Officer made the requisite inquiries and applied his mind before accepting the assessee's claim that the land was agricultural - HELD THAT: - The Court analysed the materials before the AO and the nature of the Tehsildar's endorsement relied upon by the assessee. It observed that the Tehsildar's 2012 endorsement did not state the critical distance from municipal limits required by Section 2(14)(iii) and lacked identifying particulars; the 2016 certificate merely reiterated the 2012 endorsement and was issued after assessment. The AO framed assessment on the same day the documents were submitted and did not record reasons for accepting the assessee's claim; he did not seek verification from DTP, Gurugram, whose report later placed the land within municipal limits and on sectoral plans. On these facts the Court concluded that the AO had not conducted any effective inquiry (not merely an inadequate one) nor applied his mind, and that reliance on the Tehsildar endorsement without verification was unsustainable. [Paras 32, 36, 51, 56, 57]

The AO failed to make the requisite inquiries and apply his mind; the material deficiencies in the Tehsildar's certificate and absence of verification rendered the assessment order erroneous and prejudicial to revenue.

Final Conclusion: The appeal is allowed. The High Court sets aside the ITAT's order and upholds the PCIT's exercise of jurisdiction under Section 263 in respect of AY 2013-14, concluding that the assessment order was erroneous and prejudicial to the interests of the revenue because the Assessing Officer failed to make requisite inquiries or apply his mind.

Gifts made out of Privy Purse - Exemption under Section 5 (1) (xvi) of the Gift Tax Act, 1958 - Onus of proof regarding source of gift - Remand direction and de novo examination by Tribunal

Gifts made out of Privy Purse - Exemption under Section 5 (1) (xvi) of the Gift Tax Act, 1958 - Onus of proof regarding source of gift - Gift amount of Rs. 10,00,000/- was made out of the Privy Purse. - HELD THAT: - The Supreme Court had remitted the question whether the cash gift of Rs. 10,00,000/- was made out of the Privy Purse for fresh consideration by the Tribunal. The Commissioner of Gift Tax had recorded that the relevant bank account (No.956, State Bank of India, Patiala) and wealth-tax returns showed deposits from Privy Purse receipts and subsequent disbursements by cheque and cash in favour of the two trusts, with particulars reproduced in his para 8. The ITAT declined to accept that material, stating the assessee had not placed the bank account and wealth-tax returns before it and therefore could not independently find the source; the High Court found this approach erroneous. Having regard to the record available to the Commissioner (including the statement of account and the breakdown of cheques and cash payments to the trusts), the High Court held the ITAT's refusal to treat that material as establishing the source to be perverse. For these reasons the court concluded that the primary factual question was already answerable on the material before the Commissioner and that the correct finding is that the Rs. 10,00,000/- gift was made out of the Privy Purse, with the consequent legal effects on exemption under section 5(1)(xvi) to follow. [Paras 7, 8, 9, 10]

Answer found in favour of the appellant-Assessee: the gift of Rs. 10,00,000/- was made out of the Privy Purse.

Effect of the Hindu Succession Act, 1956 - Taxability of transfer of agricultural lands under the Gift Tax Act, 1958 - Remand direction and de novo examination by Tribunal - Whether transfer of agricultural lands measuring 425 bhigas was exigible to gift tax after the Hindu Succession Act, 1956 (remanded). - HELD THAT: - The Supreme Court's remand included the question whether transfers of agricultural lands were exigible to tax under the Gift Tax Act, 1958, particularly after the Hindu Succession Act, 1956. The High Court's present order decides only the question relating to the Rs. 10,00,000/- cash gift and does not adjudicate the taxability of the agricultural land transfers or the effect of the Hindu Succession Act. That question remains for the Tribunal to examine afresh in accordance with law as directed by the Supreme Court.

Issue remanded to the Tribunal for fresh consideration; not decided by this Court.

Final Conclusion: The High Court allows the appeal on the primary factual question and holds that the Rs. 10,00,000/- gift was made out of the Privy Purse; the separate question regarding taxability of the agricultural land transfers after the Hindu Succession Act, 1956 remains remanded to the Tribunal for de novo consideration.

Recall and restoration of appeal - rectification of order under section 254(2) of the Income Tax Act, 1961 - non-appearance and Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 - ex parte disposal and setting aside for sufficient cause

Recall and restoration of appeal - ex parte disposal and setting aside for sufficient cause - non-appearance and Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 - Validity of the Tribunal's refusal to recall/restore the appeal and its disposal of the miscellaneous application seeking restoration after ex parte disposal. - HELD THAT: - The Tribunal's miscellaneous application was captioned under section 254(2) (rectification) but also addressed the sufficiency of cause for non-appearance under Rule 24. The High Court held that while the Tribunal could consider rectification under section 254(2), it was nevertheless required to satisfy itself about the cause shown for non appearance before refusing restoration under the Rule. The Tribunal's reasoning-that the appeal concerned recovery matters spanning five years and that further adjournment would merely challenge the Bench's functioning-related to rectification and adjournment but did not adequately address the medical indisposition relied upon by the petitioner as sufficient cause. The application annexed medical evidence and additional grounds which, contrary to the Tribunal's observation about inability to furnish documents in twenty days, were in fact before the Tribunal. For these reasons the Court found the Tribunal's refusal to restore the appeal unsustainable and interfered with the impugned order, set it aside and directed restoration of the appeal. [Paras 4, 5, 6, 7]

Impugned order quashed; miscellaneous application allowed; appeal restored and directed to be placed for hearing.

Rectification of order under section 254(2) of the Income Tax Act, 1961 - Whether the Tribunal was precluded from referring to rectification by treating the application solely as one for recall/ restoration. - HELD THAT: - The Court observed that the application was expressly made under section 254(2) (rectification), and therefore the Tribunal was entitled to consider rectification aspects. The High Court distinguished the coordinate Bench decision cited by the petitioner (Rabindra Kumar Mohanty) as addressing a different factual scenario-where the Tribunal must decide on merits when the respondent appears and the appellant is absent-and held that that view did not assist the petitioner on the facts of the present case. Nevertheless, the Tribunal could not confine itself to rectification reasoning while neglecting to examine the sufficiency of cause for non appearance under Rule 24. [Paras 4, 6]

Reference to rectification was permissible but insufficient; the Tribunal also had to and failed to properly consider the sufficient cause for non appearance.

Final Conclusion: Writ petition allowed: impugned order set aside, miscellaneous application allowed and the appeal restored for hearing; petitioner to communicate certified copy to the Tribunal and obtain a hearing date.

Notional interest - addition under section 69 of the Income Tax Act - presumption without documentary evidence - requirement of evidence to establish accrual/receipt of income - followed decision of co-ordinate Bench

Notional interest - addition under section 69 of the Income Tax Act - presumption without documentary evidence - requirement of evidence to establish accrual/receipt of income - followed decision of co-ordinate Bench - Validity of deletion of addition of notional interest made by the Assessing Officer on alleged foreign bank balances - HELD THAT: - The Assessing Officer made an addition by applying notional interest @4% on alleged balances in an HSBC Geneva account without first establishing that the foreign bank account belonged to the assessee or that any interest had actually been credited. The CIT(A) deleted the addition, noting absence of documentary evidence to support the presumption of interest and reliance on the fact that similar additions in connected matters were deleted. The Tribunal, after considering the assessing officer's order, the absence of corroborative evidence that interest accrued or was received, and the reasoning of a co-ordinate Bench in the assessee's own cases for Assessment Years 2006-07 to 2012-13, held that an addition based purely on hypothesis and presumption is unsustainable. The Tribunal observed that in developed-country banking systems rates and practices differ from Indian banks and that no evidence was produced showing interest credited; consequently the notional interest addition could not be sustained either on the ground of double addition in earlier years or on merits for lack of evidence. [Paras 5, 9, 10]

Addition of notional interest under section 69 deleted; Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the deletion of the notional interest addition made under section 69, following the reasoning that no documentary evidence established the existence of the account or accrual/receipt of interest and by applying the co-ordinate Bench's decisions in the assessee's related matters.

Taxability of offshore supply receipts - Permanent Establishment (Fixed Place, Dependent Agent, Construction PE) - Business Connection under section 9(1)(i) - Attribution of profits to PE - Applicability of section 44BBB - Article 7 of India-France DTAA - FOB transfer of ownership

Taxability of offshore supply receipts - Permanent Establishment (Fixed Place, Dependent Agent, Construction PE) - Business Connection under section 9(1)(i) - Applicability of section 44BBB - Article 7 of India-France DTAA - FOB transfer of ownership - Whether receipts from offshore supply to THDC are taxable in India by attributing income to a PE or business connection and by invoking section 44BBB - HELD THAT: - The Tribunal examined the THDC consortium contracts and the specific Contract No.3 under which the appellant supplied electromechanical and hydromechanical plant and equipment on an FOB basis, with title transfer and receipt of payment outside India. Applying settled precedents and construing the contractual terms, the Tribunal held that where sale is concluded outside India, title passes outside India and receipts are received outside India, no business connection arises in India in respect of such offshore supplies. The Revenue failed to discharge the onus to prove existence of a fixed place, construction or dependent agent PE attributable to the offshore supplies; the AO's reliance on earlier findings and on splitting of contracts was rejected on the facts, and the invocation of section 44BBB was held inapplicable because the receipts related to offshore supply where no role of any alleged PE in India was shown. In view of Article 7 of the India-France DTAA and the contractual FOB terms, the Tribunal directed deletion of the addition made in respect of the THDC offshore receipts. [Paras 6, 9, 10]

Addition in respect of offshore receipts from THDC is deleted; grounds 4 to 13 are allowed.

Taxability of offshore supply receipts - Permanent Establishment (Fixed Place, Dependent Agent PE) - Attribution of profits to PE - Article 7 of India-France DTAA - Whether receipts received from GE Power India Ltd. (GEPIL) for offshore supplies are taxable in India - HELD THAT: - The Tribunal, following its conclusion that no PE or business connection subsisted in India for the appellant with respect to the offshore supplies, applied that conclusion to receipts from GEPIL. The coordinate-bench reasoning in the appellant's own earlier proceedings was relied upon and the Tribunal held that the amount received from GEPIL for offshore supplies is not taxable in India. [Paras 6, 8]

Receipts of Rs. 3,07,83,774 received from GEPIL in respect of offshore supplies are not taxable in India; ground 15 is allowed.

Interest under section 234B - Whether interest under section 234B should be levied following the deletion of additions - HELD THAT: - The Tribunal treated the ground as consequential. It directed the Assessing Officer to levy interest under section 234B as per law while taking into account the deletions entered in accordance with the Tribunal's conclusions and the coordinate-bench decisions relied upon. [Paras 9]

Ground relating to levy of interest under section 234B is partly allowed; AO to levy interest as per law in view of the order.

Final Conclusion: The appeal is partly allowed: additions in respect of offshore receipts from THDC and receipts from GEPIL are deleted (grounds 4-13 and 15 allowed); interest under section 234B to be levied by the AO as per law in consequence of the decision (ground 16 partly allowed); grounds 1 and 2 were not pressed.

Deduction under section 80P(2)(a)(i) for cooperative societies - Investment income from surplus funds and its characterisation as profits and gains of business - Interest on deposits with cooperative/ nationalised banks treated as income attributable to business activities - Distinction from Totgar's Cooperative Sale Society Ltd. on facts - Application of jurisdictional High Court precedent (Vavveru) and coordinate Tribunal precedents

Deduction under section 80P(2)(a)(i) for cooperative societies - Investment income from surplus funds and its characterisation as profits and gains of business - Distinction from Totgar's Cooperative Sale Society Ltd. on facts - Application of jurisdictional High Court precedent (Vavveru) - Allowability of deduction under section 80P in respect of interest earned on reserve fund deposits with Krishna District Co-op. Central Bank Ltd. - HELD THAT: - The Tribunal held that the interest on deposits represented investment of surplus funds which originally arose from activities enumerated in section 80P(2)(a) and therefore retained the character of income "attributable to" those business activities. The Tribunal distinguished the Supreme Court's decision in Totgar's Cooperative Sale Society Ltd. on its facts, noting Totgar's involved monies belonging to members retained and shown as liabilities so as not to constitute business profits. Relying on the jurisdictional High Court decision in Vavveru Cooperative Rural Bank Ltd., and following coordinate Bench authority (Kakateeya and Tirumala Tirupati Devasthanams Employees Coop. Credit Society), the Tribunal accepted that investments of society's own monies in bank deposits do not lose their character as income attributable to the business under clause (a) and are therefore allowable as deduction under section 80P(2)(a)(i). Applying these precedents and factual distinction from Totgar's, the Tribunal allowed the assessee's claim and set aside the Revenue's disallowance. [Paras 6, 7, 8]

Interest on the reserve fund deposits with KDCC Bank is allowable as deduction under section 80P(2)(a)(i); the assessee's appeal is allowed.

Final Conclusion: Appeal allowed: the Tribunal, following the jurisdictional High Court and coordinate Bench precedents and distinguishing Totgar's on facts, held that interest on deposits of surplus funds with cooperative/nationalised banks is income attributable to the society's business and is deductible under section 80P for AY 2020-21.

Duty to provide opportunity of hearing - natural justice - appeal dismissed for non-prosecution - e mail communications and notice service on tax consultant - remand for fresh adjudication - reopening of assessment under section 147 read with section 148 - explanation for unexplained cash deposits under section 69A - adjudication on merits

Duty to provide opportunity of hearing - natural justice - appeal dismissed for non-prosecution - e mail communications and notice service on tax consultant - remand for fresh adjudication - The dismissal of the appeal by the Addl.CIT(A) for non-prosecution was vitiated by denial of a fair opportunity and was set aside; matter remanded for fresh adjudication after providing opportunity to the assessee. - HELD THAT: - The Appellate Tribunal found that the Addl.CIT(A) dismissed the appeal solely for non-compliance with section 250 notices without considering why the assessee did not respond. Notices were sent to the registered e mail on the ITBA portal which belonged to the assessee's tax consultant; the assessee, a small businessman unfamiliar with e mail/portal access, was unaware of the communications and the consultant did not inform him. The Tribunal held that treating such non-receipt as non-prosecution deprived the assessee of the principles of natural justice and a reasonable opportunity to be heard. The assessee's AR offered to cooperate and to supply evidence, and the Department did not oppose restoration. In these circumstances the impugned order could not stand and required setting aside so that the appeal may be decided on merits after giving adequate opportunity.

Order of the Addl.CIT(A) dismissing the appeal for non-prosecution set aside; matter restored and remanded to Addl.CIT(A) for fresh adjudication after giving the assessee adequate opportunity to present his case.

Reopening of assessment under section 147 read with section 148 - explanation for unexplained cash deposits under section 69A - adjudication on merits - The substantive issues regarding the validity of the reopening under section 147/148 and the correctness of the addition made as unexplained cash under section 69A were not decided on merits and are remanded to the Addl.CIT(A) for fresh consideration. - HELD THAT: - The Tribunal observed that the Addl.CIT(A) did not examine or decide the substantive contentions raised by the assessee - including the challenge to the jurisdiction/validity of the notice under section 148 and the explanations offered for cash deposits which the AO treated as unexplained under section 69A. Because the appeal was dismissed for non-prosecution without any merits adjudication, these legal and factual questions remain unanswered. The matter is therefore remitted to the Addl.CIT(A) to determine those issues afresh in accordance with law and after affording the assessee a proper opportunity to produce evidence and be heard.

Substantive disputes on the validity of the reopening and on the addition under section 69A remanded to Addl.CIT(A) for fresh adjudication on merits after giving the assessee an adequate opportunity.

Final Conclusion: The impugned order of the Addl.CIT(A) is set aside for having denied the assessee a fair opportunity; the appeal is restored for adjudication on merits and remitted to the Addl.CIT(A) to decide the validity of the reopening and the addition under section 69A after providing adequate opportunity to the assessee. The appeal is treated as allowed for statistical purposes.

Explanation of cash credit under section 68 - Peak credit theory - Burden of proof on the assessee to substantiate source of cash - Reassessment under section 147 - Remand for fresh adjudication with opportunity of being heard

Explanation of cash credit under section 68 - Burden of proof on the assessee to substantiate source of cash - Peak credit theory - Remand for fresh adjudication with opportunity of being heard - Admissibility and proof of cash deposits of INR 96,00,000 and whether the addition under section 68 should stand or be re-examined. - HELD THAT: - The Tribunal found that the appellant's claim of opening cash-in-hand and the cash summary filed before the authorities was not supported by corroborative documentary evidence such as bank statements, financial statements and the return for the preceding year. Lower authorities did not resolve the evidentiary deficiency on record. Given the absence of supporting documents and the need for fresh verification of the appellant's contention that deposits were sourced from opening cash and subsequent withdrawals, the Tribunal remanded the matter to the Assessing Officer for fresh adjudication. The Assessing Officer is directed to grant the appellant a reasonable opportunity of being heard and to permit filing of all relevant documents and details (including financial statements, bank statements, ledger accounts and return of income) to substantiate the asserted opening cash balance and source of deposits; in the event of non-filing or non-appearance the Assessing Officer may decide the issue on the material on record. The remand contemplates re-examination of the addition under section 68 and does not embody a final adjudication on merits by the Tribunal. [Paras 6]

Addition of INR 96,00,000 under section 68 remanded to the Assessing Officer for fresh adjudication after affording the appellant opportunity to produce supporting evidence.

Appeal treated as allowed for statistical purposes - Statutory remand - Immediate appellate outcome and treatment of remaining grounds. - HELD THAT: - In view of the remand on the principal evidentiary issue, the Tribunal directed that Grounds Nos. 2 and 3 be allowed for statistical purposes. The other grounds raised by the appellant were held to be infructuous in light of the remand and were not proceeded with. The appellate order therefore did not decide the substantive merit of the addition but disposed the appeal by remand and by recording the appeal as allowed for statistical purposes. [Paras 6, 7]

Appeal treated as allowed for statistical purposes; other grounds dismissed as infructuous.

Final Conclusion: The Tribunal has remanded the addition of INR 96,00,000 under section 68 to the Assessing Officer for fresh adjudication after granting the appellant an opportunity to furnish corroborative documents to substantiate the claimed opening cash and sources of deposits; consequently the appeal is treated as allowed for statistical purposes and other grounds are held infructuous.

Genuineness and creditworthiness of creditors under Section 68 - onus of proof on assessee to explain unexplained credits - evidentiary value of responses to notice under Section 133(6) and statements recorded under Section 131 - reliance on third party investigation/search reports in assessment proceedings - allowability of interest on genuine unsecured loans

Genuineness and creditworthiness of creditors under Section 68 - reliance on third party investigation/search reports in assessment proceedings - evidentiary value of responses to notice under Section 133(6) and statements recorded under Section 131 - Deletion of addition of unsecured loans aggregating to Rs. 1,50,00,000/- treated as unexplained credit under Section 68 - HELD THAT: - The AO treated the unsecured loans as unexplained credit relying primarily on adverse findings in an investigation/search into the Bhanwarlal Jain group and characteristic features of the lenders' balance sheets. However, the assessee produced ledger copies, bank statements evidencing loan payments, income tax returns and audited financials of the lenders, affidavits and confirmations, and the AO himself issued notices under Section 133(6) to the alleged lenders, two of whom personally appeared and recorded statements under Section 131 confirming the loans and explaining their business and sources. The CIT(A) found that the assessee had discharged the obligations under Section 68 by verifying identity, creditworthiness and genuineness of the lenders, and that the AO did not point to any specific material linking the assessee to accommodation entries despite having conducted enquiries. The Tribunal agreed that once the purported lenders confirmed the source of funds in response to statutory notices and on oath, and no particular adverse material against the assessee was brought on record, mere reliance on a general investigation report without case specific contrary evidence did not justify sustaining the addition. Therefore the deletion of the addition was upheld. [Paras 6, 8, 13]

Deletion of the addition of Rs. 1,50,00,000/- upheld; AO's addition under Section 68 dismissed.

Allowability of interest on genuine unsecured loans - evidentiary value of responses to notice under Section 133(6) and statements recorded under Section 131 - Disallowance of interest (aggregating to Rs. 28,90,574/-) paid on the unsecured loans - HELD THAT: - The AO disallowed interest on the ground that the underlying loans were not genuine. The assessee produced the same evidence for the lenders (ledgers, bank statements, ITRs, audited accounts, affidavits) and the lenders responded to notices and gave statements confirming the loans. The CIT(A) therefore found the loans genuine and allowed the interest. The Tribunal concurred that once the loans were accepted as genuine on the basis of documentary evidence and statutory enquiries, there was no justification for disallowing the interest paid thereon. [Paras 6, 9, 14]

Disallowance of interest deleted; interest allowed.

Final Conclusion: The order of the CIT(A) deleting the additions and allowing the interest is confirmed; the Revenue's appeal is dismissed for A.Y.2012-13.

Agricultural income - exemption under section 10(1) of the Income-tax Act - interpretation of 'land' and 'soil' for agricultural activity - controlled environment/greenhouse cultivation does not alter agricultural character - mushroom as an agricultural product despite being a fungus

Agricultural income - exemption under section 10(1) of the Income-tax Act - interpretation of 'land' and 'soil' for agricultural activity - controlled environment/greenhouse cultivation does not alter agricultural character - Income from cultivation and sale of white button mushrooms is agricultural income exempt under section 10(1) of the Act - HELD THAT: - The Tribunal considered whether the receipts from cultivation and sale of white button mushrooms should be treated as agricultural income or as business income. Applying the purposive interpretation accepted by the Special Bench in DCIT v. Inventaa Industries (P.) Ltd., the Tribunal held that the cultured top strata of the earth (soil) used for mushroom cultivation is to be regarded as 'land' for the purpose of agricultural operations, and detaching such soil and cultivating it in trays or vertical beds does not deprive the activity of its agricultural character. The nature of the product (mushroom being a fungus) is not decisive; what matters is that the product is raised on soil by performing basic operations involving human skill and labour and has utility for consumption and trade. Further, cultivation in controlled conditions or under greenhouse-like environments does not change the nature of the activity into non-agricultural; the degree of control or scientific input is irrelevant to classification as agricultural income. The Tribunal observed that the factual matrix and processes employed in the present case are identical to those considered by the Special Bench, whose reasoning regarding meaning of 'land'/'soil', product characterization, and controlled conditions was followed. Having held the receipts to be agricultural income, the Tribunal allowed the assessee's claim of exemption under section 10(1), rendering the alternate contentions on allowance of expenses and depreciation infructuous. [Paras 9, 10]

Claim for treating cultivation and sale of white button mushrooms as agricultural activity is allowed and the income is exempt under section 10(1) of the Act

Final Conclusion: Appeal allowed; receipts from cultivation and sale of white button mushrooms held to be agricultural income exempt under section 10(1) of the Income-tax Act; alternative grounds rendered infructuous.

Allowability of expenditure for earning income from other sources - deduction under section 57(iii) of the Income-tax Act - deduction under section 37(1) of the Income-tax Act - genuineness and commercial expediency of expenditure - inadmissibility of ad hoc/estimate disallowance unsupported by evidence - precedent of Rajendra Prasad Moody

Allowability of expenditure for earning income from other sources - deduction under section 57(iii) of the Income-tax Act - genuineness and commercial expediency of expenditure - precedent of Rajendra Prasad Moody - Deletion of disallowance of professional and related charges claimed against income from other sources - HELD THAT: - The Assessing Officer disallowed the claimed professional and related charges on the ground that the fees were excessively high (over 75% of the income) and that there was no nexus to the income. The Tribunal found that the AO did not dispute the genuineness of the expenditure or demonstrate that the expenses were not incurred for the purpose of earning the relevant income. Reliance was placed on the decision in Rajendra Prasad Moody, which establishes that where genuineness is not disputed the deduction under section 57(iii) cannot be denied merely because the expenditure exceeds the income or appears disproportionate. The CIT(A) recorded a speaking finding that the expenses were necessitated by legal and advisory disputes with the foreign bank and that the AO's conclusion rested on his subjective view about the percentage of fees rather than on evidence displacing the appellant's claim. The Tribunal held that the AO's ad hoc rejection based on perceived disproportionality was not sustainable and upheld the deletion by the CIT(A). [Paras 7, 9]

Disallowance under section 57(iii) deleted; CIT(A) order upheld.

Deduction under section 37(1) of the Income-tax Act - inadmissibility of ad hoc/estimate disallowance unsupported by evidence - genuineness and commercial expediency of expenditure - Deletion of ad hoc disallowance of estimated expenses claimed under section 37(1) - HELD THAT: - The AO made an estimated disallowance under section 37(1) without identifying specific bills or vouchers and based the addition on conjecture. The CIT(A) observed that section 37(1) requires only that an expense be for the purpose of business and not capital or personal, and that estimation cannot be founded on mere surmise. The Tribunal agreed that the impugned addition lacked evidentiary foundation and that the assessee had, on the material, substantiated the necessity and genuineness of the expenses. Consequently, the CIT(A)'s deletion of the adhoc disallowance was held to be justified and was affirmed. [Paras 10, 11]

Ad hoc disallowance under section 37(1) deleted; CIT(A) order upheld.

Final Conclusion: The Revenue's appeal is dismissed; the orders of the Commissioner of Income-tax (Appeals) deleting the disallowances under section 57(iii) and section 37(1) for AY 2015-16 are upheld.

Estimation of income on unaccounted sales by application of Gross Profit rate - exclusion of intra-group circular transactions from taxable receipts - assessment on basis of seized notebooks and electronic records requires corroboration - presumption in search and seizure proceedings under search regime - estimation of bogus/excess expenses by adopting a percentage of alleged expenditure - inadmissibility of unsigned third party excel sheets without authentication or corroboration - requirement to verify vendor nexus before disallowing claimed expenditures

Estimation of income on unaccounted sales by application of Gross Profit rate - exclusion of intra-group circular transactions from taxable receipts - Quantum of additions on account of unaccounted sale of scrap and rutile - HELD THAT: - The Tribunal found that incriminating notebooks and associated material furnished sufficient basis for the department to allege unaccounted sales, but the seized records also disclose unaccounted expenditure. The CIT(A) correctly proceeded to estimate only the profit element by applying the assessee's declared gross profit rates for each year rather than taxing gross receipts without allowance for corresponding unaccounted outgoings. That methodology is logical and reasonable and is upheld. However, entries which represent circular transactions within the group (accepted by the CIT(A) as amounting to Rs. 732.30 lakhs for AYs 2015-16 and 2016-17) do not constitute income of the assessee and must be excluded from the computation. The AO is directed to exclude those circular receipts and recompute the taxable profit; the assessee is to furnish year wise working for the exclusion. [Paras 14]

CIT(A)'s approach of estimating profit by applying GP rates is upheld; circular intra group receipts (Rs.732.30 lakhs) to be excluded and recomputed by AO; corresponding revenue grounds dismissed and assessee's grounds partly allowed.

Estimation of bogus/excess expenses by adopting a percentage of alleged expenditure - requirement to verify vendor nexus before disallowing claimed expenditures - Disallowance on account of alleged bogus expenses - HELD THAT: - The AO relied primarily on WhatsApp conversations and did not carry out enquiries with the alleged vendors or produce corroborative material showing that payments were made and returned as cash. On these facts the CIT(A) correctly held that the standalone communications did not justify large disallowances. While wholly deleting the additions where expenses were not claimed in the books, the CIT(A) reasonably allowed an estimated disallowance of 12.5% of the alleged bogus expenses to meet possible leakage, applying settled judicial precedents. The Tribunal finds no infirmity in this estimation and in the requirement that the AO should have made vendor enquiries before making full disallowance. [Paras 17]

CIT(A)'s deletions and the imposition of a 12.5% estimated disallowance are sustained; revenue's challenge dismissed.

Inadmissibility of unsigned third party excel sheets without authentication or corroboration - assessment on basis of seized notebooks and electronic records requires corroboration - Additions based on unaccounted cash receipts recorded in seized excel sheets and notebooks - HELD THAT: - For AYs within the appeal period the Tribunal concurs with the CIT(A) that unsigned excel sheets exchanged between third parties (not recovered from the assessee's premises nor in the assessee's handwriting) lack evidentiary value absent corroboration; the AO did not confront or examine authors of the sheets, nor establish nexus with the assessee, and thus additions based on those sheets for the relevant years cannot be sustained. As regards notebooks seized from a third person (Shri S. Raja) who was not an employee of the assessee, many notings were bald and unconnected to the assessee; nevertheless, because of inconsistencies in accounting the CIT(A) fairly estimated unreconciled receipts and applied the assessee's GP rates to determine taxable profit for AYs 2017-18 to 2019-20. The Tribunal upholds the deletions where corroboration was absent and confirms the CIT(A)'s reasonable estimation on unreconciled items. [Paras 19, 20]

Additions based solely on unsigned third party excel sheets are deleted; CIT(A)'s estimation of taxable profit on unreconciled notebook receipts (applying GP rates) for AYs 2017-18 to 2019-20 is confirmed.

Assessment on basis of seized notebooks and electronic records requires corroboration - Addition for alleged manipulation in accounts based on internal e mail - HELD THAT: - The impugned addition rested on an internal e mail suggesting accounting adjustments. The Tribunal agrees with the CIT(A) that an officer's suggestion or proposal in e mail, without further examination of books or corroborative material showing that such adjustments were carried out to evade tax, cannot sustain an addition. The assessee's accounts were audited and no adverse remarks were found; no incriminating material was discovered during search to prove that the e mail led to manipulative entries resulting in tax evasion. [Paras 22]

Addition based solely on the internal e mail is deleted; CIT(A)'s order in deleting the addition is upheld and revenue's appeal dismissed.

Final Conclusion: The Tribunal partly allows the assessee's appeals for AYs 2015-16 and 2016-17 by directing exclusion of identified intra group circular receipts and remand for recomputation, and otherwise upholds the CIT(A)'s adjustments and estimations (including a 12.5% estimate for bogus expenses and GP rate estimations on unreconciled receipts); all other appeals are dismissed.

Reconciliation of ITS/CBEC export-import data with books - Actual cost to the assessee versus gross assessable value - Reliance on ITS/CBEC screen-shot data without independent verification - Unexplained expenditure under Section 69C - Assessing Officer's duty to verify before making mechanical additions

Reconciliation of ITS/CBEC export-import data with books - Actual cost to the assessee versus gross assessable value - Reliance on ITS/CBEC screen-shot data without independent verification - Unexplained expenditure under Section 69C - Assessing Officer's duty to verify before making mechanical additions - Validity of addition made by Assessing Officer by treating difference between ITS/CBEC import summary data and books as unexplained income under Section 69C - HELD THAT: - The Tribunal examined the chart, invoices, bill of entry entries on ICEGATE and the audited balance sheet which showed imports recorded in the assessee's books after adjustment of credit notes, representing the actual cost to the assessee. The ITS/CBEC summary data represented a gross assessable value and was a screen-shot/raw data which could contain duplicate entries and required bill-wise breakup and verification. The Assessing Officer made a mechanical addition by taking the gross ITS figure less the books figure without undertaking verification or providing a bill-wise break-up, and rejected the assessee's reconciliation explanation at face value. The Tribunal observed that customs duty paid as per ITS data more or less matched the assessee's records, and that difference in gross assessable value (without considering credit notes) does not by itself establish suppression of income or unexplained expenditure under Section 69C. Reliance solely on ITS summary data without proper verification and without demonstrating how book entries amount to under-valuation or undisclosed income renders the addition unsustainable. The Tribunal also noted the consistency of this approach with the reasoning in a preceding ITAT decision where ITS raw data without bill-wise breakup was held not actionable for making additions. Applying these principles, the Tribunal found no reason to sustain the addition made by the Assessing Officer. [Paras 10, 11, 12]

Addition of Rs. 1,03,45,076/- made by the Assessing Officer by reconciling ITS/CBEC import summary data with the books is deleted and the appeal is allowed.

Final Conclusion: The mechanical addition based on gross ITS/CBEC import summary data without bill wise verification or adequate enquiry is unsustainable; the Tribunal allows the appeal and deletes the addition for Assessment Year 2017 18.

Inordinate delay in disposal - quashing of show cause notice - writ of certiorari - writ of prohibition - interim injunction restraining proceedings

Inordinate delay in disposal - quashing of show cause notice - Challenge to the impugned Show Cause Notice dated 24th September 2003 was confined to inordinate delay in disposal and whether the notice should be quashed on that ground. - HELD THAT: - The petitioner limited the challenge to the delay in adjudication and did not press the merits. The Court adopted the reasoning applied in the connected petition challenging the same show cause notice and found the delay to be a ground for interference. Applying that reasoning, the Court concluded that the impugned show cause notice had to be quashed and further proceedings restrained. The Court did not adjudicate the merits of the allegations in the show cause notice because those grounds were not urged before it. [Paras 6]

Impugned Show Cause Notice F. No. DRI/MZU/D/25/Espayjee/2001 dated 24th September 2003 quashed and respondents restrained from taking further steps pursuant thereto.

Final Conclusion: The petition is allowed: the show cause notice dated 24.09.2003 is quashed for inordinate delay and respondents are restrained from proceeding further; writ rule made absolute without costs.

Inadmissibility of Wikipedia as evidentiary basis - mechanical or summary confirmation of demand without appreciating material on record - judicial interference by quashing and remand for fresh consideration - right to be heard and opportunity for personal hearing on reconsideration

Inadmissibility of Wikipedia as evidentiary basis - Reliance by the authority on information from Wikipedia in support of the demand was impermissible and could not sustain the impugned order. - HELD THAT: - The court noted that the Show Cause Notice and the impugned order placed reliance upon information said to have been secured from Wikipedia. The petitioner had specifically pointed this out in its reply and relied on the decisions of the Apex Court. The High Court agreed with the petitioner that reliance on Wikipedia as the basis for the demand was impermissible in law and formed a material defect in the impugned order. [Paras 3, 5]

The reliance on Wikipedia by the respondent-authority was held impermissible and vitiated the impugned order.

Mechanical or summary confirmation of demand without appreciating material on record - right to be heard and opportunity for personal hearing on reconsideration - judicial interference by quashing and remand for fresh consideration - The impugned order was a mechanical confirmation of the demand without consideration of the petitioner's submissions and documents, warranting quashing and remand for fresh consideration with an opportunity to the petitioner. - HELD THAT: - The court found that despite the petitioner having filed detailed replies and produced documents, the authority did not consider those contentions and mechanically confirmed the demand. Given this failure to appreciate material on record and to afford adequate opportunity, the High Court concluded that interference was necessary. The court set aside the impugned order and remitted the matter for fresh consideration in accordance with law, expressly reserving liberty for the petitioner to file additional pleadings and documents and directing that a sufficient and reasonable opportunity, including personal hearing, be afforded. [Paras 5, 6]

Impugned order quashed; matter remitted for fresh consideration with directions to consider all submissions and documents and to grant an opportunity of personal hearing.

Final Conclusion: Writ petition allowed; the impugned order dated 15.03.2023 set aside and the matter remitted to the respondent-authority for fresh consideration in accordance with law, with liberty to the petitioner to file additional pleadings/documents and to be afforded a sufficient opportunity including personal hearing.

Restricted import of old and used clothing requiring specific licence - Confiscation for import without required licence - Redemption fine in lieu of release of confiscated goods - Invoking Section 111(m) absent a declaration in the bill of entry - Reliance on prior Tribunal precedent for valuation and mitigation of fine/penalty

Restricted import of old and used clothing requiring specific licence - Confiscation for import without required licence - Redemption fine in lieu of release of confiscated goods - Reliance on prior Tribunal precedent for valuation and mitigation of fine/penalty - Validity of confiscation and of the redemption fine and penalty imposed for import of old and used worn clothing without a specific import licence - HELD THAT: - The imported goods were held to be old and used worn clothing which are a restricted item whose import is permitted only against a valid specific licence under the Foreign Trade Policy. In such circumstances confiscation under the provision dealing with import without required licence is sustainable. Having regard to the precedential approach of this Tribunal, the imposition of redemption fine and penalties was examined and found to be sufficient to meet the ends of justice. The Tribunal, following its earlier reasoning about limited scope for fresh factual ascertainment and the admitted failure to comply with licensing requirements, upheld the confiscation and confirmed the fines and penalties as adequate.

Confiscation upheld; redemption fine and penalties confirmed as sufficient; impugned order sustained.

Invoking Section 111(m) absent a declaration in the bill of entry - Appropriateness of invoking the provision relating to goods not corresponding with the entry (Section 111(m)) where there was no declaration in the bill of entry - HELD THAT: - The Tribunal noted that the provision invoked for goods not corresponding with the entry is not properly applicable where proceedings commenced prior to or in the absence of a declaration in the bill of entry. Reliance on the earlier Tribunal decision establishes that confiscation under that provision cannot be sustained in the absence of a declaration, because Section 111(m) presupposes withholding or incorrect recording of material particulars in the bill of entry.

Invocation of the provision concerned with non-correspondence with the bill of entry is not appropriate in the absence of a declaration; that ground is not relied upon to sustain confiscation in this case.

Final Conclusion: The appeals by the Revenue are dismissed; the adjudicating authority's order of confiscation and the redemption fine and penalties are upheld as meeting the ends of justice.

Writ jurisdiction under Article 226 - Stock exchange as 'State' under Article 12 - Stop-transfer direction - Authority to withhold third-party assets - Appeal to Securities Appellate Tribunal under Section 23L of SCRA - Right to property under Article 300A - Laches and delay in invoking public remedy

Writ jurisdiction under Article 226 - Stock exchange as 'State' under Article 12 - Amenability of the National Stock Exchange (NSE) to writ jurisdiction and maintainability of the petition under Article 226. - HELD THAT: - The Court accepted that the objects and public functions of the NSE, as set out in its affidavit, fall within the scope of public duties sufficient to attract writ jurisdiction. Applying precedent that a stock exchange is covered by the definition of 'State' and is amenable to writ jurisdiction, the Court held that a writ remedy is available against the NSE if it acts unfairly or arbitrarily in discharge of its public functions. The plea that the petition is not maintainable on this ground was therefore rejected. [Paras 16, 17]

Respondent No. 3-NSE is amenable to writ jurisdiction and the petition is maintainable under Article 226.

Appeal to Securities Appellate Tribunal under Section 23L of SCRA - Whether the petitioner was obliged to seek remedy before the Securities Appellate Tribunal under Section 23L/Section 22E of the SCRA. - HELD THAT: - The Court analysed Section 23L(1) and held that an appeal to the Securities Appellate Tribunal lies only against an 'order or decision' of a recognised stock exchange. The impugned communication of 4 October 2007 was characterised as a direction to the transfer agent to 'stop transfer' and not an 'order or decision' falling within Section 23L. Consequently Section 22E (bar on civil courts) did not apply, and the existence of the Tribunal remedy did not preclude writ jurisdiction in the present facts. [Paras 19, 20, 21]

Relegation to the Securities Appellate Tribunal under Sections 23L/22E SCRA is not compelled because the impugned communication is not an 'order or decision' within those provisions.

Stop-transfer direction - Authority to withhold third-party assets - Right to property under Article 300A - Legality of the impugned communication directing stop-transfer where the shares continued to stand in the petitioner's name and were not shown to be assets of the defaulting member. - HELD THAT: - On the admitted material, the company and transfer agent recorded that the shares still stood in the petitioner's name. The share transfer forms relied upon by NSE did not name the defaulting member as transferee but named third party transferees, and no document was produced to show that the shares were assets of the defaulting member. Merely recovering transfer forms from a defaulting member does not confer ownership on the exchange. NSE failed to identify any regulation or legal authority empowering it to issue the impugned stop-transfer direction in respect of shares not shown to be assets of the defaulter. The Court limited its scrutiny to the authority to issue the communication and did not adjudicate title to the shares. [Paras 22, 24, 27, 33]

Impugned communication of 4 October 2007, and consequential proceedings based thereon, are without lawful authority and infringe the petitioner's rights; they are quashed.

Laches and delay in invoking public remedy - Whether delay and laches disentitle the petitioner from relief. - HELD THAT: - The Court observed that NSE had not shown any legal authority to withhold the shares and that the petitioner had applied for duplicate certificates from April 2007 and only learnt of the impugned communication when the transfer agent rejected his request in November 2007. The grievance was held to be continuing, and there was no evidence that the petitioner had slept upon his rights or that any intervening equities arose in favour of NSE. Given NSE's lack of demonstrated authority to issue the direction, the plea of delay and laches was rejected. [Paras 29, 30, 31]

Delay and laches do not bar the petition; the objection is rejected.

Stop-transfer direction - Petitioner's locus to challenge the impugned communication and entitlement to relief for issuance of duplicate share certificates and payment of dividends. - HELD THAT: - Respondent No. 4-Company and the transfer agent confirmed that the shares remain registered in the petitioner's name and the petitioner had applied for duplicate certificates which were refused by the transfer agent relying on the impugned communication. On these admitted facts the petitioner possessed locus to challenge the communication. The Court directed that upon petitioner complying with any further formal requirements (in addition to what was already filed), the company and transfer agent must issue duplicate certificates within four weeks and the Investor Protection Fund must transfer the withheld dividends to the petitioner within eight weeks. [Paras 21, 33, 35]

Petitioner has locus; Respondent Nos. 4 and 5 to issue duplicate share certificates and Respondent Nos. 1 and 2 to transfer dividends as directed.

Final Conclusion: The impugned communication dated 4 October 2007 and consequential proceedings by the NSE are quashed for lack of lawful authority; the petitioner has locus and writ remedy lies. Respondent Nos. 4 and 5 are directed to issue duplicate share certificates on compliance with outstanding formalities within four weeks, and Respondent Nos. 1 and 2 are directed to transfer the relevant dividends to the petitioner within eight weeks. The rule is made absolute without costs.

Disqualification under Section 164(2) - vacation of office under proviso to Section 167(1) - striking off under Section 248 - competence to sign and verify a Section 7 petition

Striking off under Section 248 - disqualification under Section 164(2) - Whether the striking off of Airwill Infracon was by reason of default under Section 164(2)(a) so as to attract disqualification of its directors - HELD THAT: - The Tribunal examined the official MCA publications (Public Notice dated 18.06.2018 and the striking-off notice dated 08.08.2018) and found that Airwill Infracon was struck off under the Registrar's power in Section 248 on the ground that it had not been carrying on business for two immediately preceding financial years (Section 248(1)(c)/(a) territory), and not on the ground of non filing of financial statements for a continuous period of three financial years as envisaged by Section 164(2)(a). Because the statutory basis for striking off was Section 248 (failure to carry on business / failure to apply for dormant status) and not a finding or adjudication of default under Section 164(2), the essential condition for attracting the disqualification in Section 164(2)(a) was not established on the record. The Tribunal therefore concluded that disqualification under Section 164(2) did not arise from the facts and documents before it. [Paras 13, 14, 15, 16]

Airwill Infracon was struck off under Section 248 for not carrying on business and not for defaults under Section 164(2); accordingly Section 164(2) disqualification is not attracted.

Vacation of office under proviso to Section 167(1) - disqualification under Section 164(2) - Whether the proviso to Section 167(1) operated so as to cause vacation of the office of the director in all other companies (including the Financial Creditor) on account of any alleged default by Airwill Infracon - HELD THAT: - The Tribunal noted that the proviso to Section 167(1) (inserted with effect from 07.05.2018) provides for vacation of office in all companies other than the defaulting company where a director incurs disqualification under Section 164(2). Two reasons justified rejecting the appellant's contention: first, there was no established disqualification under Section 164(2) in respect of Airwill Infracon (see above); second, even on the authorities relied upon by the parties (including the Delhi High Court in Mukul Pathak & Ors.), the proviso's operation requires that the director incur the disqualification contemplated by Section 164(2) such that the proviso can be applied prospectively from its insertion. On the material before the Tribunal there was no basis to hold that Vinod Sachdeva had incurred a disqualification under Section 164(2) on or after 07.05.2018 that would trigger vacation of his office in the Financial Creditor. [Paras 17, 18, 19, 20, 21]

The proviso to Section 167(1) does not operate to vacate the office of Vinod Sachdeva in the Financial Creditor because disqualification under Section 164(2) was not established.

Competence to sign and verify a Section 7 petition - Whether Vinod Sachdeva was competent to sign and verify the Section 7 applications filed by the Financial Creditor - HELD THAT: - The Tribunal observed the Financial Creditor's board resolution dated 23.02.2022 authorising Vinod Sachdeva to sign and verify the Section 7 petitions filed on 04.03.2022. Given the finding that no disqualification under Section 164(2) attached to Vinod Sachdeva in respect of the Financial Creditor, and that Airwill Infracon had been dissolved prior to filing, the dissolution of the sister company did not affect Vinod Sachdeva's capacity to act as director of Airwill JKM Infrastructure Pvt. Ltd. The Tribunal thus held that he was competent to sign and swear the affidavit verifying the Section 7 petitions. [Paras 8, 21, 22]

Vinod Sachdeva was competent to sign and verify the Section 7 applications filed by the Financial Creditor.

Final Conclusion: The Adjudicating Authority's orders rejecting the interlocutory applications challenging the authority of the signatory are affirmed. Disqualification under Section 164(2) was not demonstrated and the proviso to Section 167(1) does not operate to vacate the director's office in the Financial Creditor; accordingly the Section 7 petitions remain valid and the appeals are dismissed.

Adjudicatory function under Section 100 - Facilitative role of the resolution professional under Section 97-99 - Dilip B. Jiwrajka precedent on stages of Section 95-100 - Waiver of statutory rights - Requirement to follow statutory procedure as prescribed

Adjudicatory function under Section 100 - Facilitative role of the resolution professional under Section 97-99 - Dilip B. Jiwrajka precedent on stages of Section 95-100 - Requirement to follow statutory procedure as prescribed - Whether the Adjudicating Authority could adjudicate merits of objections to a Section 95 application before appointment of a resolution professional and receipt of the RP's report. - HELD THAT: - The Tribunal held that Sections 95-100 form a staged statutory scheme in which no judicial adjudication is to take place prior to the stage contemplated by Section 100. The role assigned by Sections 97-99 to the resolution professional is facilitative - to collate facts and submit a recommendatory report - and the Adjudicating Authority's true adjudicatory function commences on receipt of that report under Section 100. Reliance on the Hon'ble Supreme Court's decision in Dilip B. Jiwrajka established that intervening adjudication at the appointment stage under Section 97(5) is impermissible because it would frustrate the timelines and scheme of Sections 99-100 and substitute an adjudicatory role where only facilitation is prescribed. In the present case the Adjudicating Authority proceeded to decide objections on merits before appointing a resolution professional and before any report from an RP could be obtained, including recording findings that the guarantee had not become effective. That process was contrary to the statutory scheme and the binding authority of the Supreme Court; accordingly the impugned order was unsustainable and had to be set aside for fresh consideration at the proper stage. [Paras 15, 16, 17, 36, 37]

Impugned order of the Adjudicating Authority dismissing the Section 95 petition after adjudicating objections prior to appointment of an RP is set aside; the matter is to be considered in accordance with law after appointment of a resolution professional and on receipt of the RP's report under Section 100.

Waiver of statutory rights - Principle that waiver requires intentional relinquishment and consideration - Whether the Financial Creditor was precluded by waiver from challenging the Adjudicating Authority's jurisdictional or procedural errors. - HELD THAT: - The Tribunal examined the plea of waiver raised by the Personal Guarantor and applied settled principles that waiver is an intentional relinquishment of a known right, generally involving consideration or conduct inconsistent with continuance of the right. The mere filing of a reply to an interlocutory application or failure to cite a particular precedent at the Adjudicating Authority's hearing does not, without more, constitute an abandonment of statutory rights. On the facts, there was no proved consideration or deliberate surrender of rights by the Financial Creditor; consequently it was not estopped from invoking the statutory scheme and binding Supreme Court precedent in this appeal. [Paras 23, 28, 29, 31]

The plea of waiver is rejected; the Financial Creditor is not precluded from challenging the Adjudicating Authority's premature adjudication.

Final Conclusion: Appeal allowed. The NCLT order dated 21.02.2024 that adjudicated objections to the Section 95 petition before appointment of a resolution professional is set aside. No opinion is expressed on the merits of those objections; the Adjudicating Authority shall consider the Section 95 application in accordance with the statutory scheme (Sections 97-100), after appointment of an RP and on receipt of the RP's report. The Personal Guarantor remains free to raise objections in accordance with law at the appropriate stage.

Mutual credits and set-off - Regulation 29 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Adjustment of security amount in proof of claim - Scope of set-off in liquidation - Application of precedent in CIRP to liquidation proceedings

Mutual credits and set-off - Adjustment of security amount in proof of claim - Regulation 29 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Set-off of a security amount stated in the proof of claim by an operational creditor is permissible under Regulation 29 and the Adjudicating Authority's direction to refund the security could not be sustained. - HELD THAT: - The claim form submitted by the appellant explicitly recorded that the security amount had been adjusted against the claim (Clause 8). Regulation 29 recognises mutual credits and set-off where there are mutual dealings between the corporate debtor and another party, permitting sums due from one party to be set off against sums due from the other to arrive at the net payable amount. The Adjudicating Authority relied on the Supreme Court decision in Bharti Airtel (which arose in the CIRP context) to disallow the set-off; however, the judgment excerpted by the Adjudicating Authority itself indicates that set-off on mutual dealings is permitted under Regulation 29. The present case involves an actual claim filed in liquidation with adjustment of security recorded therein, and is therefore not a case of an anticipated claim. Consequently, the Adjudicating Authority's conclusion that the appellant could not effect set-off/adjustment was erroneous and its direction to pay the specified amount could not be sustained. The appeal is accordingly allowed to the extent of overturning that direction.

The Adjudicating Authority's order directing payment was set aside to the extent that it disallowed the set-off of the security amount; the appeal is partly allowed.

Final Conclusion: The appeal is partly allowed: the Tribunal held that Regulation 29 permits set-off of the security amount recorded in the proof of claim and therefore the Adjudicating Authority's direction to refund/pay the security amount could not be sustained.

Financial debt - financial creditor - operational debt - operational creditor - commercial effect of borrowing - claim under Section 3(6) of IBC - control and custody of assets under Section 18 of IBC - classification of creditors

Financial debt - commercial effect of borrowing - Whether the Security Deposit qualifies as a financial debt and the Appellant as a financial creditor - HELD THAT: - The Bench held that the Security Deposit did not qualify as a financial debt. The Lease Deed showed the deposit was equivalent to four months' lease rent, retained by the lessor without any liability to pay interest, and was not disbursed against consideration for the time value of money. Interest at 18% was contractual only upon the lessor's failure to refund the deposit when due, and therefore the essential elements of disbursal against consideration for time value of money and commercial effect of borrowing under the statutory definition of financial debt were absent. Reliance on authorities requiring disbursal against time value of money was noted, and the Adjudicating Authority's conclusion that the transaction lacked ingredients of financial debt was upheld. [Paras 18]

Security Deposit is not a financial debt and the Appellant is not a financial creditor

Operational debt - operational creditor - claim under Section 3(6) of IBC - Whether the Appellant's claim for refund of Security Deposit is an operational debt and the Appellant an operational creditor - HELD THAT: - The Bench found that termination of the lease gave rise to a claim for breach of contract falling within the statutory definition of 'claim' under Section 3(6). The Security Deposit, paid as an advance for prospective occupation of leased premises, bears nexus with the provision of services (use/occupation of premises) and thus falls within the scope of 'operational debt' as defined under Section 5(21). Applying a purposive construction of 'services' and relevant precedents on nexus to provision of goods/services, the Tribunal concluded that the ingredients of operational debt are satisfied and the Appellant ought to be classified as an operational creditor. [Paras 21, 22]

Appellant's claim is an operational debt and Appellant is to be treated as an operational creditor

Control and custody of assets under Section 18 of IBC - classification of creditors - Whether the Resolution Professional was justified in taking custody of the Security Deposit and in the initial categorisation of the claim - HELD THAT: - The Tribunal observed that the RP is empowered under Section 18 to take control and custody of assets of the corporate debtor but is not to take custody of assets owned by third parties held under trust or contractual arrangements. Given the factual and contractual matrix, the RP was entitled to include the deposit in the pool and invite claims under the CIRP; however, having examined the nature of the claim, the RP's categorisation of the Appellant as an 'Other Creditor' was incorrect because the deposit constituted an operational debt. Accordingly, the RP's action in taking custody was not faulted, but the classification required correction. [Paras 22]

RP was justified in taking custody of the amount for CIRP purposes but must reclassify the Appellant's claim as operational (not "Other Creditors") and admit the claim accordingly

Final Conclusion: The appeal is allowed in part: the Security Deposit is not a financial debt but constitutes an operational debt; the Appellant is to be admitted as an operational creditor and permitted to substitute Form-C with Form-B; the RP's custody of the deposit for CIRP was not impermissible, but the claim must be reclassified and admitted as directed.

Section 7 of the Insolvency and Bankruptcy Code - Section 10A moratorium/protection - Consent decree/Consent terms constituting a fresh cause of action - Recovery Certificate as restarting limitation and fresh right to sue - NeSL information utility certificate as evidence of debt and default

Section 10A moratorium/protection - Section 7 of the Insolvency and Bankruptcy Code - Section 7 application was not barred by Section 10A - HELD THAT: - The Tribunal held that the Section 7 petition was founded on a default arising from the Consent Decree/Recovery Certificate dated 29.08.2022, which post-dates the Section 10A period. The Adjudicating Authority correctly recorded that the issuance of the Recovery Certificate and the DRT decree constituted the basis for the Section 7 application and that, therefore, the petition could not be treated as barred by Section 10A. The Tribunal also noted that earlier defaults prior to the 10A period existed, but where the Section 7 application is predicated on a subsequent decree/recovery certificate, Section 10A protection does not operate to bar the proceedings. [Paras 26, 35]

Application under Section 7 was not hit by Section 10A and the Adjudicating Authority did not err in admitting the petition.

Recovery Certificate as restarting limitation and fresh right to sue - Consent decree/Consent terms constituting a fresh cause of action - NeSL information utility certificate as evidence of debt and default - Section 7 may be founded on the DRT Consent Decree/Recovery Certificate dated 29.08.2022 - HELD THAT: - The Tribunal accepted that the Section 7 application expressly relied on the Recovery Certificate/Consent Decree of 29.08.2022 as giving rise to a fresh cause of action. The Adjudicating Authority had noted annexures including the NeSL record of default and the DRT Recovery Certificate as evidence of debt and default. In view of authorities recognizing that a final decree and the associated recovery certificate create a fresh right to recover decretal amounts, the petition based on that decree was maintainable. Consequently, the date of default for the present Section 7 petition was correctly recorded as 29.08.2022. [Paras 8, 12, 16, 32, 34]

Section 7 application validly founded on the DRT Consent Decree/Recovery Certificate dated 29.08.2022 and the attached NeSL certificate provided admissible evidence of debt and default.

Final Conclusion: The Appeal is dismissed. The Adjudicating Authority correctly admitted the Section 7 petition: the petition was based on the DRT Consent Decree/Recovery Certificate dated 29.08.2022 (a post-Section 10A event) supported by NeSL records, and therefore was not barred by Section 10A.

Grant of bail - medical ailment as ground for bail - setting aside impugned order - conditioning bail by Trial Court

Grant of bail - medical ailment as ground for bail - setting aside impugned order - conditioning bail by Trial Court - Whether the appellant should be granted bail and the impugned order set aside in view of the appellant's medical ailment. - HELD THAT: - The Supreme Court, taking into account that the appellant is a woman suffering from a medical ailment, exercised its discretion to set aside the impugned order and grant bail. The Court did not specify detailed bail conditions but directed that the grant of bail is subject to such terms and conditions as the Trial Court may impose. The exercise of supervisory jurisdiction resulted in the impugned order being quashed to the extent necessary to release the appellant on bail governed by conditions to be fixed by the Trial Court.

Impugned order set aside; appellant granted bail subject to terms and conditions to be imposed by the Trial Court; appeal allowed.

Final Conclusion: The Supreme Court allowed the appeal, set aside the impugned order and granted bail to the appellant in view of her medical ailment, leaving the precise terms and conditions of bail to be stipulated by the Trial Court; pending applications disposed of.

Proprietorship not separate from proprietor - reverse charge liability under Rule 2(1)(d)(EE) of Service Tax Rules, 1994 read with Notification No. 30/2012-ST - revenue neutrality - extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994

Proprietorship not separate from proprietor - reverse charge liability under Rule 2(1)(d)(EE) of Service Tax Rules, 1994 read with Notification No. 30/2012-ST - Services rendered by the proprietorship concern of a director are to be treated as services provided by the director and attract reverse charge liability on the recipient-company. - HELD THAT: - The Tribunal accepted the settled principle that a sole proprietorship is not a separate legal entity from its proprietor, and applied earlier High Court decisions to conclude that M/s IRIS Engineering Co. and Shri Chittranjanbhai D. Badheka are indistinguishable for the purpose of taxation. Consequently, services received by the appellant from the proprietorship of its director fall within the ambit of Rule 2(1)(d)(EE) of the Service Tax Rules, 1994 read with Notification No. 30/2012-ST, making the appellant liable to discharge service tax on a reverse charge basis for the engineering and consultancy services received.

Reverse charge liability under Rule 2(1)(d)(EE) read with the Notification attaches to the appellant in respect of services received from the director's proprietorship.

Revenue neutrality - extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - penalty set aside where no mala fide intention - The demand for service tax by invoking the extended period of limitation is not sustainable in view of revenue neutrality; consequent penalty is also set aside. - HELD THAT: - The Tribunal found that although the appellant was liable on merits under the reverse charge mechanism, the tax payable could be availed as CENVAT credit by the appellant, creating a revenue-neutral position. Relying on this Tribunal's earlier decision, the Bench held that where non-payment is revenue neutral and there is no mala fide intention, invocation of the extended five-year period under the proviso to Section 73(1) is unjustified. In these circumstances there is no loss of revenue and the extended-period demand (and any penalty attributable to it) cannot be sustained; only liability within the normal period of limitation, if any, would be recoverable.

Extended-period demand set aside on the ground of revenue neutrality; related penalty also set aside.

Final Conclusion: The Tribunal held that services from the director's proprietorship attract reverse charge liability on the appellant, but on facts the case is revenue neutral; the extended-period demand and attendant penalty were therefore set aside and the appeal allowed.

Reverse charge mechanism - service tax liability on legal and professional fees - verification of books of account - proof of bifurcation of expenses - classification of services - de novo adjudication

Reverse charge mechanism - verification of books of account - proof of bifurcation of expenses - de novo adjudication - Whether the demand for service tax under the reverse charge mechanism could be sustained where the adjudicating authority did not verify the books, ledgers and the appellant's detailed bifurcation of amounts billed under "legal and professional charges", and whether the matter required remand for fresh adjudication. - HELD THAT: - The Tribunal found that the adjudicating authority proceeded on the assumption that all amounts booked under the head "legal and professional expenses" were taxable under the reverse charge mechanism without adequately verifying the appellant's books of account, ledgers and the detailed bifurcation showing amounts attributable to non-legal professionals (e.g., chartered accountants, chartered engineers). The appellant had produced documents and a chart demonstrating that substantial portions of the aggregate head related to services not attracting reverse charge liability. In similar proceedings for an earlier period the Tribunal had remanded the matter where the adjudicating authority had not considered the bifurcation. Given that the adjudicating authority here also failed to examine the records and verify classification of services, the Tribunal held that a final conclusion on liability could not properly be drawn on the existing record. Consequently the Tribunal set aside the impugned order and directed a de novo consideration by the adjudicating authority so that the classification of each component of the expenditure and the applicability of reverse charge can be determined after verifying the books and supporting documents.

Impugned order set aside and matter remanded to the adjudicating authority for de novo adjudication after verification of records.

Final Conclusion: The appeal is allowed in part: the impugned order is set aside and the matter is remanded for de novo adjudication, with the adjudicating authority directed to verify the books, ledgers and the appellant's bifurcation of "legal and professional" expenses and to pass a fresh order for the period July-2012 to November2015 within the time directed by the Tribunal.

Interest on delayed refunds under Section 11BB - deeming fiction in the Explanation to Section 11BB - date from which interest becomes payable on refund

Interest on delayed refunds under Section 11BB - deeming fiction in the Explanation to Section 11BB - date from which interest becomes payable on refund - Interest on delayed refund is payable from the expiry of three months from the date of receipt of the refund application filed on 29.06.2007 and not from the date of the appellate order or fresh application. - HELD THAT: - The Tribunal applied the statutory scheme embodied in Section 11BB as made applicable to service tax matters and relied on the interpretation of the Hon'ble Apex Court in Ranbaxy Laboratories Limited to hold that Section 11BB operates once an order for refund has been made under Section 11B but that the date from which interest becomes payable is the expiry of three months from the date of receipt of the application for refund. The Explanation to Section 11BB, which creates a deeming fiction that an order of refund made by a Commissioner (Appeals), Appellate Tribunal or Court shall be deemed to be an order under sub-section (2) of Section 11B, does not postpone or alter the date on which interest begins to run. The Tribunal further referred to subsequent Apex Court authority which re-affirmed the principle (UOI vs. Hamdard (WAQF) Laboratories ) and noted that earlier precedents on refund cases (Mafatlal Industries Limited ) support the proposition that delayed refunds attract interest as provided in Section 11BB. Applying these legal principles to the undisputed fact that the refund application was filed on 29.06.2007, the Tribunal concluded that interest is payable from three months after 29.06.2007 until payment. [Paras 7, 8]

Order of the Commissioner (Appeals) set aside to the extent it fixed the interest from three months of 11.03.2016; appellant entitled to interest from three months after 29.06.2007 and revenue directed to make good the shortfall within four months.

Final Conclusion: The appeal is allowed on merits: interest on the delayed refund is payable from the expiry of three months from 29.06.2007 until payment; the Commissioner (Appeals) order is set aside insofar as it fixed a later date for interest and the revenue is directed to pay the shortfall within four months.

Cenvat credit and clearance of inputs as such - Rule 3(5) of the Cenvat Credit Rules, 2004 - payment equal to Cenvat credit on inputs removed as such - Section 11D of the Central Excise Act, 1944 - duties collected from the buyer to be deposited with the Central Government - Payment of excise duty by debiting Cenvat account - effect on applicability of Section 11D - CBEC Circular on applicability of Section 11D (Circular No. 651/42/2002CX dated 782002)

Section 11D of the Central Excise Act, 1944 - duties collected from the buyer to be deposited with the Central Government - Cenvat credit and clearance of inputs as such - Payment of excise duty by debiting Cenvat account - effect on applicability of Section 11D - Rule 3(5) of the Cenvat Credit Rules, 2004 - payment equal to Cenvat credit on inputs removed as such - CBEC Circular on applicability of Section 11D (Circular No. 651/42/2002CX dated 782002) - Validity of demand under Section 11D where excess amount charged as excise duty on removal of inputs as such was paid to the Government by debiting the Cenvat account - HELD THAT: - The Tribunal found that although duty charged on removal of inputs as such exceeded the actual Cenvat credit attributable to those inputs under Rule 3(5), the total amount collected from the buyer had been paid to the Government by debiting the appellant's Cenvat account. Reliance was placed on earlier Tribunal and High Court decisions which hold that Section 11D applies to amounts collected as representing excise duty and retained by the assessee, and does not apply where the amount collected has, in fact, been deposited with the Government. The Board's Circular dated 782002 confirms that Section 11D is not attracted where duty collected has been deposited with the Government, including situations where moneycredit (Cenvat) was utilised to pay duty. Applying these authorities and the Circular, the Tribunal concluded that a fresh recovery under Section 11D was not sustainable when the collected amount had already been paid to the Central Government by debiting the Cenvat account.

Demand under Section 11D set aside as the excess amount collected had been paid to the Central Government by debiting the Cenvat account; therefore Section 11D did not apply.

Final Conclusion: Impugned orders confirming recovery under Section 11D are quashed and the appeals are allowed, the Tribunal holding that Section 11D cannot be invoked where amounts collected as excise duty have already been deposited with the Central Government by debiting the Cenvat account.

Binding effect of decisions of the Appellate Tribunal on subordinate/adjudicating authorities - judicial discipline and duty to follow coordinate/precedent Tribunal decisions - classification of goods - distinction between cultures of micro-organisms and preparations put up in retail packings - finality of a Tribunal decision on issues not specifically assailed before the Supreme Court

Binding effect of decisions of the Appellate Tribunal on subordinate/adjudicating authorities - judicial discipline and duty to follow coordinate/precedent Tribunal decisions - Whether the Commissioner was bound to follow the Tribunal's earlier decisions (NMS Babu and T. Stanes) and whether declining to follow them constituted jurisdictional error and breach of judicial discipline. - HELD THAT: - The Tribunal had earlier remanded the matter to the Commissioner with a specific direction to decide de novo in the light of its two precedents. The Commissioner placed the matter in abeyance awaiting Supreme Court orders and ultimately declined to follow the Tribunal precedents, observing that the Tribunal decision did not 'expound the correct position of law'. The Tribunal on appeal held that (i) the Supreme Court's remand in NMS Babu concerned only two specified issues and did not render final the parts of the Tribunal decision on classification which were not assailed before the Supreme Court; (ii) the Commissioner was therefore bound by the Tribunal's decisions on classification and had no jurisdiction to re-adjudicate the classification contrary to those binding decisions; (iii) the Commissioner's approach of treating the Supreme Court's leaving questions of law open in T. Stanes as permitting fresh adjudication by the Commissioner was incorrect; and (iv) the Commissioner's contrary observations and refusal to follow binding Tribunal precedents violated the principles of judicial discipline and the hierarchical binding character of appellate orders. The Tribunal relied on settled authorities emphasising that subordinate adjudicating authorities must give effect to directions of superior appellate fora and cannot ignore or re-decide issues already decided by those fora merely because an appeal on other points is pending or the department is dissatisfied. [Paras 38, 39, 40, 41, 42]

The Commissioner erred in not following the binding decisions of the Tribunal; his refusal to apply those precedents amounted to a breach of judicial discipline and jurisdictional error.

Classification of goods - distinction between cultures of micro-organisms and preparations put up in retail packings - finality of a Tribunal decision on issues not specifically assailed before the Supreme Court - Whether the order of the Commissioner confirming the demand of excise duty on the appellant's products (classified under ETI 3808 99 10 by the Commissioner) could be sustained in view of the binding Tribunal precedents. - HELD THAT: - The Commissioner, having declined to follow the Tribunal precedents, proceeded to decide classification on merits and treated the products as preparations put up for retail sale classifiable under CETH 3808. The appellate Tribunal found this course impermissible because the Commissioner was bound to follow the Tribunal decisions (NMS Babu and T. Stanes) on the classification issue which had attained finality as regards classification parts not assailed before the Supreme Court. The Tribunal therefore held that the Commissioner exceeded his jurisdiction in re-adjudicating and rejecting those binding precedents, and that his order confirming differential duty could not stand for that reason. The Tribunal did not itself determine classification afresh; rather it remedied the jurisdictional error by setting aside the Commissioner's order confirming the demand. [Paras 42, 43]

The order dated 13.09.2022 confirming the demand of excise duty is set aside because the Commissioner impermissibly departed from binding Tribunal precedents on classification.

Final Conclusion: The Commissioner's order dated 13.09.2022 confirming differential excise duty for the period April 2009 to January 2010 is set aside: the Commissioner wrongly declined to follow binding Tribunal decisions on classification and thereby breached judicial discipline; appeal allowed with consequential reliefs, if any.

Cenvat Credit utilization during default period - Rule 8(3A) of Central Excise Rules, 2002 - ultra vires - penalty for mis-utilisation of Cenvat Credit

Cenvat Credit utilization during default period - Rule 8(3A) of Central Excise Rules, 2002 - ultra vires - Denial of Cenvat credit for payment of duty during the defaulted period pursuant to Rule 8(3A). - HELD THAT: - The Tribunal examined the adjudication which denied utilization of Cenvat credit for payment of duty for the period 7th March, 2008 to 21st January, 2009 on the basis of Rule 8(3A). Reliance was placed on High Court decisions holding Rule 8(3A) to be ultra vires (Indsur Global Ltd. and Sandley Industries). Applying those precedents, the Tribunal concluded that the provision cannot sustain denial of Cenvat credit and therefore the demand founded on such denial is unsustainable. [Paras 7, 8]

Demand for recovery of Cenvat credit for the defaulted period is set aside and the appellant is entitled to utilize Cenvat credit for that period.

Penalty for mis-utilisation of Cenvat Credit - Imposability of penalty for alleged mis-utilisation of Cenvat credit during the defaulted period. - HELD THAT: - Since the Tribunal held that the denial of Cenvat credit under Rule 8(3A) was not sustainable, the foundational premise for imposing penalty for mis-utilisation during that period failed. Consequently, the Tribunal found that no penalty is imposable upon the appellant in respect of the disputed period. [Paras 7, 8]

Penalty imposed in relation to the alleged mis-utilisation of Cenvat credit during the defaulted period is set aside.

Final Conclusion: The impugned order is set aside: Cenvat credit could not be denied for the period 7th March, 2008 to 21st January, 2009 in view of the declared invalidity of Rule 8(3A), and the consequential demand and penalty are quashed; appeal allowed with consequential relief.

Exemption under Notification No.49-50/2003-CE dated 10.06.2003 - substantial expansion - declaration/acknowledgement requirement - extended period - penalty under Section 11AC - cum-duty benefit - res judicata not applicable in taxation

Exemption under Notification No.49-50/2003-CE dated 10.06.2003 - substantial expansion - declaration/acknowledgement requirement - Whether the appellants are eligible for exemption under the Notification by virtue of substantial expansion and/or filed declarations - HELD THAT: - The Tribunal examined whether the appellants satisfied the Notification criteria for units existing before 7.1.2003 that undertake substantial expansion of installed capacity by not less than 25% on or after 7.1.2003. The record showed the appellants commenced production on 30.03.2002 and the alleged expansion said to be effective from 08.01.2003 was not corroborated by contemporaneous documentary evidence; circumstantial material did not establish increased production after the appointed date. However, a District Industry Centre certificate dated 23.11.2006 certified substantial expansion and increased capacity, and the Tribunal accepted that substantive compliance with the Notification conditions was thereby established. The Tribunal further held that mere non-availability of departmental acknowledgements for the declarations (which the appellants contend were filed) constitutes a procedural deficiency and, in the facts of this case, should not defeat entitlement where substantial compliance is otherwise proved. The Tribunal also noted that an earlier letter of the appellants indicating SSI status in 2007 could not preclude them from claiming another statutory benefit if otherwise eligible. [Paras 10, 11, 12, 13]

Appellants are entitled to the exemption under the Notification with effect from 25.11.2006.

Extended period - penalty under Section 11AC - Whether extended period can be invoked and whether penalties under Section 11AC are sustainable - HELD THAT: - The Tribunal considered Revenue's plea to invoke extended period and to sustain penalties. The record did not establish a positive act of suppression with intent to evade duty by the appellants; the unit had been subject to visits and audit, and there was no evidence of concealment. Given the Tribunal's finding of eligibility for the exemption from 25.11.2006, and absence of deliberate suppression, extended period was held not invokable and the penalties imposed under Section 11AC were set aside. [Paras 14]

Extended period cannot be invoked and the penalties under Section 11AC are liable to be set aside.

Cum-duty benefit - exemption under Notification No.49-50/2003-CE dated 10.06.2003 - Revenue's challenge to the Commissioner's grant of exemption from 12.11.2008 and its contentions on cum-duty benefit - HELD THAT: - Revenue appealed the Commissioner's decision to allow exemption from 12.11.2008 and contested the grant of cum-duty benefit. Having held that appellants are eligible for exemption with effect from 25.11.2006 and that extended period does not apply, the Tribunal found Revenue's submissions on the choice of effective date and on cum-duty benefit immaterial to the result. The Tribunal noted that the Commissioner had given reasons for allowing cum-duty benefit but, on the facts as decided, those submissions do not affect the appellant's entitlement from 25.11.2006. [Paras 15, 16]

Revenue's appeal is rejected; Commissioner's grant of exemption is upheld as from 25.11.2006 and Revenue's challenge on cum-duty benefit has no bearing on the outcome.

Final Conclusion: Appeal No. E/3985/2010 is partially allowed by holding that the appellants are eligible for the exemption under Notification No.49-50/2003-CE with effect from 25.11.2006; extended period is not invokable and penalties under Section 11AC are set aside. Revenue's Appeal No. E/210/2011 is rejected.

Utilisation of CENVAT credit of Basic Excise Duty for payment of education cess and secondary & higher education cess - exemption under Notification No. 56/2002-CE and refund mechanism for duty paid through PLA - requirement of an express notification to exempt additional duties/cess - precedential effect of Supreme Court decision in M/s Unicorn Industries

Utilisation of CENVAT credit of Basic Excise Duty for payment of education cess and secondary & higher education cess - exemption under Notification No. 56/2002-CE and refund mechanism for duty paid through PLA - requirement of an express notification to exempt additional duties/cess - precedential effect of Supreme Court decision in M/s Unicorn Industries - Whether a unit availing exemption under Notification No. 56/2002-CE can utilize CENVAT credit of Basic Excise Duty for payment of education cess and secondary & higher education cess and claim refund of the extra BED paid through PLA. - HELD THAT: - The Tribunal identified the sole controversy as the permissibility of using BED CENVAT credit to discharge education cess and secondary & higher education cess by a unit covered by Notification No. 56/2002-CE and the consequent refund claim. The adjudicating authorities denied refund on the ground that utilization of BED credit for cess payments resulted in indirect refund of cess which is not permissible under the notification and refund rules tied to PLA payments. The Tribunal followed the Division Bench decision in Commissioner of C.E., Jammu v. R.B. Jodhamal & Co. Pvt. Ltd., which held that a unit availing exemption under Notification No. 56/2002-CE cannot utilize BED credit for payment of education cess and S&H cess not exempted by the notification. The Tribunal further relied on the Supreme Court's decision in M/s Unicorn Industries v. Union of India, which held that additional duties in the nature of education cess and secondary & higher education cess require express inclusion in an exemption notification to be treated as exempted; absence of such express exemption precludes treating those cesses as covered. Applying these precedents and observing that Notification No. 56/2002-CE is pari materia to the notification considered in Unicorn Industries, the Tribunal concluded there was no error in denying the refund claims and in holding that extra BED paid through PLA because of diversion of BED credit for cess payment is not refundable under the notification and applicable rules. [Paras 6, 7, 8, 9]

The impugned order rejecting the refund of education cess and secondary & higher education cess is upheld and all three appeals are dismissed.

Final Conclusion: Appeals dismissed; refund claims for education cess and secondary & higher education cess denied because CENVAT credit of BED cannot be utilized for those cesses by units availing exemption under Notification No. 56/2002-CE, and such cesses are not exempted in the absence of an express notification, as affirmed by the Supreme Court in M/s Unicorn Industries.

Limitation for revision of assessment under Section 27(1)(a) of the TN VAT Act, 2006 - Commencement and pendency of assessment proceedings - notice issued within limitation - Reopening of assessment - substance of notice controls despite erroneous reference to another provision - Typographical or wrong citation of statutory provision not fatal where jurisdiction otherwise exists

Limitation for revision of assessment under Section 27(1)(a) of the TN VAT Act, 2006 - Commencement and pendency of assessment proceedings - notice issued within limitation - Notices issued on 23.07.2014 were effectively notices under Section 27(1)(a) and the revised assessments dated 31.12.2020, 04.01.2021 and 07.01.2021 were within the period of limitation. - HELD THAT: - The Court examined the tenor and subject of the notices dated 23.07.2014 and concluded they proposed revision of assessment and levy of penalty under Section 27(3), thereby indicating invocation of revisionary power under Section 27(1)(a). Applying the settled principle that assessment proceedings which are initiated by issue of notice within the prescribed period remain pending and are not vitiated by finalisation after the limitation period, the Court followed the view in M/s. Orient Fans and the Supreme Court decisions cited (including Ghanshyam Das and analogous authorities) to hold that initiation within time preserves jurisdiction to complete revision. On this basis the assessments challenged in these petitions were held to be within limitation and legally valid. [Paras 26, 30, 38]

The notices of 23.07.2014 are to be treated as notices under Section 27(1)(a) and the revised assessment orders impugned are within the period of limitation.

Reopening of assessment - substance of notice controls despite erroneous reference to another provision - Typographical or wrong citation of statutory provision not fatal where jurisdiction otherwise exists - Erroneous citation of Section 84 in the notices did not vitiate the proceedings where the notice in substance sought revision under Section 27. - HELD THAT: - The Court applied the well settled principle that mis quotation of the enabling provision will not invalidate an action if the authority had the power and the notice, by its tenor and subject, discloses the requisite proposal to revise assessment. Reliance was placed on the decisions of the Supreme Court in Ram Sunder Ram and N. Mani which recognise that a wrong reference to a statutory provision is not fatal where the power can be traced to a source available in law. The notices here expressly stated 'Revision of Assessment' and proposed penalty under Section 27(3), supporting the conclusion that the reference to Section 84 was a typographical/error in citation rather than a jurisdictional defect. [Paras 31, 32, 33]

The incorrect reference to Section 84 does not invalidate the notices or the revision proceedings; the notices are to be treated as issued under Section 27(1)(a).

Final Conclusion: The writ petitions are dismissed: the notices dated 23.07.2014 are to be treated as revision notices under Section 27(1)(a) of the TN VAT Act, 2006, the subsequent revised assessments were within limitation and the typographical reference to Section 84 is not fatal to the proceedings.

Equal treatment of parties - independence and impartiality of arbitrators - party autonomy - nemo judex rule - doctrine of bias - real likelihood of bias test - mandatory effect of Section 12(5) and the Seventh Schedule - appointing authority's duty under Section 11(8) - public policy and Article 14 (non-arbitrariness) - express waiver under the proviso to Section 12(5) - prospective overruling

Equal treatment of parties - independence and impartiality of arbitrators - party autonomy - Principle of equal treatment applies at all stages of arbitration including at the stage of appointment of arbitrators. - HELD THAT: - The Court held that Section 18's mandate of equality and a fair hearing is a mandatory principle governing arbitral proceedings and applies to the appointment stage because appointment is integral to securing an independent and impartial tribunal. Party autonomy remains central but is subject to mandatory standards (including equality and impartiality) embedded in the Arbitration Act; accordingly the appointment procedure agreed by parties must conform to those mandatory standards to preserve procedural equality and legitimacy of the arbitral process. [Paras 67, 72, 75, 169]

Equality of treatment of parties governs the appointment of arbitrators and party autonomy is subject to that mandatory requirement.

Mandatory effect of Section 12(5) and the Seventh Schedule - appointing authority's duty under Section 11(8) - Section 12(5) renders certain persons ineligible as arbitrators but does not, by itself, amount to a blanket prohibition on panels curated by parties; appointing authorities under Section 11(8) must have due regard to disclosures and secure independent and impartial appointments. - HELD THAT: - The Court explained that Section 12(5) (read with the Seventh Schedule) operates as a statutory ineligibility that overrides prior agreements, subject to the express post-dispute written waiver in the proviso. While Section 12(5) nullifies appointments of listed ineligible persons (their mandate terminates under Section 14), the Act still contemplates party-crafted procedures (including panels). Where judicial appointment is required under Section 11(6)/(8), the appointing authority must seek the Section 12 disclosure and ensure independence and impartiality; the statutory scheme provides remedies (challenge under Sections 12-14 and setting-aside under Section 34) rather than an automatic interdiction of all party-curated panels. [Paras 37, 45, 47, 48, 169]

Section 12(5) creates de jure ineligibility for listed categories, subject to an express post-dispute waiver; courts/appointing authorities must consider Section 12 disclosures under Section 11(8) to secure independent and impartial appointments.

Nemo judex rule - doctrine of bias - real likelihood of bias test - A clause permitting unilateral appointment of a sole arbitrator by a party with an interest in the dispute gives rise to justifiable doubts about independence and impartiality and thereby threatens procedural equality. - HELD THAT: - Drawing on the nemo judex principle and the test of real likelihood of bias, the Court held that when one party unilaterally appoints a sole arbitrator (or otherwise exerts dominant control), circumstances create a real possibility of bias because the appointing party can chart the course of the entire arbitration and the sole arbitrator may reasonably be seen as indebted to that party. Such arrangements hinder equal participation and generate justifiable doubts under Section 12(1)/(3), even if the nominee is not literally ineligible under Section 12(5). [Paras 127, 128, 129, 169]

Unilateral appointment of a sole arbitrator by a party with an interest in the dispute gives rise to justifiable doubts as to independence and impartiality and undermines equality.

Equal treatment of parties - party autonomy - mandatory effect of Section 12(5) and the Seventh Schedule - In a three-member tribunal, mandating that one party select its arbitrator from a curated panel prepared unilaterally by the other party is contrary to the principle of equal treatment and is invalid. - HELD THAT: - The Court analysed panel-based clauses (as in CORE and Voestalpine) and concluded that while empanelling potential arbitrators is permissible, making it mandatory for the counter-party to choose its nominee only from a panel curated exclusively by the other disputant restricts the counter-party's freedom and participation, produces no effective counterbalance, and gives rise to justifiable doubts about impartiality. The Railway style clause that limited choice to a curated list and allowed unilateral nomination of the presiding arbitrator was held unequal and prejudicial. [Paras 132, 133, 134, 135, 169]

An arbitration clause that compels a party to choose its arbitrator only from a panel curated unilaterally by the other party is against the equality principle and therefore invalid.

Public policy and Article 14 (non-arbitrariness) - nemo judex rule - Unilateral appointment clauses in public private contracts, which permit a government entity to unilaterally appoint a sole arbitrator or the majority of arbitrators, are violative of Article 14 and public policy. - HELD THAT: - The Court held that where the State or its instrumentalities occupy the appointing role, the public element makes the equality and non arbitrariness requirements more acute. Unilateral appointment clauses in public private contracts are exclusionary, risk allowing the State to chart arbitration to its advantage, infringe procedural equality, and therefore offend Article 14 as arbitrary; such clauses fail to provide an effective substitute for judicial proceedings. [Paras 56, 161, 162, 163, 169]

Unilateral appointment clauses in public private contracts violate Article 14 and are contrary to public policy.

Express waiver under the proviso to Section 12(5) - doctrine of necessity - The proviso to Section 12(5) permits parties, after disputes have arisen, to waive the ineligibility prescribed by Section 12(5) by an express agreement in writing; the doctrine of necessity informs but does not replace the statutory proviso. - HELD THAT: - The Court explained that the proviso embodies the possibility of express post dispute waiver, requiring a writing made with full knowledge; this reflects a limited application of the doctrine of necessity and preserves genuine party autonomy in narrowly circumscribed circumstances (e.g., specialized industries), while maintaining the primacy of mandatory rules absent such an express waiver. [Paras 47, 121, 122, 123, 169]

Parties may waive Section 12(5) only by an express post dispute written agreement; the proviso reflects a controlled form of the doctrine of necessity.

Prospective overruling - party autonomy - The legal principles declared in this reference regarding three member tribunal appointments will operate prospectively for arbitrator appointments made after the date of this judgment. - HELD THAT: - Recognising settled commercial expectations and numerous concluded or ongoing arbitrations conducted under prior precedents (notably Voestalpine and CORE), the Court held that to avoid widespread disruption of commercial bargains it would apply the new rule prospectively to appointments made after the judgment date-but this prospective application is confined to the three member tribunal context addressed in the decision. [Paras 166, 167, 168, 169]

The law declared on three member tribunal appointment procedures shall have prospective effect for appointments made after this judgment.

Final Conclusion: The Court answered the reference by holding that equality of parties and the need for an independent and impartial tribunal constrain party autonomy at the appointment stage; PSUs may empanel potential arbitrators but cannot compel the other party to select its nominee solely from a panel curated unilaterally; unilateral appointment of a sole arbitrator or clauses enabling one party to control appointment (especially in public private contracts) give rise to justifiable doubts and may violate Article 14; Section 12(5)'s ineligibilities stand subject to the express post dispute written waiver; and the rule on three member tribunal appointments announced in this reference is applied prospectively to appointments made after this judgment.

Directions for expeditious disposal of complaints under Section 138 of the Negotiable Instruments Act - trial on day-to-day basis and statutory six-month limit for conclusion of trial under Section 143 of the Negotiable Instruments Act - use of coercive measures under the Code of Criminal Procedure to ensure presence of accused during trial

Directions for expeditious disposal of complaints under Section 138 of the Negotiable Instruments Act - trial on day-to-day basis and statutory six-month limit for conclusion of trial under Section 143 of the Negotiable Instruments Act - Direction to the trial court to decide Complaint Case No.468 of 2019 (under Section 138 NI Act) expeditiously and in accordance with statutory timelines and Apex Court directions. - HELD THAT: - The High Court, having considered the statutory mandate in Sections 143(2) and 143(3) of the Negotiable Instruments Act and the pronouncements of the Supreme Court on expeditious disposal of Section 138 cases, directed that the Additional Chief Judicial Magistrate, Court No.8, Prayagraj shall decide Complaint Case No.468 of 2019 expeditiously. The court emphasised that proceedings under the Act should be conducted on a day-to-day basis and, where no legal impediment exists, the trial should be concluded within six months from the date of filing of the complaint. The directions of the Supreme Court summarising procedures for prompt service, pragmatic issuance of summons, conduct of inquiry and permitting evidence on affidavit were to be borne in mind by the trial court while expediting the matter. [Paras 4, 5, 6, 7, 8]

The trial court is directed to decide the complaint expeditiously, preferably within six months from receipt of certified copy of this order, strictly in accordance with Sections 143(2) and 143(3) of the Act and the Apex Court directions, if there is no legal impediment.

Use of coercive measures under the Code of Criminal Procedure to ensure presence of accused during trial - Authority of the trial court to employ coercive measures under the Cr.P.C. to secure attendance of the accused during trial. - HELD THAT: - The High Court directed the concerned magistrate not to hesitate to invoke coercive measures permitted under the Code of Criminal Procedure to ensure the presence of the accused during trial. This direction was given to facilitate adherence to the day-to-day trial requirement and timely completion of proceedings under Section 138 of the Negotiable Instruments Act. [Paras 9]

The trial court may take appropriate coercive measures under the Cr.P.C. to ensure the accused's presence for trial.

Impleadment of State as party - Permission to implead the State of Uttar Pradesh as opposite party No.1 in the petitioner's application. - HELD THAT: - On prayer of learned counsel for the applicant, the High Court allowed impleadment of the State of U.P. as opposite party No.1 in the array of parties during the course of the day. The order records the court's grant of that procedural relief without further conditions. [Paras 1]

The State of U.P. is permitted to be impleaded as opposite party No.1.

Final Conclusion: The petition is disposed of by directing the trial court to expeditiously decide the Section 138 complaint in Complaint Case No.468 of 2019 in accordance with the statutory requirements and Supreme Court directions, preferably within six months of receipt of the certified copy of this order; the court may use coercive measures under the Cr.P.C. to secure the accused's presence, and the State of U.P. is permitted to be impleaded as opposite party No.1.

Exemption for electric vehicles - purchase and registration conditions for tax exemption - refund of One Time Tax (OTT) - strict interpretation of exemption notification

Purchase and registration conditions for tax exemption - refund of One Time Tax (OTT) - Entitlement to refund of One Time Tax paid for a Hybrid Vehicle purchased on 13.10.2022 and registered on 18.10.2022 in view of a notification granting tax exemption for electric vehicles purchased and registered in Uttar Pradesh from 14.10.2022. - HELD THAT: - The notification substituted by the State provides 100 percent exemption for electric vehicles that are both purchased and registered in Uttar Pradesh from the date of notification of the Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy, 2022, dated 14.10.2022. The condition for exemption is conjunctive: purchase and registration must occur on or after 14.10.2022. The petitioner admittedly purchased the vehicle on 13.10.2022 and paid the tax on that date, although registration occurred on 18.10.2022. The Court held that paying tax and purchasing prior to 14.10.2022 precludes entitlement to the exemption even if registration occurred after that date. The Court applied the principle that eligibility criteria in an exemption notification must be construed strictly, as reiterated from Star Industries v. Commissioner of Customs (Imports), and concluded that the petitioner's facts do not satisfy the temporal purchase requirement of the exemption provision. [Paras 7, 8, 9, 10]

Refund claim rejected; petitioner not entitled to refund of the One Time Tax as purchase occurred before 14.10.2022 and therefore did not meet the exemption condition.

Final Conclusion: Writ petition dismissed; no direction for refund of the tax realized as the vehicle was purchased prior to the qualifying date for exemption and the exemption notification must be strictly construed.

Existence of a prima facie arbitration agreement - Accrual of cause of action and commencement of limitation for arbitration - Limited scope of enquiry at the Section 11 stage - Concurrent criminal/section 138 NI Act proceedings not a bar to arbitration - Appointment of arbitrator by consent notwithstanding three-member clause - Arbitrator to decide preliminary/jurisdictional objections including limitation - Disclosure obligation under Section 12 of the A&C Act - Arbitration under institutional rules (DIAC)

Existence of a prima facie arbitration agreement - Limited scope of enquiry at the Section 11 stage - Whether there exists a prima facie arbitration agreement permitting the court to appoint an arbitrator under Section 11 of the A&C Act - HELD THAT: - The Court found that the MoU dated 14.06.2019 contains an arbitration clause and that at the Section 11 stage the referral court's enquiry is confined to the prima facie existence of an arbitration agreement and not to merits or collateral issues. The Court applied the principle that judicial interference at the appointment stage should be minimal and limited to ascertaining whether an arbitration agreement exists on the face of record, leaving other contested matters for determination by the arbitral tribunal. [Paras 1, 6, 9]

A prima facie arbitration agreement exists and the Court proceeded to appoint an arbitrator.

Accrual of cause of action and commencement of limitation for arbitration - Limited scope of enquiry at the Section 11 stage - Whether the petition under Section 11 is hopelessly time-barred because limitation began from execution of the MoU - HELD THAT: - Relying on authorities explaining that limitation for arbitration runs from the date when the cause of arbitration accrues (i.e., when the claimant acquires the right to require arbitration), the Court held that limitation does not necessarily commence from the date of the MoU but from when disputes arose and the right to require arbitration crystallised. At the Section 11 stage the Court will not undertake a detailed limitation inquiry if the claim is not ex facie time-barred; such merits/maintainability issues are left to the arbitral tribunal. [Paras 7, 9]

The petition is not ex facie barred by limitation so as to preclude reference to arbitration; limitation is a matter for the arbitrator if raised as a preliminary objection.

Concurrent criminal/section 138 NI Act proceedings not a bar to arbitration - Whether pendency of proceedings under Section 138 of the NI Act, or prior attempt at pre-litigation mediation under the CC Act, precludes invocation of arbitration - HELD THAT: - The Court held that proceedings under Section 138 NI Act arise from a distinct cause of action and their pendency does not preclude arbitration under the contractual arbitration clause. Similarly, the fact that the petitioner sought pre-litigation mediation does not bar recourse to arbitration. Questions such as whether the cheque was given as security are matters of defence to be examined in the appropriate forum. [Paras 10, 11]

The pendency of Section 138 proceedings and prior mediation attempts do not impede constitution of an arbitral tribunal.

Appointment of arbitrator by consent notwithstanding three-member clause - Arbitrator to decide preliminary/jurisdictional objections including limitation - Disclosure obligation under Section 12 of the A&C Act - Arbitration under institutional rules (DIAC) - Whether a Sole Arbitrator may be appointed by the Court as jointly requested and what directions should govern the arbitration - HELD THAT: - Although the arbitration clause envisaged a three-member tribunal, the parties jointly prayed for and consented to appointment of a Sole Arbitrator. The Court acceded to the joint request and appointed the agreed nominee as Sole Arbitrator. The Court directed that any preliminary or jurisdictional objections (including limitation) be considered and decided by the Arbitrator at the outset. The Sole Arbitrator was directed to furnish disclosures as required under Section 12 of the A&C Act and the arbitration was ordered to proceed under the rules of the Delhi International Arbitration Centre (DIAC). [Paras 12, 13, 14, 15, 16]

By consent, Mr. Tushar Sannu is appointed Sole Arbitrator; preliminary jurisdictional objections to be decided by the Arbitrator; Section 12 disclosure to be made; arbitration to proceed under DIAC rules.

Final Conclusion: The petition under Section 11 is allowed: a prima facie arbitration agreement was found, the court appointed the parties' agreed Sole Arbitrator, directed the Arbitrator to decide preliminary/jurisdictional objections including limitation at the outset, required Section 12 disclosure, and directed that the arbitration proceed under DIAC rules; the Court expressed no opinion on merits.