TaxTMI Updates e-Newsletter
Nov 17,2021

Fraudulent registration and misuse of Aadhaar and PAN - quashing of administrative order pending criminal investigation - no expression of opinion on merits - preservation of Revenue's right to proceed subject to investigation - preservation of limitation - periodic updation of investigation outcome

Quashing of administrative order pending criminal investigation - fraudulent registration and misuse of Aadhaar and PAN - Impugned GST orders were set aside solely because alleged misuse of petitioner's Aadhaar and PAN cards to obtain a fraudulent registration was under investigation. - HELD THAT: - The Court observed that the petitioner consistently pleaded that her identity documents had been misused to procure a fake GST registration. In view of the petitioner having lodged a police complaint and an FIR being registered for offences under the IPC and the Information Technology Act, the Court found it appropriate to set aside the impugned order of adjudication and the consequential order without deciding the merits. The setting aside was limited to the fact of ongoing investigation and was not a decision on the correctness of the departmental findings.

Impugned order dated 08.02.2021 and consequential order dated 23.07.2021 set aside solely on the ground that the alleged fraudulent registration and misuse of Aadhaar and PAN are under investigation.

No expression of opinion on merits - preservation of Revenue's right to proceed subject to investigation - Court did not express any view on the merits and preserved the Revenue's rights to proceed against the petitioner or any other person depending on the outcome of the investigation. - HELD THAT: - While interfering with the administrative orders, the Court expressly refrained from adjudicating the substantive correctness of the departmental conclusion. The order preserves the respondents' statutory rights to take action in accordance with law against the petitioner or any other natural or juristic person, subject to developments in the concurrent criminal investigation. This preserves the prosecutorial and adjudicatory options of the Revenue pending investigation.

No view on merits; respondents' rights to proceed preserved and may be exercised in accordance with the progress and results of the investigation.

Preservation of limitation - periodic updation of investigation outcome - Limitation was preserved for both parties and the petitioner was directed to furnish updates of the investigation outcome to the respondents every three months. - HELD THAT: - Because the Court interfered by setting aside departmental orders, it expressly preserved any limitation defence or bar that may be available to either party. The Court mandated that the petitioner supply the outcome or progress of the investigation to the respondents within three months and thereafter once in three months until completion of the investigation, thereby creating a procedural mechanism to keep the Revenue informed while the investigation proceeds.

Limitation preserved; petitioner to update respondents on investigation outcome within three months and thereafter every three months until completion.

Final Conclusion: Writ petition disposed by setting aside the impugned adjudication and consequential orders solely on the ground that alleged misuse of the petitioner's Aadhaar and PAN to obtain a fraudulent registration is under investigation; no opinion expressed on merits, Revenue's rights and limitation preserved, and petitioner directed to furnish periodic updates of the investigation.

Revocation of cancellation of registration - Opportunity of being heard (audi alteram partem) - Section 30 of the U.P. Goods and Services Tax Act, 2017 - Procedure under Rule 23 and Forms GST REG-23 and GST REG-24 - Invalidity of rejection order where statutory notice requirements are not complied with

Revocation of cancellation of registration - Opportunity of being heard (audi alteram partem) - Procedure under Rule 23 and Forms GST REG-23 and GST REG-24 - Validity of the rejection of the application for revocation of cancellation of registration where the show cause notice did not specify the period to file a reply nor a date and time for personal hearing and no opportunity of hearing was afforded. - HELD THAT: - Section 30(1) permits a person whose registration was cancelled to apply for revocation within thirty days, and Section 30(2) empowers the proper officer to revoke or reject the application in the manner and period prescribed. The Rules (sub rules to Rule 23) require issuance of a show cause notice in Form GST REG 23 and a reply in Form GST REG 24 within seven working days, and the proviso to Section 30(2) expressly prohibits rejection of the application unless the applicant has been given an opportunity of being heard. The notice placed on record (dated 02/01/2021) failed to specify the period to furnish a reply (stating "null working days") and omitted any appointed date and time for personal hearing. The counter affidavit does not rebut these facts. Consequently, the mandatory requirement of the proviso to Section 30(2) was not complied with; the deficient show cause notice cannot be treated as a valid notice and the subsequent order rejecting the revocation application is legally questionable. The appellate order did not consider the proviso to Section 30(2) and merely upheld the rejection on the ground of delay without addressing the failure to afford an opportunity of hearing.

The show cause notice dated 02/01/2021 was legally defective for want of the statutory hearing opportunity and the order rejecting the revocation application dated 30/01/2021 (and the appellate order dated 24/03/2021) cannot stand; the appellate order is set aside and the matter is remitted for fresh decision in accordance with law.

Final Conclusion: Writ petition allowed to the extent that the appellate order is set aside and the matter is remitted to the appellate authority to decide the petitioner's appeal afresh after compliance with the statutory requirement to afford an opportunity of being heard under Section 30 of the Act and the prescribed Rules.

Economic offences - grant of bail under Section 437 Cr.P.C. - Section 132 of the Central Goods and Services Act, 2017 - flight risk / jumping bail - concession of bail

Economic offences - Section 132 of the Central Goods and Services Act, 2017 - grant of bail under Section 437 Cr.P.C. - flight risk / jumping bail - Whether the accused Yogender Singh should be released on bail in respect of offences under Section 132 of the CGST Act. - HELD THAT: - The Court considered the submissions of the parties, including the applicant's plea that he was a Chartered Accountant acting in a professional capacity and had not retained any wrongful benefit, and the prosecution's contention that the accused had admitted involvement in preparation and use of forged/fake documents facilitating fraudulent input tax credit. The court applied the established principle that economic offences are grave in nature, often committed with cool calculation and having wide adverse effects on public interest and the State's revenue; such offences attract stricter scrutiny in bail matters. The court also noted that investigation was ongoing and that there existed a real possibility of the accused absconding if released. Balancing these considerations, and without expressing any adjudication on the ultimate merits of the prosecution case or on the specific applicability of Section 132 to the accused's role, the court concluded that the accused was not entitled to bail at this stage because of the seriousness of the alleged economic offence and the risk of his jumping bail. [Paras 6, 7]

Bail application dismissed; accused not released on bail.

Final Conclusion: The regular bail application under Section 437 Cr.P.C. by Yogender Singh is dismissed on the grounds of the gravity of the alleged economic offences and risk of the accused absconding; the observations are confined to bail and do not express any opinion on the merits of the case.

Allowability of depreciation on increased cost due to exchange rate fluctuation - adjustment of actual cost in the year in which increase or decrease in liability arises - time of quantification of actual cost for depreciation purposes - interpretation and application of Section 43A in relation to exchange rate variation

Allowability of depreciation on increased cost due to exchange rate fluctuation - interpretation and application of Section 43A in relation to exchange rate variation - The claim for additional depreciation on the increased cost of plant and machinery arising from exchange rate fluctuation was held allowable to the assessee for AY 1994-95. - HELD THAT: - The ITAT erred in concluding that actual cost can be quantified only at the time of actual payment and not on an accrual basis, thereby overlooking the effect of exchange rate fluctuation on the cost of the asset. The Supreme Court in Arvind Mills Ltd. recognized that increase or decrease in liability due to exchange fluctuation should be taken into account to modify the figure of actual cost and that such adjustment is to be made in the year in which the increase or decrease in liability arises. The Gujarat High Court in New India Industries Ltd., while applying Arvind Mills, held that the liability to pay the price of the asset (and any increase therein due to exchange fluctuation) arises when the assessee becomes owner and starts using the asset, for the purpose of determining depreciation. The decisions of the Calcutta and Bombay High Courts similarly support allowance of the adjustment. Applying these authorities, the Court concluded that the additional depreciation claimed on account of exchange rate-induced increase in cost is permissible under Section 43A, and the CIT(A)'s allowance was correctly made. [Paras 7, 8, 9, 10, 11]

The claim is allowed; the ITAT and AO orders on this aspect are set aside and the CIT(A)'s order restoring the additional depreciation is restored.

Final Conclusion: The appeal is allowed: the assessee's claim for additional depreciation on increased cost due to exchange rate fluctuation for AY 1994-95 is held allowable, the ITAT and AO orders on this point are set aside and the CIT(A)'s order is restored; no order as to costs.

Approval under Section 151 - Reasons recorded requirement - Validity of notice under Section 148 - Non-application of mind in granting approval

Approval under Section 151 - Reasons recorded requirement - Validity of notice under Section 148 - Non-application of mind in granting approval - Approval under Section 151 was vitiated because the reasons recorded and annexed to the approval related to another assessee and no fresh satisfaction was recorded on the subsequently supplied reasons, rendering the notice under Section 148 and the consequent order invalid. - HELD THAT: - The only approval on file dated 30th March 2019 purports to grant satisfaction under Section 151 based on reasons which, on their face, pertain to a different assessee. The approving authority's endorsement and the printed header on the annexure show a mismatch between the reasons relied upon and the petitioner. Subsequent reasons dated 20th August 2019 and 12th September 2019 were not accompanied by any fresh approval recording satisfaction by the requisite higher authority. At the relevant time Section 151 required that no notice under Section 148 be issued after the statutory period unless the prescribed senior officer is satisfied on the reasons recorded by the AO that it is a fit case; that statutory precondition was not fulfilled in respect of the later reasons and the sole approval cannot be treated as validating those later grounds. The circumstances disclose non-application of mind in granting the approval and a failure to comply with the statutory requirement for recording satisfaction on the appropriate reasons, which is fatal to the validity of the reopening notice and the assessment order passed thereon. [Paras 4, 5, 6]

Impugned notice dated 31st March 2019 and order dated 30th October 2019 quashed and set aside for want of valid approval under Section 151.

Final Conclusion: The petition is allowed solely on the ground that the statutory precondition in Section 151 for issuance of a notice under Section 148 was not satisfied; other grounds were not adjudicated.

Reopening of assessment after four years (proviso to Section 147) - Reason to believe that income has escaped assessment - Failure to disclose fully and truly all material facts necessary for assessment - Tangible material post period cannot by itself form basis for reasonable belief - Change of opinion as impermissible ground for reassessment

Failure to disclose fully and truly all material facts necessary for assessment - Reason to believe that income has escaped assessment - Reopening of assessment after four years (proviso to Section 147) - Jurisdiction to issue notice under Section 148 for reopening AY 2012-2013 where reopening is beyond four years was not established because the assessee had disclosed necessary material facts. - HELD THAT: - The Court examined whether the second limb of the proviso to Section 147 - that escapement occurred by reason of the assessee's failure to disclose fully and truly all material facts - was satisfied. The record shows that during original assessment proceedings the Department had invoked Section 142(1) and specifically sought party-wise details of advertisement and sales promotion payments (item 11). The assessee furnished an exhaustive response with annexures and a detailed break-up of the advertisement and sales promotion expenses. On these facts the allegation of non-disclosure is incorrect. Since both conditions required for reopening after four years (a reason to believe that income escaped assessment and that such escapement was due to failure to disclose material facts) must coexist, and the failure-to-disclose limb is absent, the Assessing Officer lacked jurisdiction to issue the notice under Section 148 for AY 2012-2013. [Paras 6, 7, 8]

Notice issued under Section 148 is without jurisdiction and unsustainable on the ground that there was no failure to disclose material facts.

Tangible material post period cannot by itself form basis for reasonable belief - Change of opinion as impermissible ground for reassessment - An agreement executed after the relevant assessment year cannot, by itself, constitute tangible material to form a reasonable belief for reassessment of that earlier year; reliance on such post period material and a resultant change of opinion render the notice unsustainable. - HELD THAT: - The Assessing Officer relied on an agreement dated 6 March 2014, which is post the subject period, as the tangible material to initiate reassessment. The Court, applying the reasoning adopted in an earlier, factually identical order, held that post period material must be processed and its applicability to the subject assessment year examined; an agreement executed after the relevant year cannot alone justify forming a reasonable belief that income escaped assessment for that earlier year. Further, the circumstances (including consideration of the break-up of promotional expenses in the original assessment and disallowances) indicate that the reopening was an attempt to review the earlier assessment - a change of opinion - which is impermissible as a basis for reassessment. [Paras 9, 10, 11]

Reopening premised on post period agreement and change of opinion is unsustainable; the notice is quashed.

Final Conclusion: The notice dated 13th March 2019 and the consequential order dated 5th November 2019 for reopening assessment of AY 2012-2013 are quashed as being without jurisdiction; writ petition disposed.

Reopening of assessment under Section 148/147 of the Income Tax Act - Proviso to Section 147 - failure to disclose fully and truly all material facts - Consideration of objections raised during original assessment proceedings - Reliance on information from TDS wing as tangible material for reopening

Consideration of objections raised during original assessment proceedings - Whether the reopening notice dated 25th March 2019 was invalid because the Assessing Officer had already considered the objection relating to stockists' margins during the original assessment. - HELD THAT: - The Court held that where a query is raised by the Assessing Officer during the original assessment proceedings and the assessee files a reply, that query is regarded as having been a subject of consideration in completing the assessment even if the assessment order does not expressly refer to the objection. The Assessing Officer's reason for reopening - that the original assessment records did not show that the aspect was considered - was incorrect because the petitioner had replied to the query and the issue was hence deemed to have been considered. Consequently, the assumption in the reasons for reopening that the assessee had not disclosed or that the matter was not considered was unsustainable, rendering the reopening notice invalid on this ground. [Paras 3]

Reopening notice quashed insofar as it proceeded on the incorrect premise that the objection was not considered during the original assessment.

Reliance on information from TDS wing as tangible material for reopening - Whether the information from the Deputy Commissioner of Income Tax, TDS-2(1), Mumbai, constituted tangible material justifying reopening for alleged non-deduction of TDS on payments to stockists. - HELD THAT: - The Court found that the Assessing Officer relied on a letter dated 27th March 2017 from the TDS office and an earlier order dated 26th March 2014 under Section 201(1)/(1A) to contend that income had escaped assessment. That reliance was flawed: the chronology asserted by the Assessing Officer (that an order was passed in 2014 on the basis of information of 2017) was inconsistent, and in any event the subject matter of the TDS order had been raised and explained during the original assessment proceedings. There was therefore no fresh tangible material on record to justify reopening. [Paras 4]

Reopening notice unsustainable for lack of fresh tangible material arising from the TDS communication and because the matter had been dealt with in original proceedings.

Proviso to Section 147 - failure to disclose fully and truly all material facts - Whether the statutory condition in the proviso to Section 147 (applicable where assessment is reopened after four years) that the assessee failed to disclose fully and truly all material facts was satisfied. - HELD THAT: - As the reopening related to a period beyond four years, the proviso to Section 147 required that income has escaped assessment by reason of omission or failure to disclose fully and truly all material facts. The Court held that this condition was not met because the objection regarding margins and the TDS-related order had been raised and answered during the original assessment, and there was no material to show nondisclosure by the assessee. Accordingly, the statutory threshold for reopening under the proviso was not satisfied. [Paras 5]

Reopening did not meet the proviso to Section 147 and was therefore invalid.

Final Conclusion: Petition allowed; the notice dated 25th March 2019 and order dated 2nd November 2019 with consequential notices and orders are quashed and set aside; petition disposed of with no order as to costs.

Treatment of receipts as export turnover versus income from other sources - entitlement to deduction under Section 10A where foreign exchange realisation occurs after the prescribed period but is credited through the Reserve Bank of India - precedential effect of coordinate-bench and full-bench decisions in assessing allowance of export turnover

Treatment of receipts as export turnover versus income from other sources - precedential effect of full-bench decision in CIT v. Hewlett Packard Global Soft Ltd. - Whether the Tribunal was justified in treating the disputed amount as part of export turnover and setting aside the assessing officer's disallowance treating it as income from other sources. - HELD THAT: - The Court held that the question is governed by the coordinate-bench decision arising from the same common order and by the Full Bench ruling in CIT v. Hewlett Packard Global Soft Ltd. The coordinate bench had dismissed the Revenue's appeal relying on the Full Bench, observing no perversity or infirmity in the Tribunal's order. Applying that precedent, this Court found no reason to differ and answered the question in favour of the assessee, concluding that the Tribunal rightly set aside the assessing officer's disallowance. [Paras 5]

Answered in favour of the assessee and against the Revenue; the Tribunal correctly treated the amount as part of export turnover.

Entitlement to deduction under Section 10A where foreign exchange realisation occurs after the prescribed period but is credited through the Reserve Bank of India - precedential effect of this Court's decision in Wipro Ltd. on realization timing and documentary evidence - Whether the Tribunal was right in holding that amounts realised in foreign exchange after the due date of filing the return can be considered part of export turnover for Section 10A benefit. - HELD THAT: - The Court accepted the coordinate-bench decision in Wipro Ltd., which held that where foreign exchange remittances are received and credited to the assessee's account through the Reserve Bank of India after the prescribed period, the assessee is not to be denied the benefit of Section 10A merely for lack of a written RBI extension. The Revenue's contention that the assessee produced no evidence before the assessing officer did not suffice to disturb the Tribunal's reliance on Wipro Ltd. The Court found no infirmity or perversity in the Tribunal's conclusion and therefore affirmed the Tribunal's dismissal of the Revenue's appeal on this point. [Paras 8]

Answered in favour of the assessee and against the Revenue; amounts realized and credited through the RBI after the prescribed period qualify for consideration as export turnover for Section 10A purposes.

Final Conclusion: Both substantial questions of law were answered in favour of the assessee and against the Revenue; the appeal is dismissed.

Determination of annual value - computation of annual value under section 23 - market rent versus municipal or certified value - sham transaction / colourable device - comparables and evidentiary opportunity - principles of natural justice in assessment proceedings

Determination of annual value - computation of annual value under section 23 - market rent versus municipal or certified value - sham transaction / colourable device - comparables and evidentiary opportunity - Validity of the Tribunal's confirmation of the annual letting value adopted by the Assessing Officer (Rs.7 per sq. ft.) instead of the value certified by the local Gram Panchayat, and whether the supplementary lease agreements and security deposits were a sham or colourable device to evade tax. - HELD THAT: - The Court upheld the Tribunal's conclusion that determination of annual value must consider all surrounding factors and that the actual contractual entries executed at the fag end of the year were journalised and not supported by actual payments. The supplementary lease agreements dated 29/30.03.2007, which reduced rent and recorded large interest free security deposits, were found disproportionate to the stated rent and were not satisfactorily explained as genuine rent related transactions; the balance sheet current liability entries did not reliably demonstrate that advances had been used for construction or represented genuine rent deposits. The municipal certificate produced at the assessee's request certifying a low rate was not treated as authoritative in preference to the market/contractual indications absent supporting guidelines or comparable statistical basis. The Tribunal also examined precedent on not adding notional interest on security deposits and on the requirement to consider material evidence; applying those principles, it concluded that the Assessing Officer's adoption of a higher annual letting value based on market comparables and the parties' original lease terms was sustainable and not perverse. Having regard to the timing, nature and disproportionality of the supplementary agreements and the absence of convincing documentary foundation for the certified low municipal rate, the Tribunal's confirmation of the addition was held to be unimpeachable. [Paras 9, 11, 13, 15, 16]

Tribunal's confirmation of the annual letting value and the view that the supplementary agreements/security deposits amounted to a device to subvert tax liability is affirmed; no perversity is found in the impugned order.

Final Conclusion: Substantial questions of law answered in favour of the Revenue and against the assessee; both appeals are dismissed.

Deduction under Section 80IB(10) - housing project on a plot having minimum area of one acre - approval by local authority - strict interpretation of exemption provisions

Deduction under Section 80IB(10) - housing project on a plot having minimum area of one acre - approval by local authority - Whether the assessee was entitled to deduction under Section 80IB(10) where multiple housing projects sanctioned in individual partners' names fell within the same survey number and the aggregate area exceeded one acre - HELD THAT: - The Tribunal had held, relying on the decision in Vandana Properties, that Section 80IB(10) requires the housing project to be on a plot of land having a minimum area of one acre and does not mandate that the plot be a single vacant parcel exclusive of existing projects; multiple projects approved by the local authority on a plot meeting the area requirement qualify for the deduction. The High Court concurred with that construction, observing that a narrow reading urged by the Revenue would render the provision otiose and that the approvals by the local authority for the projects in the same survey number (Sy. No.132) satisfying the one-acre threshold attract the benefit. The Court distinguished the Apex Court's strict-interpretation principle applied in Dilip Kumar & Company (which concerned an exemption notification and the burden of proof) as not decisive to deny the deduction in the present factual matrix, where statutory conditions as interpreted in Vandana Properties were satisfied. The Court also noted that the matter, as adjudicated by the Tribunal, involved factual findings which did not give rise to a substantial question of law requiring interference. [Paras 9, 11, 13]

Deduction under Section 80IB(10) allowed to the assessee; Tribunal's view affirmed and substantial question of law answered in favour of the assessee.

Final Conclusion: The substantial question of law was answered in favour of the assessee: the Tribunal's allowance of deduction under Section 80IB(10) was upheld because the housing projects sanctioned by the local authority on the plot(s) falling within the same survey number meeting the one-acre requirement attracted the deduction; the appeal is dismissed.

Reassessment under section 153C of the Income tax Act, 1961 - incriminating material - finality of assessment / completed assessment - addition based on non seized material or mere assumption - presumption as to cessation of liability on cancellation of booking

Reassessment under section 153C of the Income tax Act, 1961 - finality of assessment / completed assessment - incriminating material - Validity of notice and reassessment issued under section 153C in respect of Assessment Year 2010-11 - HELD THAT: - The Tribunal held that the return for AY 2010 11 had been filed on 15.10.2010 and, by the time notice under section 153C was issued on 05.02.2015, the original assessment for that year had attained finality. Applying the ratio of the jurisdictional High Court decisions cited and the Supreme Court precedent referenced, reassessment under section 153C can be invoked only insofar as incriminating material found in the search relates to that year and only after the statutory satisfaction is recorded; absent such material/satisfaction and where the original assessment has stood completed, the issuance of notice and consequential reassessment for AY 2010 11 was legally unsustainable. The Tribunal agreed with the view taken by the CIT(A) that the notice was invalid and the reassessment was ab initio void. [Paras 17, 18, 21, 22]

Notice and reassessment under section 153C in respect of Assessment Year 2010 11 quashed as invalid; appeal on this ground dismissed in favour of the assessee.

Incriminating material - addition based on non seized material or mere assumption - presumption as to cessation of liability on cancellation of booking - Validity on merits of the addition of the forfeited booking amounts made in the reassessment - HELD THAT: - Although the Assessing Officer treated cancelled booking amounts as forfeited and made an addition, the Tribunal concurred with the CIT(A) that the addition was not founded on any seized or other incriminating material relating to AY 2010 11. The seized document (SCO 3) merely noted that certain amounts were received in cash against bookings later cancelled; it did not constitute material demonstrating forfeiture or non refund for the year in question. Further, the dates of advances shown in the list of allottees did not pertain to AY 2010 11, and any inference from the time gap between booking and cancellation could at best give rise to a presumption of cessation of liability but cannot substitute for incriminating material required to reopen assessment under section 153C. On these bases the addition was held to be founded on assumption and not on incriminating material and therefore unsustainable. [Paras 11, 19, 21]

Addition of forfeited booking amounts set aside as not being supported by incriminating/seized material and not relatable to Assessment Year 2010 11.

Final Conclusion: The appeal filed by the Revenue is dismissed; the reassessment under section 153C for Assessment Year 2010 11 is quashed and the addition of forfeited booking amounts is held unsustainable for want of incriminating material relating to that year.

Applicability of section 43B to employer's and employees' contributions paid before the due date for furnishing return - Prospective operation of amendment by Finance Act, 2021 to clause (va) of section 36(1) and to section 43B - Clarificatory amendment doctrine versus substantive change in law - Presumption against retrospectivity of taxation statutes

Applicability of section 43B to employer's and employees' contributions paid before the due date for furnishing return - Hon'ble Karnataka High Court decision in Essae Teraoka - Deduction under section 43B in respect of employees' contribution to PF/ESI paid before the due date for filing the return is allowable for A.Y. 2019-2020. - HELD THAT: - On facts the assessee remitted employees' contribution before the due date for filing return under section 139(1). Following the view of the jurisdictional High Court in Essae Teraoka (P.) Ltd. v. DCIT, the Tribunal held that where contribution (employer's and employee's) is paid on or before the due date for furnishing return, the employer is entitled to deduction under section 43B. The Tribunal observed that the A.O.'s disallowance for late remittance could not be sustained for the relevant year where payment was made before the return due date and directed deletion of the disallowance. [Paras 7, 8]

Disallowance in respect of employees' contribution to PF/ESI for A.Y. 2019-2020 deleted and deduction granted as payment was made before the due date for filing return.

Prospective operation of amendment by Finance Act, 2021 to clause (va) of section 36(1) and to section 43B - Clarificatory amendment doctrine versus substantive change in law - Presumption against retrospectivity of taxation statutes - Amendments made by Finance Act, 2021 to section 36(1)(va) and section 43B are prospective and do not apply to A.Y. 2019-2020. - HELD THAT: - The Tribunal examined whether the Finance Act, 2021 amendments were merely clarificatory or effected a substantive change. Relying on precedents concerning the principle that retrospective operation cannot be presumed and on authorities distinguishing true clarificatory changes from substantive alterations, the Tribunal found that the amendments alter the law adversely to the assessee by removing the relevance of the due date and therefore cannot be treated as retrospective. The Tribunal also noted the Finance Ministry's explanatory memorandum stating that the amendments take effect from 1.4.2021 and apply to A.Y. 2021-22 onwards, reinforcing a prospective operation. Consequently, the Finance Act, 2021 amendments were held not to apply to the assessment year before the effective date. [Paras 7, 8]

Amendments by Finance Act, 2021 held prospective; they do not apply to A.Y. 2019-2020.

Final Conclusion: The Tribunal allowed the appeal: the employees' contributions to PF/ESI paid before the due date for filing the return were permitted as deduction for A.Y. 2019-2020, and the Finance Act, 2021 amendments to section 36(1)(va) and section 43B were held to be prospective, not affecting the relevant assessment year.

Income from house property - business income - deemed owner under Section 27(iiib) - letting out as business - application of Chennai Properties & Investments Pvt. Ltd. decision - tests to determine head of income (owner v. businessman approach) - disallowance of interest as business expenditure - disallowance relating to expenditure on earning exempt income

Income from house property - business income - deemed owner under Section 27(iiib) - letting out as business - tests to determine head of income (owner v. businessman approach) - Classification of lease rental receipts as business income or income from house property for the stated assessment years - HELD THAT: - The Tribunal examined whether long term lease receipts should be taxed under the head 'Income from House Property' (where the lessor is the owner or deemed owner) or as 'Business Income' where letting out is carried out in the course of a business. Although Section 27(iiib) renders a lessee a deemed owner for certain long leases, the Court's authorities require a factual inquiry into whether letting was the ordinary exploitation of property by an owner or the carrying on of a business of letting. Applying the tests in the cited decisions (including the approach in Chennai Properties & Investments Ltd. and the owner v businessman analysis), the Tribunal found that the assessee had obtained long term leases and systematically sub let premises as a commercial activity; the assessee and associated entities were engaged in real estate activities, loans were taken and investments were largely in properties, and the letting was carried out in a business like manner. On these facts the rental receipts represent business income, notwithstanding the deeming provision, and the view taken by the Assessing Officer and CIT(A) to tax them as income from house property was reversed. The Tribunal directed recomputation of income in accordance with this conclusion and applied the same reasoning mutatis mutandis to the other assessment years. [Paras 7, 8, 9]

Lease rental receipts for AY 2011-12, AY 2014-15, AY 2015-16 and AY 2016-17 are to be treated as business income; the Assessing Officer is directed to recompute income accordingly and the appeals are partly allowed.

Final Conclusion: The Tribunal allowed the appeals partly by holding that the assessee's long term lease and systematic sub letting activity amounted to carrying on a business of letting, thereby treating the lease receipts as business income for AY 2011-12, 2014-15, 2015-16 and 2016-17 and directing recomputation of income in accordance with this finding.

Assessment under section 153A following search - presumption of correctness of seized documents under section 292C - diversion of interest-bearing funds and disallowance under section 36(1)(iii) - treatment of unexplained expenditure/investment under section 69C - prohibition on re-opening by section 147 where section 153A applies - maintainability of appeals in view of CBDT circulars

Assessment under section 153A following search - Validity of initiating assessment proceedings under section 153A in light of seized incriminating material and abatement contention - HELD THAT: - The Tribunal examined whether proceedings under section 153A could be initiated given the assessee had an earlier section 143(1) processing. The seized material (Annexure AKR/R/PO/01 pages 119-121) contained entries indicating unexplained payments and investments which the Assessing Officer relied upon to invoke section 153A. The Tribunal held that where incriminating material is found and no assessment proceedings were pending as on the date of search, initiation of section 153A proceedings was proper. The assessee's contention that existing 143(1) proceedings abated the 153A action was rejected on the facts because the seized material justified framing of 153A assessment. [Paras 6]

Initiation of assessment under section 153A was valid and the legal ground that proceedings abated was rejected.

Diversion of interest-bearing funds and disallowance under section 36(1)(iii) - Correctness of disallowance of interest on account of diversion of interest-bearing funds to interest-free advances/loans - HELD THAT: - The Assessing Officer disallowed proportionate interest after concluding that interest-bearing funds were diverted to interest-free advances/loans. The CIT(A) accepted the AO's principle but directed recomputation. The Tribunal found no error in principle with the AO/CIT(A) approach: where funds borrowed at interest are shown to have been applied for non-business or interest-free advances, proportionate interest is disallowable. However, the quantification requires reconciliation of interest-bearing and non-interest funds and the assessee's fund position on dates of advances. The Tribunal therefore upheld the disallowance in principle and directed the AO to recompute the disallowance after considering the assessee's cash-flow/fund position and evidence. [Paras 8, 9]

Disallowance upheld in principle; Assessing Officer directed to recompute proportionate disallowance taking into account fund position and evidence.

Treatment of unexplained expenditure/investment under section 69C - Whether labour charges debited in books could be disallowed as unexplained expenditure - HELD THAT: - The AO treated labour charges as unexplained and added the claimed amount. The CIT(A) examined ledger entries and proof of subsequent payments, noted that the expenditure was recorded in regular books and that the assessee produced ledger copies showing discharge of liabilities. On the facts, mere suspicion that wages remained payable was inadequate for disallowance under section 69C; suspicion could not substitute satisfactory explanation. The Tribunal, however, considered the total facts and concluded a partial disallowance would be reasonable: while the CIT(A) deleted the entire addition, the Tribunal deemed a lump-sum disallowance of Rs.60 lakhs (as a just and proper exercise in revisional moderation) appropriate, with a rider that it not be treated as precedent. [Paras 10, 11]

Full addition deleted by the CIT(A) was modified: Tribunal allows a limited lump-sum disallowance of Rs.60 lakhs and directs consequential action accordingly.

Presumption of correctness of seized documents under section 292C - assessment under section 153A following search - Sustenance of addition for unexplained investment based on seized statement (difference of Rs.1,80,12,096) and correctness of CIT(A)'s direction to initiate section 147 proceedings - HELD THAT: - Seized documents (Annexure AKR/R/PO/01 pages 119-121) showed higher payments for Aarkay Project than recorded in books; under law a document seized from the assessee is presumed to be his and its contents presumed correct unless rebutted. The assessee's explanations (clerical error, entries not part of regular books, payments not made by him) were held insufficient to rebut the presumption, and the addition for unexplained investment was confirmed in principle. The Tribunal, however, found the CIT(A)'s instruction to the AO to initiate section 147/147-related proceedings misplaced because section 153A is the specific code for assessments consequent to search; therefore the Tribunal directed the AO to make consequential computation and assess the unexplained investment in the relevant assessment year(s) under the 153A framework, restricting any reopening under section 147. [Paras 12, 13, 14, 15]

Addition for unexplained investment confirmed in principle; AO to compute quantum for the relevant year(s) under section 153A; CIT(A)'s direction to initiate section 147 proceedings set aside.

Maintainability of appeals in view of CBDT circulars - Maintainability of Revenue's appeal for A.Y. 2008-09 in view of CBDT circulars limiting appeals before the Tribunal - HELD THAT: - The Tribunal noted the Revenue did not dispute that the tax effect of the disputed section 36(1)(iii) disallowance for A.Y.2008-09 fell within limits set out in CBDT Circular No.03 of 2018 and Circular No.17 of 2019, which govern the tax threshold for filing appeals before the Tribunal. Applying those circulars, the Tribunal held the Revenue's appeal was not maintainable and dismissed the appeal; the assessee's cross-objection thus became infructuous. [Paras 16]

Revenue's appeal for A.Y.2008-09 dismissed as not maintainable under the cited CBDT circulars; assessee's cross-objection rendered infructuous.

Final Conclusion: For A.Y.2007-08, the Tribunal upheld the validity of assessment proceedings under section 153A; confirmed in principle the disallowance for diversion of interest-bearing funds (directing recomputation by the AO), modified the labour-charges addition to a lump-sum disallowance of Rs.60 lakhs, and confirmed the unexplained investment addition in principle while directing assessment under section 153A (setting aside the CIT(A)'s direction to invoke section 147). For A.Y.2008-09, the Revenue's appeal was dismissed as not maintainable under the relevant CBDT circulars. Appeals disposed as stated.

Allowability of depreciation as statutory deduction under section 32 vis-a -vis disallowance under section 40(a)(ia) - Liability to deduct tax at source under section 195 and its bearing on section 40(a)(ia) - Treatment of grossed up payments and tax borne by payer under section 195A - Admissibility of reimbursement to agents versus commission for withholding under section 194H - Admission and consideration of additional evidence on appeal

Allowability of depreciation as statutory deduction under section 32 vis-a -vis disallowance under section 40(a)(ia) - Liability to deduct tax at source under section 195 and its bearing on section 40(a)(ia) - Deletion of disallowance of depreciation claimed on Foster's brand where no TDS was deducted on the purchase consideration - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the payment for acquisition of Foster's brand and related intellectual property was not taxable in India in view of the authoritative decision relied upon, and consequently the question of deduction of tax at source under section 195 did not arise so as to invoke section 40(a)(ia) to disallow depreciation. The Tribunal observed that depreciation under section 32 is a statutory deduction on an asset and is not the 'amount paid or payable' which is subject to TDS; consistent decisions of a Co ordinate Bench in the assessee's own case were applied. On these bases the addition disallowing depreciation was deleted and the Revenue's grounds 1 to 3 were dismissed. [Paras 9]

Addition disallowing depreciation of the Foster's brand deleted; Revenue's grounds 1-3 dismissed.

Treatment of grossed up payments and tax borne by payer under section 195A - Deletion of disallowance of grossed up expenses representing tax borne by the assessee under net of tax arrangements - HELD THAT: - The Tribunal agreed with the CIT(A) and followed the Co ordinate Bench decision in the assessee's own case for AY 2011-12, holding that where agreements provide for payments on a net of tax basis and the assessee contractually bears the tax liability, the tax element forms part of the consideration and is an allowable expenditure. Consequently the addition on account of grossed up taxes withheld under section 195A was deleted. The Revenue's ground No.4 was dismissed. [Paras 16]

Addition on account of grossed up taxes deleted; Revenue's ground 4 dismissed.

Admissibility of reimbursement to agents versus commission for withholding under section 194H - Admission and consideration of additional evidence on appeal - Whether amounts characterised as reimbursements to agents are commission chargeable to tax under section 194H and disallowable under section 40(a)(ia) - HELD THAT: - The Tribunal found that the CIT(A) had not considered the additional evidences filed by the assessee and that the appellate order was cryptic for failing to admit and examine those documents. In view of the legal propositions (including the principles in the cited Supreme Court and High Court authorities) and the omission to consider the additional evidence, the Tribunal admitted the evidence and set aside the CIT(A)'s order, directing the CIT(A) to decide the issue afresh on merits after admitting and considering the additional evidence and after giving the assessee a reasonable opportunity of being heard. Consequential grounds were to be determined in accordance with that decision. [Paras 24, 25]

Issue remanded to the CIT(A) to admit the additional evidence and decide the question of reimbursement versus commission (and consequential matters) on merits in accordance with law; cross objection partly allowed for statistical purposes.

Final Conclusion: The Revenue's appeal is dismissed. The assessee's cross objection is partly allowed: the Tribunal remanded the disputed claim of reimbursements (characterised by the AO as commission) to the CIT(A) for fresh decision after admitting and considering additional evidence; consequential adjustments to follow the CIT(A)'s fresh decision.

Reopening of assessment under section 147/148 - reason to believe - nexus between material and belief - application of mind in recording reasons - addition on account of interest on interest-free advances - estimation and ad-hoc disallowance of expenses without rejection of books

Reopening of assessment under section 147/148 - reason to believe - application of mind in recording reasons - nexus between material and belief - Validity of reopening assessment for AY 2007-08 and AY 2008-09 under section 147/148 - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer and found them vague and internally inconsistent, referring to two sums without a clear indication of how much income had escaped assessment and relying on information from the Investigation Wing without a demonstrated application of mind. The court reiterated the requisites of section 147: existence of material, circumstances giving rise to belief (not mere suspicion), disclosure of the reasoning process, and a live nexus between material and the belief. On the facts the reasons did not disclose a rational connection between the material relied upon and a definite escaped income; consequently the jurisdictional precondition for reopening was not met. The reassessment was held to be ab initio void and therefore quashed; consequentially all consequential additions were held academic. [Paras 17, 18, 21, 22, 23]

Reopening of assessment under section 147/148 for AY 2007-08 and AY 2008-09 quashed; appeals allowed.

Addition on account of interest on interest-free advances - own interest-free funds - Addition of interest on advances for AY 2013-14 - HELD THAT: - AO added interest presumed to have accrued on interest-free advances to related parties. The Tribunal accepted the assessee's audited balance-sheet showing own interest-free funds in excess of the advances made, and held that where own interest-free funds suffice to cover the advances no disallowance on account of not charging interest is warranted. On this factual basis the addition arising from not charging interest was deleted. [Paras 28]

Addition of interest on advances for AY 2013-14 deleted.

Estimation and ad-hoc disallowance of expenses without rejection of books - best judgment assessment - Ad-hoc disallowance of office and telephone expenses for AY 2013-14 - HELD THAT: - The AO made an ad-hoc percentage disallowance of miscellaneous office expenses without rejecting the books of account or undertaking a best judgment assessment under section 144. The Tribunal held that where vouchers are deficient the AO may disallow specific unsupported items, but cannot proceed to a generalized percentage estimation unless books are rejected and appropriate procedure under section 144 is followed. The ad-hoc disallowance was therefore arbitrary and unsustainable. [Paras 29]

Ad-hoc disallowance of office/telephone expenses for AY 2013-14 deleted.

Final Conclusion: The Tribunal quashed the reassessment proceedings initiated under section 147/148 for AY 2007-08 and 2008-09 and allowed those appeals; for AY 2013-14 the Tribunal deleted the additions: interest on advances and the ad-hoc disallowance of office/telephone expenses, and allowed the appeal.

Deduction under section 80P(2)(a)(vi) for co-operative societies - income "attributable to" activity of collective disposal of members' labour - interest on security deposit held to secure government contracts as business linked income - matching principle and treatment of work in progress - deductibility of routine repairs and maintenance under general business expenditure - allowability of expenses for outsourced work under section 37(1) - non allowability of outsourced income under section 80P(2)(a)(vi)

Deduction under section 80P(2)(a)(vi) for co-operative societies - interest on security deposit held to secure government contracts as business linked income - income "attributable to" activity of collective disposal of members' labour - Interest income of Rs. 4,09,735/- earned on fixed deposits made as security for obtaining government contracts is eligible for deduction under section 80P(2)(a)(vi). - HELD THAT: - The tribunal analysed section 80P(2)(a)(vi) and observed that deduction is available for the whole of business profits attributable to the activity of collective disposal of members' labour. The term "attributable to" is wide and covers profits that have a direct nexus with that activity. The assessee was obliged to place security deposits to secure contracts without which it could not obtain projects; interest earned on those deposits therefore arose from events attributable to the cooperative's business activity and is incidental to carrying on that activity. The authorities below had not controverted the nexus; consequently the interest income falls within profits attributable to the specified activity and qualifies for deduction under section 80P(2)(a)(vi). [Paras 8]

Deduction under section 80P(2)(a)(vi) allowed in respect of the interest income; order of the CIT(A) set aside and AO directed to allow the deduction.

Matching principle and treatment of work in progress - tax neutrality of disallowance where corresponding income taxed in subsequent year - Expenditure of Rs. 1,96,614/- incurred on a project started at the fag end of the year was not allowable in the year under consideration where corresponding income was shown in the subsequent year; the disallowance is tax neutral and the deduction must be allowed when the corresponding income is recognized. - HELD THAT: - The tribunal held that if expenses are disallowed in the current year and the related income is subsequently taxed, the overall tax effect is neutral (subject to time value of money). The matching principle requires work in progress to be treated consistently; expenditure relating to unfinished project may properly be treated as work in progress and not immediately deductible. Given that the corresponding income was offered to tax in the next assessment year, there is no revenue prejudice though opportunity cost exists; the CIT(A)'s approach was not interfered with, but the assessee must be permitted deduction on the enhanced income in the year it is recognized. [Paras 14]

Disallowance in the year under consideration upheld as work in progress; tax neutrality noted and deduction to be allowed in the year in which corresponding income is recognized.

Deductibility of routine repairs and maintenance under general business expenditure - absence of corresponding income does not preclude deduction for wear and tear repairs - Repair expenses of Rs. 22,032/- incurred on JCB machines are allowable as business expenditure despite no corresponding income being shown in the year. - HELD THAT: - The tribunal found these expenses to be routine repairs and maintenance incurred in the ordinary course of business for machinery appearing in the balance sheet. Such wear and tear expenditures are not contingent upon the receipt of specific project income and are deductible under general principles of business expenditure. The CIT(A)'s disallowance for want of corresponding income was therefore unsustainable. [Paras 20]

Repair expenditure allowed as deduction.

Allowability of expenses for outsourced work under section 37(1) - non allowability of outsourced income under section 80P(2)(a)(vi) - Expenses of Rs. 56,500/- paid to non members for outsourced work are allowable under section 37(1) because gross income from the outsourced project was shown; however the small net income of Rs. 1,058/- from that outsourced activity is not eligible for deduction under section 80P(2)(a)(vi). - HELD THAT: - Section 80P(2)(a)(vi) permits deduction only for income arising from the collective disposal of members' labour; income from jobs performed by outsiders does not qualify for that deduction. Nonetheless, the assessee recorded gross receipts from the outsourced project in its profit and loss account, and corresponding project expenses are allowable under the general business expenditure provision (section 37(1)). The prohibition in section 80P operates against permitting the outsourced income itself as an 80P deduction, not against allowing bona fide expenses claimed under section 37. [Paras 26]

Outsourced expenses of Rs. 56,500/- directed to be allowed under section 37(1); the outsourced net income of Rs. 1,058/- not allowable under section 80P(2)(a)(vi).

Final Conclusion: The appeal is partly allowed: interest on security deposits qualifies for deduction under section 80P(2)(a)(vi); the work in progress expenditure treatment and tax neutral effect stand as recorded (deduction to follow when corresponding income is recognised); JCB repair expenses are allowed; outsourced project expenses are allowable under section 37(1) though the small outsourced income is not deductible under section 80P(2)(a)(vi).

Allowability of revenue expenditure vs capital expenditure - Treatment of R&D expenditure for software services - Enduring benefit test for capitalisation - Allowability of business expenditure under section 37(1) - Taxability of reimbursements to directors

Allowability of revenue expenditure vs capital expenditure - Treatment of R&D expenditure for software services - Enduring benefit test for capitalisation - R&D expenditure incurred by the assessee in the course of software development activities is revenue expenditure and not capital expenditure eligible only for depreciation. - HELD THAT: - The impugned R&D outlay primarily comprised salaries, provident fund contributions, business promotion, web services, consultancy charges and training of employees incurred for testing, coding shortcuts and improving technical expertise to generate revenue rather than for creating an end product. Although such expenditure may yield future or enduring benefit, the Tribunal held that enduring benefit alone does not convert revenue expenditure into capital expenditure where no new capital asset is created. On the facts and having regard to the nature of the payments and the purpose of enhancing services and expertise, the expenditure was held to be revenue in nature and fully allowable; the depreciation claimed by the Assessing Officer on treating the amounts as capital expenditure was reversed. The Tribunal relied on parallel reasoning in a decision on similar facts and allowed the ground. [Paras 2]

The R&D expenditure is revenue expenditure and allowable; the AO's treatment as capital expenditure and grant of depreciation is reversed.

Taxability of reimbursements to directors - Allowability of business expenditure under section 37(1) - Addition made by the AO on account of travel/expenditure reimbursements paid to directors is not sustainable. - HELD THAT: - The AO's addition rested on the view that reimbursements should have been included in the salary component in Form No.16. However, there were no findings that the reimbursements were not genuine or that they were taxable per se. The reimbursements were provided for in the offer letters and were reflected in pay-slips; hence the payments were genuine business outgoings. Even if the directors had not offered the reimbursements to tax, the assessee had incurred the expenditure, and the claim is maintainable under the provision dealing with business expenditure. In absence of any adverse finding on genuineness or taxability, the impugned addition could not be sustained. [Paras 3]

The addition on account of travel/expenditure reimbursements to directors is deleted and the ground is allowed.

Final Conclusion: Both grounds of the assessee's appeal are allowed: the R&D expenditure is held to be revenue in nature and allowable (AO's capitalisation and depreciation treatment reversed), and the addition made in respect of directors' reimbursements is deleted; the appeal is accordingly allowed.

Rejection of plaint under Order 7 Rule 11 CPC - cause of action - benami transaction - exception where property is held by a person standing in a fiduciary capacity - effect of registered sale deed on existence of cause of action and registration requirement

Rejection of plaint under Order 7 Rule 11 CPC - cause of action - Whether the plaint discloses a cause of action and hence is liable to be rejected under Order 7, Rule 11 CPC. - HELD THAT: - On an entire and meaningful reading of the plaint, the Court held that the averments (notably paras. 9, 14-16 and 26 of the plaint) constitute a bundle of material facts which, if traversed, the plaintiffs must prove to obtain relief. The plaint alleges that the consideration for the two sale deeds was paid by respondent No. 3, that the deeds were executed in the name of the petitioner with an oral understanding that she would hold the properties in trust for the plaintiffs and transfer them when they attained 20 years, and that petitioner later asserted rights and interfered with possession. These averments, accepted for the limited purpose of the Rule 11 enquiry, disclose a cause of action. The Court reiterated that while defenses and contrary contentions are irrelevant at the threshold, the plaint must be read as a whole to determine whether it on its face is barred by law or devoid of cause of action; applying that test, the plaint survives the Rule 11 challenge. [Paras 11, 15]

The plaint discloses a cause of action and cannot be rejected under Order 7, Rule 11 CPC.

Benami transaction - exception where property is held by a person standing in a fiduciary capacity - effect of registered sale deed on existence of cause of action and registration requirement - Whether the plaint is barred by law because the sale deeds are allegedly benami or not compulsorily registrable, thereby justifying rejection under Order 7, Rule 11 CPC. - HELD THAT: - The Court rejected the contention that the plaint is barred at the threshold on the ground of a benami transaction. It relied on the exception in the definition of 'benami transaction' which excludes transactions where the property is held by a person standing in a fiduciary capacity for another; therefore, mere assertion of benami does not extinguish the plaintiffs' claim without following the procedure prescribed under the Benami Act. Likewise, the plea based on compulsory registration and the fact of sale deeds being in the petitioner's name was treated as a defensive plea of facts and not a legal bar to suit on the face of the plaint. Such defenses cannot be adjudicated in an application under Order 7, Rule 11 CPC where the plaint's averments, taken at face value, disclose a cause of action. [Paras 12, 13]

Pleas of benami transaction and registration non-compliance do not, on the averments of the plaint, bar the suit at the threshold; these contentions are not grounds for rejection under Order 7, Rule 11 CPC.

Final Conclusion: The High Court affirmed the trial Court's order refusing to reject the plaint under Order 7, Rule 11 CPC; the petition under Article 227 is dismissed and the suit may proceed, the observations being without prejudice to adjudication on merits.

Anti-dumping duty - designated authority recommendation - legality of Central Government's refusal to impose duty despite recommendation - remand for fresh decision - time limit for Central Government decision under rule 18

Anti-dumping duty - designated authority recommendation - legality of Central Government's refusal to impose duty despite recommendation - remand for fresh decision - Validity of the Office Memorandum dated 05.02.2021 declining to impose anti-dumping duty despite the designated authority's recommendation, and consequential relief - HELD THAT: - The Tribunal applied its reasoning in Jubilant Ingrevia Limited where the Central Government's decision not to impose anti-dumping duty despite a recommendation by the designated authority was held unsustainable and remitted for fresh consideration. Following that precedent, the Office Memorandum dated 05.02.2021 declining to impose anti-dumping duty on imports of the subject goods from the subject countries was set aside. The matter is remitted to the Central Government to reconsider the designated authority's recommendation in light of the observations made in Jubilant Ingrevia Limited. The Tribunal also recorded that the statutory time-limit under rule 18 for the Central Government to take a decision does not apply where the matter is remitted for fresh consideration, consistent with earlier observations of the Tribunal. [Paras 2, 3]

The Office Memorandum dated 05.02.2021 is set aside and the matter is remitted to the Central Government to reconsider the designated authority's recommendation; the appeal is allowed to that extent.

Final Conclusion: The Tribunal set aside the Central Government's decision refusing to impose anti-dumping duty despite the designated authority's recommendation, remitted the matter for fresh consideration, and allowed the appeal to that extent.

Amendment of documents under Section 149 of the Customs Act - Proviso to Rule 12(1)(a) of the Customs, Central Excise and Service Tax Drawback Rules, 1995 - belated declaration - Conversion of free shipping bills into drawback shipping bills - Requirement of documentary evidence in existence at the time of export - CBEC Circular No.36/2010 - three months prescription for conversion - Reasonable time for seeking amendment - limitation principle (three year benchmark applied)

Amendment of documents under Section 149 of the Customs Act - Requirement of documentary evidence in existence at the time of export - Conversion of free shipping bills into drawback shipping bills - Proviso to Rule 12(1)(a) of the Customs, Central Excise and Service Tax Drawback Rules, 1995 - belated declaration - Request for conversion/amendment of shipping bills for the period January 2012 to December 2014 - HELD THAT: - Section 149 permits amendment of shipping bills even after export provided documentary evidence which was in existence at the time of export is produced; Rule 12(1)(a) proviso likewise permits belated declaration where failure was for reasons beyond the exporter's control. The Tribunal found that the appellant had produced shipping bills, ARE 1 and BRCs sufficient to establish exports and use of inputs, and that the department's contention that documents must be on record with the department was legally untenable. The Board circular prescribing three months cannot override section 149 or the proviso to Rule 12(1)(a). Applying these principles, the Tribunal set aside the rejection insofar as it related to the shipping bills for January 2012 to December 2014 and allowed conversion with consequential reliefs. [Paras 19, 21, 27, 42, 43]

Rejection of conversion/amendment for January 2012 to December 2014 set aside and conversion allowed.

Amendment of documents under Section 149 of the Customs Act - Reasonable time for seeking amendment - limitation principle (three year benchmark applied) - CBEC Circular No.36/2010 - three months prescription for conversion - Request for conversion/amendment of shipping bills for the period 2000 to 2011 - HELD THAT: - Although section 149 and the Drawback Rules contain no express time limit, the Tribunal held that an application for amendment must be made within a reasonable time and that unduly long delay may extinguish the remedy. Having considered the scheme of the Customs Act, precedent and limitation principles, the Tribunal adopted a three year benchmark as a reasonable period for seeking amendment under section 149. The appellant's inclusion, by the second application, of shipping bills from 2000 to 2011 amounted to an inordinate and unreasonable delay; accordingly the original rejection of conversion for that period was upheld. [Paras 33, 35, 41, 42, 43]

Rejection of conversion/amendment for the period 2000 to 2011 upheld.

Final Conclusion: The appeal is partly allowed: conversion of free shipping bills to drawback shipping bills is permitted for January 2012 to December 2014 (rejection set aside), whereas the request for conversion in respect of 2000 to 2011 is rejected as barred by unreasonable delay.

Remand for de novo adjudication - Power of Commissioner (Appeals) to remit - Failure of adjudicating authority to respond to material submissions - Principles of natural justice - Classification and canalization of exports under DGFT

Remand for de novo adjudication - Failure of adjudicating authority to respond to material submissions - Power of Commissioner (Appeals) to remit - Principles of natural justice - Whether the impugned adjudication order should be set aside and the matter remitted for fresh adjudication in view of material submissions not considered by the adjudicating authority. - HELD THAT: - The Commissioner (Appeals) found that the appellant had placed reliance on material documents and statutory notifications (including a DGFT notification and a Lok Sabha reply) which were not considered in the impugned order. Comments were sought from the adjudicating authority but no response was furnished; a reminder also remained unanswered. In these circumstances the appellate authority concluded that remand was necessary to do justice, so that the proper officer may examine the facts, documents and submissions afresh and pass a speaking order following the principles of natural justice. The Commissioner (Appeals) relied on earlier authorities affirming that the Commissioner (Appeals) retains the power to remit for de novo proceedings and accordingly set aside the impugned order and remitted the case to the proper officer for fresh adjudication. No opinion was expressed on the merits, which were left open for independent consideration by the lower authority. [Paras 5, 6]

Impugned order set aside and the matter remitted to the proper officer for de novo proceedings, to be decided after affording opportunity in accordance with principles of natural justice.

Final Conclusion: The appeal is allowed to the extent that the impugned order is set aside and the matter is remitted to the proper officer for fresh adjudication after considering the appellant's submissions and materials and following the principles of natural justice; no view expressed on the merits.

Attachment order - vacation of appellate stay - primacy of Supreme Court directions under Article 142 - jurisdictional impropriety of parallel appellate interference - recourse to a court appointed judicial officer for objections - escrow to secure contested funds pending adjudication - possession and transfer of attached property to implementing authority

Attachment order - vacation of appellate stay - primacy of Supreme Court directions under Article 142 - jurisdictional impropriety of parallel appellate interference - recourse to a court appointed judicial officer for objections - escrow to secure contested funds pending adjudication - Whether the interim order of SAT staying SEBI's attachment and permitting operation of accounts should be vacated and further proceedings before SAT stayed, and the manner in which objections to SEBI's attachment are to be adjudicated pending compliance with this Court's directions. - HELD THAT: - The Court held that the attachment dated 1 March 2021 was issued by SEBI to implement directions issued by this Court under Article 142 and that the interim order of SAT entertaining appeals and permitting operation of accounts would, if allowed to stand, frustrate the implementation of this Court's directions. The Court found it inappropriate for SAT to have entertained the appeals in light of the supervisory scheme created by this Court and emphasised that parties aggrieved by SEBI's attachment should be permitted to move this Court and avail the mechanism created by the Court. Accordingly, the SAT order dated 26 March 2021 was vacated and further proceedings before SAT in the specified appeals were stayed. The Court directed that DDPL and Unicorn may submit their objections to the attachment to Shri R S Virk, the judicial officer appointed by this Court, who is empowered to obtain the view of the Enforcement Directorate; his report shall be placed before this Court after hearing the parties. Pending further orders, the attachment continues to operate to the extent of the amount identified for recovery, but the Court granted liberty to the companies to deposit that amount in an escrow to the satisfaction of SEBI, whereupon SEBI may modify the attachment to operate only in respect of the escrowed amount and may direct investment of escrowed funds in interest bearing fixed deposits. [Paras 13]

The SAT order dated 26 March 2021 is vacated; further proceedings before SAT are stayed; objections to the attachment to be heard by Shri R S Virk and reported to this Court; the SEBI attachment remains in operation to the extent directed, subject to deposit in escrow in accordance with the directions.

Possession and transfer of attached property to implementing authority - Whether possession of the immovable property at C 55, Sector 57, Noida should be handed over to SEBI (or its authorised representative) for administration under the Court's scheme. - HELD THAT: - The Official Liquidator was directed to hand over possession of the identified immovable property to the Nodal Officer cum Secretary of SEBI, an authorised representative of SEBI, subject to production of requisite title documents. SEBI was directed to publish a notice so that any person asserting a claim may have it adjudicated before Shri R S Virk. A claim by an unsecured creditor (PBCL) must be lodged in the requisite form to be processed within four weeks. The interlocutory application was made absolute and disposed of in these terms. [Paras 5]

The Official Liquidator shall hand over possession of the Noida property to SEBI's authorised representative; SEBI to publish notice and claims to be adjudicated by Shri R S Virk; the interlocutory application is allowed.

Appointment of judicial officer for objections - Whether the tenure of Shri R S Virk, the judicial officer appointed by this Court to examine claims and objections, should be extended. - HELD THAT: - The Court noted that the tenure of Shri R S Virk was due to expire on 31 October 2021 and extended his tenure to 31 March 2022 to ensure continuity in the adjudicatory mechanism established by the Court for the implementation of its directions. [Paras 2]

The tenure of Shri R S Virk is extended until 31 March 2022.

Claims evaluation by court appointed officer - release of properties confirmed on evaluation - Whether interlocutory applications seeking release or exclusion of specified properties from attachment, after evaluation by Shri R S Virk, should be allowed. - HELD THAT: - Applicants placed claims before Shri R S Virk, the judicial officer nominated by this Court, and those claims were found valid on evaluation. SEBI and the Justice R M Lodha Committee raised no objection to allowing the interlocutory applications in accordance with Shri R S Virk's evaluations. The Court accordingly allowed the batch of interlocutory applications and directed removal or release of the properties as assessed by Shri R S Virk, subject to the filing and processing of any outstanding claims in the prescribed manner. [Paras 3]

The interlocutory applications in the identified batch are allowed in terms of the evaluations made by Shri R S Virk.

Interim restraint on release of funds - Whether compensation payable to certain respondents should be restrained pending further orders. - HELD THAT: - In IA No.121435 of 2020 the Court issued notice returnable in three weeks and, pending further orders, directed that the first and second respondents shall not release the compensation to Respondent Nos. 3 to 29. This is an interim protective direction to preserve funds until the notice is adjudicated. [Paras 2]

Issue notice; pending further orders, the first and second respondents shall not release the compensation to Respondent Nos. 3-29.

Final Conclusion: SEBI's IA is allowed in part: the SAT interim order of 26 March 2021 is vacated and further proceedings before SAT stayed; objections to SEBI's attachment to be submitted to the Court appointed judicial officer whose report will be considered by this Court; the SEBI attachment continues to operate for the recovery amount unless that sum is deposited in escrow to SEBI's satisfaction; additional interlocutory applications concerning property possession, claim evaluations and tenure extension are disposed of in accordance with the directions recorded above.

Classification of debt as Financial Debt or Operational Debt - treatment of security deposit as Financial Debt - interest as consideration for time value of money - application of Section 5(7) read with Section 5(8) of the IBC - precedential application of prior appellate judgment

Classification of debt as Financial Debt or Operational Debt - treatment of security deposit as Financial Debt - interest as consideration for time value of money - application of Section 5(7) read with Section 5(8) of the IBC - Whether the amounts claimed by the appellants are Financial Debt rather than Operational Debt - HELD THAT: - The Tribunal held that the appellants' case is squarely covered by the earlier decision in CA (AT) (Ins) No. 180 of 2021, where it was concluded that amounts accepted by the corporate debtor as a 'security deposit' and on which interest was credited constitute consideration for the time value of money and therefore fall within the definition of Financial Debt. The Tribunal relied on the reasoning that payment of interest for use of the appellant's money over a period indicates the status of the creditor as a Financial Creditor, applying the legal tests in Section 5(7) read with Section 5(8) of the Code and the ratio of the referred precedents. Having accepted that the coordinate bench decision applied to the present appellants, the Tribunal set aside the impugned orders of the Adjudicating Authority which had treated the claims as Operational Debt and held the debts to be Financial Debt. [Paras 7, 8]

Allowed; the impugned orders are set aside and the amounts claimed by the appellants are held to be Financial Debt.

Final Conclusion: Appeals allowed; the claims made by the appellants are treated as Financial Debt and the impugned orders classifying them as Operational Debt are set aside; no order as to costs.

Exemption of vocational training institutes from service tax - Commercial Training or Coaching Centre - definition and exclusion for qualifications recognised by law - exemption for coaching or training leading to grant of a certificate/diploma/degree recognised by law - negative list exemption - education as part of a curriculum for obtaining a qualification recognised by law - extended period of limitation not attracted where activity is bona fide and records maintained

Exemption of vocational training institutes from service tax - Commercial Training or Coaching Centre - definition and exclusion for qualifications recognised by law - Whether the appellants' activities during 01.04.2009 to 26.02.2010 were exempt as vocational or recreational training and thus not chargeable to service tax - HELD THAT: - The Tribunal found the adjudicating authority misconstrued the scope of the exemption by importing an unstated limitation based on the quantum/'glamour' of fees. The statutory definition and Notification No.24/2004 ST exempt vocational and recreational training that impart skill to enable trainees to seek employment or self employment directly after training. The examples in the Board circular are illustrative only and the statute contains no fee related bar. On the facts, the courses impart skills enabling employment/self employment and therefore fall within the exemption; the Commissioner's contrary conclusion was based on conjecture and an impermissible addition to the statutory test. [Paras 24]

Activities of the appellants for the period 01.04.2009 to 26.02.2010 qualify as vocational/recreational training exempt from service tax.

Exemption for coaching or training leading to grant of a certificate/diploma/degree recognised by law - negative list exemption - education as part of a curriculum for obtaining a qualification recognised by law - Whether the appellants' activities from 27.02.2010 (and thereafter up to the relevant dispute period) conducted in collaboration with recognised universities and leading to qualifications recognised by law are exempt from service tax - HELD THAT: - The Tribunal accepted the appellants' evidence of MoUs, university curriculum, university conducted examinations and issuance of degrees/diplomas by recognised State universities (PTU, Mewar University, Shobhit University). Notification No.33/2011 ST and the exclusion in the definition of 'Commercial training or coaching centre', together with the negative list entry for education as part of a curriculum leading to a legally recognised qualification, exclude such activities from service tax. The Commissioner's findings that the appellants lacked authority to issue certificates or valid affiliation were contrary to the demonstrated facts; the appellants functioned as authorised study/extension/learning centres under MoUs and the students received university qualifications recognised by law. Coordinate Tribunal and High Court precedents were noted and followed. [Paras 25, 26, 27, 29]

Activities conducted in collaboration with recognised universities and leading to degrees/diplomas/qualifications recognised by law are exempt from service tax for the relevant period; appellants not liable.

Extended period of limitation not attracted where activity is bona fide and records maintained - Whether the extended period of limitation for recovery of service tax could be invoked against the appellants - HELD THAT: - The Tribunal noted the appellants acted under a bona fide belief that their activities were not taxable, maintained proper records, were registered as a charitable organisation under the Income tax Act, and had filed audited accounts. The demand was based on information/data supplied by the appellants. No mala fides or concealment was found and the extended limitation period could not be invoked. [Paras 30]

Extended period of limitation not attracted; show cause notices invoking extended limitation are invalid.

Final Conclusion: Appeals allowed. The impugned adjudication is set aside: the appellants' educational/vocational training activities (including those conducted in collaboration with recognised universities and leading to qualifications recognised by law) for the period in dispute are not liable to service tax, and the extended period of limitation is not attracted; appellants are entitled to consequential relief in accordance with law.

Classification of goods - Tariff heading dispute - Fertiliser versus chemical preparations for use in agriculture - Reconsideration in light of precedent

Classification of goods - Tariff heading dispute - Fertiliser versus chemical preparations for use in agriculture - Classification of Best Agri Product (BAP), Sikko Biostar, Sikko Gold, Sikko Power and Vakil 3D was not finally adjudicated and was remanded. - HELD THAT: - The Tribunal observed that the Adjudicating Authority had held the products under chapter heading 3808, whereas the appellant claimed classification under chapter heading 3101/3105. The Tribunal noted that a recent Tribunal decision in Narmada Biochem Pvt. Ltd. (supra), which treats similar soil conditioner products as fertilizers, was not available to the lower authority when the impugned order was passed. Given that the issue involves mixed questions of fact and law and that Narmada Biochem considered test reports and composition of the products, the Tribunal directed the Adjudicating Authority to re-examine classification after verifying the facts of the present case vis-a -vis the findings in Narmada Biochem. The Tribunal expressly withheld any view on the merits and kept all issues open for fresh adjudication.

Matter remanded to the Adjudicating Authority for fresh consideration of the classification of the specified products in the light of the Tribunal's decision in Narmada Biochem Pvt. Ltd., with no opinion expressed on the merits.

Limitation - Demand on limitation - Limitation challenge in respect of products 'NPK' and 'Vasool' was not finally decided and is remanded for fresh consideration. - HELD THAT: - Although the appellant did not contest the classification of 'NPK' and 'Vasool' on merits, they disputed the demand on the ground of limitation. The Tribunal did not adjudicate this limited question but remanded the matter to the Adjudicating Authority so that it may re-examine all relevant issues, including limitation, in the course of the fresh adjudication directed by the Tribunal.

Issue as to limitation in respect of 'NPK' and 'Vasool' remanded to the Adjudicating Authority for fresh consideration.

Dutiability - Classification of goods - Whether 'Black Surya' is dutiable was not finally adjudicated and is remanded. - HELD THAT: - The Tribunal noted that the question of dutiability of 'Black Surya' requires reconsideration along with the other classification issues and should be examined afresh by the Adjudicating Authority in the light of the Tribunal's observations and the precedent in Narmada Biochem Pvt. Ltd. The Tribunal refrained from expressing any view on the substantive dutiability question.

Question of dutiability of 'Black Surya' remanded to the Adjudicating Authority for fresh adjudication.

Final Conclusion: The appeal does not decide the substantive classification, limitation or dutiability issues on merits; the Tribunal remands the matter to the Adjudicating Authority to pass a fresh order after verifying the facts of the present case and considering the Tribunal's decision in Narmada Biochem Pvt. Ltd., with all issues kept open.

Substitution of statutory provision and retrospective effect - interpretation of notification by reference to Central Excise tariff headings - burden of proof for classification under tariff entries - exceeding jurisdiction by adjudicating issues not argued before lower authorities - levy of tax under residual/unscheduled entry versus concessional entry

Substitution of statutory provision and retrospective effect - interpretation of notification by reference to Central Excise tariff headings - Substitution effected by Notification No. FD 238 CSL 07 dated 07.07.2007 operates to replace the earlier entries and, having been made to take effect from 01.01.2007 (by the intervening amendment), applies to MFPs sold in the period January to March 2007. - HELD THAT: - The Court held that a substitution replaces the earlier provision and, unless such substitution would create repugnancy or absurdity, the substituted text is to be read as if it had been in the earlier notification. Applying authorities on substitution, the Court concluded that the amendment by substitution to Sl.Nos.28 and 29 was properly capable of retrospective effect and that the notification chain showed the entries to be effective from 01.01.2007. The Tribunal's view that the July 2007 notification could not be applied retrospectively because it was not issued under a particular section was rejected, as the July notification was promulgated under the statutory powers invoked and operated to substitute the earlier table entries, thereby bringing the relevant tariff entries within the scope of the IT-products notification for the period in question. [Paras 13, 14, 15, 16, 17]

Notification dated 07.07.2007 (substituting Sl.Nos.28 and 29) is an effective substitution and, as read with the amendment giving effect from 01.01.2007, covers MFPs for the tax periods in question.

Burden of proof for classification under tariff entries - exceeding jurisdiction by adjudicating issues not argued before lower authorities - The Tribunal erred in denying benefit of the notification on the ground that the assessee had not proved classification under a particular Central Excise Tariff sub-heading and in adjudicating other grounds which were not the subject matter before the Assessing Authority or First Appellate Authority. - HELD THAT: - The Court observed that the Tribunal acknowledged that machines performing multiple functions fell within the relevant heading but nevertheless dismissed the appeal for lack of proof that the specific MFPs fell under sub-heading 8443.31. The High Court held that the Tribunal exceeded its jurisdiction by raising and deciding issues that were not canvassed below, and thereby denied the benefit of the notification on a ground alien to the appellate scope. Given the Tribunal's own acceptance of the classificatory ambit and the established effect of the substitution, adjudication on an unpleaded classification deficiency was impermissible. [Paras 5, 6, 8, 18]

Tribunal's refusal to extend the notification's benefit on the additional ground of lack of classification proof (and its consideration of issues not addressed by lower authorities) was wrongful and beyond its jurisdiction.

Levy of tax under residual/unscheduled entry versus concessional entry - Assessee is entitled to the concessional tax treatment under entry 53 of the Third Schedule (4%) for Multi Function Printers for January, February and March 2007. - HELD THAT: - Following the conclusions that the substitution operated to include the relevant tariff entries effective 01.01.2007 and that the Tribunal improperly denied relief on extraneous grounds, the Court directed reassessment applying the concessional entry. The Court disposed of the revision by setting aside the impugned orders and directing the Assessing Authority to recompute tax at the concessional rate on MFPs for the specified tax periods and issue demand notices accordingly. [Paras 17, 19, 20]

Matters remitted to assessing authority for recomputation of tax at 4% under entry 53 for the tax periods January, February and March 2007.

Final Conclusion: Revision allowed; impugned orders set aside. Assessing authority to recompute and levy tax at the concessional rate (4%) on Multi Function Printers for January, February and March 2007 and issue demand notice accordingly.

Withholding of Declaration Form 'F' under Rule 5(4)(ii) of the Central Sales Tax (Delhi) Rules - compliance with opportunity of hearing and reasoned order requirement before withholding forms - state rule-making power under Section 13 of the Central Sales Tax Act to prescribe conditions for issuance of declaration/certificate forms - interim relief and final relief distinction in writ proceedings

Withholding of Declaration Form 'F' under Rule 5(4)(ii) of the Central Sales Tax (Delhi) Rules - opportunity of hearing and reasoned order - Respondents lawfully refused issuance of Form 'F' to the petitioner under Rule 5(4)(ii) of the CST (Delhi) Rules. - HELD THAT: - Rule 5(4)(ii) permits the Commissioner to withhold issuance of declaration forms where the applicant has defaulted in payment of assessed tax, after affording an opportunity of being heard and for reasons to be recorded in writing. The record in this petition (including the chart of outstanding demands, not controverted by the petitioner) demonstrates the existence of pending demands for multiple tax periods. The respondents have passed an order dated 16.06.2021 giving reasons for refusal of the Form 'F' facility. Given the admitted pendency of demands and the existence of a reasoned order and opportunity procedure, this Court cannot override or substitute itself for the authorities/fora that are adjudicating those demands. On the prima facie record, denial of the facility under Rule 5(4)(ii) was justified and lawful. [Paras 15, 16, 17]

Denial of Form 'F' facility pursuant to Rule 5(4)(ii) was lawful and the interim prayer seeking directions to issue Form 'F' was not maintainable.

State rule-making power under Section 13 of the Central Sales Tax Act - challenge to vires of subordinate rule - Challenge that Rule 5(4)(ii) is ultra vires the CST Act was rejected on prima facie consideration. - HELD THAT: - Section 13(3) and (4)(e) of the CST Act empower State Governments to make rules specifying the conditions subject to which forms or declarations under Section 6/6A may be obtained and the manner of their custody and use. Rule 5(4)(ii), which conditions issuance of declaration forms on non-default in payment of assessed taxes subject to opportunity and reasoned order, falls within this delegated rule-making power. On the prima facie material before the Court, Rule 5(4)(ii) cannot be struck down as ultra vires the CST Act. [Paras 18, 19]

The contention that Rule 5(4)(ii) is ultra vires the CST Act is not accepted at this stage.

Interim relief and final relief distinction in writ proceedings - Petitioner's claim for interim relief (direction to issue 'F' Forms) was refused because granting it would amount to granting final relief in the writ petition. - HELD THAT: - The Court observed that the relief sought by the petitioner (compulsory issuance of Form 'F' for the period in question) would effectively grant final relief in the pending writ petition. Interim relief which would dispose of the substantive controversy was therefore inappropriate. Having found the respondents' action prima facie justified and a reasoned order in place, the petition for interim directions was dismissed. [Paras 20, 21]

Application for interim relief directing issuance of Form 'F' is dismissed.

Final Conclusion: The petition for interim direction to issue Form 'F' was dismissed. On the prima facie record the respondents lawfully withheld Form 'F' under Rule 5(4)(ii) after affording opportunity and for reasons recorded; the challenge to the vires of Rule 5(4)(ii) was not accepted at this stage. Matter listed for further hearing with directions for short written submissions.

Enforcement of foreign arbitral award - public policy of India - fundamental policy of Indian law - scope of inquiry under Section 48(2)(b) - prohibition on review of merits under Explanation 2 to Section 48(2)(b) - violation of Securities Contracts (Regulation) Act affecting spot delivery - violation of Foreign Exchange Management Act by assured returns to non resident - treatment of foreign award as decree and simultaneous enforcement and execution under Section 49

Scope of inquiry under Section 48(2)(b) - prohibition on review of merits under Explanation 2 to Section 48(2)(b) - fundamental policy of Indian law - Whether the court may undertake a merits based review when resisting enforcement of a foreign award on the ground that enforcement would be contrary to the public policy of India under Section 48(2)(b). - HELD THAT: - Section 48(2)(b), read with its Explanations, confines the public policy inquiry to a narrow and obvious domain and expressly curtails a review into the merits of the dispute. Judicial precedent emphasises that contravention of a statute alone does not necessarily amount to contravention of the fundamental policy of Indian law and that only breaches of the most basic principles forming the substratum of the legal system will suffice. Explanation 2 reinforces this limitation by preventing a foray into merits when assessing whether an award offends fundamental policy. Consequently, the court must refuse enforcement only where the contravention is clear, manifest and goes to the core of the fundamental policy of Indian law, and not by re adjudicating disputed contractual interpretations or factual controversies dealt with by the arbitral tribunal. The narrower threshold set by Sections 46-49 and the statutory context favour enforceability absent proof meeting that high threshold. [Paras 16, 17, 18, 25, 30]

Inquiry under Section 48(2)(b) is narrowly confined; courts are prohibited from reviewing the merits of the dispute except where the award is clearly and manifestly contrary to the fundamental policy of Indian law.

Violation of Securities Contracts (Regulation) Act affecting spot delivery - violation of Foreign Exchange Management Act by assured returns to non resident - interpretation of contractual Put Option - consistency of arbitral tribunal's findings with existing case law - Whether, on merits, the arbitral award upholding the claimant's Put Option and awarding damages was in violation of the SCRA or FEMA so as to render the award unenforceable under public policy. - HELD THAT: - The arbitral tribunal interpreted the Shareholder's Agreement as amounting to a Spot Delivery Contract for purposes of the SCRA, relying on the near simultaneous exchange requirement and relevant regulatory guidance; it rejected the distinction between voluntary and contractual postponement and concluded performance met the SCRA test. With respect to FEMA, the tribunal construed the term 'legally able' and held that the obligation could require procurement of a non resident purchaser so that FEMA would not apply to a non resident third party purchaser. The High Court found the tribunal's commercial and textual constructions consistent with precedents such as Renusagar , Cruz City , Vijay Karia , NTT Docomo , Edelweiss and decisions affirmed subsequently (including Banyan Tree ), and therefore not susceptible to being displaced in an enforcement proceeding constrained by Explanation 2 to Section 48(2)(b). Further, the Court held FEMA does not constitute the fundamental policy of Indian law and a contravention of FEMA, even if established, would not automatically render a foreign award unenforceable. The Award was also characterisable as a money award for breach of contractual obligations rather than direct enforcement of an illegal transaction. [Paras 21, 24, 25, 26, 28]

On the merits, the Award does not offend the SCRA or FEMA in a manner that meets the high threshold of breaching the fundamental policy of Indian law; the tribunal's findings are upheld and do not justify refusal of enforcement.

Treatment of foreign award as decree and simultaneous enforcement and execution under Section 49 - enforcement as decree without separate execution proceedings - Whether enforceability and execution of the foreign award must be considered simultaneously and whether separate execution proceedings should be permitted after a threshold enforceability determination. - HELD THAT: - Section 49 provides that once a foreign award is held enforceable under Part II it shall be treated as a decree. The High Court followed the Supreme Court's directions in Fuerst Day Lawson and LMJ International , holding that enforceability and execution are to be considered in the same proceeding and that permitting a separate future hearing to oppose execution would be unacceptable. Having concluded that the award is enforceable under Sections 46, 47 and 49, the court proceeded to treat the award as a decree and directed immediate enforcement measures. [Paras 33, 34, 35]

Enforceability and execution are to be considered together; the foreign award is to be treated as a decree and execution permitted without separate collateral proceedings to relitigate enforceability.

Final Conclusion: The petition for enforcement of the ICC foreign arbitral award dated 19 June 2020 (and addendum 26 October 2020) is allowed. The award is enforceable under Part II of the Arbitration and Conciliation Act and shall be treated as a decree; the respondent is restrained from dealing with specified assets and directed to disclose assets as ordered, and execution proceedings may follow without a separate relitigation of enforceability.

Presumption under Section 139 of the Negotiable Instruments Act - Reverse onus on the accused to rebut presumption - Revisional jurisdiction under Section 482 Cr.P.C. - interference only for perversity - Compounding of offence under Section 147 of the Negotiable Instruments Act

Presumption under Section 139 of the Negotiable Instruments Act - Reverse onus on the accused to rebut presumption - Revisional jurisdiction under Section 482 Cr.P.C. - interference only for perversity - Whether the concurrent convictions under Section 138 of the Negotiable Instruments Act could be interfered with in revision in view of the defence that the cheque was obtained by coercion and was not issued to the complainant. - HELD THAT: - The High Court considered the accused's evidence that the cheque was obtained at the police station by coercion and the supporting oral and documentary material produced by the defence. Examination of the police enquiry record (Ex. D2) showed it related only to misappropriation of jewels and pre-dated the cheque; there was no specific entry or suggestion in cross-examination establishing that the cheque was taken by coercion. The Court applied the principle that once the signature on the cheque is admitted or established, the statutory presumption under Section 139 operates and the burden shifts to the accused to produce evidence tending to show that the cheque was not issued for a legally enforceable debt. Having found that the defence evidence and documents did not satisfactorily discharge that reverse onus or render the concurrent findings perverse, the High Court declined to reappreciate the evidence under revisional jurisdiction and held there was no ground to upset the concurrent convictions. [Paras 15, 16, 17, 18, 19]

Concurrent convictions under Section 138 were upheld; revision dismissed for lack of perversity and because the accused failed to rebut the statutory presumption.

Compounding of offence under Section 147 of the Negotiable Instruments Act - Whether the Court should permit compounding of the offence and on what terms. - HELD THAT: - Recognising the quasi-civil nature of offences under Section 138 and the statutory provision permitting compounding, the High Court exercised its discretion to avoid immediate imprisonment. The Court directed that if the accused deposited the cheque amount and the compensation and costs to the trial Court by the specified date, the Magistrate shall disburse the amount to the complainant or his legal heirs and compound the offence; failure to deposit would oblige the trial Court to issue warrant for commitment in accordance with the earlier sentence. [Paras 20]

The Court directed conditional compounding on deposit of the specified amounts by the stated date; failing which the sentence shall be enforced.

Final Conclusion: The Criminal Revision is dismissed; the concurrent convictions and sentence under Section 138 are confirmed, subject to the Court's conditional direction permitting compounding of the offence on payment to the trial Court within the time fixed, failing which the original sentence will be executed.

Cash handling charges - agency commission - deposits into Government account through Treasury Challans - authority of banks to levy charges - misinterpretation of Reserve Bank of India Master Circular - obligation to respond to communications from Government authorities - disciplinary action against public sector bank officials for improper statements

Cash handling charges - deposits into Government account through Treasury Challans - authority of banks to levy charges - Collection of cash handling charges from stamp vendors depositing cash into Government accounts by way of Treasury Challans - HELD THAT: - The Court found that stamp vendors deposit money into State Government accounts through Treasury Challans on behalf of the Government and that collection of cash handling charges from them cannot be sustained in the absence of specific authority. Examination of the Master Circulars relied upon by the bank did not disclose any express direction or permission from the Reserve Bank of India to collect cash handling charges on such Government receipts. The Finance Department also stated that no cash handling charges have been explicitly provided for Government receipts and that any collection appears to be by mistake or misinterpretation of the bank's circulars. Absent a specific RBI or banking regulation authorising such levies, the State Bank of India was not entitled to collect cash handling charges from stamp vendors depositing cash into Government accounts through Treasury Challans. [Paras 16, 17, 18, 27]

Collection of cash handling charges from stamp vendors for deposits into Government accounts by Treasury Challans is illegal and without authority; the bank is directed not to collect such charges.

Agency commission - misinterpretation of Reserve Bank of India Master Circular - Whether the Master Circulars or agency commission regime authorised simultaneous collection of cash handling charges from stamp vendors - HELD THAT: - The Court observed that the Master Circulars placed before it relate to agency commission payable to agency banks for Government business and do not contain a specific instruction permitting collection of cash handling charges from persons depositing into Government accounts via Treasury Challans. The Government's averments indicated that agency commission is paid for Government transactions and that no separate cash handling charge for Government receipts is provided. Consequently, the bank failed to demonstrate that agency commission rules authorised the contested collections; the collections appeared to stem from a misreading of the circulars rather than any explicit authorization. [Paras 7, 13, 17, 27]

The Master Circulars do not furnish specific authority to collect cash handling charges from stamp vendors; the bank's reliance on agency commission provisions does not justify such collections.

Obligation to respond to communications from Government authorities - disciplinary action against public sector bank officials for improper statements - Conduct of bank officials in (a) making an assertion that petitioners could approach other banks, and (b) failing properly to respond to Government communications - HELD THAT: - The Court characterised the statement in the bank's counter-affidavit suggesting petitioners could approach other banks as irresponsible and indicative of administrative arrogance given that stamp vendors deposit on behalf of the Government and have to use Government account branches. The bank's representatives, on being confronted, filed affidavits regretting the statement. The Court emphasised that communications from Government officials performing solemn functions must be answered courteously and not neglected; in light of the counter-affidavit statement the Court directed the General Manager to initiate appropriate disciplinary enquiry to ascertain circumstances in which the statement was made and to sensitize staff to proper conduct towards customers and governmental correspondents. [Paras 20, 21, 22, 23, 26]

Bank officials rebuked; General Manager directed to initiate enquiry into the counter-affidavit statement and to sensitize staff to respond appropriately to Government communications and customers.

Implementation of court order - public dissemination of instructions - Remedial directions to ensure compliance and public awareness - HELD THAT: - Having held the collections unlawful, the Court directed the bank not to collect cash handling charges from stamp vendors depositing into Government accounts through Treasury Challans at any SBI branch. The Court further directed the General Manager to circulate the order and necessary instructions to all SBI branches and to upload the same on the bank's official website to enable citizens to know their rights. The Court retained jurisdiction to review compliance by listing the matter for reporting. [Paras 28]

Bank directed to cease collection of such charges; to communicate the order to all branches and publish it on its website; matter posted for reporting compliance.

Final Conclusion: Writ petitions allowed: collection of cash handling charges from stamp vendors depositing into Government accounts through Treasury Challans declared illegal; State Bank of India directed to stop such collection, communicate and publish the order, and the General Manager directed to institute enquiry into the improvident statement in the bank's counter-affidavit; matter posted for reporting compliance.

Principles of natural justice - opportunity to complete cross-examination and to adduce defence evidence - setting aside convictions and sentences and remanding for fresh consideration - remand for fresh consideration with conditions - deposit as condition for grant of interim relief - entitlement to withdraw deposited amount on executing indemnity bond - automatic revocation of benefit on breach of conditions

Principles of natural justice - opportunity to complete cross-examination and to adduce defence evidence - setting aside convictions and sentences and remanding for fresh consideration - remand for fresh consideration with conditions - Whether the revision petitions should be allowed by setting aside the trial and appellate judgments and remanding the matters for fresh consideration so that the accused may be afforded an opportunity to complete cross-examination and to adduce defence evidence, subject to conditions. - HELD THAT: - The Court found that the accused had not completed cross-examination of the complainant and had not led defence evidence before the trial court. While recognising that principles of natural justice require that an opportunity be afforded, the Court held that it is not obliged to leave matters pending until every available opportunity is exhausted; however, in the interests of justice a further opportunity should be granted here. For that purpose the Court set aside the convictions and sentences recorded by the trial court and confirmed on appeal, and remanded the matters for fresh disposal on limited terms. The remand is conditional: the accused must deposit 50% of the fine amount by the stipulated date (or complete any earlier partial deposit up to that quantum); upon such deposit the complainant may withdraw the deposited amount after executing an indemnity bond; both parties must appear on the specified date, the complainant shall present himself for cross-examination and the accused shall avail the first opportunity to cross-examine and shall tender his defence evidence by the specified deadline; the trial court is directed to dispose of the matters in accordance with law within 15 days thereafter; and any failure to comply with these conditions will automatically revoke the benefit of the remand order. The Court therefore granted a conditional remand to afford the accused a further, time limited opportunity to complete his defence while protecting the complainant's interim financial interest. [Paras 13, 14]

Revision petitions allowed; judgments and orders of the trial court and appellate court set aside and matters remanded to the trial court for fresh consideration on the specified conditions, failing which the benefit of the order stands revoked.

Final Conclusion: The revision petitions are allowed. The convictions and sentences recorded by the trial court and confirmed on appeal are set aside and the cases are remanded to the trial court for fresh adjudication on the limited conditions specified by the High Court (deposit of 50% of fine, indemnity bond for withdrawal, attendance and completion of cross-examination and defence evidence within fixed dates, disposal within 15 days thereafter), with automatic revocation of the remand relief on breach of conditions.

Offence under Section 138 of Negotiable Instruments Act - Statutory presumption under Section 139 of N.I. Act - Burden to rebut presumption by preponderance of probability - Concurrent findings of fact - Revision under Sections 397 and 401 Cr.P.C.

Statutory presumption under Section 139 of N.I. Act - Burden to rebut presumption by preponderance of probability - Offence under Section 138 of Negotiable Instruments Act - Validity of conviction under Section 138 of N.I. Act in view of cheque-Ex.P1, admitted signature and accused's defence - HELD THAT: - The court found that cheque-Ex.P1 belonged to the complainant and her signature thereon was not disputed, thereby attracting the statutory presumption under Section 139 of the N.I. Act in favour of the complainant. The accused bore the burden to rebut that presumption by leading cogent evidence on the preponderance of probabilities. The defence asserted an alternative transaction (cheque issued to Rajiv) and relied on Ex.D1, but Ex.D1 was filed belatedly-after initiation of the present proceedings-and was therefore treated as an afterthought. The accused produced no other documentary evidence to establish that the cheque was not issued towards a legally enforceable debt. The accused's failure to respond to the legal notice and absence of a satisfactory explanation further weakened the defence. The trial and appellate courts evaluated evidence and credibility and returned concurrent findings of guilt; this Court declined to disturb those concurrent findings absent any demonstrable perversity or arbitrariness. [Paras 7, 8, 9, 10, 11]

Conviction under Section 138 of the N.I. Act affirmed; accused failed to rebut the statutory presumption and revision petition dismissed.

Final Conclusion: The revision under Sections 397 and 401 Cr.P.C. is dismissed. Concurrent convictions for the offence under Section 138 of the Negotiable Instruments Act are upheld as the accused failed to rebut the statutory presumption under Section 139 and the defence materials were held to be belated and unpersuasive.

Presumption under Section 139 of the Negotiable Instruments Act - offence under Section 138 of the Negotiable Instruments Act - proof of signature by comparison and power under Section 73 of the Evidence Act - appellate reappraisal of acquittal in quasi criminal cheque cases

Presumption under Section 139 of the Negotiable Instruments Act - proof of signature by comparison and power under Section 73 of the Evidence Act - offence under Section 138 of the Negotiable Instruments Act - Whether the statutory presumption under Section 139 was available and whether the evidence of signatures sufficed to uphold conviction under Section 138. - HELD THAT: - The Court held that the transaction (hire purchase loan) and the borrower's failure to repay were not disputed, and that the trial court had found similarity between the signature on the cheque and signatures in the admitted hire purchase agreement and the vehicle registration extract. Those findings entitled the complainant to the benefit of the statutory presumption under Section 139, shifting the evidentiary burden to the accused. Although the appellate court invoked Section 73 and questioned signatures in some documents, it nonetheless accepted similarity between the cheque signature and the hire purchase agreement and registration extract; once that similarity is accepted and the underlying debt is admitted, the presumption applies and supports conviction under Section 138. The appellate court therefore erred in reversing the trial court's conviction based on its comparison of other signatures when the admitted documents established the requisite similarity and the debt. The Court relied on comparative reasoning in prior authority that quasi criminal cheque cases admit appellate reappraisal where the evidence supports conviction, and observed that the accused failed to secure forensic comparison by not producing requisite specimens. [Paras 5, 8, 9]

Conviction under Section 138 is restored; the statutory presumption under Section 139 was rightly available and the signature evidence sufficed to sustain the conviction.

Sentence modification - consideration of accused's personal circumstances in sentencing - Whether the sentence imposed by the trial court should be maintained or modified. - HELD THAT: - Having restored the conviction, the Court revisited sentence in view of the totality of facts including the accused's personal circumstances (noted as a toddy tapper). The Court reduced the imprisonment originally imposed by the trial court and substituted a mitigated sentence-one month simple imprisonment-and ordered payment of compensation equivalent to the amount of the cheque, with a further month's imprisonment in default. [Paras 9]

Sentence modified to one month simple imprisonment; compensation equal to the cheque amount ordered, with one month simple imprisonment in default.

Final Conclusion: The appeal is allowed: the trial court's conviction under Section 138 is restored on the basis that the statutory presumption under Section 139 was available from admitted documents and signature similarity, and the sentence is reduced to one month simple imprisonment with compensation ordered equal to the cheque amount (further one month in default).

Presumption of cheque's validity under Sections 118 and 139 of the Negotiable Instruments Act - burden to rebut statutory presumptions lies on the accused - possession of cheque and Section 20 of the Negotiable Instruments Act - authorship immaterial - burden of proof under Section 103 of the Indian Evidence Act - presumption under Section 114 of the Indian Evidence Act - requirement of cogent evidence to rebut statutory presumptions

Presumption of cheque's validity under Sections 118 and 139 of the Negotiable Instruments Act - possession of cheque and Section 20 of the Negotiable Instruments Act - authorship immaterial - burden to rebut statutory presumptions lies on the accused - burden of proof under Section 103 of the Indian Evidence Act - presumption under Section 114 of the Indian Evidence Act - requirement of cogent evidence to rebut statutory presumptions - Whether the trial court erred in dismissing the complaint under Section 138 NI Act despite the accused failing to rebut statutory presumptions in respect of the cheque - HELD THAT: - The court found that Ext.P1 was in the possession of the complainant and the signature on the cheque was not disowned by the accused. In view of Section 20 of the Negotiable Instruments Act, the question who authored the writings on the cheque is immaterial where possession and linkage to the accused's bank account are established. Consequently the presumptions under Sections 118 and 139 of the Negotiable Instruments Act and the relevant presumptions under Sections 103 and 114 of the Indian Evidence Act were attracted in favour of the complainant. Those presumptions are rebuttable, but the onus to adduce cogent evidence to rebut them lay on the accused. On appreciation of the evidence the accused did not satisfactorily discharge that burden. The trial court's reliance on surmises and observations (as recorded in its paragraphs 10 and 11) to dismiss the complaint was erroneous; the lower court should have applied the statutory presumptions and required cogent rebuttal evidence rather than drawing adverse inferences from peripheral facts. For these reasons the trial court's conclusion that the prosecution failed was held to be incorrect. [Paras 5, 7, 8]

The trial court's judgment dismissing the complaint is erroneous and is set aside; the accused failed to rebut the statutory presumptions and the complaint is to be restored and disposed of in accordance with law.

Final Conclusion: Appeal allowed; impugned judgment set aside and the complaint restored to the trial court file for disposal in accordance with law within two months from receipt of certified copy.