TaxTMI Updates e-Newsletter
Nov 20,2021

Attachment of bank account under the CGST Act - interim relief pendente lite and exceptions in Deoraj v. State of Maharashtra - mala fide action - direction to adjudicating authority to decide show-cause notice within a specified time - opportunity of hearing before adjudication

Interim relief pendente lite and exceptions in Deoraj v. State of Maharashtra - attachment of bank account under the CGST Act - mala fide action - Whether interim relief should be granted to lift the attachment of the petitioner's bank account pending adjudication. - HELD THAT: - The court rejected the petitioner's prayer for interim relief to lift the bank-account attachment. Granting such interim relief would effectively grant the principal relief sought in the writ petition and is impermissible unless exceptional circumstances identified in Deoraj v. State of Maharashtra are satisfied. The court found that the facts of the present case do not attract those exceptions and therefore interim relief cannot be granted despite allegations of mala fides. [Paras 3]

Prayer for interim relief to lift the attachment is rejected.

Direction to adjudicating authority to decide show-cause notice within a specified time - opportunity of hearing before adjudication - attachment of bank account under the CGST Act - Whether the adjudicating authority should be directed to conclude the show-cause proceedings within a stipulated time and afford opportunity of hearing. - HELD THAT: - The court observed that the tax authority had acted promptly in attaching the petitioner's bank account but thereafter had not concluded proceedings despite the petitioner filing a preliminary reply. Rather than grant interim relief, the court directed expedition: the adjudicating authority (Additional Commissioner) must decide the show-cause notice in accordance with law after granting the petitioner an opportunity of hearing. The authority was expected to proceed without unnecessary delay and asked to preferably decide the matter within two months from receipt of the order. All substantive contentions of the petitioner are left open for consideration before the adjudicating authority. [Paras 4, 5]

Adjudicating authority directed to decide the show-cause notice after hearing, preferably within two months; parties' contentions left open.

Final Conclusion: The writ petition's interim relief seeking vacation of the bank-account attachment is refused; instead the court directed the adjudicating authority to decide the pending show-cause notice after affording hearing, preferably within two months, with all contentions reserved, and listed the petition for compliance reporting.

Amendment of writ petition - Impleadment of parties - Interim custody of seized cash - deposit in interest-bearing fixed deposit - Undertaking by respondents binding on court - Bank guarantee to be kept alive during pendency

Amendment of writ petition - Impleadment of parties - Amendment seeking impleadment of immediate family members of the petitioner was allowed and the amended writ petition with amended memo of parties was taken on record. - HELD THAT: - The application for amendment was considered at the inception stage of the writ petition. Notice was issued and counsel for respondents accepted notice and, without prejudice to their rights, stated that the amendment application be allowed. In view of the respondents' statement and the early stage of proceedings, the Court permitted the amendment and recorded the amended writ petition and amended memo of parties.

Application for amendment and impleadment allowed; amended writ petition and amended memo of parties taken on record.

Interim custody of seized cash - deposit in interest-bearing fixed deposit - Undertaking by respondents binding on court - Respondents' statement that the seized amount is deposited in an interest-bearing fixed deposit in the name of the President of India and their undertaking to maintain the deposit during pendency was accepted and held binding on the respondents. - HELD THAT: - Notice was issued and respondents' counsel accepted notice and informed the Court that the amount is already deposited in a fixed deposit receipt in the name of the President of India through the designated authority. Counsel further undertook that the amount shall continue in an interest-bearing fixed deposit and shall abide by orders of the Court. The Court accepted this statement and held the respondents bound by the undertaking, disposing of the application accordingly.

Respondents' undertaking accepted; amount to remain in interest-bearing fixed deposit and respondents bound by the undertaking; application disposed of.

Bank guarantee to be kept alive during pendency - Application declared infructuous in view of earlier order; bank guarantee furnished by petitioner to be kept alive until disposal of the writ petition; parties directed to file counter-affidavits and rejoinder as per timetable. - HELD THAT: - The Court recorded that the subsequent application had become infructuous in view of the order passed on the previous date. The Court directed that the bank guarantee furnished by the petitioner remain alive till disposal of the writ petition. Notices were issued and respondents permitted to file counter affidavits/replies within three weeks, with liberty for the petitioner to file a rejoinder before the next date of hearing. The matter was listed on the fixed date.

Application disposed of as infructuous; bank guarantee to be kept alive; directions issued for filing of counter-affidavits and rejoinder and matter listed for further hearing.

Final Conclusion: The Court allowed amendment to implead immediate family members and recorded the amended petition; accepted respondents' undertaking that the seized amount shall remain in an interest-bearing fixed deposit in the name of the President of India and held respondents bound by that undertaking; a subsequent application was disposed of as infructuous and the petitioner's bank guarantee was directed to be kept alive pending disposal, with further pleadings directed to be filed and the matter listed for hearing.

Transitional provisions and entitlement to carry forward unutilised input tax credit - Validity of delegated rule-making vis-a -vis statutory mandate in transitional scheme - Permissibility of extending time for filing transitional returns in light of absence of explicit statutory time-limit - Exercise of power under law to remove difficulty and grant relief in transitional period - Mandamus directing administrative reopening of portal or permitting manual filing for filing/revision of TRAN-1 - Tax authority's power to verify and adjudicate claims filed pursuant to reopened filing opportunity

Transitional provisions and entitlement to carry forward unutilised input tax credit - Validity of delegated rule-making vis-a -vis statutory mandate in transitional scheme - Permissibility of extending time for filing transitional returns in light of absence of explicit statutory time-limit - Exercise of power under law to remove difficulty and grant relief in transitional period - Challenge to sub-rule 1A to Rule 117, the proviso to Rule 117(1), and parts of Circular No.39/13/2018 seeking to restrict extensions and to impose evidentiary pre conditions for TRAN-1 filing. - HELD THAT: - The Court declined to quash or read down the impugned rule and circulars. It held that the transitional provisions governing filing of TRAN-1 must be construed in a beneficent manner so as not to deprive assessees of legitimate rights to carry forward unutilised credit arising from transactions prior to the introduction of the GST regime. In the absence of an explicit statutory time-limit under Section 140, and having regard to the transitional character of the scheme and the remedial power to remove difficulties, arguments validating a strict technical denial of opportunity could not be countenanced. For these reasons the petitioners' challenge to strike down the specified sub rules and circular provisions was refused; however the Court observed that any filing thereby permitted would remain subject to verification and scrutiny by the tax authorities under the Act.

Petition to quash/read down the impugned rule provisions and circular was refused; the Court endorsed a beneficent approach to transitional relief but did not invalidate the provisions challenged.

Mandamus directing administrative reopening of portal or permitting manual filing for filing/revision of TRAN-1 - Tax authority's power to verify and adjudicate claims filed pursuant to reopened filing opportunity - Validity of respondent No.3's decision refusing the petitioner another opportunity to file TRAN-1 and the appropriate relief to afford the petitioner a chance to file/revise TRAN-1. - HELD THAT: - Relying on the Court's earlier reasoning in Asiad Paints and the transitional character of the provisions, the Court quashed the decision of respondent No.3 refusing another opportunity to file TRAN-1. The Court issued a mandamus directing the respondent authorities to reopen the portal to permit uploading of the TRAN-1 form; if the portal cannot be opened, the authorities are to permit filing of hard copies and act upon them. The Court made clear that allowing the filing is a procedural opportunity and that the authorities retain the full statutory power to verify the correctness of the information provided and to deal with any false or incorrect claims under the Act.

Decision of respondent No.3 refusing another opportunity to file TRAN-1 quashed; authorities directed to permit electronic upload or manual filing and to verify and act upon filed claims.

Final Conclusion: The petition seeking invalidation of the specified rules and circulars was rejected; however the writ petition was allowed insofar as the impugned administrative refusal to permit filing/revision of TRAN-1 was quashed and the respondents were directed to reopen the portal or accept manual TRAN-1 filings, subject to statutory verification and scrutiny by the tax authorities.

Additional depreciation under Section 32(1)(iia) - electricity as movable property - exercise of revisional jurisdiction under Section 263 of the Income Tax Act

Additional depreciation under Section 32(1)(iia) - electricity as movable property - Entitlement of the assessee (a thermal power generator) to claim additional depreciation at 20% under Section 32(1)(iia) for AY 2011-12. - HELD THAT: - The Court held that electricity is to be regarded as movable property for relevant purposes, following the principles in State of Andhra Pradesh vs. National Thermal Power Corporation . Relying on precedents of this Court and other High Courts which have allowed additional depreciation to power-generating undertakings (including Commissioner of Income Tax, Kolkata-I vs. Ankit Metal and Power Limited ; decisions of the High Court of Madras in CIT vs. Hi-tech Arai Limited and CIT vs. VTM Ltd. , and later authority in PCIT, New Delhi vs. NTPC SAIL Power Co.(P.) Ltd. ), the Court concluded that a generator of electricity is entitled to the additional depreciation under Section 32(1)(iia). The Court therefore allowed the claim of the assessee and dismissed the revenue appeal on this question.

Assessee entitled to additional depreciation under Section 32(1)(iia); appeal dismissed on this ground.

Exercise of revisional jurisdiction under Section 263 of the Income Tax Act - Whether the initiation and exercise of jurisdiction by the Commissioner under Section 263 was justified in relation to the allowance of additional depreciation. - HELD THAT: - The Court observed that once the core issue-entitlement to additional depreciation-was decided in favour of the assessee on binding precedents, consideration of the validity of the exercise of revisional jurisdiction under Section 263 became academic. The Court expressly declined to adjudicate the question whether the Commissioner's action under Section 263 was justified, since the substantive entitlement had been resolved against the revenue.

Not adjudicated as the point became academic upon deciding entitlement in favour of the assessee.

Final Conclusion: The appeal by the Revenue is dismissed: the assessee (thermal power generator) is entitled to additional depreciation under Section 32(1)(iia) for AY 2011-12; the question on the validity of exercise of jurisdiction under Section 263 was not decided as it became academic.

Interest on short-term deposits incidental to acquisition of capital assets - capital receipt versus revenue receipt - capitalisation of interest and reduction of cost of construction - interest earned on deposits of borrowed funds - distinction between surplus funds invested and deposits directly linked to asset acquisition

Interest on short-term deposits incidental to acquisition of capital assets - interest earned on deposits of borrowed funds - capital receipt versus revenue receipt - capitalisation of interest and reduction of cost of construction - distinction between surplus funds invested and deposits directly linked to asset acquisition - Interest earned on Short Term Deposit Receipts created to enable opening of letters of credit for procuring plant and machinery is to be treated as a capital receipt and not taxable as income. - HELD THAT: - The Court found on the facts that the STDRs were created from borrowed funds to enable opening of letters of credit for procuring plant and machinery and that the interest earned thereon was utilised towards payments for the project while loans continued to be serviced. The decision in Tuticorin Alkali Chemicals & Fertilizers Ltd. was held to be distinguishable because that case involved surplus funds invested to earn income; by contrast, where receipts are inextricably linked to the process of setting up plant and machinery they reduce the cost of construction and are of a capital nature. The Court relied on and followed the principles in Bokaro Steel Ltd. and Karnal Co operative Sugar Mills Ltd., which recognise that interest or other receipts directly connected with the acquisition or erection of capital assets may be capitalised or treated as reducing the capital cost. Applying those authorities to the undisputed factual matrix of utilisation of the interest for the project, the Court concluded the interest was incidental to acquisition and not income chargeable to tax. [Paras 15, 16, 17, 18, 19]

The interest of Rs. 4,40,92,790 earned on STDRs made to enable opening of LoCs for procuring plant and machinery is a capital receipt incidental to acquisition and not taxable as income; the impugned orders are set aside.

Final Conclusion: The appeal is allowed: the interest earned on the STDRs created to enable opening of letters of credit for procurement of plant and machinery in AY 1998-99 is held to be a capital receipt incidental to acquisition (reducing the cost of the assets) and not taxable as income; the orders of the AO, CIT(A) and ITAT are set aside.

Charitable purpose - application of the proviso to Section 2(15) of the Income Tax Act - trade, commerce or business - profit motive test - entitlement to exemption under Section 11 of the Income Tax Act - ploughing back of surplus - registration under Section 12A and recognition under Section 10(23C)(vi) - principle of consistency

Entitlement to exemption under Section 11 of the Income Tax Act - principle of consistency - The Tribunal and the CIT(A) were correct in granting exemption under Section 11 for the assessee for the assessment year 2011-12. - HELD THAT: - The High Court agreed with the concurrent findings of the CIT(A) and the Tribunal that the assessee is a charitable institution and entitled to exemption under Section 11. The Court noted that the assessee had enjoyed exemption and recognition in earlier years and that the principle of consistency supports allowing exemption subject to statutory conditions. The Court declined to disturb the factual conclusion reached by the lower authorities, observing that interference would require re-appreciation of evidence, which is not permissible in second appeal where concurrent findings are not perverse. [Paras 7, 8, 9]

Exemption under Section 11 allowed and the concurrent orders of the CIT(A) and ITAT upheld.

Application of the proviso to Section 2(15) of the Income Tax Act - trade, commerce or business - profit motive test - ploughing back of surplus - The proviso to Section 2(15) does not apply because the assessee's activities (running a printing press and publishing a newspaper) are not carried on with a profit motive or as trade, commerce or business. - HELD THAT: - On the material before it, the Court found that the income generated by the printing press and newspaper is applied for charitable purposes and there is apparently no profit motive. The object of the proviso is to exclude entities engaged in regular business with an intent to earn and distribute profits; that mischief is not attracted where surplus, if any, is ploughed back for charitable objects. Accordingly, the Tribunal correctly held that mere receipt of fees for activities does not per se render the assessee non-charitable under the proviso. [Paras 6, 7]

Proviso to Section 2(15) held not attracted; activities not a trade or business for the purpose of denying charitable status.

Registration under Section 12A and recognition under Section 10(23C)(vi) - trade, commerce or business - It was not necessary for the Tribunal to apply or re-open principles from the Constitution Bench decision referred to by the Revenue for the purpose of denying exemption in this case. - HELD THAT: - The Court observed that the assessee had already been granted registration and recognition by the tax authorities and that the factual findings by the lower authorities did not warrant interference. The High Court relied on settled principles limiting its scope to substantial questions of law and not to re-appreciation of evidence; therefore the Revenue's contention that broader constitutional or prior judicial tests required re-application in the present facts was not accepted. [Paras 8, 9]

No requirement to re-test the case under the cited constitutional-bench authority; Revenue's challenge rejected.

Final Conclusion: The appeal is dismissed; the concurrent findings of the CIT(A) and the ITAT that the assessee is charitable, that the proviso to Section 2(15) is not attracted, and that exemption under Section 11 is allowable for AY 2011-12 are upheld.

Transfer pricing - arm's length price - comparables inclusion/exclusion - functions, assets and risks (FAR) analysis - investment advisory versus portfolio management services - findings of fact and perversity - TPO, DRP and ITAT as fact-finding authorities - estimate of a broad and fair guesswork

Investment advisory versus portfolio management services - functions, assets and risks (FAR) analysis - transfer pricing - Whether the assessee rendered separate portfolio management services (PMS) requiring distinct benchmarking in addition to investment advisory services - HELD THAT: - The Court accepted the Tribunal's factual finding that there was no evidence of the assessee rendering separate PMS over and above investment advisory services. The ITAT examined the functions performed under the Investment Advisory Agreement with the Associate Enterprise and concluded that the activities alleged to be PMS were part and parcel of the investment advisory engagement; therefore no separate benchmarking for PMS was required. Given that this conclusion is a finding of fact, the questions (a) to (e) premised on asserting a distinct PMS activity were not entertainable before the High Court. [Paras 5, 9]

The challenge to the Tribunal's finding that no separate PMS needed benchmarking is not maintainable and the questions (a)-(e) cannot be entertained.

Comparables inclusion/exclusion - arm's length price - findings of fact and perversity - estimate of a broad and fair guesswork - Whether the Tribunal erred in excluding or including certain comparables (including Kinetic Trust Ltd., IDC India Ltd. and Future Capital Investment Advisors Ltd.) in the TNMM analysis - HELD THAT: - The Court held that the ITAT's conclusions on selection and exclusion of comparables are findings of fact. The Revenue failed to demonstrate that the Tribunal's analysis was perverse or contrary to settled legal principles governing comparables. The Court reiterated that determination of arm's length price through comparables involves a fact-sensitive estimate by the fact-finding authorities (TPO, DRP, ITAT) and that routine challenges to inclusion/exclusion of comparables, absent demonstration of perversity or misapplication of legal principles, do not raise substantial questions of law. [Paras 6, 7, 9]

The Tribunal's exclusion/inclusion of the suggested comparables was a permissible factual finding; the Revenue's challenge on points (f) and (g) fails for want of perversity or error in law.

Final Conclusion: The appeal is dismissed for lack of merit. The High Court upheld the ITAT's factual findings that no separate PMS required benchmarking and that the Tribunal's selection/exclusion of comparables was not perverse; the questions of law pressed by Revenue do not survive.

Credit of tax deducted at source - protection of deductee against recovery where tax has been deducted but not deposited - deductor deemed an assessee in default under Section 201 and liable for recovery - non-liability of assessee to pay tax to the extent deducted under Section 205 - precedential reliance on Om Prakash Gattani and Devarsh Pravinbhai Patel

Credit of tax deducted at source - protection of deductee against recovery where tax has been deducted but not deposited - deductor deemed an assessee in default under Section 201 and liable for recovery - non-liability of assessee to pay tax to the extent deducted under Section 205 - Whether the petitioner is entitled to credit of TDS on salary deducted by the employer for AY 2009-10 and AY 2011-12 despite the employer's failure to deposit the amounts with the Central Government, and whether recovery proceedings against the petitioner are permissible. - HELD THAT: - The Court held that the factual matrix is not in dispute and is covered by earlier decisions of this Court and the Gauhati/Bombay High Courts. Applying the principle in Om Prakash Gattani and the subsequent decision in Devarsh Pravinbhai Patel, the Court reiterated that where tax has been deducted at source by the employer, the deductee should not be subjected to recovery proceedings for the same tax merely because the deductor failed to deposit the amount. Section 201 treats the deductor as an assessee in default and permits recovery proceedings against the deductor; Section 205 prevents calling upon the assessee to pay tax to the extent the tax has been deducted. While credit under Section 199 may strictly follow deposit, those provisions together protect the deductee from being doubly saddled. In view of the identical facts, the department cannot deny the benefit of TDS to the petitioner for the relevant years; credit must be given and any sums adjusted or recovered in the interregnum must be returned with statutory interest. The Court noted that proceedings may continue against the employer, but that does not justify refusing credit to the petitioner or pursuing recovery against him. [Paras 7, 9, 11]

Petitioner is entitled to credit of the TDS deducted by his employer for AY 2009-10 and AY 2011-12; the department is precluded from denying such credit and must refund any amounts improperly recovered or adjusted with statutory interest.

Final Conclusion: Petition allowed; credit of TDS deducted by the employer for the specified assessment years shall be given to the petitioner and any recovery or adjustment made in the interim shall be refunded with statutory interest within eight weeks; proceedings, if any, may be continued against the employer.

Search and seizure scheme under section 132 of the Income-tax Act - functus officio of the authorised officer after fifteen days - invalid encashment and appropriation of seized assets without statutory authority - requirement of determination of tax liability before appropriation of seized assets under section 132B - non-curability of statutory defect by recourse to section 292B - restoration of status quo ante and revival of application under the Kar Vivad Samadhan Scheme

Invalid encashment and appropriation of seized assets without statutory authority - search and seizure scheme under section 132 of the Income-tax Act - Encashments of the seized Indira Vikas Patras (IVP's) were carried out by the Assistant Director of Income-tax (Investigation) (1st respondent) and not by the assessing officer (2nd respondent). - HELD THAT: - Ext.P2 series are letters from the 1st respondent requesting the postmaster to encash the IVP's and directing proceeds to be paid to the undersigned; Ext.P3 series notify the assessee of such encashments. The correspondence unequivocally shows the request for encashment originated from and was executed by the 1st respondent. Respondents are independent statutory authorities and one cannot be treated as acting on behalf of the other; the Single Judge's contrary finding is set aside and the court holds that the 1st respondent carried out the encashments. [Paras 11, 13, 14]

The encashments were effected by the 1st respondent.

Functus officio of the authorised officer after fifteen days - search and seizure scheme under section 132 of the Income-tax Act - invalid encashment and appropriation of seized assets without statutory authority - The encashment of IVP's by the 1st respondent was contrary to law because the authorised officer had become functus officio after fifteen days and could not lawfully retain or encash seized assets thereafter. - HELD THAT: - Section 132 (as construed and applied) requires an authorised officer who lacks jurisdiction over the person to hand over seized assets to the assessing officer within fifteen days; thereafter the authorised officer cannot retain possession or exercise powers in respect of those assets. Judicial precedents establish that retention beyond fifteen days and any order under section 132(5) by an unauthorised officer is impermissible. In this case searches concluded by 07.01.1995 and the authorised officer ceased to have lawful possession after 22.01.1995; the first encashment letter is dated 29.03.1995 (and others thereafter). Consequently the encashments were made by a person without authority and are void. [Paras 15, 18, 21, 23]

The encashments carried out by the 1st respondent after he had become functus officio were void and contrary to the statutory scheme.

Requirement of determination of tax liability before appropriation of seized assets under section 132B - invalid encashment and appropriation of seized assets without statutory authority - non-curability of statutory defect by recourse to section 292B - Adjustments of amounts realised from the IVP's against tax liabilities were illegal because appropriation towards liabilities under section 132B is permissible only after determination of liability, and the adjustments here were made before such determination; reliance on the assessee's letter or on section 292B does not cure the statutory defect. - HELD THAT: - Section 132B permits utilisation of seized assets to satisfy existing or subsequently determined liabilities, but appropriation presupposes an adjudicated liability. Assessment orders for the relevant years (except 1995-96) were passed on 23.12.1997, and adjustments from IVP proceeds occurred earlier (for 1995-96 between April 1995 and Jan 1997, and for 1994-95 in Aug and Oct 1997). Thus adjustments were effected before liability was determined and while the encashments themselves were void. Ext.R3(a), the assessee's letter, did not authorise encashment or adjustment by the 1st respondent in contravention of the statutory procedure, and section 292B cannot validate actions that violate mandatory conditions. [Paras 24, 26, 27, 29]

The adjustments of the encashed IVP proceeds against tax liabilities were illegal and void.

Restoration of status quo ante and revival of application under the Kar Vivad Samadhan Scheme - The assessee is entitled to restoration of the status quo ante as on the date of application under the KVS Scheme and revival of the claim for benefit under that scheme; the matter is remitted for fresh consideration in accordance with law. - HELD THAT: - Because the encashments and subsequent adjustments were found void and contrary to law, the consequence is that the application for benefit under the Kar Vivad Samadhan Scheme was prejudiced. The court quashes Ext.P2 and Ext.P3 (encashment documents) and Ext.P5 insofar as it relates to the listed assessment years, restores the status quo ante, and directs the tax authority to pass fresh orders on the KVS application in accordance with law, so the applicant is not penalised by delay of litigation. [Paras 31, 32]

Relief granted by restoring status quo ante and reviving the KVS application for fresh adjudication.

Final Conclusion: The encashments of the IVP's effected by the Assistant Director of Income-tax (Investigation) were carried out without legal authority after he had become functus officio; the encashments and subsequent adjustments against tax liabilities (for the assessment years 1991-92 to 1995-96) are void. Ext.P2 and Ext.P3 are quashed; Ext.P5 is quashed insofar as it relates to the listed assessment years; the appellant's application under the Kar Vivad Samadhan Scheme is revived and the respondent is directed to pass fresh orders in accordance with law.

Classification of computer software as part of tangible asset vis-a -vis intangible asset - allowability of depreciation at higher block rate for software treated as part of computer - interpretation of the Appendix entry 'computers including computer software' by contemporanea expositio - distinction between system/software integral to computer and standalone licensed application

Classification of computer software as part of tangible asset vis-a -vis intangible asset - allowability of depreciation at higher block rate for software treated as part of computer - Depreciation at 60% is allowable on the Policy Administration Software (PAS) as held by the appellate authority, rather than restricting depreciation to 25% treating it as an intangible asset. - HELD THAT: - The Tribunal affirmed the finding of the Ld. CIT(A) that the PAS fell within the scope of the Appendix entry dealing with "computers including computer software" and, therefore, depreciation at the higher rate (60%) was allowable. The authorities below were held to have correctly applied settled principles of interpretation - giving effect to the specific description in the entry and applying contemporanea expositio - and relied upon a consistent line of decisions of appellate tribunals and the Madras High Court which supported allowance of higher depreciation where software is to be regarded as part of the computer equipment for the purposes of the Appendix. The Revenue's contention that the customized PAS constituted an independent intangible (license) attracting 25% was rejected in view of those precedents and the appellate fact-finding that the software could not be ignored from the specific entry. On this basis the Tribunal found no reason to interfere with the CIT(A)'s order allowing depreciation at 60%. [Paras 6, 8, 10, 11]

The CIT(A)'s order allowing depreciation @60% on the PAS is affirmed and the Revenue's ground is dismissed.

Final Conclusion: The appeal filed by the Revenue is dismissed; the appellate order allowing depreciation at the higher rate on the Policy Administration Software for Assessment Year 2014-15 is affirmed.

Deductibility under section 43B for employer and employee contributions paid before the due date of filing return - Prospective operation of amendment by Finance Act, 2021 to section 36(1)(va) and section 43B - Principle against retrospectivity of taxation legislation - Distinction between clarificatory and substantive amendments

Deductibility under section 43B for employer and employee contributions paid before the due date of filing return - Effect of Essae Teraoka (Kar.) on deduction of PF/ESI contributions - Employees' contributions to PF/ESI paid before the due date for filing the return are allowable as deduction under section 43B for the relevant assessment year. - HELD THAT: - The Tribunal accepted the jurisprudence of the jurisdictional High Court in Essae Teraoka (P.) Ltd. v. DCIT that the term 'contribution' in the relevant provisions covers both employer and employee contributions and that where payment was made on or before the due date for furnishing return under section 139(1) the employer is entitled to deduction. The Tribunal distinguished the decision relied upon by the Revenue and, applying the Essae Teraoka view, held that the assessee who remitted employees' contribution before the due date of filing the return is entitled to the deduction. This finding led to the deletion of the disallowance in the assessment for the year in question. [Paras 8]

Disallowance in respect of employees' contribution to PF/ESI deleted and deduction granted.

Prospective operation of amendment by Finance Act, 2021 to section 36(1)(va) and section 43B - Distinction between clarificatory and substantive amendments - Principle against retrospectivity of taxation legislation - Amendments made by the Finance Act, 2021 to section 36(1)(va) and section 43B are prospective in operation and do not apply to the assessment year before 2021-22. - HELD THAT: - The Tribunal examined whether the Finance Act, 2021 amendments were clarificatory or substantive. Applying the principle that legislation is presumed prospective unless a contrary intent is clear, and having regard to the jurisdictional High Court decision in Essae Teraoka which afforded deduction where payment was made before the return due date, the Tribunal concluded the amendments operate to alter the earlier position of law adversely to assessees and therefore cannot be treated as retrospective. The Tribunal also relied on the Memorandum explaining the Finance Bill, 2021 which expressly stated the amendment would take effect from 1 April 2021 and apply to AY 2021-22 onwards, reinforcing the prospective character. The Tribunal distinguished the Supreme Court authority relied upon by the Revenue as inapposite on the facts and legislative context. [Paras 8]

Amendments by Finance Act, 2021 held prospective and not applicable to AY 2018-2019.

Final Conclusion: The appeal is allowed: the Tribunal held that (i) employees' contributions to PF/ESI paid before the due date for filing the return are deductible under section 43B for AY 2018-2019, and (ii) the Finance Act, 2021 amendments to section 36(1)(va) and section 43B are prospective (effective 1.4.2021) and therefore do not apply to the assessment year before the Tribunal; the assessing officer is directed to delete the disallowance.

Arm's length price - Transfer Pricing adjustment - Verification of receipt of services - Necessity of expenditure versus evidentiary proof - Transactional Net Margin Method (TNMM) aggregation - Determination of NIL ALP for management fees - Disallowance of grossed-up TDS paid on behalf of Associated Enterprise

Arm's length price - Transfer Pricing adjustment - Verification of receipt of services - Determination of NIL ALP for management fees - Necessity of expenditure versus evidentiary proof - Transactional Net Margin Method (TNMM) aggregation - Validity of transfer pricing adjustment treating management fees paid to the Associated Enterprise as having NIL arm's length price and consequent disallowance. - HELD THAT: - The Tribunal examined the managerial services agreement and the contemporaneous material before the authorities and found the agreement to be a broad, need based document lacking specific documentation of services actually rendered. The agreement's allocation keys linked fees to group sales rather than to demonstrable services and contained no protective clauses for the beneficiary in case of deficiency of service. Clause 2.7 required substantiation of costs by documentary evidence (trips, meetings, work performed), but the assessee filed only the agreement, invoices and limited e mail samples which, on scrutiny, were general and did not demonstrate the rendering of managerial or technical services. The Tribunal held that testing aggregate international transactions by TNMM does not obviate the need to verify, by evidence, that a particular expenditure was genuinely incurred and services were actually provided. While acknowledging the principle that the AO/TPO cannot ordinarily question a business decision to incur expenditure, the Tribunal emphasised that the AO/TPO retains power to examine genuineness and evidentiary support for the expenditure. On the cumulative findings of lack of substantiation and the nature of the agreement, the Tribunal sustained the TPO/DRP conclusion that the management fee transaction lacked evidence of actual services and that the arm's length price for that transaction is NIL; accordingly, the transfer pricing adjustment and resultant addition were upheld. [Paras 9, 10, 11, 12, 13]

Upheld the TPO/DRP in treating management fees as having NIL arm's length price and dismissed the assessee's grounds challenging the TP adjustment for AY 2012-13 (and, by identical reasoning, for AY 2013-14).

Disallowance of grossed-up TDS paid on behalf of Associated Enterprise - Verification of contractual obligation - Deductibility of expenditure under general principles - Permissibility of deducting the grossed-up portion of TDS (paid on interest on External Commercial Borrowings) as expenditure where TDS was borne and remitted by the assessee on behalf of the lender/Associated Enterprise. - HELD THAT: - The Tribunal considered the loan agreement which allocated any tax liability on interest to the lender while obliging the borrower to deduct and remit tax under Indian law and furnish proof to the lender. The assessee had grossed up the interest payment to account for TDS it remitted and claimed the grossed-up amount as a deductible expense. The Tribunal found this procedure inconsistent with the contractual terms and with the legal position: the TDS liability was that of the lender, and the borrower's statutory duty was limited to deduction and remittance with production of evidence. The assessee's grossing up effectively altered the contractual and legal allocation of liability and was therefore not allowable; the TPO/DRP disallowance of the grossed-up TDS portion was sustained. [Paras 17, 18, 19, 20, 21]

Upheld the TPO/DRP in disallowing the grossed-up portion of TDS on interest paid on ECBs and dismissed the assessee's ground on this issue for AY 2013-14.

Final Conclusion: Both appeals are dismissed: the Tribunal sustained the transfer pricing adjustment treating the management fees as unsupported by evidence and having NIL arm's length price (affecting AY 2012-13 and 2013-14), and upheld the disallowance of the grossed-up TDS on ECB interest for AY 2013-14.

Revisional power under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of revenue - Requirement of enquiry and verification by Assessing Officer - Scope of Explanation 2 to section 263 - Distinction between no enquiry and inadequate enquiry

Revisional power under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of revenue - Requirement of enquiry and verification by Assessing Officer - Distinction between no enquiry and inadequate enquiry - Scope of Explanation 2 to section 263 - Validity of the Principal Commissioner of Income Tax's order under section 263 setting aside the assessment for being erroneous and prejudicial to the revenue on the ground of lack of enquiry - HELD THAT: - The Tribunal examined whether the PCIT was justified in invoking revisional jurisdiction under section 263 on the ground that the assessing officer had passed the assessment without making requisite enquiries or verification. The record showed that the AO had issued specific notices during assessment, called for documents and particulars, and had received point wise replies and supporting documents from the assessee which were considered before passing the assessment. The Tribunal applied the settled two fold test that the revisional authority must be satisfied that the order is (i) erroneous and (ii) prejudicial to the interests of the revenue, observing that section 263 cannot be used to correct every alleged mistake of the AO. Reliance placed by the Tribunal on earlier authorities was noted as establishing that revisional power is to be exercised in cases of no enquiry rather than merely for inadequate enquiry. The Tribunal further observed that Explanation 2 to section 263 does not confer unfettered power on the commissioner to reopen every order merely on his view that enquiries which could have been made were not made. Applying these principles to the facts, the Tribunal concluded that the AO had applied his mind and made enquiries called for by the issues relied upon by the PCIT; therefore the PCIT's finding of lack of enquiry was contrary to the material on record and the order under section 263 was not sustainable.

The order passed by the PCIT under section 263 setting aside the assessment was quashed and the appeal of the assessee was allowed.

Final Conclusion: The Tribunal set aside the revisional order passed under section 263 as the Assessing Officer had conducted requisite enquiries and applied his mind; Explanation 2 does not permit unfettered revision where the AO's order is not ex facie erroneous, and accordingly the PCIT's order was held bad in law.

Levy of late fee under section 234E - computation and intimation of fee under section 234E via section 200A - prospective operation of amendment to section 200A w.e.f. 01.06.2015 - constitutional validity of section 234E

Levy of late fee under section 234E - computation and intimation of fee under section 234E via section 200A - prospective operation of amendment to section 200A w.e.f. 01.06.2015 - Validity of intimation/demand under section 200A for computing and levying fee under section 234E in respect of TDS statements relating to periods prior to 01.06.2015 and consequent sustainability of the levy of fee u/s.234E for the assessment years before 2015-16. - HELD THAT: - The Tribunal analysed the statutory scheme and precedent holdings and held that the mechanism for computation and intimation of the fee under section 234E by invoking section 200A was introduced with effect from 01.06.2015. Relying on the reasoning in Fatheraj Singhvi (Karnataka High Court) and subsequent coordinate decisions, the Tribunal concluded that the substitution/amendment enabling computation and demand under section 200A must be given prospective effect and could not be used to make demands for periods prior to 01.06.2015. The Hon'ble Bombay High Court decision in Rashmikant Kundalia upheld the constitutional validity of section 234E but did not address retrospective operation of the mechanism under section 200A; therefore it did not assist the Revenue on the specific point of retrospective intimation/demand. Applying these principles to the facts, the Tribunal held that intimations issued under section 200A for fee under section 234E insofar as they relate to tax-deduction periods before 01.06.2015 are without authority of law and must be set aside, and directed deletion of the levy of fee u/s.234E for the assessment years in question. [Paras 9, 10, 11]

The intimations/demands under section 200A for computation and payment of fee under section 234E in respect of periods prior to 01.06.2015 are without authority and the levy of fee u/s.234E is deleted; the appeals for AY 2013-14 and AY 2014-15 are allowed.

Final Conclusion: Appeals allowed: levy of late fee under section 234E deleted for the assessment years 2013-14 and 2014-15 as intimations under section 200A for periods prior to 01.06.2015 were held to be without authority; the question of constitutional validity of section 234E was left open.

Registration under section 12A/12AA - Section 12A(1)(ab) - application triggered by adoption of modifications of objects which do not conform to conditions of registration - charitable purpose and proviso to Section 2(15) - distinction between object and power of an institution - Section 13(8) - year to year denial of exemption where proviso to Section 2(15) applies - cancellation of registration under section 12AA(3)

Section 12A(1)(ab) - application triggered by adoption of modifications of objects which do not conform to conditions of registration - distinction between object and power of an institution - Whether the amended Memorandum of Association of the assessee amounted to modifications of its objects which do not conform to the conditions of the original registration so as to attract Section 12A(1)(ab). - HELD THAT: - Section 12A(1)(ab) is engaged only when an institution that previously obtained registration adopts or undertakes modifications of its objects that do not conform to the conditions on the basis of which registration was originally granted. The Tribunal compared the pre amendment MoA (28.11.1940) and the post Lodha/2018 MoA and found no material change that is contrary to the fundamental object of promoting the game of cricket. Changes approved to further transparency, governance and public interest cannot be equated with objects that are not in conformity with the original registered objects. The Principal Commissioner exceeded the limited jurisdiction conferred by Section 12A(1)(ab) by venturing beyond the objects to examine powers and activities; the power to conduct IPL (even if remunerative) is a power ancillary to the core object and not a change in object. Therefore the foundational condition precedent for invoking Section 12A(1)(ab) was not satisfied on the facts of this case, and there was no occasion for the Principal Commissioner to reject the registration application on that statutory ground. [Paras 18, 19, 21, 23, 24]

Section 12A(1)(ab) did not get triggered because the amendments did not result in objects that were not in conformity with the original objects; the Principal Commissioner erred in declining registration on that basis.

Charitable purpose and proviso to Section 2(15) - Section 13(8) - year to year denial of exemption where proviso to Section 2(15) applies - registration under section 12A/12AA - Whether attraction of the proviso to Section 2(15) (commercial/business character of certain activities) is a valid ground for refusing or withdrawing registration under Section 12A/12AA. - HELD THAT: - The proviso to Section 2(15) operates on a year to year basis and, where triggered, leads to denial of exemption for that previous year by virtue of Section 13(8). The statutory scheme contemplates that the remedy for commercial receipts exceeding the specified threshold is denial of exemption for the relevant year(s), not denial or cancellation of registration which is a one time exercise. Allowing the proviso to affect grant or continuation of registration would render complementary provisions (notably Section 13(8)) redundant and produce unworkable and inequitable results. The Tribunal, following co ordinate authority, held that considerations under the first proviso to Section 2(15) are extraneous to the exercise of deciding registration under Section 12A/12AA and cannot justify refusal of registration in the present case. The Principal Commissioner's reliance on the proviso to Section 2(15) to reject the application was therefore legally unsustainable. [Paras 25, 26, 28]

Proviso to Section 2(15) is not a relevant consideration for grant or denial of registration under Section 12A/12AA; the refusal of registration based on that proviso was unsustainable.

Final Conclusion: The Tribunal quashed the Principal Commissioner's order rejecting the application for registration: the amendments to the MoA did not amount to changes in objects not conforming to the original registration and the proviso to Section 2(15) is not a valid ground to refuse or withdraw registration under Section 12A/12AA; accordingly the assessee's original registration dated 12 February 1996 continues in force and the appeal is allowed.

Section 68 - cash credits - identity, genuineness and creditworthiness - onus of proof - non-compliance of summons under section 131 not sufficient for adverse inference - reopening of investors' assessments as alternative remedy - prospective operation of proviso to section 68 (Finance Act, 2012) - requirement of satisfaction by the Assessing Officer before taxing as unexplained income - limitation extension due to COVID-19 (Supreme Court orders)

Section 68 - cash credits - identity, genuineness and creditworthiness - onus of proof - non-compliance of summons under section 131 not sufficient for adverse inference - reopening of investors' assessments as alternative remedy - requirement of satisfaction by the Assessing Officer before taxing as unexplained income - Addition of Rs. 5,91,00,000 treated as unexplained cash credit under section 68 and sustained by lower authorities. - HELD THAT: - The Tribunal held that the assessee had discharged the primary onus under section 68 by producing PAN/ITR acknowledgments, audited accounts, bank statements and other documents establishing the identity of each subscriber, the genuineness of the transactions (through banking channels) and the creditworthiness/networth of the subscriber companies. The AO did not point out any defect in those documents, nor prepared any money trail or produced evidence to show that the funds originated from the assessee; instead he proceeded on the sole ground that some summons under section 131 were not complied with or not served. The Tribunal applied settled precedents that non-compliance of summons by the alleged creditors is not by itself sufficient to draw an adverse inference against the assessee and that where shareholders are identifiable and assessed to tax the proper course is to investigate or reopen their assessments rather than treat the amounts as the assessee's undisclosed income. The proviso to section 68 introduced by Finance Act, 2012 operates prospectively from AY 2013-14 and was not applicable to AY 2012-13. The CIT(A)'s deletion was therefore sustained and the AO's addition, being founded on conjecture and without independent enquiry or cogent material, was set aside.

Addition of Rs. 5,91,00,000 under section 68 deleted; appeal of the Revenue dismissed and assessee's appeal allowed.

Limitation extension due to COVID-19 (Supreme Court orders) - Maintainability of the appeal filed after statutory period. - HELD THAT: - The Tribunal treated the appeal as within time by applying the Supreme Court's suo motu orders excluding the period from 15.03.2020 to 14.03.2021 and granting further days thereafter; the delay of 74 days in filing the appeal was therefore condoned and the appeal was entertained on merits.

Delay in filing the appeal is excused by the Supreme Court's limitation exclusion orders; the appeal is treated as filed within limitation.

Final Conclusion: The Tribunal, applying settled principles on section 68 and relevant precedents and construing the temporal inapplicability of the 2012 proviso, sustained the deletion of the addition of Rs. 5.91 crores for AY 2012-13 and dismissed the Revenue's appeal; the assessee's appeal is allowed. The appeal was entertained as within time after applying the Supreme Court's COVID-19 limitation orders.

Speaking document - dumb document - presumption under section 132(4A) - corroborative evidence requirement for seized documents - onus shifting and rebuttable presumption - need for investigation and correlation to fill gaps in seized documents - assessment additions based on seized papers

Speaking document - dumb document - corroborative evidence requirement for seized documents - presumption under section 132(4A) - Validity of additions made in A.Y. 2011-12 on the basis of seized loose papers/diary entries - HELD THAT: - The Tribunal analysed whether the seized loose papers were sufficiently descriptive to be treated as speaking documents capable of sustaining additions. It held that the documents lacked essential particulars - specific identification of properties, dates, parties, sequential receipts/payments and corroborative title or transaction documents - and therefore could not speak on their own. Post search enquiries to the Sub Registrar/Tehsildar and other investigations did not yield registered sale deeds, agreements to sell or power of attorney documents connecting the assessee to the alleged transactions, nor was any unaccounted cash or valuable seized that corroborated the notings. The Tribunal applied the principle that the statutory presumption under section 132(4A) is rebuttable and that where gaps exist in the four components of a charge (nature of transaction, person, assessment year/period and quantum) those gaps must be filled by investigation and corroborative material; absent such corroboration, additions based on dumb documents are unsustainable. On these grounds the Tribunal concluded that the additions made by the Assessing Officer were founded on presumption and conjecture and could not be sustained, and therefore deleted the additions which the CIT(A) had partly sustained (including the amount sustained at first appeal).

Additions in A.Y. 2011-12 made solely on the basis of the seized loose papers are deleted for want of speaking documents and corroborative evidence; the Assessing Officer's additions are set aside.

Assessment additions based on seized papers - need for investigation and correlation to fill gaps in seized documents - onus shifting and rebuttable presumption - Validity of departmental appeal for A.Y. 2007-08 challenging deletion of addition - HELD THAT: - The facts and legal principles in the appeal for A.Y. 2007-08 were identical to those in A.Y. 2011-12. The Tribunal applied the same reasoning: the seized records were not corroborated by registered sale deeds, agreements or other material establishing that the notings materialized into actual transactions attributable to the assessee; no power of attorney or other documentary link was found during search or subsequent enquiries. In the absence of corroborative evidence and with the presumption under section 132(4A) being rebuttable, the Tribunal found that additions based on the seized papers could not be sustained and that the first appellate authority's deletion of the addition was correct. Consequently the revenue's grounds of appeal were dismissed.

Revenue's appeal for A.Y. 2007-08 is dismissed and the deletion of the addition is upheld.

Final Conclusion: Applying settled principles that a seized document must be a loud, clear and unambiguous speaking document or be supported by corroborative investigation to sustain tax additions, the Tribunal found the seized loose papers in these matters to be non speaking and the statutory presumption rebutted; accordingly the departmental appeals are dismissed and the assessee's appeal is allowed.

Disallowance under section 40(a)(ia) for failure to deduct TDS on payments to subcontractors - estimation of income by adopting a reasonable gross profit percentage where books/claims are not fully acceptable - assessment completed under section 144 (ex parte assessment)

Disallowance under section 40(a)(ia) for failure to deduct TDS on payments to subcontractors - Whether expenditure claimed for payments to subcontractors must be disallowed where no TDS was deducted and the Assessing Officer proceeded under section 144 without complete particulars. - HELD THAT: - The Tribunal affirmed the CIT(A)'s conclusion that payments made to subcontractors which attracted tax deduction at source but on which TDS was not deducted fall within the ambit of section 40(a)(ia). The CIT(A) had accepted the assessee's concession that the provision was applicable and therefore directed the Assessing Officer to quantify the disallowance under section 40(a)(ia) after the assessee furnishes particulars of payments to individual subcontractors. The Tribunal held that the CIT(A) considered the overall facts and granted partial relief by requiring computation of the actual disallowable amount rather than confirming the entire addition made in the ex parte assessment; that conclusion was affirmed as reasonable and no contrary material was shown to justify reversing it. [Paras 11]

The CIT(A)'s direction to apply section 40(a)(ia) and to have the AO work out the actual disallowable amount after the assessee furnishes details is affirmed and the revenue's challenge on this ground is dismissed.

Estimation of income by adopting a reasonable gross profit percentage where books/claims are not fully acceptable - Whether the Assessing Officer was justified in disallowing entire purchases where sales are recorded, and whether the CIT(A)'s ordering of a 3% gross profit estimate was appropriate. - HELD THAT: - The Tribunal agreed with the CIT(A)'s approach that the Assessing Officer erred in disallowing the entire purchases despite recorded sales. The CIT(A) examined comparable decisions and facts, noted the assessee's low reported gross and net profit ratios and the absence of own infrastructure, and in the interest of justice directed the AO to adopt a 3% gross profit for computation of taxable income. The Tribunal found this restriction sufficient to guard revenue interest and affirmed the CIT(A)'s direction, rejecting the revenue's plea to restore the AO's complete disallowance. [Paras 12]

The CIT(A)'s direction to adopt 3% gross profit for computing taxable income in place of the AO's disallowance of entire purchases is affirmed and the revenue's ground is dismissed.

Final Conclusion: Having considered the orders of the lower authorities and the submissions of the Departmental Representative, the Tribunal dismissed both revenue appeals and affirmed the CIT(A)'s directions: (i) application of section 40(a)(ia) with quantification by the AO after receipt of particulars, and (ii) adoption of 3% gross profit for computing taxable income, thereby rejecting the Assessing Officer's complete additions.

Summary order. Writ petition issued notice returnable on 08.12.2021; respondents to file affidavit in DRI and be served with extra copies by 16.11.2021; interim relief to be considered on the returnable date.

Condonation of delay - sufficient cause - law of limitation - duty credit scrip under the Incremental Export Incentivisation Scheme - interpretation of Notification No.43 dated 25.09.2013 - claims in excess of prescribed limit subject to greater scrutiny

Condonation of delay - sufficient cause - law of limitation - Application for condonation of delay of 921 days in filing the Letters Patent Appeal was not maintainable and is liable to be dismissed. - HELD THAT: - The Court found an unexplained delay of approximately one year between pronouncement of the impugned judgment (25.02.2019) and the commencement of the nationwide lockdown (25.03.2020), and held that the reasons advanced - pendency of an SLP in a related matter and internal governmental processes - do not constitute a "sufficient cause" to excuse that period of inaction. Reliance was placed on established principles that condonation of delay is an exception requiring adequate explanation and that government departments must demonstrate reasonable and acceptable reasons for delay; mere bureaucratic procedure, pendency of other proceedings, or general reference to file movements is inadequate. Applying those principles, the Court concluded that the appellants had slept over their rights, failed to act with requisite diligence, and thus could not be permitted relief. The Court therefore declined to examine the merits of the appeal. [Paras 8, 11, 12]

Application for condonation of delay dismissed; appeal dismissed for delay without adjudication on merits.

Final Conclusion: The application to condone 921 days' delay is rejected for lack of sufficient cause, and the Letters Patent Appeal is dismissed on the ground of inordinate and unexplained delay; the Court did not proceed to decide the substantive merits of the challenge to the Notification.

Confiscation under section 111(f) of Customs Act, 1962 - locus standii of intended importer to challenge import manifest / seek amendment - distinction between liability of person-in-charge of conveyance (or agent) and importer - vesting of confiscated goods in Central Government under section 126 of Customs Act, 1962 - amendment of Import General Manifest

Locus standii of intended importer to challenge import manifest / seek amendment - confiscation under section 111(f) of Customs Act, 1962 - amendment of Import General Manifest - Whether the appellant, as the intended importer, had locus to challenge the confiscation under section 111(f) and to seek amendment of the relevant line in the Import General Manifest. - HELD THAT: - The Tribunal held that proceedings under the manifest provisions and confiscation under section 111(f) are directed at the person-in-charge of the conveyance or its agent; an importer who has not completed statutory steps of clearance stands outside that statutory relationship. The decision in Vallabh Wool Industries was relied upon to distinguish liability of the importer from that of the person-in-charge/agent where no evidence linked the importer to the manifest irregularity. The appellant's claimed commercial entitlement to the goods arises from its private contract with the shipper and cannot erase or displace the statutory liability of the person-in-charge or agent. Consequently the appellant has no statutory locus to obtain a remedy that would affect liability or erase the consequences of confiscation imposed on the person-in-charge/agent, and its request for amendment of the manifest could not be entertained. [Paras 6, 7, 8]

The appellant, as intended importer, lacked locus to have the confiscation quashed or to compel amendment of the Import General Manifest.

Vesting of confiscated goods in Central Government under section 126 of Customs Act, 1962 - confiscation under section 111(f) of Customs Act, 1962 - Whether, having been confiscated, the goods could be the subject of relief in favour of the appellant given vesting under section 126. - HELD THAT: - The Tribunal held that confiscation vests title to the goods in the Central Government under section 126, thereby precluding any alteration of ownership or alienation in favour of a private party regardless of pre-existing commercial arrangements. Since title had vested in the Central Government, the appellant's claim to be permitted to file a bill of entry or to obtain amendments to the manifest that would enable clearance could not be entertained. [Paras 9]

Once confiscated, the goods vested in the Central Government and the appellant's claim for recognition of entitlement or for amendment enabling clearance was not maintainable.

Final Conclusion: The appeal was dismissed: the intended importer had no statutory locus to challenge the confiscation or to seek amendment of the Import General Manifest, and confiscation had vested title in the Central Government, precluding the relief sought.

Duty to transact business personally or through an authorised employee - maintenance of up-to-date records and KYC obligations of a Customs Broker - verification of importer-exporter credentials and documents - vicarious liability of Customs Broker for acts or omissions of its employees - scope of Regulation 10(d) - no duty to assess correct value of goods - revocation of Customs Broker licence for regulatory contraventions and supervisory failures

Duty to transact business personally or through an authorised employee - Appellant violated Regulation 10(b) by allowing a person who was neither a licensed Customs Broker nor its employee to carry out carting and transact business at the Customs station. - HELD THAT: - The Tribunal accepted the inquiry finding that carting of goods and related transactions in the Customs station were performed by Shri Inder Prakash Kohli, who was neither the appellant nor its employee nor the exporter. Regulation 10(b) requires transactions in the Customs station to be done personally or through an authorised employee approved by the proper officer. Allowing an unauthorised third party to transact at the Customs station undermines the regulatory scheme and facilitates fraud; therefore the factual matrix established a breach of Regulation 10(b). [Paras 14]

Violation of Regulation 10(b) is upheld.

Scope of Regulation 10(d) - no duty to assess correct value of goods - Appellant did not violate Regulation 10(d); Regulation 10(d) does not impose on the Customs Broker an obligation to assess or know the correct market value of the goods. - HELD THAT: - Regulation 10(d) obliges the Customs Broker to advise clients to comply with statutory provisions and to bring non-compliance to the notice of the appropriate officer. The Tribunal found no material to show that the appellant was aware of the exporter's mis-declarations or that it failed to bring any known non-compliance to the attention of Customs. The Court observed that CBLR, 2018 does not require the Customs Broker to determine the correct value of the goods; mere over-invoicing by the exporter, without evidence of the broker's knowledge or willful non-reporting, does not constitute a breach of Regulation 10(d). [Paras 15]

No violation of Regulation 10(d) is made out.

Maintenance of up-to-date records and KYC obligations of a Customs Broker - Appellant violated Regulation 10(k) by failing to maintain and produce KYC documents and required records in an orderly and itemised manner. - HELD THAT: - Regulation 10(k) requires Customs Brokers to maintain up-to-date records including KYC and correspondence. The inquiry and subsequent proceedings revealed that the G-card holder claimed KYC documents had been received by email but failed to produce them at any stage. Neither the partner nor the authorised employee knew the exporter. The absence of produced records and the appellant's inability to identify or verify the exporter led to the finding that records were not maintained as required, constituting a breach of Regulation 10(k). [Paras 16]

Violation of Regulation 10(k) is upheld.

Verification of importer-exporter credentials and documents - Appellant violated Regulation 10(n) by failing to verify the correctness of IEC, GSTIN, identity of the client and functioning at the declared address using reliable documents. - HELD THAT: - Regulation 10(n) mandates verification of IEC, GSTIN and client identity by independent, authentic means. The record shows the appellant did nothing beyond accepting documents allegedly provided by Shri Kohli, did not contact the exporter, and produced no KYC documents. While Brokers are not required to personally visit every exporter, they must obtain and verify KYC and conduct basic due diligence. The absence of such due diligence, together with the undisputed overvaluation in shipping bills, supports the conclusion that Regulation 10(n) was contravened. [Paras 17]

Violation of Regulation 10(n) is upheld.

Vicarious liability of Customs Broker for acts or omissions of its employees - Appellant is vicariously liable under Regulation 13(12) for the acts and omissions of its authorised employee who filed the shipping bills. - HELD THAT: - Regulation 13(12) requires a Customs Broker to exercise necessary supervision over employees and makes the broker responsible for acts or omissions of employees during employment. The Tribunal noted the appellant had appointed the G-card holder with power of attorney to operate in Mumbai; the shipping bills were filed by that authorised person. Removal of the employee after detection of malpractice does not negate vicarious liability. Given the employee filed overvalued shipping bills without due diligence, the appellant is responsible for those acts under Regulation 13(12). [Paras 18]

Appellant held vicariously liable under Regulation 13(12).

Final Conclusion: The Tribunal upheld the impugned order to the extent of finding contraventions of Regulations 10(b), 10(k), 10(n) and responsibility under Regulation 13(12), but set aside the finding of violation of Regulation 10(d); the appeal is rejected and the revocation and ancillary measures are sustained insofar as they rest on the upheld breaches.

Jurisdiction of the proper officer under Section 28 - power of re assessment/recovery as administrative review - validity of show cause notices issued by Directorate of Revenue Intelligence - segregability of duty demand from confiscation and penalty - survival of proceedings under Section 124 when Section 28 demand fails

Jurisdiction of the proper officer under Section 28 - validity of show cause notices issued by Directorate of Revenue Intelligence - power of re assessment/recovery as administrative review - Whether the Additional Director General, DRI was a competent "proper officer" to issue show cause notice under Section 28 and initiate recovery proceedings. - HELD THAT: - The Tribunal applied the Supreme Court's reasoning in Canon India, holding that the power conferred by Section 28 to determine duty not levied or short paid is in the nature of an administrative review and must be exercised by "the proper officer" who made the original assessment or his successor or an officer specifically entrusted with assessment functions. An officer of DRI, including the Additional Director General, who neither made the original assessment nor was shown to have been appointed or entrusted under Section 6 as a Customs officer performing assessment functions, cannot be treated as "the proper officer" under Section 28. Consequentially, proceedings initiated by issuance of a show cause notice by the Additional Director General, DRI are without authority of law and liable to be set aside. [Paras 6, 15]

Show cause notice issued by the Additional Director General, DRI under Section 28 was without jurisdiction; proceedings based on that notice are invalid.

Segregability of duty demand from confiscation and penalty - survival of proceedings under Section 124 when Section 28 demand fails - Whether proposals for confiscation and imposition of penalty (including under Section 112/114/114A/114AA/111/124) can survive independently when the duty demand founded on the show cause notice fails for want of jurisdiction. - HELD THAT: - Relying on Tribunal precedent in Bakeman's Home Products and the line of authority that the question of penalty or confiscation ordinarily arises only if the Department can sustain the demand of duty, the Tribunal held that proposals for confiscation and penalty are so interlinked with the duty demand that they cannot be sensibly segregated. Since the foundational demand under Section 28 was set aside as issued without jurisdiction by DRI, the attendant proposals for confiscation and penalties based on the same show cause notice cannot survive. [Paras 18, 19]

Proceedings for confiscation and imposition of penalty founded on the invalid Section 28 show cause notice do not survive and must be set aside.

Validity of show cause notices issued by Directorate of Revenue Intelligence - deferment pending review petition - Whether the Tribunal should defer hearing because the Department has filed a review petition in the Supreme Court against Canon India. - HELD THAT: - The Tribunal considered the Department's submission seeking adjournment pending the outcome of its review petition in Canon India and noted judicial precedent (including the Karnataka High Court) declining to defer in similar circumstances. The Tribunal declined to postpone the hearing and proceeded to apply the existing Supreme Court authority. [Paras 16]

Request to defer hearing pending the Department's review petition was rejected; the appeal was decided in light of existing Supreme Court authority.

Final Conclusion: The order dated 29.03.2019 of the Commissioner of Customs (Import) is set aside: the show cause notice issued by the Additional Director General, DRI under Section 28 was without jurisdiction, and the consequent demand, confiscation and penalty proceedings founded on that notice cannot be sustained; the appeals are allowed.

Imposition of penalty under Regulation 12(8) of Handling Cargo in Customs Area Regulation, 2009 - penalty under Section 117 of the Customs Act, 1962 - custodian's obligations under Section 45 of the Customs Act - compliance with Handling of Cargo in Customs Area Regulations (HCCAR), 2009 - validity of a public notice restricting handling of hazardous cargo - effect of directions issued by a competent civil authority and interim order of the High Court

Imposition of penalty under Regulation 12(8) of Handling Cargo in Customs Area Regulation, 2009 - penalty under Section 117 of the Customs Act, 1962 - compliance with Handling of Cargo in Customs Area Regulations (HCCAR), 2009 - Whether penalties imposed on the appellant under Regulation 12(8) of HCCAR, 2009 and under Section 117 of the Customs Act were justified for alleged violations of HCCAR and the Customs Act. - HELD THAT: - The Tribunal found that the appellant acted bona fide in issuing the public notice and in moving containers containing hazardous goods under directions of the competent civil authority (SDM), directions which received interim consideration by the High Court. The record shows the appellant is the statutory custodian under Section 45 and had disaster-management measures, bonds and other safeguards in place; the High Court's orders and subsequent enquiry acknowledged precautions taken and remanded for further consideration. On the facts and in view of the SDM's direction and the High Court's interim observations, the Tribunal held there was no violation of HCCAR or the Customs Act warranting the impugned penalties. The penalty order was therefore set aside and the appellant held entitled to consequential benefits. [Paras 22]

Impugned penalties under Regulation 12(8) of HCCAR, 2009 and under Section 117 of the Customs Act are set aside.

Custodian's obligations under Section 45 of the Customs Act - validity of a public notice restricting handling of hazardous cargo - effect of directions issued by a competent civil authority and interim order of the High Court - Whether the appellant's public notice restricting acceptance/handling of hazardous cargo at ICD Tughlakabad and related actions were lawful and in compliance with statutory obligations. - HELD THAT: - The Tribunal accepted that the public notice dated 16.05.2017 was issued in bona fide compliance with directions of the SDM aimed at local public safety and that the appellant informed and acted with awareness of Customs and in light of the High Court's interim proceedings. The Tribunal noted the High Court's findings and remand, its recognition of CONCOR's disaster management measures and that a small proportion of containers contained hazardous goods. On that basis the Tribunal held the appellant's issuance of the public notice and associated measures did not constitute unlawful removal or breach of statutory duties under HCCAR/Customs Act. [Paras 22]

The public notice and actions taken by the appellant in the circumstances were lawful and did not amount to violation of HCCAR or the Customs Act.

Final Conclusion: The appeal is allowed; the Tribunal set aside the penalty imposed under Regulation 12(8) of HCCAR, 2009 and the penalty under Section 117 of the Customs Act, holding that the appellant acted bona fide pursuant to directions of the SDM and in the context of interim High Court proceedings, and is entitled to consequential relief in accordance with law.

Grant of bail in non-bailable economic offences - cooperation with investigation as condition for bail - bail not to be withheld as punishment - absence of continued/pending investigation as ground for bail refusal - risk of tampering with evidence and obstruction to investigation

Grant of bail in non-bailable economic offences - absence of continued/pending investigation as ground for bail refusal - cooperation with investigation as condition for bail - risk of tampering with evidence and obstruction to investigation - Accused entitled to bail under section 437 Cr.P.C. - HELD THAT: - The court found that the primary ground advanced for refusal of bail - non-cooperation with investigation - was not borne out by the record. Documents show the accused responded to summonses, sought certain documents from the department and had made arrangements to travel to Bangalore for appearance; his arrest on the date he intended to appear negated the prosecution's assertion of wilful non-cooperation. The questioned idol had been seized and examined, and the investigation did not appear to be ongoing in a manner that would be hampered by release; no material was placed before the court to establish that bail would lead to tampering with evidence or obstruction of investigation. While economic offences are serious, there is no absolute rule to deny bail in such cases; bail is not to be withheld as a measure of punishment and must be exercised judicially having regard to the facts. Weighing these factors, and noting the accused's willingness to abide by conditions, the court concluded bail should be granted subject to protective conditions to ensure attendance and cooperation. [Paras 6, 8, 10, 11, 12]

Bail allowed; accused released on personal bond and surety/cash with conditions including cooperation with investigation, production of documents, furnishing contact particulars, prohibition on committing similar offences and restriction on leaving India without court permission.

Final Conclusion: Bail application under section 437 Cr.P.C. allowed; accused released on specified bond and surety/cash subject to enumerated conditions to secure cooperation and attendance.

Look-out Circular - quashing of LOC - extension and renewal of LOC - flight risk - cooperation with investigation - economic interests of India - larger public interest - investigation by Serious Fraud Investigation Office under Chapter XIV of the Companies Act - procedural validity of LOC under the Guidelines dated 22 February 2021

Look-out Circular - investigation by Serious Fraud Investigation Office under Chapter XIV of the Companies Act - economic interests of India - larger public interest - Validity of issuing a Look-Out Circular against the petitioner in the course of the SFIO investigation - HELD THAT: - The Court held that issuance of an LOC by the Serious Fraud Investigation Office in the present facts was not unwarranted. The SFIO was investigating complex, large-scale alleged frauds involving Gitanjali Gems Limited and related entities, and the petitioner's significant share transactions (including purchases and sales of convertible warrants/shares) formed part of transactions that the SFIO alleges were routed through other persons, including an absconding accused. The scale, complexity and cross-border aspects of the alleged fraud engage the economic interests of India and the larger public interest, and the petitioner has a demonstrable connection to the subject-matter of the investigation. Attendance at the SFIO office on discrete occasions did not, in the view of the Court, establish complete cooperation sufficient to negate the investigative need for the LOC; mere physical attendance does not preclude further evidentiary or explanatory requirements. On these grounds the Court found the decision to issue the LOC to be justified and not arbitrary. [Paras 21, 22, 32]

Issuance of the LOC against the petitioner was valid and justified in the context of the SFIO investigation.

Extension and renewal of LOC - procedural validity of LOC under the Guidelines dated 22 February 2021 - Whether the original LOC expired automatically after one year and whether its subsequent renewal was lawful - HELD THAT: - The Court examined the evolution of the Bureau of Immigration Guidelines, including the Office Memorandum of 22 February 2021. Clause (J) of those Guidelines provides that an LOC shall remain in force until a deletion request is received from the originator and that no LOC shall be deleted automatically; originators must review and, if appropriate, seek deletion. The LOC in question was issued on 8 September 2020 and was renewed on 2 September 2021 pursuant to the post-issuance Guidelines. The Court concluded that extension/renewal in these circumstances, following the procedural framework in the Guidelines, was not unlawful and did not amount to an impermissible retrospective alteration of rights such as to invalidate the renewed LOC. [Paras 33]

The LOC did not lapse automatically after one year and its renewal under the 22 February 2021 Guidelines was procedurally valid.

Flight risk - cooperation with investigation - Whether the petitioner posed a flight risk and whether that justified refusal to quash the LOC and denial of permission to travel - HELD THAT: - Having regard to the petitioner's status as an NRI with principal business and family ties abroad, and the allegations that some funds involved in his transactions were traceable to an absconding accused, the Court accepted the respondents' contention that there was a real risk of non-return. The Court found the petitioner's offers (such as surrendering his parents' passports) to be ineffective security given the nature of the investigation and the petitioner's dual/foreign ties. The Court held that the investigative need for the petitioner's physical presence and the risk of evasion outweighed the petitioner's asserted right to travel, particularly in view of the scale and cross-border nature of the alleged fraud and the alleged gaps in cooperation. [Paras 34]

The petitioner was a flight risk and that circumstance justified continued operation of the LOC; relief to quash the LOC and permit travel was refused.

Final Conclusion: The petition seeking quashing of the Look-Out Circular and related reliefs was dismissed. The Court found the LOC to have been validly issued in the context of an SFIO investigation implicating the economic and larger public interest, held that its renewal under the 22 February 2021 Guidelines was lawful, and concluded that the petitioner posed a flight risk necessitating continuation of the LOC.

Piercing the corporate veil - integral asset for insolvency resolution - inclusion of assets held by related entities in the information memorandum - consolidation / joint CIRP - intermingling of assets and common control as ground for substantive consolidation

Piercing the corporate veil - integral asset for insolvency resolution - inclusion of assets held by related entities in the information memorandum - Whether the land held by the related landowning company forms part of the asset base relevant to the CIRP of the corporate debtor and must be reflected in the information memorandum. - HELD THAT: - The Tribunal examined the Collaboration Agreement, the MoUs with home buyers and the inter se shareholding and common directorship to conclude that the land and development rights were organically linked to the corporate debtor's project. Reading the definitions of "property", "transaction" and "transfer" together with section 29 and Regulation 36, the Tribunal held that assets transferred to or from the corporate debtor and germane to its insolvency resolution must be treated as part of the corporate debtor's asset base and disclosed in the information memorandum. The reasoning emphasises (a) the developer's possession and exclusive development and marketing rights under the Collaboration Agreement, (b) the corporate debtor's receipt of booking amounts under MoUs premised on those rights, and (c) the common control and commingling of interests which render the land integral to any meaningful resolution of the corporate debtor. The Tribunal relied on group insolvency principles and relevant precedents to observe that where assets and liabilities are interwoven and there is common control, the interests of creditors may require treating such assets as part of the corporate debtor's resolution process. [Paras 25, 28, 31, 32, 36]

The land held by Respondent No.2 is an integral part of the housing project and should be treated as part of the corporate debtor's asset base for the purpose of insolvency resolution and included in the information memorandum.

Consolidation / joint CIRP - intermingling of assets and common control as ground for substantive consolidation - Whether a joint/consolidated CIRP can be undertaken in the absence of CIRP proceedings against the landowning company and the procedural consequence. - HELD THAT: - The Tribunal found no provision in the Code for ordering a joint CIRP without initiation against the other entity. Having held that there is a strong case on facts (common control, interwoven assets and transaction structure) for treating the assets jointly, the Tribunal directed that the Adjudicating Authority consider an admission application against the landowning company and thereafter examine consolidation of CIRPs. The Tribunal therefore remanded the matter to the Adjudicating Authority to decide the admission application and, if appropriate, consolidation/joint CIRP so that the combined assets may be considered together for a fair and effective resolution. The remand is directed to be completed at an early date, preferably within two months. [Paras 31, 37, 38]

Remand to the Adjudicating Authority to consider an admission application against the landowning company and thereafter decide on consolidation/joint CIRP; the Adjudicating Authority to complete the process preferably within two months.

Final Conclusion: The Tribunal held that the land of the related landowning company is integral to the corporate debtor's asset base and must feature in the information memorandum; because joint CIRP cannot be ordered without initiation against the landowner, the matter is remanded to the Adjudicating Authority to consider admission of CIRP against the landowning company and thereafter to decide on consolidation/joint CIRP, preferably within two months.

Inclusion of reimbursed electricity charges in assessable value - reimbursement on actual basis not part of gross value of output service - pure agent doctrine - contractual allocation of liability and presence of separate meter as indicia of reimbursement - precedential effect of Tribunal and Supreme Court decisions

Inclusion of reimbursed electricity charges in assessable value - reimbursement on actual basis not part of gross value of output service - contractual allocation of liability and presence of separate meter as indicia of reimbursement - precedential effect of Tribunal and Supreme Court decisions - Electricity charges reimbursed by the service recipient to the appellant under the contract are not includible in the gross value of the appellant's output service. - HELD THAT: - The Tribunal found that the contract between the appellant and M/s Gujarat Gas Company Limited placed the liability for electricity charges of compressors and dispensers on the service recipient and required an independent electricity meter to measure actual consumption. On that basis the amounts recovered from Gujarat Gas were reimbursements on actual basis and not part of the appellant's output value. The Tribunal applied its earlier decision in V V Brothers (which relied on Kiran Gems, ICC Reality, Malabar Management Services, Bizsolindia, Dream Loanz and other Tribunal precedents) and noted the pronouncement of the Hon'ble Supreme Court in Intercontinental Consultants & Technocrats to support the principle that genuine reimbursements made on actuals, under contractual allocation and evidenced by a separate meter, are excludable from the assessable value. Having treated the matter as covered by consistent precedent and the contractual facts, the Tribunal set aside the impugned order and allowed the appeals. [Paras 4, 5]

Impugned order set aside; appeals allowed insofar as electricity charges reimbursed on actual basis are not includible in gross value of the appellant's output service.

Final Conclusion: On the facts and in view of binding Tribunal and Supreme Court authority, electricity charges reimbursed by Gujarat Gas Company Limited to the appellant pursuant to the contract and measured by a separate meter are reimbursements on actuals and are not includible in the gross value of the appellant's output service; impugned order is set aside and appeals are allowed.

Taxability of works contract value excluding value of goods - negative list entry (p)(i) of Section 66D covering transportation services - pure agent principle - valuation under Service Tax (Determination of Value) Rules, 2006 - refund of excess service tax as revenue deposit and limitation

Negative list entry (p)(i) of Section 66D covering transportation services - pure agent principle - Service tax liability in respect of inland transportation arranged by the appellant for PGCIL. - HELD THAT: - The Tribunal accepted the finding that the appellant merely arranged transportation of goods imported by PGCIL and was neither a Goods Transport Agency nor the true provider/receiver of the transportation service. In view of the negative list entry at clause (p)(i) of Section 66D and the appellant's role as arranger/pure agent for the service receiver (PGCIL), no service tax was leviable on the transportation charges claimed to have been recovered by the appellant. [Paras 13]

No service tax payable on transportation charges arranged for PGCIL; appellant is not liable.

Taxability of works contract value excluding value of goods - valuation under Service Tax (Determination of Value) Rules, 2006 - Extent of service tax liability on erection/installation and works contract services and proper valuation for tax purposes. - HELD THAT: - The Tribunal held that the value of transformers and other equipment to be installed cannot be included in the value of the works contract service; only the value of materials used in the erection/installation is includible subject to the adjustments permitted. The gross turnover stated in the contract cannot be treated as taxable turnover where invoices and actual values differ. The turnover of Rs. 15,79,05,395 (erection/installation) must be adjusted to exclude amounts of VAT and service tax included therein and, thereafter, the material component must be deducted in accordance with the Service Tax (Determination of Value) Rules, 2006. The Tribunal set aside the impugned order for the limited purpose of recalculating the tax liability in accordance with these principles and remanded the matter for verification and adjustment by the Original Adjudicating Authority. [Paras 12, 14, 15]

Principles for valuation affirmed; computation of service tax remitted to adjudicating authority for recalculation and verification.

Refund of excess service tax as revenue deposit and limitation - Entitlement to refund of excess service tax already paid and applicability of limitation to such refund. - HELD THAT: - The Tribunal recorded that the appellant had paid service tax in excess (including voluntary payment of differential tax and interest) and directed that the appellant shall be entitled to refund of any excess amount as it constitutes a revenue deposit. The Tribunal further indicated that no limitation is attracted to bar such refund and directed the appellant to present calculations before the Original Adjudicating Authority for verification and adjustment. [Paras 15]

Appellant entitled to refund of excess service tax paid; refund not barred by limitation; matter remitted for verification and adjustment.

Taxability of contracted but unrendered services - Liability for service tax on contracted training services which were not actually provided. - HELD THAT: - The Tribunal found that although training was contracted, no training services were actually performed, no invoices were raised and no consideration was received; accordingly, no service tax is attracted for the projected training component. [Paras 14]

No service tax payable for training as no service was rendered and no consideration received.

Final Conclusion: The appeal is allowed in part. The Tribunal upheld that transportation charges arranged by the appellant attract no service tax (being covered by the negative list and by virtue of the appellant acting as pure agent), held that projected but unrendered training services are not taxable, affirmed principles excluding the value of goods from works contract valuation and directing adjustments under the Service Tax (Determination of Value) Rules, 2006, and remitted the matter to the Original Adjudicating Authority for computation, verification and adjustment of tax and refund of any excess without being barred by limitation.

Maintainability of departmental appeal in view of monetary limits - substantial question of law under Section 35G of the Central Excise Act - finality of adjudicatory orders and effect of non appeal - admissibility and refund of CENVAT credit / double payment - interpretation of exemption notification vis a vis taxing statute - perversity of tribunal's factual findings

Maintainability of departmental appeal in view of monetary limits - substantial question of law under Section 35G of the Central Excise Act - Whether the departmental appeal was maintainable before the High Court despite the monetary limit prescribed by the Board's instructions. - HELD THAT: - The Court held that the Board's instruction prescribing monetary thresholds for filing departmental appeals in legacy Central Excise and Service Tax matters is not an absolute bar to High Court jurisdiction where matters involve common principles or cascading effects. The Court relied on precedents recognising that appeals raising questions likely to affect a group of cases may be entertained notwithstanding monetary limits. However, maintainability remains subject to the statutory requirement under Section 35G that the High Court be satisfied that a substantial question of law arises. On the facts, the Court declined to reject the appeal at the threshold on monetary limit grounds and proceeded to examine the merits under Section 35G. [Paras 6]

Appeal is maintainable and admissible for hearing notwithstanding the Board's monetary limit; the Court proceeded to examine whether substantial questions of law arise under Section 35G.

Finality of adjudicatory orders and effect of non appeal - admissibility and refund of CENVAT credit / double payment - substantial question of law under Section 35G of the Central Excise Act - Whether substantial questions of law arise in respect of the Commissioner/CESTAT decisions on (i) admissibility of CENVAT credit, and (ii) refund of duty paid by TR 6 challan, given the Additional Commissioner's earlier order dropping proceedings. - HELD THAT: - The Court observed that the Additional Commissioner had earlier found (Order dated 30.01.2009) that the assessee had effectively paid duty twice (by CENVAT debit and cash deposit) and accordingly dropped proceedings; that finding was not appealed by the Department and has attained finality. The Tribunal correctly took the finality of that finding into account and held that the Commissioner should not have re decided credit eligibility in the absence of fresh show cause notices. Given the finality of the Addl. Commissioner's factual finding and absence of challenge by Revenue, the High Court concluded there were no substantial questions of law arising from Questions A, B and C which would justify admission under Section 35G. The Court emphasised that it will not re open Tribunal's findings of fact unless perversity is made out. [Paras 12, 15]

No substantial question of law arises in respect of Questions A, B and C; the Tribunal's allowance of refund and related findings stand.

Interpretation of exemption notification vis a vis taxing statute - substantial question of law under Section 35G of the Central Excise Act - Whether the Tribunal's order conflicted with the ratio in Commissioner of Customs (Imports), Mumbai v. Dilip Kumar & Co. and thereby raised a substantial question of law. - HELD THAT: - The Court accepted the legal principle in Dilip Kumar that exemption notifications must be construed strictly but liberally where ambiguity exists. Nevertheless, the Court found that the peculiar facts here - notably the Addl. Commissioner's unappealed finding that duty was paid twice and proceedings were dropped - distinguish the present case from Dilip Kumar. The appellant did not demonstrate how the Tribunal misapplied that ratio; accordingly, Question D did not raise any substantial question of law. [Paras 14]

Question D does not raise a substantial question of law; Dilip Kumar does not assist the appellant on these facts.

Perversity of tribunal's factual findings - finality of adjudicatory orders and effect of non appeal - Whether the Tribunal's findings were perverse and could be re examined by the High Court in this appeal despite lack of specific pleadings on perversity. - HELD THAT: - The Court noted that perversity can justify interference only where findings are arrived at on no evidence or on wholly unreliable evidence, or where relevant materials were ignored or irrelevant materials taken into account. However, the appellant had not specifically pleaded or particularised how the Tribunal's factual conclusions were perverse. In the absence of such pleadings or demonstrable errors in appreciation of evidence, the High Court will not disturb the Tribunal's findings of fact. [Paras 17]

No substantial question of law on perversity is established; factual findings of the Tribunal are not to be set aside.

Final Conclusion: The appeal is dismissed for want of any substantial question of law under Section 35G; the CESTAT's order allowing refund and upholding the effect of the Addl. Commissioner's unappealed findings is upheld. No order as to costs.

Cenvat credit - transitional credit - denial of credit for non-filing of declaration - compliance with procedural requirements under Rule 9A of Cenvat Credit Rules - verification of stock as basis for allowing credit - conclusive verification report - scope of remand for factual verification

Cenvat credit - transitional credit - denial of credit for non-filing of declaration - compliance with procedural requirements under Rule 9A of Cenvat Credit Rules - Entitlement to Cenvat credit and transitional credit where declaration was filed and departmental verification of opening stock was conducted. - HELD THAT: - The Tribunal observed that the legal question whether credit can be denied solely for non-filing or late filing of declaration has been settled by earlier Tribunal precedents relied upon in the prior remand order. The appellant had filed the requisite declaration and the Range Superintendent conducted a stock verification which identified only a minor discrepancy that was reversed by the appellant. Having regard to the settled legal position and the fact that departmental verification of stock was carried out, the Tribunal held that the appellant had complied with the procedural requirements for availing transitional credit and that there was no reason to deny Cenvat credit. [Paras 4, 5]

Cenvat credit/transitional credit allowed as appellant complied with procedural requirements and stock verification supports entitlement.

Verification of stock as basis for allowing credit - conclusive verification report - scope of remand for factual verification - Whether the Commissioner (Appeals) exceeded the scope of the Tribunal's earlier remand by ordering further verification despite an existing verification report. - HELD THAT: - The Tribunal recited its earlier remand which confined further action to actual verification of stock. It found that the Range Superintendent's verification report was a conclusive departmental finding and that the Adjudicating Authority's insistence on re-verification beyond that report went beyond the direction given in the earlier remand. In view of the conclusive verification and the limited mandatory scope of the remand, the Tribunal held that further re-verification was unwarranted and the Commissioner (Appeals) had gone beyond the remand. [Paras 4]

Impugned order set aside insofar as it ordered further re-verification; matter resolved in favour of appellant on the basis of the conclusive verification report.

Final Conclusion: The impugned order is set aside; appeal allowed and Cenvat/transitional credit is granted to the appellant with consequential reliefs, the Tribunal holding that the filed declaration and departmental stock verification suffice and that further re verification was beyond the scope of the prior remand.

Exemption notification applicability - use in or in relation to the manufacture - by product and main product distinction - captive consumption - exemption not to be denied by subsequent use - penalty under Section 11AC - requirement of mala fides - benefit of limitation

Exemption notification applicability - use in or in relation to the manufacture - captive consumption - Entitlement to exemption under Notification No. 12/2012 CE in respect of sulphur used for manufacture of sulphuric acid/oleum which is in turn used in the manufacture of molten urea. - HELD THAT: - The Tribunal found the facts identical to its earlier decision in the appellant's own case and followed the principle that molten urea, being a chemical fertiliser, attracts the exemption when sulphur (via sulphuric acid/oleum) is used in its manufacture. Reliance was placed on binding precedents emphasising that the plain language of an exemption notification controls and that captive consumption of an input resulting in an excisable fertiliser does not disentitle the user from exemption merely because the fertiliser is subsequently used in further manufacture. Revenue's attempt to distinguish on the basis that sulphuric acid used in cooling towers does not qualify was not maintained, the Tribunal noting Revenue had not contested the direct use of sulphuric acid in urea manufacture in the impugned order. Consequently exemption was allowed in respect of sulphur used for manufacture of urea. [Paras 5, 6]

Exemption under Notification No. 12/2012 CE allowed for sulphur used in manufacture of sulphuric acid/oleum that is directly used to manufacture molten urea.

By product and main product distinction - exemption notification applicability - Entitlement to exemption for sulphur used in manufacture of sulphuric acid/oleum that is used in the Caprolactam plant where Ammonium Sulphate (a fertiliser) is produced as a by product. - HELD THAT: - The Tribunal applied the earlier decisions of the Delhi High Court in the appellant's case and held that the exemption looks to whether the acid is intended for and in fact used in the manufacture of a fertiliser. The notification contains no distinction between primary product and by product; therefore production of Ammonium Sulphate alongside Caprolactam attracts the exemption for the sulphur used in that stream. The Tribunal, however, recorded that a small quantity of Hydroxylamine Sulphate (HX/HAS) sold in the open market had been admitted by the appellant as liable and that demand in respect of sulphur used for that quantity must be confirmed. [Paras 7, 8]

Exemption allowed for sulphur used in the Caprolactam/Ammonium Sulphate stream, except that demand is sustained for sulphur attributable to Hydroxylamine Sulphate sold by the appellant in the open market.

Use in or in relation to the manufacture - exemption notification applicability - Entitlement to exemption for sulphuric acid used in cooling towers to maintain pH balance of water which is later used in manufacture (i.e., whether such use is 'in or in relation to the manufacture of fertilisers'). - HELD THAT: - Relying on Tribunal and High Court/Apex Court precedent, the Tribunal accepted that sulphuric acid used in cooling towers for pH control of water subsequently used in the ammonia plant is used in or in relation to the manufacture of fertilisers and therefore falls within the exemption. The earlier Tribunal decision in the appellant's own case on this point was followed as directly on point. [Paras 8]

Exemption allowed for sulphuric acid used in cooling towers for pH control where that water is used in the fertiliser manufacturing process.

Exemption notification applicability - by product and main product distinction - exemption not to be denied by subsequent use - Entitlement to exemption for sulphur used in manufacture of phosphoric acid (and phospho gypsum) which is in turn used to produce ammonium phosphate, and treatment of phospho gypsum sold in the market. - HELD THAT: - The Tribunal held that the reasoning applied to urea and caprolactam streams equally applies: where sulphuric acid is used in producing phosphoric acid that is further used to make a fertiliser (ammonium phosphate), the exemption applies. The fact that phospho gypsum (a by product) is generated and sold on payment of duty does not negate the exemption for sulphur used in the fertiliser linked manufacture; however the Tribunal confirmed liability in respect of sulphur attributable to quantities cleared on payment of duty in the market. [Paras 9]

Exemption allowed for sulphur used in manufacture of phosphoric acid for production of fertiliser, except liability confirmed for sulphur used in respect of phospho gypsum (and related clearances) sold on payment of duty.

Penalty under Section 11AC - requirement of mala fides - benefit of limitation - Whether penalty under Section 11AC can be imposed and whether the benefit of limitation should be extended. - HELD THAT: - The Tribunal found no apparent mala fide intention on the part of the appellant and held that the disputes were questions of interpretation of exemption notifications. Accordingly, imposition of penalty under Section 11AC was not justified and was set aside. The Tribunal also limited confirmation of demand to quantities sold in the market (Hydroxylamine Sulphate and phospho gypsum) and extended the benefit of limitation to the appellant in respect of other demands. [Paras 10, 11]

Penalty under Section 11AC set aside for lack of mala fide intention; benefit of limitation extended; demand confirmed only for specified quantities cleared on payment of duty.

Final Conclusion: The Tribunal allowed the appeal by following its earlier order in the appellant's own case: exemptions under Notification No. 12/2012 CE were allowed in respect of sulphur used for manufacture of urea, for sulphur used in the Caprolactam/Ammonium Sulphate stream, for sulphuric acid used in cooling towers, and for sulphur used in manufacture of phosphoric acid to produce fertiliser, subject to confirmation of duty for sulphur attributable to Hydroxylamine Sulphate and phospho gypsum sold on payment of duty; penalty under Section 11AC was set aside and benefit of limitation extended.

Clandestine manufacture and clearance - retracted confessional statements - reliance on seized private records as corroborative evidence - preponderance of probabilities in clandestine activity - cross-examination of co-noticees and non-appearance - extended period of limitation for duty demand - interest under Section 11AB - penalty equivalent to duty under Section 11AC - personal penalty on directors and brokers under Rule 26

Clandestine manufacture and clearance - reliance on seized private records as corroborative evidence - preponderance of probabilities in clandestine activity - Whether M/s. Ishu Super Steel Pvt. Ltd. clandestinely manufactured and cleared M.S. Ingots to M/s. Salasar Ispat Pvt. Ltd. during July 2006 to Dec 2006. - HELD THAT: - The Tribunal affirmed the adjudicating authority's finding that clandestine manufacture and clearance of 1,782.425 MTs of M.S. Ingots by the manufacturer to the buyer during the specified period was established on a preponderance of probability. The decision rests on (i) entries in private note books/cash book recovered from the buyer's premises, (ii) admissions in statements of the company's directors and of brokers, (iii) detailed annexures/chart reconciling seized entries to consignments without Central Excise invoices, and (iv) evidence of cash payments. The Tribunal accepted that clandestine activity is by nature secretive and that full documentary trail need not exist; circumstantial and corroborative evidence that collectively point to one inference is sufficient. On this basis the Tribunal upheld the demand of duty for the period July 2006 to Dec 2006. [Paras 5]

Finding of clandestine manufacture and clearance during July 2006 to Dec 2006 upheld and duty demand confirmed.

Retracted confessional statements - reliance on seized private records as corroborative evidence - Whether retractions of statements by directors rendered their earlier confessional statements inadmissible or unreliable. - HELD THAT: - The Tribunal held that mere retraction by letters (posted under certificate of posting) did not render earlier statements irrelevant. The adjudicating authority considered timing, manner and surrounding circumstances of retraction and concluded the confessional portions were voluntary and corroborated by seized records and other admissions. Authorities were applied to the effect that a retracted confession may be relied upon if found voluntary and corroborated by other evidence; here the confessions were corroborated by the private records and other witnesses' statements. [Paras 4, 5]

Retractions held not to vitiate earlier confessions; confessional statements may be relied upon as corroborative evidence.

Reliance on seized private records as corroborative evidence - preponderance of probabilities in clandestine activity - Whether private note books/cash book seized from the buyer's premises could be used to establish clandestine transactions against the manufacturer. - HELD THAT: - The Tribunal upheld the use of the private records seized from M/s. SSIPL's premises as admissible and corroborative evidence. The records contained detailed entries (product, quantity, rate, supplier, payments) which, when deciphered and affirmed by the buyer's director and matched with directors'/brokers' statements, supported the finding of clandestine supplies without invoices. The Tribunal noted that such private records showing both invoiced and non-invoiced consignments, signed or admitted by the parties, cannot be lightly discarded and form crucial corroboration in clandestine-clearance cases. [Paras 4, 5]

Seized private records are admissible and formed cogent corroborative evidence for clandestine clearances.

Cross-examination of co-noticees and non-appearance - retracted confessional statements - Whether failure of two brokers/co-noticees to appear for cross-examination vitiated reliance on their statements. - HELD THAT: - The Tribunal found that ample opportunities for cross-examination were afforded by the department; one broker did appear and was cross-examined while two did not appear despite being given dates. In the circumstances-where witnesses are co-noticees/co-appellants and may invoke privilege or strategically not appear-non-appearance is not fatal. Precedents and reasoning were applied to distinguish cases where opportunity was denied; here opportunity was given and non-appearance does not amount to breach of natural justice. The Tribunal therefore sustained reliance on the statements to the extent they were corroborated. [Paras 4, 5]

Non-appearance of co-noticee brokers for cross-examination did not vitiate reliance on their statements where opportunity was afforded and other corroboration existed.

Overlap of multiple adjudications - reliance on independent evidences for separate demands - Whether the demand for July 2006 to Dec 2006 was barred or rendered impermissible by an earlier demand covering Feb 2005 to Nov 2007 based on electricity-consumption study. - HELD THAT: - The Tribunal observed the earlier demand arose from a different basis (electricity consumption report) and was presumptive in nature. The present demand was founded on specific seized records, admissions and corroborative evidence of clandestine consignments. The Tribunal accepted that overlapping periods do not per se invalidate a separate demand where the basis and evidence differ and the present demand is supported by direct and corroborative material. [Paras 4, 5]

Overlap with an earlier demand did not invalidate the present demand; the demand for July-Dec 2006 stands on its own evidentiary footing.

Extended period of limitation for duty demand - Whether invocation of the extended period of limitation was justified for the duty demand. - HELD THAT: - Given the adjudged existence of a well-planned, surreptitious scheme to evade duty, the Tribunal agreed that ingredients for invoking the proviso to the limitation provision were present. The clandestine, concealed nature of the activity justified issuance of a show cause for the longer period. [Paras 4, 5]

Invocation of extended period of limitation upheld.

Interest under Section 11AB - penalty equivalent to duty under Section 11AC - personal penalty on directors and brokers under Rule 26 - Whether interest, equal penalty under Section 11AC, and personal penalties on directors and brokers under Rule 26/Rule 26 consequences were rightly imposed. - HELD THAT: - Having upheld the substantive demand, the Tribunal concurred that interest under the statutory provision applies. The Tribunal also upheld imposition of penalty equivalent to duty under Section 11AC in view of mens rea and contraventions of excise rules, and sustained personal penalties on the company directors and brokers where their roles were found to have abetted the clandestine scheme. The adjudicating authority's reasoning-linking admissions, brokers' involvement, cash realisations and the modus operandi-to impose personal liability was endorsed. [Paras 4, 5]

Interest and penalties (including personal penalties) were correctly levied and upheld.

Final Conclusion: The appeals are dismissed. The Tribunal upheld the adjudicating authority's finding of clandestine manufacture and clearance for July 2006 to Dec 2006, upheld invocation of extended limitation, and sustained the demand of duty with interest and the penalties (including personal penalties on directors and brokers) in light of the seized records, admissions and corroborative evidence.

Manufacture - excisable goods - C.T. Cotton - proviso to Section 3(1) of the Central Excise Act, 1944 - Section 11A of the Central Excise Act, 1944 - permission of the Development Commissioner for DTA sale

Manufacture - excisable goods - C.T. Cotton - Whether the cotton waste/droppings generated in the appellant's process are 'manufactured' and therefore excisable goods - HELD THAT: - The Tribunal applied the established test of 'manufacture' (emergence of a commercially new product with distinct name, usage and character) and followed the Tribunal precedent in C.T. Cotton which held that soft cotton waste arising in carding and combing of ginned cotton does not amount to manufacture. The source of raw material (imported or indigenous) does not alter the test of manufacture under Section 2(f). Because the show-cause notices under Section 11A were directed to duty on cotton waste as an excisable product, once the waste is held non-excisable the consequent demands under the Central Excise proceedings could not survive. The Tribunal therefore held that the impugned demand of duty on cotton waste cannot be sustained in view of C.T. Cotton and the statutory meaning of 'manufacture'. [Paras 4]

Cotton waste/droppings are not a 'manufactured' excisable product and demands to that extent are set aside.

Proviso to Section 3(1) of the Central Excise Act, 1944 - Section 11A of the Central Excise Act, 1944 - permission of the Development Commissioner for DTA sale - Whether the revenue could, under show-cause notices issued under Section 11A of the Central Excise Act, recover amounts computed as customs duty or on excess consumption of duty-free imported inputs by invoking the proviso to Section 3(1), and the relevance of Development Commissioner permission/exemption notifications - HELD THAT: - The Tribunal found that Section 11A proceedings are for recovery of 'duty of excise' and are not the appropriate vehicle to recover customs duty or amounts arising from alleged contravention of Customs notifications or EXIM policy. The Commissioner had attempted to characterise the demand as recovery of duty equivalent to customs duty under the proviso to Section 3(1) by treating excess consumption of duty-free imported comber noil as the taxable event. The Tribunal held that where cotton waste is non-excisable, arguments based on contravention of exemption notifications and need for Development Commissioner permission become irrelevant for proceedings initiated under Section 11A. The Tribunal therefore rejected the characterization of Customs claims as recoverable under Section 11A excise notices in these proceedings. [Paras 4]

Revenue could not sustain demands framed under Section 11A as claims for customs duty or for alleged excess consumption of imported inputs once cotton waste is held non-excisable; such Customs/EXIM policy issues are not maintainable in the present excise recovery proceedings.

C.T. Cotton - excisable goods - Consequences for interest and penalties levied under the impugned order once the primary demand is set aside - HELD THAT: - The Tribunal recorded that since the primary demand for duty under the excise show-cause notices could not be sustained on merits (in view of C.T. Cotton and the finding that cotton waste is not a manufactured excisable product), the consequential demands for statutory interest and penalties founded on that demand also fall away. The Tribunal therefore set aside interest and penalties imposed in the impugned order. [Paras 4, 5]

Interest and penalties levied under the impugned excise order are set aside along with the primary demand.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order insofar as it demands excise duty on cotton waste (holding the waste non-excisable in light of C.T. Cotton), and consequently quashed the related interest and penalties; the Tribunal made clear that its order does not preclude independent action or recovery proceedings under the Customs Act or EXIM policy where appropriate.

Binding effect of an earlier order of a co-ordinate Bench - obligation to follow precedent of co-ordinate Tribunal on identical facts and parties - reopening of assessment on the basis of a fraud report - sale suppression cannot be presumed from mere stock discrepancy without corroborative evidence - application of the principle in Collector of Central Excise v. Matador Foam

Binding effect of an earlier order of a co-ordinate Bench - obligation to follow precedent of co-ordinate Tribunal on identical facts and parties - application of the principle in Collector of Central Excise v. Matador Foam - Whether the Division Bench of the Orissa Sales Tax Tribunal was legally correct in declining to follow an earlier order of a co-ordinate Bench on identical facts and between the same parties. - HELD THAT: - The Court found that a co-ordinate Bench of the Tribunal had earlier disbelieved the same fraud report and allowed the assessee's appeal for 1991-92. The impugned Tribunal order for 1992-93 proceeded without referring to any additional material distinct from the common fraud report. In the absence of any new or corroborative evidence for 1992-93, the Tribunal could not distinguish the earlier decision on mere ground of different assessment year. Applying the legal principle laid down in Collector of Central Excise v. Matador Foam, a Tribunal is bound by the earlier contrary finding of a co-ordinate Bench where the facts and parties are the same; consequently the later Bench was obliged to follow the earlier conclusion that the fraud report did not suffice to establish sale suppression. The Court therefore held the impugned order unsustainable for failing to adhere to the binding effect of the earlier co-ordinate Bench decision. [Paras 5, 6, 7]

The Tribunal's refusal to follow the earlier co-ordinate Bench order was unjustified and the impugned order for 1992-93 was set aside.

Reopening of assessment on the basis of a fraud report - sale suppression cannot be presumed from mere stock discrepancy without corroborative evidence - Whether the reassessment and demand for 1992-93, founded only on the fraud report and stock discrepancy, were sustainable. - HELD THAT: - The Court examined the assessing and appellate records and found no reference to any material other than the fraud report common to both years. The earlier Tribunal had held that mere stock discrepancy and the fraud report did not amount to conclusive evidence of sale suppression and that books could not be rejected on presumption and surmise. Since no additional corroborative material was shown for 1992-93, the reassessment and demand based solely on the fraud report lacked foundation. The Tribunal's acceptance of the fraud report for 1992-93 without fresh material was therefore contrary to the earlier finding and unsustainable. [Paras 3, 5, 6]

The reassessment and demand for 1992-93 founded only on the fraud report and stock discrepancy were not sustainable and the Tribunal's order upholding them was set aside.

Final Conclusion: The revision petition succeeds. The Tribunal's impugned order for 1992-93 is set aside and the decision is pronounced in favour of the assessee, the earlier Tribunal order for 1991-92 being binding on the Tribunal in respect of identical facts and parties.

Offence under Section 138 of the Negotiable Instruments Act - Presumption under Section 139 of the Negotiable Instruments Act - Liability arising from an admitted signature on a cheque - Re-appreciation of evidence on appeal - Characterisation as an unregistered moneylender - Standard of proof to rebut statutory presumption (preponderance of probabilities)

Offence under Section 138 of the Negotiable Instruments Act - Presumption under Section 139 of the Negotiable Instruments Act - Liability arising from an admitted signature on a cheque - Standard of proof to rebut statutory presumption (preponderance of probabilities) - Whether the conviction of respondent No.1 for offence under Section 138 of the Negotiable Instruments Act was legally sustainable - HELD THAT: - The Trial Court's finding that the respondent received Rs. 4 lakhs and issued the cheque to discharge that liability is supported by the complainant's evidence, the passbook showing withdrawal, and the respondent's admission of his signature on the cheque and receipt. The appellate court had disbelieved the defence that the payment was a margin for a separate transaction, but that disbelief did not justify upsetting the Trial Court's concurrent finding. Section 139 creates a rebuttable presumption that a cheque admitted to be signed was issued for discharge of debt or liability; the onus to rebut is on the accused and requires proof on preponderance of probabilities. The respondent failed to explain the source of the Rs. 4 lakhs or to produce corroboration (for example his father who allegedly accompanied him), and the evidence adduced by him did not meet the requisite standard to rebut the statutory presumption. Non-reflection of the amount in income tax returns does not, in the circumstances and having regard to the other evidence, rebut the statutory presumption or absolve the accused. Consequently, the Trial Court's conviction under Section 138 was rightly sustained. [Paras 11, 13, 15]

The conviction of respondent No.1 under Section 138 of the Negotiable Instruments Act is upheld and the Trial Court's appreciation of evidence is affirmed.

Re-appreciation of evidence on appeal - Characterisation as an unregistered moneylender - Whether the Appellate Court was justified in quashing the Trial Court's conviction by re-appreciating evidence and by holding that the complainant was an unregistered moneylender - HELD THAT: - The Appellate Court's disturbance of the Trial Court's concurrent findings was not warranted: witnesses called by the defence did not testify to loans advanced by the complainant on interest, but rather reflected prior litigation/convictions connected to the complainant. The Appellate Court's specific finding that the complainant was an unregistered moneylender is not borne out by the evidence; none of the defence witnesses established that the complainant advanced money as a moneylender for interest. Given the Trial Court's specific findings of fact (accepted signature, withdrawal from the complainant's account, and the accused's failure to substantiate his defence), the Appellate Court's re-appreciation and the moneylender characterisation were erroneous. [Paras 12, 19]

The Appellate Court's re-appreciation of evidence and its finding that the complainant was an unregistered moneylender are set aside; the Appellate Court erred in disturbing the Trial Court's findings.

Final Conclusion: The appeal is allowed; the judgment and order of the Additional Sessions Judge dated 12.10.2016 is quashed and set aside, and the Trial Court's conviction and sentence in Criminal Case No. 500/OA/NIA/2006/A dated 26/11/2014 (and order dated 15/12/2014) are confirmed.

Liability under Section 138 of the Negotiable Instruments Act - Presumption under Section 139 of the Negotiable Instruments Act - Burden of proof on accused to rebut presumption on preponderance of probabilities - Statutory time-limits for presentation, demand notice and payment under Section 138 - Payment made after the statutory period and its effect on prosecution under Section 138

Liability under Section 138 of the Negotiable Instruments Act - Presumption under Section 139 of the Negotiable Instruments Act - Burden of proof on accused to rebut presumption on preponderance of probabilities - The conviction under Section 138 of the Negotiable Instruments Act was validly recorded and the appellant failed to rebut the statutory presumption under Section 139. - HELD THAT: - The learned High Court agreed with the factual findings of the trial and appellate courts that the cheque in question was issued for the sale of one specific property (sale deed No. 18852, Ext.6) and was presented and dishonoured in accordance with the statutory timetables. The court applied the statutory presumption of consideration in favour of the complainant under Section 139 and noted that the accused bore the onus to rebut that presumption on the preponderance of probabilities. The defence evidence of subsequent payment was held insufficient to discharge that burden because it did not establish that the obligation in respect of the subject cheque had been discharged within the statutory framework or that the presumption of consideration was overcome. On this basis the prosecution was held to have proved the essential ingredients of the offence under Section 138 and the conviction and sentence were affirmed.

Conviction and sentence under Section 138 affirmed; accused failed to rebut Section 139 presumption.

Statutory time-limits for presentation, demand notice and payment under Section 138 - Payment made after the statutory period and its effect on prosecution under Section 138 - A belated payment made after the expiration of the statutory period did not absolve the accused of criminal liability under Section 138. - HELD THAT: - The court recorded that the demand notice was issued and the statutory periods for presentation and demand were complied with by the complainant. Evidence was that any payment alleged to have been made by the accused occurred on 18.08.2014, which was beyond the fifteen-day period permitted for payment after receipt of the demand notice. The court therefore held that the subsequent payment, being belated, could not cure the failure to make payment within the statutory period and was insufficient to negate the prosecution case under Section 138. The defence contention that payment related to a different property (Ext.6/1) did not meet the evidentiary standard required to show discharge of liability in respect of the cheque under challenge.

Belated payment after statutory period is not a defence; guilty finding sustained.

Final Conclusion: The High Court dismissed the revisional application, affirmed the conviction and sentence imposed by the trial Court and the order of the Appellate Court; the accused's bail is cancelled and he is directed to surrender or pay the directed compensation within the timeframe ordered by the trial court.

Quashing of criminal complaints under Section 482 Cr.P.C. - Offence under Section 138 of the Negotiable Instruments Act - cheque drawn on account "maintained by" the drawer - Presumption under Section 139 of the Negotiable Instruments Act - Role of disputed questions of fact in petitions under Section 482 Cr.P.C. - Exercise of extraordinary jurisdiction in the "rarest of rare" cases

Quashing of criminal complaints under Section 482 Cr.P.C. - Exercise of extraordinary jurisdiction in the "rarest of rare" cases - Whether the petitions under Section 482 Cr.P.C. should be allowed to quash the complaints filed under Section 138 of the Negotiable Instruments Act. - HELD THAT: - The High Court reiterated that the power to quash criminal proceedings under Section 482 Cr.P.C. is to be exercised sparingly and only in exceptional cases, following settled precedents which caution against entering into disputed questions of fact. The court observed that many of the contentions raised by the petitioner-namely, that the complaints are pressure tactics in matrimonial litigation, that blank cheques were misused, and that forged KYC documents were used-raise disputed factual questions which require evidence. Reliance on authorities such as State of Haryana v. Bhajan Lal and Suryalakshmi Cotton Mills (as discussed) establishes that a defence which is plausible should not ordinarily lead to quashing; documents of unimpeachable character may exceptionally justify interference, but no such undisputed documentary basis for quashing exists here. The Supreme Court had earlier set aside an interim High Court order that had directed pre-trial production of certain documents; the present exercise addressed the merits and found that the matters relied upon by the petitioner involve factual disputes fit for trial rather than for summary quashing. [Paras 16, 17, 21, 22]

Petitions under Section 482 Cr.P.C. are dismissed; the complaints under Section 138 of the Negotiable Instruments Act are not quashed.

Offence under Section 138 of the Negotiable Instruments Act - cheque drawn on account "maintained by" the drawer - Presumption under Section 139 of the Negotiable Instruments Act - Role of disputed questions of fact in Section 138 proceedings - Whether the first ingredient of Section 138 (that the cheque be drawn on an account maintained by the drawer) and the presumption under Section 139 are rebutted so as to justify quashing at this stage. - HELD THAT: - The court noted that the account is in the name of the petitioner and that signatures on the cheques are not disputed; accordingly, the basic ingredient that the cheque was drawn on an account "maintained by" the drawer is not negatived on the materials before the High Court. Section 139 raises a presumption in favour of the holder that the cheque was issued for discharge of debt or liability, and that presumption is rebuttable but by evidence. Allegations that the account was opened at the behest of the father-in-law, that the petitioner handed over signed blank cheques, and that the KYC was updated using a forged PAN, are disputed contentions requiring evidentiary adjudication. The court observed that it is not the function of a quashing petition to resolve such contested factual issues which are properly determinable at trial. [Paras 14, 15, 18, 20]

On the material before it, the court held that the ingredients of Section 138 and the statutory presumptions under Section 139 are not shown to be displaced so as to warrant quashing; the factual pleas raised by the petitioner must be tested at trial.

Final Conclusion: The petitions seeking quashing of the complaints under Section 138 of the Negotiable Instruments Act are dismissed; the disputed factual contentions relied upon by the petitioner are to be adjudicated by the trial court and nothing in this order expresses any opinion on the merits of the complaints.

Maintainability of Section 138 NI Act complaints where cheque presented after corporate winding up - Vicarious liability of directors under Section 141 NI Act in face of corporate winding up or moratorium - Scope of moratorium under insolvency/winding up and its effect on continuation or institution of Section 138/141 proceedings - Referral to a larger Bench for authoritative determination of conflicting precedents

Maintainability of Section 138 NI Act complaints where cheque presented after corporate winding up - Whether the complaints under Section 138 of the Negotiable Instruments Act which were held by the trial court to be not maintainable because the cheques were presented after the company was wound up are to be finally adjudicated by this Court at this stage - HELD THAT: - The High Court recorded that the trial court relied on the decision in M.L. Gupta (DLT) holding that a complaint under Section 138 is not maintainable where the cheque is presented after the company has been ordered to be wound up. Petitioners relied on later Supreme Court pronouncements, in particular P. Mohanraj and others, which clarify that moratorium provisions (and related statutory bars) operate in specified ways and that liability of natural persons under Section 141 may continue where corporate liability is statutorily interdicted. Given this tension between precedents and the fact that the trial court has discharged accused after taking cognizance, the High Court did not finally decide the substantive maintainability question on merits. Instead, in view of the apparent conflict between M.L. Gupta and the principles in P. Mohanraj concerning liability of natural persons when corporate proceedings bar action against the company, the Court considered it appropriate that the question be placed before the Chief Justice for reference to a larger Bench for authoritative determination.

Substantive determination was not made; the matter is to be placed before the Chief Justice for consideration by a larger Bench on the question whether the reasoning in M.L. Gupta (to the extent it set aside summons including of directors where cheques presented after winding up) remains good law in light of P. Mohanraj.

Referral to a larger Bench for authoritative determination of conflicting precedents - Appropriate administrative step to resolve the precedent conflict between M.L. Gupta and subsequent Supreme Court pronouncements regarding prosecution of directors where the corporate debtor is under winding up or moratorium - HELD THAT: - Having noted conflicting judicial views on whether criminal proceedings under Sections 138/141 can be maintained against natural persons when the corporate entity is under a statutory bar (winding up or moratorium), the Court concluded that the question raises a substantial point of law warranting consideration by a larger Bench. The Court therefore directed that the matter be placed before the Chief Justice for reference to a larger Bench and listed the matter accordingly, leaving the trial court's discharge order to be addressed in light of the larger Bench's direction.

Directed placement before the Chief Justice for consideration for reference to a larger Bench; no final adjudication on maintainability was undertaken by this Court.

Procedural discretion: grant of exemptions and disposal of interim applications - Whether the exemption applications connected with these petitions should be allowed - HELD THAT: - The Court allowed the exemption applications (CRL.M.A.17491/2021 to CRL.M.A.17494/2021) subject to all just exceptions and disposed of those applications. This was a procedural step ancillary to the main petitions.

Exemptions allowed subject to all just exceptions; the exemption applications stand disposed of.

Final Conclusion: The High Court declined to decide the substantive question whether complaints under Section 138 NI Act are maintainable where cheques were presented after the company's winding up; noting an apparent conflict between M.L. Gupta and later Supreme Court pronouncements (notably P. Mohanraj) on liability of natural persons, the Court directed that the matter be placed before the Chief Justice for possible reference to a larger Bench. Ancillary exemption applications were allowed and disposed of.

Authority of a power of attorney holder to represent a company - Presumption of due execution and authentication of a power of attorney under Section 85 of the Indian Evidence Act - Distinct juristic personality of a company and representation by directors or authorised agents - Requirement of board resolution or authorization under Articles of Association for representation of a company - Statutory presumption of negotiable instrument under Section 139 of the Negotiable Instruments Act - Maintainability of complaint where corporate representation is challenged

Authority of a power of attorney holder to represent a company - Presumption of due execution and authentication of a power of attorney under Section 85 of the Indian Evidence Act - Requirement of board resolution or authorization under Articles of Association for representation of a company - Maintainability of complaint where corporate representation is challenged - Whether the complaint filed on behalf of the company by the power of attorney holder was maintainable in the absence of evidence that the person executing the power of attorney was duly authorised to represent the company. - HELD THAT: - The Court held that Section 85 of the Evidence Act, which generates a presumption as to the due execution and authentication of instruments executed before a notary, does not itself convert a power of attorney into proof of authority to represent a company. A company is a separate juristic person and acts through persons authorised under its Articles of Association or by a board resolution. Absent evidence showing that the person who executed the power of attorney had been authorised-by Articles or a board resolution-to confer such authority, the power of attorney could not be treated as establishing authority to represent the company in criminal proceedings. Reliance on precedents emphasising that individual directors or agents must demonstrate delegated authority was affirmed. Because the power of attorney holder failed to establish such delegation, the complaint was not maintainable on that basis and no further points needed adjudication. [Paras 3, 6, 8]

The power of attorney holder failed to prove authority to represent the company; the complaint filed through that power of attorney was not maintainable and the appeal is dismissed.

Final Conclusion: The High Court dismissed the appeal, holding that the power of attorney produced did not establish authority to represent the company and therefore the complaint was not maintainable; other contentions were not considered as unnecessary in view of this finding.