TaxTMI Updates e-Newsletter
Nov 23,2020

Retrospective registration - validation of registration - input tax credit eligibility - consideration of representation on merits - technical glitches in migration

Retrospective registration - validation of registration - consideration of representation on merits - The petitioner's representation seeking validation of registration with retrospective effect from 01.07.2017 was directed to be considered afresh by the competent officers. - HELD THAT: - The High Court declined to decide on the merits whether retrospective effect should be granted to the petitioner's registration or whether the petitioner is entitled to input tax credit, and instead held that the fourth and fifth respondents must consider the representation dated 14.09.2020 on merits and in accordance with law. The Court observed that the petitioner relied on earlier decisions of the High Court of Kerala and that the grounds raised require adjudication by the authority competent to grant or refuse validation. The respondents are to give the petitioner sufficient opportunity of hearing and to pass final orders after taking into account the decisions cited by the petitioner and the contentions raised in the representation. The Court imposed an eight week timeline for such consideration from receipt of the order, reserving any substantive determination to the administrative decision-making process. [Paras 10, 11]

Direct respondents 4 and 5 to consider the representation dated 14.09.2020 and pass final orders on merits and in accordance with law, after giving opportunity to the petitioner, within eight weeks.

Final Conclusion: Writ petition disposed by directing the appropriate officers to reconsider and decide the petitioner's request for validation of registration from 01.07.2017 on merits and in accordance with law within eight weeks; no adjudication on substantive entitlement to retrospective registration or input tax credit was made.

Violation of principles of natural justice - right of personal hearing - mechanical acceptance of statements made before inspecting officials - failure to consider statutory replies - quashing of assessment as arbitrary - remand for fresh consideration and decision on merits - claim of input tax credit as per GSTR-3B not considered

Violation of principles of natural justice - failure to consider statutory replies - mechanical acceptance of statements made before inspecting officials - claim of input tax credit as per GSTR-3B not considered - Impugned assessment order was arbitrary and in violation of principles of natural justice because the assessing authority did not consider the petitioner's replies and mechanically relied upon an alleged deposition that books of accounts were not maintained. - HELD THAT: - The Court examined the assessment order and the replies sent by the petitioner on 10.10.2019, 11.10.2019 and 18.10.2019, in which the petitioner consistently stated readiness to produce books of accounts and asserted that only eligible input tax credit claimed in GSTR-3B was taken. The assessing authority, however, accepted an alleged statement recorded by Inspecting Officials that the petitioner did not maintain books, without including a copy of such statement in the assessment order or independently considering and recording reasons for rejecting the petitioner's objections. The Court treated the assessing authority's approach as mechanical and an instance of blind acceptance of the investigating/depositing officer's note, noting that the petitioner's replies were not dealt with on merits and the claim of input tax credit as per returns was not considered, thereby denying the petitioner a meaningful opportunity to be heard. [Paras 7, 9, 10, 11]

Assessment order set aside as arbitrary for violating principles of natural justice; assessment quashed.

Remand for fresh consideration and decision on merits - right of personal hearing - Matter remanded to the assessing authority for fresh consideration after affording sufficient opportunity including personal hearing, and for passing final orders on merits and in accordance with law within a specified timeframe. - HELD THAT: - Having quashed the impugned order for procedural infirmity and lack of consideration of the petitioner's objections and claims, the Court directed that the second respondent shall reconsider the matter afresh. The reconsideration is to be on merits, after giving the petitioner adequate opportunity of hearing including personal hearing, and with due consideration of the replies and the claim of input tax credit filed in GSTR-3B. The Court prescribed a timeline of eight weeks from receipt of the order for completion of the proceedings and final order. [Paras 12]

Proceedings remanded to the second respondent for fresh adjudication on merits within eight weeks after granting the petitioner a personal hearing.

Final Conclusion: Impugned assessment order dated 08.11.2019 quashed for failure to consider the petitioner's replies and denial of natural justice; matter remitted to the assessing authority to decide afresh on merits after affording personal hearing within eight weeks.

Stay of recovery subject to deposit - deposit limited to twenty percent of demand - release of excess security/deposit - penalty demand - appeals pending before the Income Tax Appellate Tribunal

Release of excess security/deposit - deposit limited to twenty percent of demand - appeals pending before the Income Tax Appellate Tribunal - Whether the excess amount deposited with the Income Tax Department in compliance with interim directions should be released where penalty demands for certain assessment years have been dropped and only a reduced 20% deposit is chargeable against the remaining demands. - HELD THAT: - The petitioner had deposited the amount directed by this Court under its interim order granting stay of recovery subject to specified deposits. Subsequent to that deposit, penalty demands for some assessment years were dropped and consequential orders passed, leaving before the appellate authority only the penalty demands relating to assessment years 2006-07, 2007-08 and 2008-09. The Court observed that even if the writ petitions were dismissed, the maximum amount that could be insisted upon under the impugned orders and circulars is 20% of the remaining demand which, on the material before the Court, is a much smaller figure. In the factual matrix where the appeal on quantum remains pending before the ITAT and the revenue's contention that demand may revive if appeals succeed is noted, there is nonetheless no reasonable ground for the revenue to retain the balance amount which is not required to sustain the stay mechanism. Accordingly the Court directed release of the excess deposit to the petitioner within a limited time frame. [Paras 9, 10]

Excess amount deposited with the Income Tax Department to secure stay is to be released to the petitioner; only 20% of the remaining penalty demand pertaining to AY 2006-07, 2007-08 and 2008-09 can be retained and the balance shall be refunded within four weeks.

Final Conclusion: Writ petitions disposed of by directing refund of the excess deposit, leaving the revenue entitled to retain only 20% of the remaining penalty demand relating to assessment years 2006-07, 2007-08 and 2008-09; refund to be effected within four weeks.

Treatment of interest on non-performing assets under mercantile system - cash basis taxation of income once an asset is declared non-performing - allowability of provision for bad and doubtful debts under Section 36(1)(viia) - set-off of actual write-off against provision and proviso to Section 36(1)(vii) - interaction between Reserve Bank of India provisioning norms and the method of accounting under Section 145 - prohibition of double deduction and the principle against double allowance

Treatment of interest on non-performing assets under mercantile system - cash basis taxation of income once an asset is declared non-performing - Tribunal correctly deleted interest accrued on non-performing assets from taxable income despite assessee following mercantile system of accounting. - HELD THAT: - The Court noted that this substantial question had been previously addressed by a bench of this Court in I.T.A.No.471/2013, and that the revenue did not dispute that precedent. For the reasons given in that earlier judgment, the Court held that when an asset is shown to be a non-performing asset the assumption is that it is not yielding revenue; consequently recognising interest on such asset under the mercantile system is not appropriate and taxation on that interest does not arise. The Court treated the earlier decision as dispositive of the first substantial question and answered it against the revenue and in favour of the assessee. [Paras 4]

First substantial question of law answered against the revenue; deletion of interest accrued on non-performing assets sustained.

Allowability of provision for bad and doubtful debts under Section 36(1)(viia) - interaction between Reserve Bank of India provisioning norms and the method of accounting under Section 145 - set-off of actual write-off against provision and proviso to Section 36(1)(vii) - prohibition of double deduction and the principle against double allowance - Provision for non-performing assets made as per RBI guidelines was allowable under Section 36(1)(viia) and the tribunal and CIT(A) were justified in upholding the deduction; the contention regarding mandatory application of Section 145 and consequent disallowance was rejected. - HELD THAT: - The Court recorded that the assessee had created a provision in accordance with Reserve Bank of India norms and had explained why the provision was not added back in the income computation. Both the Commissioner (Appeals) and the Tribunal found that the provision, though denominated as for non-performing assets, was in substance a provision for bad and doubtful debts and thus allowable under Section 36(1)(viia). The Court relied on its decision in Canfin Homes Ltd. and on the concurrent findings of the lower authorities, observing those findings were not perverse. Although the revenue argued that actual write-offs must first be set off against provisions and invoked the proviso to Section 36(1)(vii) and the rule against double deductions (as in Catholic Syrian Bank), the Court held that such contentions did not arise for consideration within the framed substantial question of law and did not warrant upsetting the concurrent conclusions that RBI-compliant provisioning was permissible. [Paras 7, 8]

Second substantial question of law answered against the revenue and in favour of the assessee; allowance of provision upheld.

Final Conclusion: The revenue's appeal is dismissed. Both substantial questions of law are answered against the revenue and in favour of the assessee; the deletion of interest on non-performing assets and the allowance of RBI-compliant provisioning under Section 36(1)(viia) are sustained.

Deduction under Section 10A - Computer software includes customized electronic data and any product or service of similar nature as may be notified by the Board - Human Resources Services as Information Technology enabled services - Validity and application of CBDT Notification dated 26.09.2000

Deduction under Section 10A - Human Resources Services as Information Technology enabled services - Validity and application of CBDT Notification dated 26.09.2000 - Computer software includes customized electronic data and any product or service of similar nature as may be notified by the Board - Assessee's activity of maintaining and transmitting an electronic database of qualified IT personnel constitutes human resources services and an Information Technology enabled service entitling it to deduction under Section 10A. - HELD THAT: - Section 10A permits deduction to an undertaking engaged in manufacture or production of computer software, where Explanation 2 defines 'computer software' to include any customized electronic data or any product or service of similar nature as may be notified by the Board. The Central Board of Direct Taxes, by Notification dated 26.09.2000, specified among the information technology enabled products or services 'Human Resources Services'. The assessee maintained a computerized database of qualified IT personnel and transmitted that data electronically to clients, and supplied manpower to foreign clients after recruitment in India. Those activities fall within the scope of human resources services as specified in the CBDT Notification and thus are covered by the definition of computer software in Explanation 2 for the purposes of Section 10A. Consequently, the assessee's income from such activities is eligible for deduction under Section 10A. [Paras 7, 8, 9]

Assessee entitled to deduction under Section 10A in respect of its human resource / IT enabled services; substantial questions answered against the revenue.

Final Conclusion: The appeal is dismissed; the High Court answers the substantial questions of law against the revenue, holding that the assessee's provision of an electronic database and related human resource services qualify as IT enabled services under the CBDT Notification and are eligible for deduction under Section 10A for AY 2007-08.

Remand for fresh consideration - doctrine of precedent - judicial discipline in following binding decisions - reference to Larger Bench where earlier decision is not acceptable - tax deduction at source (TDS) liability of representative assessee - principle of mutuality - taxation at maximum marginal rate for indeterminate beneficiaries

Doctrine of precedent - judicial discipline in following binding decisions - Whether the Tribunal erred in declining to follow an earlier Tribunal decision without either distinguishing it on facts, holding it per incuriam, or referring the matter to a Larger Bench. - HELD THAT: - The High Court found the methodology adopted by the Tribunal to be incorrect because the Tribunal noted the earlier decision in Income-tax Officer, Ward I(1), Vellore vs. Sarvodaya Mutual Benefit Trust but declined to follow it without recording a finding of per incuriam or distinguishing the factual matrix, and without referring the question to a Larger Bench. The Court relied on established principles of judicial discipline requiring subordinate fora to follow earlier appellate orders unless valid reasons for not doing so are recorded or the matter is referred for authoritative determination. The Court observed that if a subsequent forum considers an earlier decision inapplicable, it must either distinguish it on the facts or refer the issue for consideration by a larger constitutional forum rather than simply disagreeing with it. [Paras 6, 8, 9]

The Tribunal's approach was held to be incorrect and legally unsatisfactory; the impugned order was set aside on this ground.

Remand for fresh consideration - reference to Larger Bench where earlier decision is not acceptable - reference to Sarvodaya Mutual Benefit Trust decision - Whether the matter should be remanded to the Tribunal for fresh consideration in light of the prior decision and the Tribunal's failure to adopt a proper methodology. - HELD THAT: - Having found the Tribunal's reasoning deficient, the High Court declined to enter the merits on the substantial questions of law and instead remanded the matter to the Tribunal. The Court directed the Tribunal to take note of the earlier Sarvodaya Mutual Benefit Trust decision and, if that decision applies on the facts, to follow it; if the Tribunal finds the earlier decision not acceptable for reasons it records, the Tribunal should refer the question to a Larger Bench for authoritative resolution. The Court explicitly left the merits to be considered afresh by the Tribunal in accordance with law. [Paras 9, 11]

Impugned order set aside and the matter remanded to the Tribunal for fresh consideration with directions to either apply the earlier decision or refer the question to a Larger Bench.

Tax deduction at source (TDS) liability of representative assessee - principle of mutuality - taxation at maximum marginal rate for indeterminate beneficiaries - Whether the Court answered the substantial questions of law concerning indeterminate beneficiaries, TDS liability, and applicability of the principle of mutuality. - HELD THAT: - The Court expressly refrained from deciding the substantial questions of law framed in the appeal - including whether the beneficiaries' share was indeterminate (attracting maximum marginal rate), whether the trust was liable to deduct tax at source on borrowings for the benefit of individual beneficiaries, and whether the principle of mutuality applied. Those questions were not adjudicated on merits; rather, their determination was left to the Tribunal on remand so that it may consider them in accordance with law and the guidance given regarding precedent. [Paras 10, 11]

Substantial questions of law were not decided by the High Court and are to be considered afresh by the Tribunal on remand.

Final Conclusion: The impugned Tribunal order is set aside and the matter is remanded to the Income-tax Appellate Tribunal for fresh consideration; the Tribunal must take note of the earlier Sarvodaya Mutual Benefit Trust decision and either apply it, distinguish it with recorded reasons, or refer the issue to a Larger Bench, and thereafter decide the substantial questions of law in accordance with law.

Comparability analysis - Transaction Net Margin Method - working capital adjustment - arm's-length price - double counting - remand for reconstruction of financials - penalty initiation premature

Comparability analysis - arm's-length price - Inclusion of Accentia Technologies Ltd as a comparable - HELD THAT: - The Tribunal examined the standalone annual accounts and related schedules of Accentia Technologies Ltd and found that the purported extraordinary investment did not affect standalone profitability. The company operated on a single segment basis (healthcare receivable management) on standalone accounts and did not show functional attributes of a KPO on standalone basis. Goodwill noted in fixed assets arose from acquisitions and did not demonstrably affect profit-earning capacity. Precedents relied upon by the assessee were inapplicable for the year under consideration. Consequently Accentia was held functionally comparable and inclusion in the comparability set was confirmed. [Paras 9, 10]

Accentia Technologies Ltd is a valid comparable and is to be retained in the comparability analysis.

Comparability analysis - Exclusion of ICRA Techno Analytics Ltd from the comparable set - HELD THAT: - On review of the standalone accounts it was found that ICRA Techno Analytics Ltd engaged in software development, consultancy and sale of branded computer software-activities not undertaken by the assessee. The functional profile therefore differed materially from the assessee's provision of ITeS services. The Tribunal directed the TPO to exclude ICRA Techno Analytics Ltd from the set of comparables. [Paras 11, 13]

ICRA Techno Analytics Ltd is not a comparable and must be excluded from the comparability analysis.

Comparability analysis - Exclusion of Eclrex Services Ltd from the comparable set - HELD THAT: - The standalone annual accounts and notes demonstrated that Eclrex operated as a KPO engaged in knowledge process outsourcing and had functional distinctions from the assessee. Given that the assessee did not establish itself as a KPO in its TP documentation, the Tribunal held that the TPO could not select a KPO comparable for an assessee not characterised as such and directed exclusion of Eclrex Services Ltd. [Paras 14, 16]

Eclrex Services Ltd is not a valid comparable and is to be excluded.

Comparability analysis - Exclusion of TCS E Serve Ltd from the comparable set on the ground of disproportionate size - HELD THAT: - The Tribunal noted the very large disparity in turnover (comparable being some 34 times larger) and, having regard to judicial guidance accepting exclusion of comparables with substantially larger turnovers, held that such a large entity is unsuitable for benchmarking the assessee. Accordingly the TPO was directed to exclude TCS E Serve Ltd. [Paras 17, 19]

TCS E Serve Ltd is to be excluded from the comparability analysis due to disproportionate size.

Comparability analysis - Exclusion of Infosys BPO Ltd from the comparable set on the ground of disproportionate size and brand/intangibles - HELD THAT: - Infosys BPO Ltd had turnover more than 27 times that of the assessee and possessed high brand value and associated intangibles, rendering it functionally and scale-wise dissimilar. For the same reasons applied to TCS E Serve Ltd, the Tribunal directed exclusion of Infosys BPO Ltd from the comparability set. [Paras 20, 22]

Infosys BPO Ltd is to be excluded from the comparability analysis.

Remand for reconstruction of financials - comparability analysis - Inclusion of R Systems International Ltd subject to reconstruction of financials - HELD THAT: - R Systems International Ltd followed a different accounting period (calendar year). The Tribunal observed that, as a listed company furnishing quarterly results, its financials can be recast into the assessee's accounting year by reconstructing quarterly results. The assessee was directed to produce credible quarterly data to enable the TPO to examine and, if in order, include R Systems in the comparability analysis. [Paras 23, 25]

R Systems International Ltd may be included if the assessee reconstructs its financials and the TPO verifies them; the matter is remanded for that limited purpose.

Working capital adjustment - double counting - Deletion of addition for interest on overdue receivables from associated enterprise - HELD THAT: - The TPO had computed working-capital-adjusted margins for comparables. The Tribunal found that treating outstanding receivables as a separate international transaction and adding interest would amount to double counting because debtors were already reflected in the working capital adjustment. Consequently the addition for interest on overdue receivables was deleted. [Paras 28]

The addition on account of interest on overdue receivables is deleted.

Transaction Net Margin Method - Grounds 1-5 (general TP grounds and methods) not pressed and dismissed - HELD THAT: - The Tribunal recorded that grounds 1-5 were either general or related to transfer pricing issues other than comparables and were not pressed by the assessee. Accordingly those grounds were dismissed. [Paras 27]

Grounds 1-5 are dismissed as not pressed.

Penalty initiation premature - Challenge to initiation of penalty proceedings under section 271(1)(c) dismissed as premature - HELD THAT: - The Tribunal held that initiating penalty proceedings at that stage was premature and therefore dismissed the ground challenging the initiation of penalty proceedings. [Paras 29]

The challenge to initiation of penalty proceedings is dismissed as premature.

Final Conclusion: The appeal is partly allowed: certain comparables (ICRA Techno Analytics Ltd, Eclrex Services Ltd, TCS E Serve Ltd, Infosys BPO Ltd) are excluded; Accentia Technologies Ltd is retained; R Systems International Ltd may be included if the assessee reconstructs its quarterly financials for verification by the TPO; the addition for interest on overdue receivables is deleted; grounds 1-5 are dismissed as not pressed; the challenge to penalty initiation is dismissed as premature.

Exemption under section 10(38) of the Income-tax Act - bogus/accommodation entries of long term capital gains - onus on assessee to substantiate long term capital gains by independent third party documents - evidentiary requirement to confront third party statements and right to cross examination - weight of investigation wing's general study report versus case specific evidence - addition as unexplained credit and notional commission under section 68/section 69C

Exemption under section 10(38) of the Income-tax Act - bogus/accommodation entries of long term capital gains - weight of investigation wing's general study report versus case specific evidence - onus on assessee to substantiate long term capital gains by independent third party documents - Long term capital gains claimed on sale of shares of M/s Sunrise Asian Ltd. are genuine and eligible for exemption under section 10(38). - HELD THAT: - The Tribunal analysed the assessment material and the assessee's documentary evidence (allotment advice, bank payments for purchase, demat statements showing credit and delivery, contract notes for sale, books of account and timely filed returns) and found no specific or tangible material brought on record by the AO to controvert those documents. Reliance placed by the AO on a general investigation wing report and statements in other searches was held insufficient because the report was not made available to or confronted with the assessee and did not link the assessee specifically to any entry operators. The Tribunal applied the settled principle that suspicion, surmise or a generalised modus operandi in other cases cannot substitute specific evidence against the assessee; where an assessee produces independently verifiable third party documents, the department must produce contrary material to displace them. The Tribunal further observed that third party statements relied upon by the AO (recorded under search provisions) were not furnished for confrontation or cross examination, rendering reliance on them procedurally and legally infirm. Having weighed the documentary proof produced by the assessee and the absence of case specific incriminating material from the AO, the Tribunal concluded that the assessee discharged the onus to prove genuineness and was entitled to exemption under section 10(38). [Paras 15, 16, 18, 21, 25]

The addition treating the claimed LTCG as bogus is set aside and the claim of exemption under section 10(38) is allowed.

Addition as unexplained credit and notional commission under section 68/section 69C - Consequential addition on account of notional commission under section 69C is not sustainable once the long term capital gain finding is reversed. - HELD THAT: - The notional commission addition was consequential to the AO's treatment of the long term capital gains as bogus. As the Tribunal has reversed the finding that the LTCG were bogus and allowed the exemption, the consequential addition under section 69C (notional commission) cannot stand and must be deleted. [Paras 28]

The notional commission addition under section 69C is deleted.

Onus on assessee to substantiate long term capital gains by independent third party documents - Disallowance of interest (claimed set off/allowance) is deleted where Revenue failed to establish nexus that interest bearing funds were used for interest free advances. - HELD THAT: - On the facts the assessee demonstrated that interest free funds exceeded interest bearing funds and produced evidence of receipt of interest from the partnership; Revenue did not establish any direct nexus showing that interest bearing funds were utilised to make interest free advances. The Tribunal relied on the presumption applicable in mixed fund situations and on the absence of contrary material from the AO to delete the disallowance of interest. [Paras 29, 30, 31, 32, 33]

The disallowance of interest is deleted and the ground is allowed.

Final Conclusion: For A.Y. 2014-15 the Tribunal allowed the appeals: the assessee's claim of exemption of long term capital gains on sale of Sunrise Asian Ltd. shares under section 10(38) was accepted; the consequential notional commission addition under section 69C was deleted; and the disallowance of interest was deleted. The appeals are allowed in favour of the assessees and against the Revenue.

Classification of interest income as business income - income from other sources - interest incidental and attributable to business - temporary parking of advances with banks - precedential application of earlier Tribunal orders

Classification of interest income as business income - income from other sources - interest incidental and attributable to business - temporary parking of advances with banks - Whether interest earned on fixed deposits constituted income from business and profession or income from other sources for AY 2013-14 - HELD THAT: - The Tribunal upheld the view of the first appellate authority that interest on fixed deposits arising from advances received and held temporarily for film production activities was directly linked to the assessee's business and therefore taxable as business income. The Tribunal noted that the factual matrix for AY 2013-14 was identical to AYs 2011-12 and 2012-13, where in its earlier orders it had held such interest to be business income because (a) advances were received for business purposes from government ministries and departments, (b) the amounts could not be immediately utilised due to the nature and duration of film production and were therefore parked short-term with banks to make them productive, and (c) the interest was attributable and incidental to the business activities rather than arising from an independent activity. The Tribunal rejected reliance on authorities where business had not commenced or facts differed, observing those decisions were distinguishable. Applying the prior decisions in the assessee's own case and the factual findings of the FAA which the Department did not challenge, the Tribunal declined to interfere with the classification made by the CIT(A). [Paras 3, 5]

The interest on fixed deposits for AY 2013-14 is to be treated as income from business and profession; the revenue's appeal is dismissed.

Final Conclusion: Following earlier Tribunal decisions in the assessee's own case for AYs 2011-12 and 2012-13 and on the basis that the advances were business receipts temporarily deposited with banks and the interest was incidental and attributable to the business of film production, the Tribunal dismissed the revenue's appeal for AY 2013-14.

Deduction of tax at source - Chargeability to tax - Exemption under section 10(26) - Disallowance under section 40(a)(ia) - Scope of section 195(1)

Deduction of tax at source - Exemption under section 10(26) - Scope of section 195(1) - Whether payments made to members of Scheduled Tribes, whose incomes are exempt under section 10(26), required deduction of tax at source and consequent disallowance under section 40(a)(ia). - HELD THAT: - The Tribunal accepted the reasoning of the CIT(A) and precedent of the jurisdictional Tribunal and the Supreme Court that tax deduction obligations arise only where the amount paid is chargeable to tax. Payments to payees who are tribal persons and whose incomes are exempt under section 10(26) are not chargeable to tax; hence there was no occasion for the payer to deduct tax at source and the Assessing Officer was not justified in invoking section 40(a)(ia) to disallow such payments. The CIT(A)'s deletion of the disallowance in respect of payments to Scheduled Tribes is therefore upheld. [Paras 7, 8]

Deletion of disallowance in respect of payments to Scheduled Tribes upheld; the addition in respect of such payments is vacated.

Disallowance under section 40(a)(ia) - Deduction of tax at source - Whether disallowance under section 40(a)(ia) on payments to Non-Schedule Tribes is sustainable. - HELD THAT: - The Tribunal sustained the CIT(A)'s finding that payments made to non-tribal payees were liable to TDS and that the assessee failed to produce evidence that these payees had complied with the conditions necessary to avoid disallowance. Consequently, the CIT(A)'s confirmation of disallowance aggregating to Rs. 30,89,162 for specified categories of payments to non-tribal payees was maintained. [Paras 5, 8]

Disallowance of Rs. 30,89,162 in respect of payments to non-tribal payees sustained.

Disallowance under section 40(a)(ia) - Deduction of tax at source - Whether the disallowance sustained in respect of payments to non-tribal payees should stand where those payees have included the receipts in their returns of income. - HELD THAT: - The Tribunal directed a remand to the Assessing Officer to verify whether the non-tribal payees had included the disputed receipts in their books/computation of total income and filed returns. If such inclusion and tax compliance by the payees is established, no disallowance under section 40(a)(ia) would arise; if not, the Assessing Officer may proceed in accordance with law. The Tribunal therefore restored this limited factual enquiry to the file of the Assessing Officer for determination. [Paras 13]

Issue remitted to the Assessing Officer to examine whether the noted non-tribal payees included the receipts in their books/returns; if so, disallowance shall not be made, otherwise AO to act in accordance with law.

Final Conclusion: The Tribunal dismisses the Revenue's appeal and upholds the CIT(A)'s deletion of disallowance for payments to Scheduled Tribes while confirming the disallowance in respect of specified payments to non-tribal payees; the question whether those non-tribal payees declared the receipts is remitted to the Assessing Officer for verification.

Reopening of assessment - reasons to believe - fishing and roving enquiries - burden under section 68 - identity and creditworthiness of donor - discretion under section 68 - penalty under section 271(1)(c) - interest under sections 234B and 234C

Reopening of assessment - reasons to believe - fishing and roving enquiries - Validity of reassessment notice issued under section 148/147 for AY 2012-13 - HELD THAT: - The Tribunal examined whether the Assessing Officer had material to form a 'reason to believe' that income chargeable to tax had escaped assessment. The Tribunal rejected the assessee's challenge that reopening was wholly casual in view of the material before the AO: the purchase of agricultural land was not disclosed in earlier return and the AO had information regarding the transaction which, in the Tribunal's view, justified reopening to verify both source and genuineness of claimed gifts/loan. The assessee's reliance on authorities prohibiting reopening merely for verification of source was considered but the Tribunal found facts distinguishable and held that no infirmity could be found in the AO's action to reopen. Consequentially these grounds of the assessee's appeal were dismissed.

Grounds challenging reopening dismissed; reopening held valid.

Burden under section 68 - identity and creditworthiness of donor - discretion under section 68 - Sustainability of additions under section 68 in respect of gifts/loan and enhancement by CIT(A) - HELD THAT: - The Tribunal addressed whether additions made by the AO (Rs.31,10,000) and the further enhancement by the CIT(A) (Rs.34,64,150) could be sustained. It recorded that the assessee had filed confirmations, PAN/addresses where available and source documents in respect of several donors, and that certain gifts were accepted in part by the AO. On appellate review the Tribunal deleted the enhancement of Rs.34,64,150 made by the CIT(A) and gave the assessee relief in specified items: it allowed the gifts from the father and modified the AO's findings for mother and grandmother (allowing Rs.17,00,000; Rs.2,50,000; and Rs.3,00,000 respectively - aggregate relief noted in the order). The Tribunal found there was insufficient basis to sustain the CIT(A)'s broad enhancement where identity and relationship were established and where documentary material had been placed on record. However, for certain other gifts/loan (from wife, father in law, mother in law, brother in law and friend) the matter was restored to the AO for verification and directed the AO to examine veracity; if claims are proved the AO is to delete the additions. The Tribunal applied the principle that section 68 imposes an initial onus on the assessee and, once discharged, the revenue must prove that the apparent is not real; where the AO/CIT(A) failed to rebut the evidence the additions were deleted or reduced.

Enhancement of Rs.34,64,150 by CIT(A) set aside; specified portions of gifts allowed; remaining disputed gifts/loan remanded to AO for verification.

Opening balance of capital - burden under section 68 - Treatment of opening capital of Rs.8,43,150 - HELD THAT: - The CIT(A) had enhanced income by including opening capital, observing lack of documentary proof of earlier earnings. The Tribunal noted that the opening capital formed part of the enhancement which it has set aside. On this basis the Tribunal allowed the ground challenging the enhancement of opening capital and directed deletion in consequence of its earlier directions on enhancement.

Enhancement on account of opening balance of capital (Rs.8,43,150) deleted.

Lump sum additions - Addition of Rs.1,00,000 for low marriage expenses - HELD THAT: - The Tribunal reviewed the material and authorities on estimating marriage expenses and found no infirmity in the concurrent factual finding of the authorities below. The Tribunal sustained the AO's lump sum addition of Rs.1,00,000 made on account of marriage expenses.

Addition of Rs.1,00,000 on account of marriage expenses upheld.

Interest under sections 234B and 234C - Chargeability of interest under sections 234B and 234C - HELD THAT: - The Tribunal recorded that interest under sections 234B and 234C is consequential and mandatory. It directed that interest be charged as per law on the amount of income that may be finally assessed.

Interest under sections 234B and 234C to be charged as per law on the final assessed income (consequential).

Penalty under section 271(1)(c) - Sustainability of penalty levied by AO and enhanced by CIT(A) - HELD THAT: - The Tribunal noted that in the connected quantum appeal substantial additions were deleted and other issues remanded for verification. In view of the deletions and remand, the Tribunal set aside the penalty order and directed the AO to delete penalty in respect of amounts deleted and to return to the file of the AO penalty aspects relating to additions remanded for verification. The Tribunal observed that penalty could not be sustained in respect of deleted additions.

Penalty order set aside in part; AO directed to delete penalty for amounts deleted and to re-examine penalty for remanded issues.

Final Conclusion: For AY 2012-13 the Tribunal dismissed the challenge to reopening; deleted the CIT(A)'s enhancement of gifts/opening capital (with specified relief allowed in respect of certain donors), sustained the AO's addition for marriage expenses, held interest to be charged as per law on the finally assessed income, and set aside the penalty order insofar as it relates to amounts deleted while directing the AO to re-examine penalty for issues remanded to him. Appeals partly allowed and remittances directed as indicated.

Addition under section 68 treated as unexplained cash credit - genuineness of the transaction - identity of the payer - creditworthiness - remand to the Assessing Officer for fresh enquiry and speaking order - right to cross-examination and principles of natural justice - admission of additional evidence under Rule 29

Addition under section 68 treated as unexplained cash credit - genuineness of the transaction - identity of the payer - creditworthiness - remand to the Assessing Officer for fresh enquiry and speaking order - right to cross-examination and principles of natural justice - Whether the addition of share application money of Rs. 4,45,00,000/- under section 68 can be sustained on the basis of material on record or whether the matter must be remitted to the Assessing Officer for fresh examination of identity, creditworthiness and genuineness. - HELD THAT: - The Tribunal observed that the Assessing Officer relied primarily on findings of the departmental investigation and the statement recorded under section 132(4) to treat share application money as bogus. The authorities below recorded that notices under section 133(6) to the investor company remained unresponded and treated the investor as part of a web of accommodation entries. The Tribunal held that the three determinative ingredients for invoking section 68 are the genuineness of the transaction, the identity of the payer and the creditworthiness of the payer. The material on record, including documents filed by the assessee and the affidavit obtained from the person whose statement had been relied upon, did not make these aspects sufficiently clear and the lower orders did not contain the required cogent, speaking findings on these three ingredients. Given the lacunae in the record and the assessee's contention that it could secure attendance of representatives of the investor if required, the Tribunal considered it appropriate to remit the matter to the Assessing Officer. The AO was directed to issue necessary notices, afford adequate opportunity of being heard to the assessee, examine the documents and financial statements produced by the assessee, permit production/cross-examination of relevant persons if necessary, and pass a reasoned speaking order on identity, creditworthiness and genuineness of the transactions. The Tribunal noted the parties' submissions on natural justice and additional evidence but found that admission of the affidavit rendered further reliance on cross-examination immaterial for the present disposal; nonetheless procedural fairness in the remand was mandated. [Paras 14, 15, 16, 17]

Issue remitted to the file of the Assessing Officer for fresh examination of identity, creditworthiness and genuineness of the share application money, with directions to issue necessary notices, afford the assessee opportunity of hearing and pass a speaking order; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal did not uphold the addition on the record before it but remitted the matter to the Assessing Officer to examine and decide, with reasons, the identity, creditworthiness and genuineness of the share application money; the assessee to be given adequate hearing and the appeal stands allowed for statistical purposes.

Unexplained cash credit under section 68 - identity, creditworthiness and genuineness of creditors/transactions - onus on the assessee to prove genuineness by documentary evidence - admission and subsequent retraction of statement - evidentiary weight - right to cross examination and principles of natural justice - consequential treatment of interest paid on held genuine loans

Unexplained cash credit under section 68 - identity, creditworthiness and genuineness of creditors/transactions - onus on the assessee to prove genuineness by documentary evidence - admission and subsequent retraction of statement - evidentiary weight - right to cross examination and principles of natural justice - Deletion of addition made by the AO treating unsecured loans as unexplained cash credit was upheld. - HELD THAT: - The Tribunal followed a coordinate bench decision in the assessee's earlier years where identical facts were considered. The assessee furnished confirmations, bank statements, financial statements and tax documents to establish identity, creditworthiness and genuineness of the lenders and of receipt/repayment of loans. The AO failed to bring cogent adverse material to rebut the documentary evidence or to make further enquiry. Reliance placed by the AO on initial statements of third parties was not treated as conclusive since admissions may be retracted and the assessee sought cross examination which the AO did not provide; denial of cross examination was a breach of principles of natural justice. In those circumstances the CIT(A)'s conclusion that the onus was discharged and the addition under section 68 was not sustainable was upheld. [Paras 5, 7]

Grounds of appeal challenging deletion of the addition under section 68 dismissed and the CIT(A)'s order upheld.

Consequential treatment of interest paid on held genuine loans - Disallowance of interest expense paid on the said unsecured loans was deleted consequentially and that deletion was upheld. - HELD THAT: - Having held that the unsecured loans were genuine and not liable to be added under section 68, the AO's disallowance of interest as being paid on bogus loans could not be sustained. The deletion of the disallowance by the CIT(A) was therefore affirmed as consequential to the finding on the genuineness of the loans. [Paras 11]

Ground of appeal against disallowance of interest dismissed and the CIT(A)'s order upheld.

Final Conclusion: Both appeals of the Revenue are dismissed and the orders of the CIT(A) for assessment years 2014-15 and 2015-16 are upheld.

Treatment of unexplained cash/loans as income under section 68 doctrine of identity, genuineness and creditworthiness of creditors - weight to assessment order in another assessee's case and limits of its application - protective assessment vis-a -vis substantive assessment - proof of genuineness by banking channel and deduction of TDS as corroborative evidence - pronouncement of Tribunal orders beyond 90 days and exclusion of lockdown period under rule 34(5)

Treatment of unexplained cash/loans as income under section 68 doctrine of identity, genuineness and creditworthiness of creditors - weight to assessment order in another assessee's case and limits of its application - protective assessment vis-a -vis substantive assessment - Addition under section 68 in respect of loan from M/s Samir Enterprises was not warranted and was rightly deleted by the Commissioner (Appeals). - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the Assessing Officer had relied primarily on an assessment order in the case of M/s Samir Enterprises without conducting independent corroborative inquiry in the assessee's case. The AO did not point out defects in the documentary evidence furnished by the assessee nor demonstrate why the loan should be treated as accommodation entry; reliance ipso facto on findings in another assessee's assessment was held insufficient. The CIT(A) further observed that a protective assessment cannot stand independent of substantive assessment and, on the material on record (loan taken in an earlier year, transactions through banking channel and documentary proof), the assessee discharged its onus of establishing identity, genuineness and creditworthiness of M/s Samir Enterprises. In absence of any new material from Revenue, the Tribunal affirmed deletion of the addition. [Paras 14]

Addition under section 68 in respect of loan from M/s Samir Enterprises deleted; revenue's ground dismissed.

Treatment of unexplained cash/loans as income under section 68 doctrine of identity, genuineness and creditworthiness of creditors - proof of genuineness by banking channel and deduction of TDS as corroborative evidence - Additions disallowing loans and interest in respect of other creditors were not sustainable and were deleted by the Commissioner (Appeals). - HELD THAT: - The assessee produced loan confirmations, banking evidence of acceptance and repayment, and had deducted and remitted TDS on interest payments. The AO had not recorded any examination of or objection to the confirmations in the assessment order. The CIT(A) accepted the documentary proof and creditworthiness as established; the Tribunal found no contrary material placed by Revenue and upheld the deletion of additions and disallowances in respect of principal and interest. [Paras 15]

Disallowance of loans and interest in respect of other creditors deleted; revenue's grounds dismissed.

Pronouncement of Tribunal orders beyond 90 days and exclusion of lockdown period under rule 34(5) - Pronouncement of the Tribunal's order beyond 90 days from conclusion of hearing was justified by excluding the lockdown period as per the cited coordinate-bench precedent. - HELD THAT: - The Tribunal followed its coordinate-bench decision in JSW Ltd which held that the exceptional circumstances of the COVID-19 lockdown justify excluding the lockdown period for computing the 90-day limit under rule 34(5). Relying on that reasoning and relevant higher-court directions extending limitation during lockdown, the Tribunal pronounced the order beyond 90 days and recorded reliance on the precedent. [Paras 18]

Delay in pronouncement beyond 90 days upheld by excluding lockdown period; order pronounced as per rule 34(5).

Final Conclusion: The Tribunal dismissed the revenue's appeal for AY 2012-13, upholding the CIT(A)'s deletions of additions under section 68 in respect of loan from M/s Samir Enterprises and other loans and interest, and validated pronouncement of the order beyond 90 days by excluding the lockdown period under rule 34(5).

Penalty for concealment or furnishing inaccurate particulars of income under section 271(1)(c) - inadvertent mistake or bona fide omission versus deliberate concealment - reversal in subsequent year and prior/subsequent year consistency as evidence against concealment - assessment selection and detection of accounting errors - scope of appellate authority to delete penalty - pronouncement beyond ninety days and exclusion of lockdown period for computation of time

Penalty for concealment or furnishing inaccurate particulars of income under section 271(1)(c) - inadvertent mistake or bona fide omission versus deliberate concealment - reversal in subsequent year and prior/subsequent year consistency as evidence against concealment - Whether penalty under section 271(1)(c) could be sustained for (i) auditors' fees debited twice due to accounting entries and (ii) failure to disallow STT in the computation, where the assessee rectified the entries in the subsequent year and the errors were claimed to be inadvertent. - HELD THAT: - The Tribunal found that the assessee had initially debited the payment to the auditor to legal and professional fees and subsequently - while finalising accounts - passed a journal creating a payable and debited auditor's remuneration, resulting in double debit which was not noticed until scrutiny. The assessee accepted the mistake when pointed out, reversed the entries in the next year and produced ledger details. Similarly, the omission to disallow Securities Transaction Tax in the computation was held to be an oversight. Considering the total income declared and the corrective action in the subsequent year, the Tribunal concluded that there was no evidence of an intention to conceal income or to furnish inaccurate particulars so as to attract penalty. The Tribunal applied the principle that bona fide mistakes, corrected in books and supported by surrounding facts showing consistency across years, are not equivalent to deliberate suppression warranting penalty; it relied on the approach taken in the decision relied upon by the assessee, Price Waterhouse Coopers , as analogous. In these circumstances, and having regard to the nature of the errors (provisional year-end entries and oversight in computation) and their rectification, the Tribunal exercised its appellate jurisdiction to delete the penalty confirmed by the CIT(A). [Paras 12, 13, 14]

Penalty under section 271(1)(c) deleted with respect to the double debit of auditors' remuneration and the STT omission; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2008-09 and deleted the penalty under section 271(1)(c) imposed for the double debit of auditors' fees and the inadvertent failure to disallow STT, holding the errors to be bona fide mistakes rectified in the subsequent year; the order was pronounced beyond 90 days with reliance on exclusion of the lockdown period.

Characterisation of licensed software supply as sale or as royalty - scope of fee for technical services and the make available requirement under DTAA - tax deduction at source obligation under Section 195 and disallowance under section 40(a)(i) - treatment of subscriptions and software maintenance as services

Characterisation of licensed software supply as sale or as royalty - disallowance under section 40(a)(i) - Whether the computer maintenance and software-related payments made to Omron Asia Pacific Pte. Ltd., Singapore are in the nature of royalty so as to justify disallowance under section 40(a)(i) for failure to deduct tax at source. - HELD THAT: - The Tribunal examined the scope of the system maintenance and support agreement and noted that parts of the contract related to pure rendition of services (support, maintenance, manpower support, business care) while other parts granted entitlement to subscribe to updated versions of third party software licenses which the Singapore entity had purchased and resold. The Singapore entity was not the owner of the copyright in the software; it procured licenses from third party manufacturers and on sold/subscribed them to the Indian assessee. On these facts the Tribunal held that the transactions constituted provision of services and purchase/sale of licensed software from a third party, rather than grant of a copyright or a right to use copyright that would constitute royalty. The Tribunal further observed that the CIT(A)'s reliance on earlier decisions treating software consideration as royalty did not assist the Revenue in the present factual matrix, and that subsequent decisions including those favouring the assessee had undermined the precedential value of the authorities relied upon by the CIT(A). In view of this legal and factual analysis the Tribunal concluded that the expenditure could not be characterized as royalty and therefore the basis for disallowance under section 40(a)(i) did not subsist. [Paras 5]

The payment to the Singapore entity is not in the nature of royalty; consequently the disallowance under section 40(a)(i) cannot be sustained and the related grounds are allowed.

Tax deduction at source obligation under Section 195 and disallowance under section 40(a)(i) - temporal apportionment/actual payment as determinative of TDS liability - Whether the question of actual payment during the year (and its effect on TDS liability) is to be adjudicated in this appeal. - HELD THAT: - The Tribunal expressly granted relief to the assessee on the primary legal principle that the expenditure is not royalty. Consequently it declined to decide the alternate contention raised by the assessee that the money was not actually paid in the relevant year and thus TDS consequences might not arise. That factual/temporal contention was left open for consideration as it was not necessary to decide it after granting relief on the principal issue. [Paras 5]

The issue whether money was actually paid in the year (and the consequent TDS consequences) is left open and not adjudicated.

Final Conclusion: The Tribunal allowed the appeal: the computer maintenance and software related payments made to the Singapore affiliate were held not to be in the nature of royalty, and therefore the disallowance under section 40(a)(i) cannot be sustained; an alternate contention as to whether payment was actually made in the year was left open for future consideration.

Treatment of long term capital gain as unexplained cash credit under section 68 - requirement to prove nature and source of credit where sale proceeds arise from sale of shares through recognised broker and STT paid - reliance on co-ordinate bench precedent in identical scrip transactions - consequential deletion of additions linked to deleted primary addition

Treatment of long term capital gain as unexplained cash credit under section 68 - requirement to prove nature and source of credit where sale proceeds arise from sale of shares through recognised broker and STT paid - reliance on co-ordinate bench precedent in identical scrip transactions - Addition of long term capital gain from sale of shares of M/s. Jolly Plastic Industries Ltd. treated as unexplained cash credit under section 68 was not sustainable - HELD THAT: - The Tribunal examined the facts that the assessee purchased 43,000 shares and sold the same through a recognised broker within the relevant period, that STT was paid on the transactions and sale proceeds were credited to the assessee's bank account. Relying on the decision of the co-ordinate bench in Akshay Jain (same scrip and similar transactional matrix), the Bench observed that where the availability of shares and sale through recognised broker with contemporaneous contract notes, STT payment and bank credits is not disputed, the nature and source of the credit stand explained for the purposes of section 68. The Department had not produced material establishing that the assessee was a beneficiary of accommodation entries or had routed unaccounted money; the authorities had relied on general allegations of price manipulation and SEBI action without any live nexus to the assessee. In these circumstances, the Tribunal followed the co-ordinate bench precedent and directed deletion of the addition made under section 68. [Paras 9]

Addition of Rs. 98,93,959/- treated as unexplained cash credit under section 68 deleted and order of Ld. CIT(A) set aside.

Consequential deletion of additions linked to deleted primary addition - Addition of commission paid for procuring the long term capital gain as consequential to the primary addition was to be deleted - HELD THAT: - The Tribunal held that having directed deletion of the primary addition in respect of the long term capital gain, the sum added by the AO as commission for procuring that gain was consequential and could not survive independently. No separate basis was shown to sustain this addition once the principal addition was deleted. [Paras 10]

Addition of Rs. 66,948/- towards commission deleted as consequential to the deletion of the primary addition.

Final Conclusion: The assessee's appeal is allowed: the addition treating the long term capital gain as unexplained cash credit is deleted and the consequential addition for commission is also deleted; the matter is remitted to the AO for compliance with this direction.

Principles of natural justice - Denied Entity List (DEL) - Reasoned order / recording of reasons - Show Cause Notice - adequacy and specificity - Interim measure versus final order - Section 9(4) of the Foreign Trade (Development & Regulation) Act, 1992 - suspension/cancellation for good and sufficient reasons - Rule 7, Rule 9 and Rule 10 of Foreign Trade (Regulation) Rules, 1993 - refusal, suspension and cancellation by order in writing - Guidelines for Maintaining the Denied Entities List (DEL) - right to be heard and speaking order - Availability of alternative remedy not a bar where natural justice is violated

Availability of alternative remedy not a bar where natural justice is violated - Abuse of process - concealment of earlier proceedings - Maintainability of writ petition in face of earlier withdrawn petition and existence of alternative statutory appeal. - HELD THAT: - The Court considered the respondents' preliminary objections that the petitioner had earlier filed and withdrawn a petition after concealing the second Show Cause Notice and that an alternative remedy under Section 15 of the Act was available. The Court held that the petitioner had obtained leave to file a fresh petition with full disclosure and therefore the earlier withdrawal did not warrant dismissal for abuse of process. Further, relying on the principle that availability of an alternative remedy does not bar a writ petition where there is an alleged violation of the principles of natural justice, the Court found the objection based on alternate remedy untenable in the facts of this case. [Paras 18, 20]

Petition is maintainable despite earlier withdrawal and existence of statutory appeal because the petition raises alleged breaches of natural justice.

Show Cause Notice - adequacy and specificity - Guidelines for Maintaining the Denied Entities List (DEL) - requirement to examine evidence and issue speaking order - Validity of the Show Cause Notices dated 08.11.2019 and 02.12.2019 in respect of vagueness and failure to disclose supporting material. - HELD THAT: - The Court examined the Show Cause Notices which stated that DRI had informed of an investigation alleging gross over-valuation and requested withholding of incentives. The petitioner contended it had not claimed MEIS benefits and sought a copy of the DRI communication. The Guidelines require that where external agencies recommend suspension/cancellation the licensing authority must examine evidence, call for more evidence if insufficient, and, if satisfied, place the firm in DEL only after issuing a speaking order. The Court found the DRI communication cryptic and that the Show Cause Notices did not spell out precise violations or enclose the underlying communication, thereby rendering the notices deficient for the purposes of a reasoned administrative decision. [Paras 6, 15, 22, 23, 39]

Show Cause Notices were defective for lack of specificity and failure to disclose or suitably examine the material relied upon.

Denied Entity List (DEL) - Reasoned order / recording of reasons - Section 9(4) of the Foreign Trade (Development & Regulation) Act, 1992 - suspension/cancellation for good and sufficient reasons - Rule 7, Rule 9 and Rule 10 of Foreign Trade (Regulation) Rules, 1993 - refusal, suspension and cancellation by order in writing - Interim measure versus final order - Guidelines for Maintaining the Denied Entities List (DEL) - right to be heard and speaking order - Validity of the placement of the petitioner on the DEL (referred to as order dated 10.01.2020) without a separate reasoned order, without recording reasons, and without affording adequate opportunity of hearing. - HELD THAT: - Statutory provisions and Rules require refusal, suspension or cancellation of licence/certificate/scrip to be by an order in writing with reasons; Section 9(4) mandates "good and sufficient reasons" and a reasonable opportunity of hearing. The DEL Guidelines specifically require a speaking order where the licensing authority is satisfied on the basis of evidence from external agencies. The Court found that, beyond an entry on the DGFT website stating only that the firm "is under D.R.I Ludhiana investigation," there was no separate reasoned order recording the licensing authority's independent application of mind or reference to the Show Cause Notices and replies. The respondents admitted that save for the DRI reference they had no other material. The entry neither recorded reasons amounting to "good and sufficient reasons" nor complied with the Guidelines' requirement to inform the entity of appeal rights. The respondents' belated oral plea that the order was an interim measure was not reflected in any order and was an afterthought; moreover, even interim measures affecting civil rights require recorded reasons and, if passed in urgency without prior hearing, must afford post-decisional hearing. In consequence the entry operated as a final order with civil consequences by blocking MEIS benefits and therefore could not stand without compliance with statutory and natural justice mandates. [Paras 37, 38, 40, 41, 42]

The placement on DEL (10.01.2020) is invalid for failure to record reasons, non-compliance with the DEL Guidelines and statutory requirements, and for not affording proper opportunity of hearing; the order is set aside.

Final Conclusion: The writ petition is allowed: the Show Cause Notices dated 08.11.2019 and 02.12.2019 and the action placing the petitioner on the Denied Entity List (referenced as order dated 10.01.2020) are set aside for non-compliance with statutory requirements and principles of natural justice. Respondents are at liberty to pass a fresh order in accordance with law. Respondents to pay costs to the petitioner.

Mandatory Kimberley Process certification for import of rough diamonds - requirement of pre-arrival production and container marking of Kimberley Process Certificate - discretion for limited time to produce certificate where certificate exists prior to export - confiscation of goods for non-compliance with Kimberley Process requirements under customs law - re-export only after confiscation and payment of redemption fee and penalty

Mandatory Kimberley Process certification for import of rough diamonds - requirement of pre-arrival production and container marking of Kimberley Process Certificate - The Kimberley Process (KP) certificate must accompany every consignment of rough diamonds on import and a copy must be produced on or before arrival for verification by GJEPC; failure to comply attracts the consequences provided in the Circular. - HELD THAT: - The Court examined Exhibit P5 and held that paragraph 4(a) makes it obligatory that every imported consignment of rough diamonds be accompanied by a Kimberley Process Certificate and that the importer must ensure the certificate is placed inside the parcel with the certificate number on the container. Further, a copy of the certificate must be produced on or before arrival along with import documents to enable GJEPC verification. The admitted facts show no certificate accompanied the goods and no copy was filed prior to arrival; there is also no case that a KP certificate had been issued for the goods before export from UAE. Thus the mandatory pre-arrival production requirement was not complied with, engaging the Circular's regulatory regime. [Paras 4]

Non-production of a KP Certificate and failure to produce its copy prior to arrival amounted to breach of the mandatory import procedure prescribed in Exhibit P5.

Discretion for limited time to produce certificate where certificate exists prior to export - seven working days provision in the Circular - The seven-day provision for production of the original KP certificate applies only where a KP certificate exists in respect of the goods at the time of export; it was not available to the appellant and was not invoked prior to seizure. - HELD THAT: - Paragraph 6 of Exhibit P5 contemplates a scenario where the KP Certificate does not accompany the goods but does exist for the consignment from the country of export; there the authorities may grant seven days' time to produce the original. The Court found that the appellant did not claim that a KP Certificate existed at export nor sought time from Customs after arrival to produce any such certificate. Arrival and bill of entry dates were noted, and the seven-day relaxation was thus inapplicable. Consequently, the limited-time discretion could not cure the non-compliance in this case. [Paras 5]

The seven-day production facility is inapplicable where no KP Certificate was issued prior to export and where no request for time was made to Customs.

Exhibit P10 is not a Kimberley Process Certificate - re-export only after payment of redemption fee and penalty - confiscation of goods for non-compliance with Kimberley Process requirements under customs law - Exhibit P10 is a technical certificate enabling export back to UAE and is not a KP Certificate that would validate the original import; consequently re-export without complying with confiscation, penalty and redemption provisions is not permissible. - HELD THAT: - The Court distinguished Exhibit P10 from a Kimberley Process Certificate, holding that P10 does not constitute a certificate issued for export from UAE which alone would validate import into India under the KP scheme. The Circular mandates confiscation for contravention and re-export is permissible only under the statutory mechanism after confiscation, which would require payment of redemption fee and penalty under Section 125 of the Customs Act. Thus submission of Exhibit P10 did not cure the defect nor preclude confiscation or the statutory route for re-export. [Paras 6]

Exhibit P10 does not substitute for a KP Certificate; re-export would require compliance with the confiscation/redemption/penalty route.

Confiscation of goods for non-compliance with Kimberley Process requirements under customs law - The Circular prescribes confiscation for contravention of its conditions, and the Court declined to interfere with the Single Judge's order permitting re-export only after payment of penalty and redemption fine and relegation to appellate remedy. - HELD THAT: - Paragraph 7 of Exhibit P5 and the overall scheme make clear that where rough diamonds become liable for confiscation under the Customs Act for contravention of the Circular's conditions, the goods should be absolutely confiscated. Applying this scheme to the admitted non-compliance, the Court found no reason to disturb the Single Judge's conclusion that the statutory consequences follow and that the appellate remedy remains available. Consequently, the appeal was dismissed in limine. [Paras 7, 8]

The statutory and circular mandate for confiscation on violation applies; the Single Judge's order allowing re-export only after payment of penalty/redemption and subject to appeal is upheld.

Final Conclusion: The appeal is dismissed; the mandatory Kimberley Process certification and related pre-arrival production requirements were not satisfied, Exhibit P10 does not cure the defect, and the statutory/circular consequences including confiscation and re-export only after payment of redemption fee and penalty stand as affirmed by the Single Judge.

Permission to carry food and medicines during official enquiry - Writ of Certiorari - detention memo - interim custody under Section 100A of the Customs Act, 1962 - expeditious conduct of enquiry during office hours

Permission to carry food and medicines during official enquiry - detention memo - Petitioners are permitted to carry their own food and medicines during the Directorate of Revenue Intelligence enquiry; no order quashing the detention memo was made. - HELD THAT: - The petitioner sought, inter alia, quashing of the detention memo and a direction that they be permitted to have food and medicines if the DRI enquiry extended for long. The DRI denied earlier allegations that petitioners were not permitted food or medicines but, without contesting the general proposition that food and medicines are essential, stated it had no objection to petitioners carrying their own supplies. The Court accepted that food and medicines are essential requirements and granted a direction permitting the petitioners to carry their own food and medicines while the enquiry proceeds. The Court did not grant or record a quashing of the detention memo; instead it disposed of the petition by issuing the limited directions recorded in the order. [Paras 5, 6, 7]

Petitioners permitted to carry their own food and medicines during the DRI enquiry; the request to quash the detention memo was not acceded to by way of the order.

Expeditious conduct of enquiry during office hours - interim custody under Section 100A of the Customs Act, 1962 - Court directed petitioners to appear on a specified date and directed that the DRI conduct and complete the enquiry during office hours and as expeditiously as possible; petitioners may thereafter seek interim custody under the statutory remedy if so advised. - HELD THAT: - The Court disposed of the petition by ordering the petitioners to appear before the DRI on the fixed date for further enquiry. Recognising that completion of the enquiry is the procedural precursor to any application for interim custody under the statutory provision relied upon by the parties, the Court directed that the enquiry be conducted in office hours and completed as expeditiously as possible so that statutory remedies (including an application under Section 100A of the Customs Act, 1962) can be pursued thereafter. The direction is procedural and limited to facilitating prompt completion of the enquiry. [Paras 7]

Petitioners to appear on 17.11.2020; enquiry to be conducted during office hours and completed expeditiously, enabling any subsequent statutory application for interim custody.

Final Conclusion: The petition was disposed of by directing the petitioners to appear on the specified date, permitting them to carry their own food and medicines during the DRI enquiry, and directing that the enquiry be conducted during office hours and completed as expeditiously as possible; no costs were awarded.

Adjournment - miscellaneous application dismissed as infructuous - consent to proceed with hearing - listing and hearing procedure under Public Notice - direction to authorized representative to be prepared

Miscellaneous application dismissed as infructuous - listing and hearing procedure under Public Notice - Miscellaneous Application for out of turn/early hearing was dismissed as infructuous. - HELD THAT: - The Tribunal found that the appeal had already been listed for hearing and therefore there was no occasion to file a separate Miscellaneous Application for early hearing. The record showed compliance with the filing requirements under the prescribed format in Annexure II following Public Notice No.1 of 2020, and the application filed on 17.06.2020 was rendered unnecessary by the existing listing and subsequent filing in Annexure II on 20.08.2020. Consequently the Miscellaneous Application was dismissed as infructuous. [Paras 2]

Miscellaneous Application dismissed as infructuous.

Adjournment - consent to proceed with hearing - direction to authorized representative to be prepared - The appeal was adjourned for further hearing with directions to the department's authorized representative to be prepared. - HELD THAT: - With the consent of both parties the appeal itself was taken up for hearing. The authorized representative for the department sought a short adjournment due to non availability of certain documents, a request which was not opposed by the appellant. The Tribunal granted the adjournment and fixed the matter for hearing on the specified date, specifically directing the department's Authorized Representative to come prepared and make submissions. [Paras 4]

Appeal adjourned to the specified date with a direction that the department's Authorized Representative come prepared to make submissions.

Final Conclusion: The Miscellaneous Application for early hearing was dismissed as infructuous; the appeal was adjourned by consent to the listed date and the department's Authorized Representative was directed to attend prepared to make submissions.

Limitation for filing appeals - date of receipt versus date of issuance of order - calculation of limitation period from date of receipt - remand for de novo decision on merits - condonation of delay not required where appeal is within limitation

Limitation for filing appeals - date of receipt versus date of issuance of order - calculation of limitation period from date of receipt - Whether the appeal was rightly dismissed as time barred by the Commissioner (Appeals) when limitation was computed from date of issuance instead of date of receipt. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) did not decide the appeal on merits but dismissed it as time barred. The learned Advocate for the appellant demonstrated that the impugned order was issued on 3rd October 2018 but was received by the appellant on 5th October 2018, and the appeal was filed on 4th December 2018. Applying the statutory rule that the period of limitation is to be computed from the date of receipt of the order, the appeal was within the prescribed period of sixty days. As there was no delay in filing before the lower appellate authority, the question of condonation of delay did not arise. In these circumstances the Tribunal concluded that the dismissal for being time barred was erroneous and warranted setting aside the impugned order and remanding the matter for adjudication on merits, with liberty to both parties to place evidence and a reasonable opportunity of hearing to be afforded to the appellant. All substantive issues were therefore left open for fresh decision by the Commissioner (Appeals).

Impugned order set aside and the appeal remanded to the Commissioner (Appeals) for fresh decision on merits; no delay in filing established so limitation not to be further considered.

Final Conclusion: The Tribunal set aside the order of dismissal as time barred, held that limitation must be computed from date of receipt (which rendered the appeal within sixty days), and remanded the matter to the Commissioner (Appeals) to decide the appeal on merits after affording the appellant a reasonable opportunity of hearing; all issues kept open.

Transmission of shares - rectification of register of members - oppression - estoppel by conduct - requirement of succession certificate in transmission - transfer and transmission of securities under Chapter IV of the Companies Act, 2013 - Civil Court not to have jurisdiction

Transmission of shares - rectification of register of members - oppression - Whether the Tribunal's order directing the company to effect transmission of shares in favour of the respondents and to rectify the register of members (with consequential benefits from 01.05.2017) should be set aside. - HELD THAT: - The Appellate Tribunal found no merit in the challenge to the NCLT order and upheld the Tribunal's direction. The Tribunal had concluded that the company was exercising arbitrary powers under its articles amounting to oppression and that the respondents, having submitted requisite documents by 01.04.2017, were entitled to be treated as shareholders with consequential benefits from 01.05.2017. The Appellants' new factual contention about the deceased's mother being a co-heir had not been raised before the Tribunal and, in any event, the mother had, by a letter dated 25.12.2015, released her rights in the shares. The Appellant had earlier treated the respondents as heirs for transfer of US company shares and could not adopt a different stand in India; such conduct attracted estoppel under Section 115 of the Evidence Act. Having regard to these findings and the company law mechanism for transmission, the Tribunal's order was sustained and the appeal dismissed. [Paras 3, 5, 6]

The Tribunal's order directing transmission and rectification of the register in favour of the respondents (with consequential benefits from 01.05.2017) is upheld; the appeal is dismissed.

Requirement of succession certificate in transmission - transfer and transmission of securities under Chapter IV of the Companies Act, 2013 - Whether production of a succession certificate was a prerequisite for transmission of shares in the circumstances of this case. - HELD THAT: - The Tribunal and this Appellate Tribunal observed that a succession certificate is required only where succession is disputed or not supported by relevant evidence. Here the respondents had produced requisite documents and the deceased's mother had indicated release of her claim; consequently the absence of a succession certificate did not preclude transmission. The Companies Act regime (Chapter IV) provides the statutory mechanism for transmission and the company failed to show a tenable reason to deny transmission on the ground relied upon. [Paras 3, 5]

Succession certificate was not a necessary precondition to deny transmission where succession was not genuinely disputed and supporting documents (and conduct of parties) established the respondents' entitlement.

Civil Court not to have jurisdiction - transfer and transmission of securities under Chapter IV of the Companies Act, 2013 - Whether the question of inheritance of shares and transmission falls within the exclusive jurisdiction of company law fora rather than the Civil Court. - HELD THAT: - Relying on the statutory scheme, the Tribunal and this Appellate Tribunal recorded that chapter IV of the Companies Act governs transfer and transmission of securities and that Section 430 of the Companies Act excludes Civil Court jurisdiction in matters which the Tribunal or Appellate Tribunal are empowered to determine. The Appellants' contention that civil adjudication of inheritance rights was requisite was rejected, since the dispensation under the Companies Act and the facts supported adjudication and relief by the company law forum. [Paras 5, 6]

The company law forum was competent to decide the transmission dispute; Civil Court jurisdiction on this matter is excluded by the Companies Act.

Final Conclusion: The appeal is dismissed; the NCLT/Bengaluru Bench order directing transmission of shares to the respondents, rectification of the register of members and consequential benefits from 01.05.2017 is upheld, with no order as to costs.

Condonation of delay - dismissal as not pressed with liberty to agitate the relief - leave to file written submissions and documents previously permitted - urgent hearing permitted - service of notice by speed post and filing of affidavit of service - time-limits for filing reply and rejoinder - directions to file cause titles and main reliefs of related suits - forfeiture of right to complete pleadings for non-compliance

Condonation of delay - Application for condonation of delay in filing CA No. 198/2020 - HELD THAT: - The Tribunal considered the application seeking condonation of delay in filing CA No. 198/2020 and, after hearing both sides, exercised its discretion to condone the delay. Consequentially, CA No. 199/2020 (the condonation application) was allowed and CA No. 198/2020 was taken up for hearing. [Paras 1, 2, 3]

Delay condoned; CA No. 199/2020 allowed and CA No. 198/2020 taken up for hearing.

Dismissal as not pressed with liberty to agitate the relief - leave to file written submissions and documents previously permitted - Disposition of CA No. 198/2020 where counsel did not press the application but sought liberty to pursue similar relief and to file previously permitted materials in CA No. 94/2020 - HELD THAT: - On hearing, learned senior counsel for the applicant stated that CA No. 198/2020 would not be pressed but sought, without prejudice, liberty to agitate for the same relief in accordance with law. The Tribunal dismissed CA No. 198/2020 as not pressed while granting the applicant in CA No. 94/2020 permission to file written submissions and documents as earlier allowed by order dated 23.07.2020. Respondents in CA No. 94/2020 were also allowed time to file their written submissions and documents. [Paras 4, 5, 6]

CA No. 198/2020 dismissed as not pressed with liberty preserved; parties in CA No. 94/2020 permitted to file submissions and documents within two weeks.

Urgent hearing permitted - Application for urgent hearing of CA No. 208/2020 (CA No. 207/2020) - HELD THAT: - The Tribunal allowed the application for urgent hearing, thereby granting CA No. 207/2020 and taking CA No. 208/2020 up for hearing as prayed. [Paras 8, 9]

CA No. 207/2020 allowed and CA No. 208/2020 taken up for hearing.

Service of notice by speed post and filing of affidavit of service - time-limits for filing reply and rejoinder - Issuance and service of notice in CA No. 208/2020 and timetable for pleadings - HELD THAT: - The Tribunal issued notice in CA No. 208/2020 and recorded which counsel accepted notice for certain respondents. The applicants were directed to collect notices from the Registry and send them immediately by speed post with the application, paper book and copy of the order. An affidavit of service, supported by postal receipt and tracking report, was to be filed within two weeks. Replies were directed to be filed within two weeks with copy in advance to opposing counsel, and rejoinder, if any, within one week thereafter. [Paras 10, 11, 12]

Notice issued; applicants to effect service by speed post and file affidavit of service within two weeks; reply and rejoinder to be filed within the specified periods.

Directions to file cause titles and main reliefs of related suits - forfeiture of right to complete pleadings for non-compliance - Directions concerning filing of cause titles, main reliefs of related suits and completion of pleadings in CP No. 76/1999 and pending CAs - HELD THAT: - The Tribunal directed the applicant in CA No. 94/2020 to file copies of the cause title and main relief/prayer in specified suits and any other suits having bearing on CP No. 76/1999, along with orders, if any. All other pending CAs in CP No. 76/1999 were listed for the next date, with a mandate that any outstanding pleadings be completed one week before that date and served on opposite counsel. The Tribunal further directed that any party failing to complete its part of pleadings in any CA would forfeit the right to do so. [Paras 15, 16]

Applicants directed to file specified cause titles and reliefs; pending CAs listed; pleadings to be completed one week prior and, on non-compliance, the delinquent party's right to complete pleadings stands forfeited.

Final Conclusion: The Tribunal granted condonation of delay and progressed the listed applications: CA No. 198/2020 was dismissed as not pressed with liberty preserved and parties in CA No. 94/2020 permitted to file submissions; urgent hearing was allowed for CA No. 208/2020 with notices, service directions and strict timelines for filing and completion of pleadings, failing which rights to complete pleadings are forfeited.

Restoration of company name in the register - waiver of statutory filing fee and penalty - fee for filing under Section 403 of the Companies Act - incidental powers of the Tribunal - maintainability of restoration petition by Interim Resolution Professional

Restoration of company name in the register - maintainability of restoration petition by Interim Resolution Professional - The Tribunal's direction restoring the company's name in the register and the maintainability of the petition filed by the Interim Resolution Professional - HELD THAT: - The Appellate Tribunal upheld the Tribunal's order directing restoration of the company's name to the register so as to enable completion of the Corporate Insolvency Resolution Process. The petition under Section 252(3) filed by the Interim Resolution Professional pursuant to the Tribunal's earlier direction was held to be maintainable. The Court relied on the statutory scheme under Section 252 and the authorities cited to conclude that restoration may be ordered where it is shown the company was carrying on business at the time of striking off or it is otherwise just to restore the name, and that an IRP could file the petition in the circumstances of this case. [Paras 22, 23, 29, 36, 39]

The direction to restore the company's name is sustained and the petition by the Interim Resolution Professional is maintainable.

Waiver of statutory filing fee and penalty - fee for filing under Section 403 of the Companies Act - incidental powers of the Tribunal - The Tribunal's direction absolving the Registrar of Companies from levying statutory filing fees/additional fees or penalties was legally untenable - HELD THAT: - The Appellate Tribunal held that there is no express provision in the Companies Act, 2013 or the relevant Rules permitting waiver of filing fees or additional fees. Section 403 and Rule 12 of the Companies (Registration Offices and Fees) Rules, 2014 constitute an inbuilt, self-contained scheme requiring payment of prescribed fees for filing; therefore the Tribunal could not lawfully direct the Registrar to accept filings without payment. Ancillary or incidental powers of the Tribunal cannot be used to override or nullify substantive statutory provisions authorising the levy of fees. Consequently, the specific direction in the impugned order that no fee/penalty be levied was set aside. [Paras 34, 35, 40, 41, 42]

The direction to the Registrar of Companies not to levy any fee or penalty is set aside as legally untenable.

Limitation for filing appeal - The Appellate Tribunal held the present appeal to be within the period of limitation - HELD THAT: - Having considered the dates of communication of the impugned order, steps taken by the Appellant to obtain certified copy, and the extensions/notifications relevant to limitation issued in the context of COVID-19, the Tribunal concluded that the appeal was filed within the prescribed limitation period. The Tribunal applied a practical approach in the circumstances, finding no want of bona fides or negligence on the part of the Appellant. [Paras 18, 20, 21, 22]

The appeal is within time and therefore maintainable on limitation grounds.

Final Conclusion: The appeal is allowed: the Tribunal's order restoring the company's name is sustained and the petition by the Interim Resolution Professional is held maintainable, but the Tribunal's direction absolving the Registrar of Companies from levying statutory filing fees/additional fees or penalties is set aside; appeal disposed of with no costs.

Appeal against liquidation order - material irregularity or fraud - Commercial wisdom of the Committee of Creditors - Oppression and mismanagement claims vis-a -vis appeal under Section 61(4) - Liquidator's duty to investigate and initiate actions under Chapter III Part II of the IBC

Appeal against liquidation order - material irregularity or fraud - Validity of the liquidation order in the absence of alleged material irregularity or fraud relating to the liquidation order. - HELD THAT: - The Appellants challenged the Adjudicating Authority's liquidation order dated 29.07.2020. Section 61(4) permits an appeal against a liquidation order only on grounds of material irregularity or fraud committed in relation to such liquidation order. The Tribunal examined the record, the CoC recommendation (98.5% in favour), and the materials placed before the Adjudicating Authority and found no material irregularity or fraud in relation to the impugned liquidation order. Accordingly, there was no jurisdictional or legal basis under Section 61(4) to set aside the liquidation order. [Paras 10, 12]

No material irregularity or fraud found; the liquidation order is upheld.

Commercial wisdom of the Committee of Creditors - Whether the Tribunal or Adjudicating Authority could re-examine or substitute the commercial decision of the CoC to liquidate the corporate debtor. - HELD THAT: - The Tribunal applied binding precedent referred to in the judgment to reiterate that the commercial wisdom of the Committee of Creditors is not susceptible to judicial interference by the Adjudicating Authority or the Appellate Tribunal. The CoC, which comprised financial creditors (Bank of Baroda holding the dominant voting share), exercised its commercial judgment to recommend liquidation after considering the state of operations and available assets. The Adjudicating Authority rightly declined to substitute its view for the commercial decision of the CoC. [Paras 2, 8]

CoC's commercial decision to liquidate cannot be interfered with by the Adjudicating Authority or this Tribunal.

Oppression and mismanagement claims vis-a -vis appeal under Section 61(4) - Liquidator's duty to investigate and initiate actions under Chapter III Part II of the IBC - Whether allegations of oppression, mismanagement or pre-CIRP fraud provide a ground to assail the liquidation order under Section 61(4), and the remedy available under the IBC for alleged wrongful transactions. - HELD THAT: - The Tribunal observed that the IBC is not a forum for redressing general allegations of oppression and mismanagement through an appeal under Section 61(4). However, Chapter III of Part II of the IBC provides specific mechanisms (including provisions dealing with undervalued transactions, preferential transactions and fraudulent trading) for initiating action against wrongdoers during liquidation. The liquidator (erstwhile IRP) is duty-bound to examine suspected wrongful transactions and, where appropriate, initiate proceedings under the statutory provisions; the Bank and other stakeholders are to provide assistance. The appellants' grievance about alleged fraud and diversion of funds was therefore not a valid ground to set aside the liquidation order, though it may be pursued by the liquidator by initiating actions under the relevant provisions of the Code. [Paras 5, 6, 7, 11]

Allegations of oppression/mismanagement do not invalidate the liquidation order under Section 61(4); alleged wrongful acts may be investigated and pursued by the liquidator under Chapter III Part II of the IBC.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's liquidation order dated 29.07.2020 is upheld as there is no material irregularity or fraud in relation to that order, the commercial wisdom of the CoC is not subject to interference, and allegations of pre CIRP mismanagement/ fraud are matters for investigation and action by the liquidator under the IBC rather than grounds to set aside the liquidation order.

Moratorium under section 14 of the I&B Code - security interest under section 3(31) of the I&B Code - performance bank guarantee vs. non-performance bank guarantee - invocation of bank guarantees during CIRP - Provisional Mega Power Project status and extended concession period - filing of claim in CIRP and effect on pari passu treatment of creditors

Provisional Mega Power Project status and extended concession period - invocation of bank guarantees during CIRP - Respondent no. 1 cannot invoke the Bank Guarantees before the expiry of the extended concession period granted to the Corporate Debtor. - HELD THAT: - The Corporate Debtor had been granted Provisional Mega Power Project status and, by the Ministry of Power Office Memorandum dated 12.04.2017, the period for furnishing Final Mega Certificates was extended to 120 months from date of import. The Tribunal accepted the applicant's submission that, in the facts of this case, the Corporate Debtor imported machinery in 2011 and therefore enjoys the benefit of exemption from payment of customs duty for 120 months (till 2021). On that basis the Tribunal held that respondent no. 1 is estopped from recovering any amounts by invoking the Bank Guarantees prior to expiry of that 120 month period and accordingly restrained invocation until the expiry of 120 months from date of import or until the CIRP is over, whichever is earlier.

Respondent no. 1 is restrained from invoking the Bank Guarantees until the period of 120 months from the date of import is completed or until the CIRP is over, whichever is earlier.

Performance bank guarantee vs. non-performance bank guarantee - security interest under section 3(31) of the I&B Code - moratorium under section 14 of the I&B Code - The impugned Bank Guarantees are non performance bank guarantees (NBGs) falling within the concept of 'security interest' and are covered by the moratorium under section 14(1) of the I&B Code, and hence are not excluded as performance bank guarantees (PBGs). - HELD THAT: - The Tribunal examined the purpose for which the Bank Guarantees were furnished and concluded they were provided to avail exemption from payment of customs duty (i.e., to secure deferred tax liability) rather than to secure performance of the underlying project contract. Consequently, these instruments are NBGs and not PBGs. Given the proviso to section 3(31) excludes PBGs from the definition of 'security interest', the Tribunal held that these NBGs fall within the rigour of section 14(1)(c) (prohibition on enforcement of security interest) and are not saved by the insertion of section 14(3)(b) (which exempts a surety in a contract of guarantee). The Tribunal relied on analogous decisions and considered the effect of invocation on value maximization of the Corporate Debtor in holding that invocation would be contrary to the objectives of the Code.

The impugned Bank Guarantees are NBGs covered by the moratorium under section 14 of the I&B Code and cannot be invoked during the moratorium period as held.

Filing of claim in CIRP and effect on pari passu treatment of creditors - invocation of bank guarantees during CIRP - Respondent no. 1 having filed a proof of claim in the CIRP cannot, in the circumstances of this case, invoke the Bank Guarantees to obtain preference over other creditors. - HELD THAT: - The Tribunal found that respondent no. 1 had submitted its claim to the Resolution Professional and was participating in the CIRP process. Invocation of the Bank Guarantees after filing the claim would afford respondent no. 1 a better position than other creditors of the same class and would undermine the pari passu and value maximisation objectives of the Code. Taking into account the CIRP context and potential prejudice to the Corporate Debtor and other stakeholders, the Tribunal held that respondent no. 1's invocation of the Bank Guarantees was not permissible while the claim verification and CIRP were in progress, and subject to the restraint ordered until 120 months from import or completion of CIRP.

Invocation of the Bank Guarantees by respondent no. 1 after having filed its claim with the Resolution Professional is not permissible in the circumstances and is restrained as ordered.

Final Conclusion: The application is disposed of by restraining respondent no. 1 from invoking the specified Bank Guarantees until the expiry of 120 months from the date of import or until the conclusion of the CIRP, whichever occurs earlier; the Resolution Professional is directed to take steps to extend the Bank Guarantees until that period or the end of CIRP.

Provisional attachment under PMLA - period of validity of provisional attachment - automatic lapsing by efflux of time - non-extension of statutory validity period by orders extending limitation - deprivation of property and Article 300A - functus officio of Adjudicating Authority

Provisional attachment under PMLA - period of validity of provisional attachment - automatic lapsing by efflux of time - deprivation of property and Article 300A - One hundred and eighty days from the date of a provisional attachment under Section 5(1) PMLA is the outer limit of the order's validity and, in absence of confirmation under Section 8(3), the provisional attachment ceases to have effect automatically on expiry of that period. - HELD THAT: - The Court held that Section 5(1) empowers provisional attachment "for a period not exceeding one hundred and eighty days" and Section 5(3) provides that such order "shall cease to have effect after the expiry of the period specified" or on earlier confirmation under Section 8(3). Therefore the 180 day term is not a mere limitation for performing an act but the outer period of the order's validity; lapse thereafter is automatic and preemptory. The Court emphasized that attachment effects a deprivation of the right to deal with property (Section 2(1)(d)) engaging Article 300A, and that statutes which deprive property must be strictly construed and complied with. Consequently, absent a confirming order under Section 8(3) within 180 days (or applicable statutory proviso), the provisional attachment ends by efflux of time without need for further action. [Paras 20, 21, 23, 24, 25]

The provisional attachment lapsed automatically on expiry of 180 days unless earlier confirmed under Section 8(3); no further extension is available under the Act.

Non-extension of statutory validity period by orders extending limitation - provisional attachment under PMLA - Orders of the Supreme Court extending periods of limitation and executive measures/ordinances relaxing timelines do not extend the statutory period of validity of a provisional attachment under Section 5(1) PMLA. - HELD THAT: - The Court distinguished between (i) periods of limitation for instituting proceedings and (ii) a statutory time limit that defines the validity of an order. The Supreme Court's Suo Motu orders (23.03.2020, 06.05.2020, 10.07.2020) and the Taxation and Other Laws (Relaxation) Ordinance, 2020, were held to operate in relation to limitation or specified statutory timelines but not to alter the outer validity period of an order created by a statute (such as the 180 days in Section 5(1)). Reliance on S. Kasi was noted to show the limits of the Suo Motu order; the Ordinance did not include PMLA among specified Acts and thus cannot be invoked to extend attachment validity. The Court therefore rejected the respondents' plea that the Supreme Court orders or the Ordinance extended the period of the provisional attachment. [Paras 29, 30, 31, 32]

The Supreme Court's orders extending limitation and the Government's Ordinance do not extend the 180 day statutory validity of a provisional attachment under the PMLA.

Functus officio of Adjudicating Authority - provisional attachment under PMLA - Where the provisional attachment lapsed by efflux of the 180 day period without confirmation under Section 8(3), the Adjudicating Authority became functus officio and could not proceed with the complaint or validly issue notice/summons thereafter. - HELD THAT: - Applying the conclusion that the provisional attachment had ceased to have effect on expiry of 180 days (absent confirmation), the Court held there was no subsisting order before the Adjudicating Authority to confirm. Consequently the Adjudicating Authority was rendered functus officio and its Notice/Summons dated 26.05.2020 issued in the pending Original Complaint could not be sustained. The Court set aside that notice and restrained further proceedings in O.C. No.1228/2019 before the Authority. [Paras 25, 37]

Adjudicating Authority was functus officio; the notice dated 26.05.2020 stood set aside and it could not proceed with the complaint.

Provisional attachment under PMLA - Whether the period of total lockdown (24.03.2020 to 20.04.2020) ought to be excluded in computing the 180 days was not decided and was left open. - HELD THAT: - The Court expressly refrained from deciding the specific question of exclusion of the period of total lockdown for computation of the 180 day period because it was unnecessary to the decision: even if that period were excluded, the 180 days would have expired on 16.06.2020. The Court therefore did not adjudicate on that computation and left the question unaddressed. [Paras 38]

Question of excluding the total lockdown period from computation of 180 days is left undecided.

Final Conclusion: The petition is allowed. The provisional attachment dated 13.11.2019 lapsed on expiry of the statutory 180 day period in absence of confirmation under Section 8(3) PMLA; the Adjudicating Authority became functus officio and the notice dated 26.05.2020 is set aside. The Court refrained from deciding whether the total lockdown period is to be excluded for computation of the 180 days. No order as to costs.

Exemption under Sl. No. 12(a)/12A of Notification No. 25/2012-ST - definition of "governmental authority" in clause 2(s) of Notification No. 25/2012 ST - scope of Article 243W and Twelfth Schedule of the Constitution in relation to transmission and distribution of electricity - reimbursement as pure agent under Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006

Exemption under Sl. No. 12(a)/12A of Notification No. 25/2012-ST - definition of "governmental authority" in clause 2(s) of Notification No. 25/2012 ST - scope of Article 243W and Twelfth Schedule of the Constitution in relation to transmission and distribution of electricity - Entitlement to exemption for works contract / erection, commissioning and installation services supplied to the transmission companies / corporations under the said notification - HELD THAT: - The Judicial Member concluded that the service recipients are government companies meeting the description of a "governmental authority" under clause 2(s) of Notification No. 25/2012 ST and that the works fall within the exemption at Sl. No. 12(a)/12A, applying the reasoning in Shapoorji Paloonji and having regard to Article 243W and the Twelfth Schedule. The Technical Member agreed that exemption applies to services rendered to entities set up by Acts of Parliament or State Legislatures but disagreed with the Judicial Member's extension of Article 243W to include transmission and distribution of electricity as a function entrusted to municipalities; he observed that transmission/distribution is not itself a municipal function and that factual determination is required as to which service recipients were created by statute as distinct from being companies established by government. Because of this difference of opinion on the constitutional/notification interpretation and factual matrix, the Tribunal recorded the disagreement and issued a reference for appointment of a third Member to decide whether transmission and distribution of electricity fall within Article 243W/Twelfth Schedule and remitted to the Adjudicating Authority the limited task of ascertaining which service recipients (if any) were set up by statute so that duty may be re determined accordingly.

The Judicial Member held the exemption rightly claimed and dismissed Revenue's appeal on this limb; because of the Technical Member's contrary legal view on the scope of Article 243W and the need for factual verification as to which recipients were set up by statute, the question on inclusion of transmission/distribution within Article 243W and related factual determinations were referred/remanded for further consideration.

Reimbursement as pure agent under Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 - Whether amounts received towards crop/tree compensation and right of way from service recipients are exigible to service tax or are non taxable reimbursements (pure agent) or otherwise not consideration for a service - HELD THAT: - The Tribunal (Judicial Member) found that payments received by the assessee towards crop/tree compensation/right of way were reimbursements for amounts disbursed to land owners and constituted pure agent activity; they were not consideration for any service provided by the assessee and thus not taxable. The Judicial Member further observed that even if some surplus was received, in the facts of the case the activity could not, by any stretch, be classified as a "service" under the Finance Act. The Technical Member concurred with the substantive conclusion that these reimbursements were not taxable (and remand issues did not affect this finding).

Amounts received as crop/tree compensation/right of way were held not exigible to service tax as they were reimbursements (pure agent activity) and not consideration for a taxable service.

Final Conclusion: The Tribunal recorded that there was no merit in Revenue's appeal on the points decided by the Judicial Member and dismissed the appeal insofar as the exemption claim and non taxability of crop/tree compensation reimbursements were concerned; however, because of a difference of opinion between Members on whether transmission and distribution of electricity fall within Article 243W/Twelfth Schedule and the need to ascertain which service recipients were set up by statute, the matter was referred to a third Member and limited factual verification was remanded to the Adjudicating Authority for determination of duty, if any.

Service tax under reverse charge mechanism - employer-employee relationship - services rendered by an employee excluded from levy of service tax - whole-time director as key managerial personnel and employee - deduction of tax at source under Section 192 of the Income-tax Act, 1961

Service tax under reverse charge mechanism - employer-employee relationship - services rendered by an employee excluded from levy of service tax - whole-time director as key managerial personnel and employee - deduction of tax at source under Section 192 of the Income-tax Act, 1961 - Whether the remuneration in the form of commission (percentage of profit) paid to whole-time directors is liable to service tax under reverse charge or is remuneration in the nature of salary excluded from service tax as services rendered by an employee. - HELD THAT: - The Tribunal found that the controversy related solely to commission based on percentage of profit paid to whole-time directors. A whole-time director is defined under the Companies Act and is in whole-time employment of the company, is recognised as key managerial personnel and may be an officer in default for violations under the Companies Act. These statutory attributes demonstrate an employer-employee relationship between the company and its whole-time directors. The appellants produced company secretary's certificate and evidence of tax deduction at source under the Income-tax Act (treated as salaries in Form 26AS), which corroborated that payments were made as remuneration in the nature of salaries. Prior decisions of the Tribunal and a departmental circular were applied to the facts, holding that where payments to whole-time directors are declared and treated as salary by statutory authorities and are within Companies Act limits, they cannot be treated as consideration for taxable services. The Adjudicating Authority had already disallowed service tax on the fixed salary component on the ground of employer-employee relationship; confirming the remaining demand on the contradictory premise that directors rendered taxable services was held to be unsustainable. Consequently, the service tax demand was set aside and attendant interest and penalty were also held not to be sustainable. [Paras 8, 9, 10]

Demand of service tax on the remuneration (commission as a percentage of profit) paid to whole-time directors for 2012-13 to 2015-16 is set aside; interest and penalty are also not sustainable; appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, holding that remuneration paid to whole-time directors (including commission based on profit) constituted salary within an employer-employee relationship and was not liable to service tax for the period 2012-13 to 2015-16; related interest and penalty were accordingly unsustainable.

Validity of invoice for CENVAT credit under Rule 4A of the Service Tax Rules, 1994 - documentary requirements for taking CENVAT credit under Rule 9 of the CENVAT Credit Rules, 2004 - requirement of registration of premises for entitlement to CENVAT credit - necessity of centralized/service tax or ISD registration for distribution of CENVAT credit

Validity of invoice for CENVAT credit under Rule 4A of the Service Tax Rules, 1994 - documentary requirements for taking CENVAT credit under Rule 9 of the CENVAT Credit Rules, 2004 - Whether invoices on which CENVAT credit was availed were proper documents entitling the appellant to CENVAT credit - HELD THAT: - The Tribunal examined rule 4A of the Service Tax Rules, 1994 and rule 9 of the CENVAT Credit Rules, 2004 and held that once the statutory requirements of those rules are satisfied the benefit of CENVAT credit cannot be denied merely because an invoice bears the address of a different office. Prior decisions of the Tribunal and High Courts were noted to the effect that registration of the premises is not a statutory precondition for claiming CENVAT credit. Applying that legal principle to the facts, the Tribunal concluded that denial of CENVAT credit on the ground that invoices were addressed to unregistered premises was not tenable and therefore the Commissioner was not justified in denying the claimed credit (satisfaction of rule 4A and rule 9 being the determinative test). [Paras 10, 15, 16, 17, 19]

Denial of CENVAT credit on the ground that invoices were not proper under rule 4A/read with rule 9 is set aside and the credit is allowable where the statutory invoice/documentary requirements are met.

Requirement of registration of premises for entitlement to CENVAT credit - Whether registration of the premises with the Service Tax Department is a condition precedent for availing CENVAT credit - HELD THAT: - The Tribunal held that registration of the premises with the Service Tax Department is not a statutory condition for entitlement to CENVAT credit. The Court relied on authoritative decisions which found no provision in the CENVAT Credit Rules making premises registration a condition precedent to claim credit. Consequently, the Commissioner's conclusion that credit was inadmissible solely because invoices related to an unregistered premises was rejected. [Paras 15, 16, 19]

Registration of the premises is not a mandatory requirement for availing CENVAT credit; denial on that ground is unsustainable.

Necessity of centralized/service tax or ISD registration for distribution of CENVAT credit - Whether the appellant was required to obtain central/service tax registration or to be registered as an Input Service Distributor to avail and distribute CENVAT credit on invoices issued to different offices - HELD THAT: - The Tribunal rejected the Commissioner's finding that the only mechanism to distribute CENVAT credit was by obtaining ISD or centralized service tax registration. The Court observed that there is no legal requirement prescribing that an assessee can distribute or avail credit only through ISD registration and held that the Commissioner's conclusion on this point was incorrect. [Paras 11, 20, 21]

Requirement to take central/ISD registration as a precondition for availing/distributing CENVAT credit on invoices addressed to different offices is not supported by law; the Commissioner's finding on this point is set aside.

Final Conclusion: The appeal is allowed insofar as the Commissioner's denial of CENVAT credit (for invoices addressed to other offices or unregistered premises and for failure to have ISD/central registration) is set aside; the only part not reopened for adjudication in this order relates to the demand appropriated in respect of imported services during 2005-06, which the Tribunal found need not be decided as the amount has already been paid and appropriated.

Taxability of reimbursement - Reimbursable expenses - Value of taxable service - Consideration for service - Audit services

Taxability of reimbursement - Reimbursable expenses - Consideration for service - Reimbursed travelling and boarding expenses paid to the auditor are not includible in the taxable value of audit services. - HELD THAT: - The appellants received an audit fee per shop and separately incurred travelling and lodging expenses which were reimbursed. The department demanded service tax on the reimbursed amounts treating them as part of the consideration for the audit service. The Tribunal examined the nature of the amounts and found them to be mere reimbursements for expenses incurred in rendering the service, while service tax had already been paid on the audit fee as consideration. Applying the principle that genuine reimbursements which merely pass through the hands of the service provider and are not consideration for the service are not includible in the taxable value, the Tribunal held that the demand for differential service tax, interest and penalties on the travelling and boarding reimbursements could not be sustained. The Tribunal also noted appellant's reliance on the Apex Court decision in Union of India v. M/s. Intercontinental Consultants and Technocrafts and accepted the contention that the amounts in question were reimbursable expenses and not consideration.

Demand, interest and penalties confirmed by lower authorities quashed; appeal allowed and impugned order set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that travelling and boarding reimbursements paid to the auditor are genuine reimbursements and not part of the taxable consideration for audit services; the demand, interest and penalties framed on those amounts were set aside with consequential relief, if any.

Economic offences - anticipatory bail under Section 438 CrPC - custodial interrogation - public interest in investigation of economic offences - non-cooperation with investigation - seriousness of allegations involving large-scale duty evasion

Anticipatory bail under Section 438 CrPC - economic offences - custodial interrogation - non-cooperation with investigation - Application for anticipatory bail of the applicant/accused - HELD THAT: - The court considered the nature and gravity of allegations of large-scale duty evasion, the applicant's admitted involvement in manufacture without valid registration, the department's contention of non-cooperation and evasive replies during investigation, and authorities holding that economic offences constitute a separate class requiring a cautious approach to bail. The court accepted that custodial interrogation may be necessary to elicit concealed information and to advance investigation into the extent of alleged evasion, and observed that pre-arrest protection may impede effective interrogation in such cases. Having regard to these factors and the desirability of disinterring unraveled aspects of the offence, the court concluded that this was not a fit case for exercise of discretion in favour of anticipatory bail.

Anticipatory bail application rejected.

Public interest in investigation of economic offences - seriousness of allegations involving large-scale duty evasion - Conduct of the complainant Department during investigation and appropriate administrative action - HELD THAT: - The court noted a prolonged period of inactivity by the department between November 2017 and July 2019 despite serious allegations, observed that evidence in tax-related criminal matters is ephemeral and requires diligent, time bound inquiry, and expressed concern at apparent lethargy. In view of these observations, the court called for personal attention by the Principal DG, DGGI and requested initiation of appropriate remedial action against erring officials.

Principal DG, DGGI to look into the matter personally and consider remedial action; copy of order to be sent to Principal DG, DGGI.

Final Conclusion: Anticipatory bail denied; court directs administrative review of departmental conduct by Principal DG, DGGI and disposal of the application accordingly.

Non-compliance with the pre-deposit requirement under section 35F of the Central Excise Act, 1944 - remand for decision on merits - pre-deposit furnished before the appellate tribunal treated as sufficient for adjudication on merits - opportunity of hearing

Non-compliance with the pre-deposit requirement under section 35F of the Central Excise Act, 1944 - remand for decision on merits - Whether the Commissioner (Appeals) erred in dismissing the appeal for non-compliance with the pre-deposit requirement instead of deciding the appeal on merits. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) did not decide the appeal on merits but dismissed it solely for non-compliance with the pre-deposit requirement under section 35F. The appellant thereafter filed the appeal before the Tribunal and made a deposit of Rs. 10,00,000/-. Having regard to the deposit made before the Tribunal and the absence of any adjudication on merits by the Commissioner (Appeals), the Tribunal held that dismissal without deciding the merits was not appropriate and that the matter should be remitted for fresh adjudication on merits.

The dismissal by the Commissioner (Appeals) for non-compliance with the pre-deposit requirement was set aside and the matter remitted for decision on merits.

Pre-deposit furnished before the appellate tribunal treated as sufficient for adjudication on merits - opportunity of hearing - Whether the deposit of Rs. 10,00,000/- made by the appellant before the Tribunal suffices to enable remand without insisting on any further pre-deposit and what directions should follow on remand. - HELD THAT: - The Tribunal regarded the deposit made before it as sufficient to entertain the appeal and to remit the matter to the Commissioner (Appeals) for a decision on merits. The Tribunal directed that no further pre-deposit be insisted upon, that the appellant be afforded a reasonable opportunity of hearing, and that both parties be at liberty to place evidence in their favour. All substantive issues were expressly kept open for fresh consideration by the Commissioner (Appeals).

The deposit before the Tribunal was treated as adequate; appeal remitted to the Commissioner (Appeals) to decide merits without further pre-deposit, with liberty to both parties to adduce evidence and be heard.

Final Conclusion: The Tribunal allowed the appeal by way of remand: it set aside the dismissal for non-compliance with the pre-deposit requirement, treated the deposit made before the Tribunal as sufficient, and directed the Commissioner (Appeals) to decide the appeal on merits after affording the appellant a reasonable opportunity of hearing; all issues were kept open.

Default bail under Section 167(2) Cr.P.C. - cancellation of bail under Section 439(2) Cr.P.C. - combined charge-sheet filed within statutory period - law on setting aside orders releasing accused on default grounds

Default bail under Section 167(2) Cr.P.C. - combined charge-sheet filed within statutory period - cancellation of bail under Section 439(2) Cr.P.C. - Whether the default bail granted under Section 167(2) Cr.P.C. on 12.07.2018 was liable to be cancelled in view of a combined complaint/charge-sheet filed on 06.07.2018. - HELD THAT: - The Court found on the record that a combined complaint concerning the events, including the seizure on 11.01.2018 and related recoveries at Omerga, was filed on 06.07.2018 and taken on file on 11.07.2018. Because the combined charge-sheet was filed within the 180-day period, the appellants were not entitled to default bail under Section 167(2) Cr.P.C. The Court applied the settled principle that a person erroneously or illegally released on bail under Section 167(2) can have such bail cancelled by an order under Section 439(2) Cr.P.C., noting precedent to that effect and observing that the proviso to Section 167 treats release under that provision as release under Chapter XXXIII for purposes of cancellation. The Court further recorded that no challenge was made to the jurisdiction of the Omerga Court to try the offences, and that the non-communication of the filing of the combined complaint to the Hyderabad court explained why default bail was granted but did not validate the grant of default bail once the charge-sheet predated it. [Paras 9, 11, 12]

The High Court's cancellation of the default bail granted on 12.07.2018 was upheld as correct and there was no error in setting aside the bail in view of the combined complaint filed on 06.07.2018; appellants may seek regular bail before the Omerga Court.

Final Conclusion: Appeals dismissed. The High Court rightly cancelled the default bail granted on 12.07.2018 because a combined complaint/charge-sheet was filed on 06.07.2018 within 180 days; appellants are at liberty to apply afresh for regular bail before the Omerga Court, which should decide such application expeditiously.

Right to equal treatment under Article 14 - Right against arbitrary preventive detention under Article 22 - Representation before Advisory Board under Section 8 of the COFEPOSA Act - Parity in legal representation

Right to equal treatment under Article 14 - Parity in legal representation - Whether denial of permission to the petitioners to be represented by counsel before the Advisory Board, while the respondents were represented through counsel, violated the petitioners' right to equal treatment under Article 14. - HELD THAT: - The Court found that although detenues do not possess an automatic statutory right to be represented by a legal practitioner before the Advisory Board, once the respondents were permitted and did appear through an advocate, parity required that the petitioners' request for legal representation be given equal treatment. The petitioners had made timely representations seeking counsel; those representations were either rejected or not communicated as accepted, and further representations (including one forwarded by the petitioners' counsel) were not placed before the Advisory Board. The respondents' additional affidavit admitted that an advocate appeared for respondents before the Board. On the record, the petitioners were never put on notice that their request to be represented by counsel had been accepted, nor was any active facilitation (such as providing a VC link) afforded to secure counsel's participation. The combination of (a) respondents being represented by counsel, and (b) the petitioners being denied effective opportunity for counsel to participate, resulted in unequal treatment in the conduct of the Advisory Board proceedings.

Denial of effective legal representation to the petitioners, when respondents were represented through counsel, violated Article 14 and vitiated the Advisory Board proceedings.

Representation before Advisory Board under Section 8 of the COFEPOSA Act - Right against arbitrary preventive detention under Article 22 - Whether the Advisory Board's failure to consider the petitioners' representations and their request for legal representation rendered the preventive detention unlawful and unsustainable. - HELD THAT: - The Court examined the sequence of communications and found that the petitioners' representations (including the representation forwarded by their counsel shortly before the hearing) were not placed before the Advisory Board, and the petitioners were not informed that their request to be represented had been acceded to. The Advisory Board nevertheless returned an opinion finding sufficient cause for detention without affording parity of representation or considering the petitioners' unplaced representation. Given Section 8's role in securing consideration by the Advisory Board, the omission to place the petitioners' representation before the Board and the resulting procedural inequality amounted to a failure to afford the statutory and constitutional safeguards. As a consequence, the continued detention lacked lawful authority.

The detention was unlawful for want of proper consideration under Section 8 and in breach of Articles 14 and 22; the detention order was quashed.

Final Conclusion: The petitions are allowed: the Advisory Board's proceedings lacked parity and failed to consider the petitioners' representations and request for legal representation; consequently the preventive detention could not be sustained and the detention orders are quashed.

Delineation of relevant market - dominant position - abuse of dominant position - prima facie case - closure of information by Competition Commission of India - obligation on informant to define relevant market

Delineation of relevant market - obligation on informant to define relevant market - Whether the Competition Commission of India was obliged to delineate the relevant market notwithstanding the informant's failure to define or suggest it with requisite material. - HELD THAT: - The Tribunal accepted the CCI's finding that the informant did not define or suggest any relevant market and that, in the absence of requisite data on record, it was neither necessary nor feasible for the Commission to delineate the relevant market. The CCI relied on information from RDSO showing at least four other global players operating in the market for rolling stock mounted GPR for ballast inspection in India; on that market construct the Commission concluded delineation was unnecessary to dispose of the information. The Tribunal held that the burden to define or suggest the relevant market with prima facie material lies on the informant, and the CCI was entitled to decline further market delineation where the record did not support it and market responses indicated multiple competitors. [Paras 5, 6, 7]

The CCI did not err in declining to delineate the relevant market in the absence of requisite data and because the available material indicated multiple players in the market.

Dominant position - abuse of dominant position - prima facie case - Whether the CCI was required to direct an investigation by the Director General or proceed further under Section 26(2) despite the informant's failure to establish prima facie dominance or abusive conduct. - HELD THAT: - The Tribunal noted the CCI's conclusion that given the market structure evidenced by RDSO's reply-identifying several global competitors-the opposite party did not appear to command market power. On that basis the Commission found no case of contravention under Section 4 and ordered closure of the information under Section 26(2). The appellant's contention that CCI should have sought an investigation was rejected because the informant had not established the initial elements: delineation of the relevant market, existence of dominance, and a prima facie case of abuse. The Tribunal observed that the appellant could not shift the burden of defining the relevant market and providing prima facie material to the CCI. [Paras 5, 6, 7, 8]

The CCI acted within its discretion in closing the information without directing a Director General investigation where the informant had not made out prima facie dominance or abuse.

Final Conclusion: The appeal is dismissed; there is no merit in the challenge to the CCI's order closing the information where the informant failed to define the relevant market or establish prima facie dominance and the record indicated the presence of multiple global competitors, and accordingly no investigation was required.