TaxTMI Updates e-Newsletter
Nov 24,2020

Advance Ruling - Withdrawal of Application - Infructuous Application - Dismissal as Withdrawn

Advance Ruling - Withdrawal of Application - Infructuous Application - Application for advance ruling withdrawn by the applicant and rendered infructuous. - HELD THAT: - The applicant filed an application for advance ruling and was served notices and requests for comments. Subsequently the applicant informed the Authority by mail that the venture was over and that they did not require the ruling, effectively withdrawing the application. Given the withdrawal by the applicant, the Authority treated the application as infructuous and no further adjudication on the merits was undertaken. The procedural steps taken earlier (requests for comments and hearing notice) were overtaken by the withdrawal and do not warrant continuation of the proceedings.

The application for advance ruling is dismissed as withdrawn at the behest of the applicant and declared infructuous.

Final Conclusion: The Advance Ruling application filed by M/s. Savitri Ashirvaad Buildtech Limited is dismissed as withdrawn and the matter is closed as infructuous.

Sale of land - sale of building - Schedule III - Schedule II - completion/occupancy certificate - supply of services - works contract service - time of supply - open market value - Notification No. 11/2017 Central Tax (Rate) - Notification No. 4/2019 Central Tax (Rate)

Schedule III - Schedule II - completion/occupancy certificate - sale of land - supply of services - Whether amounts received by the owner for sale of his share of flats are exigible to GST having regard to issuance of Completion/Occupancy Certificate dated 26.08.2019. - HELD THAT: - The Authority examined the Joint Development Agreement, Area Sharing Agreement and the fact that the developer obtained sanctioned plan, commencement certificate and the Completion/Occupancy Certificate dated 26.08.2019. Clause 5 of Schedule III treats 'sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building' as neither a supply of goods nor a supply of services. Clause 5(b) of Schedule II treats construction of a building intended for sale as a supply of service except where the entire consideration has been received after issuance of the Completion Certificate or after first occupation, whichever is earlier. The applicant's entitlement to units was handed over after issuance of the Occupancy Certificate and the Area Sharing Agreement restricted the applicant from executing sale transactions prior to taking over after completion. The Authority therefore held that the amounts received by the applicant towards sale of his share of flats are not exigible to GST only if the entire consideration for those flats was received after issuance of the Completion/Occupancy Certificate dated 26.08.2019. If any sale (by the applicant or by the developer on his behalf) occurred prior to issuance of the Completion/Occupancy Certificate, the activity would amount to a supply of "works contract service" and be liable to GST. [Paras 6]

Amounts are not exigible to GST if and only if entire consideration was received after Completion/Occupancy Certificate dated 26.08.2019; otherwise the transactions are exigible as works contract services.

Time of supply - open market value - Notification No. 4/2019 Central Tax (Rate) - works contract service - The valuation and time of supply where the owner's share of constructed flats is treated as a taxable supply. - HELD THAT: - The Authority stated that where the sale amounts are exigible to GST (i.e., where consideration is received prior to completion), the value of the supply is to be ascertained by reference to open market value in accordance with the CGST/SGST Rules and relevant notifications. Rule 27 and Notification No. 4/2019 were noted: the value of un-booked portions on date of issuance of completion certificate is to be deemed equal to the value of similar apartments charged by the promoter nearest to that date. Further, the Authority observed that the time of supply, in the present facts, would be the time at which the constructed flats are handed over by the developer to the applicant; the applicant's claim that handing over occurred after issuance of the Completion/Occupancy Certificate is a material fact relevant to time of supply and exigibility. [Paras 6]

When exigible, value is to be determined by open market value as per applicable rules and notifications; time of supply is the moment of handing over of the constructed flats to the applicant.

Final Conclusion: Ruling: The amounts received by the applicant towards sale of his share of flats are not subject to GST only if the entire consideration for those flats was received after issuance of the Completion/Occupancy Certificate dated 26.08.2019; if consideration was received earlier or sales were effected prior to completion, the transactions will be taxable as works contract services with value and time of supply determined in accordance with the CGST/SGST rules and relevant notifications.

Challenge to National Anti-Profiteering Authority order - interim deposit of alleged profiteered amount - stay of interest, penalty and further investigation - direction to deposit with Central Consumer Welfare Fund - procedural interim relief pending adjudication

Interim deposit of alleged profiteered amount - direction to deposit with Central Consumer Welfare Fund - procedural interim relief pending adjudication - Interim directions regarding payment and treatment of the alleged profiteered amount pending adjudication of challenge to the NAPA order. - HELD THAT: - The High Court, while issuing notice on the writ petition challenging the final order of the National Anti-Profiteering Authority, directed the petitioner to deposit the principal component of the alleged profiteered amount (net of GST component already deposited with the tax department) with the Central Consumer Welfare Fund within three months. The court recorded the deposit obligation as an interim measure while keeping the substantive challenge to the NAPA order pending. Contemporaneously, the court stayed the liability to pay interest, halted penalty proceedings and further investigation qua other outlets until further orders, thereby granting limited procedural relief to the petitioner during the adjudicatory process.

Petitioner to deposit the principal net profiteered amount with the Central Consumer Welfare Fund within three months; interest, penalty proceedings and further investigation stayed until further orders.

Final Conclusion: Notice issued; limited interim relief granted - principal net alleged profiteered amount ordered to be deposited with the Central Consumer Welfare Fund within three months, while interest, penalty proceedings and further investigation are stayed pending disposal of the writ petition.

Recording of statement during investigation - video conferencing for recording statement - judicial interference in ongoing investigation - balance of convenience in investigation - health risk due to COVID-19 not automatically entitlement - summons under Section 70 of the CGST Act - non-cooperation during investigation

Video conferencing for recording statement - recording of statement during investigation - health risk due to COVID-19 not automatically entitlement - Petitioner's request to tender his statement and adduce evidence through video conferencing instead of personal attendance before the investigating officer. - HELD THAT: - The Court examined the petitioner's medical documentation and the circumstances of the investigation to decide whether the petitioner could be permitted to record his statement via video conferencing. The medical certificate filed initially merely recorded short-term rest for moderate hypertension and subsequent blood reports indicated high cholesterol and mean plasma glucose; the doctors' notes showed treatment for hypertension and diabetes and an elevated risk factor for heart disease but did not establish an inability to travel. The petitioner's counsel conceded that the petitioner could undertake travel and relied instead on the risk of contracting COVID-19 as the ground for virtual attendance. The Court held that a general apprehension of contracting COVID-19, even coupled with comorbidities, does not ipso facto entitle a witness to insist on virtual recording of statement when an investigation is in progress. The Court distinguished precedents permitting video recording of evidence in judicial proceedings and an interim order from another High Court, observing that recording of statements during an investigative stage is different in nature since questioning is document-driven, may lead to on-the-spot discoveries, and can be adversely affected by remote attendance. Given the petitioner's earlier conduct of repeatedly avoiding personal attendance during the inspection and summons process, and the sensitive, document-intensive nature of the ongoing investigation, the Court declined to direct recording of the petitioner's statement by video conferencing. [Paras 10, 11, 12]

Request for recording statement by video conferencing refused; petitioner not entitled to virtual recording on the sole ground of COVID-19 risk.

Judicial interference in ongoing investigation - balance of convenience in investigation - non-cooperation during investigation - summons under Section 70 of the CGST Act - Whether the Court should intervene to direct the investigating authority to accommodate the petitioner despite the ongoing investigation and the petitioner's prior non-cooperation. - HELD THAT: - The Court emphasised that judicial intervention at the investigative stage must be exercised with circumspection. The petition arose from summons issued under Section 70 of the CGST Act and an inspection under Section 67; the investigating authority required the petitioner's personal attendance for document-based clarifications. The petitioner's prior conduct during on-site inspection-repeated requests to defer recording of his statement-was relevant to assess his entitlement to relief. Balancing convenience, the Court was not persuaded to impede the investigation or to remould investigative procedure merely because of the petitioner's apprehension of COVID-19 exposure. The Court accepted the respondent's assurance that safety protocols would be followed and that the petitioner's statement would be recorded and completed on a day-to-day basis to limit travel. On these considerations the Court declined to interfere with the summons and directed no special accommodation in the form of virtual recording. [Paras 7, 11, 12, 13]

Writ petition dismissed; no judicial interference with the investigating authority's requirement of personal attendance for recording of statement.

Final Conclusion: Petitioner's plea to record his statement by video conferencing was refused and the writ petition dismissed; the Court declined to interfere with the investigating authority's summons for personal attendance, accepting the respondent's assurance that health protocols will be observed and the recording will be completed with minimal travel.

Constitutional challenge to Rule 133(3)(b) of the Central Goods and Services Tax Rules - chargeability of interest under Section 171 of the CGST Act - interim stay of interest and penalty proceedings - repayment of excess collection to buyers

Interim stay of interest and penalty proceedings - repayment of excess collection to buyers - Interim relief in the form of stay of the direction to pay interest and of penalty proceedings was granted pending adjudication of the petition challenging the NAPA order. - HELD THAT: - The petition challenges the NAPA order insofar as it directed payment of interest at the rate of 18% from the date of excess collection until payment and contests Rule 133(3)(b) and the chargeability of interest under Section 171 of the CGST Act. Relying on earlier orders in Phillips India Limited, Samsonite South Asia Pvt. Ltd. and Patanjali Ayurved Ltd., the Court stayed the interest obligation directed by the impugned NAPA order and stayed the penalty proceedings until further orders. The Court recorded that the principal amount has been repaid to the flat buyers and proceeded to grant interim protection while requiring the respondents to file counter-affidavits and listing the matter for further consideration.

Stay granted of the interest directed to be paid and of penalty proceedings arising from the impugned NAPA order until further orders; matter posted for further hearing.

Final Conclusion: Interim protection granted: the direction to pay interest and the penalty proceedings under the impugned NAPA order are stayed until further orders; case listed for further hearing.

Writ of Certiorari - Remand for fresh consideration - Appellate reconsideration of assessment under the Goods and Services Tax regime - Stay of coercive recovery pending adjudication - Preservation of parties' statutory rights under the Act

Remand for fresh consideration - Appellate reconsideration of assessment under the Goods and Services Tax regime - Preservation of parties' statutory rights under the Act - Appellate authority directed to reconsider the petitioner's appeal and issues raised before the Court, without the High Court expressing any opinion on the merits. - HELD THAT: - The High Court declined to decide the substantive questions of law or fact raised by the petitioner (including contentions concerning applicability of provisions of the Act) and instead directed that the appellate authority reconsider the appeal. The petitioner was ordered to appear before the appellate authority on a specified date and the appellate authority was directed to consider all aspects, including errors apparent on the face of the record and the contentions earlier raised before it, and to take a decision preferably within two months thereafter. The Court left all issues open and expressly refrained from commenting on the merits, leaving the appellate authority free to pass a fresh order as per law after consideration of the material placed before it.

Petition disposed by remitting the matter to the appellate authority for fresh consideration of the appeal, with liberty to pass a fresh order and all issues left open.

Stay of coercive recovery pending adjudication - Preservation of parties' statutory rights under the Act - Interim protection granted against coercive recovery until the appellate authority disposes of the reconsideration. - HELD THAT: - In view of the remand for fresh consideration, the Court restrained the authority from taking any coercive action for recovery of the amount against the petitioner until the appellate authority decides the matter. The order is interlocutory and tied to the appellate authority's reconsideration and decision within the timeframe directed by the Court.

No coercive recovery action to be taken against the petitioner until the appellate authority renders its decision following reconsideration.

Final Conclusion: Writ petition disposed by directing the petitioner to appear before the appellate authority and by remitting the matter for fresh consideration; the High Court expressed no view on merits and granted interim protection against coercive recovery until the appellate authority decides the appeal within the timeframe directed.

Principles of natural justice - garnishee notice under Section 79(1)(c) of CGST Act, 2017 - premature recovery proceedings - procedure for imposition of penalty under Section 122 requiring proceedings under Sections 73 and 74 - preliminary notice and opportunity to explain discrepancies (Form GSTR ASMT-10)

Principles of natural justice - garnishee notice under Section 79(1)(c) of CGST Act, 2017 - premature recovery proceedings - preliminary notice and opportunity to explain discrepancies (Form GSTR ASMT-10) - Whether the Garnishee Notice dated 26.08.2020 was issued in conformity with principles of natural justice and whether recovery could be initiated before expiry of the appeal/response period. - HELD THAT: - The Court found that the Assessment Order for the period January 2020 to June 2020 was communicated on 13.08.2020, thereby giving the petitioner the statutory time to prefer an appeal; notwithstanding this, the garnishee notice was issued on 26.08.2020 without awaiting the expiry of the period for filing an appeal. Similarly, for the period January 2019 to December 2019, the authority had issued a discrepancy notice (Form GSTR ASMT-10) dated 28.07.2020 directing the petitioner to explain discrepancies on or before 27.08.2020, but the garnishee notice was issued on 26.08.2020, i.e., before the response period lapsed. Initiation of recovery by issuing the garnishee notice before affording the petitioner the opportunity to explain, and before expiry of the period allowed for appeal, was held to contravene the principles of natural justice. The Court emphasised that recovery proceedings which preempt statutorily provided opportunities to reply or to file appeals amount to premature action and cannot be sustained without first following the prescribed procedure and giving the petitioner a chance to be heard. [Paras 16, 17, 20]

Garnishee Notice set aside as having been issued in breach of principles of natural justice; authorities left free to proceed in accordance with law after affording opportunity and following statutory procedure.

Procedure for imposition of penalty under Section 122 requiring proceedings under Sections 73 and 74 - recovery of cess and clerical error claims - Whether the penalty and cess components included in the garnishee notice could be recovered without following the statutory adjudicatory procedure and without considering the petitioner's claim of clerical error regarding cess. - HELD THAT: - The petitioner contended that imposition of penalty under Section 122 could not be made without following the procedure under Sections 73/74 and that a portion of the cess had been wrongly declared due to a clerical entry (cess column instead of IGST), relying on the petitioner's communication to the authority. The Court noted that for the period February 2018 to May 2018 a valid return had been filed for part demand and, under Section 62(2), the assessment to that extent stood withdrawn leaving only liability for interest but not penalty. The Court observed that recovery including penalty and cess, without adhering to the due adjudicatory process and without considering the petitioner's explanations, was improper. Given these procedural infirmities and the pending explanations, the garnishee notice that sought recovery of penalty and cess was set aside. [Paras 18, 19, 20]

Recovery of penalty and cess as effected by the impugned garnishee notice cannot be sustained without compliance with the statutory adjudicatory procedure and consideration of the petitioner's explanations; the garnishee notice is set aside.

Final Conclusion: Writ petition allowed; impugned Garnishee Notice dated 26.08.2020 set aside for having been issued prematurely and in breach of principles of natural justice; authorities are at liberty to proceed in accordance with law after affording opportunity and following the prescribed statutory procedure.

Principles of natural justice - assessment under Section 62 - imposition of penalty under Section 122 - procedure under Sections 73 and 74

Principles of natural justice - assessment under Section 62 - imposition of penalty under Section 122 - Assessment order passed under Section 62 imposing penalty without affording opportunity violated principles of natural justice and was liable to be set aside. - HELD THAT: - The Court found that a notice under Form GSTR-3A was issued on 15.01.2019 but, without waiting for the statutory opportunity and without following the adjudicatory process contemplated for imposition of penalty, an assessment order in Form GSTR ASMT 13 under Section 62 was passed on 29.01.2019 directing payment including penalty. The Court observed that the procedure for adjudication and imposition of penalty requires adherence to principles of natural justice and that the order was passed without giving the petitioner an effective opportunity to be heard. In these circumstances the impugned assessment order and consequential proceedings were set aside and the matter remanded for fresh consideration after affording an opportunity of hearing to the petitioner. [Paras 12, 13, 14]

Impugned order dated 29.01.2019 and consequential proceedings dated 12.08.2020 set aside; matter remitted to authorities to be dealt with afresh after giving opportunity of hearing.

Procedure under Sections 73 and 74 - jurisdiction to impose penalty - assessment of non-filers under Section 62 - Question whether penalty could be validly imposed in the assessment under Section 62 without following the procedure of Sections 73/74 was not finally adjudicated and was remitted for fresh consideration. - HELD THAT: - While the petitioner contended that penalty under Section 122 can be imposed only after following the show-cause and adjudication procedure under Sections 73 and 74, the Court noted the competing contentions of the revenue and the factual matrix that an assessment under Section 62 was framed. Rather than adjudicating this contested legal question on the present record, the Court remitted the matter to the authorities to examine and decide the jurisdictional and procedural aspects, including the applicability of Sections 73/74 vis a vis Section 62, and to do so after giving the petitioner a proper opportunity of hearing. [Paras 11, 12, 13, 14]

Jurisdictional and procedural question remitted to the authorities for fresh consideration and decision after affording opportunity of hearing to the petitioner.

Final Conclusion: Writ petition allowed; impugned assessment order dated 29.01.2019 and consequential proceedings dated 12.08.2020 set aside and matter remitted to the authorities to be reconsidered afresh in accordance with law after giving the petitioner an opportunity of hearing.

Cancellation of GST registration - exercise of writ jurisdiction - alternative statutory remedy - revocation of cancellation - opportunity of hearing - supply of material on which order was based - strict construction of fiscal statutes - public revenue

Cancellation of GST registration - exercise of writ jurisdiction - alternative statutory remedy - Whether the High Court should set aside the order of cancellation of the petitioner's GST registration by exercising writ jurisdiction. - HELD THAT: - The Court declined to exercise its high prerogative writ jurisdiction to set aside the cancellation order. The petition was made several months after service of the order and after the petitioner had not availed the statutory remedies under the Goods and Services Tax Act. The Court noted that Sections 30 and 107 of the Act and Rule 23(1) of the GST Rules provide an alternative efficacious remedy including application for revocation of cancellation, and that fiscal statutes must be strictly construed with caution when public revenue is involved. In these circumstances, and having regard to the delay and the availability of an alternative remedy, the petition to quash the cancellation was not entertained.

Writ petition dismissed; petitioner directed to exhaust statutory remedies (including applying for revocation) instead of seeking immediate interference by this Court.

Revocation of cancellation - opportunity of hearing - supply of material on which order was based - Whether the statutory authority, on receipt of a statutory application, should consider procedural infirmities raised by the petitioner such as non grant of hearing and non supply of the report on which cancellation was based. - HELD THAT: - The Court did not finally adjudicate the merits of the procedural complaints but directed that if the petitioner approaches the authority under the statute, the authority shall consider all aspects including the petitioner's contention that no opportunity of hearing was given and that the report relied upon was not supplied. The Court observed that the petitioner may pray for supply of the report before the authority and that the authority must independently examine these contentions and pass an order in accordance with law.

Matter left to the statutory authority for fresh consideration; authority directed to consider procedural aspects and supply of material if requested by the petitioner.

Final Conclusion: The writ petition seeking quashing of the GST registration cancellation was refused for want of propriety to invoke writ jurisdiction in the face of available statutory remedies; the petitioner is directed to pursue revocation and related remedies under the GST statute, and the authority is directed to consider afresh the petitioner's procedural complaints (including lack of hearing and supply of the report) if the petitioner applies under the statute.

Opportunity of hearing - reasoned order - stay of operation of adverse order - consideration of reply to demand notice - administrative/technical fault as defence to interest demand

Consideration of reply to demand notice - opportunity of hearing - reasoned order - Respondent No.1 was directed to consider the petitioner's reply to the demand notice, afford an opportunity of hearing and pass a reasoned order. - HELD THAT: - The petition sought quashing of the demand notice and raised substantive legal contentions, but the High Court confined itself to directing the 1st respondent to consider the petitioner's reply dated 21.2.2020 and all relevant facts narrated therein. The court ordered that if the 1st respondent finds non-compliance, a reasoned order should be passed after affording the petitioner an opportunity of hearing. The direction is procedural and mandates fresh consideration by the assessing authority rather than adjudication of the substantive legal issues by this Court. [Paras 3]

Respondent No.1 to reconsider the reply, afford hearing and pass a reasoned order within one month from communication of this order.

Stay of operation of adverse order - Adverse action pursuant to the impugned notice was restrained pending the respondent's fresh consideration of the petitioner's reply. - HELD THAT: - The Court granted interim protection by directing that until the 1st respondent completes the exercise mandated - and passes any reasoned order after hearing the petitioner - any adverse order shall not be given effect to. This is a limited interim direction tied to the period for reconsideration and does not decide the merits of the underlying demand. [Paras 3]

Adverse order, if any, shall not be given effect to until the 1st respondent passes the reasoned order as directed.

Administrative/technical fault as defence to interest demand - opportunity of hearing - The substantive legal and factual contentions raised by the petitioner, including the claim that delayed filing was due to departmental/technical fault and the legal challenges to the demand, were left open for the assessing authority's fresh consideration. - HELD THAT: - The Court did not adjudicate the petitioner's substantive pleas concerning retrospectivity of amendment, the legality of summary levy of interest, or the contention that delay arose from a technical fault of the department. Instead, these contentions were remitted to the 1st respondent to be considered on merits while affording the petitioner an opportunity of hearing and passing a reasoned order. The High Court thus remanded the controversy for fresh administrative adjudication rather than deciding it on merits. [Paras 3]

Substantive contentions, including the plea of departmental/technical fault and legality of the demand, are remanded for fresh consideration by the 1st respondent after hearing the petitioner.

Final Conclusion: Writ petition disposed by directing the 1st respondent to consider the petitioner's reply, afford opportunity of hearing and pass a reasoned order within one month; meanwhile any adverse order shall not be given effect to; substantive legal issues were left open and remitted for fresh consideration.

Disallowance under Section 14A of the Income Tax Act - application of Rule 8D of the Income Tax Rules - requirement of a finding that expenditure was incurred in relation to earning of exempt income - Rule 8D cannot extend the scope of Section 14A

Disallowance under Section 14A of the Income Tax Act - requirement of a finding that expenditure was incurred in relation to earning of exempt income - Validity of deletion of the Section 14A disallowance where no exempt income was earned and the Assessing Officer did not record how Section 14A(1) was attracted - HELD THAT: - The Court followed earlier Division Bench decisions, including CIT v. Celebrity Fashion Ltd. and Chettinad Logistics Pvt. Ltd., holding that Section 14A permits disallowance only of expenditure that is proved to have been incurred in relation to earning tax free income. To invoke Section 14A the Assessing Officer must record a finding as to how sub section (1) of Section 14A is attracted; in the absence of any such finding and where no exempt income was earned in the year under consideration, the disallowance could not be sustained. Applying these principles to the facts, the Tribunal was correct in deleting the disallowance. [Paras 6, 8, 9]

Deletion of the Section 14A disallowance was upheld and the appeal dismissed as against the Revenue.

Application of Rule 8D of the Income Tax Rules - Rule 8D cannot extend the scope of Section 14A - Whether Rule 8D (including its amendment) authorises a disallowance under Section 14A even where no exempt income is earned - HELD THAT: - The Court held that Rule 8D cannot be read so as to take the rule beyond the scope and content of the main provision, Section 14A. Even considering the amendments to Rule 8D, the rule cannot operate to create disallowance in the absence of the conditions prescribed by Section 14A; Rule 8D cannot 'rescue' the Revenue where Section 14A's substantive requirements are not established by record findings. [Paras 6, 8, 9]

Invocation of Rule 8D did not justify sustaining the disallowance where Section 14A's requirements were not shown to be met.

Final Conclusion: The appeal is dismissed; the Tribunal's deletion of the Section 14A disallowance (and refusal to sustain a Rule 8D computation in the absence of Section 14A findings) is affirmed, and the substantial questions of law are answered against the Revenue.

Deduction under section 35(2)(AB) - in-house research and development facility - reliance on precedent - remand for fresh consideration

Deduction under section 35(2)(AB) - in-house research and development facility - reliance on precedent - remand for fresh consideration - The Tribunal's allowance of deduction claimed under section 35(2)(AB) in respect of expenditure incurred outside the in house R&D facility was quashed and the matter remitted to the Tribunal for fresh decision. - HELD THAT: - The Tribunal allowed the deduction by relying upon the Gujarat High Court decision in CIT v. Cadila Healthcare Ltd., but did not record independent reasons or findings on the claim. The Supreme Court has remitted the Cadila matter to the High Court for fresh consideration, and in view of the Tribunal's failure to give reasons and the pendency of authoritative consideration of the precedent relied upon, the High Court found it necessary to set aside the Tribunal's order insofar as it granted the deduction and to remit the issue to the Tribunal for adjudication afresh after affording the parties an opportunity of hearing. Because the matter is remitted for fresh consideration, the substantial question of law admitted for hearing was left unanswered. [Paras 5]

Tribunal order dated 16.09.2016 quashed insofar as it pertains to the claim under section 35(2)(AB) and the matter remitted to the Tribunal for fresh decision in accordance with law after hearing the parties.

Final Conclusion: The appeal is disposed of by quashing the Tribunal's order insofar as it allowed the deduction under section 35(2)(AB) for expenditure incurred outside the in house R&D facility, and the matter is remitted to the Tribunal for fresh consideration after affording the parties an opportunity of hearing; the substantial question of law was not decided.

Application of amended tax provision to income of the previous year - Non retrospective operation of tax amendments - Assessment year rule - Advisory jurisdiction of the High Court in a reference

Application of amended tax provision to income of the previous year - Non retrospective operation of tax amendments - Assessment year rule - Inclusion of the minor's share of income for the accounting year ending 10.8.1975 in the assessee's total income for assessment year 1976-77 in consequence of an amendment brought into force after the income had accrued. - HELD THAT: - The Court held that the amended provision could not be given retrospective operation to charge tax on income which had accrued in the previous accounting year 1975-76 merely because the amendment became effective for the later assessment year. Applying the principle that an Amending Act which came into force on 1.4.1976 cannot be made applicable to the previous accounting year (i.e., income accrued on 10.8.1975), the Court disagreed with the Tribunal's approach of applying the law in force at the beginning of the assessment year to incomes already accrued in an earlier previous year. The Court noted the limits of the High Court's reference jurisdiction and the Tribunal's role on questions of fact, but on the legal question framed it concluded that the amendment was prospective and did not operate to include the minor's share for the year ended 10.8.1975 in assessment year 1976-77.

The inclusion upheld by the Tribunal was incorrect in law; the amendment did not apply retrospectively to income accrued on 10.8.1975 and the minor's share was not includible for assessment year 1976-77.

Final Conclusion: The Reference is answered in the negative: the amendment does not operate retrospectively to cover income accrued on 10.8.1975 and the Tribunal was incorrect in upholding its inclusion in the assessment for 1976-77.

Direct Tax Vivad Se Vishwas Act, 2020 - declaration under Section 4 - disposal of appeal on account of settlement scheme - processing of the declaration by the Revenue - liberty to restore the appeal without condonation of delay

Direct Tax Vivad Se Vishwas Act, 2020 - declaration under Section 4 - disposal of appeal on account of settlement scheme - processing of the declaration by the Revenue - Whether the appeal should be disposed of by the High Court in view of the assessee having filed a declaration under the Direct Tax Vivad Se Vishwas Act, 2020 and the consequent directions to the Revenue. - HELD THAT: - The Court noted that the assessee filed a declaration under Section 4 of the Direct Tax Vivad Se Vishwas Act, 2020. Given that the Act provides a statutory mechanism to determine the amount payable on declaration and to bring finality to pending tax disputes, the Court held that no useful purpose would be served by keeping the present appeal pending. The Court therefore disposed of the Tax Case Appeal on the ground that the assessee had availed the scheme and directed the Department to process the declaration and communicate its decision at the earliest in accordance with the Act. This course was adopted notwithstanding the earlier framing of Substantial Questions of Law, which the Court declined to decide in view of the statutory resolution mechanism invoked by the assessee. [Paras 6, 7]

Appeal disposed of as the assessee has filed a declaration under the Act; Revenue directed to process and communicate the decision in accordance with the Act.

Liberty to restore the appeal without condonation of delay - disposal of appeal on account of settlement scheme - Whether the assessee should be permitted to restore the appeal if the declaration's outcome is not in its favour, and on what terms. - HELD THAT: - To safeguard the assessee's interest in the event the Department's decision under the scheme is adverse, the Court granted the assessee liberty to seek restoration of this appeal by filing a Miscellaneous Petition for Restoration. The Registry was directed to entertain such a prayer without insisting on any separate application for condonation of delay; on receipt of such a petition the Registry shall place it before the Division Bench for orders. The Court expressly left the Substantial Questions of Law open for adjudication if the assessee restores the appeal following an unfavourable decision under the Act. [Paras 7, 8]

Assessee given liberty to restore the appeal if dissatisfied with the Department's decision under the declaration; restoration to be permitted without condonation of delay and placed before the Division Bench.

Final Conclusion: The Tax Case Appeal is disposed of because the assessee filed a declaration under the Direct Tax Vivad Se Vishwas Act, 2020; the Revenue is directed to process the declaration and communicate its decision promptly, and the assessee is granted liberty to restore the appeal without condonation of delay if the outcome under the Act is adverse. Substantial Questions of Law are left open.

Disallowance under Section 14A - computation under Rule 8D of the Income Tax Rules, 1962 - disallowance limited to exempt income earned - requirement of recording satisfaction by Assessing Authority before invoking Rule 8D

Disallowance under Section 14A - computation under Rule 8D of the Income Tax Rules, 1962 - disallowance limited to exempt income earned - requirement of recording satisfaction by Assessing Authority before invoking Rule 8D - Applicability of Section 14A read with Rule 8D where the assessee earned no exempt income in the relevant previous year. - HELD THAT: - The Division Bench decision in M/s. Marg Limited v. Commissioner of Income Tax, Chennai was held to be determinative. That decision states that any disallowance computed under Rule 8D read with Section 14A cannot exceed the exempt income earned by the assessee in the relevant assessment year. Further, before resorting to the computation method under Rule 8D, the Assessing Authority must record satisfaction that the assessee's apportionment of expenditure in relation to exempt income is unacceptable and must assign reasons for such dissatisfaction. Applying this principle, the Court did not decide the quantification on merits but remitted the matter to the Assessing Officer to decide the Section 14A disallowance for the Assessment Year 2010-2011 in accordance with the law laid down by the Division Bench. [Paras 2, 3]

Appeal allowed to the extent of remitting the issue of disallowance under Section 14A for Assessment Year 2010-2011 to the Assessing Officer for fresh decision in accordance with the Division Bench ruling in M/s. Marg Limited.

Final Conclusion: The Tax Case Appeal is disposed of by remitting the question of disallowance under Section 14A for Assessment Year 2010-2011 to the Assessing Officer to be decided in accordance with the law laid down by the Division Bench in M/s. Marg Limited; no costs.

Reason to believe - reopening under Section 147 - requirement of satisfaction by superior authority under Section 151 - limitations on scope of reasons recorded for reopening - deeming fiction under Section 2(22)(e)

Limitations on scope of reasons recorded for reopening - deeming fiction under Section 2(22)(e) - reopening under Section 147 - Whether additions under Section 2(22)(e) could be sustained when the assessment was reopened on different grounds recorded in the reasons under Section 148(2) and no additions were made on those recorded grounds. - HELD THAT: - The Tribunal held that the source of jurisdiction to reopen is the 'reason to believe' recorded under Section 148(2) and that the AO must act within the scope of those recorded reasons. The reasons recorded in the present case related to alleged escapement by virtue of purchase of immovable property and contract receipts; during reassessment no additions were made on those grounds (e.g., under Section 69). The AO subsequently invoked the deeming fiction of Section 2(22)(e) - a legal test materially different from the grounds recorded for reopening - without there being any whisper of its applicability in the reasons. Relying on the settled principle that the AO cannot supplement or change the basis of reopening at the assessment stage, the Tribunal concluded that making additions on a different legal premise de hors the reasons recorded is impermissible. Consequently, additions under Section 2(22)(e) made in departure from the recorded reasons are unsustainable and liable to be struck down. [Paras 8, 11]

Additions under Section 2(22)(e) are void insofar as they are extraneous to the reasons recorded for reopening under Section 148(2)/147 and are therefore struck down.

Requirement of satisfaction by superior authority under Section 151 - reason to believe - reopening under Section 147 - Whether the consolidated approval by the Joint Commissioner under Section 151, without an expression or record of satisfaction in respect of each case, rendered the reopening notice under Section 147 invalid. - HELD THAT: - The Tribunal emphasised that Section 151 imposes an independent statutory check requiring the superior authority to be 'satisfied' with the reasons for reopening; such satisfaction must reflect application of mind to the material presented. A mere mechanical or consolidated 'approved' endorsement, devoid of any indication that the sanctioning authority was satisfied in relation to each individual case, is a nullity. The approval memo in this case granted consolidated approval for multiple cases without recording any satisfaction specific to the assessee; accordingly, the sanction under Section 151 was vitiated. Given that valid sanction is a condition precedent to exercise of powers under Section 147, the reopening stood vitiated on this ground as well. [Paras 9, 11]

The consolidated approval lacking any recorded satisfaction under Section 151 is invalid, rendering the reopening notice under Section 147 void.

Final Conclusion: The Tribunal quashed the reassessment proceedings under Sections 147/148 as void ab initio and set aside the additions made under Section 2(22)(e); the assessee's appeal is allowed.

Best judgment assessment under section 144 - addition to income on account of unexplained cash deposits under section 69A - admissibility of additional evidence under Rule 46A of the Income tax Rules - treatment of demonetisation period cash deposits in income assessment - restoration/remand for fresh adjudication to the Assessing Officer - application of section 115BBE to unexplained income

Best judgment assessment under section 144 - admissibility of additional evidence under Rule 46A of the Income tax Rules - Whether the Assessing Officer was justified in completing assessment by best judgment under section 144 where the assessee did not respond to statutory notices and whether the CIT(A) was right in refusing to admit additional evidence. - HELD THAT: - The Tribunal accepted that the Assessing Officer proceeded under section 144 because the assessee failed to furnish any reply or explanation to multiple notices issued under section 142(1), and therefore the Assessing Officer could not be faulted for passing a best judgment assessment. The CIT(A)'s refusal to admit the additional evidence was noted to have been made on the ground that the assessee did not satisfy the conditions of Rule 46A; the Tribunal recorded and upheld the conclusion that there were lapses and non cooperation by the assessee during assessment proceedings, which justified the initial course adopted by the Assessing Officer. The Tribunal nevertheless observed that the Assessing Officer's action in making a best judgment assessment flowed from the absence of response by the assessee and that the procedural non cooperation was a material factor in the assessment outcome. [Paras 7]

The Assessing Officer's completion of assessment by best judgment was justified by the assessee's non cooperation; the CIT(A)'s refusal to admit the additional evidence was recorded on the basis of non compliance with Rule 46A.

Addition to income on account of unexplained cash deposits under section 69A - treatment of demonetisation period cash deposits in income assessment - restoration/remand for fresh adjudication to the Assessing Officer - application of section 115BBE to unexplained income - Whether the cash deposits in the assessee's bank account for FY 2016 17 are properly assessable as unexplained income under section 69A, or whether they are attributable to the assessee's trading/commission agency business and require fresh consideration. - HELD THAT: - The Tribunal found there was material suggesting the assessee carried on business as a commission agent/trader in agricultural produce - notably frequent cash deposits and transfers to entities described as cold storage/stockists, and similar patterns in other years (Form 26AS). While the Assessing Officer treated the entire cash deposits as unexplained money and taxed the amount under section 69A with levy under section 115BBE, the Tribunal concluded that the whole of the deposits could not be summarily treated as unexplained income without giving the assessee an opportunity to substantiate that the deposits arose from trading activity. In the interest of justice and equity the Tribunal restored the issue to the Assessing Officer for fresh adjudication, directing that the assessee cooperate, furnish necessary evidence to establish that the deposits are business receipts, and avoid unnecessary adjournments. The remand contemplates verification and consideration of the evidence on merits rather than an outright endorsement of the addition. [Paras 7]

The matter is restored to the Assessing Officer for fresh enquiry and adjudication on whether the cash deposits are business receipts or unexplained income; the assessee to cooperate and produce evidence to substantiate the deposits.

Final Conclusion: The Tribunal upheld the Assessing Officer's use of best judgment assessment in view of the assessee's non cooperation and the CIT(A)'s admission decision under Rule 46A, but in the interest of justice restored the issue of whether the bank cash deposits constitute unexplained income to the Assessing Officer for fresh consideration; the appeal is allowed for statistical purposes with directions for the assessee to cooperate.

Mandatory notice under section 143(2) as condition precedent to framing scrutiny assessment under section 143(3) - Nullity of assessment framed without mandatory notice - Territorial jurisdiction of Assessing Officer - Transfer of jurisdiction under section 127 of the Act - PAN-based administrative jurisdiction not recognised by statute

Mandatory notice under section 143(2) as condition precedent to framing scrutiny assessment under section 143(3) - Nullity of assessment framed without mandatory notice - Territorial jurisdiction of Assessing Officer - Validity of scrutiny assessment framed by ITO, Ward-2, Digboi without issuing notice under section 143(2) after transfer of the case - HELD THAT: - The return was selected for scrutiny under CASS and ITO, Ward-3, Shillong issued notice under section 143(2), which the assessee objected to on territorial grounds. ITO, Ward-3, Shillong transferred the case to ITO, Ward-2, Digboi, who thereafter completed assessment under section 143(3) without issuing a fresh notice under section 143(2). Relying on the binding ratio in Hotel Blue Moon, the Tribunal held that issuance/service of notice under section 143(2) is sine qua non to framing a scrutiny assessment under section 143(3). The departmental contention that PAN-based administrative jurisdiction justified the proceedings was rejected because PAN jurisdiction is an internal administrative arrangement not sanctioned by the statute; statutory jurisdiction is territorial as per the Act. As the ITO, Ward-2, Digboi framed the assessment without issuing the mandatory notice under section 143(2), the assessment was held to be without jurisdiction and thus null and void. [Paras 5, 6, 7]

Assessment framed by ITO, Ward-2, Digboi on 10.12.2018 without issuing notice under section 143(2) is null and is quashed.

Final Conclusion: The appeal is allowed; the scrutiny assessment for A.Y. 2016-17 framed by ITO, Ward-2, Digboi is quashed because no notice under section 143(2) was issued by the officer who completed the assessment.

Disallowance of provision - provisional accounts versus final accounts - rejection of books of account and reliance on provisional financials - allowability of provisions in computing taxable income - provision for unreconciled overdraft and cash credit loan

Disallowance of provision - provisional accounts versus final accounts - provision for unreconciled overdraft and cash credit loan - Deletion of the addition of Rs. 1,91,32,790 claimed as provision for unreconciled OD and CC loan - HELD THAT: - The Assessing Officer disallowed the provision shown in the assessee's final accounts and added it back to income on the basis of provisional profit and loss account relied upon after rejecting the books of account. The CIT(A) found that the AO computed taxable income on the basis of provisional accounts and that the provision of Rs. 1,91,32,790 was debited only to the final accounts and not to the provisional accounts used by the AO. The Tribunal observed that, while provisions unsupported by any liability are not ordinarily allowable, the material on record does not show that the amount was debited in the provisional P&L account relied upon by the AO. On that factual basis the CIT(A)'s conclusion that the addition could not be sustained was justified. The Tribunal accordingly upheld the deletion of the addition. [Paras 7]

The deletion of the addition of Rs. 1,91,32,790 as provision for unreconciled OD and CC loan is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal affirms the CIT(A)'s deletion of the addition relating to the provision for unreconciled OD and CC loan for AY 2010-2011 and dismisses the Revenue's appeal.

Allowability of Corporate Social Responsibility expenses as business expenditure under section 37 - prospective operation of Explanation 2 to section 37 - revision jurisdiction under section 263 - requirement of enquiry by the Assessing Officer for allowability - public sector undertakings' compliance with government directions

Allowability of Corporate Social Responsibility expenses as business expenditure under section 37 - prospective operation of Explanation 2 to section 37 - public sector undertakings' compliance with government directions - The claimed Corporate Social Responsibility (CSR) expenditure is allowable as business expenditure for A.Y. 2013-14 and A.Y. 2014-15 and Explanation 2 (Finance Act, 2014) is prospective in operation. - HELD THAT: - The Tribunal held that CSR expenses incurred in accordance with Government guidelines and on directions applicable to a public sector undertaking fall within the ambit of expenditure laid out wholly and exclusively for the purposes of business under section 37 for the assessment years in question. The Finance Act, 2014 inserted Explanation 2 to section 37 with effect from 01.04.2015; the notes on clauses and coordinate decisions of the Tribunal (including Jindal Power Ltd. and other Bench decisions) establish that the amendment operates prospectively and does not apply to assessment years prior to A.Y. 2015-16. Authorities and precedents were applied to the factual matrix of a Government company bound by governmental directions, leading the Tribunal to conclude that the Assessing Officer's allowance of the CSR expenditure for A.Y. 2013-14 and A.Y. 2014-15 was a permissible view and not erroneous on merits. [Paras 7, 8, 9]

CSR expenditure incurred as per Government directions is allowable under section 37 for A.Y. 2013-14 and A.Y. 2014-15; Explanation 2 to section 37 is prospective and does not displace that conclusion.

Revision jurisdiction under section 263 - requirement of enquiry by the Assessing Officer for allowability - allowability of Corporate Social Responsibility expenses as business expenditure under section 37 - The Principal Commissioner's exercise of revision jurisdiction under section 263 to set aside the assessments was not sustainable as the assessment orders were not shown to be erroneous and prejudicial to the interests of revenue. - HELD THAT: - The Tribunal found that the Assessing Officer had called for and considered explanations and records regarding the CSR claim and that the AO had taken a possible view in allowing the expenditure. Even if some further enquiry could have been made, the record showed that the expenditure was audited and incurred pursuant to governmental directions for a public sector undertaking; therefore the twin conditions for exercise of section 263 (that the assessment is erroneous and prejudicial to the interests of revenue) were not satisfied. Coordinate decisions and Supreme Court/High Court jurisprudence cited in the order were relied upon to conclude that mere non-discussion in the assessment order or arguable differences of view do not render an order erroneous so as to invoke revision. [Paras 4, 6, 8, 9]

The Pr. CIT's orders under section 263 setting aside the assessments are unsustainable and are cancelled; the Assessing Officer's original assessment stands.

Final Conclusion: Both appeals are allowed: the orders passed by the Principal Commissioner under section 263 are cancelled, the Assessing Officer's assessments for A.Y. 2013-14 and A.Y. 2014-15 are restored, and the CSR expenditures claimed for those years are held allowable under section 37 as Explanation 2 is prospective.

Deduction under section 54F - interpretation of "a residential house" for section 54/54F purposes - taxability of long term capital gain on joint development agreement - possession/transfer under a joint development agreement

Deduction under section 54F - interpretation of "a residential house" for section 54/54F purposes - Whether the assessee is entitled to claim deduction under section 54F of the Act in respect of all flats received under the joint development agreement. - HELD THAT: - The Tribunal examined earlier judicial decisions, notably the Karnataka High Court decision in CIT v. K. G. Rukminiamma and Tribunal precedents, which construed the expression 'a residential house' in section 54/54F as capable of including multiple residential units forming part of the same residential building prior to amendment effective 01.04.2015. Applying those precedents to the facts - where the assessee received multiple flats as consideration under the JDA and the flats are situate in the same premises - the Tribunal held that the assessee is entitled to claim exemption under section 54F in respect of all the flats received. The Tribunal noted subsequent amendment narrowing the scope to one residential house from 01.04.2015, but held that on the facts and relevant law applicable to the assessment year in issue the broader interpretation applies and the deduction must be allowed on all units received.

Assessee entitled to deduction under section 54F in respect of all flats received under the JDA; appeal allowed on this point.

Taxability of long term capital gain on joint development agreement - possession/transfer under a joint development agreement - Whether the date of transfer and year of taxability of long term capital gain arising from the JDA falls in the assessment year under challenge. - HELD THAT: - Although the question whether transfer occurred on execution/possession under the JDA (and hence the year of taxability) was raised and considered by lower authorities, the Tribunal observed that allowing the section 54F deduction on all flats would eliminate any taxable long term capital gain. In view of the substantive relief granted under section 54F, the Tribunal found it unnecessary to adjudicate the contested question of the year of taxability of the LTCG and refrained from deciding that issue.

Issue as to year of taxability of the LTCG not decided as it became academic following grant of deduction under section 54F.

Final Conclusion: Appeal partly allowed: deduction under section 54F granted in respect of all flats received under the joint development agreement for Assessment Year 2010-11; consequently no taxable long term capital gain remains and the Tribunal did not decide the question of the year of taxability.

Deductibility of employees' contribution to PF and ESI where remitted before the due date of filing return - application of Section 36(1)(va) to PF and ESI contributions and interaction with Section 43B - allocation of expenditure between taxable and tax-exempt units and permissibility of estimation-based disallowance - stage and manner of allowing deduction under Section 10A - deduction to be allowed at the gross total income of the eligible undertaking - remand for limited computation consistent with higher court precedent

Deductibility of employees' contribution to PF and ESI where remitted before the due date of filing return - application of Section 36(1)(va) to PF and ESI contributions and interaction with Section 43B - Whether employees' contribution to PF and ESI paid belatedly under the respective statutes but deposited before the due date of filing return is allowable as deduction - HELD THAT: - The Tribunal accepted the assessee's contention that both the employees' PF contribution and the ESI contribution, though paid to the respective authorities after the statutory due date under those statutes, were deposited into the relevant accounts before the due date for filing returns under section 139(1). Following the consistent view of the coordinate Bench in KLR Industries Ltd. and the decisions of the High Court affirmed by the Supreme Court in the reported proceedings, the Tribunal held that such deposits made on or before the due date of filing the return are allowable as deduction and, therefore, the additions made by the Assessing Officer and sustained by the CIT(A) were deleted.

Addition disallowing PF and ESI contributions deleted; appeal allowed on this ground.

Treatment of grounds not pressed at hearing - Disposition of the addition relating to sales promotion expenses which the assessee did not press before the Tribunal - HELD THAT: - The assessee did not press the ground relating to the confirmed addition for sales promotion expenses during the hearing before the Tribunal. The Tribunal therefore dismissed that ground as not pressed.

Ground dismissed as not pressed.

Allocation of expenditure between taxable and tax-exempt units and permissibility of estimation-based disallowance - Whether the Assessing Officer could make estimation-based disallowance of expenditure attributable to tax-exempt units despite the assessee maintaining separate unit-wise books and profit & loss accounts - HELD THAT: - The Tribunal examined the assessee's division-wise Profit & Loss accounts and the assertion that separate books were maintained for each unit. The AO did not reject the books of account nor point to suppression or inflation of expenditure in the taxable unit. In these circumstances the Tribunal found no justification for an estimation-based disallowance, and set aside the additions made by the AO and confirmed by the CIT(A).

Estimation-based disallowance deleted; appeal allowed on this ground.

Stage and manner of allowing deduction under Section 10A - deduction to be allowed at the gross total income of the eligible undertaking - remand for limited computation consistent with higher court precedent - Whether deduction under Section 10A is to be allowed after aggregation under Chapter VI (Sections 70, 71, 72) or at the stage of computing gross total income of the eligible undertaking, and the consequent course of remand - HELD THAT: - Applying the ratio of the Hon'ble Supreme Court in CIT v. Yokogawa India Ltd. , the Tribunal held that deduction under Section 10A must be allowed while computing the gross total income of the eligible undertaking and not at the later stage of computing total income under Chapter VI. The Tribunal therefore set aside the CIT(A)'s conclusion and remitted the matter to the Assessing Officer for the limited purpose of computing the deduction under Section 10A in accordance with the Apex Court's decision.

Matter remitted to AO for limited recomputation of deduction under Section 10A in accordance with the Supreme Court's ratio; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal partly allowed the appeal: deletions were directed in respect of PF/ESI contributions and the estimation-based disallowance for non taxable units; the sales promotion ground was dismissed as not pressed; and the question of deduction under Section 10A was remitted to the Assessing Officer for limited computation in accordance with the Supreme Court's ruling.

Genuineness of purchases - accommodation entries - onus of proof on the assessee to prove genuineness - disallowance of profit element in bogus purchases - 12.5% profit margin as reasonable measure for disallowance - reassessment under section 147

Genuineness of purchases - accommodation entries - onus of proof on the assessee to prove genuineness - disallowance of profit element in bogus purchases - 12.5% profit margin as reasonable measure for disallowance - Whether the Assessing Officer was justified in treating entire purchases as non-genuine and disallowing them, or whether the disallowance should be limited to the profit element (12.5%) as applied by the Commissioner (Appeals). - HELD THAT: - The Assessing Officer treated the entire purchases as non-genuine on the basis of information from DGIT(Inv.), non-service of notices issued under section 133(6) to suppliers and non-production of parties or delivery/transportation evidence, and therefore added the full amounts to the assessee's income. The Commissioner (Appeals) examined the assessee's submissions, noted that onward sales shown by the assessee were not controverted by the AO, and applied the principle, following the decision of the Hon'ble Gujarat High Court in CIT v. Simit P. Sheth, that where purchases are shown to be from hawala/accommodation operators but sales are established, the appropriate course is to disallow the embedded profit margin rather than the entire purchase value. The appellate authority determined that a 12.5% profit margin on the bogus purchases was reasonable and restricted the addition accordingly. The Tribunal, on review of the authorities below and the reasoning adopted by the Commissioner (Appeals), found no infirmity in restricting the disallowance to 12.5% of the purchases and upheld that approach, observing that payment by cheque and documentary facade do not conclusively prove genuineness where surrounding circumstances indicate accommodation entries, but the existence of unabandoned onward sales supports limiting the disallowance to the profit element.

The disallowance is to be restricted to 12.5% of the purchases treated as non-genuine; the Revenue's appeals are dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals)'s decision limiting the addition to 12.5% of the purchases treated as accommodation entries for A.Ys. 2009-10, 2010-11 and 2011-12, and dismissed the Revenue's appeals.

Unexplained cash credits under Section 68 - burden of proof on assessee to identify creditors and prove genuineness of transactions - claim of being a commission agent and relevance of books of account - peak credit doctrine

Unexplained cash credits under Section 68 - burden of proof on assessee to identify creditors and prove genuineness of transactions - claim of being a commission agent and relevance of books of account - Addition under Section 68 in respect of large cash deposits held to be justified where assessee failed to explain source and genuineness of credits and could not identify persons transacting through his accounts. - HELD THAT: - The Tribunal upheld the conclusions of the Assessing Officer and the CIT(A) that the assessee, a salaried individual, had deposited substantial cash in multiple bank accounts without furnishing particulars of the persons who deposited the cash, their capacity to advance funds, or the transactions' genuineness. The authorities relied on bank information (AIR) showing cash deposits and found that the assessee did not produce any evidence to substantiate his submission that the deposits were made on behalf of retail traders/principals and that he merely earned small commissions. The Tribunal noted that the assessee had earlier produced audited accounts before the AO, thereby negating his later contention that he did not maintain books; in any event, mere assertion of being a commission agent without particulars of principals, payers and payees, or documentary proof does not discharge the primary onus under Section 68. The unexplained nature of the credits, the absence of details of identity and genuineness of transactions, and withdrawals that were not traced to identified recipients warranted treating the deposits as unexplained cash credits subject to addition. [Paras 3, 4, 7]

Addition of the unexplained cash deposits to income under Section 68 was confirmed.

Peak credit doctrine - burden of proof on assessee to establish sources and corresponding payments for peak credit - Assessee's claim for taxation limited to peak credit rejected where he failed to explain sources of deposits and the corresponding destinations of payments. - HELD THAT: - The Tribunal applied the principle that benefit of peak credit is available only if the assessee fully discloses and explains all deposits and corresponding payments so as to demonstrate that credits were not his income. Relying on precedent (cited as Delhi High Court decision in CIT v. DK Garg), the Tribunal observed that an assessee who cannot explain source and destination of funds and does not identify creditors and recipients cannot avail of peak credit. In the present case, the assessee neither furnished identities nor documentary evidence to show banking channel movements from identified principals to his accounts and then to the intended recipients; consequently, the peak-credit computation advanced by the assessee was not permissible. [Paras 8]

Request to restrict addition to peak credit was rejected.

Final Conclusion: The appeal is dismissed; the addition made by the Assessing Officer in respect of unexplained cash deposits is upheld and the plea to tax only peak credit is refused.

Non-compete fee - capital versus revenue expenditure - amortisation and depreciation of capital expenditure - disallowance for lack of supporting details - admission of additional evidence and remand for verification - book profit for purposes of Section 115JB - share premium account not chargeable to profit and loss account - scope of Explanation to section 115JB(2)

Non-compete fee - capital versus revenue expenditure - amortisation and depreciation of capital expenditure - The claim for deduction/amortisation of non compete fees was disallowed and the question held against the assessee. - HELD THAT: - The Tribunal declined the assessee's contention that the payments under non compete agreements were revenue in nature or otherwise allowable as depreciation. The assessee conceded that identical issue had been decided against it in its own earlier appeals for A.Y. 2001-02 and 2002-03, and the Tribunal applied those consistent precedents (including the Delhi High Court decision relied upon in the earlier proceedings) to dismiss the grounds challenging the CIT(A)'s confirmation of the disallowance. No fresh factual inquiry was held necessary on this point. [Paras 8]

Grounds challenging disallowance of non compete fee dismissed; claim disallowed.

Disallowance for lack of supporting details - admission of additional evidence and remand for verification - The disallowance of 1/5th of processing and service charges was set aside for the purpose of fresh consideration and the matter remanded to the Assessing Officer after granting a final opportunity to the assessee to produce reconciliatory details and evidence. - HELD THAT: - The AO originally disallowed 1/5th of the processing and service charges for want of requisite details; the CIT(A) rejected additional evidence and sustained the disallowance. The Tribunal found that, in the interest of justice and considering the importance of the additional material, the proper course was to restore the issue to the file of the AO. The Tribunal directed the AO to give the assessee one final opportunity to furnish required particulars, reconcile differences between its books and third party confirmations, and decide the claim on facts and law after affording hearing. The matter was therefore not finally adjudicated on merits but remitted for verification. [Paras 16]

Grounds sustaining disallowance of processing/service charges allowed for statistical purposes; issue remanded to AO for final adjudication after affording opportunity to assessee.

Book profit for purposes of Section 115JB - share premium account not chargeable to profit and loss account - scope of Explanation to section 115JB(2) - The CIT(A)'s deletion of the adjustment adding back reversal of securities/share premium to book profit under Section 115JB was upheld and the Revenue's appeal dismissed. - HELD THAT: - The CIT(A) concluded that the securities/share premium account is part of capital and not a reserve or provision debited to the profit and loss account; consequently its reversal need not be added back to book profit under the Explanation to Section 115JB(2). The CIT(A) examined the Companies Act provisions, Schedule VI formats and the definition of reserves/provisions, and relied on authoritative precedent limiting the AO's power to go behind audited profit & loss except as provided in the statutory Explanation. The Tribunal found no infirmity in that reasoning and upheld deletion of the addition. [Paras 21, 24]

Revenue's appeal dismissed; CIT(A)'s deletion of share premium adjustment from book profit upheld.

Final Conclusion: The assessee's appeal is partly dismissed (non compete fee disallowance sustained) and partly allowed for statistical purposes by remanding the processing/service charges issue to the AO for final consideration after granting a last opportunity; the Revenue's appeal regarding addition of securities premium to book profit under Section 115JB is dismissed.

Encashment of bank guarantee - preservation of proceeds pending adjudication - export obligation under EPCG scheme - consideration of pending EPCG committee application with opportunity of hearing

Encashment of bank guarantee - preservation of proceeds pending adjudication - Permission to encash the bank guarantee subject to interim preservation of proceeds until the EPCG Committee decides the pending application - HELD THAT: - The court recognised that the petitioner had already alienated the imported goods in respect of which export obligation was due and therefore permitted the customs authority to proceed with encashment of the bank guarantee for recovery of customs duty. Simultaneously, the court directed that any amount realised by encashment shall be kept in a separate account and shall not be appropriated as government dues until the EPCG Committee passes a reasoned order on the petitioner's pending application. If the EPCG Committee's reasoned order is in favour of the petitioner, the customs department is to refund the amount to the petitioner at the earliest. The court expressly limited its order to this interim mechanism and did not adjudicate the merits of the underlying export-obligation dispute.

Customs permitted to encash the bank guarantee, but realised proceeds must be kept separately and not appropriated pending the EPCG Committee's reasoned decision; refund to follow if committee rules in petitioner's favour.

Export obligation under EPCG scheme - consideration of pending EPCG committee application with opportunity of hearing - Direction to the EPCG Committee to consider the petitioner's pending application for relaxation/amendment and to pass a reasoned order after hearing - HELD THAT: - The court declined to go into the merits of the petitioner's claim and observed that the application filed on 9th August, 2020 before the EPCG Committee remained pending. In the exercise of supervisory jurisdiction, the court directed the EPCG Committee to consider the said application within four weeks from the date of the order and to pass a reasoned order after affording opportunity of hearing to the petitioner and, if required, to the customs authority. The direction is procedural and mandative, requiring fresh consideration and a reasoned outcome from the competent committee rather than resolving the substantive dispute itself.

EPCG Committee directed to consider the petitioner's application within four weeks and to pass a reasoned order after giving opportunity of hearing.

Final Conclusion: Writ petition disposed: customs may encash the bank guarantee but must retain proceeds in a separate account pending the EPCG Committee's reasoned decision on the petitioner's application (to be decided within four weeks after hearing); if the committee rules in favour of the petitioner, the realised amount shall be refunded.

Provisional assessment - finalisation of bills of entry - statutory mandate to finalise assessments - judicial direction for administrative compliance - contempt for non-compliance

Provisional assessment - finalisation of bills of entry - statutory mandate to finalise assessments - judicial direction for administrative compliance - contempt for non-compliance - Direction to respondent to finalise provisionally assessed bills of entry for polyester knitted fabrics filed by the petitioner for the period 2013 to 2016 within a specified time-frame. - HELD THAT: - The Court noted that bills of entry which have been provisionally assessed cannot be kept provisional indefinitely and that the respondent is under a statutory duty to finalise such assessments. In view of the limited prayer and the petitioner's representation that prior bills for 2013-14 were finalised only after earlier court intervention, the Court issued a mandamus directing the respondent to finalise the bills of entry for the period 2013 to 2016 within six weeks. The Court recorded that, if the direction is not complied with, the petitioner has liberty to initiate appropriate proceedings in accordance with law, including contempt proceedings. The order is administrative in character and intended to secure timely finalisation of assessments.

Writ petition disposed by directing finalisation of the petitioner's provisionally assessed bills of entry for 2013 to 2016 within six weeks, with liberty to move proceedings including contempt in case of non-compliance.

Final Conclusion: The High Court disposed of the writ petition by directing the respondent to finalise the petitioner's provisionally assessed bills of entry for polyester knitted fabrics for the period 2013 to 2016 within six weeks and granted liberty to initiate appropriate proceedings, including contempt, for non-compliance.

Mandatory injunction - surrender of goods under Section 23(2) of the Customs Act - title of goods passing to Customs under Section 23 - remedial appeal to the Commissioner (Appeals) under Section 128 of the Customs Act - failure to exhaust departmental remedies - malafide allegation insufficient to bypass statutory remedies

Surrender of goods under Section 23(2) of the Customs Act - title of goods passing to Customs under Section 23 - The plaintiffs had surrendered their right and claim over the goods and therefore were not entitled to delivery of the goods or to the mandatory injunction sought. - HELD THAT: - The Court recorded that the plaintiffs admitted that, following an increase in ad valorem customs duty, they did not exercise the option to take delivery and had given a written letter relinquishing their rights. The Collector had disallowed clearance by a letter dated 25-2-1986 on the basis that title had passed to the customs department under Section 23, making the goods Government property. In these circumstances the Trial Court correctly found that the plaintiffs had surrendered the goods and thus had no subsisting right to demand delivery or injunctive relief. [Paras 6, 7]

Plaintiffs surrendered the goods and are not entitled to the mandatory injunction or delivery of the goods.

Remedial appeal to the Commissioner (Appeals) under Section 128 of the Customs Act - failure to exhaust departmental remedies - malafide allegation insufficient to bypass statutory remedies - The plaintiffs failed to avail the statutory remedies under the Customs Act and therefore could not maintain a civil suit to circumvent the specialized remedy; allegations of mala fides could not justify bypassing those remedies. - HELD THAT: - The Court noted that the Customs Act, being a special statute, provides specific remedial procedures-specifically remedy by appeal to the Commissioner (Appeals) under Section 128-against orders such as the Collector's disallowance of clearance. No evidence was produced that the plaintiffs pursued those departmental remedies. The plaintiffs also did not challenge the Collector's order within the suit. Consequently, the plaintiffs could not resort to general civil remedies to obtain what was effectively an administrative decision; an unproven allegation of mala fide by the department could not supplant the requirement to exhaust statutory remedies. [Paras 6, 7]

Suit barred by failure to exhaust the departmental remedies under the Customs Act; civil suit cannot be used to bypass statutory appeal mechanism.

Mandatory injunction - malafide allegation insufficient to bypass statutory remedies - The First Appellate Court's reversal of the Trial Court on the ground of alleged mala fides was perverse and erroneous and is set aside. - HELD THAT: - The impugned appellate judgment reversed the Trial Court solely on a finding that the department's refusal to supply the goods was mala fide. The High Court held that this conclusion ignored the admitted surrender by the plaintiffs and the availability of statutory remedies which the plaintiffs did not invoke. The reversal was therefore based on a misappreciation of the record and legal principle and could not be sustained. [Paras 7, 8]

Impugned appellate order reversing the Trial Court is set aside; the Trial Court's finding is restored.

Final Conclusion: The appeal is allowed: the Trial Court's finding that the plaintiffs surrendered the goods and had not availed statutory remedies is upheld; the First Appellate Court's reversal on alleged mala fides is set aside, and the plaintiffs are not entitled to the mandatory injunction or delivery of the goods.

Duty to decide appeals on merits under Section 129B of the Customs Act - dismissal of appeal for non prosecution/non compliance vis a vis statutory mandate - restoration of appeal and recall of interim order for fresh disposal - requirement of expeditious disposal on merits

Duty to decide appeals on merits under Section 129B of the Customs Act - dismissal of appeal for non prosecution/non compliance vis a vis statutory mandate - Whether the CESTAT could dismiss the petitioner's appeals for non compliance/default instead of deciding them on merits in view of the mandate of Section 129B of the Customs Act. - HELD THAT: - The High Court held that the CESTAT's dismissal of the appeals for non compliance (failure to deposit 50% of the demand/penalty and absence of counsel on the listed date) was not a determination on merits of the impugned order. Applying the principle in the cited Supreme Court precedent, the statutory scheme under Section 129B requires the appellate authority to decide an appeal by confirming, modifying, annulling or remanding the matter on merits. The CESTAT's order of dismissal for non compliance was therefore impermissible and not in consonance with Section 129B. The Court observed that the CESTAT did not render a decision in any of the modes sanctioned by Section 129B and that the Supreme Court's view precluded upholding a dismissal for want of prosecution in such circumstances. [Paras 10]

CESTAT's dismissal of the appeals for non compliance/default is impermissible; appeals must be decided on merits in accordance with Section 129B.

Restoration of appeal and recall of interim order for fresh disposal - requirement of expeditious disposal on merits - Whether the appeals and the petitioner's application for recall of the interim order should be restored for fresh consideration. - HELD THAT: - Given the illegality of the CESTAT's dismissal, the High Court set aside the impugned order and restored the appeals for reconsideration on merits. The Court also restored the petitioner's application filed under the CESTAT Rules (for recall of the interim order dated 2 2 2016) for consideration on merits. In view of the prolonged pendency of the dispute, the Court requested the CESTAT to expedite final disposal of the appeals on merits, leaving the parties free to urge their respective grounds before the tribunal. [Paras 11]

Appeals restored for reconsideration on merits and the application for recall of the interim order restored; CESTAT requested to expedite disposal.

Final Conclusion: Writ petition partly allowed: the CESTAT's order dismissing the appeals is set aside; the appeals and the application to recall the interim order are restored for fresh consideration on merits in accordance with Section 129B, with a request to the CESTAT to expedite disposal.

Deemed acceptance by prolonged silence - reopening of adjudication proceedings - compliance with notice requirements under Section 124 of the Customs Act - limitation and laches in challenging customs adjudication - statutory remedy of appeal

Compliance with notice requirements under Section 124 of the Customs Act - deemed acceptance by prolonged silence - Challenge to the adjudication order on the ground of alleged non-adherence to notice requirements under Section 124 after a lapse of three years - HELD THAT: - The Court held that the petitioner, having been served with summons (Ext. P2) and having an adjudication order (Ext. P3) in January 2017, remained silent for about three years and did not challenge the order within the statutory or reasonable period. The contention that a separate notice under Section 124 should have been issued before imposition of penalty and confiscation was raised for the first time after three years; such a belated challenge is barred by the principle of deemed acceptance resulting from prolonged inaction. The Court found no force in reopening the same contention at this stage and treated the long silence as precluding belated invocation of the procedural deficiency now alleged.

The objection based on non-adherence to the notice requirement under Section 124 cannot be agitated after three years and is time-barred by deemed acceptance.

Reopening of adjudication proceedings - limitation and laches in challenging customs adjudication - statutory remedy of appeal - Permissibility of reopening adjudication proceedings or condoning delay to pursue the statutory remedy of appeal after the lapse of three years - HELD THAT: - The Court rejected the petitioner's plea that the adjudication order could be reopened because the counsel engaged failed to file an appeal. The court observed that there is no provision in the Customs Act for reopening adjudication proceedings merely because an appeal was not filed by retained counsel, and that three years of inaction amounts to deemed acceptance; the explanation of engagement of counsel was held to have been raised belatedly and treated as an attempt to circumvent the limitation. Reliance on Section 5 of the Limitation Act to condone such delay was not accepted in the absence of statutory power to reopen the adjudication, and no grounds were found to warrant interference with the adjudication order.

Reopening of the adjudication is not permissible and delay cannot be condoned to enable filing of a belated appeal; no interference with the adjudication order is warranted.

Final Conclusion: Writ petition dismissed; challenge to the adjudication order and the claimed procedural irregularity was held time barred after three years, and there is no provision to reopen the adjudication or condone the delay to pursue a belated appeal.

Implementation of appellate order - restoration of CHA licence - stay of tribunal order by higher forum - compliance with tribunal direction - direction to obtain stay

Implementation of appellate order - restoration of CHA licence - stay of tribunal order by higher forum - direction to obtain stay - Implementation of Tribunal order dated 21.11.2019 restoring the CHA licence and the course to be followed in absence of a stay by a higher forum. - HELD THAT: - The Tribunal recorded that its order dated 21.11.2019 restoring the CHA licence has not been stayed or set aside by any higher appellate forum. Since no stay has been made out on the record before the Bench, the Revenue is obliged to give effect to the Tribunal's order. Noting that the Revenue has filed an appeal with an accompanying stay application before the Hon'ble Bombay High Court which remains undecided, the Tribunal directed that the Revenue must either obtain an order of stay from the High Court or, in default, implement the Tribunal's order after the expiry of one month. Registry was directed to list the matter for reporting compliance on the specified date. [Paras 3]

Revenue directed to obtain a stay from the Hon'ble Bombay High Court if so advised, or otherwise to implement the Tribunal's order dated 21.11.2019 within one month; list for compliance report on 16.11.2020.

Final Conclusion: The Tribunal directed implementation of its order dated 21.11.2019 restoring the CHA licence in the absence of an effective stay; alternatively, the Revenue may obtain a stay from the Hon'ble Bombay High Court, and compliance is to be reported on 16.11.2020.

General Rules for Interpretation of the Customs Tariff - Rule 2(a) - Chapter note 2(b) of Chapter 90 - classification of parts presented in SKD condition - essential character test - separation of components by Revenue for independent classification - binding nature of CBIC clarification/circular - exemption from payment of countervailing duty

Classification of parts presented in SKD condition - General Rules for Interpretation of the Customs Tariff - Rule 2(a) - essential character test - separation of components by Revenue for independent classification - Whether Revenue could sever and classify individual components imported in SKD condition separately under different tariff headings and deny exemption from countervailing duty - HELD THAT: - The Tribunal applied Rule 2(a) of the General Rules for Interpretation of the Customs Tariff, observing that a reference in a heading to an article includes that article incomplete or unfinished provided the incomplete article has the essential character of the finished article as presented. Where goods are imported in SKD condition, Revenue lacks legal authority to separate parts and classify them independently unless it demonstrates that the remaining assembled parts, if put together, do not possess the essential character of the final product. The record contained no evidence by Revenue establishing such a distinction. Consequently, the impugned separations and independent classifications were held unsustainable.

Revenue cannot, without evidence that the remaining parts lack the essential character of the finished article, sever components from an SKD consignment for separate classification; the separations and classifications challenged were held not permissible.

Chapter note 2(b) of Chapter 90 - binding nature of CBIC clarification/circular - exemption from payment of countervailing duty - Whether the CBIC clarification relying on Chapter Note 2(b) of Chapter 90, and classifying parts suitable solely or principally for medical devices with those devices, is binding on departmental officers for purposes of classification and CVD exemption - HELD THAT: - The Tribunal noted the CBIC circular which interprets chapter note 2(b) of Chapter 90 to the effect that parts and accessories suitable solely or principally for medical devices falling under heading 9018 are to be classified with those devices and treated accordingly for taxation. The Tribunal held that this clarification is binding on departmental officers and supports classifying the SKD components with the final medical apparatus rather than as separate items for CVD assessment. That administrative clarification reinforced the conclusion that the impugned demands and penalties could not be sustained.

The CBIC clarification adopting chapter note 2(b) is binding on departmental officers and supports classification of parts suitable solely or principally for medical devices with the devices, militating against denial of the claimed CVD exemption.

Final Conclusion: Impugned orders confirming demands and imposing penalties were set aside; both appeals allowed and appellants entitled to consequential relief in law.

Restoration of company name - strike off under Section 248 of the Companies Act, 2013 - aggrieved party under Section 252(1) and creditor under Section 252(3) - company not dissolved for discharge of obligations despite striking off - power to direct Registrar to restore name if just and equitable - setting aside freezing of bank accounts consequent to restoration

Aggrieved party under Section 252(1) and creditor under Section 252(3) - power to direct Registrar to restore name if just and equitable - company not dissolved for discharge of obligations despite striking off - Income-tax Department is an aggrieved party and creditor entitled to seek restoration of the respondent company's name and the Tribunal may direct restoration if it is just and equitable. - HELD THAT: - The company had been struck off the Register under Section 248 for failure to file statutory returns, but the Income-tax Department had pending assessment proceedings, notices and a demand against the company. Section 252 permits restoration of the name where it is just and equitable; the Tribunal found that the Income-tax Department is an aggrieved party within the meaning of Section 252(1) and a creditor under Section 252(3), and that failure to restore would cause great prejudice to the Revenue and the public. On these findings the Bench concluded that restoration was just and equitable and ordered restoration of the company's name as if it had never been struck off. [Paras 5, 6, 7, 8, 10]

Appeal allowed; Registrar of Companies directed to restore the respondent company's name in the Register as if never struck off.

Restoration of company name - setting aside freezing of bank accounts consequent to restoration - Consequential directions on bank accounts and compliance following restoration. - HELD THAT: - The Tribunal directed that upon restoration of the company's name the consequential directions follow, including that any freezing of the respondent company's bank accounts on the ground of strike-off shall be set aside immediately to enable business operations. Compliance with the order of restoration and its consequences was directed to be completed within one week of compliance by the appellant. [Paras 10, 11]

Direction issued to set aside any freezing of the company's bank accounts consequential to strike-off and to effect compliance with the restoration within the stipulated time.

Final Conclusion: The Tribunal allowed the appeal by the Income tax Department, held that restoration of the company's name under Section 252 was just and equitable given the Department's status as an aggrieved creditor, directed the Registrar to restore the name as if never struck off, and ordered that any bank account freezes consequent to the strike off be lifted to permit the company to carry on business.

Scheme of Arrangement - Demerger - Dispensation of meetings under Section 230 where all members/creditors consent - Notice to regulatory and revenue authorities for schemes - Assistance to Official Liquidator by an appointed auditor/accountant - Hosting of scheme on company website and filing proof of compliance

Scheme of Arrangement - Demerger - Dispensation of meetings under Section 230 where all members/creditors consent - Dispensation of convening meetings of equity shareholders, secured creditors and unsecured creditors of the Applicant Companies and acceptance of affidavits/consents in lieu of meetings. - HELD THAT: - The Tribunal recorded that all four equity shareholders of each Applicant Company have given their consent by affidavits and, accordingly, dispensed with convening the meetings of equity shareholders. The Tribunal further recorded that a requisite majority of secured creditors of the Transferor (two of three secured creditors constituting approximately 99% by value) and requisite majority of unsecured creditors of both Applicant Companies (listed consents constituting the stated percentages) have given their consent; hence, meetings of secured and unsecured creditors are dispensed with. The Tribunal treated the scheme as an arrangement between the companies and their shareholders (and not involving a compromise with creditors) and proceeded on the basis of the consents filed. [Paras 7, 9, 10, 11]

Meetings of equity shareholders, secured creditors and unsecured creditors are dispensed with and the filed consents/affidavits are accepted in lieu of holding such meetings.

Notice to regulatory and revenue authorities for schemes - Service of copy of scheme and statutory notice - Direction to serve statutory notices and copy of the Scheme on Regional Director, Registrar of Companies and Income Tax Authorities and the consequence of no response within thirty days. - HELD THAT: - Pursuant to the statutory procedure, the Tribunal directed the Applicant Companies to serve notice along with a copy of the Scheme on the Central Government through the Regional Director (Western Region), the Registrar of Companies, Mumbai, and the Income Tax Authorities within whose jurisdiction the companies are assessed, with the Income Tax notices clearly indicating the PAN of each Applicant Company as recorded. The Tribunal specified that absence of any response from these authorities within thirty days of receipt of the notice will be treated as no objection to the Scheme. [Paras 12]

Applicants directed to serve statutory notices and copy of the Scheme on the specified authorities; lack of response within thirty days will be presumed as no objection.

Assistance to Official Liquidator by an appointed auditor/accountant - Scrutiny of books and report to Tribunal - Appointment of a chartered accountant to assist the Official Liquidator in scrutinising the books of the Applicant Companies and submission of a report to the Tribunal, with a time-bound opportunity for the Official Liquidator to object. - HELD THAT: - The Tribunal appointed M/s Bhupendra G. Fafadia & Co., chartered accountants, to assist the Official Liquidator in scrutinising the companies' books of account and to submit a report to the Tribunal, fixing the remuneration stated in the order. The Tribunal further directed that if the Official Liquidator, High Court, Bombay, has no representation or objection within thirty days of receipt of notice, it will be presumed the Official Liquidator has no objection to the proposed Scheme. [Paras 13]

Chartered accountants appointed to assist the Official Liquidator; absence of objection within thirty days by the Official Liquidator will be treated as no objection.

Hosting of scheme on company website and filing proof of compliance - Direction to host notices and the Scheme on the Applicant Companies' websites and to file electronic proof of compliance with the Tribunal's directions. - HELD THAT: - The Tribunal directed the Applicant Companies to host the notices and a copy of the Scheme on their respective websites, if any, and to file proof of compliance electronically confirming that the directions regarding issuance of notices and hosting have been complied with. [Paras 14, 15]

Applicants directed to host the Scheme and notices on their websites and to file electronic proof of compliance with the Tribunal's directions.

Final Conclusion: The Tribunal, after recording the consents filed by shareholders and creditors, dispensed with convening the respective meetings, directed service of statutory notices on specified authorities with a thirty-day response period, appointed chartered accountants to assist the Official Liquidator with a thirty-day objection window, required hosting of the Scheme on the companies' websites and ordered filing of proof of compliance; the matter is recorded and the file is consigned to records.

Dispensation of meetings under Section 230 - appointment of Chairperson to conduct shareholders' and creditors' meetings - sanction of scheme of amalgamation and filing of petition in Form CAA-5 - scrutiny of books and records by Official Liquidator through Chartered Accountant - statutory notice and representation to Regional Director/Registrar of Companies/Income Tax Authorities

Dispensation of meetings under Section 230 - Dispensation of convening and conducting meetings of equity shareholders and creditors of the applicant companies - HELD THAT: - The Tribunal considered the applicants' primary prayer to dispense with the convening and conducting of meetings of equity shareholders and secured and unsecured creditors. At the interim stage when the application was first considered, the Tribunal found that dispensation of meetings could not be granted and therefore proceeded to consider the alternative reliefs involving convening of meetings and appointment of a chairperson to conduct them. The order records that the dispensation prayer was not acceded to at that stage and the alternative process was followed. [Paras 10]

Prayer for dispensation of meetings refused at that stage; alternative procedure for convening meetings proceeded with.

Appointment of Chairperson to conduct shareholders' and creditors' meetings - Appointment of a Chairperson to determine classes, fix venue/time/quorum, issue notices, and to report on meetings - HELD THAT: - The Tribunal, after hearing counsel and considering the name submitted by the applicants, appointed the named Chairperson and specified his duties including determining classes of members/creditors, fixing time/place/quorum and procedure, issuing notices and advertisements, and sending notices to sectoral regulators as required under Section 230. The Chairperson conducted the meetings on the dates and times recorded and submitted his report which the Tribunal took on record. The Chairperson's report records attendance and unanimous approval by the members and unsecured creditors of all three companies. [Paras 10, 11, 12, 13]

Chairperson appointed with prescribed functions; meetings were convened, held and the Chairperson's report recording unanimous approval was taken on record.

Scrutiny of books and records by Official Liquidator through Chartered Accountant - Permitting the Official Liquidator to engage a Chartered Accountant to scrutinize books, registers and records of the Transferor Companies and consideration of his report - HELD THAT: - The Tribunal allowed the Official Liquidator's application to engage a Chartered Accountant from his panel to scrutinize the books and records of the Transferor Companies and granted time for completion. The Chartered Accountant filed a report recording no secured creditors, specifying the unsecured creditors, noting certain procedural/compliance lapses (including issues relating to Section 179, deposit rules, advertising in vernacular, minutes and statutory registers, and circulation of supplementary accounts), and stating that, subject to those observations, the affairs of the Transferor Company did not appear conducted prejudicially to members' or creditors' interests or against public interest. The Tribunal, having perused the Chairperson's and Chartered Accountant's reports, concluded there was no impediment to the amalgamation. [Paras 14, 15, 16]

Official Liquidator permitted to engage Chartered Accountant; CA report accepted subject to noted observations and no impediment to amalgamation found.

Statutory notice and representation to Regional Director/Registrar of Companies/Income Tax Authorities - sanction of scheme of amalgamation and filing of petition in Form CAA-5 - Directions to send statutory notices to authorities and to present petition in Form CAA-5 for sanction of the Scheme of Amalgamation - HELD THAT: - The Tribunal directed compliance with Sub-section (5) of Section 230 and Rule 8 of the Companies (CAA) Rules, 2016 by requiring the applicant companies to send notices under Section 230(3) read with Rule 6, along with the Scheme, explanatory statement and disclosures, to the Central Government through the Regional Director (South Eastern Region), the Registrar of Companies, Kerala and the Income Tax Authorities within one week of receipt of the order. The Tribunal prescribed modes of service and a 30 day period for those authorities to make representations. Further, the Tribunal directed the applicant companies to present the petition for sanction of the Scheme in Form No. CAA-5. [Paras 16]

Applicants directed to serve statutory notices on specified authorities within one week and to present the petition in Form CAA-5; authorities given 30 days to make representations.

Final Conclusion: The Tribunal refused dispensation of meetings at the initial stage, appointed a Chairperson who convened and reported unanimous approvals in shareholders' and creditors' meetings, permitted the Official Liquidator to engage a Chartered Accountant whose scrutiny disclosed certain compliance lapses but no impediment to amalgamation, and directed statutory notices to the Regional Director/ROC/Income Tax Authorities and filing of the sanction petition in Form CAA-5; the Company Application CA(CAA)/01/KOB/2020 was disposed of accordingly.

Restoration of company name - striking off of company name for non-filing of statutory returns - restoration under Section 252 of the Companies Act, 2013 - discretion to restore where it is just to do so - conditional restoration subject to filing of pending statutory documents and payment of fees - payment to Prime Minister's Relief Fund as a condition of restoration

Striking off of company name for non-filing of statutory returns - restoration under Section 252 of the Companies Act, 2013 - discretion to restore where it is just to do so - conditional restoration subject to filing of pending statutory documents and payment of fees - Whether the name of the company struck off under the Registrar's public notice ought to be restored to the Register of Companies. - HELD THAT: - The Tribunal examined the statutory scope of Section 252 which permits restoration where the company was carrying on business or where it is just to do so. The company produced evidence of continuing operation and non-defunct status, including a lease deed for industrial premises, audited financial statements for specified years showing tangible and current assets, a certificate from the Office of the Deputy Commissioner of Industries and an MSME registration. The Registrar of Companies raised no objection to restoration so long as all outstanding statutory documents are filed and requisite late filing fees paid. The Income Tax Department's reply recording non-filing of income-tax returns for certain assessment years did not negate the documentary evidence of the company's operations. Applying the discretionary standard in Section 252, and in the interest of stakeholders, the Tribunal concluded that restoration is just and appropriate, while permitting restoration only on compliance with statutory filings, payment of all applicable fees and charges and an express condition of a payment to the Prime Minister's Relief Fund. [Paras 10, 11, 12]

The appeal is allowed; the Registrar's public notice striking off the company's name is set aside and the company's name is ordered to be restored to the Register subject to filing of all outstanding documents with payment of proper filing and late fees, completion of formalities, and payment of Rs. 25,000 to the Prime Minister's Relief Fund.

Final Conclusion: The Tribunal allowed the appeal and ordered restoration of the company's name to the Register of Companies as if it had not been struck off, subject to compliance with filing of outstanding statutory documents, payment of all due fees and charges and the specified payment to the Prime Minister's Relief Fund.

Sanction of scheme of amalgamation under sections 230 and 232 of the Companies Act, 2013 - Compliance with statutory convening and voting procedures for scheme meetings - Judicial deference to valuation and exchange ratio determined by chartered accountants - Obligation to comply with requirement for enhanced authorised capital and payment of additional fees under section 232(3)(i) - Dissolution of transferor companies without winding up on filing certified order

Sanction of scheme of amalgamation under sections 230 and 232 of the Companies Act, 2013 - Compliance with statutory convening and voting procedures for scheme meetings - The Scheme of Amalgamation between the Transferor Companies and the Transferee Company is sanctioned by the Tribunal. - HELD THAT: - The Tribunal examined the scheme filed under sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The convening and conduct of meetings for shareholders and creditors of the three companies were ordered and the results filed. The scheme's rationale, accounting treatment and benefits to stakeholders were considered and no prejudice to creditors or other classes was found. Statutory compliances required under the Companies Act and the Rules were held to have been complied with. The Tribunal therefore sanctioned the scheme and directed that it be binding on all members, creditors and shareholders. [Paras 6, 7, 8, 15, 17]

Company Petitions CP/246/CAA/2020, CP/247/CAA/2020 and CP/248/CAA/2020 are allowed and the scheme of amalgamation is sanctioned.

Judicial deference to valuation and exchange ratio determined by chartered accountants - The Tribunal accepted the valuation process and exchange ratio as arrived at by the valuers and declined to rework or substitute the exchange ratio. - HELD THAT: - The Official Liquidator noted concerns about projected EBITDA increases and the composite valuation methodology and weightages adopted. The Tribunal referred to the settled principle that where a recognised firm of chartered accountants has worked out the exchange ratio and no mistake is demonstrable, the court will not substitute its own ratio, particularly where the scheme has been accepted by the shareholders. In view of the valuers' report and the acceptances recorded, the Tribunal did not interfere with the exchange ratio. [Paras 13]

No interference with the valuation methodology or the exchange ratio fixed by the valuers.

Obligation to comply with requirement for enhanced authorised capital and payment of additional fees under section 232(3)(i) - The Transferee Company was directed to comply with the requirement to pay any further fees for enhanced authorised capital and to amend its Memorandum and Articles of Association as required under section 232(3)(i). - HELD THAT: - The Regional Director observed that the Transferee Company must pay differential fees, if any, on the enhanced authorised capital after adjusting fees paid by the transferor companies, and suggested compliance with clause (i) of sub-section (3) of section 232. The Transferee Company has undertaken to comply with the RD's observations by filing amended Memorandum and Articles of Association and the Tribunal recorded this undertaking while sanctioning the scheme. The Tribunal clarified that sanction does not exempt the parties from payment of stamp duty, taxes or other statutory permissions or compliances. [Paras 10, 11, 18]

Transferee Company to comply with payment of further fees for enhanced authorised capital and to file amended constitutional documents as required; sanction does not grant exemptions from taxes or statutory dues.

Dissolution of transferor companies without winding up on filing certified order - On filing a certified copy of the sanction order with the Registrar of Companies, the Transferor Companies shall stand dissolved without winding up. - HELD THAT: - The Tribunal directed that upon filing the certified copy of this order with the ROC, the transferor companies will be dissolved without a separate winding up process, consistent with statutory practice following amalgamation and sanction. The registry was directed to prepare the order of sanction in the prescribed format and the petitioners were directed to file the certified copy with the Registrar within the stipulated time. [Paras 19, 20, 22]

Transferor Companies shall be dissolved without winding up from the date of filing the certified copy of this order with the Registrar of Companies.

Payment to Official Liquidator's appointed auditors - The Transferor Companies 1 & 2 were directed to pay the fees to the Official Liquidator's auditors appointed for scrutiny of their affairs. - HELD THAT: - The Tribunal accepted the report of the Official Liquidator and the auditors engaged for scrutinising the books of the transferor companies. As a consequence, it directed the Transferor Companies to make specified payments to the Official Liquidator for the auditors within a prescribed time period. [Paras 12, 21]

Transferor Companies 1 & 2 to pay the amounts directed to the Official Liquidator for the auditors within the time stipulated.

Final Conclusion: The Tribunal has sanctioned the scheme of amalgamation between the stated transferor companies and the transferee company after recording statutory compliances, RD and OL reports and undertakings; directions include compliance with enhanced authorised capital formalities, payment to the Official Liquidator's auditors, preparation and filing of the certified order, and dissolution of the transferor companies on filing with the ROC.

Company Court retains jurisdiction over winding-up petitions filed before the Insolvency and Bankruptcy Code - Provisional Liquidator may retain symbolic possession of company assets - Declaratory jurisdiction of Company Court to determine title to flats - Company Court resumes jurisdiction after failure or final rejection of a Resolution Plan - Interim protection of assets pending conclusion of the Corporate Insolvency Resolution Process

Interim protection of assets pending conclusion of the Corporate Insolvency Resolution Process - Provisional Liquidator may retain symbolic possession of company assets - Interim preservation and protection of the specific flat paid for by the applicant was ordered for a limited period. - HELD THAT: - The Court, having considered the prior judgment of 12th December, 2019 and the progress of the CIRP before the NCLT, found that the applicant - having paid the entire consideration in 2015 and not being a party before the NCLT - faces a real risk of the flat being treated as an asset of the corporate debtor. The NCLT had earlier extended time for the RP and the extended CIRP period concluded with no resolution plan received to date; consequently, the Court considered interim protection necessary. On that basis the Court directed that the specified flat and the additional spaces identified in the Judge's Summons be preserved and protected for a limited period, until 21st December, 2020, as interim relief to safeguard the applicant's interest pending further orders after the listing noted in this order.

The flat in question and specified additional spaces shall be preserved and protected until 21st December, 2020.

Company Court retains jurisdiction over winding-up petitions filed before the Insolvency and Bankruptcy Code - Company Court resumes jurisdiction after failure or final rejection of a Resolution Plan - Declaratory jurisdiction of Company Court to determine title to flats - The Court reaffirmed the operative construction of the earlier judgment that the Company Court will resume jurisdiction to pass necessary orders once a Resolution Plan fails or is finally rejected. - HELD THAT: - Relying on the earlier decision which held that winding-up petitions filed before the IBC remain within the Company Court's jurisdiction and that questions of title to flats are declaratory matters for this Court, the present order records that where the CIRP has run its course without an approved resolution plan, the Company Court will take over and proceed with winding-up. The Court noted the NCLT's directions and the absence of any approved Resolution Plan to date, and treated that circumstance as rendering the Company Court's asserted jurisdiction applicable upon failure or final rejection of any plan. The present order therefore proceeds on the basis that final adjudication by the Company Court may follow if the RP's pending application does not produce an approved plan.

The Company Court will take over from the NCLT and exercise jurisdiction to pass necessary orders if the Resolution Plan is not approved or its rejection attains finality.

Final Conclusion: The application was listed for further hearing on 16th December, 2020; in the interim the Court granted limited protective relief directing preservation of the specified flat and ancillary spaces until 21st December, 2020, and recorded that the Company Court will resume jurisdiction to deal with the corporate debtor if the Resolution Plan process fails or is finally rejected.

Jurisdiction of National Company Law Tribunal under Section 60(5) of the I.B. Code - exclusive jurisdiction of Designated Court under the MPID Act to adjudicate attachments under Section 4 and objections under Section 7 - interaction of moratorium under the I.B. Code with actions under the MPID Act - scope of Section 32A of the I.B. Code regarding liability for prior offences and action against property - availability of alternative remedy under Section 61 of the I.B. Code and writ jurisdiction where order is wholly without jurisdiction

Availability of alternative remedy under Section 61 of the I.B. Code and writ jurisdiction where order is wholly without jurisdiction - Maintainability of the writ petition challenging the NCLT order directing de-freezing of the corporate debtor's bank account. - HELD THAT: - The High Court held that the writ petition was maintainable because the impugned order of the NCLT was passed without jurisdiction. Although the I.B. Code provides an appeal remedy to NCLAT under Section 61, the Court reiterated the settled principle that plenary writ jurisdiction under Article 226 may be exercised where an order is wholly without jurisdiction. Given the conclusion that NCLT lacked jurisdiction to adjudicate the validity of action taken under the MPID Act, the alternative remedy did not bar exercise of writ jurisdiction in this case. [Paras 31, 32]

Writ petition maintainable and to be entertained because the NCLT order was without jurisdiction.

Jurisdiction of National Company Law Tribunal under Section 60(5) of the I.B. Code - exclusive jurisdiction of Designated Court under the MPID Act to adjudicate attachments under Section 4 and objections under Section 7 - interaction of moratorium under the I.B. Code with actions under the MPID Act - scope of Section 32A of the I.B. Code regarding liability for prior offences and action against property - Whether the NCLT could entertain and decide the legality or validity of attachments made under the MPID Act, including the de-freezing of the corporate debtor's bank account. - HELD THAT: - Applying the statutory scheme of the MPID Act and the I.B. Code and following the reasoning in Embassy Property Developments, the Court held that the MPID Act constitutes a complete code for protection of depositors and confers on the Designated Court the exclusive procedure to deal with attachments made under Section 4 and objections under Section 7. Section 60(5) of the I.B. Code does not extend NCLT's jurisdiction to displace the designated statutory forum for adjudication of MPID attachments; where the corporate debtor's rights under MPID require judicial determination, those matters must be ventilated before the Designated Court which may, of course, consider and give effect to relevant provisions and orders under the I.B. Code (including moratorium and Section 32A) in determining the MPID objections. Consequently the NCLT's direction to de-freeze the account was held to be beyond its jurisdiction. [Paras 27, 30]

NCLT had no jurisdiction to adjudicate the legality or validity of actions taken under the MPID Act; such matters lie before the Designated Court under the MPID Act.

Final Conclusion: The order of the NCLT dated 28.01.2019 directing de-freezing of the corporate debtor's bank account is quashed as passed without jurisdiction; the IRP/Corporate Debtor must pursue objections to attachments under Section 7 of the MPID Act before the Designated Court, which alone can adjudicate the validity of actions under the MPID Act while taking into account the provisions and orders under the I.B. Code.

Release of assets during CIRP subject to settlement of dues and compliance with conditions - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 and its impact on transfer of assets - Resolution Professional's duty to safeguard corporate debtor's assets and to impose reasonable protective conditions - Applicant's undertaking to meet tax liabilities and indemnify for show-cause proceedings - Liability for restoration of property where removal of machinery causes damage

Release of assets during CIRP subject to settlement of dues and compliance with conditions - Resolution Professional's duty to safeguard corporate debtor's assets and to impose reasonable protective conditions - The applicant's claim for return of machinery in possession of the corporate debtor during the CIRP and the conditions upon which the Resolution Professional must release those machines. - HELD THAT: - The Tribunal examined the competing interests of the applicant (owner/lessor of machinery) and the Resolution Professional's obligation to protect assets of the corporate debtor during CIRP. Having considered the written statement of the Resolution Professional and the undertaking filed by the applicant, the Tribunal concluded that release of the machinery during the ongoing CIRP could be ordered provided specific conditions aimed at protecting the corporate debtor's estate and addressing outstanding liabilities were satisfied. The Tribunal accepted that the Resolution Professional may impose reasonable conditions (payment of outstanding manufacturing charges, security charges and assurances against damage) to ensure preservation of assets and equitable treatment of creditors, and directed that upon compliance with those conditions the Resolution Professional shall hand over the listed machinery to the applicant.

The Resolution Professional shall hand over the machinery to the applicant if the applicant complies with the specified conditions regarding payment of dues, security charges and undertakings to prevent damage.

Applicant's undertaking to meet tax liabilities and indemnify for show-cause proceedings - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 and its impact on transfer of assets - Whether the applicant must discharge the tax liability arising from the show-cause notice and provide cooperation/documents to the tax authority and the corporate debtor before removal of machinery. - HELD THAT: - A show-cause notice from the Central GST Department regarding alleged irregular CENVAT/CENVAT-credit related transactions was placed before the Tribunal. The Resolution Professional required the applicant to undertake to meet any final liability arising from that show-cause notice as a condition for release of machinery. The applicant filed an undertaking to pay the final liability, subject to cooperation by the corporate debtor in signing communications (since registration details are with the corporate debtor), and agreed to pay an upfront amount towards outstanding dues. The Tribunal recorded and accepted that undertaking as a pre-condition for handing over the machinery and accordingly directed payment of the tax demand by the applicant and cooperation by the corporate debtor/Resolution Professional in signing necessary communications.

The applicant shall pay the CGST liability as demanded and the corporate debtor/Resolution Professional shall sign communications as required; payment and cooperation are conditions precedent to removal of the machinery.

Liability for restoration of property where removal of machinery causes damage - Whether the applicant is liable to ensure that removal of machinery does not cause damage to the factory premises and to restore any damage caused. - HELD THAT: - The Tribunal noted the Resolution Professional's concern that removal of certain machines might require demolition or could cause damage to the building. The applicant furnished an undertaking to remove the machinery without causing major damage and to reimburse or repair any damage to the satisfaction of the Resolution Professional. The Tribunal held that protection of the corporate debtor's premises is a legitimate condition for permitting removal and directed that no damage should be caused; any damage caused must be set right by the applicant while taking the machinery.

The applicant must ensure no damage occurs on removal and is responsible for repairing or reimbursing the cost of any damage before or while taking the machinery.

Final Conclusion: MA/150/KOB/2020 disposed of by directing that the applicant may remove the specified machinery only upon satisfying the Tribunal's conditions: payment of the tax demand and upfront outstanding dues, payment towards security charges, provision of undertakings against damage, and cooperation by the corporate debtor/Resolution Professional in signing necessary communications; on compliance, the Resolution Professional shall hand over the machinery.

Requisition of property for public health emergency - use of corporate debtor property during liquidation - as is where is basis - temporary possession and return condition - prohibition on promoters' access during requisition - compensation under Section 66 of the Disaster Management Act, 2005 - overriding effect of disaster management measures on conflicting laws

Requisition of property for public health emergency - use of corporate debtor property during liquidation - as is where is basis - temporary possession and return condition - prohibition on promoters' access during requisition - compensation under Section 66 of the Disaster Management Act, 2005 - Whether the District Collector may be permitted to use the Corporate Debtor hospital as a Covid-19 treatment facility during the liquidation proceedings and on what terms - HELD THAT: - The Tribunal accepted that the request of the District Collector to use the hospital premises for Covid-19 treatment is reasonable given the pandemic emergency and the State guidelines on requisition and compensation. The Bench noted the prior order dated 15.05.2020 authorising temporary takeover for NRI quarantine and the Disaster Management Department guidance including reference to compensation under Section 66 of the Disaster Management Act, 2005 and the overriding effect of disaster management measures. Balancing the public health need against the liquidation process, the Tribunal granted temporary possession to the applicant on specified conditions intended to protect the interests of the liquidator and stakeholders: a pre-handover inventory; no alteration of permanent structures; possession on an "as is where is" basis without liability on the liquidator for running or upkeep costs; no claim against the liquidator for expenditure incurred by the applicant; exclusion of promoters from the premises during requisition; a fixed initial period of two months for use with liberty to seek extension before the Bench; and a requirement to return the premises in the same condition at the end of the period. The order also provided that if no request for extension is made, it would be presumed the applicant does not wish to continue and the liquidator may resume liquidation steps, thereby addressing concerns about prejudice to sale as a going concern and employees' prospects.

Miscellaneous Application allowed; the District Collector permitted to use the Corporate Debtor hospital for Covid-19 treatment for two months subject to the specified conditions, with liberty to seek extension and safeguards for the liquidator and stakeholders.

Final Conclusion: The application is allowed: the District Collector is authorised to take temporary possession of the hospital for Covid-19 treatment on the stated conditions for an initial period of 60 days, subject to returning the premises and the liquidator's right to proceed thereafter if no extension is sought.

Exclusion of lockdown period from CIRP timeline - Extension of limitation and its binding effect - Application of Regulation 40C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Application of Regulation 47A of the IBBI (Liquidation Process) Regulations, 2016 - Exercise of power under Section 60(5) of the Insolvency and Bankruptcy Code, 2016

Exclusion of lockdown period from CIRP timeline - Extension of limitation and its binding effect - Regulation 40C of the IBBI (IRP) Regulations, 2016 - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - Period from 25.03.2020 to 30.06.2020 excluded from computation of the Corporate Insolvency Resolution Process period. - HELD THAT: - The application under Section 60(5) of the Code, supported by Regulation 40C of the IBBI (IRP) Regulations and the orders of higher fora, was considered and allowed. The Tribunal noted the Supreme Court's suo motu order extending limitation with effect from 15.03.2020 and its binding effect, the NCLAT suo motu direction excluding the lockdown period for computation of timelines under Section 12 of the Code, and the IBBI's insertion of Regulation 40C (and corresponding Regulation 47A for liquidation) which provide that the period of lockdown shall not be counted for timeline computation where activities could not be completed due to lockdown. In view of these authoritative directions and the facts that the CIRP was pending and could not be completed due to the nationwide lockdown, the Tribunal excluded the period 25.03.2020 to 30.06.2020 from the CIRP timeline and disposed of the application accordingly. [Paras 9]

IA No. 327/2020 allowed; the period 25.03.2020 to 30.06.2020 is excluded from the CIRP period and the IA is disposed of.

Final Conclusion: The Tribunal allowed the application and directed exclusion of the lockdown period 25.03.2020 to 30.06.2020 from the CIRP timeline in view of the Supreme Court's extension of limitation, the NCLAT direction, and the IBBI regulations; IA disposed.

Jurisdiction under Section 60(5)(c) of the IBC - withdrawal of a Resolution Plan after CoC approval - time bound nature of CIRP and speed as essence of the IBC - frustration/impracticability of contract (Section 56, Indian Contract Act) - time for performance and reasonable time (Section 46, Indian Contract Act) - reciprocal promises and effect of default (Sections 54 and 55, Indian Contract Act) - mandatory contents of Resolution Plan - term and implementation schedule (Regulation 38(2)) - prohibition on contravening 'any law' in a Resolution Plan (Section 30(2)(e) of the IBC) - inherent powers of the Tribunal / Rule 11 NCLT Rules to meet the ends of justice

Jurisdiction under Section 60(5)(c) of the IBC - withdrawal of a Resolution Plan after CoC approval - inherent powers of the Tribunal / Rule 11 NCLT Rules to meet the ends of justice - Whether the Adjudicating Authority (NCLT) has jurisdiction to entertain an application by a Resolution Applicant to withdraw a Resolution Plan after approval by the Committee of Creditors. - HELD THAT: - The Tribunal held that there is no express or implied bar in the Code or Regulations precluding a Resolution Applicant from seeking withdrawal of a CoC approved plan and that Sections 30 and 31 do not directly govern an application by a Resolution Applicant for withdrawal. Clause (c) of Section 60(5) confers jurisdiction over "any question of law or fact arising out of or in relation to the insolvency resolution or liquidation proceedings," which includes the present legal and factual questions about permissibility of withdrawal and the reasonable time for approval. Where specific statutory provisions are silent, the Tribunal may invoke Rule 11 (inherent powers) and be guided by the scheme and objects of the Code (preamble) to do substantial justice. Limitations identified by the Supreme Court (e.g., in Embassy) do not preclude NCLT from exercising jurisdiction in the present intra Code dispute. Accordingly the NCLT has jurisdiction to decide the withdrawal application under Section 60(5)(c) (see paras 23-26, 34). [Paras 23, 24, 25, 26, 34]

NCLT has jurisdiction under Section 60(5)(c) to entertain and decide the Resolution Applicant's application for withdrawal of a Resolution Plan approved by the CoC.

Time bound nature of CIRP and speed as essence of the IBC - frustration/impracticability of contract (Section 56, Indian Contract Act) - time for performance and reasonable time (Section 46, Indian Contract Act) - reciprocal promises and effect of default (Sections 54 and 55, Indian Contract Act) - Whether, on the facts of the case, delay in approval of the Resolution Plan (and resulting commercial changes) entitled the Resolution Applicant to be released from its obligations under the Resolution Plan. - HELD THAT: - The Tribunal applied principles of the Indian Contract Act to the contractual matrix created by the process document, the Resolution Plan and the statutory scheme. It found the transaction to be bilateral with reciprocal obligations: the Resolution Applicant's obligation to fund/implement the plan and the RP/CoC's obligation to procure approval and handover. Regulation 38(2) requires a term and implementation schedule; absence of a meaningful term and prolonged delay frustrates the commercial object of the plan. Section 56 (frustration/impracticability) extends to situations where performance becomes impracticable or the object fails; Section 46 (reasonable time) and Sections 54/55 (effect of default where time is or is not of the essence) inform the analysis of whether the applicant may void or be discharged from performance. Considering the inordinate delay (and the realistic prospect that approval might not attain finality soon given pending litigation and pandemic related effects), and that certain asserted adverse liabilities (workers' dues) remained uncontroverted, the Tribunal concluded the applicant was discharged from performance and entitled to withdraw (see paras 42-46, 48-56). [Paras 46, 48, 54, 55, 56]

On the facts, delay and consequent change in commercial circumstances frustrated the object of the Resolution Plan and discharged the Resolution Applicant from its obligation; withdrawal is permissible.

Mandatory contents of Resolution Plan - term and implementation schedule (Regulation 38(2)) - prohibition on contravening 'any law' in a Resolution Plan (Section 30(2)(e) of the IBC) - Whether the Process Document/Resolution Plan complied with Regulation 38(2) and Section 30(2)(e), in particular the requirement to specify the term of the plan. - HELD THAT: - Regulation 38(2)(a) and (b) require that a Resolution Plan provide the term of the plan and its implementation schedule. The Tribunal interpreted "term" to mean a period and noted that Explanation II to Regulation 36B(4A) contemplates performance security tied to the term or years. The Process Document clause 1.7.4 and the approved Resolution Plan did not specify a finite term (clause asserting plan shall remain valid and binding perpetually). That omission is inconsistent with Regulation 38(2) and could render the plan non compliant with Section 30(2)(e) (not to contravene any law). Given that rejection of the plan on that ground would likely lead to liquidation (with adverse consequences to stakeholders), the Tribunal treated withdrawal as a preferable route on the facts (see paras 41-46). [Paras 42, 43, 44, 45, 46]

The Process Document/Resolution Plan lacked the mandatory specification of the plan's term and thereby risked contravening Regulation 38(2) and Section 30(2)(e); that defect supported the Tribunal's disposition to permit withdrawal rather than reject and liquidate.

Withdrawal of a Resolution Plan after CoC approval - inherent powers of the Tribunal / Rule 11 NCLT Rules to meet the ends of justice - What reliefs and directions should follow where withdrawal is permitted? - HELD THAT: - Exercising its jurisdiction and inherent powers to meet the ends of justice, the Tribunal framed reliefs to protect stakeholders and to restore the CIRP process within a time bound framework. It balanced the interests of the Resolution Applicant (return of performance security) and of the CoC/CIRP (opportunity to invite and finalise fresh plans promptly, failing which to move to liquidation). The Tribunal also directed amendment of the process document to conform with the IBC, CIRP Regulations and applicable contract law to prevent recurrence of arbitrary terms (paras 73-75). [Paras 73, 74, 75]

Permission to withdraw was granted; the RP was directed to return the performance bank guarantee within ten working days, amend the process document, invite/finalise fresh Resolution Plans within 15 days and complete CIRP within a further 75 days, failing which to file for liquidation.

Final Conclusion: The Tribunal held that it has jurisdiction under Section 60(5)(c) to entertain a Resolution Applicant's application to withdraw a CoC approved Resolution Plan; on the facts (inordinate delay, lack of a finite term in the plan, and frustrated commercial object) the Resolution Applicant was discharged from performance and permitted to withdraw. Consequential directions include return of the performance bank guarantee, amendment of the process document, time bound invitation and finalisation of fresh plans, and filing for liquidation if no acceptable plan is approved within the stipulated period.

Dissolution of corporate debtor - pendency of investigation as a bar to dissolution - effect of dissolution on corporate existence and legal capacity - vesting of assets recovered on investigation - Registrar of Companies' prohibition on removal where investigation is pending - liquidator's duty to apply for dissolution on complete liquidation - completion of liquidation within one year under Regulation 44 of IBBI (Liquidation Process) Regulations

Pendency of investigation as a bar to dissolution - dissolution of corporate debtor - effect of dissolution on corporate existence and legal capacity - vesting of assets recovered on investigation - Registrar of Companies' prohibition on removal where investigation is pending - completion of liquidation within one year under Regulation 44 of IBBI (Liquidation Process) Regulations - liquidator's duty to apply for dissolution on complete liquidation - Pendency of an investigation ordered against the corporate debtor bars the Adjudicating Authority from ordering dissolution of the corporate debtor at that stage - HELD THAT: - The Tribunal held that dissolution extinguishes the company's legal existence and the capacity to sue or be sued, and a liquidator cannot represent a dissolved company before investigative fora; consequently dissolution while an investigation capable of yielding recoverable assets remains pending would impede vesting and distribution of assets recovered by that investigation. The Companies (Removal of Names) Rules, 2016 expressly prohibit striking off where inspection or investigation is ordered and pending, demonstrating that ongoing investigations are a recognized bar to removal/dissolution. Although Section 54 of the IBC obliges the liquidator to apply for dissolution when assets are completely liquidated, and Regulation 44 requires liquidation to be completed within one year, Regulation 44 does not compel the Adjudicating Authority to order dissolution where an investigation (which may result in additional assets for distribution) is pending. For judicial propriety and to enable completion of the investigation, maximisation of assets and their appropriate distribution, the Tribunal concluded that dissolution should not be ordered while the investigation referred by the NCLAT remains pending and therefore declined to order dissolution at this stage. The application for dissolution was dismissed as premature, with liberty to apply again after completion of the investigation and directions to the Ministry of Corporate Affairs to expedite the investigation. [Paras 26, 27, 28, 30, 31]

Application for dissolution dismissed as premature; liberty to apply after closure of the investigation ordered by the NCLAT and directions issued to the Ministry of Corporate Affairs to expedite investigation.

Final Conclusion: The Tribunal dismissed the liquidator's application for dissolution as premature because an investigation referred by the NCLAT is pending; dissolution at this stage would extinguish the corporate entity and impede vesting and distribution of assets that may be recovered through the investigation, and the liquidator may reapply after the investigation concludes.

Privity of contract - financial debt - registration of charge with the Registrar of Companies - equitable mortgage by deposit of title deeds - time bar and limitation under the Limitation Act - appeal against liquidator under Section 42 - 14 days - voidness of unregistered charge against liquidator and creditors

Privity of contract - financial debt - Whether the appellant bank's claim against the liquidator of NOCL in respect of loans advanced to COGIL can be treated as a claim against the company under liquidation - HELD THAT: - The Tribunal held that a claim filed by the bank in relation to debts owed by COGIL does not, merely because COGIL had filed a claim, entitle the bank to make that claim against the liquidator of NOCL. The bank's recourse is against COGIL unless NOCL had stood as guarantor or surety for the loan or there exists direct contractual privity between NOCL and the bank. The pleadings and documents in the appeal did not establish that NOCL was liable as guarantor or that there was privity of contract sufficient to treat the claim as a debt of NOCL. Consequently the claim could not be allowed against the company in liquidation on that basis. [Paras 27]

Claim against the liquidator of NOCL based on loans to COGIL is not maintainable in absence of privity or NOCL having stood as guarantor/surety.

Equitable mortgage by deposit of title deeds - registration of charge with the Registrar of Companies - voidness of unregistered charge against liquidator and creditors - Whether the existence of an equitable mortgage over lands sub let by NOCL to COGIL, and related registrations, renders the appellant's claim enforceable against NOCL's liquidation estate - HELD THAT: - The Tribunal noted that even assuming an equitable mortgage by deposit of title deeds was created in favour of the bank over properties sub let by NOCL to COGIL, the effect of such security on the liquidation estate turns on registration of charge. In the absence of registration of any charge by NOCL (and no privity to the underlying contract), the company under liquidation and its creditors cannot be bound by an unregistered charge; the tribunal relied on the statutory principle that an unregistered charge is void against the liquidator and other creditors. The appellant failed to show registration by NOCL or any contractual basis binding NOCL to the debt. [Paras 28]

Equitable mortgage/charge in favour of the bank does not render the claim enforceable against NOCL's liquidation estate where registration and privity are absent.

Time bar and limitation under the Limitation Act - Whether the claim filed by the appellant before the liquidator was barred by limitation - HELD THAT: - The Tribunal examined the claim form and supporting documents and observed that the bank failed to specify when any debt of NOCL became due or to produce documents evidencing a demand for repayment. Reliance was placed on authorities establishing that limitation can be raised at any stage and that a party must specifically plead how a claim is within limitation. Given the absence of material showing when the cause of action arose or that the claim was within the prescribed period, the Tribunal concluded that the claim was hopelessly barred by limitation. [Paras 29, 30]

The claim before the liquidator is time barred and barred by limitation.

Appeal against liquidator under Section 42 - 14 days - time bar and limitation under the Limitation Act - Whether the appellant's appeal against the liquidator's rejection was maintainable in view of delay in filing and absence of condonation - HELD THAT: - Under the statutory regime an appeal against the liquidator's decision must be filed within 14 days. The Tribunal found that the appellant filed the appeal after 17 days and did not seek condonation of delay. Applying the well established principle that 'there is no equity about limitation', the Tribunal held that absence of an application for condonation and the unexplained delay rendered the appeal not maintainable. [Paras 31, 32]

The appeal is barred by delay in filing beyond 14 days and is not maintainable in absence of a condonation application.

Final Conclusion: The Tribunal dismissed the appellant bank's appeal against the liquidator's rejection of its claim: the bank cannot claim against NOCL in liquidation for loans made to COGIL in absence of privity or NOCL liability; the asserted security/charge did not bind the liquidation estate without proper registration; the claim was time barred; and the appeal itself was filed late beyond the 14 day period without condonation. IA/419/2020 is dismissed without costs.

Exclusion of time period under Regulation 40C due to COVID-19 lockdown - extension of CIRP timeline beyond the outer limit where delay not attributable to parties - completion of CIRP within outer limit of 330 days and limited power to extend in interest of stakeholders - role of Committee of Creditors' approval in seeking timeline relief - avoidance of liquidation as a last resort in favour of resolution

Exclusion of time period under Regulation 40C due to COVID-19 lockdown - effect of COVID-19 lockdown on CIRP timeline - role of Committee of Creditors' approval in seeking timeline relief - Exclusion of the period from 25.03.2020 to 30.06.2020 (97 days) from computation of the CIRP timeline was permitted. - HELD THAT: - The Adjudicating Authority applied the regulatory framework introduced by way of Regulation 40C and considered the exceptional circumstances caused by the COVID-19 lockdown, the stage of the CIRP and consistent efforts by prospective resolution applicants to undertake due diligence once travel and inspection became feasible. The Authority also took guidance from the principle that timelines may be extended or relief granted where delay is not attributable to the parties and where permitting additional time would better serve stakeholders and avoid liquidation. The Committee of Creditors had approved seeking extension/exclusion with 81.11% voting and RP had taken requisite steps in the process; on this basis the Authority found that excluding the 97 days lost to lockdown was in the interest of stakeholders and approved the exclusion. [Paras 6, 7]

Application for exclusion of 97 days from computation of CIRP period is allowed.

Extension of CIRP timeline beyond the outer limit where delay not attributable to parties - completion of CIRP within outer limit of 330 days and limited power to extend in interest of stakeholders - Prayer for a further extension of 120 days from 01.07.2020 to 28.10.2020 was not adjudicated and was not granted at this stage. - HELD THAT: - Having allowed the exclusion of 97 days and having noted the steps already taken by the RP and the CoC's approval, the Adjudicating Authority concluded that sufficient time had been made available for completion of the CIRP and therefore it was not appropriate to adjudicate the separate prayer for a 120-day extension. The Authority disposed of the IA without granting that extension. [Paras 7, 8]

Application for extension of 120 days is not adjudicated and is not granted; the IA is disposed of.

Final Conclusion: The Tribunal allowed exclusion of 97 days (25.03.2020-30.06.2020) from the CIRP timeline under Regulation 40C in view of COVID-19 disruptions and CoC approval, and declined to adjudicate or grant the separate prayer for a 120-day extension; the interlocutory application stands disposed of.

Compliance with Request for Resolution Plan (RFRP) - duty of Resolution Professional to place only compliant resolution plans before the Committee of Creditors - joint and several liability of consortium members for implementation of an approved resolution plan - management and implementation obligations in a resolution plan under section 30(2) and section 30(3) of the I&B Code - commercial wisdom of the Committee of Creditors and RFRP as the guiding document for submission and evaluation of resolution plans - status and regulatory constraints of an Asset Reconstruction Company (ARC) under the SARFAESI Act and RBI guidelines vis-a -vis RFRP requirements

Compliance with Request for Resolution Plan (RFRP) - duty of Resolution Professional to place only compliant resolution plans before the Committee of Creditors - management and implementation obligations in a resolution plan under section 30(2) and section 30(3) of the I&B Code - Whether the Resolution Professional erred in refusing to place the applicants' resolution plan before the Committee of Creditors on the ground of non-compliance with the RFRP. - HELD THAT: - The Tribunal found that the Resolution Professional repeatedly sought modifications and issued compliance checklists to the applicants because the submitted plan did not conform to material requirements of the RFRP. Under section 30(2) the RP must examine each plan to ensure it provides for management and implementation of the corporate debtor post-approval; section 30(3) requires that only plans meeting section 30(2) be placed before the CoC. The applicants' plan left implementation responsibility out of scope for one consortium member (RA-1/ARC) and therefore failed to satisfy the RFRP and the management/implementation prerequisites in section 30(2). The Tribunal held that where a plan is not in conformity with the RFRP and does not meet the statutory requirements, the RP was justified in not placing it before the CoC. [Paras 18, 20, 21, 22, 23]

The Resolution Professional did not commit any irregularity in refusing to place the non compliant resolution plan before the Committee of Creditors.

Joint and several liability of consortium members for implementation of an approved resolution plan - status and regulatory constraints of an Asset Reconstruction Company (ARC) under the SARFAESI Act and RBI guidelines vis-a -vis RFRP requirements - compliance with Request for Resolution Plan (RFRP) - Whether the applicants could lawfully submit a resolution plan in which the ARC-member (RA 1) disclaimed liability for implementation and refused to take equity as required by the RFRP. - HELD THAT: - The RFRP expressly required that consortium members be jointly and severally liable and that the consortium collectively hold prescribed equity interests where applicable. The applicants' plan sought to exclude RA 1 from implementation liability and asserted that RA 1 would not subscribe to equity in light of RBI/SARFAESI constraints. The Tribunal held that regulatory constraints of an ARC do not permit a Resolution Applicant to contravene express eligibility and implementation obligations formulated in the RFRP and approved by the CoC. Since the plan did not allocate implementation responsibility in the manner mandated by the RFRP, it failed the RFRP test and the statutory tests under section 30(2)(c)-(d). The personal or regulatory difficulties of the ARC did not relieve the consortium from complying with the RFRP. [Paras 21, 22, 23]

The consortium could not lawfully exclude the ARC from joint and several liability or from meeting RFRP equity/implementation requirements; the plan was non compliant on this ground.

Commercial wisdom of the Committee of Creditors and RFRP as the guiding document for submission and evaluation of resolution plans - compliance with Request for Resolution Plan (RFRP) - Whether the Tribunal should strike down or amend contested clauses of the RFRP as arbitrary because they confer extensive powers on the Resolution Professional or are against commercial fairness. - HELD THAT: - The Tribunal observed that the framing of the RFRP is within the commercial domain of the CoC and becomes the guiding document for submission and evaluation of plans. The Adjudicating Authority is not the forum to re examine the commercial wisdom of CoC or the reasonableness of RFRP clauses unless they offended statutory provisions; routine challenges to alleged arbitrariness or broad discretionary powers in RFRP cannot be entertained to override CoC's formulated requirements. The Tribunal therefore declined to rewrite or amend the RFRP on the applicants' contention that certain clauses were arbitrary or conferred excessive powers. [Paras 19, 20, 23]

The Tribunal will not interfere with the RFRP framed/approved by the CoC on grounds of commercial reasonableness; challenges to such clauses were rejected.

Final Conclusion: The application challenging the Resolution Professional's refusal to place the applicants' resolution plan before the Committee of Creditors is dismissed: the plan was non compliant with the RFRP and did not satisfy the management and implementation requirements under section 30(2)/(3) of the I&B Code, a consortium member could not legitimately disclaim joint and several liability, and the Tribunal will not re write RFRP clauses grounded in the commercial wisdom of the CoC.

Exclusion of period from CIRP timeline - interim resolution professional's failure to perform duties - lockdown due to COVID-19 and tolling of timelines - continuity and object of the Insolvency and Bankruptcy Code - judicial and regulatory orders effecting timeline computation

Exclusion of period from CIRP timeline - interim resolution professional's failure to perform duties - Exclusion of the period from 27.11.2019 to 25.02.2020 from computation of the CIRP period on account of failure of the initially appointed IRP to perform substantial work and consequent replacement. - HELD THAT: - The Adjudicating Authority recorded that CIRP was initiated on 27.11.2019 and an IRP was appointed, but no substantial work in the CIRP was carried out until the order replacing the IRP and appointing a new Resolution Professional on 25.02.2020. In view of the inactivity attributable to the failure of the initial IRP to conduct requisite processes enabling the Committee of Creditors to function and to appoint a replacement earlier, the period from 27.11.2019 to 25.02.2020 was held to be excluded from the CIRP timeline in the interest of the corporate debtor and having regard to the object of the Code. The order disposes of the application filed under Section 60(5) seeking such exclusion and records the factual basis for excluding that period. [Paras 4, 5, 6, 11, 12]

Period from 27.11.2019 to 25.02.2020 excluded from the CIRP period.

Lockdown due to COVID-19 and tolling of timelines - judicial and regulatory orders effecting timeline computation - Exclusion of the period from 25.03.2020 to 31.07.2020 from computation of the CIRP period by reference to judicial pronouncements and regulatory amendments addressing lockdown-related delays. - HELD THAT: - The Authority applied and relied upon (a) the Supreme Court's suo motu order extending limitation from 15.03.2020; (b) the NCLAT suo motu order excluding lockdown period from computation of the Section 12 timeline; and (c) IBBI's insertion of Regulation 40C (and Regulation 47A for liquidation) excluding lockdown period for activities that could not be completed due to lockdown. Having regard to these orders and regulations and the factual position that significant activity could not be carried out during the nationwide lockdown (w.e.f. 25.03.2020 until Unlock 3.0 / 31.07.2020), the Authority excluded the period from 25.03.2020 to 31.07.2020 from the CIRP timeline and disposed of the application accordingly. [Paras 8, 9, 10, 11, 12]

Period from 25.03.2020 to 31.07.2020 excluded from the CIRP period.

Final Conclusion: The application under Section 60(5) is allowed: the period 27.11.2019 to 25.02.2020 (due to inactivity of the initial IRP and replacement process) and the period 25.03.2020 to 31.07.2020 (lockdown-related tolling in light of Supreme Court, NCLAT orders and IBBI regulations) are excluded from computation of the CIRP period; IA No. 306/2020 is disposed of.

Reason to believe - provisional attachment under Section 5(1) of PMLA - adjudication under Section 8 of PMLA - effect of acquittal on PMLA proceedings - remand for re-adjudication - continuation of status quo in respect of attached properties

Effect of acquittal on PMLA proceedings - provisional attachment under Section 5(1) of PMLA - Whether acquittal in the underlying scheduled offences precludes or vitiates attachment/adjudication proceedings under the PMLA. - HELD THAT: - The Tribunal examined authorities and statutory structure and held that proceedings under the PMLA constitute a distinct, self-contained code directed at laundering of proceeds and are not automatically terminated by closure, discharge or acquittal in the scheduled offences. The Tribunal relied on the reasoning in M/s. VGN Developers (Madras High Court) and the statutory scheme (including Section 44(1) explanation as amended) to conclude that acquittal in the predicate or scheduled-offence proceedings has no automatic bearing on attachment or adjudication under PMLA. Consequently the appellants' contention that acquittals in the FIRs abate the PMLA proceedings was rejected.

Acquittal in scheduled offences does not by itself invalidate attachment or adjudication proceedings under the PMLA; the contention of the appellants on this ground is negatived.

Reason to believe - adjudication under Section 8 of PMLA - Whether the Adjudicating Authority recorded legally sufficient "reasons to believe" when confirming the provisional attachment. - HELD THAT: - The Tribunal found that the Adjudicating Authority's impugned order merely recited that it had 'gone through' the complaint and documents and stated a prima facie reason to believe, without demonstrating an independent application of mind or articulating the factual material and rationale connecting the material to the formation of the belief as required by the authorities on 'reason to believe'. The Tribunal observed that reasons must be specific, show a live nexus to the material on record and not be a verbatim reproduction of statutory language. Because the Adjudicating Authority did not adequately examine or record whether the complainant's satisfaction met legal standards (including the requirement to identify why non-attachment would frustrate confiscation proceedings), the Tribunal concluded that the adjudicatory exercise under Section 8(1) was deficient.

The confirmation order is set aside for failure to record legally sufficient reasons to believe; the matter is remanded for fresh adjudication on this and other legal issues.

Remand for re-adjudication - continuation of status quo in respect of attached properties - Remedial directions upon finding defect in adjudication process. - HELD THAT: - Having set aside the impugned confirmation order for inadequate reasons, the Tribunal directed remand to the Adjudicating Authority to re-adjudicate the matter afresh within a fixed timeframe and to decide all legal issues raised by the appellants (including reasons to believe) after hearing parties and examining materials. The Tribunal preserved the interim position by directing that attachments shall continue and both parties must maintain status quo in respect of attached properties pending re-adjudication. The Tribunal clarified it did not express any opinion on the merits of source of income or the ultimate question of whether properties are proceeds of crime.

Impugned order set aside and remanded to the Adjudicating Authority for fresh adjudication within 180 days; attachments to continue and status quo to be maintained.

Final Conclusion: The Tribunal held that acquittal in predicate/scheduled-offence proceedings does not automatically invalidate PMLA attachment or adjudication; however, because the Adjudicating Authority failed to record legally sufficient "reasons to believe" in confirmation of the provisional attachment, the confirmation order was set aside and the matter remanded for fresh adjudication within 180 days, with the provisional attachment to remain in force and the parties directed to maintain status quo.

Refund of tax paid by mistake of law - limitation for refund and statutory remedy - Section 11B - bar to refund where tax claimed outside statutory provision - service tax on foreign agency commission - not leviable prior to 18.04.2006 as Business Auxiliary Service - recovery of amounts refunded - Article 265 - requirement of levy by law and prohibition of recovery where no legal exigibility - estoppel and equity in tax law

Refund of tax paid by mistake of law - limitation for refund and statutory remedy - Section 11B - bar to refund where tax claimed outside statutory provision - estoppel and equity in tax law - Whether the appellant's claim for refund of service tax paid prior to 18.04.2006 could be sustained despite statutory bars and limitation, where payment was made under a mistake of law. - HELD THAT: - The Court accepted the legal principle that a mistake of law by the assessee does not confer an equitable right to refund outside the statutory framework and that the remedy for recovery must be sought under the statute, relying on the Constitution Bench reasoning in Mafatlal Industries and the decision of this Court in Southern Surface Finishers. Accordingly, the questions of law concerning limitation, the applicability of Section 11B and the proper statutory remedy were answered in favour of the Revenue. The Court therefore held that the legal questions raised on limitation and statutory bar must be answered against the assessee even where the payment resulted from a mistake of law. [Paras 4, 5, 6]

Questions of law on limitation, Section 11B and the availability of refund for payments made under a mistake of law were answered in favour of the Revenue.

Service tax on foreign agency commission - not leviable prior to 18.04.2006 as Business Auxiliary Service - recovery of amounts refunded - Article 265 - requirement of levy by law and prohibition of recovery where no legal exigibility - estoppel and equity in tax law - Whether the Revenue could recover amounts already refunded to the appellant where, on the admitted facts, service tax on foreign agency commission was not leviable prior to 18.04.2006. - HELD THAT: - Although the Court answered the legal questions in favour of the Revenue, it observed that the levy of service tax on payments in lieu of foreign agency commission was not leviable as 'Business Auxiliary Service' prior to 18.04.2006. Citing the principle that tax can be imposed only where the taxing statute makes it exigible and that equity or estoppel cannot be invoked to sustain a tax not provided by law (as in CIT, Madras v. Mr. P Firm Muar), the Court held that the Revenue is incapable of recovering the amounts already refunded as tax due. Consequently, even while upholding the legal correctness of the Revenue's position on the statutory issues, the Court restrained the Revenue from recovering the refunded amounts. [Paras 6, 7]

Recovery of the amounts already refunded is restrained because the levy was not legally exigible prior to 18.04.2006; the Revenue cannot recover those refunded sums as tax due.

Final Conclusion: Questions of law on limitation, Section 11B and related statutory defences were answered in favour of the Revenue; however, because service tax on foreign agency commission was not leviable prior to 18.04.2006, the Revenue is restrained from recovering amounts already refunded to the appellant. Parties shall bear their own costs.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS-1 form incorrect declaration - inadvertent mistake versus incurable mistake - curability of mistaken declarations - correction of application and fresh consideration by tax authority

SVLDRS-1 form incorrect declaration - inadvertent mistake versus incurable mistake - curability of mistaken declarations - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - An inadvertent failure to state the amount of penalty in the SVLDRS-1 form does not, by itself, operate as an incurable misstatement disentitling the applicant to benefits under the Scheme 2019. - HELD THAT: - Relying on the reasoning in the Court's earlier decision in WP(C) No. 2149/2020, the Court examined whether omission of the penalty amount in Form SVLDRS-1 amounted to a deliberate misrepresentation that would bar relief under the Scheme or was an inadvertent/curable error. The Court accepted the distinction between deliberate, misleading declarations which produce undue benefit and inadvertent or callous oversights which do not confer an advantage that the applicant would otherwise not have obtained. The Scheme does not contain any provision excluding persons upon whom a penalty has been imposed from availing its benefits; indeed, mentioning the penalty could in some situations increase the relief available. Consequently, the omission of the penalty in the present circumstances was held to be a curable inadvertent mistake and not an incurable misstatement disentitling the petitioner from consideration under the Scheme. [Paras 4, 5]

The Court held that the inadvertent non-disclosure of the penalty in Form SVLDRS-1 is a curable mistake and does not automatically disentitle the petitioner from benefits under the Scheme 2019.

Correction of application and fresh consideration by tax authority - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - The proper remedy is to permit the petitioner to seek correction of the information in Form SVLDRS-1 and require the respondent authorities to consider the corrected claim and pass a reasoned, speaking order. - HELD THAT: - Having treated the omission as curable, the Court directed that the petitioner submit an application for correction of the SVLDRS-1 within 15 days of obtaining the certified copy of the order. On receipt of such application the respondent authorities are to examine the corrected information and pass a reasoned and speaking order thereon within two months from receipt. This direction mandates fresh consideration by the authorities rather than deciding the substantive claim on the writ petition itself. [Paras 6]

Petitioner to apply for correction within 15 days; respondents to pass a reasoned speaking order on the corrected application within two months of receipt.

Final Conclusion: Writ petition disposed of by permitting correction of the SVLDRS-1 filing for the inadvertent omission of penalty and directing the tax authorities to examine the corrected claim and pass a reasoned order within the stipulated timeframe.

Disposal under National Litigation Policy - Litigation Policy applicability where quantum is within notified limit - Remand for re hearing and re determination by the High Court

Disposal under National Litigation Policy - Litigation Policy applicability where quantum is within notified limit - Remand for re hearing and re determination by the High Court - Appeals were to be disposed of under the Government's National Litigation Policy as the dispute quantum fell within the limits notified under that policy, notwithstanding the High Court's remand for re hearing. - HELD THAT: - The Tribunal recorded that the matter had earlier been the subject of its final order dated 12.10.2017 and that the High Court of Calcutta set aside that order and remanded the appeal with a direction to re hear and re determine. On re hearing, the Tribunal found the appeals to be covered by the Government's Litigation Policy (Board instruction F.No.390/Misc./116/2017 JC dated 22.08.2019). Because the quantum of dispute in the appeals fell within the amount specified in the Litigation Policy, the Tribunal considered it appropriate to dispose of the appeals in terms of that policy and accordingly disposed of the appeals and the cross objection under the National Litigation Policy.

Appeals and cross objection disposed of in terms of the National Litigation Policy as the dispute quantum was within the notified limit.

Final Conclusion: The Tribunal complied with the High Court's remand by re hearing and, finding the matters covered by the Government's Litigation Policy, disposed of the appeals and the cross objection under that policy.

Applicability of Rule 6 of the Cenvat Credit Rules to electricity generated from Bagasse (non-excisable goods) - effect of Explanation 1 to Rule 6(1) equating non-excisable goods with exempted goods for Rule 6 - requirement of separate records and reversal of common input service credit for credit neutralisation - invocation of extended period of limitation where prior notice on same subject-matter exists

Applicability of Rule 6 of the Cenvat Credit Rules to electricity generated from Bagasse (non-excisable goods) - effect of Explanation 1 to Rule 6(1) equating non-excisable goods with exempted goods for Rule 6 - requirement of separate records and reversal of common input service credit for credit neutralisation - Whether Rule 6 of the Cenvat Credit Rules applies to electricity generated from Bagasse and, if so, whether the demand under Rule 6(3)(i) is sustainable after 1 March 2015. - HELD THAT: - The Tribunal held that electricity generated from Bagasse is non-excisable as earlier held by the Allahabad High Court in Gularia Chini Mills and affirmed by the Supreme Court in DSCL Sugar, and therefore Rule 6 did not apply to such electricity for the period upto 1 March 2015. With regard to the post-amendment position (after Explanation 1 to Rule 6(1) dated 1 March 2015), the Tribunal found on the facts that the appellant had not used any Cenvat-availed inputs in the generation of electricity from Bagasse, had maintained separate records as evidenced by the Chartered Accountant's certificate, and had reversed proportionate credit for common input services, so as to effect credit neutralisation. The adjudicating authority had not produced specific and cogent evidence to displace the CA certificate. Consequently, even after the amendment, the demand under Rule 6(3)(i) could not be sustained as the statutory objective is credit neutralisation and no Cenvat credit was attributable to power generation from Bagasse in the appellant's case. [Paras 6, 7]

Demand under Rule 6(3)(i) dropped for the period upto 1 March 2015; and on the facts found, demand under Rule 6(3)(i) unsustainable even after the amendment to Rule 6(1).

Invocation of extended period of limitation where prior notice on same subject-matter exists - Whether the assessing authority could invoke the extended period of limitation in the subsequent notice dated 28 November 2016 in view of an earlier notice and audit for prior periods. - HELD THAT: - The Tribunal recorded that the adjudicating authority had itself accepted that a prior notice on the same issue had been issued for the period 2013-14 and that the demand under Rule 6(3) for that earlier period had been dropped. Applying the principle in Nizam Sugar Factory, the Tribunal held that a subsequent notice could not validly invoke the extended period of limitation on the same subject-matter. On this ground also the demand was held to be barred. [Paras 8]

Extended period of limitation could not be invoked; the subsequent demand was barred by limitation.

Final Conclusion: The appeal is allowed on merits and limitation: the demand under Rule 6(3)(i) is set aside for the period upto 1 March 2015 and is unsustainable on the facts even after the amendment; invocation of the extended period of limitation in the subsequent notice is barred. Consequential relief, if any, to follow.

Inter se seniority - application of settled four principles in seniority disputes - probation commencement as criterion for seniority - permanent posts versus temporary posts in cadre strength - preference for direct recruits in reserved quota - preparation of provisional seniority list - prematurity of writ petitions

Inter se seniority - application of settled four principles in seniority disputes - Whether the Division Bench order dated 28.07.2016 fettered the State Government from revising seniority lists. - HELD THAT: - The Court examined the 28.07.2016 order in context and held that the Division Bench did not impose an embargo preventing the State from revising seniority lists. The Division Bench reproduced and required application of the four principles (as earlier formulated and affirmed by the Supreme Court) and directed the State to await the outcome of a delinked appeal because that appeal concerned whether temporary posts should be considered; the direction to await the outcome was procedurally linked to that discrete controversy and not a general restraint on revision. Thus the 28.07.2016 order obliged the State to prepare lists in accordance with the four principles while awaiting the specific outcome in W.A. No.2280 of 2011, but did not validate or preclude revision per se. [Paras 17, 18, 19]

The 28.07.2016 Division Bench order did not bar the State from revising seniority lists; it required adherence to the four principles and waiting for the specific appeal dealing with temporary posts.

Permanent posts versus temporary posts in cadre strength - prematurity of writ petitions - Whether the writ petitions seeking to restrain preparation of a provisional seniority list were maintainable and whether the learned Single Judge correctly issued the directions in paragraph 38. - HELD THAT: - The Court held that the Supreme Court had firmly closed the question of treating temporary appointments as creating cadre strength for seniority purposes; temporary posts cannot be utilized to alter the settled seniority without intervention of the Supreme Court. Given that backdrop, the petitions filed to pre-empt the State's preparation of provisional lists (which would and should adhere to the four principles and consider only permanent posts) were premature. The Single Judge's directions in paragraph 38 interfering with the preparatory process were therefore unsustainable. [Paras 20]

The writ petitions were premature and the Single Judge erred in issuing the directions in paragraph 38; those directions are set aside.

Preparation of provisional seniority list - application of settled four principles in seniority disputes - permanent posts versus temporary posts in cadre strength - Whether the State Government is entitled to prepare provisional seniority lists and on what legal basis such lists should be prepared. - HELD THAT: - The Court held that the State is entitled to prepare provisional seniority lists by applying the applicable general and special rules together with the four principles formulated by the Division Bench and affirmed by the Supreme Court. In doing so, the State must reckon only permanent posts (temporary posts having been excluded by the Supreme Court's judgment and reiterated by the Division Bench). Once provisional lists are published in conformity with those principles and rules, affected parties are at liberty to object or challenge them through available remedies. [Paras 20, 21]

The State may prepare provisional seniority lists adhering to the four principles and considering only permanent posts; publication of such lists will permit subsequent objections or challenges.

Final Conclusion: Writ appeals allowed. The Division Bench's directions require application of the four established principles but do not bar the State from revising seniority lists; temporary posts cannot be treated as enlarging cadre strength for seniority; the Single Judge's interference (paragraph 38) was premature and is set aside; the State may publish provisional seniority lists applying the four principles and reckoning only permanent posts, subject to objections or challenges thereafter.

Statutory remedy under the DVAT Act - availability of assessment orders on dealer portal - challenge to demands and penalties through statutory mechanism - stay of writ of demand

Availability of assessment orders on dealer portal - challenge to demands and penalties through statutory mechanism - Whether the petitioner could maintain the present writ challenging the writ of demand when demands and assessment orders are reflected on the DVAT dealer/ward portal and thus amenable to statutory challenge under the DVAT Act. - HELD THAT: - The court recorded that the assessment orders and demands forming the basis of the impugned writ of demand are reflected on the dealer login and ward in-charge login of the DVAT portal, with the order-generated dates available in the database. Since those demands and penalties are the foundation of the writ of demand dated 29th September, 2020, the court held that the petitioner must challenge the demands and penalties by availing the statutory remedy provided under the DVAT Act rather than proceeding by the present writ petition. The petitioner informed the court that assessment orders were unsigned and passed without notice; however, given the portal availability and that the demands are contestable through the statutory mechanism, the court required the petitioner to proceed under the DVAT Act to impugn those orders. [Paras 6, 7, 8, 9]

Petitioner directed to withdraw the writ and challenge the demands and penalties in accordance with the statutory mechanism under the DVAT Act.

Stay of writ of demand - Interim relief to permit the petitioner to initiate statutory proceedings to challenge the demands and penalties. - HELD THAT: - To facilitate filing of statutory proceedings, the court accepted the petitioner's statement of withdrawal of the writ petition and granted an interim stay of the impugned writ of demand dated 29th September, 2020 for a limited period, thereby preserving the petitioner's opportunity to seek redress under the DVAT Act. The court left all substantive rights and contentions open while directing the order to be uploaded and communicated to counsel. [Paras 9, 10]

Impugned writ of demand dated 29th September, 2020 stayed for six weeks to enable the petitioner to challenge the demands and penalties through the statutory mechanism; all rights and contentions left open.

Final Conclusion: Writ petition disposed of on the petitioner's undertaking to withdraw the writ and to challenge the stated demands and penalties for assessment years 2012-2013, 2014-2015, 2015-2016 and 2016-2017 under the DVAT Act; the writ of demand dated 29th September, 2020 is stayed for six weeks to permit filing of statutory proceedings, with all rights and contentions preserved.

Violation of principles of natural justice - failure to consider reply to pre-assessment notice - denial of personal hearing - remand for fresh consideration and adjudication on merits - availability of statutory appellate remedy vis-a -vis writ maintainability

Violation of principles of natural justice - failure to consider reply to pre-assessment notice - denial of personal hearing - The assessment order was passed in breach of principles of natural justice by not considering the petitioner's reply and by failing to afford a personal hearing. - HELD THAT: - The Court examined the pre-assessment notice dated 07.02.2018, the petitioner's reply dated 07.03.2018 and the impugned assessment order. The receipt of the reply was not disputed. The petitioner in the reply had expressly denied liability under the TNVAT Act, 2006 and given specific explanations for the alleged defects (purchase treated as asset for cargo handling, goods moved for repair with delivery challan marked 'Not For Sale', and store goods used in operations). The impugned assessment order, however, proceeded solely on alleged sworn statements recorded during inspection and did not deal with or apply mind to the substantive contentions contained in the reply, nor was any personal hearing afforded before finalising the assessment. For these reasons the Court concluded that the principles of natural justice were violated. [Paras 8, 11]

Impugned assessment order quashed insofar as it was passed without considering the reply and without affording personal hearing.

Remand for fresh consideration and adjudication on merits - availability of statutory appellate remedy vis-a -vis writ maintainability - Despite the existence of a statutory appellate remedy, the writ petition was maintainable and the matter was remanded for fresh consideration on merits after granting opportunity of personal hearing. - HELD THAT: - The respondent relied on the existence of a statutory appellate remedy under the TNVAT Act, 2006 to contend that the writ was not maintainable. The Court, however, found that the fundamental breach of natural justice in the assessment process rendered adjudication in writ jurisdiction appropriate. Consequently, the impugned order was set aside and the assessment remitted to the respondent to decide afresh on merits and in accordance with law after affording the petitioner a sufficient opportunity, including a personal hearing, within the time directed by the Court. [Paras 7, 12]

Writ petition held maintainable; matter remanded for fresh adjudication with directions to afford personal hearing and pass final orders within twelve weeks.

Final Conclusion: The assessment order dated 13.03.2018 is quashed for breach of natural justice; the matter is remitted to the respondent for fresh consideration and final orders on merits after affording the petitioner a personal hearing within twelve weeks.

Prematurity of challenge to pre-assessment notice - Compliance with JKM Graphics decision - Transparency and sharing of materials relied upon by the Department - Obligation to provide third-party data and opportunity to respond - Validity of proceedings pending constitution of central data sharing mechanism

Prematurity of challenge to pre-assessment notice - Compliance with JKM Graphics decision - Writ petitions challenging pre-assessment notices dismissed as premature. - HELD THAT: - The Court held that the petitions were filed at the pre mature stage because the Assessing Officer had issued notices calling upon the assessee to produce material and respond to alleged mismatches; therefore judicial interference at the admission stage was not appropriate. The judgment reiterated that the ratio in JKM Graphics binds the Department and requires that mismatches be addressed scientifically, but that this does not ipso facto bar the Assessing Officer from obtaining case specific details, supplying the materials relied upon to the assessee, soliciting responses, hearing the assessee and finalising assessment in accordance with law. The Court noted the Commissioner's circular directing assessments involving mismatches to be kept pending until a central mechanism is constituted, but observed that the circular does not prevent officers from continuing efforts to collate third party details and to share relevant materials with the assessee prior to finalisation of assessment. [Paras 3, 5, 7]

Writ petitions dismissed as premature; matters are not amenable to pre assessment judicial intervention at this stage.

Transparency and sharing of materials relied upon by the Department - Obligation to provide third-party data and opportunity to respond - Validity of proceedings pending constitution of central data sharing mechanism - Proceedings may continue without awaiting constitution of a central sharing mechanism where third party details have been collated, subject to strict compliance with transparency and the JKM Graphics directions. - HELD THAT: - The Court found that where the Assessing Officer has in fact collated the details of third party dealers, the object of a central sharing mechanism is achieved in that case and proceedings need not await constitution of the central facility. In such cases the officer may proceed to furnish the collated material (including data uploaded on the Department's website), solicit and receive the assessee's response, hear the assessee and finalise the assessment in strict conformity with the decision in JKM Graphics and applicable law. The Court emphasised complete transparency in regard to the materials relied upon by the Department and directed that further proceedings be conducted either physically or by video conference in line with those observations. [Paras 5, 6]

Assessing Officer may proceed where third party data has been collated, after sharing materials with the assessee and affording opportunity to respond; further proceedings to be in strict conformity with JKM Graphics.

Final Conclusion: The Writ Petitions were dismissed as premature; the petitioner was directed to appear before the Assessing Officer and further proceedings were authorised to continue (physically or via video conference) provided the Department shares the materials relied upon, affords the assessee an opportunity to respond, and complies with the JKM Graphics decision; no costs.

Summoning under Section 138 of the Negotiable Instruments Act - applicability of the Payment and Settlement Systems Act, 2007 - common order for multiple complaints involving different parties - remand for fresh consideration of summoning

Common order for multiple complaints involving different parties - summoning under Section 138 of the Negotiable Instruments Act - The impugned common order dated 11.3.2019 insofar as it applies to CC No. 1565/19 could not have been validly passed together with orders in CC Nos. 1566/19 and 1567/19 where the parties to the complaints differ. - HELD THAT: - The record demonstrated that CC Nos. 1566/2019 and 1567/2019 involved different accused and distinct memo of parties from CC No. 1565/2019. In those circumstances the learned Trial Court's issuance of a common order applying identically to CC No. 1565/19 along with CC Nos. 1566/19 and 1567/19 was inappropriate. The High Court found it essential that the proceedings in CC No. 1565/19 be treated on their own facts and parties, and that the summoning question in that complaint not be determined by reference to a collective order covering unrelated complaints. For these reasons the impugned order insofar as it relates to CC No. 1565/19 was set aside.

Impugned order dated 11.3.2019 qua CC No.1565/19 set aside on ground that a common order could not validly be passed in respect of complaints involving different parties.

Applicability of the Payment and Settlement Systems Act, 2007 - summoning under Section 138 of the Negotiable Instruments Act - remand for fresh consideration of summoning - The question whether the provisions of the Payment and Settlement Systems Act, 2007 apply to the averments in CC No.1565/19 was not finally adjudicated and is remitted to the learned Trial Court for fresh consideration. - HELD THAT: - Petitioners specifically contended that the complaint in CC No.1565/19 invoked provisions of the Payment & Settlement Systems Act, 2007 read with provisions of the Negotiable Instruments Act and that those statutory provisions are not entirely coextensive. The High Court observed that the learned Trial Court was required to ascertain the applicability (or otherwise) of the Payment & Settlement Systems Act, 2007 to the averments in CC No.1565/19 before determining summoning. As that aspect had not been independently considered in relation to CC No.1565/19, the High Court remanded the matter directing the Trial Court to determine, in accordance with law, whether the accused in CC No.1565/19 should be summoned having regard to the applicability of the Payment & Settlement Systems Act, 2007 read with the Negotiable Instruments Act, 1881.

Matter remanded to the learned Trial Court to decide afresh the question of summoning in CC No.1565/19, including determination of the applicability of the Payment & Settlement Systems Act, 2007 read with the Negotiable Instruments Act.

Final Conclusion: The petition is allowed in part: the order dated 11.3.2019 insofar as it relates to CC No.1565/19 is set aside and the matter is remitted to the learned Trial Court to reconsider summoning in CC No.1565/19, including the question of the applicability of the Payment & Settlement Systems Act, 2007 read with the Negotiable Instruments Act, 1881, in accordance with law.