TaxTMI Updates e-Newsletter
Nov 25,2021

Applicability of GST versus DVAT - Input tax credit under Section 140(3) of the CGST Act, 2017 - Advance ruling under Section 97 of the CGST Act, 2017 - Contractual obligation to pass on tax benefit in procurement contracts - Arbitral Tribunal's power and duty under Section 28(2) of the Arbitration and Conciliation Act, 1996

Applicability of GST versus DVAT - Whether the transaction in respect of the 85 lifts was taxable under GST or under DVAT - HELD THAT: - The Arbitral Tribunal found that the evidence did not establish that the lifts were incorporated into the works prior to 01.07.2017 and concluded that DVAT invoices could not have been properly raised for the 85 lifts. The Tribunal also observed that DMRC had not objected to Kone raising tax invoices under the GST regime and had partially reimbursed GST, which supported the Tribunal's view. This Court found no infirmity in that conclusion and declined to fault the Tribunal's rejection of DMRC's plea that DVAT applied; the Court held that the Tribunal's view was not ex facie illegal or inconsistent with public policy. [Paras 18, 30, 31, 33]

Held in favour of the claimant (Kone): the Tribunal rightly concluded GST, not DVAT, applied to the 85 lifts and this conclusion is upheld.

Input tax credit under Section 140(3) of the CGST Act, 2017 - Advance ruling under Section 97 of the CGST Act, 2017 - Whether Kone was entitled to transitional input tax credit in respect of excise duty paid prior to 30.06.2017 and whether the Tribunal adequately adjudicated entitlement and consequences - HELD THAT: - The Arbitral Tribunal recorded that it could not definitively decide admissibility of transitional credit under Section 140(3) and criticized both parties for not seeking an advance ruling under the CGST Act; it held that both parties had erred in not jointly pursuing the possibility of claiming credit and apportioned responsibility between them, awarding 50% of the claimed amount. This Court concluded that the Tribunal did not render a definitive adjudication on whether Kone in law was entitled to the input tax credit or whether DMRC could lawfully withhold payment on account of unavailed credit. Because the core question of legal entitlement to the credit (and DMRC's onus to establish a right to withhold) remained undecided, the Court found the award did not resolve the principal dispute and therefore set aside the award insofar as it left the matter undecided. [Paras 46, 48, 49, 51]

The Tribunal's apportionment and failure to decide entitlement to transitional input tax credit rendered the award incomplete; the award is set aside on this ground and the matter is left open for fresh proceedings.

Contractual obligation to pass on tax benefit in procurement contracts - Whether Clause 11.1.2 of the General Conditions of Contract obligated Kone to avail exemptions/credit and pass benefit to DMRC in the facts of this case - HELD THAT: - The Arbitral Tribunal examined Clause 11.1.2 and concluded that it addressed government-granted exemptions and was not applicable where no exemption order existed. The Tribunal therefore found the clause inapplicable to the excise duty reimbursement in the present contract. This Court found the Tribunal's interpretation plausible and declined to interfere with that finding. [Paras 43, 44]

Clause 11.1.2 held not applicable on the facts; the Tribunal's conclusion is upheld.

Arbitral Tribunal's jurisdiction to decide counter-claims - Whether DMRC's counter-claim was within the Tribunal's jurisdiction and whether the Tribunal correctly disposed of the counter-claim - HELD THAT: - The Tribunal found DMRC's counter-claim to be maintainable and within its jurisdiction but, on its merits, rejected the counter-claim because it accepted that Kone had rightly raised GST invoices and DMRC had reimbursed GST. This Court found no ground to fault the Tribunal's rejection of the counter-claim in view of the Tribunal's factual and legal findings regarding applicability of GST and DMRC's conduct in reimbursing GST. [Paras 21, 32]

Counter-claim found maintainable but rejected on merits by the Tribunal; that rejection is upheld.

Arbitral Tribunal's power and duty under Section 28(2) of the Arbitration and Conciliation Act, 1996 - Whether the Tribunal improperly decided matters on equitable considerations (ex aequo et bono) or failed to decide legal entitlement as required by law - HELD THAT: - The Court observed the Tribunal must decide disputes in accordance with law unless expressly authorized to decide ex aequo et bono. The Court noted the Tribunal's approach-criticising both parties for not seeking an advance ruling and then apportioning responsibility-resulted in an absence of a legal adjudication on entitlement to transitional credit. The Court held that the Tribunal could not dispense with applying the law and that leaving the core legal entitlement undecided was impermissible. Consequently, the award was set aside for failing to resolve the legal issue. [Paras 50, 51, 52]

The Tribunal failed to render a legal determination as required; the award is set aside for not deciding the legal entitlement in accordance with law.

Final Conclusion: The Court affirms the Tribunal's finding that GST (and not DVAT) applied and upholds the Tribunal's rejection of DMRC's counter claim and the inapplicability of Clause 11.1.2. However, because the Tribunal did not adjudicate the determinative legal question whether Kone was entitled to transitional input tax credit and whether DMRC could withhold payment on that account, the award is set aside and the parties are at liberty to initiate fresh proceedings.

Cancellation of GST registration - opportunity of hearing before cancellation - first proviso to Section 29(2) of the Uttar Pradesh Goods and Services Tax Act, 2017 - service of show cause notice on GST portal - Rule 22 of the Uttar Pradesh Goods and Services Tax Rules, 2017 - principles of natural justice - remand for fresh consideration after opportunity to be afforded

Opportunity of hearing before cancellation - first proviso to Section 29(2) of the Uttar Pradesh Goods and Services Tax Act, 2017 - principles of natural justice - cancellation of GST registration - Order cancelling the petitioner's registration was passed without affording the mandatory opportunity of hearing and therefore was invalid. - HELD THAT: - The court found that the first proviso to Section 29(2) of the Act mandates that an opportunity of hearing must be afforded before an order cancelling registration can be passed. The court emphasised that rules of natural justice are deeply entrenched and that cancellation of registration carries far reaching civil consequences affecting the business of the registrant. Reliance on Rule 22 of the Rules by the revenue was held to be misplaced insofar as it could not supplant the statutory requirement of issuing a show cause notice and affording a hearing under the proviso to Section 29(2). Given the admitted factual position that no hearing date was fixed and no opportunity was afforded, the cancellation order could not stand. [Paras 7, 8, 9]

The cancellation order dated 29.06.2019 is set aside for failure to afford the mandatory opportunity of hearing as required by the first proviso to Section 29(2).

Service of show cause notice on GST portal - remand for fresh consideration after opportunity to be afforded - Matter remanded for fresh consideration limited to affording opportunity and deciding the show cause notice on merits after receipt of reply. - HELD THAT: - The court declined to rule finally on the question of whether the show cause notice uploaded on the GST portal was effectively served, noting absence of a counter affidavit. Instead, the court directed that the petitioner be permitted to furnish its reply to the show cause notice within two weeks. Thereafter the respondent authority was directed to consider the reply and pass an appropriate order in accordance with law. The remand is thus for fresh consideration confined to complying with the statutory requirement of issuing notice/affording hearing and adjudicating the matter on merits. [Paras 9, 10]

Petitioner to furnish reply within two weeks; respondent authority to consider the reply and pass appropriate order in accordance with law (matter remanded for fresh consideration).

Final Conclusion: Writ petition allowed; impugned cancellation order set aside for failure to afford the mandatory opportunity of hearing under the first proviso to Section 29(2). Petitioner to file reply to the show cause notice within two weeks and the authority to reconsider and pass appropriate order in accordance with law.

Voluntary deposit under Section 74(5) CGST Act - effect of Section 74(6) CGST Act - bar on service of notice - dismissal for concealment of material facts in writ proceedings - supply and acknowledgment of panchnama in search and seizure - justiciability of seizure of cash after release pursuant to representation

Dismissal for concealment of material facts in writ proceedings - Petition liable to be dismissed in exercise of extraordinary writ jurisdiction for concealment of material documents and facts. - HELD THAT: - The Court found that the petitioner did not place before the Court the letter dated 24.03.2021 by which the director undertook that the seized fixed deposit would be utilised for payment of Government dues and which described the deposit as voluntary. The Panchnama was produced by respondents and bore acknowledgements by the director and his wife. The failure to disclose these documents and to raise the grievance contemporaneously was treated as concealment of material facts and a basis to deny relief in exercise of the Court's discretionary jurisdiction under Article 226. [Paras 13, 14, 15]

Relief denied on the ground of concealment; petition dismissed insofar as relief was sought.

Voluntary deposit under Section 74(5) CGST Act - effect of Section 74(6) CGST Act - bar on service of notice - Deposit made by the petitioner was voluntary within the meaning of Section 74(5) and, consequentially, proceedings were closed under Section 74(6); the petitioner cannot now challenge those proceedings. - HELD THAT: - The Court examined the communications from the petitioner, including the letter of 24.03.2021 and earlier correspondence (including DRC-03 payment particulars and a letter of 11.03.2021), which recorded that tax, interest and penalty were being paid 'voluntarily' and sought not to have a show cause notice issued. Under Section 74(5) an assessee may pay tax, interest and penalty on his own ascertainment and under Section 74(6) the proper officer shall not serve notice in respect of such tax. The petitioner availed itself of this statutory remedy and the proceedings were closed accordingly; having availed the benefit, the petitioner cannot repudiate that course. [Paras 19, 21, 22]

The deposit is treated as voluntary and the statutory consequence under Sections 74(5)-(6) applies; the petitioner cannot challenge the closed proceedings.

Supply and acknowledgment of panchnama in search and seizure - justiciability of seizure of cash after release pursuant to representation - Complaint about non-supply of Panchnama and the authority to seize cash is not entertained as a substantive ground for relief where Panchnama bears acknowledgement and the seized cash was released pursuant to the petitioner's own representation. - HELD THAT: - The Court noted that the Panchnama produced by respondents bore acknowledgements and that the petitioner did not raise any contemporaneous grievance; the petitioner's later claim of non-supply was an afterthought. Further, since the seized cash was released to the petitioner on the basis of the petitioner's own undertaking, the question of the power to seize cash became academic in the present writ petition and was left open for adjudication in an appropriate case. [Paras 14, 16, 17]

The plea regarding non-supply of Panchnama and the legality of cash seizure is not sustained in this petition and is left open for appropriate proceedings.

Final Conclusion: The petition is dismissed for want of merit and on account of concealment of material facts; the petitioner, having made voluntary payments under Section 74(5) CGST Act and obtained the statutory consequence under Section 74(6), cannot now challenge the proceedings. Costs quantified at Rs. 25,000/- are directed to be deposited with the Delhi High Court Legal Services Committee.

Transition of Input Tax Credit - Form TRAN-1 - substantial compliance - limitation on revision under Rule 120A - clerical error / inadvertent mistake - Input Tax Credit as a beneficial concession

Form TRAN-1 - clerical error / inadvertent mistake - substantial compliance - limitation on revision under Rule 120A - Input Tax Credit as a beneficial concession - Whether the respondent may be permitted to revise Form TRAN-1 after the statutory/extended correction window on account of an inadvertent clerical error in Column 6, having otherwise filed TRAN-1 within time and shown the correct credit in Column 5(b). - HELD THAT: - The Court found that the respondent had lodged Form TRAN-1 within the prescribed period and had correctly disclosed the full Balance Cenvat Credit in Column 5(b), the only defect being an inadvertent and bona fide wrong entry in Column 6 of the form arising from a misconstruction of that column. Applying the doctrine of substantial compliance, the Court held that where mandatory requirements essential to the object of the statute are complied with, minor procedural or clerical mistakes that do not defeat the statutory purpose ought not to be fatal. The Court noted that Input Tax Credit is a beneficial scheme framed to eliminate cascading of taxes and that undue emphasis on technicalities would frustrate the transition objective. While acknowledging Rule 120A's one-time correction limit and authorities emphasising strict compliance for concessional reliefs, the Court distinguished cases where claimants sought to introduce a claim for the first time after the deadline from the present case of a genuine clerical error. In view of the above, and in light of precedents permitting relief from hyper-technical objections where the statutory purpose is otherwise satisfied, the Court affirmed the Single Judge's direction to reopen the portal to enable filing of a revised TRAN-1 for correction of the clerical mistake, leaving the Revenue free to examine the legal correctness of the transitioned credit thereafter. [Paras 7, 8, 10, 12, 13]

Portal to be reopened and respondent permitted to file a revised Form TRAN-1 to correct the inadvertent entry within eight weeks; Revenue may thereafter examine the claim in accordance with law.

Final Conclusion: The writ appeal is dismissed; the Single Judge's direction to enable filing of a revised Form TRAN-1 is affirmed (portal to be opened for eight weeks) while preserving the Revenue's right to examine the legality and correctness of the credit claimed.

Provisional attachment - Section 83 of the Central Goods and Services Tax Act - mandatory one-year statutory period - restoration of provisionally attached property - availability of statutory remedies - compliance with statutory provisions

Provisional attachment - Section 83 of the Central Goods and Services Tax Act - mandatory one-year statutory period - restoration of provisionally attached property - availability of statutory remedies - Continuation of provisional attachment beyond the one-year period prescribed by Sub section (2) of Section 83 of the CGST Act and relief by way of release/restoration of the attached property. - HELD THAT: - The petition challenged continuation of provisional attachment of the petitioner's properties after the statutory one year period under Sub section (2) of Section 83 of the CGST Act. The respondents produced records showing issuance of DRC 7 (tax determination) and steps taken to lift attachments. The authority issued an order restoring the provisionally attached property, noting that tax liability had been determined and the statutory period had elapsed. Given that the provisional attachment had been lifted by the competent authority, the cause of action for the present petition no longer survived. The Court emphasised that statutory provisions governing provisional attachment must be strictly complied with and that parties should resort to the statutory remedies (including the appeal route) where available.

Petition disposed of as the provisional attachment has been restored and the cause no longer survives; respondents cautioned to comply strictly with statutory provisions and available remedies.

Final Conclusion: The writ petition has been disposed of because the provisional attachment challenged in the petition was restored by the authority; the Court warned the respondents to adhere strictly to the statutory scheme and noted that statutory remedies remain available to the parties.

Intermediary (definition and scope) - arrange or facilitate (main supply and ancillary supply) - place of supply of intermediary services - export of services (conditions) - classification of intermediary services under Heading 998599 - exclusion for supply on one's own account

Intermediary (definition and scope) - arrange or facilitate (main supply and ancillary supply) - exclusion for supply on one's own account - Whether the services rendered by the appellant constitute intermediary services as defined in Section 2(13) of the IGST Act, 2017. - HELD THAT: - The authority analysed the statutory definition of 'intermediary' and broke it into constituent requirements: (a) broker/agent/any other person; (b) arranging or facilitating a supply between two or more persons (main supply and ancillary supply); and (c) not supplying the main goods/services on one's own account. It held that the phrase 'any other person' is not confined by ejusdem generis to broker/agent and may include persons who perform facilitative/arranging roles distinct from agents or brokers (paras 10-14). The Agreement shows the appellant identifies potential Indian suppliers, provides market and technical inputs, assists in RFx processes, supports contractual negotiations, and conducts ongoing supplier assessments to ensure compliance with Airbus standards; it expressly excludes awarding contracts, issuing purchase orders or payments (paras 9, 16-18). Those activities both enable Airbus France to identify and contract with Indian suppliers and ensure continued supply performance; they therefore amount to arranging or facilitating the main supply between two principals (paras 18-19). The appellant does not supply the goods on its own account; it only facilitates the supplier-principal relationship, so the exclusion for supplying on one's own account does not apply (para 24). The Board's Circular No.159/15/2021 (20 Sep 2021) supports the view that an intermediary involves at least three parties and an ancillary facilitative supply; the illustrations cited are distinguishable and in fact validate the reasoning that facilitation of a supplier's supply to a foreign principal constitutes intermediary activity (paras 20-22). Prior rulings cited by the appellant were found factually distinguishable (para 25). [Paras 20, 21, 22, 24, 25]

The services rendered by the appellant are intermediary services within the meaning of Section 2(13) of the IGST Act, 2017.

Classification of intermediary services under Heading 998599 - Proper classification of the appellant's services under the GST tariff. - HELD THAT: - Having concluded that the appellant performs intermediary services, the authority referred to the Explanatory Notes to the Scheme of Classification of Services and observed that business services of intermediaries and brokers fall within Heading 998599. The appellant's attempt to classify the services under the more general Heading 998399 was rejected because specific headings prevail over general ones and the intermediary character of the service makes Heading 998599 the appropriate classification (para 26). [Paras 26]

The appellant's services are classifiable as 'Other support services' under Heading 998599 (SAC 998599).

Place of supply of intermediary services - export of services (conditions) - Whether the intermediary services qualify as 'export of services' and thus as zero-rated supplies. - HELD THAT: - The authority applied the definition of 'export of services' and the place-of-supply rules. Section 13(8)(b) of the IGST Act provides that the place of supply of intermediary services is the location of the supplier. The appellant's intermediary activities (identification, analysis, supplier development and on-site assessments) are performed in India, so the place of supply is India (paras 27-28). Since one of the essential conditions for export of services is that the place of supply be outside India, the intermediary services do not qualify as export of services and cannot be treated as zero-rated (para 28). [Paras 27, 28]

The intermediary services do not qualify as export of services because the place of supply, being intermediary services, is the location of the supplier in India.

Final Conclusion: The AAAR upheld the AAR order: the appellant's activities constitute intermediary services classifiable under Heading 998599 and do not qualify as export of services; the appeal is dismissed.

Vivad se Vishwas scheme - benefit under settlement scheme

HELD THAT: - The Court recorded that the respondent had already availed the benefit under the Vivad se Vishwas scheme. In light of that factual position, the Court found there was no necessity for any further judicial intervention and therefore concluded that the special leave petition should be disposed of. The Court also directed that pending applications stand disposed of.

Special leave petition disposed of; pending applications disposed of, as the respondent has availed the Vivad se Vishwas benefit.

Final Conclusion: The special leave petition was disposed of and pending applications were disposed of because the respondent had already availed the benefit under the Vivad se Vishwas scheme.

Slump sale as transfer of undertakings without assignment of individual asset values - valuation report prepared for arriving at enterprise value vis-a -vis assignment of values to individual assets - effective date of transfer as recorded in sale agreement and conduct of parties - disallowance under section 14A read with Rule 8D - HELD THAT:- We see no reason to interfere [2019 (2) TMI 1542 - BOMBAY HIGH COURT]. The Special Leave Petition is dismissed.

Reopening of assessment - change of opinion - reason to believe - failure to disclose fully and truly all material facts - proviso to Section 147 - no fresh material after completion of assessment

Reopening of assessment - change of opinion - no fresh material after completion of assessment - failure to disclose fully and truly all material facts - proviso to Section 147 - Validity of notice under Section 148 issued for Assessment year 2013-2014 on the basis that income had escaped assessment by reason of failure to disclose material facts - HELD THAT: - The Court examined the reasons for reopening which relied on an alleged discrepancy between ITS data showing sales of flats aggregating the stated amount and the turnover declared in the original return. Records show that prior to completion of assessment the Assessing Officer had specifically called for details of the flat sales and the petitioner furnished explanations and documents which were considered before the assessment order was passed. No new material emerged after the assessment order which was not available to or considered by the Assessing Officer. The Court held that the reasons for reopening amounted to a change of opinion and that invoking the language of failure to disclose fully and truly all material facts was an attempt to evade the temporal restriction in the proviso to Section 147. In the absence of fresh material discovered post-assessment, the statutory precondition for invoking the extended time bar was not satisfied and the notice under Section 148 was therefore invalid. [Paras 4, 5, 6]

Notice dated 29/3/2019 under Section 148 and consequential notices/demands quashed and set aside

Final Conclusion: The High Court set aside the reopening notice for AY 2013-2014, holding it to be a change of opinion unsupported by any fresh material discovered after assessment and therefore barred by the proviso to Section 147; consequential notices and demands were also quashed.

Re-opening of assessment - change of opinion - reasons to believe recorded for re-opening - escapement of income - full and true disclosure of material facts - reliance on ITS / AIR data - sanction under Section 151 of the Income-tax Act

Re-opening of assessment - change of opinion - full and true disclosure of material facts - reliance on ITS / AIR data - sanction under Section 151 of the Income-tax Act - Validity of the notices under Sections 148, 143(2) and 142(1) and the sanction for reopening assessment for AY 2012-13. - HELD THAT: - The Court found on the record, notably the Petitioner's detailed reply (Exh.B) disclosing ITS/AIR transactions and the method of accounting, that the Assessing Officer had applied his mind in the original assessment and had accepted the Petitioner's explanations. The reasons furnished for re-opening relied on the same ITS/AIR data already before the Assessing Officer and did not disclose any fresh tangible material showing escapement of income. In these circumstances the Court concluded that the re-opening amounted to a mere change of opinion, which is impermissible where primary facts have been fully and truly disclosed and have been considered in the original assessment. The Court further relied on the principle that an Assessing Officer cannot, on the basis of identical material, take a different view to reopen assessment, and that sanction granted to reopen in such circumstances cannot validate the re-opening. Applying these principles to the facts, the Court held there was no justification for reopening the assessment for AY 2012-13 and therefore the notices and sanction could not be sustained. [Paras 13, 15, 16]

Notices under Sections 148, 143(2) and 142(1) and the sanction for reopening the assessment for AY 2012-13 are quashed as the re-opening is a prohibited change of opinion in the absence of material showing escapement of income.

Final Conclusion: The petition is allowed; the re-opening notices and the sanction relating to AY 2012-13 are quashed and set aside as the Assessing Officer's action constituted an impermissible change of opinion where material had been fully and truly disclosed and considered in the original assessment.

Validity of notice under Section 148 of the Income Tax Act - Service of notice on non existent / merged entity - Effect of corporate merger on service of statutory notice - Liberty to issue fresh notice subject to compliance with law

Validity of notice under Section 148 of the Income Tax Act - Service of notice on non existent / merged entity - Effect of corporate merger on service of statutory notice - Impugned notice(s) under Section 148 issued to entities that had ceased to exist by virtue of merger with the petitioner cannot be sustained. - HELD THAT: - The Court found that the notice(s) dated 30.06.2021 were served on entities (GE India Technology Centre Pvt. Ltd. and GE India Exports Pvt. Ltd.) which were not in existence at the relevant time because they had merged into the petitioner, GE India Industrial Pvt. Ltd. A statutory notice issued to an entity that has ceased to exist consequent upon merger is flawed. Applying this principle, the Court held that the impugned notice(s) could not be sustained and therefore set them aside. [Paras 3]

Impugned notice(s) dated 30.06.2021 set aside.

Liberty to issue fresh notice subject to compliance with law - Right to challenge future action - Whether the revenue may take further steps after the notices are set aside. - HELD THAT: - The Court granted the respondents liberty to take further steps in accordance with law, making clear that any fresh action must conform to statutory requirements. The petitioner was accorded the usual right to challenge any such future steps by the revenue through appropriate proceedings in accordance with law. [Paras 4]

Respondents given liberty to take lawful steps; petitioner has liberty to assail any such steps in accordance with law.

Final Conclusion: Writ petitions disposed by setting aside the notices dated 30.06.2021 issued to merged/non existent entities; respondents permitted to take further steps as per law and petitioner permitted to challenge such steps.

Framing or alteration of charge under Section 216 Cr.P.C. - Requirement of fresh sanction where prior sanction covers same facts (sanction under Section 279(1) of the Income tax Act and effect under Section 216(5) Cr.P.C.) - Irrelevance of the stage of proceedings to the power to alter or add charges - Admission of additional evidence and its bearing on framing of fresh/altered charges - Delay in prosecution not per se a bar to framing additional charges

Framing or alteration of charge under Section 216 Cr.P.C. - Requirement of fresh sanction where prior sanction covers same facts (sanction under Section 279(1) of the Income tax Act and effect under Section 216(5) Cr.P.C.) - Irrelevance of the stage of proceedings to the power to alter or add charges - Admission of additional evidence and its bearing on framing of fresh/altered charges - Order framing an additional charge under Section 276C(2) of the Income tax Act by way of alteration of charge under Section 216 Cr.P.C. was lawful and rightly allowed. - HELD THAT: - The trial court permitted an application under Section 216 Cr.P.C. to add a charge of evasion of payment of tax (Section 276C(2) I.T. Act) after examination of an additional witness (P.W.7, a Tax Recovery Officer) whose evidence produced recovery documents. The High Court found that the facts underlying the newly framed charge were common to the originally framed offence of evasion (Section 276C(1)) for the same assessment year(s). Sanction for prosecution in respect of the same facts had already been granted under Section 279(1) of the Income tax Act, and therefore, in terms of the proviso contemplated by Section 216(5) Cr.P.C., no fresh sanction was required for the altered charge. The Court further recognised that factual disputes raised by the accused (for example, whether notices were issued) are matters for trial and not a ground to reject the alteration at the framing stage. Reliance on the Supreme Court precedent that the stage of proceedings is irrelevant for alteration of charge reinforced that the trial court did not err in permitting the additional charge despite the late stage and long delay in the prosecution process. [Paras 9, 10, 11, 13, 14]

Application under Section 216 Cr.P.C. to alter the charge and include Section 276C(2) I.T. Act was properly allowed; the revision is dismissed.

Delay in prosecution not per se a bar to framing additional charges - Admission of additional evidence and its bearing on framing of fresh/altered charges - Contention that long delay (26 years) or late stage of proceedings precluded framing of an additional charge was rejected. - HELD THAT: - The petitioner argued that permitting an additional charge after protracted proceedings would amount to endless persecution. The Court observed that the fact that prosecution is old or that proceedings have continued for many years does not by itself render the alteration impermissible. Where additional evidence relevant to an additional offence is permitted to be adduced (here P.W.7 and related documents), and the facts remain common to the originally charged offences, permitting alteration is not barred by the passage of time. The Court noted that disputed factual questions regarding issuance of notices must be confronted in trial rather than at the charge alteration stage. The decision of the Supreme Court in Dr. Nallapareddy Sridhar Reddy (cited in the record) was held to support the proposition that the stage of proceedings is irrelevant to the power to alter a charge. [Paras 4, 5, 8, 10, 13]

Delay and the stage of proceedings did not invalidate the order permitting framing of the additional charge; the revision petition on this ground fails.

Final Conclusion: The High Court dismissed the criminal revision petitions and upheld the trial court's order allowing alteration of the charge to include Section 276C(2) of the Income tax Act, holding that prior sanction covered the same facts, factual disputes raised were for trial, and neither the long delay nor the stage of proceedings rendered the alteration impermissible.

Condonation of delay - principles of natural justice - revisionary jurisdiction under section 263 - Vivad Se Vishwas Scheme - finality and non-reopening - remand for fresh consideration

Condonation of delay - Delay in filing the appeal and condonation thereof. - HELD THAT: - The Tribunal examined the explanation that the appeal was filed 30 days late due to the COVID-19 pandemic and lockdown and noted that the Revenue did not press any specific objection. In the circumstances, and having regard to the extension of limitation announced by the Supreme Court, the Tribunal found reasonable cause for the delay and condoned the same, admitting the appeal for adjudication on merits. [Paras 2, 3, 4]

Delay of 30 days in filing the appeal is condoned and the appeal is admitted for adjudication on merits.

Principles of natural justice - revisionary jurisdiction under section 263 - remand for fresh consideration - Whether the order passed by the Pr. CIT under section 263 complied with the principles of natural justice and whether the assessment order should be set aside. - HELD THAT: - The Tribunal found that the show-cause notice under section 263 was issued at the fag end of the limitation period, giving the assessee effectively one working day to respond, and the impugned order was passed shortly thereafter. Although limitation constrained the Pr. CIT, the Tribunal observed that the Pr. CIT could have initiated proceedings earlier and ought to have ensured the assessee was afforded a reasonable opportunity, especially in light of court and administrative extensions of limitation during the pandemic. The Tribunal therefore concluded there was lack of adequate opportunity and set aside the section 263 order, directing the Pr. CIT to decide the matter afresh after affording a reasonable opportunity to the assessee. [Paras 10, 11, 12]

The section 263 order is set aside for lack of adequate opportunity; matter remitted to the Pr. CIT for fresh decision after affording reasonable opportunity to the assessee.

Vivad Se Vishwas Scheme - finality and non-reopening - revisionary jurisdiction under section 263 - remand for fresh consideration - Whether the prior acceptance of a declaration under the direct taxes Vivad Se Vishwas Scheme precluded the Pr. CIT from exercising jurisdiction under section 263. - HELD THAT: - The assessee contended that because Form 3 under the Vivad Se Vishwas Scheme had been issued prior to the show-cause notice, the section 263 revision was impermissible. The Tribunal noted the scheme contains provisions as to finality in relation to matters specifically covered but also observed that the scheme does not, by necessary implication, render the revisionary powers under the Income-tax Act ineffective. As the contention was raised before the Tribunal for the first time and the Pr. CIT himself had issued Form 3 in the case, the Tribunal considered it appropriate to leave this question open for examination by the Pr. CIT. The Tribunal therefore directed the Pr. CIT to examine the contention in the course of the fresh proceedings. [Paras 7, 8, 13]

The question whether the Vivad Se Vishwas Scheme bars exercise of section 263 was left open and remitted to the Pr. CIT for examination in the fresh proceedings.

Final Conclusion: The appeal is admitted (delay condoned); the section 263 order is set aside for failure to afford adequate opportunity and the matter is remitted to the Pr. CIT for fresh decision after giving the assessee a reasonable hearing; the contention regarding the effect of prior acceptance under the Vivad Se Vishwas Scheme is left open for the Pr. CIT to examine.

Revisionary jurisdiction under Section 263 - erroneous and prejudicial to the interest of revenue - obligation to conduct independent inquiry - remit to Assessing Officer without own finding is impermissible - Explanation 2(a) to Section 263

Revisionary jurisdiction under Section 263 - erroneous and prejudicial to the interest of revenue - obligation to conduct independent inquiry - remit to Assessing Officer without own finding is impermissible - Validity of the Principal Commissioner of Income Tax's exercise of revisionary jurisdiction under Section 263 in setting aside the assessments and remitting the matter to the Assessing Officer without recording a clear finding of error. - HELD THAT: - The Tribunal held that the PCIT did not arrive at a clear, independent finding that the Assessing Officer's orders were erroneous and prejudicial to the revenue. The assessee had submitted explanations and reconciliations for the alleged mismatches in sales, trade receivables and payables, which were available on the record; instead of examining those explanations and conducting requisite verification himself, the PCIT merely restored the matter to the AO to examine the same. Section 263 requires the PCIT/CIT to form a clear, unambiguous conclusion that the AO's order is erroneous and unsustainable in law, which may follow from such inquiries or from examination of additional material, but cannot be satisfied by directing the AO to decide whether his order was erroneous. The Tribunal applied settled precedents to hold that remitting the matter for fresh inquiries without the PCIT first establishing the error is beyond the scope of Section 263 and impermissible. Consequently the revision orders were held to be invalid. [Paras 7, 11, 12, 14, 15]

Orders of the Principal Commissioner under Section 263 setting aside the assessments and remitting the matters to the Assessing Officer were invalid for lack of a clear finding of error and are set aside.

Final Conclusion: The appeals succeed; the revision orders dated 31.03.2021 passed by the Principal Commissioner for AY 2016-17 and AY 2017-18 under Section 263 are set aside as being beyond the scope of the provision for want of a clear finding of error by the PCIT.

Unexplained cash credit and burden under section 68 - disallowance as bogus expenditure under section 69C - onus of proof and evidentiary burden under section 106 of the Indian Evidence Act - reliability of third party statements and requirement of confrontation/cross examination - acceptance of documentary proof (banking channel, PAN, ITR, audited accounts) to discharge initial onus

Unexplained cash credit and burden under section 68 - onus of proof and evidentiary burden under section 106 of the Indian Evidence Act - reliability of third party statements and requirement of confrontation/cross examination - Deletion of addition of Rs. 1,50,10,000/- made as unexplained cash credit under section 68. - HELD THAT: - The Tribunal upheld the finding that the assessee had discharged the initial onus under section 68 by producing confirmations from creditors, bank statements showing payments through banking channels, PAN and ITR details and audited accounts of the lenders. The Assessing Officer's adverse conclusion rested primarily on a third party statement of an alleged entry operator recorded by the Investigation Wing; that statement had been retracted shortly thereafter and, when summoned before the AO, the third party did not corroborate an incriminating version against the assessee but confirmed the genuineness and source of the loans. The AO did not bring independent material to rebut the documentary evidence nor did he make inquiries of the lenders' assessing officers before branding them as lacking creditworthiness. In these circumstances, and having regard to the limitation of the assessee's burden under section 106 (after which the onus shifts to the AO to prove contra), the Tribunal found no valid basis to sustain the addition and confirmed the CIT(A)'s deletion of the section 68 addition. [Paras 18, 19]

The addition of Rs. 1,50,10,000/- under section 68 was deleted and the deletion by the CIT(A) is confirmed.

Disallowance as bogus expenditure under section 69C - acceptance of documentary proof (banking channel, PAN, ITR, audited accounts) to discharge initial onus - reliability of third party statements and requirement of confrontation/cross examination - Deletion of disallowance of interest of Rs. 13,34,669/- treated as bogus expenditure under section 69C. - HELD THAT: - The Tribunal agreed with the CIT(A) that interest payments were substantiated by bank records, TDS compliance and the lenders' returns and accounts filed in response to notices, and that no independent material was produced by the AO to impeach those documents. The AO relied on the same third party statement that had been retracted and which did not withstand direct questioning; the AO also failed to verify with the lenders' assessing officers before imputing bogusness. On these facts the Tribunal held that the AO had not discharged the burden of proving that the interest payments were bogus expenditure, and therefore the disallowance under section 69C could not be sustained. [Paras 18, 19]

The disallowance of interest of Rs. 13,34,669/- under section 69C was deleted and the CIT(A)'s order is upheld.

Final Conclusion: The Tribunal dismissed the revenue's appeal and confirmed the CIT(A)'s deletion of the additions: the unexplained cash credit under section 68 and the disallowance under section 69C for AY 2014-15 (Financial Year 2013-14) were not sustained on the record and the AO's reliance on third party material was found legally inadequate.

Royalty - Article 12 of India-US Double Taxation Avoidance Agreement - Supply of software treated as sale of a copyrighted article - Business income - nomenclature of 'license' not determinative of substance

Royalty - Article 12 of India-US Double Taxation Avoidance Agreement - Supply of software treated as sale of a copyrighted article - nomenclature of 'license' not determinative of substance - The receipts from supply of software to customers in India are not 'royalty' under Article 12 of the India US DTAA and are to be treated as consideration for a copyrighted article (business receipts) rather than royalty. - HELD THAT: - The Tribunal applied the binding view of the Hon'ble Delhi High Court as expressed in the assessee's earlier proceedings and in the ZTE decision, following Ericsson and Infrasoft, that where software supplied to end users amounted to the transfer of a copyrighted article (even if separately invoiced or described as a 'license'), such payments do not constitute 'royalty' under Article 12. The Tribunal noted that nomenclature in agreements is not decisive and that the true nature of the transaction - sale of a copyrighted article enabling use of hardware - determines tax character. In view of the High Court's precedent, the impugned classification of software receipts as royalty could not be sustained. [Paras 9, 11]

Appeal allowed on the ground that supply of software is not taxable as royalty under Article 12; receipts are business receipts (sale of copyrighted article).

Final Conclusion: Applying the binding decision of the Hon'ble Delhi High Court, the Tribunal allowed the appeal and held that the revenue from supply of software is not 'royalty' under the India US DTAA and must be treated as business receipts arising from sale of a copyrighted article.

Mandatory issue of notice under section 143(2) for assumption of jurisdiction in reassessment - jurisdictional defect rendering reassessment void-ab-initio - non-curability of non-issuance of notice under section 143(2) by virtue of section 292BB

Mandatory issue of notice under section 143(2) for assumption of jurisdiction in reassessment - jurisdictional defect rendering reassessment void-ab-initio - non-curability of non-issuance of notice under section 143(2) by virtue of section 292BB - Failure to issue notice under section 143(2) before framing reassessment under sections 147/148 renders the reassessment void for want of jurisdiction and cannot be cured by section 292BB. - HELD THAT: - The Tribunal found as an undisputed fact (admitted in the Assessing Officer's remand report) that no notice under section 143(2) was issued in the present proceedings. The Court observed that issuance of notice under section 143(2) is a mandatory precondition for the Assessing Officer to assume jurisdiction to complete scrutiny/reassessment under section 148/147; absence of such notice is a defect going to jurisdiction and is not a mere procedural lapse. Participation by the assessee in proceedings pursuant to a notice under section 148, or cooperation, does not obviate the statutory requirement of issuing a notice under section 143(2). The deeming/curative fiction in section 292BB relates only to service defects and does not validate the non-issuance of the mandatory notice required for assumption of jurisdiction. On these grounds and having regard to precedent and the remand admission, the Tribunal upheld the CIT(A)'s quashing of the reassessment and declined to interfere with that legal conclusion. [Paras 13, 15, 20, 21]

The reassessment proceedings were void for want of the mandatory notice under section 143(2), and the CIT(A)'s order quashing the reassessment is upheld; Revenue's appeals are dismissed.

Final Conclusion: The Tribunal affirms the CIT(A)'s finding that absence of a notice under section 143(2) is fatal to the reassessment under sections 147/148 and cannot be cured by section 292BB; accordingly, the Revenue's appeals for Assessment Years 2007-08 and 2008-09 are dismissed.

Re-domiciliation / continuation of a company - tax residency certificate and treaty entitlement - dependent agent permanent establishment (DAPE) - attribution of profits to a permanent establishment - arm's length remuneration and transfer pricing - tax neutrality of DAPE where agent paid arm's length remuneration

Re-domiciliation / continuation of a company - tax residency certificate and treaty entitlement - Whether re-domiciliation of the assessee from British Virgin Islands to Mauritius disentitles it from treaty benefits or permits reopening of the foundational question of residence and treaty entitlement. - HELD THAT: - The Tribunal examined documentary evidence showing that the company originally incorporated in the British Virgin Islands was continued in Mauritius by issuance of a certificate of incorporation by continuation and deregistration in the BVI, and that a Mauritius tax residency certificate was issued. While recognising conceptual concerns about facile re-domiciliation in offshore jurisdictions, the Tribunal held that such academic objections cannot overturn final acts and long-accepted positions after decades and where the Assessing Officer had granted treaty benefits earlier. In the absence of any material suggesting that the company is not fiscally domiciled in Mauritius, mere doubt by the Department does not suffice to deny treaty entitlement. The Tribunal therefore rejected the Departmental Representative's objection to the treaty benefits on account of re-domiciliation and the timing of the TRC. [Paras 2, 3, 4, 5]

The objection to treaty entitlement based on the company's re-domiciliation is rejected and the grant of treaty benefits is sustained.

Dependent agent permanent establishment (DAPE) - attribution of profits to a permanent establishment - arm's length remuneration and transfer pricing - tax neutrality of DAPE where agent paid arm's length remuneration - Whether the assessee has a taxable permanent establishment in India through its Indian agents and, if so, whether any profits are attributable to that PE in India given that the agents were paid arm's length remuneration. - HELD THAT: - Applying treaty provisions and binding precedents, the Tribunal analysed the Assessing Officer's case that the assessee was virtually projected in India through its agents and that a dependent agent PE (DAPE) existed. The Tribunal held that the factual matrix at best established a dependent agent PE, not a fixed place PE, and proceeded to consider profit attribution. Following coordinate-bench decisions and binding High Court/Supreme Court principles, the Tribunal recognised two competing approaches to DAPE profit attribution but observed that recent higher court authority supports the view that where an associated enterprise/agent constituting the PE is remunerated on an arm's length basis taking into account all relevant functions and risks, nothing further remains to be attributed to the PE. On the undisputed record there was no material to show that the Indian agents were not paid arm's length remuneration. Consequently, any question of attributing additional profits to a DAPE was rendered academic and the departmental appeals seeking to tax additional profits were held to be infructuous. [Paras 13, 14, 15, 16, 17]

Even if a dependent agent permanent establishment is held to exist, it is tax-neutral on the facts because the Indian agents were paid arm's length remuneration; appeals seeking attribution of further profits are therefore infructuous and dismissed.

Final Conclusion: The Tribunal upheld the assessee's treaty entitlement despite re-domiciliation and, following binding precedents, held that any dependent agent permanent establishment is tax-neutral where the Indian agents received arm's length remuneration; accordingly the revenue appeals are dismissed as infructuous and the assessee's cross-objections/petitions are allowed.

Deemed dividend - colourable device / afterthought documents - classification of income as business income versus capital gains - two-portfolio principle for securities - remand for verification of investment portfolios and transactions - consistent method of accounting - deduction under section 54B

Deemed dividend - colourable device / afterthought documents - Deletion of addition treated as deemed dividend on funds received from a closely-held company - HELD THAT: - The Tribunal examined the ledger, the company balance-sheet showing corresponding deposits, and the assessee's break-up of transactions showing advances paid, rental advances and consideration for sale of plot. The Tribunal found continuous commercial dealings between the assessee and the company, with receipts in the year under appeal comprising repayment of earlier advances, fresh rental advances and advance for sale. The Assessing Officer had treated the net increase in balance as deemed dividend by simply taking the difference between closing and opening balances without investigating each receipt to ascertain whether it was made for the assessee's personal benefit or was in the nature of indirect dividend. The Tribunal held that documents do not demonstrate a colourable device and that, on the material placed before it, the transactions were genuine business dealings requiring transaction-by-transaction inquiry before any addition under the deemed dividend concept could be sustained. Accordingly the addition under the head deemed dividend was deleted. [Paras 7]

Addition under the head deemed dividend deleted; Assessing Officer directed to delete the addition under deemed dividend.

Classification of income as business income versus capital gains - two-portfolio principle for securities - consistent method of accounting - remand for verification of investment portfolios and transactions - Whether income from sale of shares and derivative transactions should be treated as capital gains or business income and remand for verification - HELD THAT: - The Tribunal recorded that the assessee had declared long-term and short-term capital gains and losses from derivatives, and produced statements indicating holding periods and a historical consistent practice of segregating investment and trading activities. Relying on the principle that an assessee may maintain two portfolios (investment and trading) and on the authorities and CBDT guidance cited, the Tribunal accepted that listed shares held for the requisite period may be treated as capital assets at the election of the assessee. However, the Tribunal observed that the factual materials submitted require verification. Therefore, rather than deciding the factual classification itself, the Tribunal remitted the matter to the Assessing Officer to verify the assessee's claims regarding portfolios, holding periods and the nature of transactions and to treat income as capital gains only for those portfolios held as investments after verification. The Tribunal directed the Assessing Officer to complete the assessment in accordance with this verification and the ratio of the precedent relied upon. [Paras 12, 13, 14]

Issue remitted to the Assessing Officer for verification of the assessee's investment and trading portfolios and classification of income; grounds allowed for statistical purposes and assessment to be completed in accordance with verification.

Deduction under section 54B - remand for verification of new claim - Claim of deduction under section 54B made first before the appellate authority and remand to Assessing Officer for verification - HELD THAT: - The assessee raised a fresh claim for deduction under section 54B before the Commissioner (Appeals). The Tribunal noted that the CIT(A) rejected the claim without examining the documents and that it is permissible to advance a fresh claim during appellate proceedings. Because the claim had not been examined by the Assessing Officer, the Tribunal found it appropriate to remit the matter to the Assessing Officer to verify the acquisitions and use of the new lands and other relevant documentary evidence and to allow the deduction if the assessee is found legally eligible. [Paras 16, 18]

Claim under section 54B remitted to the Assessing Officer for verification and decision; ground allowed for statistical purposes.

Final Conclusion: The appeal is allowed for statistical purposes: the addition treated as deemed dividend is deleted; classification of share and derivative transactions between capital gains and business income is remitted to the Assessing Officer for verification of portfolios and holding periods; and the fresh claim under section 54B is remitted to the Assessing Officer for verification and decision.

Rejection of declared customs value and determination under Customs Valuation Rules - Obligation to follow Rule 12 and Rules 4 to 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules - Principles of natural justice in adjudication - Admissibility and effect of voluntary statement and its retraction - Confiscation and seizure vis-a -vis goods already cleared

Rejection of declared customs value and determination under Customs Valuation Rules - Obligation to follow Rule 12 and Rules 4 to 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules - Whether the authority, having rejected the value declared by the importer, was obliged to determine the value by following the sequential procedure prescribed under Rule 12 and Rules 4 to 9 and whether failure to do so justified remand. - HELD THAT: - The Writ Court noted that upon rejection of the importer's declared value the proper officer must proceed to determine value by separate proceedings sequentially in accordance with Rules 4 to 9 as envisaged by Rule 12 of the Valuation Rules. The adjudicating process in the present case did not follow the prescribed sequence; the authority proceeded to determine differential duty and penalties without conducting the separate, rule bound valuation steps. Because the decision making process was thus flawed and the statutory procedure was not followed, remand for fresh consideration in accordance with the Rules was warranted. [Paras 5, 9]

Remand ordered for fresh consideration because the valuation procedure under Rule 12 and Rules 4-9 was not followed.

Principles of natural justice in adjudication - Whether failure to furnish translated and authenticated copies of foreign language documents to the importer violated principles of natural justice and warranted interference. - HELD THAT: - The Writ Court recorded that two declarations before foreign customs were in a language not understood by the writ petitioner and that the petitioner had requested translated and authenticated copies in response to the show cause notice. The absence of furnished translations deprived the petitioner of a fair opportunity to meet the case against it. The High Court upheld that deficiency as a breach of natural justice sufficient to justify setting aside the adjudication and remitting the matter for fresh consideration. [Paras 5]

Setting aside of the impugned order and remand for fresh adjudication because translations of foreign language documents were not supplied, resulting in breach of natural justice.

Admissibility and effect of voluntary statement and its retraction - Whether the writ petitioner's voluntary admissions and alleged subsequent retraction rendered the impugned proceedings immune from remand or vitiation on procedural grounds. - HELD THAT: - The appellant contended that the petitioner had voluntarily admitted facts and that any retraction would not invalidate those admissions. The Court observed the investigative findings and admissions but held that even where admissions exist, they do not cure a failure to follow the statutory procedure or a breach of natural justice. Accordingly, the existence of voluntary statements did not preclude remand for correct application of the Valuation Rules and compliance with fair procedure. [Paras 6, 7, 9]

Voluntary admissions did not preclude remand; procedural non compliance and natural justice defects required fresh consideration despite admissions.

Confiscation and seizure vis-a -vis goods already cleared - Whether goods already cleared could be seized or confiscated under Section 111(m) of the Customs Act in the circumstances of this case. - HELD THAT: - The order in original had held that goods already cleared were not available for seizure or confiscation under Section 111(m). The High Court's judgment confirms the remand on procedural grounds and does not disturb the finding that already cleared goods could not be subjected to seizure/confiscation under the cited provision in the circumstances recorded by the adjudicating authority. [Paras 4]

The original finding that goods already cleared were not available for seizure or confiscation under Section 111(m) was noted and not overturned by the Court.

Final Conclusion: The writ appeal is dismissed; the Single Judge's order dated 10.12.2018 setting aside the adjudication and remitting the matter for fresh consideration in accordance with law is confirmed. No costs.

Extension of seizure period under proviso to Section 110(2) of the Customs Act, 1962 - service of intimation and limitation - application of the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 - effect of executive notification G.S.R.601(E) extending statutory time limits - validity of action taken within a period extended by statute/notification

Extension of seizure period under proviso to Section 110(2) of the Customs Act, 1962 - service of intimation and limitation - effect of executive notification G.S.R.601(E) extending statutory time limits - Validity of the appellants' extension of the period for issuance of show cause notice under the proviso to Section 110(2) of the Customs Act, 1962, where the intimation dated 30.09.2020 was received by the respondent on 07.10.2020. - HELD THAT: - The writ court had held that, absent the subsequent notification, the relaxation ordinance extended the deadline only to 30.09.2020 and therefore service on 07.10.2020 was beyond that period. The High Court examined the subsequent Central Government notification issued under Section 6 of the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (G.S.R.601(E)), by which the end date for completion or compliance of specified actions under the Customs Act, 1962 was extended from 30.09.2020 to 31.12.2020. Applying that notification, the Court concluded that the intimation dated 30.09.2020, though served on 07.10.2020, fell within the period extended by the Central Government and therefore the extension exercised under the proviso to Section 110(2) was valid. The Court noted that the Single Judge had not adverted to the subsequent notification and that, in view of the notification, the challenge based on service after 05.09.2020/30.09.2020 failed. The Court expressly left open the subsidiary question whether the proviso requires service within the initial 90 day period even when an extension is recorded within that period. [Paras 7, 9]

The extension of time effected by the appellants (intimation dated 30.09.2020) is valid because the Central Government notification G.S.R.601(E) extended the applicable time limit to 31.12.2020, and the intimation served on 07.10.2020 therefore fell within the extended period.

Final Conclusion: Writ appeal allowed: the impugned intimation dated 30.09.2020 (served 07.10.2020) is valid in law in view of the Central Government's notification extending the applicable time limit to 31.12.2020; the question whether service must occur within the original 90 day period is left open.

Qualification for appointment of Technical Members of NCLAT - application of Madras Bar Association judgment on qualifications - judicial review of Selection Committee's decision - approval by Appointments Committee of the Cabinet - locus standi of a petitioner whose Section 8 licence has been revoked - revocation of Section 8 company licence and its effect on legal standing

Qualification for appointment of Technical Members of NCLAT - application of Madras Bar Association judgment on qualifications - judicial review of Selection Committee's decision - approval by Appointments Committee of the Cabinet - Validity of the appointment of Respondent No.2 as Technical Member of NCLAT - HELD THAT: - The Court examined whether Respondent No.2's appointment contravened the amended eligibility criteria for Technical Members post the Companies (Amendment) Act, 2017 and the law in Madras Bar Association (supra). The record showed that a Search-cum-Selection Committee constituted under judicial supervision considered the candidates and submitted a panel which was approved by the Appointments Committee of the Cabinet (ACC). There were no allegations of bias, malafides or invalidity in the composition or functioning of the Selection Committee or the ACC's approval. Assessment of merit and eligibility falls within the domain of the Selection Committee and the executive; courts in judicial review will not substitute their judgment for that of expert selection bodies absent demonstrable bias, mala fides or illegality. The petitioner failed to establish that Respondent No.2 did not fulfil the eligibility criteria or that the selection process was vitiated. [Paras 8]

Appointment of Respondent No.2 as Technical Member of NCLAT is not interfered with; no grounds made out to set aside the selection and appointment.

Locus standi of a petitioner whose Section 8 licence has been revoked - revocation of Section 8 company licence and its effect on legal standing - Maintainability of the writ petition filed by the Petitioner-company - HELD THAT: - The Court found on the record that the Petitioning entity's licence as a Section 8 company had been revoked by the Regional Director by order dated 17.08.2018 and the Ministry's portal recorded the company as 'inactive'. The order also directed change of name and conversion into a non-Section 8 company. In these circumstances the petitioner lacked the requisite locus to maintain the present writ challenging the appointment. The Court further observed that the petitioner had concealed these material facts. Given the lack of standing and suppression, the petition was found to be not maintainable. [Paras 9, 10, 11]

Petitioner lacks locus standi; writ petition is dismissed for want of standing and suppression of material facts.

Final Conclusion: Writ petition challenging the appointment of Respondent No.2 as Technical Member of NCLAT is dismissed. The Court declined to interfere with the Selection Committee's recommendations and ACC approval for Respondent No.2, and further held the petitioner lacked locus to maintain the petition; petitioner directed to pay costs to the Delhi State Legal Services Authority.

Locus of shareholder to challenge prior transactions - prima facie case and balance of convenience for grant of interim relief - power to grant interim restraint on alienation of company assets - application under sections 241 and 242 of the Companies Act

Locus of shareholder to challenge prior transactions - application under sections 241 and 242 of the Companies Act - Applicant's locus to impugn the sale transactions that took place before his association with the company. - HELD THAT: - The Tribunal found on the material on record that the applicant was not a shareholder at the time when the disputed transactions were executed and only became associated with the company subsequently. On that basis the applicant was held not to possess the requisite locus to challenge those past transactions under the petition filed, and therefore could not sustain the interim application seeking relief in respect of those transactions. [Paras 7]

Applicant lacks locus to question the transaction in question.

Prima facie case and balance of convenience for grant of interim relief - Whether the applicant had established a prima facie case and balance of convenience warranting interim relief. - HELD THAT: - After hearing the parties and perusal of records the Tribunal concluded that the applicant had failed to establish a prima facie case or the balance of convenience in his favour for grant of interlocutory relief. The Tribunal therefore refused to grant the interim reliefs sought by the applicant, observing that its findings were confined to the limited purpose of deciding the interim application. [Paras 8]

No prima facie case or balance of convenience established; interim relief refused.

Power to grant interim restraint on alienation of company assets - Whether any interim restraint should be placed on further alienation of the company's assets pending final adjudication. - HELD THAT: - Although the Tribunal declined broader interim relief, it directed that no further alienation of the company's assets shall be made from the date of the order to avoid multiplicity of proceedings. This limited restraint was imposed as an interim protective measure and the Tribunal emphasised that its observations were prima facie for the purpose of the interim application and would not influence the final adjudication in the main company petition. [Paras 8, 9]

Directed that no further alienation of assets shall be made from the date of the order; restraint is interim and prima facie only.

Final Conclusion: IA No. 73 of 2021 disposed of: applicant held not to have locus to challenge past transactions and failed to make out a prima facie case or balance of convenience for interim relief; limited interim restraint imposed barring further alienation of company assets from the date of the order; observations are prima facie and do not bind the final adjudication in Company Petition No. 8/241/HDB/2021.

Residuary jurisdiction under Section 60(5)(c) of the IBC - Section 238 overriding effect of the IBC over other instruments - Effect of an arbitration clause on NCLT jurisdiction in insolvency proceedings - Moratorium under Section 14 of the IBC and its scope - Power of NCLT/NCLAT to stay termination to preserve the corporate debtor as a going concern - Gujarat Urja exception - centrality of the contract and risk of corporate death

Residuary jurisdiction under Section 60(5)(c) of the IBC - Moratorium under Section 14 of the IBC and its scope - Gujarat Urja exception - centrality of the contract and risk of corporate death - NCLT lacked residuary jurisdiction under Section 60(5)(c) to adjudicate the contractual dispute between the parties in the absence of a nexus between the termination and the insolvency of the corporate debtor. - HELD THAT: - The Court held that Section 60(5)(c) empowers the NCLT to adjudicate questions of law or fact arising out of or in relation to insolvency resolution, but that power is confined to disputes which have a genuine nexus with the insolvency process. Drawing on Gujarat Urja, the Court reaffirmed that residuary jurisdiction cannot be invoked for disputes that arise dehors the insolvency of the corporate debtor. The facts show repeated pre CIRP communications and asserted contractual breaches culminating in the termination notice; there is nothing to indicate the termination was motivated by or arose from the debtor's insolvency. Because the requisite nexus was absent, the NCLT did not have jurisdiction to entertain the application and could not exercise its residuary powers in the matter. [Paras 16, 26, 27]

Proceedings before the NCLT (and the NCLAT order upholding them) were without jurisdiction and are set aside.

Section 238 overriding effect of the IBC over other instruments - Effect of an arbitration clause on NCLT jurisdiction in insolvency proceedings - An agreement clause providing for arbitration does not oust the adjudicatory jurisdiction of the NCLT in matters arising in relation to insolvency, because Section 238 gives the IBC overriding effect over other instruments. - HELD THAT: - The Court explained that instruments such as commercial contracts fall within the ambit of Section 238 and that the presence of an arbitration clause (Clause 12(d) of the Facilities Agreement) does not per se oust the NCLT's residuary jurisdiction under Section 60(5)(c) where the dispute relates to insolvency proceedings. The decision in Indus Biotech was cited to show that, in insolvency linked proceedings, arbitration cannot be used as a device to frustrate the statutory timeline and processes under the IBC. Nevertheless, the existence of an arbitration clause is relevant to choice of forum only where the dispute does not fall within the IBC's overriding scope. [Paras 18, 19, 20, 21]

Section 238 enables the IBC to override an agreement's arbitration clause for disputes properly falling within the insolvency resolution process; however, that principle is inapplicable where the dispute lacks the required nexus with insolvency.

Power of NCLT/NCLAT to stay termination to preserve the corporate debtor as a going concern - Gujarat Urja exception - centrality of the contract and risk of corporate death - Even where the NCLT can exercise residuary jurisdiction, it may restrain termination of a contract only in narrow circumstances - principally where the contract is central to the CIRP and its termination would cause the corporate death of the debtor; the NCLT/NCLAT failed to apply this test in the present case. - HELD THAT: - The Court reiterated the limited exception recognised in Gujarat Urja: judicial intervention to restrain contract termination is permissible only when the contract is central to the success of the CIRP (for example, the sole revenue generating contract) and its termination would make corporate death inevitable. The NCLT's interim order rested on a procedural infirmity (absence of a 30 day cure notice) and did not apply or analyse the centrality/corporate death test. The NCLAT's upholding of that stay likewise lacked factual analysis showing that termination would jeopardise the debtor's survival. Given the absence of such analysis and the lack of nexus with insolvency, the stay could not be sustained. [Paras 27, 28, 29, 31]

The NCLT/NCLAT should not have stayed termination on the record before them; restraint of termination is available only under the narrow Gujarat Urja parameters, which were not shown here.

Final Conclusion: The judgment of the NCLAT dated 24 June 2020 is set aside. The NCLT lacked jurisdiction to entertain the contractual dispute; the proceedings against the appellant are dismissed for absence of jurisdiction and the ad interim stay on the termination is vacated. The appeal is disposed of with no order as to costs.

Admissibility of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - default - due date of payment / agreed time period for payment - demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - COVID-19 suspension of initiation of insolvency proceedings

Admissibility of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - default - due date of payment / agreed time period for payment - Whether the Section 9 application is admissible in the absence of any agreed due date for payment and proof of occurrence of default - HELD THAT: - The Tribunal examined the documents and invoices produced by the Operational Creditor and found that none of the invoices or other documents specify a due date for payment, nor was any contract or supply order produced establishing a mutually agreed payment period. The Tribunal held that mere existence of debt is not sufficient for admission under Section 9; a default must be shown to have occurred, which requires expiry of the time period agreed by the parties for payment. In the absence of any proof of a due date or agreed payment period, and having regard to the rolling/periodic payments made by the Corporate Debtor, the Tribunal concluded that occurrence of default was not established on the material before it. On this basis the Section 9 petition could not be admitted. [Paras 23]

Application under Section 9 rejected for failure to submit proof of due date and occurrence of default.

Final Conclusion: The petition by the Operational Creditor under Section 9 of the IBC is rejected for want of proof of the due date and occurrence of default; the petitioner is at liberty to pursue other remedies before appropriate fora in accordance with law. No costs.

Title to imported warehoused goods - relinquishment of title under the Customs Act - power of customs to detain, sell or dispose of uncleared imports - liquidator's power to take control of corporate debtor's assets - scope of jurisdiction under Section 60(5) of the I&B Code - interaction between Section 238 of the I&B Code and Customs Act provisions - priority of government dues and the waterfall under Section 53 of the I&B Code

Title to imported warehoused goods - relinquishment of title under the Customs Act - power of customs to detain, sell or dispose of uncleared imports - Whether the goods lying in customs bonded warehouses constitute assets of the corporate debtor available to the liquidator without payment of customs duty - HELD THAT: - The Tribunal found that where imported goods were not cleared for home consumption and bills of entry were not presented or the importer otherwise failed to take steps to clear the goods for several years prior to commencement of insolvency proceedings, the importer is deemed to have relinquished title under the Customs Act and the proper officer is empowered to detain and sell such goods to recover duties. In that factual matrix the goods do not amount to assets which the liquidator can claim and remove without first complying with the statutory requirements under the Customs Act, including payment of duty. The Court emphasised that imported goods subject to customs levy stand on a different footing and the liquidator cannot be in a better position than the corporate debtor itself to obtain release of such goods without payment of customs dues. This conclusion rests on the statutory scheme of the Customs Act dealing with custody, bills of entry, clearance for home consumption, and the specific provisions permitting sale of uncleared or relinquished goods. [Paras 7]

Goods left uncleared in customs bonded warehouses and in respect of which title is deemed relinquished under the Customs Act are not assets the liquidator can remove without complying with the Customs Act, including payment of customs duty.

Liquidator's power to take control of corporate debtor's assets - scope of jurisdiction under Section 60(5) of the I&B Code - interaction between Section 238 of the I&B Code and Customs Act provisions - priority of government dues and the waterfall under Section 53 of the I&B Code - Whether the Adjudicating Authority correctly directed release of goods to the liquidator without payment of customs duty by relying on the I&B Code and its overriding non obstante provisions - HELD THAT: - The Tribunal examined the contention that the I&B Code, by virtue of its non obstante clauses and Section 238, overrides inconsistent provisions of the Customs Act and that government dues must be dealt with under the Code's waterfall. It concluded that the Adjudicating Authority erred in directing release of the goods without payment of customs duty because, on the facts, the statutory scheme of the Customs Act permitted detention and sale of uncleared or relinquished imported goods and the corporate debtor had not taken steps to clear them prior to insolvency. The decision recognised the general primacy of the Code in insolvency matters but held that where title to imported goods is deemed relinquished under the Customs Act before insolvency, the Customs Act empowers the proper officer to deal with those goods. Consequently the Adjudicating Authority's direction to release goods without payment of duty was modified and the proper officer was authorised to release or dispose of the goods as per applicable provisions of the Customs Act. [Paras 7]

The Adjudicating Authority's direction to release goods to the liquidator without payment of customs duty was erroneous; goods may be released or disposed of only in accordance with the applicable provisions of the Customs Act by the proper officer.

Scope of jurisdiction under Section 60(5) of the I&B Code - interaction between public law functions and insolvency jurisdiction - Whether NCLT/NCLAT had jurisdiction under Section 60(5) to direct release of the customs held goods in the circumstances of this case - HELD THAT: - The Tribunal noted the limits on the jurisdiction of insolvency forums under Section 60(5), referencing authority that NCLT/NCLAT should not usurp legitimate jurisdiction of other fora where disputes do not arise solely from or relate to insolvency. Applying that principle, and having found that the corporate debtor had abandoned the imported goods and statutory provisions of the Customs Act empowered the customs authority to deal with them, the Tribunal held that the Adjudicating Authority exceeded its proper exercise in directing release without adherence to the Customs Act. Thus the jurisdictional reach of Section 60(5) did not validate the direction given in the impugned order under the circumstances presented. [Paras 6, 7]

NCLT's exercise of jurisdiction under Section 60(5) did not justify directing release of the customs held goods without following the Customs Act where the statutory scheme empowered customs to detain and sell uncleared/relinquished imports.

Final Conclusion: The appeal is allowed. The Adjudicating Authority's order directing removal of materials from customs bonded warehouses without payment of customs duty is modified: release or disposal of the goods must be carried out by the proper officer in accordance with the applicable provisions of the Customs Act.

Mandatory compliance of Section 97(1) and 97(2) before appointing a Resolution Professional - directory character of procedural 'shall' in Section 97 - power of the Adjudicating Authority to appoint an Interim Resolution Professional from the IBBI panel under Rule 8 - judicial discretion of the Adjudicating Authority in appointment of Resolution Professional - effect of non-compliance with procedural safeguards on the validity of an IRP appointment

Mandatory compliance of Section 97(1) and 97(2) before appointing a Resolution Professional - directory character of procedural 'shall' in Section 97 - power of the Adjudicating Authority to appoint an Interim Resolution Professional from the IBBI panel under Rule 8 - judicial discretion of the Adjudicating Authority in appointment of Resolution Professional - Validity of the appointment of Mr. Anil Kohli as Interim Resolution Professional and whether Sections 97(1) and 97(2) IBC required mandatory compliance before making the appointment. - HELD THAT: - The Tribunal examined the contention that the Adjudicating Authority was obliged, as a mandatory pre-condition, to obtain confirmation from the Board (IBBI) under Sections 97(1) and 97(2) before passing an appointment order under Section 97(5). Having regard to the object and purpose of the Code, the Rules (notably Rule 8(1)) and the Guidelines and precedents relied upon, the Tribunal concluded that the use of the word 'shall' in Section 97(1) is of a procedural character and must be construed as directory rather than mandatory in the circumstances of the case. The Tribunal noted that Rule 8 permits the Board to share a database or panel of Insolvency Professionals with the Adjudicating Authority to obviate administrative delay and that the NCLT may pick a name from such panel. Applying a purposive and pragmatic approach, the Tribunal held that where the Adjudicating Authority exercises judicial discretion fairly and appoints an IRP in accordance with the objects of the IBC and the Rules, such appointment will not be vitiated merely because the formal communication from the Board under Sections 97(1)-(2) was not recorded in the impugned order. On these grounds the Tribunal found no patent illegality in the appointment of Mr. Anil Kohli as IRP and upheld the impugned orders. [Paras 34, 35]

Appointment of Mr. Anil Kohli as Interim Resolution Professional is valid; Sections 97(1) and 97(2) are directory in the facts of this case and do not render the impugned orders unsustainable.

Final Conclusion: The appeals are dismissed; the impugned orders dated 23.07.2021 appointing Mr. Anil Kohli as Interim Resolution Professional are upheld and found free of patent legal error. No costs.

Omission of date of default in Form-1 - distinction between date of default and date of Non-Performing Asset (NPA) - Section 7(5)(a) and (b) of the Insolvency and Bankruptcy Code - admission or rejection of Section 7 application and directory nature of procedural requirements - Form-1 Part IV and Part V - attachments/annexures as intrinsic to the application - applicability of Article 137 / Section 137 of the Limitation Act to Section 7 proceedings - acknowledgement under Section 18 of the Limitation Act extending limitation - right of each consortium bank to enforce its individual rights and to file independent Section 7 applications

Omission of date of default in Form-1 - Form-1 Part IV and Part V - attachments/annexures as intrinsic to the application - Section 7(5)(a) and (b) of the Insolvency and Bankruptcy Code - admission or rejection of Section 7 application and directory nature of procedural requirements - Whether omission to mention the date of default in Part IV of Form 1 was fatal to the Section 7 application and required rejection of the application. - HELD THAT: - The Tribunal examined the Form 1 filed by the Financial Creditor and observed that while Part IV did not expressly record a date of default in the specified column, the application contained annexed pleadings and documentary evidence (including a fact sheet, SARFAESI notice and OA filed before DRT) which disclosed the date of NPA/default. The Tribunal applied the settled position that the requirements of Section 7(5) are directory in nature and that the Adjudicating Authority must be satisfied that a default has occurred and that the application is complete; where there is a defect the Authority must give an opportunity to rectify. The Tribunal held that particulars required to prove amount and date of default may be established by documents annexed under Part V (Col.8) of Form 1 and that such attachments form an intrinsic part of the application. On the facts, the Adjudicating Authority had material before it showing the date of NPA/default and was justified in holding the application complete for the purposes of admission. The omission in Part IV was therefore not fatal and did not vitiate admission of the petition. [Paras 40, 41, 42, 43, 47]

Omission to mention the date of default in the specified column of Part IV of Form 1 was not fatal where the date and default were evidenced in the pleadings and documents annexed to the application; the Adjudicating Authority was justified in admitting the Section 7 application.

Distinction between date of default and date of Non-Performing Asset (NPA) - applicability of Article 137 / Section 137 of the Limitation Act to Section 7 proceedings - acknowledgement under Section 18 of the Limitation Act extending limitation - right of each consortium bank to enforce its individual rights and to file independent Section 7 applications - Whether the Section 7 application filed by the Financial Creditor was barred by limitation having regard to earlier defaults/NPA dates of consortium banks and whether any acknowledgement extended limitation. - HELD THAT: - The Tribunal applied the binding principle that Article 137 (Section 137 of the Limitation Act) governs the limitation for filing a Section 7 application and that the right to apply accrues on the date of actual default (not necessarily the date of NPA), as explained by the Supreme Court in Laxmi Pat Surana. On the facts, the Tribunal held that SBI, as a consortium lender, was entitled to rely on the date of NPA/default as declared by it (27.11.2018) and to file an independent Section 7 application; the earlier NPA/declaration by another consortium member (Axis Bank) did not preclude SBI from invoking its own date of default/NPA. The Tribunal further found that there existed an acknowledgment by the Corporate Debtor dated 16.08.2018 which, if necessary, would operate under Section 18 of the Limitation Act to furnish a fresh starting point for limitation. Even accepting the Laxmi Pat Surana analysis that actual default may pre date NPA by the 90 day test, the application filed by SBI on 19.12.2019 fell within three years of the relevant date of default/NPA or within three years of the acknowledgment, and therefore was not time barred. Accordingly the Adjudicating Authority correctly admitted the application on limitation grounds. [Paras 46, 47, 49, 50, 51]

The Section 7 application was not barred by limitation: SBI could rely on its own date of NPA/default and the record included an acknowledgement which extended limitation, so the application dated 19.12.2019 was within the applicable period.

Final Conclusion: The Tribunal found no illegality in the Adjudicating Authority admitting the Section 7 application: omission to record the date of default in the specific column of Form 1 was not fatal where annexed pleadings and documents established the date of default/NPA, and the application was not barred by limitation. The appeal is dismissed.

Power to punish for contempt - applicability of Section 425 of the Companies Act to proceedings under the Insolvency and Bankruptcy Code - National Company Law Tribunal as Adjudicating Authority under the IBC - Tribunal's power to regulate its procedure and follow principles of natural justice - remand for fresh consideration of contempt application

Power to punish for contempt - applicability of Section 425 of the Companies Act to proceedings under the Insolvency and Bankruptcy Code - National Company Law Tribunal as Adjudicating Authority under the IBC - Tribunal's power to regulate its procedure and follow principles of natural justice - Whether the National Company Law Tribunal has jurisdiction and power to punish for contempt in proceedings arising under the Insolvency and Bankruptcy Code by virtue of Section 425 of the Companies Act, 2013 read with its constitutional and statutory role as Adjudicating Authority under the IBC. - HELD THAT: - The Tribunal held that Section 425 of the Companies Act, 2013 confers on the Tribunal (and the Appellate Tribunal) the power to punish for contempt by making the provisions of the Contempt of Courts Act, 1971 applicable to the Tribunal. The NCLT, being the Adjudicating Authority for Part II of the IBC as defined by Section 5(1) and constituted under Section 408 of the Companies Act, is competent to exercise contempt jurisdiction in respect of matters that come before it, including those arising under the IBC. A narrow construction excluding IBC proceedings would render the adjudicatory process ineffective and emasculate enforcement of orders; therefore a purposive, practical and harmonious reading of Sections 408 and 425 supports the exercise of contempt powers in IBC matters. The Tribunal relied on statutory scheme, amendments extending certain Companies Act powers to IBC-related proceedings, the Tribunal's rule-making and procedural powers under Section 424 and the NCLT Rules to regulate procedure consistent with principles of natural justice, and judicial precedents recognising tribunals' power to punish for contempt where statute so provides. The orders and observations of the Adjudicating Authority holding that IBC is devoid of contempt jurisdiction were found to be unsustainable and liable to be set aside. [Paras 39, 40, 41, 50, 51]

The Tribunal concluded that the NCLT has the power to punish for contempt in proceedings under the IBC by virtue of Section 425 of the Companies Act, 2013 and related statutory provisions.

Remand for fresh consideration - direction to restore contempt application - opportunity to raise factual and legal pleas before the Adjudicating Authority - Whether the Contempt Application dismissed by the Adjudicating Authority should be restored for fresh adjudication and the manner in which it should be proceeded with. - HELD THAT: - The Tribunal set aside the impugned order dismissing the contempt application and directed the Adjudicating Authority to restore Contempt Application No. A-01(PB) of 2020 in CA-1081/2019 in (IB)-560(PB)/2017 to its file within two weeks and to dispose of it on merits expeditiously, fairly and dispassionately. The Adjudicating Authority is to afford due opportunity to both sides and is not to be constrained by the observations in this appellate judgment; the parties retain liberty to raise all factual and legal pleas before the Adjudicating Authority which must take them into account when passing fresh orders. [Paras 52]

The contempt application is remanded to the Adjudicating Authority for restoration and fresh adjudication on merits in accordance with law and principles of natural justice.

Final Conclusion: The appeal is allowed: the impugned order of 23.09.2020 is set aside; the Tribunal held that NCLT possesses contempt jurisdiction under Section 425 of the Companies Act, 2013 in respect of IBC matters; and the Contempt Application is restored to the Adjudicating Authority for fresh, expeditious disposal on merits with liberty to the parties to urge all pleas.

Existence of dispute - operational creditor application under Section 9 - rejection under Section 9(5)(2)(d) - application of Mobilox Innovations principle - labour law non-compliance and principal employer liability - chasing for payments not object of IBC

Existence of dispute - rejection under Section 9(5)(2)(d) - application of Mobilox Innovations principle - Whether the Adjudicating Authority correctly rejected the Section 9 application on the ground of a pre-existing dispute. - HELD THAT: - The Tribunal affirmed the Adjudicating Authority's conclusion that a real dispute existed between the parties. The record showed repeated correspondence and emails pre-dating the demand notice that raised objections about deficiency of services and non-submission of documents evidencing compliance with labour laws, together with labour-related incidents including strikes and complaints to the labour commissioner. The Tribunal applied the test in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., holding that the adjudicating authority need only be satisfied that a plausible dispute exists which is not patently feeble, hypothetical or illusory. On the material before it the Adjudicating Authority was entitled to find that the dispute was genuine and required investigation rather than admission of the Section 9 petition.

The Adjudicating Authority rightly rejected the Section 9 application on existence of a bona fide dispute; the appeal is dismissed.

Labour law non-compliance and principal employer liability - chasing for payments not object of IBC - Whether the labour-law compliance issues and payments made by the respondent to employees justified treating the claim as disputed and outside the scope of IBC recovery. - HELD THAT: - The Tribunal accepted the finding that the appellant failed to comply with statutory labour obligations, which led to labour action and compelled the respondent, as principal employer, to make payments to the appellant's employees. Those payments and the surrounding correspondence demonstrated that the dispute related not merely to non-payment but to alleged contractual and statutory non-performance by the appellant. The Tribunal noted that pursuing mere recovery of payments, where disputed on such grounds, is not the object of the Code and that the Adjudicating Authority was justified in treating the claim as disputed in light of these labour-law related contentions.

The labour-law non-compliance and consequent payments by the respondent appropriately supported the finding of a dispute; the Section 9 petition was properly dismissed.

Final Conclusion: The NCLT's order refusing admission of the Section 9 petition was upheld. The Tribunal found a plausible, non-spurious dispute-rooted in alleged deficiencies of service and statutory labour non-compliance-which justified rejection of the operational creditor's application under the Mobilox test; the appeal is dismissed.

Liability of auction-purchaser for pre-sale municipal tax - municipal tax treated as a claim in the liquidation process / clean slate principle - effect of "AS IS WHERE IS" and "NO RECOURSE" sale terms in liquidation sale - duty of the liquidator to disclose liabilities in the asset memorandum and public announcement - jurisdiction of the Adjudicating Authority under the IBC to adjudicate disputes touching the liquidation estate

Liability of auction-purchaser for pre-sale municipal tax - municipal tax treated as a claim in the liquidation process / clean slate principle - effect of "AS IS WHERE IS" and "NO RECOURSE" sale terms in liquidation sale - Auction-purchaser is not liable to pay outstanding municipal property tax attributable to periods prior to confirmation of the liquidation sale; such dues constitute claims in the liquidation process and do not attach as an encumbrance on the purchaser post-sale. - HELD THAT: - The sale of the assets was conducted by the liquidator on an "AS IS WHERE IS" and "NO RECOURSE" basis with possession delivered to the auction purchaser prior to the demand notice. Municipal tax arrears relating to periods before sale confirmation are liabilities that fall within the liquidation estate and are to be treated as claims in the liquidation process rather than as encumbrances enforceable against the auction purchaser. The court relied on the established principle that municipal dues do not create an encumbrance on the property in a manner that would bind a purchaser post-sale and that the "clean slate" principle applies in liquidation, so that pre sale liabilities remain with the corporate debtor's estate and are to be addressed under the distribution scheme. Consequently the demand notice directing the auction purchaser to pay pre sale municipal dues was quashed and the purchaser was absolved from that liability. [Paras 16, 17]

Demand notice for outstanding municipal tax (relating to the stated pre-sale period) quashed; auction purchaser held not liable for those dues.

Duty of the liquidator to disclose liabilities in the asset memorandum and public announcement - jurisdiction of the Adjudicating Authority under the IBC to adjudicate disputes touching the liquidation estate - The Adjudicating Authority's order quashing the demand notice is upheld on the basis of the legal treatment of pre sale municipal dues in liquidation; obligations of the liquidator to disclose relevant liabilities in the asset memorandum and by public announcement are noted but do not render the auction purchaser liable for pre sale municipal dues. - HELD THAT: - Regulations require the liquidator to make public announcements calling for claims and to prepare an asset memorandum disclosing information relevant to sale, including liabilities. While such duties exist to bring relevant liabilities to prospective bidders' notice, the court found that the legal consequence of the sale terms and the statutory treatment of municipal dues means the purchaser cannot be saddled with pre sale municipal taxes. The Adjudicating Authority's intervention in the liquidation proceedings to declare the demand void and absolve the purchaser from pre sale liabilities is sustained by applying these principles; the appellant's contention that the NCLT lacked jurisdiction to adjudicate the dispute between the municipality and a third party purchaser was rejected insofar as the result flows from the statutory scheme governing liquidation and distribution of claims. [Paras 14, 16, 17]

Impugned order of the Adjudicating Authority quashing the demand notice and absolving the auction purchaser from pre sale liabilities is upheld; liquidator's disclosure duties do not impose those liabilities on the purchaser.

Final Conclusion: Appeal dismissed; the demand notice dated 01.02.2021 for municipal property tax relating to the pre sale period is quashed and the auction purchaser is not liable to pay those dues; no order as to costs.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Appointment of Liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' resolution to initiate liquidation - Moratorium ceasing on initiation of liquidation - Fees of the Liquidator under Regulation 4 of the IBBI (Liquidation Process) Regulations, 2016 - Public notice and intimation to Registrar of Companies in liquidation - Vesting of management powers in the Liquidator - Proviso to Section 33(5) - suits by liquidator with prior approval of Adjudicating Authority

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' resolution to initiate liquidation - Initiation of liquidation process against the Corporate Debtor was ordered. - HELD THAT: - The Tribunal noted that the Committee of Creditors, with 100% voting share, resolved in its 11th meeting to file an application for liquidation of the Corporate Debtor. Having perused the records, including the CoC resolution and the RP's submissions, and after hearing counsel, the Tribunal was inclined to permit the application under Section 33 and accordingly ordered initiation of the liquidation process. The order records the CoC's approval as the determinative basis for permitting liquidation in this proceeding. [Paras 11, 12]

IA(IBC)/106/KOB/2021 is allowed and the Corporate Debtor is ordered to be liquidated.

Appointment of Liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - Consent of Resolution Professional to act as Liquidator - Mr. George Varkey was appointed as the Liquidator of the Corporate Debtor. - HELD THAT: - The Tribunal considered the CoC recommendation and the consent filed by the Resolution Professional, including certification that no disciplinary proceedings are pending against him. On that basis and in terms of Section 34(1) of the Code, the Bench appointed Mr. George Varkey as Liquidator and directed that his appointment be communicated to the Registrar of Companies. [Paras 9, 12]

Mr. George Varkey is appointed as Liquidator in terms of Section 34(1).

Public notice and intimation to Registrar of Companies in liquidation - Fees of the Liquidator under Regulation 4 of the IBBI (Liquidation Process) Regulations, 2016 - Vesting of management powers in the Liquidator - Moratorium ceasing on initiation of liquidation - Proviso to Section 33(5) - suits by liquidator with prior approval of Adjudicating Authority - Ancillary directions for conducting the liquidation were issued, including publication requirements, fee compliance, vesting of powers, cooperation by personnel, restriction on suits, and cessation of moratorium. - HELD THAT: - The Tribunal directed that the Corporate Debtor be liquidated as per Chapter III of the Code and ordered publication of notice in widely circulated English and Malayalam newspapers, and transmission of the order to the Registrar of Companies for updating master data. The Bench specified that publications should be in widely circulated newspapers in the State of the registered office. Fees payable to the Liquidator were ordered to be in compliance with Regulation 4 of the IBBI (Liquidation Process) Regulations, 2016. It was declared that all powers of the board and key managerial personnel cease and vest in the Liquidator; personnel of the Corporate Debtor were directed to cooperate with the Liquidator. Subject to Section 52 and the proviso to Section 33(5), no suit or proceeding shall be instituted by or against the Corporate Debtor save that the Liquidator may institute suits on behalf of the Corporate Debtor with prior approval of the Adjudicating Authority. The Tribunal further recorded that the moratorium previously declared ceased upon initiation of liquidation. [Paras 12]

Liquidation shall proceed with the specified publication, ROC intimation, fee compliance, vesting of powers in the Liquidator, cooperation by personnel, restriction on suits with liberties to the Liquidator as provided, and the moratorium shall cease.

Final Conclusion: The application for initiation of liquidation filed by the Resolution Professional was allowed; Mr. George Varkey was appointed Liquidator and the Tribunal issued directions governing publication, ROC intimation, fee compliance, vesting of management powers in the Liquidator, cooperation by personnel, limitation on suits and cessation of the moratorium. IA(IBC)/106/KOB/2021 is disposed of.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Commercial wisdom of the Committee of Creditors - Appointment of liquidator pursuant to CoC resolution - Requirement of written consent to act as liquidator (Form AA) - Consequences of liquidation: cessation of moratorium and vesting of management powers in liquidator - Liquidator's obligations: public announcement, claim submission timeline and statutory reports

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Commercial wisdom of the Committee of Creditors - Order for liquidation of M/s. Padmavati Intermediates Pvt. Ltd. under Section 33 of the Code pursuant to CoC resolution. - HELD THAT: - The Adjudicating Authority accepted the Committee of Creditors' unanimous decision, taken after evaluation that no assets existed and that the likelihood of a resolution was remote, and held that such a commercial decision of the CoC falls within its domain of commercial wisdom and is not amenable to judicial re examination. Having regard to Section 33 and the CoC resolution communicated prior to confirmation of any resolution plan, the Tribunal passed an order directing liquidation of the corporate debtor and recorded consequential statutory requirements flowing from Section 33.

Liquidation order for the corporate debtor was passed under Section 33 of the Code on the basis of the CoC resolution.

Appointment of liquidator pursuant to CoC resolution - Requirement of written consent to act as liquidator (Form AA) - Appointment of the Resolution Professional, Mr. Darshan Bharatbhai Patel, as liquidator subject to filing of written consent in Form AA. - HELD THAT: - The CoC had resolved to appoint the incumbent Resolution Professional as liquidator. The Adjudicating Authority approved that appointment but noted that the appointee had not filed the prescribed written consent. Consequently, the appointment was confirmed conditionally, directing the proposed liquidator to file Form AA within five days from the order, failing which the statutory formalities for appointment would not be complete.

The RP is appointed as liquidator subject to his filing of written consent in Form AA within five days.

Consequences of liquidation: cessation of moratorium and vesting of management powers in liquidator - Immediate consequences of liquidation were declared: moratorium ceases and all powers of the board and management vest in the liquidator; discharge notice to employees subject to continuance of business by liquidator. - HELD THAT: - The order declared liquidation effective from the date of the order and that the moratorium earlier imposed ceases. It further recorded that the liquidation order serves as notice of discharge to officers, employees and workmen unless the business is continued by the liquidator, and that all powers of directors and key managerial personnel stand vested in the liquidator. The order also reiterated statutory restrictions on institution of suits and the liquidator's capacity to institute proceedings with prior approval of the Adjudicating Authority.

Moratorium ceases; management powers vest in the liquidator; notices of discharge issued as per Section 33.

Liquidator's obligations: public announcement, claim submission timeline and statutory reports - Directions to the liquidator to carry out statutory duties: publish public announcement, invite claims within 30 days from liquidation commencement date, and file preliminary and periodic reports within prescribed timeframes. - HELD THAT: - The Tribunal directed the liquidator to publish the public announcement in Form B as mandated, giving stakeholders 30 days from liquidation commencement date to submit claims, and to comply with Regulation 12(3) and Regulation 13 of the CIRP (Liquidation Process) Regulations, 2016 by filing a preliminary report within 75 days and thereafter regular progress reports under Regulation 15. These directions implement the liquidator's statutory obligations to admit and adjudicate claims and to report progress of liquidation.

Liquidator directed to publish announcement, fix claim submission deadline of 30 days, and file preliminary and periodic reports as prescribed.

Pending ancillary applications to be listed with main corporate petition - Pending interlocutory applications (IA No. 295/2021 and IA No. 511/2021) having bearing on liquidation proceedings were directed to be listed along with the main company petition for further consideration. - HELD THAT: - The Tribunal observed that two listed applications raise issues relevant to the liquidation and therefore ordered that they be placed along with CP No. 807/9/JPR/2019 when the matter is next taken up. The liquidator was permitted, if necessary, to move applications to have those proceedings prosecuted by a suitable person/entity instead of the RP; the liquidator is not precluded from taking steps in relation to those matters.

IA No. 295/2021 and IA No. 511/2021 to be listed with the main corporate petition for consideration in the liquidation proceedings.

Final Conclusion: The Tribunal allowed IA No. 354 of 2021 and ordered liquidation of M/s. Padmavati Intermediates Pvt. Ltd. under Section 33 of the Code; the incumbent Resolution Professional was appointed as liquidator subject to filing of Form AA, the moratorium ceased, management powers vested in the liquidator, statutory steps for announcement, claims and reporting were directed, and related pending applications were ordered to be listed with the main petition.

Appeal against decision of liquidator under Section 42 (fourteen days limitation) - Limitation period and bar to appeal - Maintainability of remedy under Section 60(5) vis-a -vis Section 42 - Effect of COVID-19 lockdown on limitation

Appeal against decision of liquidator under Section 42 (fourteen days limitation) - Limitation period and bar to appeal - Whether the appeal against rejection of claim by the liquidator is maintainable notwithstanding the expiry of the fourteen days period prescribed by Section 42. - HELD THAT: - The Tribunal examined Section 42 which provides that a creditor may appeal to the Adjudicating Authority against the liquidator's decision accepting or rejecting claims within fourteen days of receipt of such decision. The liquidator communicated rejection by email dated 09.08.2019, whereas the present appeal was filed on 18.02.2021. The Tribunal noted that the prescribed fourteen-day period had expired long before the filing of the appeal and that the earlier application (IA No.1153/2019) filed on 28.08.2019 was itself beyond the fourteen-day period. On this basis the Tribunal concluded that the appeal is time-barred and hence not maintainable. [Paras 5, 6, 8, 9, 10]

Appeal dismissed as barred by limitation.

Effect of COVID-19 lockdown on limitation - Maintainability of remedy under Section 60(5) vis-a -vis Section 42 - Whether the appellant's plea of inability to file within time due to COVID-19 and related events furnished a valid ground to condone delay or to excuse non-compliance with the fourteen-day limitation, and whether remedy under Section 60(5) was a proper avenue. - HELD THAT: - The Tribunal considered the appellant's contention that the national lockdown and illness of a director prevented timely filing. It observed that the first application under Section 60(5) was filed on 28.08.2019 and was therefore made after the fourteen-day period had already lapsed and well before the lockdown imposed on 25.03.2020. Consequently, the plea that the lockdown caused the delay was rejected as untenable. The Tribunal also noted that the earlier application under Section 60(5) was technically inappropriate (remedy lies under Section 42) and was permitted to be withdrawn, but that withdrawal did not cure the antecedent delay. Thus neither the timing nor the invocation of Section 60(5) justified condonation of the delay. [Paras 7, 8, 9]

Delay not excused by COVID-19; prior application under Section 60(5) did not cure the limitation bar and was improperly filed.

Final Conclusion: The appeal against the liquidator's rejection of the claim is dismissed as time-barred under Section 42; the appellant's COVID-19 related plea and prior application under Section 60(5) do not afford a basis to condone the delay.

Limitation - date of default - accrual of right to apply under the Insolvency and Bankruptcy Code - initiation of Corporate Insolvency Resolution Process under Section 9 of the IBC, 2016 - operational debt - operational creditor - time-barred applications under Section 9

Date of default - limitation - accrual of right to apply under the Insolvency and Bankruptcy Code - time-barred applications under Section 9 - Whether the Section 9 application filed by the operational creditor is barred by limitation and therefore not maintainable. - HELD THAT: - The Tribunal examined Part IV of the application which records the Date of Default as 21.04.2016 and noted that the present application was filed on 10.10.2019. Applying the principle that the right to apply under the Code accrues on the date of default and that limitation runs from that date, the Tribunal found the petition was filed beyond the three-year period prescribed by Article 137 of the Limitation Act. The Tribunal relied on governing Supreme Court authority, including B.K. Educational Services v. Parag Gupta and Associates , and Babulal Vardharji Gurjar v. Veer Gurjar Aluminum Industries Pvt. Ltd. , which establish that the limitation period for a Section 9 petition begins on the date of default and that applications filed more than three years after that date are time-barred. The Tribunal also considered the procedural history (an earlier petition that was dismissed with liberty to file afresh) and concluded that the present petition, even allowing for that history, remained outside the permissible limitation period. For these reasons the petition failed the limitation test and could not be admitted under Section 9. [Paras 6, 7, 8, 9, 10]

The Section 9 application is time-barred and is rejected; the petition is dismissed.

Final Conclusion: The application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was dismissed as barred by limitation because the date of default (21.04.2016) rendered the petition (filed on 10.10.2019) beyond the three-year limitation period; the Tribunal rejected the claim to initiate CIRP.

Approval of a Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 - compliance with requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - role of commercial wisdom of the Committee of Creditors in approving a resolution plan - compliance with Regulations 38 and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - effect of approval on moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016

Compliance with requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - payment to insolvency resolution process costs and operational creditors - management, implementation and supervision of the Resolution Plan - Whether the Resolution Plan approved by the Committee of Creditors satisfies the requirements of Section 30(2) of the Code and related CIRP Regulations so as to warrant approval by the Adjudicating Authority under Section 31. - HELD THAT: - The Tribunal examined the Resolution Plan against the criteria in Section 30(2) and Regulations 38 and 39 of the CIRP Regulations. It noted that the Plan provides for payment of CIRP costs within 60 days (compliance with Section 30(2)(a)); the certified Form H states that payment to operational creditors is not less than the amount payable on liquidation (compliance with Section 30(2)(b)); management and control provisions are set out in the Plan (compliance with Section 30(2)(c)); a Monitoring Committee and supervisory mechanism are provided (compliance with Section 30(2)(d)); and declarations in the Plan address conformity with applicable law and other Board-specified requirements (compliance with Sections 30(2)(e) and (f)). The Resolution Professional certified compliance in Form H and the Plan was approved by the Committee of Creditors with 99.09% voting in favour. The Tribunal applied the settled principle that commercial wisdom of the CoC governs approval, noting the Supreme Court's observation in Essar Steel that Regulation 37/Section 30(4) gives effect to the CoC's commercial decision. On these bases the Tribunal found no impediment to approval and concluded that the Plan contains sufficient provisions for effective implementation as required by the proviso to Section 31(1). [Paras 11, 12, 13, 14, 15]

The Resolution Plan fulfills the requirements of Section 30(2) and relevant CIRP Regulations and is approved by the Adjudicating Authority.

Effect of approval of Resolution Plan on moratorium under Section 14 - duty to forward CIRP records to IBBI under Section 31(3)(b) - Consequential legal effects upon approval of the Resolution Plan. - HELD THAT: - The Tribunal declared that the moratorium previously in force under Section 14 shall cease to have effect from the date of the order. It directed the Resolution Professional to forward all records relating to the CIRP and the Resolution Plan to the IBBI for recording in its database in terms of Section 31(3)(b). The Tribunal also recorded that the approved Resolution Plan shall become effective from the date of the order and shall form part of the order. [Paras 16, 17, 18, 19]

Moratorium under Section 14 ceases from the date of this order; RP to forward CIRP records to IBBI; approved Resolution Plan becomes effective immediately and is part of the order.

Final Conclusion: The Tribunal, having satisfied itself that the Resolution Plan meets the statutory and regulatory requirements and noting the CoC's 99.09% approval, approves the Resolution Plan; the moratorium under Section 14 is lifted from the date of the order, the Plan becomes effective immediately and the Resolution Professional is directed to forward the CIRP records to the IBBI.

Dismissal for non-prosecution - adjournment culture and abuse of process - Rule 20 of the CESTAT Procedure Rules, 1982 - exercise of discretion to dismiss or decide on merits - restoration on sufficient cause - public interest in expeditious disposal of litigation

Dismissal for non-prosecution - Rule 20 of the CESTAT Procedure Rules, 1982 - exercise of discretion to dismiss or decide on merits - adjournment culture and abuse of process - Appeal dismissed for non-prosecution under Rule 20 of the CESTAT Procedure Rules, 1982. - HELD THAT: - The Tribunal found that the appellant repeatedly sought adjournments and, despite a clear direction that no further adjournments would be allowed, the authorised representative declined to argue the matter on the date fixed, stating inability to do so because the concerned partner was unavailable. The Tribunal relied on Rule 20 which empowers it to dismiss an appeal for default or hear and decide it on merits, and on Supreme Court authorities condemning mechanical grant of adjournments and dismissing matters for non-prosecution where counsel is not prepared. Having regard to the extensive history of adjournments, the prior warning recorded by the Bench and the failure of the appellant to make submissions when the matter was called, the Tribunal exercised its discretion to dismiss the appeal for non-prosecution. [Paras 4, 5]

Appeal dismissed for non-prosecution.

Adjournment culture and abuse of process - public interest in expeditious disposal of litigation - Miscellaneous Application by revenue for early hearing dismissed as infructuous. - HELD THAT: - The Tribunal noted that the revenue's application seeking early hearing, filed in view of the large revenue stake, became academic because the matter had been regularly listed and yet repeatedly adjourned; given the dismissal of the appeal for non-prosecution, the application no longer had any operative purpose and was therefore dismissed as infructuous. [Paras 4, 5]

Miscellaneous Application dismissed as infructuous.

Final Conclusion: The appeal is dismissed for non-prosecution under Rule 20 CESTAT Procedure Rules, 1982; the revenue's application for early hearing is dismissed as infructuous.

Finality of tribunal orders - implementation of appellate tribunal orders by lower authorities - recovery of refunds sanctioned pursuant to tribunal orders - retrospective effect of judicial decisions - rectification application as prerequisite for reopening final orders

Finality of tribunal orders - implementation of appellate tribunal orders by lower authorities - recovery of refunds sanctioned pursuant to tribunal orders - Orders of this Tribunal having attained finality in the absence of any appeal by Revenue must be implemented by the adjudicating authority and the Commissioner (Appeals) had no authority to seek recovery of refunds earlier sanctioned pursuant to those Tribunal orders. - HELD THAT: - The Tribunal's earlier orders allowing refund claims became final because the Revenue did not challenge them by filing appeals. Once final, subordinate authorities were duty bound to implement those orders; their failure to do so was a breach of judicial discipline. The Commissioner (Appeals) sought recovery of amounts earlier sanctioned by the adjudicating authority despite the absence of any challenge to the Tribunal's orders, and in doing so exercised power without lawful authority. The argument that subsequent Supreme Court decisions on retrospective operation of judicial precedent justified reopening the earlier-sanctioned refunds was rejected because the cases relied upon concerned situations where the issue remained alive by way of rectification or similar proceedings; no such rectification or live challenge existed here. Consequently, the Commissioner (Appeals)'s action to recover the sanctioned refunds was bad in law, and the adjudicating authority was directed to implement the Tribunal's earlier orders within 30 days.

The impugned actions ordering recovery are set aside; the adjudicating authority is directed to implement the earlier orders of this Tribunal within 30 days and the appeals are disposed of.

Final Conclusion: In the absence of any appeal against the Tribunal's earlier orders, those orders are final and must be implemented; the Commissioner (Appeals) acted without authority in seeking recovery of refunds earlier sanctioned, and the adjudicating authority is directed to give effect to the Tribunal's orders within 30 days.

Refund of duty paid pursuant to a Show Cause Notice - time-bar for refund under Section 11B of the Central Excise Act, 1944 - refund of amounts paid under protest during pendency of adjudication - unjust enrichment as a bar to refund - effect of subsequent adjudication and appellate orders on limitation for refund

Time-bar for refund under Section 11B of the Central Excise Act, 1944 - effect of subsequent adjudication and appellate orders on limitation for refund - Whether the refund claim filed after the departmental re-adjudication but within one year of the final appellate order setting aside the demand is time-barred under Section 11B. - HELD THAT: - The tribunal noted that the litigation on the Show Cause Notice dated 06.08.2009 continued until the Commissioner (Appeals), Coimbatore set aside the demand by Order-in-Appeal dated 27.02.2018. Although the appellant could have filed a refund claim after the earlier favourable appellate order, the Department re-adjudicated the same Show Cause Notice and confirmed the demand again, thereby reviving the adjudicatory controversy. The refund claim in question was filed within one month after the later Order-in-Appeal dated 27.02.2018 and therefore within one year from the date on which the demand was finally set aside by the Commissioner (Appeals). On these facts, the tribunal held that the rejection of the refund claim as time-barred under Section 11B was not justified. [Paras 13]

The refund claim is not time-barred and rejection under Section 11B is unjustified.

Refund of duty paid pursuant to a Show Cause Notice - refund of amounts paid under protest during pendency of adjudication - unjust enrichment as a bar to refund - Whether the claim for refund is barred by the doctrine of unjust enrichment where the amount was paid pursuant to the Show Cause Notice and under protest. - HELD THAT: - The tribunal recorded that the amount was paid by the appellant pursuant to the Show Cause Notice and that the demand, interest and penalties were ultimately set aside by the Commissioner (Appeals). Given that the payment was made in the course of litigation (and under protest), the tribunal found that the contention of the Department that the incidence of duty had been passed on was without basis in the circumstances of the case. Consequently, the tribunal concluded that the bar of unjust enrichment does not arise to defeat the appellant's refund claim. [Paras 13]

The plea of unjust enrichment does not apply and does not bar the refund.

Final Conclusion: The appeal is allowed: the impugned order rejecting the refund is set aside, the appellant is held eligible for refund of the amounts paid pursuant to the Show Cause Notice, and consequential reliefs shall follow as per law.

Eligibility of transitional Modvat/Cenvat credit on inputs in transit - treatment of inputs in transit as stock as on cut-off date - precedential effect of Tribunal decisions and Board circulars on deemed credit

Eligibility of transitional Modvat/Cenvat credit on inputs in transit - treatment of inputs in transit as stock as on cut-off date - precedential effect of Tribunal decisions and Board circulars on deemed credit - Modvat/Cenvat credit is admissible in respect of inputs which were in transit as on 31.03.2003 and thus to be treated as stock for the purpose of transitional credit. - HELD THAT: - The Tribunal examined whether goods in transit on the cutoff date fall within the scope of transitional credit under the notification and relevant CBEC instructions. The Range Superintendent's report (RTI) recorded that the consignments were in transit as on 31.03.2003 and subsequently received; private records corroborated receipt and utilization. The Tribunal relied on its earlier decisions in Elecon Fabrics and Jaldarshan Textile and the Board's circulars which permit deemed credit for stocks lying at places other than registered premises subject to furnishing requisite particulars and envisaged condonation of procedural lapses. Those authorities establish that where the assessee has purchased the goods and they were in transit on the crucial date, such goods constitute stock for transitional credit purposes. The adjudicating authority's denial, despite the remand direction to decide in light of those decisions and notwithstanding the RTI verification, was therefore unsustainable. Applying the determinative principles from the cited Tribunal decisions and Board instructions, the Tribunal held that the appellant was entitled to Modvat credit on inputs in transit as on 31.03.2003 and modified the impugned order accordingly. [Paras 4, 5]

Modvat/Cenvat credit allowed in respect of inputs in transit as on 31.03.2003; impugned order modified and appeal allowed to that extent.

Final Conclusion: The appeal is allowed to the extent that transitional Modvat/Cenvat credit is granted for inputs shown to be in transit as on 31.03.2003 in accordance with the Tribunal's precedent and Board circulars; the impugned order is modified accordingly.

Irregular availment of CENVAT credit - Wilful suppression with intent to evade duty - Extended period of limitation - Penalty under Rule 15(2) of CCR, 2004 and section 11AC - Reversal of credit prior to issue of show cause notice - Self-assessment and onus of disclosure

Irregular availment of CENVAT credit - Reversal of credit prior to issue of show cause notice - Extended period of limitation - Whether reversal of CENVAT credit by the assessee prior to issuance of show cause notice precludes invocation of the extended period of limitation for demand and negates a finding of time-barred assessability. - HELD THAT: - The Tribunal found that the major portion of the alleged demand had already been held not assessable by the authorities below, and the remaining amount was reversed by the appellant in August 2016 immediately after the audit objection. The appellant retained a sufficient CENVAT balance when reversal was made and the credits were duly reflected in returns and books. Applying the principle that invocation of the extended period requires positive suppression or wilful omission with intent to evade duty, the Tribunal held that mere mis apportionment between the assessee's units and prompt reversal prior to issuance of the show cause notice do not constitute suppression attracting extended limitation. Reliance was placed on authorities holding that omission alone, without mens rea or deliberate concealment, is not suppression and that reversal reflected in statutory returns before a show cause notice disentitles the Department from invoking extended limitation. In these circumstances the extended period could not be invoked and the demand on that ground could not be sustained. [Paras 6, 7, 8]

Demand under the extended period of limitation cannot be sustained because the credit was reversed and recorded before issuance of the show cause notice; the demand is time-barred on that footing.

Wilful suppression with intent to evade duty - Penalty under Rule 15(2) of CCR, 2004 and section 11AC - Self-assessment and onus of disclosure - Whether penalty for suppression and intent to evade duty was rightly imposed where the assessee had reversed the credit and there was no evidence of mens rea. - HELD THAT: - The Tribunal examined whether the facts amounted to wilful suppression warranting penalty under Rule 15(2) of CCR, 2004 and section 11AC. It observed that the questioned entries arose from incorrect apportionment between two units and that the amount in dispute related to credits admissible to the assessee as a whole. The reversal was effected promptly and recorded in ER-1 returns and books prior to the show cause notice; interest was not imposed by the authorities below. In the absence of any positive act or concealment showing an intention to evade duty, the Tribunal held that the imposition of penalty was not justified. While self-assessment places the onus of disclosure on the assessee, not every omission or mis apportionment constitutes wilful suppression attracting penalty; mens rea to evade duty must be shown. [Paras 7, 8]

Penalty imposed for alleged suppression and evasive intent is set aside as there is no evidence of wilful mis-statement or intent to evade duty; the deficiency was a clerical/apportionment error promptly rectified.

Final Conclusion: The appeal is allowed: the Tribunal held that the disputed credits were reversed and reflected in returns before issuance of the show cause notice, there was no wilful suppression or mens rea to evade duty, invocation of the extended period of limitation was improper, and the penalty imposed by the authorities is set aside.

Limitation - extended period of limitation - time-barred show-cause notice - maintenance of separate accounts under Rule 6(2) of CENVAT Credit Rules, 2004 - reversal attributable to exempted clearances under Rule 6(3)(a) of CENVAT Credit Rules, 2004 - appeal allowed on limitation without adjudication on merits

Limitation - extended period of limitation - time-barred show-cause notice - Whether the show cause notice dated 17.08.2012 relating to the period 2006 2007 was time barred and not sustainable in law. - HELD THAT: - The Tribunal found that the dispute related to the tax period 2006 2007. Even if the extended period of limitation were to be considered, the show cause notice ought to have been issued by April 2012 (five years from filing of ER I returns for March 2007, assuming filing in April 2007). The impugned show cause notice was issued on 17.08.2012, which is beyond the permissible period of five years and thus hit by limitation. The Commissioner did not furnish reasons to demonstrate how the notice avoided the limitation bar, but instead rejected the appellants' factual position; the Tribunal held that such treatment did not cure the time bar. Consequently the notice could not survive legal scrutiny and the matter was decided on the ground of limitation without entering into the merits of the alleged failure to maintain separate accounts or to reverse proportionate CENVAT credit.

Show cause notice dated 17.08.2012 in respect of 2006 2007 is time barred; impugned order set aside and appeal allowed on limitation grounds.

Final Conclusion: The appeal is allowed on the ground that the show cause notice dated 17.08.2012 relating to the period 2006 2007 was beyond the period of limitation; the impugned order is set aside and the appeal allowed with consequential relief as per law.

Correction of arbitral award under Section 33 of the Arbitration and Conciliation Act, 1996 - Scope of correction limited to arithmetical or clerical errors - Modification by arbitrator beyond claimed reliefs impermissible - Restoration of original arbitral award and quashing of unlawful modification - Judicial interference under Sections 34 and 37 where modification exceeds Section 33 powers

Correction of arbitral award under Section 33 of the Arbitration and Conciliation Act, 1996 - Scope of correction limited to arithmetical or clerical errors - Modification by arbitrator beyond claimed reliefs impermissible - Restoration of original arbitral award - Whether the arbitrator validly exercised powers under Section 33 to modify the original award by substituting the market value rate in place of the rate claimed in the statement of claim. - HELD THAT: - The Court held that Section 33 empowers an arbitrator only to correct arithmetical or clerical errors in an award. The original award of 04.12.2010 was rendered in accordance with the claimant's statement of claim and expressly dealt with the alternative relief and the rate of Rs. 740 per gram. The subsequent application filed under Section 33 sought substitution of a different market rate and thereby advanced a fresh or altered relief which was not a mere arithmetical or clerical correction. Such modification exceeded the permissible scope of Section 33. Consequently the order of the arbitrator dated 14.01.2011, which modified the original award by substituting the rate, was beyond the arbitrator's jurisdiction and could not be sustained. The Court therefore quashed the modification and restored the original award dated 04.12.2010. [Paras 12, 13]

The arbitrator's modification under Section 33 was beyond permissible scope and is quashed; the original award dated 04.12.2010 is restored.

Final Conclusion: Appeal allowed; the order dated 14.01.2011 modifying the award is quashed and set aside, the original award dated 04.12.2010 stands restored; no order as to costs.

Deemed sanction under building bye-laws - extension and exclusion of limitation on account of COVID-19 - protection of religious places and compliance with court directions - validity of administrative refusal judged by the reasons stated in the order

Deemed sanction under building bye-laws - extension and exclusion of limitation on account of COVID-19 - Deemed grant of building permission under Clause 5.1 of the Srinagar Municipal Corporation (Building) Bye-laws, 2011. - HELD THAT: - Clause 5.1 provides that where an applicant has fulfilled requisite formalities and the Authority either fails to refuse sanction or fails to communicate refusal within sixty days, the Authority shall be deemed to have accorded sanction. The petitioner contended that requisite formalities were completed by 18.02.2020 and, therefore, the Authority's refusal dated 09.07.2020 gave rise to deemed sanction. The Court held that the sixty-day period would ordinarily have expired on or about 18.04.2020 but that the unprecedented Covid-19 pandemic and the consequent lockdown in Srinagar, together with the Supreme Court's suo motu orders extending/excluding limitation from 15.03.2020 to 14.03.2021, warranted treating the limitation period under Clause 5.1 as effectively extended/excluded. In view of those circumstances and the timing of the Corporation's action after easing of lockdown, the condition for deemed sanction was not attracted and the plea of deemed permission must fail. [Paras 11, 19, 20]

Deemed building permission under Clause 5.1 does not arise on the facts because the limitation period is to be treated as extended/excluded in light of the Covid-19 situation and the relevant Supreme Court orders.

Protection of religious places and compliance with court directions - validity of administrative refusal judged by the reasons stated in the order - Validity of the refusal of building permission insofar as it relied on the land being temple property and on prior court directions to protect religious places. - HELD THAT: - The impugned order of refusal explicitly relied on revenue records showing the land as belonging to Mandir Shiv Ji, the Tehsildar's communication to that effect, and on earlier orders and directions issued in writ and contempt proceedings (including OWP No. 610/2007 and related contempt proceedings) and consequent directions of the Divisional Commissioner to the Municipal Corporation to withhold or revoke permissions on mandir properties. The Court confined itself to reviewing the refusal on the basis of the reasons stated in the order and observed that it was not required to and would not decide title to the land in the writ petition. Given the petitioner's own averments and annexed revenue extracts indicating the land as Mandir Shiv Ji's, and the Corporation's action pursuant to judicial directions to protect religious places, the Court found that the grounds stated in the impugned order were attracted and that the Corporation was entitled to refuse the building permission. The Court also rejected the petitioner's after thought plea of necessity raised in rejoinder as not pleaded in the lease deeds and as a matter that should have been pursued before the authority/court that had laid down protective directions. [Paras 16, 17, 18, 23]

Refusal of the building permission is justified on the stated reasons that the land is temple property and in view of prior court directions to protect religious places; the petition is dismissed on merits.

Final Conclusion: Writ petition dismissed on merits: the plea of deemed sanction under the Bye-laws fails in view of the Covid 19 limitation exclusion, and the refusal of building permission is sustainable as it was founded on the land being shown as temple property and on compliance with prior judicial directions to protect religious places; question of title and availability of alternate revision remedy left open for other proceedings.

Right to travel abroad - fundamental rights under Articles 19 and 21 - power under Section 482 Cr.P.C. - anticipatory bail - cause survives despite lapse of the originally sought travel period - possibility of fleeing from justice as basis to refuse permission to travel - regulation of travel by imposing conditions to secure presence at trial - custodial interrogation not required in documentary cases - conditions for grant of permission to travel abroad (surety/bond, undertaking, passport production)

Pendency of challenge to anticipatory bail - anticipatory bail - Whether the pendency of CRM-M-33202-2020 filed against the grant of anticipatory bail to the petitioner bars grant of permission to travel abroad. - HELD THAT: - This Court noted that CRM-M-33202-2020 had been dismissed by this Court on 01.09.2021 and that the aspects raised in that petition, including alleged non-cooperation and the merits relating to the two purchase orders, were considered and not held to disqualify the petitioner from travel. The order of dismissal and the reasoning in that judgment negate the relevancy of the earlier pendency as a ground to refuse permission to travel.

Pendency of CRM-M-33202-2020 does not bar grant of permission to travel abroad.

Alleged non-cooperation in investigation - custodial interrogation not required in documentary cases - Whether the petitioner's alleged non-cooperation in investigation prevents grant of permission to travel abroad. - HELD THAT: - The Court recorded that the prosecution had withdrawn the application for cancellation of bail on the ground that the petitioner and co-accused had joined investigation (order dated 04.01.2021) and that the investigation was completed with challan filed. The earlier findings show the case is documentary and custodial interrogation was not required; thus non-cooperation cannot be a continuing bar to travel.

Alleged non-cooperation does not disentitle the petitioner to permission to travel abroad.

Merits of allegations - placing of purchase orders after NCLT order - Whether the merits of the allegations (including placing two purchase orders after NCLT suspension) preclude the petitioner from obtaining permission to travel. - HELD THAT: - The Court reviewed earlier reasoning which found plausible defenses and noted that no affirmative finding on merits was appropriate at this stage as it would prejudice parties; the matter being documentary with defenses raised meant the allegations were not of such character as to disqualify the petitioner from travel.

Merits of the allegations do not, at this stage, preclude grant of permission to travel abroad.

Cause survives despite lapse of travel period - right to travel abroad - Whether change or lapse of the originally sought travel period prevents the petitioner from being permitted to travel now. - HELD THAT: - Relying on authority that the cause for travel survives even if the initial period has lapsed, the Court held that where the purpose (family reunion and preservation of immigration rights) continues to exist, the petitioner cannot be deprived of the right to travel merely because previously claimed dates have passed; each request is to be judged on present facts and appropriate conditions.

Change or lapse of earlier-sought travel dates does not bar grant of permission if the cause survives.

Fundamental rights under Articles 19 and 21 - regulation of travel by imposing conditions to secure presence at trial - Whether the petitioner has a right to travel abroad on the grounds pleaded (family reunion, medical exigency, preservation of permanent residency) and whether those pleas can be considered at this stage. - HELD THAT: - The Court observed that the right to travel abroad is a fundamental right subject to reasonable regulation; pleas earlier advanced (conjugal reunion and medical need) were sufficient and the additional plea regarding preservation of U.S. permanent residency may be considered under Section 482 Cr.P.C. since it is ancillary and could cause prejudice if denied. The Court accepted that these grounds could justify a regulated permission to travel.

The petitioner has an arguable right to travel abroad on the pleaded grounds, which may be regulated by conditions.

Possibility of fleeing from justice as basis to refuse travel - conditions for grant of permission to travel abroad (surety/bond, undertaking, passport production) - If permission is granted, what conditions are necessary to ensure the petitioner's return and safeguard the prosecution's interest. - HELD THAT: - Balancing the petitioner's travel right and the prosecution's interest, the Court reviewed precedents imposing conditions proportionate to the circumstances (ranging from personal bonds to substantial sureties or security in property). Given the petitioner's asserted lack of immovable property in his name, foreign residence of wife and son, and multiple pending matters, the Court tailored conditions to secure presence: furnishing substantial sureties, providing an undertaking, specifying travel dates within a window, release and production of passport subject to compliance, prohibition on visiting other countries, and exemption from personal appearance during the trip with return obligations.

Permission to travel may be granted subject to stringent conditions designed to ensure the petitioner's return and protect prosecution interests; the Court specified detailed conditions accordingly.

Final Conclusion: The petition under Section 482 Cr.P.C. was allowed in part: the court held that pendency of the earlier challenge, alleged non-cooperation and the merits of allegations did not bar travel; the lapse of earlier dates did not extinguish the cause; the petitioner's pleaded grounds (family reunion, medical need and preservation of U.S. permanent residency) could be considered; and permission to travel abroad for one month was granted subject to specified conditions (substantial sureties, undertaking, specified dates within a two month window, release and return of passport, prohibition on visiting other countries, and other safeguards to secure presence for trial).