TaxTMI Updates e-Newsletter
Dec 06,2022

Summary order. Writ petition dismissed as withdrawn as the amount recovered during the pendency of the appeal has been reversed.

Anticipatory bail - bailable offence under GST for evasion up to Rs.5 crore - cooperation with investigation - custodial requirement not necessary where investigation complete - conditions under Section 438(2) Cr.P.C.

Anticipatory bail - bailable offence under GST for evasion up to Rs.5 crore - cooperation with investigation - conditions under Section 438(2) Cr.P.C. - Grant of anticipatory bail to the petitioner in FIR No.0394 dated 22.07.2019. - HELD THAT: - The Court examined the allegations that the petitioner and others caused loss to the Government exchequer by claiming false input tax credit, and noted the counsel's submission that evasion under the GST Act up to Rs.5 crore is a bailable offence. The petitioner had joined the investigation, surrendered his laptop, voice sample and signature samples to the investigating agency, and those materials were sent to the FSL though reports were pending. The State did not dispute the petitioner's cooperation and indicated that he was not required for further investigation. Having regard to the nature of the offence as contended (amount within the threshold indicated) and the petitioner's cooperation such that custodial interrogation was not shown to be necessary, the Court concluded that anticipatory bail was appropriate in the circumstances.

Interim anticipatory bail granted on 27.04.2022 is made absolute, subject to the conditions envisaged under Section 438(2) Cr.P.C.

Final Conclusion: Petition allowed; interim anticipatory bail converted into absolute anticipatory bail subject to the statutory conditions under Section 438(2) Cr.P.C., in view of the bailable character of the offence as contended and the petitioner's cooperation with the investigation.

Principles of natural justice - speaking order doctrine - non-communication of reasons / absence of reasons - cancellation of GST registration - quashing for failure to assign reasons - right to reasonable opportunity of hearing

Non-communication of reasons / absence of reasons - principles of natural justice - quashing for failure to assign reasons - Validity of the show cause notice dated 28.2.2022, the cancellation order dated 9.3.2022, the order rejecting revocation dated 26.4.2022 and the appeal order dated 12.10.2022 in view of absence of reasons and breach of natural justice. - HELD THAT: - The Court held that reasons are the "heart and soul" of an order and their non-communication amounts to denial of a reasonable opportunity of hearing and results in miscarriage of justice. Applying settled principles that a quasi-judicial authority must record cogent reasons and that absence of reasons renders an order unsustainable, the Court found that the show cause notice and subsequent orders did not disclose reasons or reflect application of mind. Reliance was placed on the decision in Aggarwal Dyeing and Printing Works , which articulates the necessity of speaking orders and recording of reasons as integral to fairness, transparency and judicial review. Given the absence of reasons and failure to afford effective opportunity to meet the case against the petitioner, the impugned notice and orders could not stand and were required to be quashed.

Show cause notice dated 28.2.2022, cancellation order dated 9.3.2022, revocation-rejection order dated 26.4.2022 and appeal order dated 12.10.2022 quashed for failure to assign reasons and violation of principles of natural justice.

Right to reasonable opportunity of hearing - speaking order doctrine - cancellation of GST registration - Remedial course to be followed after quashing - whether fresh notice with particulars and opportunity should be afforded and speaking order passed on merits. - HELD THAT: - The Court declined to decide the merits and directed remedial action: respondent No.2 is at liberty to issue a fresh notice incorporating particulars and reasons, to provide the petitioner a reasonable opportunity to file objections/reply with documents relied upon, and thereafter to pass an appropriate speaking order after independent application of mind. The direction preserves the petitioner's right to be heard and mandates that the authority record cogent reasons in any fresh decision, consistent with the principles set out in the quoted precedent and the Court's finding on procedural infirmity.

Matter remitted with liberty to respondent No.2 to issue fresh notice with particulars and reasons, afford reasonable opportunity of hearing, and pass an appropriate speaking order on merits; no adjudication on merits by this Court.

Final Conclusion: Writ petition allowed; impugned show cause notice and consequential orders quashed for failure to assign reasons and breach of natural justice, with liberty to issue fresh notice containing reasons and to decide the matter after affording the petitioner a reasonable opportunity and passing a speaking order.

Extension of time limit for export under Rule 96A(1)(a) of CGST Rules, 2017 - exemption under Notification No. 41/2017-Integrated Tax (Rate) dated 23.10.2017 - liability under Letter of Undertaking (LUT) for export transactions - refund or reversal of voluntarily paid Integrated GST - writ jurisdiction in disputes between State entities and suppliers - interim protection against coercive recovery steps

Extension of time limit for export under Rule 96A(1)(a) of CGST Rules, 2017 - exemption under Notification No. 41/2017-Integrated Tax (Rate) dated 23.10.2017 - liability under Letter of Undertaking (LUT) for export transactions - Effect of the competent authority's grant of extension of time for specified export invoices on the petitioner's challenge to IGST demands arising from delayed exports. - HELD THAT: - The competent CGST authority granted post-facto extension of the time limit for export in respect of seven export invoices under the scope of Rule 96A(1)(a) of the CGST Rules, 2017. The core grievance of the petitioner concerned incidence of IGST liability arising from exports not completed within the specified period under the exemption notification; had the extension not been granted the concessional treatment availed under LUT would have become liable to payment. Since the competent authority has now extended the time for the specified invoices, the dispute concerning those invoices no longer survives before this Court. The Court accordingly observed that the petitioner should pursue refund or reversal of the voluntary tax payments with its jurisdictional GST authority; the Court declined to adjudicate the claim for refund on merits and refrained from commenting on the correctness of the claim, leaving such determination to the concerned GST authority. [Paras 7, 10]

Grant of extension by the competent CGST authority in respect of seven export invoices renders the petitioner's challenge with respect to those invoices infructuous; petitioner directed to seek refund/reversal before its jurisdictional GST authority and writ petition disposed of.

Writ jurisdiction in disputes between State entities and suppliers - interim protection against coercive recovery steps - refund or reversal of voluntarily paid Integrated GST - Consequences for interim relief and further proceedings following development that rendered the principal grievance academic. - HELD THAT: - Although interim protection against coercive steps had been granted earlier, the subsequent administrative decision granting extension of time for export altered the legal position. In view of that administrative decision, the Court found no remaining contentious issue requiring further judicial intervention and therefore disposed of the writ petition. The Court expressly declined to decide or comment upon the merits of any refund or reversal claim, which must be determined by the petitioner's jurisdictional GST authority. Pending interlocutory applications were closed. [Paras 10]

Earlier interim protection stands supervened by the administrative grant of extension; the writ petition is disposed of and pending interlocutory applications are closed, with the petitioner to approach the jurisdictional GST authority for refund or reversal.

Final Conclusion: The grant of post-facto extension of the export time limit by the competent CGST authority in respect of specified export invoices removes the immediate cause of the petition; the writ petition is disposed of as infructuous in respect of those invoices, the petitioner being relegated to seek refund or reversal of voluntarily paid IGST before its jurisdictional GST authority, and the Court declines to adjudicate the refund claim on merits.

Qualification of activity as 'job work' under the meaning of 'job work' under section 2(68) of the CGST Act - control and possession of production plant - lease agreement/Build-Own-Operate (BOO) arrangement - operation and maintenance charges and invoicing - absence of specific job work agreement and job work charges in invoices

Qualification of activity as 'job work' under the meaning of 'job work' under section 2(68) of the CGST Act - control and possession of production plant - lease agreement/Build-Own-Operate (BOO) arrangement - absence of specific job work agreement and job work charges in invoices - The operations carried out by M/s Praxair for manufacture of industrial gases at the plant within the appellant's refinery do not qualify as 'job work'. - HELD THAT: - On examination of the lease and O&M agreements for the hydrogen and nitrogen plants, the Appellate Authority found that the production plant was demised to the lessee (the appellant) for a period of 15 years and vacant physical and peaceful possession was handed over to the lessee. The contractor (Praxair) performed operation and maintenance under the specific control of the appellant and the contracts did not evidence separate job work agreements or invoicing of job work charges. The Authority contrasted the present facts with earlier AAR decisions relied upon by the appellant, noting that those cases involved express job work agreements and invoices reflecting job work charges; such features are absent here. In view of the lease of the plant and absence of contractual and invoicing elements characteristic of job work, the activity was held to be a lease/O&M arrangement and not job work within the statutory concept adopted by the Authority. [Paras 6]

The activity is not 'job work' and is a lease/O&M arrangement where Praxair has no control and possession indicative of a job work relationship.

Operation and maintenance charges and invoicing - absence of specific job work agreement and job work charges in invoices - The question whether payments under the contract will attract GST as applicable to job work is not maintainable in view of the finding that the activity is not job work. - HELD THAT: - The AAR had declined to treat the transactions as job work and accordingly treated the subsidiary question on applicability of GST as applicable to job work as not maintainable. The Appellate Authority agreed with that approach: because there is no job work relationship on the facts and no invoiced job work charges, there is no basis to treat the payments as consideration for job work services subject to the job work tax treatment. [Paras 3, 6]

The subsidiary question on GST applicability as job work is not maintainable and does not arise once the activity is held not to be job work.

Final Conclusion: The Appellate Authority for Advance Ruling confirms and upholds the Odisha AAR order No. 03/ODISHA-AAR/2021-22 dated 15-12-2021 and dismisses the appeal of M/s Indian Oil Corporation Limited; the transactions are not 'job work' and the question of GST as applicable to job work does not arise.

Supply under Section 7 (three limbs: form of supply, consideration, course or furtherance of business) - Supply of food as service under Schedule II (clause 6) - Valuation of taxable supply between related persons (Rule 28; Rule 30; Rule 31) - Employer-employee relationship as related persons for valuation - Input Tax Credit restriction for canteen services (supply classified under SAC 996333 attracting concessional rate without ITC) - Exclusion of employer-to-employee services under Schedule III not attracted where consideration is recovered

Supply under Section 7 (three limbs: form of supply, consideration, course or furtherance of business) - Supply of food as service under Schedule II (clause 6) - Exclusion of employer-to-employee services under Schedule III not attracted where consideration is recovered - Whether the subsidized deductions from employees for canteen meals amount to a 'supply' by the applicant under Section 7 of the CGST/KGST Act, 2017. - HELD THAT: - The Authority examined the three limbs of 'supply' under Section 7(1)(a): (i) form of supply, (ii) consideration, and (iii) in the course or furtherance of business. The applicant operates a canteen within factory premises (mandated by the Factories Act) and collects predetermined amounts by way of salary deductions (Rs.50 per month for payroll/union employees; Rs.10 per meal for contract employees), reflecting an agreed charging mechanism and reciprocal obligations. The contention that there is no legal intention to contract with employees was rejected on facts: the applicant runs the canteen, charges are pre decided and deducted, and therefore a contractual relationship is established. The definition of 'consideration' was held to include the payments recovered from employees; adequacy of consideration is irrelevant. The provision of canteen services was held to be incidental to and in furtherance of the applicant's manufacturing business-facilitating production by preventing loss of time-thus satisfying the 'business' limb. The Authority further relied on Schedule II, clause 6, which treats supply of food or drink for consideration as a supply of service. The applicant's reliance on Schedule III (services by employee to employer) and on press release guidance was held inapplicable because the supplies in question are from employer to employee for consideration and not free of charge. Consequently, the provision of subsidized meals with salary deductions constitutes a taxable supply of canteen services under Section 7(1)(a) and Schedule II, clause 6. [Paras 11, 13, 14, 15]

The subsidized deductions made from employees for canteen meals amount to a 'supply' of canteen service by the applicant under Section 7 of the CGST/KGST Act, 2017.

Valuation of taxable supply between related persons (Rule 28; Rule 30; Rule 31) - Employer-employee relationship as related persons for valuation - On what value GST is to be discharged for the canteen supplies made to employees by the applicant. - HELD THAT: - Employees are 'related persons' to the employer under the Explanation to Section 15(1)(a)(iii). Section 15(1) (transaction value for unrelated parties) is therefore not applicable. As open market value or value of like kind and quality is not available from the facts, the valuation must follow Rule 28 read with Rule 30 or, if applicable, Rule 31 of the CGST Rules. Rule 30 provides a cost based valuation (110% of cost of provision of services) where preceding rules are inapplicable; Rule 31 permits a residual/reasonable method for services and may be opted by the supplier. The Authority held that the applicant must determine the taxable value under Rule 30 or Rule 31 at its option. [Paras 17, 18]

GST is payable on the value of the canteen supply to be determined under Rule 30 or Rule 31 of the CGST Rules, 2017 (at the applicant's option).

Input Tax Credit restriction for canteen services (supply classified under SAC 996333 attracting concessional rate without ITC) - Eligibility of ITC for input services used in supplying exempted/zero ITC supplies - Whether the applicant is eligible to avail Input Tax Credit of GST paid on the manpower supply services used to operate the canteen. - HELD THAT: - The Authority classified the applicant's activity as canteen services falling under SAC 996333. Notification granting concessional rate for such canteen services prescribes the rate at 5% without entitlement to Input Tax Credit. Given that the outward supply is a service attracting the concessional rate without ITC, the GST paid on manpower supply services used for providing the canteen facility is not eligible for credit. The applicant's contention that ITC should be available because the canteen is provided pursuant to statutory mandate and the outward supply is not a 'supply' was negatived by the Authority's finding that the activity is a supply and is covered by the no ITC notification. [Paras 19, 20, 21]

The applicant is not eligible to avail Input Tax Credit of GST paid on manpower supply services used for providing the canteen facility.

Final Conclusion: The Authority ruled that the subsidized deductions from employees for factory canteen meals constitute a taxable supply of canteen services by the employer under Section 7 and Schedule II (clause 6); GST must be discharged on the value determined under Rule 30 or Rule 31; and Input Tax Credit of GST paid on manpower services used for the canteen is not admissible because such services are classified under SAC 996333 attracting concessional rate without ITC.

Anticipatory bail - apprehension of arrest - cooperation with investigation - conditions of bail - tampering with evidence - non-departure without permission - availment of ITC without receipt of goods

Anticipatory bail - cooperation with investigation - tampering with evidence - conditions of bail - apprehension of arrest - Anticipatory bail application of the accused Raman Kumar - HELD THAT: - The court found that the accused had joined the investigation during interim protection and had supplied documents to the department. The main accused had already been granted bail and had complied with conditions of that order. There was no material on record showing misuse of interim protection by the present applicant or non-cooperation in the investigation. Although the department alleged risk of tampering with evidence and referred to substantial alleged tax-credit irregularities, the court observed that those concerns did not outweigh the facts of cooperation and lack of adverse conduct by the applicant. Balancing the liberty interest and the department's investigative concerns, the court admitted the applicant to anticipatory bail while imposing specific conditions intended to address the department's apprehensions, including obligations to join the investigation, restrictions on leaving the country without court permission, prohibition on inducement or threats to witnesses, and prohibition on tampering with evidence.

Anticipatory bail granted to Raman Kumar on furnishing a personal bond of Rs. 50,000 with two sureties of like amount and subject to conditions that he join the investigation when required, not leave the country without court permission, not induce or threaten persons acquainted with the facts, and not tamper with evidence.

Final Conclusion: The anticipatory bail application of Raman Kumar is allowed and stands disposed of, subject to the specified bond and conditions; a copy of the order is to be given dasti.

Notice under section 143(2) of the Income-tax Act - reopening under section 148 of the Income-tax Act - mandatory service of notice subsequent to filing return in response to notice under section 148 - time barred notice and limitation under section 143(2) - assessment void ab initio for non compliance with mandatory notice requirement

Notice under section 143(2) of the Income-tax Act - reopening under section 148 of the Income-tax Act - mandatory service of notice subsequent to filing return in response to notice under section 148 - assessment void ab initio for non compliance with mandatory notice requirement - Whether issuance and service of a notice under section 143(2) is mandatory after the assessee files a revised return in response to a notice under section 148 and consequence of failure to issue such notice. - HELD THAT: - The Tribunal applied binding and persuasive decisions of higher courts and earlier benches which hold that a notice under section 143(2) is mandatory where a return is filed pursuant to a notice under section 148 and that non issuance is not a curable procedural irregularity. In the present proceedings the assessee filed a revised return dated 12.10.2012 in response to notice dated 27.03.2012 under section 148. The Assessing Officer accepted but treated the revised return as non est and proceeded to frame assessment u/s 143(3) without issuing a fresh notice u/s 143(2) after the revised return was on record. The Tribunal concluded that on acceptance of the revised return filed in response to the section 148 notice the AO was under an obligation to issue notice u/s 143(2) before proceeding with assessment; failure to do so rendered the assessment unsustainable. Relying on authorities and applying the statutory scheme, the Tribunal quashed the assessment orders for the relevant years on this ground and declined to decide merits of other contentions as they became infructuous once the assessments were set aside. [Paras 9, 10]

Assessment orders framed without issuing notice under section 143(2) after the revised return filed in response to section 148 are void; the appeals for AYs 2005-06 and 2006-07 are allowed and the assessments quashed.

Notice under section 143(2) of the Income-tax Act - time barred notice and limitation under section 143(2) - assessment void ab initio for non compliance with mandatory notice requirement - Whether a notice under section 143(2) issued beyond the statutory period (time barred) vitiates the assessment and renders it null and void. - HELD THAT: - For AY 2007 08 the Tribunal concurred with the Commissioner that the statutory requirement to issue notice under section 143(2) within the prescribed time was not complied with. The record did not contain an office copy evidencing issuance of a timely section 143(2) notice; the notice dated 12.08.2009 was held to be issued after the limitation period and therefore barred. The Commissioner had examined the assessment record, noted the absence of proof of timely service and, applying established precedents, found that service of a section 143(2) notice beyond the prescribed period cannot be cured and vitiates the proceedings. The Tribunal found no reason to interfere with that conclusion and dismissed the Revenue's appeal. [Paras 11, 12, 13, 14]

The notice under section 143(2) issued beyond the statutory period is time barred; the assessment for AY 2007-08 is null and void and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal held that the statutory requirement to issue and serve a notice under section 143(2) is mandatory where a return is filed in response to a section 148 notice and that a notice under section 143(2) issued beyond the prescribed period is time barred; consequently the assessments for AYs 2005-06 and 2006-07 were quashed and the Revenue's appeal for AY 2007-08 was dismissed.

Capital expenditure versus revenue expenditure - enduring benefit test - integral part of the profit-earning process - expenditure in the assessee's existing line of business - effect of abandonment of project on classification of expenditure - treatment of capital work in progress as revenue expenditure on abandonment

Capital expenditure versus revenue expenditure - expenditure in the assessee's existing line of business - effect of abandonment of project on classification of expenditure - The correctness of ITAT's allowance of expenditure incurred on development of a new product as revenue expenditure instead of capital expenditure for the assessment years 2006-07 and 2007-08. - HELD THAT: - The Court applied established principles governing classification of expenditure, observing that the "enduring benefit" or "asset creation" test is not conclusive and must be applied in the factual matrix of each case. If expenditure facilitates the carrying on of existing business operations and constitutes an integral part of the profit-earning process rather than the acquisition of a permanent asset, it is revenue in nature. The Court followed the distinction in Indo Rama Synthetic (I) Ltd., namely that expenditure for starting a new business is capital even if the project fails, whereas expenditure incurred in the course of the assessee's existing business (including expansion) is to be treated as business expenditure; whether a new asset came into existence is a relevant factor. Applying these principles, the Court found that the assessee was already engaged in software development, the disputed expenditure related to that existing line of business, the new product was abandoned and no enduring asset came into existence; accordingly the expenditure was revenue in nature and rightly allowed by the ITAT. [Paras 10, 11, 12, 13, 14]

ITAT's decision to treat the expenditure as revenue expenditure is upheld and the appeals are dismissed.

Final Conclusion: The High Court dismissed the appeals, holding that expenditure on development of the abandoned software project was revenue in nature since it related to the assessee's existing business and did not result in creation of an enduring asset; ITAT's allowance of the deduction is sustained.

Faceless assessment - personal hearing through video conferencing - principles of natural justice - failure to afford adequate opportunity of hearing - assessment under Section 143(3) - remand for fresh consideration

Faceless assessment - personal hearing through video conferencing - principles of natural justice - failure to afford adequate opportunity of hearing - assessment under Section 143(3) - Respondents failed to afford the petitioner the statutory and constitutional right to a hearing under the faceless assessment procedure, amounting to denial of principles of natural justice. - HELD THAT: - The petitioner filed return for AY 2020-21 and was issued notices under Sections 143(2) and 142(1); a show-cause notice under the faceless scheme directed filing of reply by 10.02.2022 and permitted request for personal hearing by video conferencing. The petitioner sought extension and on 19.02.2022 attempted to upload her reply and separately requested a video-conferencing hearing through the grievance portal, but received no response and found the e-portal closed. The assessment, demand and penalty proceedings were thereafter concluded without responding to the petitioner's requests for extension or for an online personal hearing. The Court found that, in these circumstances, the respondents acted arbitrarily by not granting or at least formally responding to the petitioner's requests and thereby failed to afford a fair hearing as envisaged under the faceless assessment procedure and the principles of natural justice. The absence of a response to the adjournment request and to the specific request for a VC hearing deprived the petitioner of the statutory opportunity to make oral submissions before finalizing the assessment. [Paras 6, 7, 8]

Findings recorded that the petitioner was not afforded a fair hearing in breach of the faceless assessment procedure and principles of natural justice; the assessment, notice of demand and penalty proceedings are vitiated on that ground.

Remand for fresh consideration - personal hearing through video conferencing - Assessment, demand and penalty proceedings were set aside and the matter was remanded for fresh consideration after affording the petitioner a personal hearing by video conferencing. - HELD THAT: - In view of the failure to afford a hearing, the Court set aside the impugned assessment order, notice of demand and show-cause/penalty notices and directed the Face Less Assessment Centre, Delhi to grant the petitioner an opportunity of personal hearing via video conferencing, to consider the petitioner's response and then pass a fresh order. The direction requires the authority to hear the petitioner on merits afresh and to reconsider the assessment and consequential notices in light of any submissions made during that hearing. [Paras 9]

Impugned assessment order, notice of demand and penalty proceedings set aside; authority directed to provide VC hearing and pass a fresh order after considering petitioner's response.

Final Conclusion: Writ petition allowed: impugned assessment, demand and penalty proceedings set aside for failure to afford a video conference personal hearing under the faceless assessment procedure; matter remitted to the Face Less Assessment Centre, Delhi to afford the petitioner a VC hearing and to pass a fresh order after considering her submissions.

Reopening notice under Section 148-A(1)(b) of the Income Tax Act, 1961 - Order under Section 148-A(1)(d) of the Income Tax Act, 1961 - Prematurity of challenge to Section 148-A orders - remedy at reassessment under Sections 147/148 - Binding effect of Supreme Court dismissal in SLP on interlocutory legality - Opportunity to urge all grounds of challenge at the stage of reassessment proceedings

Reopening notice under Section 148-A(1)(b) of the Income Tax Act, 1961 - Order under Section 148-A(1)(d) of the Income Tax Act, 1961 - Prematurity of challenge to Section 148-A orders - remedy at reassessment under Sections 147/148 - Binding effect of Supreme Court dismissal in SLP on interlocutory legality - Validity of challenging notices issued under Section 148-A(1)(b) and consequential orders under Section 148-A(1)(d) at the interlocutory stage by writ petitions - HELD THAT: - The Court considered earlier coordinate decisions of a Division Bench and the order of the Supreme Court in the dismissed SLP arising from Anshul Jain, which held that notices under Section 148-A(1)(b) and orders under Section 148-A(1)(d) may be objected to before the Assessing Officer in the reassessment proceedings and that merits, including objections to issuance, can be agitated at the stage of challenge to the consequential order passed under Section 148. Having examined authorities and submissions, this Court held that the Supreme Court's order is a binding precedent for the purpose of the present petitions and that the various grounds urged by petitioners (limitation, non-consideration of objections, absence of personal hearing, non-application of mind, and similar contentions) are not precluded from being raised; rather they are to be urged and considered at the stage when an order is passed under Section 147 read with Section 148 in the reassessment proceedings. The Court emphasised that all such grounds will have to be dealt with by the appropriate authority in accordance with law when so raised.

Challenges to the notices under Section 148-A(1)(b) and orders under Section 148-A(1)(d) are premature and may be agitated during reassessment proceedings; the writ petitions are disposed of and interim orders are vacated.

Final Conclusion: Writ petitions challenging notices under Section 148-A(1)(b) and consequent orders under Section 148-A(1)(d) are disposed of as premature; petitioners may raise all grounds of challenge before the Assessing Officer in the reassessment proceedings under Sections 147/148, and all interim injunctions previously granted are vacated.

Reopening of assessment under section 148 - reason to believe - escapement of income - development agreement versus transfer within the meaning of section 2(47)(v) - chargeability of capital gains in the year of transfer - prima facie material for forming belief

Reopening of assessment under section 148 - reason to believe - escapement of income - development agreement versus transfer within the meaning of section 2(47)(v) - chargeability of capital gains in the year of transfer - prima facie material for forming belief - Validity of the notice dated 31.03.2021 under section 148 read with section 147 for assessment year 2015-16 and validity of the order rejecting the assessee's objections. - HELD THAT: - The assessing officer's reasons recorded relied on information from search proceedings in respect of third parties and asserted that cash and cheque payments were made by Gokulesh Infra to the assessee, leading to alleged escapement of income in assessment year 2015-16. The Court examined whether there was relevant material to form a reasonable belief that income had escaped assessment in 2015-16 and whether the receipts, if any, gave rise to taxable capital gains in that year. The assessee had undisputedly offered and been assessed for long-term capital gains arising from the same land transaction in assessment year 2016-17 after scrutiny under section 143(3). The Court applied the legal principle that capital gains are chargeable in the previous year in which the transfer takes place and that a development agreement, where title remains with the owner until execution of sale deed, does not necessarily amount to a transfer under section 2(47)(v) so as to attract tax in an earlier year. The reasons recorded by the assessing officer did not contain tangible material prima facie showing that the assessee had received unreported cash in 2015-16 which resulted in escapement of income chargeable in that year; the material relied upon was insufficient to establish the required rational and intelligible nexus between the information and a belief of escapement for 2015-16. On these grounds the opinion formed by the assessing officer was held to be misconceived in fact and law and therefore the notice under section 148 and the order rejecting objections were without foundation. [Paras 5, 6, 7]

Notice dated 31.03.2021 under section 148 and the order dated 08.12.2021 rejecting objections were set aside as the reopening was unsustainable for assessment year 2015-16.

Final Conclusion: The petition is allowed: the reassessment notice issued under section 148 for assessment year 2015-16 and the order rejecting objections are quashed because the material did not justify a reasonable belief of escapement in 2015-16 and the capital gains were chargeable and offered in assessment year 2016-17.

Maintainability of writ petition against a show cause notice - availability of alternative efficacious remedy by way of appeal under Section 246 of the Income tax Act - deemed issuance of pre amendment notices as show cause notices under section 148A - limitation under section 149 of the Income tax Act

Maintainability of writ petition against a show cause notice - availability of alternative efficacious remedy by way of appeal under Section 246 of the Income tax Act - Whether the writ petition under Article 226 is maintainable against the show cause notices issued to the petitioner. - HELD THAT: - The Court upheld the preliminary objection that a writ petition challenging a show cause notice is not maintainable where an alternative efficacious remedy in the form of an appeal is available. The authorities have power to consider grounds of jurisdiction and limitation in the appellate forum under Section 246, and the law in Kunishetty Satyanarayan was held to preclude writ relief against such notices. Consequently, the High Court declined to entertain the petition and directed the petitioner to avail the statutory remedy. [Paras 3, 8, 9]

Writ petition against the show cause notices is not maintainable; petitioner must avail remedy by way of appeal.

Deemed issuance of pre amendment notices as show cause notices under section 148A - limitation under section 149 of the Income tax Act - Whether the Court should interfere with the impugned notices and orders issued pursuant to the modified directions of the Hon'ble Supreme Court in Ashish Agarwal. - HELD THAT: - The Court observed that the impugned notices were reissued by the tax authorities in accordance with the modified directions of the Supreme Court in Ashish Agarwal, whereby pre amendment notices issued under section 148 were to be treated as show cause notices under section 148A and procedural directions for providing material and further action were laid down. In view of those directions and the availability of appellate remedy, this Court refrained from interfering with the notices and orders issued pursuant to the Supreme Court's modification. The Court also noted the continued availability of all defences, including those under section 149, to the assessee. [Paras 7, 9]

Court refrained from interfering with the impugned notices/orders issued pursuant to the Supreme Court's directions.

Final Conclusion: The petition is dismissed as not maintainable; liberty granted to the petitioner to avail the statutory remedy available under law.

Writ of Mandamus - appeal under Section 246A of the Income Tax Act - best judgment assessment - dismissal of petition as academic or infructuous - liberty to pursue statutory remedies

Writ of Mandamus - dismissal of petition as academic or infructuous - liberty to pursue statutory remedies - Petition seeking a direction to the appellate authority to pass the final order in Appeal No.3/11224 of 2019-20 - HELD THAT: - The petitioner sought a writ of mandamus directing the first respondent to pass the final order in the pending appeal arising from the best judgment assessment for Assessment Year 2017-18. The respondents informed the Court that the appellate authority had, however, passed the final order in W.A.No.3/11224 of 2019-20 on 21.10.2022. In view of the appellate order having been passed, the relief sought in the writ petition became academic and there was no longer any live controversy requiring mandamus. The Court therefore found that nothing survives for adjudication and dismissed the petition while preserving the petitioner's right to pursue available statutory remedies. [Paras 4, 6]

Writ petition dismissed as infructuous in view of the final order passed on 21.10.2022; petitioner granted liberty to pursue remedies in the manner known to law; no costs.

Final Conclusion: The writ petition for issuance of mandamus was dismissed as academic because the appellate authority had passed the final order on 21.10.2022; petitioner is left free to pursue available statutory remedies.

Reassessment notice issued to deceased - Notice to legal representative and service on legal heir - Principles of natural justice in tax proceedings - Validity of reassessment under Section 148 of the Income Tax Act - Validity of assessment order under Section 147 read with Section 144 of the Income Tax Act

Reassessment notice issued to deceased - Notice to legal representative and service on legal heir - Principles of natural justice in tax proceedings - Validity of reassessment under Section 148 of the Income Tax Act - Validity of assessment order under Section 147 read with Section 144 of the Income Tax Act - Impugned reassessment notice and subsequent assessment order issued to the deceased assessee without prior notice to her legal representative are invalid. - HELD THAT: - The Court examined earlier assessment proceedings for AY 2015-16 and records show that the Department had been intimated of the assessee's death and had passed an assessment order addressing the assessee through her legal representative. Despite that, the reassessment notice under Section 148 was issued to the deceased assessee and no prior notice was served on the legal heir before initiating reassessment. The departmental plea of ignorance of the assessee's death was found factually incorrect. Because notice for reopening was not directed to or served upon the legal representative/legal heir, the reassessment and the assessment order were held to violate the requirements of service and the principles of natural justice applicable to tax proceedings, rendering the proceedings invalid and unsustainable.

Reassessment notice dated 23.03.2021 and assessment order dated 30.03.2022 issued against the deceased assessee are declared invalid and struck down.

Final Conclusion: Writ petition allowed; the reassessment notice and assessment order passed against the deceased assessee without notice to her legal representative are set aside; no order as to costs.

Principles of natural justice - adequacy of notice to reply to a showcause notice - sufficiency of time to explain/respond to showcause - effective alternative remedy before the Appellate Authority - jurisdiction under Article 226 of the Constitution of India - exclusion of limitation period during pendency of writ proceedings

Principles of natural justice - sufficiency of time to explain/respond to showcause - adequacy of notice to reply to a showcause notice - Whether the assessment order issued under Section 147 is vitiated for denial of natural justice by reason of the short time given to file objections to the showcause notice. - HELD THAT: - The Court found that, although the time granted by the department to file objections was very short, the petitioner availed the opportunity and filed objections along with supporting documents within the time allowed. The assessing officer considered those objections on merits and rejected them in the assessment order. On these facts the Court held there was no infringement of the principles of natural justice warranting interference under Article 226. The Court emphasised that adequacy of notice and time is a question of fact to be determined in each case and that mere shortness of time does not automatically vitiate proceedings where an effective reply was filed and considered. [Paras 6, 7, 9]

No vitiation of the assessment order for denial of natural justice; petitioner filed an effective reply which was considered, and therefore the writ petition cannot be sustained on this ground.

Jurisdiction under Article 226 of the Constitution of India - effective alternative remedy before the Appellate Authority - Whether the High Court should interfere under Article 226 with the merits of the assessment when an effective statutory remedy by appeal is available. - HELD THAT: - The Court reiterated that its extraordinary writ jurisdiction does not permit reappreciation of the merits of an assessment order where an effective remedy exists before the appellate authority. Having found that the petitioner had filed and had his objections considered, the Court held that the proper course for any grievance on the merits of the assessment is to pursue the statutory appellate remedy rather than to seek interference under Article 226. [Paras 7]

The petitioner should pursue the statutory appeal; the High Court will not reappreciate merits of assessment under Article 226 where an effective alternative remedy exists.

Adequacy of notice to reply to a showcause notice - principles of natural justice - Whether the Court will entertain writ petitions in cases where the department adopts a pattern of granting minimal time to assessees to reply to showcause notices. - HELD THAT: - The Court observed a disturbing pattern of minimal time being granted by the department and reiterated the principle that reasonable time must be afforded to enable collection and verification of materials, consultation and preparation of an effective reply. The Court held that where minimal time effectively denies an opportunity to reply, it will be justified in exercising jurisdiction under Article 226 to interfere. However, adequacy must be judged on the facts of each case; in the present matter the petitioner had an effective opportunity and hence interference was not warranted. [Paras 8]

The Court may interfere under Article 226 where minimal time effectively denies opportunity to reply, but adequacy of notice is a fact-sensitive inquiry; no interference in the present case.

Exclusion of limitation period during pendency of writ proceedings - Whether the period during which the writ petition was pending before the High Court should be excluded for computing the limitation for preferring the statutory appeal. - HELD THAT: - The Court directed that the period during which the petitioner prosecuted the writ petition from 26/4/2022 until receipt of a copy of this judgment shall be excluded in calculating the limitation for filing the statutory appeal, thereby reserving liberty to the petitioner to prefer the appeal within the residual period as so computed. [Paras 10]

Period of pendency of writ proceedings from 26/4/2022 until receipt of judgment is excluded for computing limitation for the statutory appeal.

Final Conclusion: Writ petition dismissed; no infringement of natural justice found on the facts as petitioner filed and had his objections considered; petitioner to pursue statutory appeal with the period of pendency of the writ (from 26/4/2022 until receipt of this judgment) excluded for limitation purposes.

Addition under section 69A - unexplained cash and burden to prove source - reliability of cash book entries and corroborative evidence - afterthought recording of transactions - deletion of addition by appellate authority

Addition under section 69A - unexplained cash and burden to prove source - reliability of cash book entries and corroborative evidence - afterthought recording of transactions - Whether the addition of Rs. 1,00,00,000 made as unexplained money under section 69A was rightly deleted by the Commissioner (Appeals). - HELD THAT: - The Tribunal found on the material on record that cash of Rs. 1 crore was seized from an employee who stated it was handed over by the assessee's director for purchase of husk, but no contemporaneous documentary proof or authorization was produced. The assessee furnished incomplete cash book extracts and failed to produce audited financial statements and bank statements to establish opening cash-in-hand or the source of the seized cash. Withdrawals shown in account statements before the Tribunal did not establish that the cash seized was the same as amounts allegedly withdrawn, nor was there evidence that the withdrawals were actually carried out by the assessee for the asserted purpose. The Tribunal applied the principle that when unexplained cash is found in possession of the assessee, the onus lies on the assessee to satisfactorily prove the source; mere reflection of the amount in books, without corroborative evidence, is insufficient. The appellate deletion was held to be based on reliance on uncorroborated statements and cash book entries which could be an afterthought; accordingly the Tribunal concluded the Assessing Officer was justified in making the addition and that the CIT(A) erred in deleting it. [Paras 11, 12, 13, 14, 15]

Deletion of the addition of Rs. 1,00,00,000 by the Commissioner (Appeals) set aside; addition made by the Assessing Officer under section 69A sustained.

Final Conclusion: The Revenue appeal is allowed; the Tribunal sustains the addition of unexplained cash under section 69A for Assessment Year 2017-18 and sets aside the CIT(A)'s deletion for lack of satisfactory proof of source and inadequate corroborative evidence.

Deduction of tax at source - penalty under section 271C - payments to government authority not requiring TDS - statutory obligation to pay External Development Charges - bonafide belief / absence of contumacious conduct - reliance on coordinate-bench precedent

Deduction of tax at source - payments to government authority not requiring TDS - penalty under section 271C - bonafide belief / absence of contumacious conduct - reliance on coordinate-bench precedent - Sustainability of penalty under section 271C for not deducting TDS on EDC payments made to HUDA for AY 2017-18. - HELD THAT: - The Tribunal held that the penalty could not be sustained. It followed coordinate-bench decisions which found that EDC payments were directed by the Government (DTCP) to be made to HUDA and were not payments pursuant to any contractual privity with HUDA such that the assessee was obliged to deduct tax at source. The Bench took note of contemporaneous ambiguity in the law prior to later clarifications and of DTCP instructions indicating that EDC receipts were deposited in the Consolidated Fund of the State, which supported the assessee's bona fide belief that TDS was not required. In the absence of contumacious conduct and having regard to the reasonable cause arising from governmental direction and conflicting contemporaneous positions, imposition of penalty under section 271C (which targets deliberate/defaulting conduct) was held unjustified. The Tribunal therefore set aside the penalty, applying and following the reasoning of the earlier coordinate-bench precedents. [Paras 8, 9, 10]

Impugned penalty under section 271C deleted; appeal allowed.

Final Conclusion: Following coordinate-bench precedents and on the facts that EDC payments were government-directed, not contractual payments to HUDA, and in view of bona fide belief and absence of contumacious conduct, the Tribunal allowed the appeal and set aside the penalty imposed for AY 2017-18.

Taxability of share premium under section 56(2)(viib) - determination of fair market value of unquoted shares under Rule 11UA - reliability of valuer's report where material inputs are post valuation date - acceptance of valuation report prepared under Rule 11UA(2)(b)

Taxability of share premium under section 56(2)(viib) - determination of fair market value of unquoted shares under Rule 11UA - Whether the addition made by the Assessing Officer under section 56(2)(viib) in respect of share premium received is sustainable. - HELD THAT: - The Tribunal examined the facts that the assessee company was incorporated on 07.11.2012 and issued shares at a premium on 16.11.2012. The Assessing Officer invoked section 56(2)(viib) and Rule 11UA, treating the premium received as consideration in excess of fair market value. The assessee later produced a valuation report dated 14.03.2018. However, the Tribunal found on the material before it that the valuation relied upon the net worth of two step-down subsidiaries which were acquired after the valuation cut-off date (acquisitions on 29.12.2012 and 10.01.2013, whereas valuation date was 16.11.2012). Those post-cut-off acquisitions were not controverted by the assessee. Because the valuer's computation incorporated entities that did not form part of the assessee's assets on the valuation date, the Tribunal concluded that the correct fair market value as on 16.11.2012 remained the face value of the shares (Rs.10 for equity and Rs.100 for preference). On that basis, the premium charged (Rs.2.50 per equity share and Rs.25 per preference share) was in excess of fair market value and taxable under section 56(2)(viib). The Tribunal therefore held that the Assessing Officer's addition was correctly made and confirmed it. [Paras 8, 10, 11, 13, 15]

Addition of Rs.8.05 Cr made under section 56(2)(viib) is confirmed; Revenue's grounds 1-4 are allowed.

Reliability of valuer's report where material inputs are post valuation date - acceptance of valuation report prepared under Rule 11UA(2)(b) - Whether the valuation report dated 14.03.2018 obtained by the assessee could be accepted to negate the addition. - HELD THAT: - Although the valuation report was prepared by a registered valuer under Rule 11UA(2)(b) and later accepted by the Assessing Officer in remand proceedings, the Tribunal scrutinised the content of that report. The report incorporated the net worth of two step-down subsidiaries (Palimarwar Solar Projects Pvt. Ltd. and Manifold Agricrops Pvt. Ltd.) in deriving the per-share values. The Tribunal observed that those entities were acquired after the valuation cut-off date and thus were not part of the assessee's assets on the valuation date. As the valuer's conclusions materially relied on information (post-cut-off acquisitions) which should not have been included, the report's results could not be accepted as establishing the fair market value as on the valuation date. For that reason the later valuation could not negate the addition made under section 56(2)(viib). [Paras 9, 11, 12, 13, 15]

Valuation report dated 14.03.2018 is not acceptable for determining FMV because it relied on post-valuation-date acquisitions; the AO's addition stands confirmed.

Final Conclusion: The Revenue appeal is allowed and the addition of Rs.8.05 crore made under section 56(2)(viib) is confirmed. The assessee's cross-objection is dismissed.

Genuineness of unsecured loans and consequential disallowance of interest - onus to prove identity, creditworthiness and genuineness of lender under section 68 - compliance with notice under section 133(6) and evidentiary value of ITBA replies, confirmations, ledgers and bank statements - proportionate disallowance of interest on interest free advances where nexus between borrowed funds and advances is established - absence of incriminating material from search as a restraint on additions in unabated assessment - principle of consistency in subsequent appeals/orders in the assessee's own case

Genuineness of unsecured loans and consequential disallowance of interest - absence of incriminating material from search as a restraint on additions in unabated assessment - principle of consistency in subsequent appeals/orders in the assessee's own case - Validity of disallowance of interest paid on unsecured loans shown as borrowed from Mayur Gems, Paras Gems, Piyush Gems and P.K. Enterprises - HELD THAT: - The Tribunal examined the Assessing Officer's disallowance which rested on reports linking certain lenders to entry providers and on peak credit additions, while noting that the Assessing Officer had not made independent adverse findings on documentary evidence produced by the assessee. The ld. CIT(A) had recorded that identical loans and interest had earlier been accepted in the assessee's own case for several assessment years and there was no change in facts. The Tribunal relied on its earlier orders in the assessee's group and the principle that, in absence of incriminating material arising from search or other adverse material gathered during assessment, mere association in third party statements does not justify disallowance where the assessee has furnished confirmations, ledger accounts, PANs, bank statements and other corroborative documents discharging the onus under section 68. Applying the principle of consistency as recorded in prior decisions of the Bench in the assessee's own case, the Tribunal found no illegality in the ld. CIT(A)'s deletion of the addition. [Paras 15, 16, 17]

Addition/disallowance of interest in respect of loans from the specified lenders is deleted and the order of the ld. CIT(A) is affirmed.

Compliance with notice under section 133(6) and evidentiary value of ITBA replies, confirmations, ledgers and bank statements - onus to prove identity, creditworthiness and genuineness of lender under section 68 - Deletion of disallowance of interest paid to lender parties (including Meenahar Gems, Vijay Exports, Aavishkar Murli Agarwal and Aarav Gems) where Assessing Officer records non compliance with notices under section 133(6) - HELD THAT: - The Assessing Officer disallowed interest on the ground that the lender parties did not respond to notices under section 133(6). The assessee produced confirmations, ledger accounts, bank statements and copies of replies visible on the ITBA portal. The ld. CIT(A) examined the ITBA record and the documentary evidence and found compliance and corroboration of the transactions. The Tribunal noted that the Assessing Officer had not given any specific adverse finding controverting the documentary evidence and that similar interest payments had been accepted in earlier assessment years. On these facts the Tribunal upheld the ld. CIT(A)'s finding that the assessee had discharged the onus to prove identity and genuineness and that non compliance findings were factually incorrect; accordingly the disallowances were not sustainable. [Paras 11, 20]

Additions/disallowances of interest in respect of the said lender parties are deleted and the ld. CIT(A)'s order is affirmed.

Proportionate disallowance of interest on interest free advances where nexus between borrowed funds and advances is established - no disallowance where interest free capital/reserves are sufficient and advances pre date borrowings - Deletion of notional interest disallowance attributable to interest free loans/advances made to group concerns - HELD THAT: - The Assessing Officer disallowed a proportion of interest on the basis that the assessee had borrowed interest bearing funds while advancing interest free loans to related concerns, applying a notional disallowance. The assessee demonstrated that most advances were made prior to 2010 11 whereas the interest bearing borrowings were taken thereafter, and also showed that interest free capital/reserves far exceeded the advances. The ld. CIT(A) accepted these facts and deleted the disallowance. The Tribunal found these factual findings uncontroverted by the revenue and, in line with its earlier decision in the assessee's own case, concluded there was no direct nexus warranting proportionate disallowance. [Paras 23, 25]

Notional/proportionate disallowance of interest on interest free advances is deleted and the ld. CIT(A)'s order is affirmed.

Final Conclusion: Both revenue appeals for AY 2018 19 are dismissed: the Tribunal affirms the ld. CIT(A)'s deletions of the interest disallowances on the grounds that the assessee discharged the onus to prove genuineness and compliance by lenders, there was no adverse incriminating material from search to justify additions, and there was no nexus to sustain a notional interest disallowance on interest free advances; the Tribunal also applied consistency with earlier orders in the assessee's own case.

Validity of reopening of assessment under the proviso permitting reopening after four years only for failure to materially disclose facts - Burden of proof in respect of unexplained cash credits and adequacy of documentary evidence to establish identity, genuineness and creditworthiness of shareholders - Use of information from investigative wing as a basis for forming reason to believe for reopening

Validity of reopening of assessment under the proviso permitting reopening after four years only for failure to materially disclose facts - Use of information from investigative wing as a basis for forming reason to believe for reopening - Reopening of assessment by issuance of notice under section 148 read with section 147 was invalid and the reassessment proceedings were quashed. - HELD THAT: - The Tribunal found that the matters concerning issuance of shares, identity and creditworthiness of the subscribers and genuineness of transactions were examined in the original assessment proceedings, with summonses and specific information sought and documents produced. An addition on account of share capital and premium had already been made in the original assessment order. The proviso to the reopening provision permits reopening after four years only where there was failure by the assessee to materially disclose facts resulting in escapement of income. Here there was no omission to disclose material facts; the AO had earlier called for requisite details, the investors had responded to notices under section 133(6) and documents were on record. The subsequent receipt of information from the Investigation wing did not cure the absence of any finding of non-disclosure in the earlier proceedings. On these facts the AO had no valid basis to form a fresh belief that income had escaped by reason of nondisclosure, and the reassessment was held to be invalid and quashed. [Paras 6]

Reopening under section 147/notice under section 148 held invalid and reassessment quashed.

Burden of proof in respect of unexplained cash credits and adequacy of documentary evidence to establish identity, genuineness and creditworthiness of shareholders - Addition of share capital and share premium under section 68 (unexplained cash credit) was deleted and the appeal allowed on merits. - HELD THAT: - The Tribunal reviewed the material placed on record: bank evidences, share application forms, allotment advices, confirmations filed by creditors in response to section 133(6) notices, ITRs and audited accounts of the subscribing entities. The AO and the CIT(A) treated non production of subscribing persons in person as sufficient to sustain the addition, but the Tribunal held that where the assessee discharges the primary onus by producing documentary evidence identifying the creditors and the transactions, the burden shifts to the department to make further inquiry and record reasons if it finds the explanation unsatisfactory. Reliance was placed on precedents establishing that mere non appearance of third parties does not warrant rejection of transactions where documentary proof (including account payee banking routes and confirmations) exists. The CIT(A)'s sustained addition was held to be based on an improper appreciation of facts; factual errors in the appellate table (double-counting) were noted and the Tribunal found that the transactions were adequately explained and sustained by supporting documents. Accordingly the addition was deleted. [Paras 11]

Addition under section 68 confirmed by lower authorities set aside; addition deleted and appeal allowed on merits.

Final Conclusion: For AY 2012-13 the Tribunal quashed the reassessment as invalid for lack of any failure to disclose material facts justifying reopening after four years, and on merits directed deletion of the addition treated as unexplained cash credit; both appeals of the assessee are allowed.

Disallowance for payment to a specified person being excessive or unreasonable - section 40A(2)(a) of the Income Tax Act, 1961 - fair market value - addition under section 40A(2)(a) unsustainable without a finding that payment is excessive

Section 40A(2)(a) of the Income Tax Act, 1961 - fair market value - disallowance for payment to a specified person being excessive or unreasonable - Whether additions made by the AO under section 40A(2)(a) for alleged excessive payment in purchase of land from a specified person are sustainable. - HELD THAT: - The Tribunal found that neither the Assessing Officer nor the CIT(A) made a determination that the payment for the land was excessive or unreasonable; instead, the evidence before the authorities showed that the consideration paid corresponded to the prevailing market rate and the sale agreement disclosed the transaction value. The Tribunal held that where the payment is found to be reasonable in the businessman's perspective and no contrary finding is recorded by the authorities below, an addition under section 40A(2)(a) cannot be sustained. Applying this principle to the facts of the case, the Tribunal concluded that the payments for purchase of land were at fair market value and therefore the disallowances confirmed by the CIT(A) were not justified.

Additions under section 40A(2)(a) sustained by the authorities are set aside as the payments were at fair market value and no finding of excessive or unreasonable payment was recorded.

Final Conclusion: Both appeals are allowed; the additions made in assessment years 2014-15 and 2015-16 under section 40A(2)(a) are deleted because the payments for the land were held to be at fair market value and no finding of excess or unreasonableness was made by the authorities below.

Summary order. Special Leave Petition under Article 136 dismissed; question of law kept open for decision in an appropriate case.

Condonation of delay - Validity of DGFT notifications under the Foreign Trade (Development and Regulation) Act, 1992 - Power of the Central Government to regulate imports under Section 3(2) and to frame Foreign Trade Policy under Section 5 of the FTDR Act - Effect of FTDR Act notifications and DGFT trade notices on Customs proceedings including confiscation - Binding effect of High Court and Supreme Court decisions on statutory interpretation - Remand for fresh consideration to the Tribunal for a reasoned and speaking order

Condonation of delay - Application for condonation of delay in filing the appeals - HELD THAT: - The Court examined the affidavit filed in support of the petitions for condonation of delay and found that sufficient cause had been shown for the eight-day delay. On that basis the applications for condonation of delay were allowed and the delay in filing the appeals was condoned.

Condonation of delay allowed and the appeals admitted for hearing.

Validity of DGFT notifications under the Foreign Trade (Development and Regulation) Act, 1992 - Power of the Central Government to regulate imports under Section 3(2) and to frame policy under Section 5 of the FTDR Act - Effect of FTDR Act notifications and DGFT trade notices on Customs proceedings including confiscation - Binding effect of High Court and Supreme Court decisions on statutory interpretation - Remand for fresh consideration to the Tribunal for a reasoned and speaking order - Validity and effect of Tribunal's orders which set aside confiscation on the basis that imports below DGFT-specified minimum prices were not prohibited; whether those orders remained tenable in view of higher judicial decisions and whether the matters required rehearing - HELD THAT: - The Court observed that earlier authoritative decisions of the Calcutta High Court and the Supreme Court (including Navin Kr. Jha, Agricas LLP and Raj Grow Impex LLP as discussed in the order) address the validity and effect of notifications and trade notices issued under the FTDR Act and their interplay with Customs proceedings. Those decisions establish that notifications/orders issued under the FTDR Act are intra vires the Central Government's powers to regulate imports and that such notifications/trade notices can have the consequence that imports made contrary to them may be dealt with under the Customs Act, including confiscation. The Tribunal's decision, which relied on a coordinate bench decision to set aside confiscation where import declarations were below DGFT-prescribed minimum prices, could not be allowed to stand without taking the higher court authorities into account. In view of these considerations and because the Tribunal did not have the benefit of later decisions when it passed the impugned order, the High Court set aside the Tribunal's order and remanded the matters to the Tribunal for fresh consideration. The remand directs the Tribunal to take note of the decisions referred to above and any other submissions placed before it and to pass a reasoned and speaking order on the merits in accordance with law.

Tribunal's orders set aside and matters remanded to the Tribunal for fresh hearing and decision after taking note of the cited higher court authorities and other submissions; substantial questions left unanswered by this Court.

Final Conclusion: Applications for condonation of delay are allowed; the High Court set aside the impugned Tribunal orders and remanded the matters to the Tribunal for fresh consideration in the light of the identified High Court and Supreme Court authorities and directed that a reasoned and speaking order be passed; the substantial questions of law were left unanswered for adjudication by the Tribunal on rehearing.

Wilful disobedience of court order - compliance with directions for refund of IGST - withdrawal of appeals filed in defiance of court directions - withdrawal of protective show cause notices - effect of dismissal of SLP

Wilful disobedience of court order - compliance with directions for refund of IGST - Filing of appeals by the respondents against the IGST refund orders despite earlier directions of the Division Bench. - HELD THAT: - The Court found that refund orders dated 04.05.2021 (with corrigendum 05.05.2021) were issued in compliance with the Division Bench's judgment/order dated 26.03.2021, which had directed refund of IGST to the petitioners. Notwithstanding that compliance, the respondents filed appeals against those refund orders. The filing of such appeals was held to be in the face of the Division Bench's directions and amounted to conduct contrary to the court's order, warranting remedial action by respondents. [Paras 2]

The Court recorded that the appeals were filed contrary to its earlier directions and treated that conduct as a breach of the Division Bench's order.

Effect of dismissal of SLP - Consequences of the Supreme Court's dismissal of the respondents' Special Leave Petition filed against the Division Bench's judgment dated 26.03.2021. - HELD THAT: - The Court noted that the respondents' SLP against the Division Bench's judgment was dismissed by the Supreme Court on 14.10.2022. That dismissal was taken into account by the Court in evaluating the respondents' position and the appropriateness of any continuation of appeals or protective proceedings against the petitioners, supporting the petitioners' contention that further appeals or protective notices were unsustainable. [Paras 4]

The dismissal of the SLP by the Supreme Court was recorded and treated as removing the respondents' appellate avenue against the Division Bench's directions.

Withdrawal of appeals filed in defiance of court directions - withdrawal of protective show cause notices - Respondents' undertaking to withdraw the appeals and consequential protective show cause notices and the Court's disposal of the petitions on that undertaking. - HELD THAT: - On instructions, the respondents' Senior Standing Counsel undertook that immediate steps would be taken to withdraw the appeals said to have been filed against the IGST refund orders dated 04.05.2021, and that expeditious steps would be taken to withdraw the consequential protective show cause notices issued to the petitioners. The undertaking included a timeline to complete these steps within four weeks from the date of the order. Accepting this undertaking and binding the respondents thereto, the Court found no further orders necessary and disposed of the petitions and any pending applications. [Paras 5, 6]

Respondents bound by their undertaking to withdraw the appeals and protective show cause notices within four weeks; petitions disposed of accordingly.

Final Conclusion: The Court recorded that the refund orders were issued in compliance with its earlier directions, noted that the respondents had nevertheless filed appeals which was contrary to those directions, recorded the dismissal of the respondents' SLP by the Supreme Court, accepted the respondents' undertaking to withdraw the appeals and consequential protective show cause notices within four weeks, and disposed of the petitions and pending applications on that basis.

Writ jurisdiction under Article 226 - disputed questions of fact - valuation of seized goods - self-declaration as evidence of value - auction sale and application of proceeds - non-challenge to auction bars relief under procedural provisions - Sections 14 and 150 of the Customs Act, 1962

Writ jurisdiction under Article 226 - disputed questions of fact - Maintainability of the writ petition where entitlement to refund depends on disputed factual valuation of seized goods. - HELD THAT: - The High Court held that a writ court exercising extraordinary jurisdiction under Article 226 should not adjudicate hotly disputed questions of fact or make comparative assessments of conflicting factual/material records. The claim for refund involved three competing valuations (self-declaration, seizure-authority approximate valuation, and auction realisation) and thus raised disputed facts appropriately determinable by a trial/adjudicatory forum rather than by writ. In view of the factual controversy, the writ petition was not maintainable on merits and ought not to have been decided as if the factual disputes were uncontroverted. [Paras 21, 23]

Writ petition not maintainable insofar as it sought adjudication of disputed factual entitlement to refund.

Valuation of seized goods - self-declaration as evidence of value - auction sale and application of proceeds - Extent of respondent's entitlement to refund - whether to the seizure-authority approximate value, the self-declared value, or the auction realisation. - HELD THAT: - The Court examined the three available valuations: the self-declaration dated 13.01.1999 (corroborated by receipts dated 19.01.1999), the seizure-entry's approximate value, and the auction realisation. It held that the respondent could not disown his own self-declaration (corroborated by receipts) and thereby claim the higher approximate seizure value which lacked material basis. The Court therefore concluded that at best the respondent was entitled to the self-declared value, and noted that the Department had already paid that amount with interest during the litigation, leaving no further relief. [Paras 24, 29, 30]

Respondent entitled only to the self-declared value corroborated by receipts; the approximate seizure value claim is rejected and no further refund remains as the self-declared sum with interest has been paid.

Sections 14 and 150 of the Customs Act, 1962 - non-challenge to auction bars relief under procedural provisions - Whether the respondent could invoke Sections 14 and 150 of the Customs Act, 1962 to claim the approximate seizure value or to challenge the auction proceeds without having questioned the validity of the auction. - HELD THAT: - The Court held that Sections 14 (valuation) and 150 (procedure for sale and application of sale proceeds) could not assist the respondent because he did not challenge the validity of the auction proceedings. Where the auction was not questioned, the respondent could not rely on these procedural or valuation provisions to claim the approximate seizure valuation; any contention based on breach of those sections would have required a direct challenge to the auction's validity. [Paras 16, 28]

Respondent cannot invoke Sections 14 and 150 to claim the approximate seizure value in the absence of a challenge to the auction proceedings.

Final Conclusion: The LPA is allowed; the Single Judge's order is set aside. The respondent is not entitled to the seizure authority's approximate valuation and was, at best, entitled to the self-declared value corroborated by receipts, which the Department has already paid with interest, leaving no further relief.

Mis-declaration of quantity and value - redemption fine under Section 125 - penalty under Section 112A - re-determination of assessable value for excess quantity - Public Notice No. 17/2010 - treatment of excess quantity up to and above 5% - permissible variation/marginal error in measurement of natural stone imports

Mis-declaration of quantity and value - redemption fine under Section 125 - penalty under Section 112A - Public Notice No. 17/2010 - treatment of excess quantity up to and above 5% - Validity of imposition of redemption fine and penalty where declared quantity of imported polished granite slabs was found to be in excess by 55.752 sqm (exceeding 5%). - HELD THAT: - The Tribunal recorded that Public Notice No. 17/2010 requires that value of excess quantity be added to the bill of entry in all cases of variation, and where variation is above 5% the matter is liable to adjudication with imposition of redemption fine and penalty. In the present case the excess quantity (55.752 sqm) exceeded 5%, and therefore the adjudicating authority was justified both in enhancing the value on account of excess quantity and in imposing the redemption fine and penalty. The appellants' contention that the difference was a marginal measurement error and that trade practice of invoicing chargeable measurement should preclude penal consequences was rejected as not being applicable in view of the Public Notice and the factual excess beyond the 5% threshold.

Imposition of redemption fine under Section 125 and penalty under Section 112A upheld; impugned order sustained.

Re-determination of assessable value for excess quantity - Public Notice No. 17/2010 - treatment of excess quantity up to and above 5% - permissible variation/marginal error in measurement of natural stone imports - Whether enhancement of value and duty demand was warranted where declared quantity was 482 sqm but examination found 489.6 sqm (excess 7.6 sqm, within 5% as per appellant's calculation of 1.58%). - HELD THAT: - The Tribunal examined Public Notice No. 17/2010 and noted that the Notice mandates addition of the value of excess weight to the bills of entry even where variation is up to 5%. The Notice further provides that where variation is above 5% the matter shall be adjudicated with fine and penalty. On the facts the authority enhanced value and confirmed duty on the excess quantity. The Tribunal found that the impugned enhancement of value was in accordance with the Public Notice and that the judgments relied upon by the appellant were distinguishable on facts. Accordingly, the re-determination of assessable value and confirmation of duty were sustained (while noting that where variation did not exceed 5% adjudication with fine/penalty may not be mandated under the Notice).

Enhancement of value and confirmation of duty on excess quantity upheld; impugned order sustained.

Final Conclusion: Both appeals dismissed; the impugned appellate orders upholding value enhancement and, where applicable, imposition of redemption fine and penalty were affirmed as being in accordance with Public Notice No. 17/2010 and the record.

Duty to file application for extension under Section 12(2) of the Insolvency and Bankruptcy Code - Responsibility of the Committee of Creditors to instruct the Resolution Professional - Disciplinary action by the Insolvency and Bankruptcy Board of India (Disciplinary Committee) - Interim relief pending challenge to a disciplinary order

Duty to file application for extension under Section 12(2) of the Insolvency and Bankruptcy Code - Responsibility of the Committee of Creditors to instruct the Resolution Professional - Disciplinary action by the Insolvency and Bankruptcy Board of India (Disciplinary Committee) - Validity of the disciplinary findings and penalty imposed on the petitioner for alleged lapse in the conduct of the CIRP of Brain Master's Classes Private Limited under the Disciplinary Committee's order dated 21.11.2022. - HELD THAT: - The Court examined the Disciplinary Committee's order alongside the statutory scheme in Section 12(2) of the IBC and the material relied upon by the Board, including the adjudicating authority's observations. Section 12(2) contemplates that an application to extend the CIRP beyond 180 days is to be filed by the resolution professional if so instructed by a resolution of the Committee of Creditors by the requisite vote. The record, including email communications and the adjudicating authority's findings quoted in the impugned order, shows that the petitioner had attempted to convene the C.O.C. meeting before the expiry of the 180-day period but meetings could not be held due to lockdown. When a meeting was ultimately held, there was no recorded dissatisfaction with the petitioner's conduct and the adjudicating authority had observed that the C.O.C. had not taken efficient measures to complete the CIRP. In that factual and legal context the Court found, prima facie, that negligence attributable to the petitioner in failing to file an extension application could not properly be made out, since the statutory duty to apply for extension is triggered by a C.O.C. resolution instructing the resolution professional to do so.

Prima facie the disciplinary findings of negligence against the petitioner are unsustainable in view of Section 12(2) and the quoted findings of the adjudicating authority; interim relief granted on conditions.

Interim relief pending challenge to a disciplinary order - Conditioned deposit as precondition for interim relief - Grant of interim relief against the Disciplinary Committee's order and terms of such relief. - HELD THAT: - The Court, after observing the prima facie position on the merits, exercised its discretion to grant interim relief. The relief was made conditional upon the petitioner depositing the penalty amount indicated in the impugned order in the Registry by a specified date. The Court ordered notice to respondents returnable on a specified date and permitted direct service. The order preserves the status quo in the terms identified in the impugned order until the returnable date, subject to the compliance condition.

Interim relief granted on condition that the petitioner deposits the penalty amount in the Registry by the stipulated date; notice issued and matter posted for hearing on the returnable date.

Final Conclusion: The petition challenges the Disciplinary Committee's order imposing penalty and probation. The High Court, finding a prima facie absence of negligence by the petitioner in light of Section 12(2) and the adjudicating authority's observations, granted interim relief conditioned on deposit of the penalty amount, directed service on respondents and listed the matter on the stated returnable date.

Jurisdiction of adjudicating authority to test vires of delegated legislation - power of regulatory authority to make regulations under delegated legislation - scope of Section 60(5)(c) of the IBC - Regulation 36A - invitation of resolution plans and expression of interest - delegated legislation to be placed before Parliament under Section 241 - tribunal not competent to declare regulations ultra vires in absence of statutory conferral - speed of CIRP is not an independent ground for NCLT to strike down regulations

Jurisdiction of adjudicating authority to test vires of delegated legislation - scope of Section 60(5)(c) of the IBC - tribunal not competent to declare regulations ultra vires in absence of statutory conferral - Whether the National Company Law Tribunal had jurisdiction and power to declare Regulation 36A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as ultra vires the IBC. - HELD THAT: - The Court examined the statutory scheme of the IBC and the distinct roles conferred on the Board and the Adjudicating Authority. The Board is empowered by Section 196 and Section 240 to frame regulations consistent with the Code and subject to parliamentary oversight under Section 241. The NCLT, constituted under Section 60, is vested with jurisdiction to decide applications and questions of law or fact arising out of insolvency resolution or liquidation proceedings pending before it. However, such jurisdiction does not extend to entertaining a direct challenge to the validity of regulations made by the Board. The Court relied on the principle that delegated legislation, being subordinate legislation placed before Parliament, is amenable to judicial review by courts and not to annulment in proceedings before a specialist adjudicatory forum unless there is statutory conferment of such power. The Court recorded that the NCLT in the impugned order declared Regulation 36A ultra vires on the ground that the two-stage process (invitation of expression of interest and subsequent submission of resolution plans) would impede the speed of CIRP. The High Court held that this was beyond the NCLT's competence, referencing precedent and statutory scheme, and that the NCLT could not assume power to strike down Regulations made by the Board merely because of perceived conflict with the objective of expedition in CIRP. [Paras 16, 21, 22, 23]

The NCLT did not have the jurisdiction to declare Regulation 36A ultra vires; the impugned declaration is set aside.

Final Conclusion: The writ petition is allowed to the extent that the NCLT's declaration that Regulation 36A is ultra vires is set aside; the High Court did not decide the substantive validity of Regulation 36A on merits, which was not canvassed before it.

Maintainability of writ petition under Articles 226 and 227 where alternative statutory remedy exists - Appeal against order of Recovery Officer under Section 30 of the Recovery of Debts and Bankruptcy Act - Finality of DRT judgment and Recovery Certificate - Moratorium under the Insolvency and Bankruptcy Code and its temporal effect - Overriding effect of the IBC and exclusive jurisdiction of NCLT/NCLAT - Validity of recovery proceedings and confirmation of sale by Recovery Officer - Allegation of sale at undervalue and requirement of proper valuation/absence of material irregularity - Abuse of process and delay tactics

Maintainability of writ petition under Articles 226 and 227 where alternative statutory remedy exists - Appeal against order of Recovery Officer under Section 30 of the Recovery of Debts and Bankruptcy Act - Finality of DRT judgment and Recovery Certificate - Writ petition challenging the Recovery Officer's order is not maintainable before the High Court and petitioners must seek remedy by appeal under Section 30 of the RDB Act where available; DRT judgment has attained finality in absence of challenge. - HELD THAT: - The Court held that any person aggrieved by an order of the Recovery Officer is obliged to prefer an appeal before the Tribunal under Section 30 of the RDB Act within the prescribed time; therefore the impugned order dated 28.11.2019 and consequential possession notice dated 03.12.2019 should be challenged before the DRT. The judgment and award dated 13.12.2018 passed by the DRT was not challenged before the Debts Recovery Appellate Tribunal and accordingly has attained finality. In these circumstances, the High Court declined to entertain the writ petition as an alternative remedy under the statutory scheme is available and appropriate, while observing that the DRT, if seized of an appeal, may decide the matter on merits uninfluenced by this Court's observations and may consider any question of delay bona fide. [Paras 8, 10, 16, 17]

Petition dismissed for want of maintainability; petitioners relegated to prefer appeal under Section 30 of the RDB Act before the Presiding Officer of the DRT.

Moratorium under the Insolvency and Bankruptcy Code and its temporal effect - Overriding effect of the IBC and exclusive jurisdiction of NCLT/NCLAT - Validity of recovery proceedings and confirmation of sale by Recovery Officer - Challenge that DRT's judgment and subsequent recovery proceedings were barred by moratorium under the IBC was rejected on the record before the Court. - HELD THAT: - The Court examined the chronology and records and found no order extending the moratorium beyond the initial period arising from the IBC order dated 21.12.2017. As per the Court's view, the moratorium under Section 14 of the IBC would not continue indefinitely in the absence of any further order by the NCLT extending it; the DRT's judgment dated 13.12.2018 and consequent Recovery Certificate therefore could not be impugned on the ground of a continuing moratorium. Reliance on IBC authorities was considered inapposite on the facts because no order extending moratorium was on record and the DRT order was not challenged, so the consequent recovery proceedings before the Recovery Officer could not be characterised as without jurisdiction. [Paras 8, 11, 14]

Petitioners' contention that the DRT's judgment and the recovery proceedings were barred by IBC moratorium rejected; recovery proceedings upheld as not being without jurisdiction on that ground.

Allegation of sale at undervalue and requirement of proper valuation/absence of material irregularity - Abuse of process and delay tactics - Validity of recovery proceedings and confirmation of sale by Recovery Officer - Allegations of undervalue sale and irregularity in auction were not accepted as a ground to entertain the writ since petitioners failed to pursue objections before the Recovery Officer and sought relief before this Court instead, which was held to be an abuse of process. - HELD THAT: - The Court observed that the petitioners did not prosecute their objections before the Recovery Officer and did not challenge the DRT judgment earlier; the recovery proceedings included e-auction conducted after following the prescribed procedure and two competitive bids were recorded. The petitioners relied upon older valuation reports which the Court found inappropriate to rely upon without having pursued contemporaneous objections. In view of the availability of the statutory appeal and the conduct of the petitioners, the Court treated the writ as an attempt to delay enforcement and held that the proper forum to challenge sale confirmation and alleged valuation irregularities is the DRT in an appeal under Section 30 of the RDB Act. [Paras 6, 7, 15]

Allegations of sale at undervalue and procedural irregularity dismissed as grounds for the writ; petitioners to raise such grievances before the DRT by way of appeal.

Final Conclusion: Writ petition dismissed as not maintainable; petitioners are relegated to challenge the Recovery Officer's order dated 28.11.2019 and consequential possession notice dated 03.12.2019 by filing an appeal under Section 30 of the RDB Act before the DRT, which may decide the matter on merits; time spent in pursuing this petition will be considered bona fide for any delay.

Transactions during corporate insolvency resolution process - authorization to directors after initiation of CIRP - burden of proof for operational expenses incurred before IRP took charge - remedial relief against deposit and fine imposed by Adjudicating Authority

Burden of proof for operational expenses incurred before IRP took charge - transactions during corporate insolvency resolution process - remedial relief against deposit and fine imposed by Adjudicating Authority - Whether the Adjudicating Authority was justified in rejecting the debit entry of Rs.1,60,000/- as not proved and in directing deposit of that amount with an additional fine. - HELD THAT: - The Adjudicating Authority accepted two transactions on the basis of available explanation and evidence but rejected the debit of Rs.1,60,000/- for want of proof. The Corporate Debtor had pleaded in its reply (Para 5.11) that the amount was utilised for procuring diesel to run two DG sets (approx. 1500 litre) due to power failures at the plant and that cash purchases were necessary as suppliers would not extend credit. The Tribunal finds that the Adjudicating Authority erred in rejecting the transaction without adequately advert ing to the specific explanation given in Para 5.11. Given the pleaded and unde nied contemporaneous purpose - operational diesel for running plant generators - the expenditure should have been accepted. In the facts of the case, where cooperation with the IRP/RP is noted, imposition of a fine and direction to deposit the amount was unnecessary. The direction to deposit Rs.1,60,000/- and the fine imposed are therefore set aside. [Paras 7, 8, 9]

The rejection of the Rs.1,60,000/- debit and the order directing deposit of that amount with a fine are deleted; the expenditure is accepted on the explanation given.

Transactions during corporate insolvency resolution process - authorization to directors after initiation of CIRP - Whether exclusion of the period 22.07.2019 to 16.08.2019 from the CIRP timeline operates to shift the date of initiation of CIRP to 16.08.2019 so as to validate transactions prior to that date. - HELD THAT: - The Tribunal clarifies that exclusion of a period for the purpose of computing the maximum CIRP duration (i.e., addition of excluded days to the 180-day timeline) does not operate to change or shift the date of initiation of CIRP. The date of initiation remains as recorded; exclusion relates only to temporal computation of the permissible CIRP duration. Consequently, the appellant's contention that the initiation date was effectively moved to 16.08.2019 and transactions prior to that date thereby validated is rejected. [Paras 7, 10]

Exclusion of the period 22.07.2019 to 16.08.2019 does not shift the initiation date of CIRP; the argument that the initiation date was thereby altered is not accepted.

Final Conclusion: The appeal is allowed to the extent that the Adjudicating Authority's direction to deposit Rs.1,60,000/- and imposition of a fine is set aside; the tribunal affirms that exclusion of a period for CIRP computation does not change the initiation date and reiterates the settled principle that directors lack authority to operate corporate accounts after CIRP initiation (not in dispute herein).

Condonation of delay beyond statutory extension under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - jurisdiction of the Appellate Tribunal to entertain an application under Section 5 of the Limitation Act for delay exceeding forty five days - application of Section 5, Limitation Act consequent to Section 238(A) amendment - statutory limitation period for appeals under Section 61(2) of the Insolvency and Bankruptcy Code

Condonation of delay beyond statutory extension under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - statutory limitation period for appeals under Section 61(2) of the Insolvency and Bankruptcy Code - Whether the National Company Law Appellate Tribunal has jurisdiction to condone delay in filing an appeal beyond the combined period of thirty days plus the fifteen day proviso under Section 61(2) of the IBC. - HELD THAT: - The Tribunal examined Section 61(2) which prescribes a thirty day period for filing appeals and contains a proviso permitting the Appellate Tribunal to allow an appeal after that period if satisfied of sufficient cause, but such extension shall not exceed fifteen days. The provision thus creates a complete code for the limited extension allowed by the Tribunal. Reliance on the Supreme Court decision in National Spot Exchange Limited v. Anil Kholi demonstrates that the Appellate Tribunal has no jurisdiction to condone delay beyond the aggregate period of forty five days. Applying this statutory scheme to the facts, the Tribunal found the appeal was filed after the forty five day window expired and therefore the Tribunal lacked jurisdiction to condone that excess delay. The appeal was accordingly held to be time barred and liable to be dismissed. [Paras 8, 9, 10, 11, 12]

Tribunal has no jurisdiction to condone delay beyond forty five days; appeal filed after that period is time barred and dismissed.

Application of Section 5, Limitation Act consequent to Section 238(A) amendment - jurisdiction of the Appellate Tribunal to entertain an application under Section 5 of the Limitation Act for delay exceeding forty five days - Whether Section 5 of the Limitation Act remains available to seek condonation of delay in appeals under the IBC after the insertion of Section 238(A), and the consequence of that applicability when delay exceeds forty five days. - HELD THAT: - The Tribunal noted the appellant's submission that Section 5 Limitation Act applies following the insertion of Section 238(A). While acknowledging that Section 5 may be invoked to seek condonation, the Tribunal held that such invocation is subject to the statutory ceiling created by Section 61(2) of the IBC. Thus, although Section 5 can be the vehicle for seeking condonation within the proviso period, it cannot confer jurisdiction on the Tribunal to extend the limitation beyond the maximum fifteen day extension permitted by the proviso to Section 61(2). Consequently, an application under Section 5 cannot cure delay that exceeds the forty five day limit prescribed by the Code. [Paras 5, 6, 10, 11]

Section 5 Limitation Act may be invoked but cannot operate to extend the appeal period beyond the forty five day cap under Section 61(2); therefore condonation under Section 5 is not available for delay exceeding forty five days.

Final Conclusion: The Appellate Tribunal found that the appeal was filed beyond the statutory forty five day period (thirty days plus fifteen days' proviso) and that it has no jurisdiction to condone delay exceeding that limit; the application for condonation of delay was dismissed and, consequently, the appeal was dismissed as time barred.

Commercial wisdom of the Committee of Creditors - limited judicial review of approval or rejection of resolution plan - requirement of sixty-six per cent voting share for approval of resolution plan - duty of Adjudicating Authority to initiate liquidation on failure of resolution plan - permissibility of late submission of Expression of Interest within regulatory framework

Permissibility of late submission of Expression of Interest within regulatory framework - amendment/replacement of resolution applicants under the RFRP - Whether the Adjudicating Authority erred in permitting a late EoI and in dealing with the appellant's request to replace co applicants and to allow fresh submissions - HELD THAT: - The Tribunal found that the Adjudicating Authority granted opportunities and exercised the options available under the Code and Regulations to avoid liquidation. The Appellate Tribunal recorded that the Adjudicating Authority permitted submission of EoIs and allowed the appellant opportunities (including replacement of co applicants and invitation of fresh EoIs) in light of the timelines and the Suo moto directions relied upon. The Adjudicating Authority's actions in allowing participation and in directing fresh EoIs were seen as measures to preserve the corporate debtor as a going concern and were within its purview under the Insolvency & Bankruptcy Code, 2016 and the CIRP Regulations; the appellant was given chances yet failed to procure the required performance security or to conclude a joint plan with the other applicant. [Paras 13, 20, 21]

The Adjudicating Authority did not err in permitting late participation and in allowing amendments/replacement subject to regulatory conditions; the appellant was afforded adequate opportunities but failed to comply.

Commercial wisdom of the Committee of Creditors - limited judicial review of approval or rejection of resolution plan - Whether the Adjudicating Authority (and this Appellate Tribunal) could re examine the commercial decision of the Committee of Creditors approving or rejecting a resolution plan - HELD THAT: - The Tribunal reiterated the settled principle that the commercial wisdom of the Committee of Creditors is paramount and generally non justiciable. Judicial review by the Adjudicating Authority and the Appellate Tribunal is limited to the statutory checks under section 30(2) and the grounds available on appeal under section 61(3), and does not permit reassessment of the commercial merits of the CoC's decision. Authorities of the Supreme Court recognising the primacy of CoC commercial decision making and restricting judicial interference were relied upon to emphasise that NCLT/NCLAT cannot trespass upon CoC's commercial choice except on limited statutory grounds. [Paras 22, 23, 24, 25, 27]

The Adjudicating Authority and the Appellate Tribunal have only limited jurisdiction to review a resolution plan; they cannot re evaluate the commercial wisdom of the CoC beyond the statutory parameters.

Requirement of sixty-six per cent voting share for approval of resolution plan - duty of Adjudicating Authority to initiate liquidation on failure of resolution plan - Whether, in the absence of approval by not less than sixty six per cent of voting share, the Adjudicating Authority was correct in proceeding to liquidation under section 33(1) - HELD THAT: - The Tribunal noted that the CoC did not approve any resolution plan by the requisite 66% voting threshold and that multiple opportunities to reach an approved plan failed. Under section 30(4) read with section 33(1) of the Code, where no resolution plan receives the requisite votes the Adjudicating Authority is obliged to initiate liquidation. The Adjudicating Authority had attempted measures (re voting, extension of time, facilitation of joint plan) but, having regard to the deadlock and statutory timelines, rightly directed liquidation. The Tribunal emphasised that upon receipt of a rejected plan the Adjudicating Authority is expected to initiate liquidation in accordance with the Code. [Paras 22, 28, 29, 30]

The Adjudicating Authority correctly ordered liquidation under section 33(1) once no plan secured the statutory 66% approval and all available procedural attempts to procure an approved plan had failed.

Final Conclusion: The appeal is without merit; the Appellate Tribunal found no infirmity in the Adjudicating Authority's order ordering liquidation - the NCLT acted within the limited scope of its jurisdiction, afforded opportunities to avoid liquidation, and correctly proceeded to liquidation where no resolution plan obtained the requisite sixty six per cent approval.

Definition of "financial debt" under Section 5(8) of the IBC - Definition of "financial creditor" under Section 5(7) of the IBC - Definition of "related party" under Section 5(24) of the IBC - Characterisation of investments/ share-application money by reference to time value of money - Role and duties of the Resolution Professional and verification of claims under the CIRP - Binding effect of a Resolution Plan approved by the Committee of Creditors

Definition of "financial debt" under Section 5(8) of the IBC - Characterisation of investments/ share-application money by reference to time value of money - Whether the amounts advanced by the appellants qualify as "financial debt" and thereby render the appellants financial creditors under the IBC - HELD THAT: - The Tribunal examined the statutory definition of "financial debt" which requires disbursal against consideration for the time value of money and considered authoritative precedent distinguishing mere obligations or investments from financial debt. Although the appellants furnished money for the benefit of the corporate debtor pursuant to a term sheet and expended funds towards debts, operations and equipment, the essential element of disbursal that directly evidences consideration for the time value of money, as required by Section 5(8), was not found to be directly evident on the material placed before the Tribunal. Reliance on the Companies Act provision treating non-allotment of share application money as deposit (and hence attracting interest) was considered, but on the facts and documents before the Tribunal the payments were held to be investments linked to an agreement with the promoter and not shown to be a disbursement to the corporate debtor that would automatically attract the character of financial debt under Section 5(8). In view of these legal principles and the factual record, the appellants' advances could not be treated as financial debt and they could not be admitted as financial creditors for purposes of CIRP.

The appellants' claims do not constitute "financial debt" within Section 5(8) and the appellants are not financial creditors.

Definition of "related party" under Section 5(24) of the IBC - Whether the appellants are "related parties" of the corporate debtor - HELD THAT: - The Tribunal analysed the statutory indicia of "related party" under Section 5(24), including participation in day-to-day operations, status as key managerial personnel, interchange of managerial personnel and association by way of advice or control. The factual matrix showed that the appellants were involved in the corporate debtor's day-to-day operations, Appellant No.2 had been the Chief Operating Officer and there existed familial/associational links with directors. On these facts the Interim Resolution Professional's characterization of the appellants as related parties was held to be correct and the Adjudicating Authority's upholding of that finding was affirmed.

The appellants were correctly held to be related parties of the corporate debtor under Section 5(24).

Role and duties of the Resolution Professional and verification of claims under the CIRP - Binding effect of a Resolution Plan approved by the Committee of Creditors - Whether the Resolution Plan was validly approved notwithstanding non-provision for the appellants' claims - HELD THAT: - The Tribunal reviewed the statutory duties of the resolution professional and the legal effect of a resolution plan approved by the Committee of Creditors (CoC). The RP's role in compiling and verifying claims and presenting plans to the CoC is administrative; the CoC's approval is central to the binding effect of a resolution plan. As the appellants' claims were not admitted as financial debt and the sole financial creditor on the CoC approved the resolution plan, the Adjudicating Authority's approval of the plan was lawful. The Tribunal found no error in the impugned order approving the resolution plan which did not make provision for the appellants' unadmitted claims.

The Resolution Plan was validly approved by the CoC and the Adjudicating Authority; no infirmity arises from non-provision for the appellants' unadmitted claims.

Final Conclusion: The appeals are dismissed. The impugned order dated 30.05.2022 (approving the resolution plan and dismissing IA No.166 of 2021) is affirmed: the appellants are not financial creditors, were correctly characterised as related parties, and the resolution plan was validly approved by the Committee of Creditors and sanctioned by the Adjudicating Authority.

Jurisdiction of the Enforcement Directorate to register ECIR against a person - requirement of existence of proceeds of crime and linkage to a scheduled offence for action under the PMLA - internal nature of ECIR and limited justiciability of departmental/investigative documents - scope of judicial intervention under Article 226 in matters of pre-trial custody and availability of alternative remedies - accused has no veto in selection of investigating agency; Court-ordered preliminary inquiry by CBI permissible on prima facie material

Jurisdiction of the Enforcement Directorate to register ECIR against a person - internal nature of ECIR and limited justiciability of departmental/investigative documents - requirement of existence of proceeds of crime and linkage to a scheduled offence for action under the PMLA - Validity of registration of ECIR-RNZO/11/2022 against the petitioner and whether the ECIR and consequent proceedings are without jurisdiction so as to warrant quashing. - HELD THAT: - The Court examined the complaint placed on record and the materials relied upon by the Enforcement Directorate and concluded that the challenge in the petition relates only to the ECIR, which is essentially an internal document of the ED. The Court noted precedents recognizing the internal character of certain ED documents and their limited justiciability. On the merits, the Court found material in the complaint indicating the petitioner's involvement in the events alleged (including allegations of payment and communications fitting the mischief addressed by the PMLA and the Prevention of Corruption Act) and observed that the PMLA requires linkage to proceeds of crime and scheduled offences but that, on the material before it, the ED's registration could not be characterised as without jurisdiction. The petitioner's contention that registration amounted to an impermissible review of a Supreme Court order was rejected because the ECIR was registered prior to the quashing of the PIL and because the Supreme Court's observation did not preclude investigation into criminal complaints arising from facts otherwise disclosed. [Paras 21, 22, 23, 24]

Petition for quashing the ECIR and related proceedings is rejected; registration is not shown to be without jurisdiction.

Scope of judicial intervention under Article 226 in matters of pre-trial custody and availability of alternative remedies - ordinary remedy of bail under statutory/special Act procedure versus writ relief - Whether the petitioner's arrest and continued detention were illegal and whether interim bail should be granted under Article 226. - HELD THAT: - The Court observed that the petitioner was produced before the trial court and remanded to judicial custody by an order not challenged before this Court. Reliance was placed on authorities that a writ under Article 226 is not a substitute for the ordinary remedy of bail when alternate remedies under the criminal process exist and that habeas corpus/writ relief is inappropriate where lawful remand orders stand unchallenged. The Court noted the serious allegations made in the complaint and cautioned against opening the door to forum-shopping by accused under the PMLA. Considering the materials and binding precedents, the Court held that the petitioner's detention could not be declared illegal in the writ petition and refused to grant interim bail under Article 226. [Paras 25, 26]

Prayer for interim bail and declaration of illegal detention is refused; petitioner must pursue available criminal remedies.

Accused has no veto in selection of investigating agency; Court-ordered preliminary inquiry by CBI permissible on prima facie material - power of High Court to direct CBI inquiry when prima facie material exists - Whether the Court should accede to the petitioner's request for a Special Investigation Team or a court-directed investigation into the registration and conduct of the ECIR. - HELD THAT: - The Court reviewed principles governing judicial direction of investigative agencies and reiterated that appointment of a particular agency is not a matter for the accused to choose, but that the High Court may direct an inquiry by a central agency if prima facie material so warrants. Given allegations in the record indicating attempts to malign judiciary and high officials and material suggesting involvement of the petitioner in the conduct complained of, the Court considered it appropriate in the interest of justice to direct the Director, CBI to undertake a preliminary inquiry into the petitioner's conduct. The preliminary inquiry is to be conducted in accordance with law and concluded expeditiously within a specified short timeframe, after which the CBI may decide further action in law. [Paras 27, 28, 29]

Prayer for constitution of a Special Investigation Team is allowed in limited terms: Director, CBI directed to conduct a preliminary inquiry and conclude it within 15 days; further action left to the Director, CBI.

Final Conclusion: Writ petition seeking quashing of the ED's ECIR and release of the petitioner is dismissed on merits and on the ground of availability of alternative remedies; however, in the interest of justice the Court has directed the Director, CBI to undertake a time-bound preliminary inquiry into the petitioner's conduct (to be completed within 15 days), leaving the Director, CBI free to take further action in accordance with law.

Discharge from prosecution - scope and duty of a Chartered Accountant in issuing Form 15CB - participation in money laundering/conspiracy by professional advisor - use of professional as prosecution witness

Discharge from prosecution - Petitioner, an auditor, was entitled to be discharged from prosecution in respect of allegations arising from issuance of five Form 15CB certificates. - HELD THAT: - The Court found that the petitioner had issued five Form 15CB certificates at the request of a client for modest professional fees and had assisted enforcement by identifying the client who was the mastermind. On the materials before the trial Court and on demurrer, mere issuance of the certificates, without more, did not establish the petitioner's participation in generation of proceeds of crime or in the alleged conspiracy. The factual matrix showed that other banks had not required Form 15CB and that the petitioner's role was limited to issuing the certificates and uploading them; there was no material to show that he investigated or participated in fraudulent fabrication of documents. Applying the legal principle that a professional providing a certificate or opinion after scrutiny of documents is not ipso facto culpable for underlying fraud, the Court held that prosecution could not be sustained against the petitioner. [Paras 9, 10, 11, 12]

Petitioner discharged from prosecution and the trial Court order dismissing discharge petition set aside.

Scope and duty of a Chartered Accountant in issuing Form 15CB - Issuance of Form 15CB requires examination of the nature of the remittance but does not impose on the Chartered Accountant an obligation to independently verify genuineness of underlying documents. - HELD THAT: - On perusal of Form 15CB and the statutory/task requirements, the Court observed that a Chartered Accountant is required to examine the nature of the remittance and certify accordingly; the CA is not tasked with an independent inquiry into the genuineness of supporting documents. The Court drew an analogy with panel lawyers who give opinions based on title documents without verifying genuineness and noted that such professionals are not automatically prosecutable alongside principal offenders. Consequently, the limited statutory scope of Form 15CB militated against treating the petitioner's actions as criminal participation. [Paras 11]

Issuance of Form 15CB in the circumstances did not attract criminal liability for the petitioner.

Participation in money laundering/conspiracy by professional advisor - There was no prima facie material to treat the petitioner as a participant in the money laundering conspiracy based solely on issuance of the certificates. - HELD THAT: - The complaint alleged that the petitioner issued certificates without ascertaining financial background and thereby facilitated fraudulent remittances. The Court evaluated the complaint, the petitioner's Section 50 statement, the limited remuneration received, and the petitioner's cooperation with investigation. Finding that these facts did not demonstrate active involvement in creating proceeds of crime or in the core fraudulent scheme, the Court concluded that criminal prosecution on that basis was unsustainable at the stage of challenge to the discharge order. [Paras 8, 9, 10, 11]

Allegation of participation in money laundering/conspiracy against the petitioner rejected for purposes of continuing prosecution.

Use of professional as prosecution witness - Prosecution remains free to use the petitioner as a witness in the trial despite his discharge from prosecution. - HELD THAT: - While discharging the petitioner from prosecution, the Court noted that the petitioner had assisted the Enforcement Directorate in identifying the mastermind and had given an undertaking to cooperate and depose for the prosecution. The Court expressly left it open to the prosecution to enlist the petitioner as a prosecution witness if so desired, thereby distinguishing discharge from the possibility of being called to testify. [Paras 12, 13]

Prosecution may call petitioner as a witness; discharge from prosecution does not prevent his testimony for the prosecution.

Final Conclusion: Criminal Revision allowed; the order refusing discharge is set aside and the petitioner (auditor) is discharged from prosecution on the impugned allegations concerning issuance of five Form 15CB certificates, with liberty to the prosecution to summon him as a witness in the trial.

Anticipatory bail under Section 438 Cr.P.C. - rigors of Section 45 of the Prevention of Money Laundering Act, 2002 - money laundering as distinct from predicate offence - sufficiency of documentary evidence to substantiate involvement in money laundering - avoidance of due process as factor against grant of bail

Anticipatory bail under Section 438 Cr.P.C. - rigors of Section 45 of the Prevention of Money Laundering Act, 2002 - sufficiency of documentary evidence to substantiate involvement in money laundering - Application for anticipatory bail under Section 438 Cr.P.C., 1973 read with Section 45 PMLA was rejected. - HELD THAT: - The Court applied the special rigors of Section 45 of the PMLA while considering anticipatory bail and observed that economic offences require a different approach in bail matters. The complaint and records disclose documentary material indicating that proceeds of scheduled offences were received and utilized by the accused-applicants, and that the role of the principal accused was covered by the definition of money laundering under Section 3 of the PMLA. Having regard to the nature of the allegations and the documentary evidence on record, the Court found no ground to enlarge the accused-applicants on anticipatory bail and accordingly dismissed their applications. [Paras 17, 18, 20]

Anticipatory bail applications rejected applying the rigors of Section 45 PMLA in view of sufficient documentary evidence of involvement in money laundering.

Money laundering as distinct from predicate offence - avoidance of due process as factor against grant of bail - Grant of bail in the predicate offence does not by itself entitle accused to bail in proceedings under the PMLA; avoidance of due process weighed against bail. - HELD THAT: - The Court emphasised that proceedings in the predicate offences and those under the PMLA are separate; therefore, mere grant of bail in the predicate offence cannot be a basis for bail in money-laundering proceedings. The trial court's note that the accused-applicants were avoiding the due process of court was taken as a relevant factor militating against anticipatory bail. In the circumstances, these considerations supported refusal of anticipatory bail. [Paras 17, 19, 20]

Refusal of anticipatory bail affirmed on the ground that bail in predicate offences does not govern bail under the PMLA and because the accused were avoiding trial.

Final Conclusion: The applications for anticipatory bail filed under Section 438 Cr.P.C. read with Section 45 of the PMLA were dismissed; the Court applied the special rigors of Section 45 PMLA, found sufficient documentary evidence of involvement in money laundering, and held that bail in predicate offences does not automatically entitle the accused to bail under the PMLA.

Anticipatory bail under Section 438 Cr.P.C. read with Section 45 of the Prevention of Money Laundering Act, 2002 - prosecution under the Prevention of Money Laundering Act contingent upon existence/registration or pending trial of a scheduled offence - proceeds of crime linked to a scheduled offence as precondition for money laundering offence

Anticipatory bail under Section 438 Cr.P.C. read with Section 45 of the Prevention of Money Laundering Act, 2002 - prosecution under the Prevention of Money Laundering Act contingent upon existence/registration or pending trial of a scheduled offence - Whether the accused applicant, not named as an accused in the predicate offence and cited only as a witness, is entitled to anticipatory bail in proceedings under the Prevention of Money Laundering Act - HELD THAT: - The Court noted that the accused applicant is not an accused in the predicate offence and was only cited as a witness. Relying on the Supreme Court's exposition that an offence under the PMLA is dependent on illegal gain as a result of a scheduled offence and that authorities cannot prosecute on a notional basis unless the scheduled offence is duly registered or is the subject of a pending enquiry/trial, the Court held that the principle applies to the present facts. Applying that ratio, the Court concluded that the accused applicant cannot be proceeded against under the PMLA merely on assumption of commission of a scheduled offence and, in view of the legal position, is entitled to protection of anticipatory bail. The Court therefore granted anticipatory bail subject to specified conditions including availability for interrogation, prohibition on inducement/threats to witnesses, prohibition on leaving India without court permission, and compliance with other conditions as may be imposed under Section 437(3) Cr.P.C. as if bail were granted under that section. [Paras 8, 9, 10]

Accused applicant enlarged on anticipatory bail on stated conditions.

Final Conclusion: Anticipatory bail application allowed; applicant Mehar Singh enlarged on anticipatory bail subject to conditions including availability for interrogation, non interference with witnesses, restriction on leaving India without permission, and other conditions as applicable under Section 437(3) Cr.P.C.

Input service - Cenvat credit - inclusive definition - services used in relation to setting up, modernization, renovation or repairs of premises - amendment excluding construction services (2011) not retrospective

Input service - Cenvat credit - inclusive definition - Whether services used for construction, erection or maintenance of immovable property for providing renting of immovable property services fall within the meaning of "input service" under Rule 2(1)(ii) of the Cenvat Credit Rules, 2004 and therefore attract Cenvat credit. - HELD THAT: - The Court applied the definition of "input service" in Rule 2(1)(ii) and followed the Division Bench decision in Commissioner of C. Ex., Delhi-III v. Bellsonica Auto Components India P. Ltd., holding that the definition contains a "means" part and an "includes" part. Services used for setting up premises or in relation to the erection of a factory or premises of the provider of output service fall within the wide language of the definition, both as used "directly or indirectly" in relation to the output and as specifically included (services used in relation to setting up a factory or premises). The Court observed that the departmental practice accepted the Bellsonica ratio. Although construction services were specifically excluded by a 2011 amendment to Rule 2(1), that amendment is not retrospective and therefore does not apply to the period in question. Applying Bellsonica, the Court found no patent infirmity in the Tribunal's conclusion that the services in dispute qualified as "input service" and that Cenvat credit could be availed for the period under consideration.

Services used for construction/maintenance of the immovable property used to provide renting of immovable property services (for 01.06.2007 to 30.09.2010) qualify as "input service" under Rule 2(1)(ii) and Cenvat credit could be availed.

Final Conclusion: The appeal is dismissed; the Tribunal's order allowing Cenvat credit for inputs, input services and capital goods used for providing renting of immovable property services for the period 01.06.2007 to 30.09.2010 is upheld.

Taxability of construction services - service tax on composite works contracts - works contract service - liability of subcontractor independent of main contractor - extended period of limitation - natural justice - audi alteram partem - correction/corrigendum versus review / apparent mistake on record

Taxability of construction services - service tax on composite works contracts - liability of subcontractor independent of main contractor - Whether the construction activities carried out by the appellant for government departments were taxable and whether liability could be fastened on the appellant when services were performed by its subcontractor - HELD THAT: - The Tribunal recorded admitted facts that the services in question were for government departments, were construction of complexes including material, and were in fact performed by the appellant's subcontractor. In light of those admissions and the definition of commercial or industrial construction and construction of complex services, the Tribunal held that the impugned services were used for non-commercial/governmental purposes and therefore not taxable. The Tribunal further relied on the principle that the liability of a subcontractor is independent of the main contractor to observe that the appellant had not provided the underlying construction services. Applying the Apex Court's reasoning in Larsen (that service tax could not be levied on indivisible composite works contracts prior to 01.07.2007) and having regard to the statutory classification post-01.07.2007 into Works Contract Service, the Tribunal concluded that no service tax liability could be sustained against the appellant for the periods in dispute. [Paras 6, 7, 9]

Construction services provided for government/non-commercial purposes and performed by the subcontractor are not taxable as service by the appellant; the demands are unsustainable.

Service tax on composite works contracts - works contract service - Whether the demand for the period prior to 01.07.2007 and for the post-01.07.2007 period could be sustained - HELD THAT: - The Tribunal applied the Apex Court's finding that prior to 01.07.2007 there was no effective charging provision for levying service tax on indivisible composite works contracts and therefore demand for the pre-July 2007 period must be set aside. For the post-July 2007 period, liability could arise only under the statutory category Works Contract Service; the record contained no demand framed under that head. Accordingly, the demands for both the pre- and post-July 2007 periods could not be confirmed. [Paras 7]

Demand prior to July 2007 set aside; demand for post-July 2007 period cannot be sustained in absence of a demand under Works Contract Service.

Extended period of limitation - Whether invocation of the extended period of limitation to recover the disputed tax was justified - HELD THAT: - The Tribunal found that the revenue failed to produce evidence of any positive act by the appellant indicating intent to evade payment of tax. The appellant is a government undertaking managed by government officers and had deposited an amount voluntarily; there was no evidence of fraud or suppression. In these circumstances the extended period was held to have been wrongly invoked by the adjudicating authority. [Paras 8]

Invocation of extended period of limitation is not justified and is set aside.

Correction/corrigendum versus review / apparent mistake on record - natural justice - audi alteram partem - Whether the corrigendum (enhancing demand by treating non taxable services as taxable) issued without hearing was permissible and whether the matter should be remanded - HELD THAT: - The Department conceded that converting non-taxable services to taxable ones and enhancing the demand could not be characterised as an apparent mistake covered by the statutory correction power. The Tribunal emphasised the principle of natural justice that enhancement of demand without affording the assessee an opportunity of being heard is impermissible. However, because the Tribunal set aside the underlying demand on substantive grounds, questions regarding the competence to issue the corrigendum, the validity of enhancement without hearing, and the applicability of penalty waiver became academic. In consequence, the Tribunal found no purpose in remanding the matter for fresh consideration. [Paras 10, 11]

Corrigendum enhancing demand without hearing was not sustainable; no remand is necessary as the impugned demand has been set aside on merits.

Final Conclusion: The impugned Order-in-Original and its corrigendum confirming and enhancing demand are set aside. The appellant's appeal is allowed; the department's appeal is partly allowed only to the extent of the question decided, but the prayer for remand is rejected.

Refund under Rule 5 of CENVAT Credit Rules, 2004 - monetisation of accumulated CENVAT credit - debit entry in CENVAT credit account as condition for refund - operational conditions in Notification No.27/2012-CE(NT) (para 2(h), Form A/Annexure A I) - post-claim rectification of procedural lapse

Debit entry in CENVAT credit account as condition for refund - refund under Rule 5 of CENVAT Credit Rules, 2004 - operational conditions in Notification No.27/2012-CE(NT) (para 2(h), Form A/Annexure A I) - post-claim rectification of procedural lapse - Whether the claim for refund of CENVAT credit under the monetisation scheme could be sanctioned in the absence of demonstrable debit of the claimed amount in the CENVAT credit account, and whether subsequent accounting (write off reflected in returns) sufficed as compliance or rectification. - HELD THAT: - The Tribunal examined the scheme under Rule 5 and the implementing Notification, which require debiting the claimed amount from the CENVAT credit account prior to claim so that the credit is not available for use once monetisation is sought. While earlier decisions recognise that procedural lapses susceptible to post claim rectification should not automatically defeat a refund, those decisions were fact specific where rectification after filing was shown. On the facts before the Tribunal the appellant did not produce primary records demonstrating continuous availability of the credited amount from the date of claim until the date on which the returns showed a write off. A mere absence of carry forward in subsequent returns or an aggregate write off in a later period does not, without supporting primary evidence, establish that the claimed amount was debited and thereby removed from use as envisaged by the Notification and Form A/Annexure A I. The remand by the first appellate authority had directed scrutiny of the CENVAT register and verification of debit entry; the adjudicating authorities, upon review, concluded that the submitted materials were insufficient. Given the appellant's failure to adduce demonstrative proof or to offer readiness to produce such evidence, the Tribunal was not persuaded to extend the principle of permissive rectification to these facts and found the lower authorities non perverse in upholding rejection on this ground. Other aspects of the earlier remand were rendered academic in view of this factual shortfall.

The rejection of the refund claim for the specified quarters on the ground of non compliance with the requirement to debit the CENVAT credit account (and absence of proof of such debit) is upheld; the appeal is dismissed.

Final Conclusion: The appeal is dismissed for failure of the appellant to demonstrate substantive compliance with the mandatory requirement of debiting the claimed amount in the CENVAT credit account under the monetisation scheme; absence of proof of debit disentitles the appellant to refund for the stated quarters.

Interest from date of deposit till date of refund - Section 35FF of the Central Excise Act - refund of pre-deposit - rate of interest - precedent of Parle Agro Ltd.

Interest from date of deposit till date of refund - Section 35FF of the Central Excise Act - refund of pre-deposit - entitlement to interest under Section 35FF to be calculated from the date of deposit until the date of grant of refund - HELD THAT: - The Tribunal held that the order under appeal was contrary to Section 35FF, which provides for grant of interest from the date of deposit until the date of refund. Having allowed the assessee's appeal and observed that the Adjudicating Authority had already granted interest subject to the Commissioner (Appeals) view, the Tribunal concluded that interest must be allowed from the date the pre-deposit was made up to the date of refund. The impugned appellate order directing recalculation contrary to Section 35FF was set aside and the Adjudicating Authority was directed to comply with Section 35FF in granting interest. [Paras 8]

Appeal allowed on this point; impugned order set aside and interest to be granted from the date of deposit till the date of refund.

Rate of interest - precedent of Parle Agro Ltd. - applicable rate of interest on the refunded pre-deposit - HELD THAT: - The Tribunal applied its prior ruling in Parle Agro Ltd. and directed that interest be allowed at 12% per annum. Following that precedent, the Tribunal directed the Adjudicating Authority to grant differential interest at the 12% rate for the period from the date of deposit until the date of refund, thereby overruling the Commissioner (Appeals) direction to limit interest to a later date. [Paras 8]

Interest to be paid at 12% per annum; Adjudicating Authority to grant differential interest accordingly.

Refund of pre-deposit - direction as to implementation and timeline for payment of differential interest - HELD THAT: - The Tribunal, after setting aside the impugned order, directed the Adjudicating Authority to compute and pay the differential interest (at the 12% rate) from the date of deposit up to the date of refund. A compliance timeline was specified to ensure finality and prompt payment. [Paras 8]

Adjudicating Authority directed to pay the differential interest within 60 days from receipt of a copy of this order.

Final Conclusion: The appeal is allowed: the appellate order is set aside; interest on the pre-deposit is payable under Section 35FF from the date of deposit until the date of refund at 12% per annum (following Parle Agro Ltd.), and the Adjudicating Authority is directed to pay the differential interest within 60 days of receipt of this order.

Interest on delayed refund under Section 11BB - Claim for refund under Section 11B(1) - Accrual of right to interest from expiry of three months from receipt of refund application - Explanation to Section 11BB deeming appellate order as an order under Section 11B(2) - Binding precedent in Ranbaxy Laboratories on commencement of interest

Interest on delayed refund under Section 11BB - Claim for refund under Section 11B(1) - Accrual of right to interest from expiry of three months from receipt of refund application - Explanation to Section 11BB deeming appellate order as an order under Section 11B(2) - Binding precedent in Ranbaxy Laboratories on commencement of interest - Whether interest under Section 11BB is payable from the date immediately after the expiry of three months from receipt of the refund application under Section 11B(1) or from the date of the order granting refund. - HELD THAT: - The Court held that the statutory scheme contemplates an application under Section 11B(1) and an order under Section 11B(2); Section 11BB provides for payment of interest where duty ordered to be refunded under Section 11B(2) is not refunded within three months from the date of receipt of the application under Section 11B(1). The Explanation to Section 11BB treats an order of the Appellate Tribunal or Court as an order under Section 11B(2) for purposes of interest. The Supreme Court's decision in Ranbaxy Laboratories establishes that the Revenue's liability to pay interest under Section 11BB commences from the date immediately after the expiry of three months from the date of receipt of the refund application under Section 11B(1), and not from the date of the order granting refund. Applying that binding principle, the tribunal's approach-which made entitlement to interest depend on expiry of three months from the date of the tribunal's order rather than from receipt of the original application-was incorrect. The High Court therefore answered the substantial question of law in favour of the appellant and allowed the appeals. [Paras 13, 16, 17, 18, 19]

Interest under Section 11BB accrues from the date immediately after the expiry of three months from receipt of the refund application under Section 11B(1); the tribunal's contrary approach was set aside and the appeals were allowed.

Final Conclusion: Appeals allowed; entitlement to interest under Section 11BB is held to accrue from the date immediately after the expiry of three months from receipt of the refund application under Section 11B(1), following Ranbaxy Laboratories, and the tribunal's contrary view set aside.

Eligibility for exemption under Notification No. 30/2004-CE where CENVAT credit was availed - reversal/payment under Rule 6(3) of the Cenvat Credit Rules, 2004 - deeming provision of sub-rule (3D) of Rule 6 - payment under Rule 6(3) to be treated as CENVAT credit not taken for purposes of exemption notifications - penalty consequential on a demand rendered unsustainable

Eligibility for exemption under Notification No. 30/2004-CE where CENVAT credit was availed - reversal/payment under Rule 6(3) of the Cenvat Credit Rules, 2004 - deeming provision of sub-rule (3D) of Rule 6 - payment under Rule 6(3) to be treated as CENVAT credit not taken for purposes of exemption notifications - Assessee who availed CENVAT credit but subsequently reversed/paid an amount under Rule 6(3) is entitled to exemption under Notification No. 30/2004-CE. - HELD THAT: - The notification disqualifies goods in respect of which credit of duty on inputs or capital goods has been taken. Sub rule (3D) of Rule 6 provides that payment of an amount under sub rule (3) shall be deemed to be CENVAT credit not taken for the purpose of an exemption notification which is granted on the condition that no CENVAT credit shall be taken. Therefore, where the assessee has availed CENVAT credit but has complied with Rule 6(3) by reversing/paying the specified amount, such payment is statutorily treated as non availment of credit and satisfies the condition of the exemption notification. The Tribunal applied its prior decisions addressing identical facts and the same statutory provision to conclude that the demand denying exemption is unsustainable. [Paras 6, 7]

Demand denying exemption under Notification No. 30/2004-CE set aside; exemption allowed as payment under Rule 6(3) is to be treated as non availment of CENVAT credit under sub rule (3D).

Penalty consequential on a demand rendered unsustainable - Penalty imposed consequential to the demand is not sustainable where the underlying demand is set aside. - HELD THAT: - The penalty was imposed as a consequence of the excise demand which the Tribunal found unsustainable because the exemption was available on compliance with Rule 6(3) read with sub rule (3D). As the demand does not survive, the ancillary penalty cannot be upheld. [Paras 8]

Penalty set aside as consequential upon the deletion of the demand.

Final Conclusion: Following the deeming provision of sub rule (3D) of Rule 6, payment/reversal under Rule 6(3) is to be treated as non availment of CENVAT credit for the purpose of Notification No. 30/2004 CE; the demand denying the exemption is set aside and, being consequential, the penalty is also set aside. Assessee's appeal allowed; Revenue's appeal dismissed.

Place of removal - assessable value - cost of transportation excluded from assessable value - FOR contracts / delivery at buyer's premises - application of Ispat Industries Ltd. precedent - refund entitlement - Section 11B limitation for refund - Section 11AC(1)(d) deemed closure requires issuance of show cause notice - revenue deposit / self-assessment

Place of removal - assessable value - cost of transportation excluded from assessable value - application of Ispat Industries Ltd. precedent - FOR contracts / delivery at buyer's premises - Whether freight and transit insurance charged for delivery to buyers' premises are includible in the assessable value for central excise when sales are on FOR/delivery at buyer's site. - HELD THAT: - The Tribunal applied the Supreme Court's ruling in Ispat Industries Ltd. and the Board clarification which adopts that principle, holding that the expression 'place of removal' in Section 4 read with the Valuation Rules refers to the manufacturer's premises (factory, warehouse, depot or premises referable to the manufacturer) and not to the buyer's premises. Rule 5 excludes the cost of transportation from the place of removal up to the place of delivery from assessable value except where the factory is not the place of removal. The Tribunal distinguished earlier decisions that turned on different facts (for example Roofit) and concluded that, on the facts before it, the plaintiff's sales fall within the scope of Ispat Industries so that freight and transit insurance up to buyer's premises are not includible in assessable value. Applying that legal principle to the appeals arising from the Srinagar/Mallacheruvu and Mulakalapalli/Vizag units, the Tribunal set aside the orders which had included freight in the assessable value and allowed the appeals of the assessee. [Paras 13, 18, 19]

Appeals allowed; freight and transit insurance up to buyers' premises are not includible in assessable value in the facts of these cases and the impugned orders including freight are set aside.

Refund entitlement - Section 11B limitation for refund - Section 11AC(1)(d) deemed closure requires issuance of show cause notice - revenue deposit / self-assessment - Whether the appellant is entitled to refund of amounts paid (duty, interest, penalty) pursuant to audit intervention and whether any part of the refund is barred by limitation or concluded under Section 11AC(1)(d). - HELD THAT: - The Tribunal found that the payments made by the assessee in response to audit communications were not appropriated by issuance of any show cause notice nor was any 'letter of closure' issued by the Department. Section 11AC(1)(d) deems proceedings concluded only where its precondition-payment within the stipulated period from the date of issue of a show cause notice-has been satisfied; absent issuance of a show cause notice, Section 11AC(1)(d) cannot operate to close the dispute. The amounts deposited therefore constituted revenue deposits rather than a concluded appropriation, and the assessee had not been precluded from claiming refund. The Tribunal also held that the limitation under Section 11B did not apply to deny the refund in the present facts because the payments arose from audit interaction without issuance of a SCN and were treated as deposits. Applying the legal conclusions reached on place of removal (that freight was not exigible), the Tribunal allowed the refund claims and ordered refund with interest as per rules. [Paras 34, 45]

Appeals allowed; the amounts deposited are refundable (total claim allowed) with interest, limitation under Section 11B and deemed closure under Section 11AC(1)(d) held inapplicable on the facts.

Final Conclusion: The Tribunal allowed the appeals of the assessee: (i) held that under the facts the 'place of removal' is the manufacturer's premises and freight/transit insurance up to buyers' premises are not includible in assessable value (appeals against inclusion of freight set aside); and (ii) allowed the refund claims for amounts deposited pursuant to audit intervention, holding that those payments were revenue deposits refundable with interest and that neither Section 11B limitation nor deemed closure under Section 11AC(1)(d) applied on the facts.

Entitlement to cenvat credit on goods used for foundations and support structures as capital goods - retrospective application of an amending notification - accrual of credit prior to amendment - interpretation of Rule 2(a) of the Cenvat Credit Rules, 2004

Retrospective application of an amending notification - interpretation of Rule 2(a) of the Cenvat Credit Rules, 2004 - Amendment made by Notification No.16/2009-CE (N.T.) dated 07.07.2009 does not operate retrospectively and therefore cannot be applied to deny cenvat credit for the period prior to 07.07.2009. - HELD THAT: - The tribunal examined the adjudicating authority's reliance on the Larger Bench decision in Vandana Global Ltd. and the amendment effected by Notification No.16/2009-CE (N.T.). It noted that subsequent pronouncements, including the Chhattisgarh High Court in Vandana Global Ltd. and the Gujarat High Court in Mundra Ports & SEZ Ltd., held that the amendment was not clarificatory and could not be given retrospective effect. The tribunal accepted those authorities and concluded that the amendment cannot be invoked to deny credit for inputs used before 07.07.2009. The finding of the adjudicating authority to the contrary was therefore held to be unsustainable. [Paras 4]

Amendment by Notification No.16/2009-CE (N.T.) is not retrospective and is inapplicable to the period prior to 07.07.2009.

Entitlement to cenvat credit on goods used for foundations and support structures as capital goods - accrual of credit prior to amendment - Cenvat credit is admissible on Cement, TMT bars, MS angles, channels, beams, racks, plates, etc., used for making foundations and support structures where such items qualify as capital goods and where the credit had accrued before the 07.07.2009 amendment. - HELD THAT: - The tribunal found that the goods in question were used in erection and installation as parts, components or support structures forming part of capital goods within the factory. It held that where credit had already accrued prior to the notification of the amendment, the amendment could not defeat that accrued credit. The tribunal relied on settled legal position and the cited judicial authorities to hold that such items, when used as capital goods or as parts/accessories of capital goods, attract admissibility of cenvat credit. Consequently, the adjudicating authority's denial of credit on these grounds was set aside. [Paras 4, 5]

Appellant entitled to cenvat credit on the goods in question as capital goods and on credits accrued before 07.07.2009; impugned order set aside and appeal allowed.

Final Conclusion: The appeal is allowed: the amendment in Notification No.16/2009-CE (N.T.) cannot be given retrospective effect to deny credit prior to 07.07.2009, and the appellant is entitled to cenvat credit on the specified goods used as capital goods or parts thereof for the period April 2008 to April, 2010; the impugned order is set aside with consequential relief as per law.

Related persons - inter-connected undertakings - transaction value - normal transaction value - mutuality of interest - valuation under Rule 8 - rejection of transaction value under Rule 9/Rule 10 - Section 4(3)(b) of the Central Excise Act

Related persons - inter-connected undertakings - transaction value - mutuality of interest - Section 4(3)(b) of the Central Excise Act - Whether the appellant and the buyer Dairies are related persons under Section 4(3)(b) and whether the transaction value declared by the appellant can be accepted for valuation. - HELD THAT: - The Tribunal applied the test in Section 4(3)(b) read with the Central Excise Valuation Rules and the CBEC circular on the meaning of "inter-connected undertakings". It observed that mere control or influence by the federation (GCMMF) over member unions does not establish mutuality of interest between the seller (appellant) and the buyer dairies. The impugned order had relied on bylaws and asserted control by GCMMF, but there was no evidence that the appellant and the dairies had control over each other or held shares constituting mutual business interest. The Tribunal placed reliance on the ratio of the authority discussed (M/s. Kaira District Co-Operative Milk Producers Union Ltd.) where similar bylaws and arrangements did not render the union and the federation "related" for valuation purposes. Applying rules 8-10 conceptually, the Tribunal held that an inter-connection by itself does not automatically convert parties into "related persons" under clauses (ii),(iii) or (iv) of Section 4(3)(b); only where those specific relationships exist would transaction value be vitiated. On the facts, the relationship required by Section 4(3)(b) was not established; hence the price declared by the appellant constituted the transaction value. [Paras 4, 5]

Appellant and the dairies are not related persons under Section 4(3)(b); the transaction value as declared by the appellant is acceptable and the appeals are allowed.

Final Conclusion: On the facts and by application of Section 4(3)(b) and the valuation rules, the Tribunal held that the appellant and the buyers are not "related persons" and accordingly set aside the impugned orders, accepting the declared transaction value and allowing the appeals.

Allowability of cenvat credit for input services - cenvat credit on Air Travel Agency/Rail Travel Agent services - reverse charge mechanism and its applicability to Works Contract Service - scope of show-cause notice and limits of adjudication - distinction between business and personal use for denial of credit

Cenvat credit on Air Travel Agency/Rail Travel Agent services - distinction between business and personal use for denial of credit - allowability of cenvat credit for input services - Whether cenvat credit on Air Travel Agency/Rail Travel Agent services availed by the appellant is admissible. - HELD THAT: - The Tribunal found that there is no record to suggest the travel services were for employees' personal use and noted that travels debited to the company's books are for business exigencies. The Adjudicating Authority's order was characterised as cryptic and lacking discussion to justify denial; consequently the Tribunal held that credit could not be denied where the services were used by company executives for business purposes and not for personal consumption, relying on precedents cited in the order. [Paras 3]

Credit of service tax paid on Air Travel Agency/Rail Travel Agent services allowed and disallowance set aside.

Reverse charge mechanism and its applicability to Works Contract Service - allowability of cenvat credit for input services - Whether cenvat credit disallowed on Works Contract Service can be sustained in view of Notification No.30/2012-ST introducing reverse charge mechanism. - HELD THAT: - The Tribunal observed that the reverse charge Notification relied upon applies to individuals, partnership firms and HUFs and is not applicable to a corporate assessee. The appellant being a Private Limited Company and the service provider also being a Private Limited Company, the Notification did not apply. The related valuation/abatement notification relied upon by the Commissioner (Appeals) was also found inapplicable. On these grounds the disallowance under Works Contract Service could not be sustained. [Paras 3]

Disallowance of credit under Works Contract Service set aside; credit restored.

Scope of show-cause notice and limits of adjudication - allowability of cenvat credit for input services - Whether disallowance of credit on commercial and construction services was permissible when the payment/valuation issue was not raised in the show-cause notice. - HELD THAT: - The Tribunal accepted the appellant's submission that the requirement to pay service value with service tax within three months was not raised in the show-cause notice or original adjudication order and that the Commissioner (Appeals) had gone beyond the scope of the notice by addressing this point for the first time. Noting that payments were made within the normal period, the Tribunal concluded that the disallowance could not be sustained. [Paras 3]

Disallowance in respect of commercial and construction services set aside.

Final Conclusion: The impugned adjudication and appellate orders are set aside; the appellant's appeal is allowed with consequential relief as per law.

Penalty under Rule 26(2) of Central Excise Rules - Abetment of fraudulent availment of Cenvat credit - Liability of transporter for providing blank LR books

Penalty under Rule 26(2) of Central Excise Rules - Liability of transporter for providing blank LR books - Abetment of fraudulent availment of Cenvat credit - Whether penalty under Rule 26(2) could be imposed on the appellants (transporters) for providing blank LRs which were used to facilitate fraudulent availment of cenvat credit. - HELD THAT: - The Tribunal found as an admitted fact that the appellants had provided blank LR books to M/s Accord Industries Limited and those LRs were used in connection with invoices by M/s Accord enabling fraudulent availment of cenvat credit by M/s Archon Engicon Limited. The Tribunal held that the mere provision of blank LRs by the transporters amounted to abetment in the fraudulent passing of cenvat credit. It was held to be immaterial whether the appellants actually handled the goods; the act of supplying blank LRs established facilitation of the fraud and thus fell within the four corners of Rule 26(2). On this basis the imposition of penalty under Rule 26(2) was sustained. [Paras 4, 5]

Penalty under Rule 26(2) upheld and the appeals dismissed.

Final Conclusion: The Tribunal affirmed the imposition of penalty on the appellants under Rule 26(2) for providing blank LR books that facilitated fraudulent availment of cenvat credit and dismissed the appeals.

Raw material - refining agent - concessional rate of tax - concurrent findings of fact - exercise of writ jurisdiction under Article 226 - test of indispensability and consumability as criterion for raw material

Raw material - refining agent - test of indispensability and consumability as criterion for raw material - concessional rate of tax - Whether the oxygen gas supplied by respondent No.1 to respondent No.2 is a "raw material" for manufacture of steel and therefore entitled to the concessional rate of tax. - HELD THAT: - The Court examined the manufacturing process (BOS method), the expert committee's detailed inspection report and the authorities' findings that oxygen functions as a refining agent whose main role is to reduce carbon content. Applying precedents distinguishing ingredients that are mere auxiliaries or fuels from those that qualify as raw material, the Court held that the committee's finding that oxygen is a refining agent (used to reduce carbon and forming slag as waste) means oxygen is not a direct raw material of steel. The Court considered the test in Ballarpur Industries (indispensability/consumability) and Thomas Stephen (ancillary/fuel cannot be raw material) and, on facts and expert conclusion, found the position aligns with the latter: oxygen is used in the refining stage and does not constitute a raw material for the end product. Accordingly, oxygen does not qualify for the concessional 2% rate and remains taxable at the higher rate applicable to non-raw-material sales. [Paras 6, 10]

Oxygen is not a "raw material" for manufacture of steel; respondents are not entitled to the concessional rate of tax.

Concurrent findings of fact - exercise of writ jurisdiction under Article 226 - expert committee report - Whether the High Court was justified in interfering with the concurrent findings of fact recorded by the assessing officer, revisional authority and the expert committee while exercising its writ jurisdiction under Article 226. - HELD THAT: - The Court reiterated that Article 226 does not enable the High Court to sit as an appellate fact-finding forum. Where concurrent findings are founded on a detailed expert inspection report and were accepted by the assessing and revisional authorities, the High Court should not have disturbed those findings absent demonstrable perversity or lack of evidence. Given the expert committee's reasoned conclusion that oxygen is a refining agent and the absence of a basis to treat those conclusions as perverse, the High Court erred in upsetting the concurrent factual conclusions. [Paras 7, 12]

High Court erred in interfering with the concurrent findings; its order is quashed and the authorities' findings are restored.

Final Conclusion: Appeals allowed. The High Court's order is quashed and set aside; the assessment order confirmed up to the revisional authority is restored. No order as to costs.

Regular Departmental Enquiry - principles of natural justice - vitiation of enquiry due to lack of cross-examination - reasoned and speaking order - remand for fresh enquiry - quasi-judicial proceedings - judicial review under Article 226

Regular Departmental Enquiry - vitiation of enquiry due to lack of cross-examination - principles of natural justice - The Regular Departmental Enquiry conducted against the claimant-respondent was vitiated for want of proper opportunity to adduce and test oral evidence including cross-examination. - HELD THAT: - The Court accepted the Tribunal's finding that the Enquiry Officer did not record the statements of the witnesses mentioned in the charge-sheet after fixing date, time and place, and therefore no opportunity was afforded to the charged official to cross-examine those witnesses. The settled law requires that even in ex parte proceedings the department must adduce oral and documentary evidence, the Enquiry Officer must fix dates for examination and cross-examination, and the delinquent employee must be given opportunity to produce witnesses and to a personal hearing. Because these procedural safeguards, which form part of the principles of natural justice applicable to quasi-judicial disciplinary proceedings, were not followed, the Court agreed that the enquiry was vitiated.

Enquiry held to be vitiated for failure to conduct a Regular Enquiry with opportunity for recording and testing oral evidence.

Reasoned and speaking order - remand for fresh enquiry - judicial review under Article 226 - Whether the orders of punishment could be upheld and whether the matter should be remanded to the disciplinary authority for fresh enquiry. - HELD THAT: - The Court observed that the punishment order and appellate order were founded on the enquiry report which was vitiated; applying the maxim 'Sublato Fundamento Cadit Opus' it held that the impugned orders could not be sustained. The Court considered authorities holding that when punishment is set aside for defective enquiry, the matter may be remitted for completion of enquiry, but whether to remit depends on factors such as the gravity of misconduct, magnitude of charges and other relevant circumstances. Having considered the facts - that the charge related to an incident on 10.10.2017, no Regular Enquiry was held, the department had imposed minor punishment (stoppage of one increment for one year and censure), and about five years had elapsed since institution of proceedings - the Court declined to remit the matter and upheld the Tribunal's setting aside of the punishment orders. The Court exercised judicial review under Article 226 and, in view of the minor nature of punishment and the delay, refused to interfere with the Tribunal's decision not to direct a fresh enquiry.

Impugned punishment and appellate orders quashed; on facts (minor punishment and delay) no remand for fresh enquiry directed.

Final Conclusion: The writ petition is dismissed. The Court agreed with the Tribunal that the departmental enquiry was vitiated for non-observance of the procedure and principles of natural justice, set aside the impugned punishment and appellate orders, and - having regard to the minor nature of punishment and the delay - declined to remit the matter for a fresh enquiry.

Definition of 'payment for admission' under Section 2(l)(iii) - meaning of 'instrument' and 'contrivance' - chargeability of costume rental to entertainment tax - taxation only by authority of law under Article 265

Definition of 'payment for admission' under Section 2(l)(iii) - meaning of 'instrument' and 'contrivance' - chargeability of costume rental to entertainment tax - taxation only by authority of law under Article 265 - Whether amounts charged for rental of costumes at the water park fall within 'payment for admission' as defined by Section 2(l)(iii) of The Uttar Pradesh Entertainment and Betting Tax Act, 1979, and thus are taxable. - HELD THAT: - Section 2(l)(iii) includes payments for the loan or use of any 'instrument' or 'contrivance' which enables a person to get a normal or better view, hearing or enjoyment of the entertainment, which without such aid the person would not get. The words 'instrument' and 'contrivance' are not defined in the Act and their ordinary dictionary meanings were applied. 'Contrivance' denotes a clever device or arrangement for a particular purpose; 'instrument' denotes an object or means by which an action is performed or an end is achieved. The material on record does not show that the costumes hired at the water park are instruments or contrivances that enable enjoyment of the entertainment such that, without them, enjoyment would not be possible or would be substantially impaired. There is no evidence that the costumes enhance the viewing, hearing or enjoyment in the sense contemplated by Section 2(l)(iii) or that entry without costumes would preclude enjoyment. A tax can be levied only by clear statutory authority; absent a specific legislative provision bringing costume rental within the definition, the demand lacks legal foundation and is thereby in conflict with the principle that taxation must be by authority of law under Article 265. For these reasons the assessment and penalty premised on treating costume rental as 'payment for admission' are without authority of law. [Paras 12, 13, 14, 15, 16]

Amounts charged for rental of costumes do not fall within Section 2(l)(iii)'s 'payment for admission' and the demand and penalty are without authority of law.

Final Conclusion: Writ petition allowed; impugned orders dated 31.08.2010, 21.01.2016 and 30.03.2017 set aside. The deposit made as a precondition of appeal to be refunded within three months.