TaxTMI Updates e-Newsletter
Dec 08,2021

Restriction on availment of input tax credit under rule 86A - cessation of restriction after one year under rule 86A(3) - right to unblock input tax credit on expiry of statutory period - propriety of continuing verification beyond statutory period - claim for interest on blocked input tax credit - issue of show cause notice after verification

Restriction on availment of input tax credit under rule 86A - cessation of restriction after one year under rule 86A(3) - right to unblock input tax credit on expiry of statutory period - propriety of continuing verification beyond statutory period - issue of show cause notice after verification - Input tax credit blocked under Rule 86A was liable to be unblocked upon expiry of one year from the date of blocking and could not be kept blocked merely by continuing verification beyond that period. - HELD THAT: - The court examined sub-rule (3) of Rule 86A and held that the statutory mandate provides for cessation of the restriction after one year from the date it was imposed. The respondents' instructions showed that the credit was blocked on 26.01.2020 and that the department continued to seek submissions and reconciliation, but did not rely on sub-rule (3) or explain any lawful basis for extending the restriction beyond one year. The court observed that if the department suspected non-cooperation or fraudulent availment, it should proceed by the remedies available under law (including issuance of a show cause notice after completion of verification) rather than perpetuating the restriction indefinitely. In view of the statutory provision and the Court's earlier decision in Writ Petition (L) No. 128 of 2021 (M/s. Aegis Polymers v. Union of India and Ors.), the petitioner was entitled to have the blocked input tax credit unblocked as a matter of law. [Paras 5, 6]

Prayer for issuance of a writ directing unblocking of the input tax credit was allowed and the blocked ITC was ordered to be unblocked.

Claim for interest on blocked input tax credit - The claim for payment of interest on the period during which the input tax credit remained blocked was refused. - HELD THAT: - Although the petitioner sought interest for deprivation of its property while the credit remained blocked, the court declined to grant the prayer for interest. The order confined relief to unblocking the credit and did not award interest. The court left open the rights of the parties insofar as future proceedings may be initiated and concluded according to law. [Paras 6]

Prayer for interest was refused.

Final Conclusion: The writ petition was disposed of by directing respondent no. 2 to unblock the input tax credit which had been restricted on 26.01.2020 in accordance with rule 86A(3); the claim for interest was declined. Proceedings, if initiated against the petitioner, may continue and all contentions remain open.

Treatment of inter-state supply versus intra-state supply where invoice is billed to an office outside the place of delivery - release of seized goods and vehicle on deposit of tax - deposit as security pending adjudication of tax liability - issuance of show-cause notice for demand of SGST and CGST and imposition of penalty

Treatment of inter-state supply versus intra-state supply where invoice is billed to an office outside the place of delivery - release of seized goods and vehicle on deposit of tax - deposit as security pending adjudication of tax liability - issuance of show-cause notice for demand of SGST and CGST and imposition of penalty - Whether the vehicle and goods seized for transportation with an expired E-way bill should be released and whether SGST and CGST are payable notwithstanding that the supplier invoiced the buyer's head office outside the State. - HELD THAT: - The Court observed on the material placed that although the supplier raised an invoice billing the petitioner's head office in Telangana, the goods were consigned from the supplier's place of business in Chennai to the petitioner's unit at Thuvakudi in Trichy. Prima facie, therefore, the supply is within the State and attracts SGST and CGST rather than IGST. In view of this prima facie conclusion, the Court directed release of the vehicle and goods subject to the petitioner depositing the applicable SGST and CGST as a deposit/security. The Court required the respondent to issue an appropriate notice to the petitioner to show cause why the SGST and CGST so directed to be deposited should be demanded and why penalty should not be imposed, clarifying that the deposit will be appropriated only according to the outcome of the departmental proceedings. The order implements a provisional mechanism for interim release by requiring a deposit pending adjudication while leaving final determination of tax liability and any penalty to the statutory process. [Paras 7, 8]

Vehicle and goods released subject to deposit of applicable SGST and CGST as security; respondent to issue show-cause notice for demand and penalty and appropriation of deposit to await outcome of proceedings.

Final Conclusion: Writ petition disposed: provisional release of seized vehicle and goods ordered on deposit of SGST and CGST to be held as security; departmental proceedings including show-cause notice on tax demand and penalty to follow and final appropriation of the deposit to depend on their outcome.

Confiscation of goods under the Central Goods and Services Tax Act, 2017 - detention and release of goods pending administrative adjudication - administrative decision on representation against proposed confiscation - interim direction for disposal of representation - service by speed post and electronic mode

Administrative decision on representation against proposed confiscation - detention and release of goods pending administrative adjudication - The petitioner's representation dated 19.10.2021 challenging the notice for confiscation was directed to be decided by the respondent within a specified time-frame. - HELD THAT: - The High Court did not adjudicate the merits of the proposed confiscation or the rival contentions on liability; instead it issued a mandamus directing the respondent-State to decide the representation submitted by the petitioner on 19.10.2021. The Court required that the representation be disposed of without being influenced by the pendency of the writ petition and fixed a concrete deadline for administrative decision. The order also directed issuance of notice in the writ petition and permitted alternative modes of direct service to ensure communication. [Paras 6, 7, 8]

Respondent directed to decide the petitioner's representation on or before 04.12.2021; notice issued returnable 09.12.2021; direct service permitted by speed post and e-mode.

Final Conclusion: Writ petition left pending; administrative representation to be decided by the respondent by 04.12.2021; notice issued returnable 09.12.2021 and direct service by speed post and e-mode permitted.

Tariff heading 1905 90 40 - Entry No. 96: Papad, by whatever name it is known, except when served for consumption - Common parlance test - Predominant ingredient test - HSN / Customs Tariff Act, 1975 applicability for GST classification - Residuary heading 2106 (food preparations not elsewhere specified or included) - Rule 3(a) of General Rules of Interpretation (specific entry preferred over general)

Tariff heading 1905 90 40 - HSN / Customs Tariff Act, 1975 applicability for GST classification - Predominant ingredient test - Common parlance test - Rule 3(a) of General Rules of Interpretation (specific entry preferred over general) - Whether the appellant's product (fried papad in different shapes and sizes) is classifiable as 'Papad' under Tariff heading 1905 90 40 of the Customs Tariff Act, 1975. - HELD THAT: - The Authority examined ingredients, manufacturing process, use and market identity. The product is made from cereal and pulse-based flours (wheat, rice, starch, corn, etc.), formed from a dough, dried and consumed after frying or roasting, and functions as a crispy accompaniment/snack. The Customs Tariff Act/HSN rules and explanatory notes (Chapter 19) apply to GST classification; the predominant-ingredient test and common parlance/user perception are determinative where no statutory definition exists. Applying these tests, the impugned products share the essential characteristics of papad. Rule 3(a) directs preference for a specific heading when applicable. On these grounds the product is classifiable under Tariff heading 1905 90 40 as Papad. [Paras 41, 42, 43, 44, 50]

The product 'fried different shapes and sizes papad' is classifiable as Papad under Tariff heading 1905 90 40 of the Customs Tariff Act, 1975.

Entry No. 96: Papad, by whatever name it is known, except when served for consumption - "served for consumption" meaning - Residuary heading 2106 (food preparations not elsewhere specified or included) - Whether supplies of the appellant's ready-to-eat fried papad fall within the exemption at Entry No. 96 or are excluded and taxable under Schedule III / residuary headings. - HELD THAT: - Entry No. 96 covers papad 'by whatever name it is known' but excludes those 'when served for consumption.' The Authority interpreted 'served for consumption' to denote products that are ready for consumption without any further cooking or roasting; the notification contains no limiting phrase restricting that expression to hotels/eating houses. The appellant's products are sold already fried with masala, ready to eat and do not require any further process; therefore they are excluded from Entry No. 96. Having been held outside the exemption, the goods must be taxed under the applicable tariff/notification. The residuary heading 2106 is a general heading for food preparations not elsewhere specified, but Rule 3(a) requires application of the specific heading (1905 90 40) when available; accordingly the products attract the rate applicable to CTH 1905 (Schedule-III entry). [Paras 47, 48, 49, 50]

The appellant's ready-to-eat fried papad are excluded from the exemption at Entry No. 96 and, being classifiable under CTH 1905 90 40, attract GST at the rate specified for that heading.

GST rate determination based on classification - Schedule-III Notification No.1/2017-Central Tax (Rate) - The applicable rate of Goods and Services Tax on the appellant's product after classification. - HELD THAT: - Once the product was held to be classifiable under CTH 1905 90 40, the Authority applied the GST rate set out for goods under CTH 1905 in Schedule-III of Notification No.1/2017-Central Tax (Rate). The product therefore falls within the entry charging tax for 'pastry, cakes, biscuits and other bakers' wares' (i.e., items under CTH 1905 not specifically exempted) and is liable to the notified rate. [Paras 50, 51]

The product is chargeable to GST at 18% (CGST 9% + SGST 9%) as per the entries applicable to CTH 1905 under the notifications relied upon.

Final Conclusion: The Advance Ruling of the Gujarat AAR is modified: the appellant's fried papad in various shapes and sizes is classifiable as Papad under Tariff heading 1905 90 40; being ready-to-eat it is excluded from the exemption at Entry No. 96 and, accordingly, is liable to GST at 18% (9% CGST + 9% SGST) as per the relevant notifications.

Classification under Chapter heading 1518 - specific entry prevails over general entry - HSN Explanatory Notes - Rule 3(a) of the General Rules of Interpretation - chemically modified vegetable oil - Advance Ruling

Classification under Chapter heading 1518 - specific entry prevails over general entry - chemically modified vegetable oil - HSN Explanatory Notes - Advance Ruling - Whether Epoxidised Soya bean Oil is classifiable under Entry No.90 of Schedule I (tariff item 1518) attracting GST @5% or under Entry No.27 of Schedule II attracting GST @12%. - HELD THAT: - The Authority examined the manufacturing process and found that Epoxidised Soya Bean Oil is produced by epoxidation of refined soybean oil using hydrogen peroxide and an acid catalyst, resulting in a chemically modified vegetable oil that retains its fundamental character and physical appearance (paras 7.2, 7.5). The HSN Explanatory Notes expressly list epoxidised oils obtained by treating soya-bean oil as falling within the scope of goods in Chapter 15 (1518), and the heading language covers vegetable fats and oils which are boiled, oxidized or otherwise chemically modified (paras 7.2, 7.5). The applicant's laboratory report confirming edible vegetable oil parameters and contemporaneous commercial practice (imports and other manufacturers classifying the product under 1518 and paying 5%) were noted (para 7.6, 7.9). The Authority observed that Entry No.27 of Schedule II is a residual entry for goods "not elsewhere specified or included" and therefore cannot apply where a specific entry (Entry No.90 of Schedule I) clearly covers the product (para 7.7). Precedents and an earlier AAR on a similar product were considered supportive of classification under 1518 (para 7.8). The Assistant Commissioner's view proposing Schedule II was noted but found unsubstantiated, and no contrary technical or legal basis was provided to displace the specific entry (para 7.7). Applying the interpretative principle that a specific tariff description prevails over a general or residual description, the Authority concluded that Epoxidised Soya Bean Oil is covered by Entry No.90 of Schedule I (paras 7.5-7.10). [Paras 7, 8]

Epoxidised Soya Bean Oil is classifiable under tariff item 1518 and is specifically covered by Entry No.90 of Schedule I; GST at 5% is leviable.

Final Conclusion: The Authority rules that Epoxidised Soya Bean Oil is a chemically modified vegetable oil classifiable under Chapter heading 1518 and, being specifically covered by Entry No.90 of Schedule I to Notification No.01/2017-Central Tax (Rate), is taxable at the rate of 5% GST.

Classification of goods - medicament versus cosmetic - Chapter Note 1(e) exclusion - preparations for use on the hair - tariff classification under Chapter 33 (heading 3305) - applicable GST rate 18%

Classification of goods - medicament versus cosmetic - Chapter Note 1(e) exclusion - preparations for use on the hair - tariff classification under Chapter 33 (heading 3305) - Whether Himsa Plus Oil is a medicament falling under Chapter 30 or a preparation for use on the hair classifiable under Chapter heading 3305 and thereby the applicable GST rate. - HELD THAT: - The Authority examined the product label, statutory chapter notes and relevant tariff entries. Chapter 30 covers 'pharmaceutical products' including medicaments but contains Note 1(e) which excludes preparations of headings 3303 to 3307 even if they have therapeutic or prophylactic properties. The court relied on the principle in Puma Ayurvedic Herbal that products falling in Chapter 33 remain outside Chapter 30 despite any therapeutic claims. The label of Himsa Plus Oil lists reliefs such as stress, heating sensation, bodyache, premature hair fall, dandruff, headache and similar complaints but does not indicate dosage instructions or reference to authoritative Ayurvedic formulae in the statutory schedule; these features are indicative that the product is not a medicament for treatment of disease. The product falls within the definition of cosmetic as an article applied to the body to promote attractiveness and, in substance and presentation, is predominantly a hair preparation. Applying Chapter Note 1(e) and the headings in the First Schedule to the Customs Tariff Act, the Authority held that Himsa Plus Oil is classifiable as a preparation for use on the hair under heading 3305 and not as a medicament under Chapter 30. Accordingly, the tariff classification determines the applicable GST rate. [Paras 21, 22, 23, 24, 26]

Himsa Plus Oil is classifiable under Chapter heading 3305 (preparations for use on the hair) and not as a medicament under Chapter 30; it attracts GST at 18% (CGST 9% and SGST 9%).

Final Conclusion: Advance Ruling: Himsa Plus Oil is a hair preparation classifiable under Chapter 3305 and is taxable at 18% (CGST 9% + SGST 9%) within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh.

Inclusion of reimbursement in the value of supply - definition of consideration under the CGST Act - valuation of taxable supply under Section 15 of the CGST Act - pure agent exclusion under Rule 33 of the CGST Rules - GST liability on reimbursement of EPF and ESI contributions

Inclusion of reimbursement in the value of supply - definition of consideration under the CGST Act - valuation of taxable supply under Section 15 of the CGST Act - Whether reimbursement of EPF and ESI contributions paid to manpower contractors is includible in the value of supply and subject to GST. - HELD THAT: - The Authority examined the statutory definition of "consideration" and the valuation provisions under Section 15 of the CGST Act and held that consideration includes any payment made in respect of, or for the inducement of, the supply of services. Section 15(1) makes the transaction value the price actually paid or payable where the parties are unrelated and the price is the sole consideration; Section 15(2) specifies amounts that must be included in the value of supply. Applying these provisions, the Authority concluded that amounts collected by the contractor from the applicant - including wages, service charges and reimbursement of EPF and ESI contributions - form part of the payment received for the manpower supply. Consequently, such reimbursements fall within the value of supply and are taxable under GST. The Authority rejected the contention that EPF and ESI reimbursements are excluded from consideration and valuation for GST purposes, noting the statutory intent in Section 15 to include such payments in the taxable value. [Paras 12, 13, 14, 15, 18]

Reimbursement of EPF and ESI contributions paid to manpower contractors is includible in the value of supply and liable to GST.

Pure agent exclusion under Rule 33 of the CGST Rules - GST liability on reimbursement of EPF and ESI contributions - Whether the manpower contractor qualifies as a "pure agent" under Rule 33 so that reimbursement of EPF and ESI may be excluded from the value of supply. - HELD THAT: - Rule 33 excludes from value expenditures incurred by a supplier as a pure agent where specified conditions are satisfied, including: (i) payment to a third party on authorization of the recipient, (ii) separate indication in the invoice, and (iii) that supplies procured as pure agent are in addition to services supplied on the supplier's own account. The Authority found that the labour contractor did not satisfy these conditions: the contractor was not procuring additional supplies from a third party but was supplying a single service (manpower supply); the work order did not establish that the contractor acted as the applicant's pure agent in depositing EPF/ESI; and documentary evidence (challans/payment receipts) did not demonstrate fulfillment of the pure agent criteria. Therefore Rule 33 could not be invoked to exclude EPF/ESI reimbursements from the taxable value. [Paras 16, 17, 18]

Manpower contractor is not a "pure agent" under Rule 33; reimbursement of EPF and ESI cannot be excluded from the value of supply.

Final Conclusion: The Authority ruled that reimbursement of EPF and ESI contributions paid to manpower contractors is includible in the value of supply and taxable under GST; the contractor does not qualify as a "pure agent" under Rule 33, and GST is therefore leviable at 18% (9% CGST and 9% SGST) on such reimbursements within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh.

Compounding of offence under section 276CC of the Income Tax Act - abeyance of non-bailable warrant pending disposal of compounding application - expeditious decision of compounding application without unnecessary adjournments

Compounding of offence under section 276CC of the Income Tax Act - expeditious decision of compounding application without unnecessary adjournments - Compounding application dated 08.08.2019 remanded to the court below for fresh and expeditious decision. - HELD THAT: - The High Court observed that the compounding application filed by the applicant before the Chief Commissioner of Income Tax remained pending and that the trial court proceeded to summon the applicant without deciding that application. Considering the facts and circumstances and in the interest of affording an adequate opportunity before passing consequential orders, the matter is remitted to the court below with a direction to decide the compounding application dated 08.08.2019 within two months. The court emphasised that the adjudicating court must decide the application in accordance with law and without granting unnecessary adjournments to either party.

Compounding application remanded for decision by the court below within two months.

Abeyance of non-bailable warrant pending disposal of compounding application - Status of the non-bailable warrant issued against the applicant during pendency of the compounding application. - HELD THAT: - Pending disposal of the compounding application remitted to the court below, the High Court directed that the non-bailable warrants issued against the applicant shall be kept in abeyance. This interim relief is tied to and co-extensive with the period until the compounding application is finally disposed of as directed.

Non-bailable warrants to be kept in abeyance until disposal of the compounding application.

Final Conclusion: The petition is partly allowed: the compounding application dated 08.08.2019 is remitted to the court below for decision within two months and, until its disposal, the non-bailable warrants issued against the applicant shall remain in abeyance.

Carry forward and set-off of unabsorbed depreciation - restriction of eight assessment years - prospective effect of amendment to section 32(2) - application of CBDT Circular No.14 of 2001 - deduction of depreciation in computing profits and gains

Carry forward and set-off of unabsorbed depreciation - restriction of eight assessment years - prospective effect of amendment to section 32(2) - application of CBDT Circular No.14 of 2001 - Whether unabsorbed depreciation relating to assessment years prior to the amendment (including A.Ys. 1997-98 to 2001-02) could be carried forward and set off without the eight-year limitation and claimed in A.Y. 2008-09 in light of the amendment and the CBDT circular. - HELD THAT: - The Court held that the issue is no longer res integra and is governed by earlier High Court decisions and the CBDT explanatory circular. The legislative amendment to the carry forward and set-off provisions was intended to dispense with the eight-year restriction so as to enable industry to conserve funds for replacement of plant and machinery; the amendment applies from the assessment year 2002-03 but operates on unabsorbed depreciation available as on 1 April 2002. Consequently, unabsorbed depreciation arising in earlier years (including A.Ys. 1997-98 through 2001-02) that survived to A.Y. 2002-03 become governed by the amended regime and are available for carry forward and set-off without any temporal limit. The Court relied on and followed consistent pronouncements of other High Courts (including Gujarat, Bombay, Punjab & Haryana) and the explanatory notes in CBDT Circular No.14/2001 to hold that the Tribunal correctly allowed the carry forward and set-off challenged by the revenue.

The substantial question is answered against the revenue: unabsorbed depreciation surviving to A.Y. 2002-03 is governed by the amended provisions and may be carried forward and set off without the eight-year limitation, permitting the assessee to claim the carry forward in A.Y. 2008-09.

Final Conclusion: Following binding precedents and the CBDT circular, the appeal is dismissed; the substantial questions of law are answered against the revenue and the connected stay application is dismissed.

Jurisdictional preconditions for reopening assessment under Section 147/148 - failure to disclose fully and truly all material facts - requirements of reasons recorded and sanction prior to issuance of notice under Section 148 - reopening cannot be justified by mere change of opinion - scope of deduction under Section 33AC prior to statutory amendment

Jurisdictional preconditions for reopening assessment under Section 147/148 - failure to disclose fully and truly all material facts - requirements of reasons recorded and sanction prior to issuance of notice under Section 148 - reopening cannot be justified by mere change of opinion - Validity of the notice dated 21st March, 2001 under Section 148/147 in view of jurisdictional preconditions, including disclosure by the assessee and reasons recorded - HELD THAT: - The Court held that proceedings under Section 148, initiated after the four year period, required satisfaction of jurisdictional preconditions: (a) the Assessing Officer must have reasons to believe income has escaped assessment; (b) escapement must be on account of the assessee's failure to disclose fully and truly all material facts; (c) reasons must be recorded prior to issuing the notice; and (d) requisite sanction must be obtained. The burden lies on the Assessing Officer to establish these jurisdictional facts on the basis of material having a live link and rational nexus with the belief. On the facts, the petitioner had filed full primary records including profit & loss accounts, balance sheet and computations, and had answered specific queries raised during assessment; the deduction claimed was considered and allowed in the original assessment. The reasons for reopening were based on material already on record and did not disclose any failure by the assessee to disclose material facts; nor did they show a rational basis beyond mere change of opinion. Consequently initiation of reassessment proceedings was held to be without jurisdiction and liable to be quashed. [Paras 7, 10, 11, 12, 15]

Impugned notice dated 21st March, 2001 under Section 148/147 is quashed as jurisdictionally invalid.

Scope of deduction under Section 33AC prior to statutory amendment - Whether allowance of deduction under Section 33AC in respect of income other than shipping income justified reopening - HELD THAT: - The Court noted that prior to the Finance Act, 1995 amendment (effective 1 April 1996) deduction under Section 33AC was to be allowed on the basis of total income provided statutory conditions (credit to reserve and utilisation for purchase of new ship) were satisfied. The subsequent amendment restricting deduction to fifty percent of profits from ship operations confirms that earlier law permitted allowance on total income. Circular No.717 explained the change and the rationale for the amendment. Therefore allowance of Section 33AC deduction in respect of income items did not, by itself, furnish a ground for reopening the assessment for 1992 93. [Paras 14]

Claimed allowance under Section 33AC as made in the assessment did not justify reassessment; no valid ground to reopen on that basis.

Final Conclusion: The writ succeeds; the notice dated 21st March, 2001 under Section 148 is quashed for want of jurisdiction and the petition is disposed accordingly with no order as to costs.

Power under Section 263 of the Income Tax Act - Limitation for exercise of revisionary power under Section 263 - MAT credit under Section 115JAA of the Income Tax Act - Effect of appellate order and giving effect under Section 251

Power under Section 263 of the Income Tax Act - Limitation for exercise of revisionary power under Section 263 - MAT credit under Section 115JAA of the Income Tax Act - Effect of appellate order and giving effect under Section 251 - Whether the Commissioner could validly invoke Section 263 to set aside the Assessing Officer's order dated 29.11.2012 by treating it as revising the earlier order dated 08.12.2011 in respect of MAT credit allowed under Section 115JAA. - HELD THAT: - The Tribunal recorded that the MAT credit was originally allowed by the Assessing Officer in the assessment completed by order dated 08.12.2011 and that the subsequent order dated 29.11.2012 merely gave effect to the appellate decision by increasing the MAT credit to include surcharge and education cess while operating under Section 143(3) read with Section 263 and 251. Any alleged error in allowing MAT credit therefore lay in the original order of 08.12.2011 and not in the later order of 29.11.2012. Applying the principle in CIT v. Alagendran Finance Ltd., the Tribunal held that the Commissioner's exercise of power under Section 263(2) was time-barred because the period of limitation must be reckoned from the date of the original order (08.12.2011) and not from the date of the consequential order (29.11.2012) that merely implemented the appellate direction. The High Court found these factual and legal conclusions of the Tribunal to be correct and upheld the conclusion that the revisionary exercise was barred by limitation. [Paras 8]

The Tribunal correctly held that the Commissioner's invocation of Section 263 was hopelessly barred by limitation and that the appeal should be allowed in favour of the assessee.

Final Conclusion: The appeal by the revenue is dismissed; the substantial question of law is answered against the revenue and the Tribunal's order allowing the assessee's appeal is upheld.

Alternate remedy rule - relegation to statutory remedy under Section 246-A of the Income Tax Act - exceptions to writ jurisdiction (breach of fundamental rights; violation of principles of natural justice; excess of jurisdiction; challenge to vires) - scope of writ jurisdiction in fiscal matters - adequacy and efficacy of the statutory appeal remedy

Alternate remedy rule - relegation to statutory remedy under Section 246-A of the Income Tax Act - scope of writ jurisdiction in fiscal matters - Entitlement to relief in writ jurisdiction where an efficacious statutory appeal under Section 246-A is available - HELD THAT: - The Court applied the well settled principle that writ jurisdiction under Article 226 is a discretionary, self imposed restraint and must be exercised with greater rigour in fiscal matters. Noting the availability of an appeal remedy under Section 246 A and finding nothing to show that the remedy is ineffective or inadequate, the Court held that the petitioner should be relegated to the statutory appeal. The Court observed that the matters raised (including the respondent's reliance on the Ex Quarry price basis and the awaited reply from TAMIN) constitute errors of law or facts which are appropriate to be ventilated in the statutory appellate process rather than by invoking writ jurisdiction. The Court therefore dismissed the writ petition while preserving the petitioner's right to prefer the statutory appeal subject to limitation and pre deposit conditions, and to seek exclusion of time under Section 14 of the Limitation Act, to be determined by the appellate authority on merits. [Paras 19, 20]

Writ petition dismissed; petitioner relegated to the statutory appeal under Section 246 A of the Income Tax Act, with rights preserved as noted.

Exceptions to writ jurisdiction (breach of fundamental rights; violation of principles of natural justice; excess of jurisdiction; challenge to vires) - scope of writ jurisdiction in fiscal matters - Whether any exception justified entertaining the writ petition despite availability of statutory remedy - HELD THAT: - Relying on precedent, including the articulation of exceptions, the Court examined whether any exceptional circumstance was present - specifically breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or challenge to the vires of the statute or subordinate legislation. The Court found none of these exceptions attracted on the facts: there was no demonstrated violation of natural justice, no challenge to legislative vires, no breach of fundamental rights, and no excess of jurisdiction. Consequently, the exceptions did not justify bypassing the statutory remedy. [Paras 13, 16]

None of the established exceptions to the alternate remedy rule were attracted; writ jurisdiction could not be exercised.

Adequacy and efficacy of the statutory appeal remedy - scope of writ jurisdiction in fiscal matters - Whether interlocutory fact specific complaints (awaited reply from TAMIN; non reopening of prior assessment years; factual basis of assessment) amounted to jurisdictional defects warranting writ relief - HELD THAT: - The Court considered the petitioner's contentions that the assessing officer proceeded without awaiting TAMIN's ledger reply and that adjustments bifurcated across earlier years were made without reopening them. The Court held these contentions, even if sustainable, would amount to grounds of appeal concerning factual or legal errors in the assessment process rather than jurisdictional breaches or violations of natural justice. Therefore, such complaints were matters for the statutory appellate forum and did not justify interference by way of writ petition. [Paras 11, 16]

Factual or procedural grievances alleged do not amount to jurisdictional defects; they are to be agitated before the appellate authority under the statutory remedy.

Penalty proceedings - scope of writ jurisdiction in fiscal matters - Whether reservation of rights to initiate penalty proceedings affected maintainability of the writ petition - HELD THAT: - The Court noted that the assessing authority had only reserved its rights regarding penalty and had not levied any penalty in the impugned assessment. The Court observed that any challenge to separate penalty proceedings can be independently contested by the petitioner through available remedies and that those prospective or separate proceedings fall outside the lis decided in the present writ petition. [Paras 12]

Reservation of rights to pursue penalty does not impede relegation to the statutory appeal and any penalty proceedings are to be challenged separately by the petitioner by the remedies provided by law.

Final Conclusion: The writ petition challenging the assessment order for assessment year 2014-2015 is dismissed; the petitioner is relegated to the statutory appeal remedy under Section 246 A of the Income Tax Act (subject to limitation and pre deposit conditions, if any), and may seek exclusion of time under Section 14 of the Limitation Act which the Appellate Authority shall decide on merits.

Summary order. Petition dismissed as withdrawn; notice discharged.

Addition as unexplained credit under section 68 - genuineness of transactions - identity and creditworthiness burden of proof - bank records and corroborative documentary evidence - deletion of assessment additions

Addition as unexplained credit under section 68 - genuineness of transactions - identity and creditworthiness burden of proof - bank records and corroborative documentary evidence - Whether the addition of Rs. 20,00,000 as unexplained credit under section 68 was sustainable where the assessee produced bank statements, withdrawal entries of the alleged creditors and confirmation letters evidencing receipt of amounts. - HELD THAT: - The Tribunal found that there was no dispute as to identity and creditworthiness of the alleged creditors since the learned CIT(A) had accepted those aspects. The only contested question was genuineness of the transactions. The assessee filed Axis Bank statement showing credits of Rs. 10 lakhs each on 28.02.2008, and the bank statements of the two creditors showing withdrawals by cheque on the same date and for the same amounts. The assessee also furnished confirmation letters from the creditors which corresponded with the credits in the assessee's bank account. The CIT(A)'s doubts rested on absence of narration in the assessee's bank statement regarding cheque numbers, PAN and addresses; the Tribunal held that such narrations being absent in the bank's printout did not, by itself, justify rejecting the explanation when independent contemporaneous bank records and confirmations established that the amounts were withdrawn from the creditors' accounts and credited to the assessee on the same date. Having regard to the materials on record, the assessee discharged the initial onus in respect of identity, creditworthiness and genuineness of the loans and the reasons recorded by the CIT(A) were inadequate to sustain the addition under section 68. [Paras 6, 7]

Addition of Rs. 20,00,000 under section 68 set aside and directed to be deleted; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, held that the assessee had satisfactorily discharged the onus to prove identity, creditworthiness and genuineness of the alleged unsecured loans by producing bank statements and confirmations, set aside the addition under section 68 and directed deletion of the addition for Assessment Year 2008-09.

Incriminating material requirement for disturbing an unabated assessment - Unabated assessment - Disallowance of expenditure in search assessments - Search and seizure under section 132 of the Income Tax Act

Incriminating material requirement for disturbing an unabated assessment - Disallowance of expenditure in search assessments - Whether the disallowance of interest and processing charges in the assessment framed under section 153A read with section 143(3) was valid in respect of an unabated assessment year where no incriminating material was found during the search - HELD THAT: - The Tribunal admitted an additional ground raising the legal contention that the assessment year was unabated as on the date of search and that the Assessing Officer had no incriminating material from the search to justify disturbing the earlier assessment. The return for A.Y.2011-12 had been processed under section 143(1) and, as on the date of search (21/07/2017), the time for issuing a notice under section 143(2) had expired, rendering the assessment unabated. The Assessing Officer sought to disallow interest and loan processing charges by re-examining material already on record rather than relying on any seized or incriminating documents. The Tribunal applied the settled principle that an unabated assessment can be disturbed in a search assessment only if incriminating material relatable to that assessment year is found during the search, and noted reliance on the decisions in Continental Warehousing Corporation and Kabul Chawla as supporting authorities. Because the disallowance was made without reference to any incriminating material seized in the search and amounted to re-evaluation of existing records, the Tribunal directed deletion of the disallowance and allowed the additional ground. In view of this conclusion, the adjudication of the original ground on merits was held to be infructuous. [Paras 5]

The disallowance of interest and processing charges in the search assessment for A.Y.2011-12 is deleted because no incriminating material was found during the search to disturb the unabated assessment.

Final Conclusion: The appeal is allowed: the Tribunal set aside the disallowance of interest and processing charges for A.Y.2011-12 on the ground that the assessment year was unabated and the Assessing Officer did not rely on any incriminating material seized during the search to justify disturbing the earlier assessment.

Income from House Property - Income from Other Sources - Rule of consistency - Standard deduction under income from house property - Reimbursement not constituting income - Condonation of delay due to COVID-19 relief notifications - Treatment as rent "by whatever name called" under Section 194I

Condonation of delay due to COVID-19 relief notifications - Admission of the appeal despite a delay of 167 days by condoning delay. - HELD THAT: - The Tribunal examined the assessee's delay condonation petition relying on the Central Government notifications and the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 which extended statutory time-limits for filing appeals during the COVID-19 period and subsequent extension. In view of those relaxations, the Tribunal exercised its discretion to condone the delay of 167 days and admitted the appeal for adjudication. [Paras 2]

Delay of 167 days is condoned and the appeal is admitted.

Income from House Property - Income from Other Sources - Rule of consistency - Standard deduction under income from house property - Treatment as rent "by whatever name called" under Section 194I - Whether the composite payment received for letting premises together with furniture and fixtures is taxable wholly under the head Income from House Property (with standard deduction) or partly under Income from Other Sources. - HELD THAT: - The Tribunal found the primary facts not in dispute: a composite payment was received from the lessee for premises and attached furniture/fixtures. The lessee's classification of the payment as rent under Section 194I was held not to be determinative for the assessee's head of income. However, applying the rule of consistency - since the Revenue had accepted the assessee's identical treatment in assessment years 2010-11, 2016-17 and 2018-19 - and there being no divergent facts for the year under consideration, the Tribunal relied on the principle in Radhasaomi Satsang that Revenue cannot adopt a divergent stand for a particular year when facts are the same. On that basis the Tribunal allowed the assessee's claim to treat the entire rental receipt as income from house property and to claim the standard deduction thereon. [Paras 5]

Entire composite rent is taxable as Income from House Property and the assessee is entitled to the standard deduction; ground No.2 is allowed.

Reimbursement not constituting income - Income from Other Sources - Whether reimbursement of maintenance/repair payments received from the tenant constitutes taxable income under the head Income from Other Sources. - HELD THAT: - The Tribunal examined payments made by the assessee to the housing society for repairs and maintenance and the subsequent reimbursement of the repair cost by the tenant. Since the assessee paid the amounts through banking channels and only recovered from the tenant the amounts it had borne for repairs (with the assessee retaining only its own share of society maintenance as an expense), the Tribunal held that the reimbursement represented merely recovery of expenditure and carried no income element. Therefore the reimbursement cannot be taxed as Income from Other Sources. [Paras 6]

Reimbursement of maintenance/repair charges is not taxable; ground No.3 is allowed.

General grounds not requiring adjudication - Adjudication of the remaining grounds and additional grounds filed by the assessee. - HELD THAT: - The Tribunal observed that certain grounds (grounds Nos.1, 4, 5 & 6) were general in nature and did not require separate adjudication. Further, additional grounds filed later were not admitted for adjudication; they were neither considered nor decided and were left open. [Paras 7, 8]

Grounds Nos.1, 4, 5 & 6 are not adjudicated as they are general; additional grounds are not admitted and are left open.

Final Conclusion: The appeal is allowed: delay in filing the appeal is condoned; the composite rental receipt is held to be income from house property (entitling the assessee to the standard deduction) and reimbursement of maintenance/repair charges is held not to be taxable; certain general and additional grounds were not adjudicated and are left open.

Validity of reassessment proceedings initiated under section 147/148 - jurisdiction of assessing officer - requirement that the AO who records reasons and issues notice under section 148 must be the territorial/jurisdictional AO who frames the assessment - quashing of assessment for lack of jurisdiction - consequential penalty under section 271(1)(c) rendered infructuous

Validity of reassessment proceedings initiated under section 147/148 - jurisdiction of assessing officer - requirement that the AO who records reasons and issues notice under section 148 must be the territorial/jurisdictional AO who frames the assessment - quashing of assessment for lack of jurisdiction - Assessment framed by ITO Ward-2 was without jurisdiction because reasons and notice under section 148 were recorded and issued by ITO Ward-4 who had no territorial jurisdiction, and therefore the reassessment proceedings and resulting addition were invalid and liable to be quashed. - HELD THAT: - It was an admitted fact on the record that ITO Ward-4 recorded reasons and issued the notice under section 148 but had no jurisdiction over the case and thereafter transferred the file to ITO Ward-2 who framed the assessment. The Tribunal applied the principle, as settled by earlier Benches, that the AO who records reasons and issues notice under section 148 must be the jurisdictional AO and should also frame the assessment. Since that requirement was not satisfied here, the assessment order passed by ITO Ward-2 was held to be without jurisdiction and contrary to law. The CIT(A)'s contrary finding confirming the addition was thus set aside as unwarranted and perverse in view of the settled position on jurisdiction. [Paras 6, 7]

Assessment order and the CIT(A)'s confirmation thereof quashed for lack of jurisdiction.

Consequential penalty under section 271(1)(c) rendered infructuous - Penalty levied under section 271(1)(c) was rendered infructuous by quashing of the quantum assessment. - HELD THAT: - Because the quantum assessment was quashed for lack of jurisdiction, the consequential penalty could not stand. The Tribunal therefore held that the penalty order would become infructuous in view of dismissal of the quantum appeal and need not be sustained. [Paras 8]

Penalty under section 271(1)(c) treated as infructuous and not sustained.

Final Conclusion: Both appeals are allowed: the reassessment and the CIT(A)'s order confirming the addition are quashed for want of jurisdiction, and the consequential penalty is rendered infructuous.

Unexplained credits under section 68 - genuineness and creditworthiness of creditors - onus of proof on the assessee - remand for fresh inquiry - opportunity of being heard

Unexplained credits under section 68 - genuineness and creditworthiness of creditors - onus of proof on the assessee - remand for fresh inquiry - opportunity of being heard - Whether the additions of Rs. 20,00,000 and Rs. 25,00,000 treated as unexplained credits under section 68 are sustainable or require fresh adjudication by the Assessing Officer after inquiry into genuineness and creditworthiness of the lenders. - HELD THAT: - The Tribunal recorded that the assessee filed additional evidences before the CIT(A) which were furnished to the Assessing Officer for verification. The CIT(A) accepted the genuineness of the Rs. 8,00,000 loan from Shri K.L. Arora but confirmed additions in respect of loans from Ms. Neha Madan and Shri R.N. Arora. The Assessing Officer, however, did not make independent inquiries from the lenders, did not issue notices to them and appears to have relied on adverse inputs from the Investigation Wing. The Assessing Officer himself noted deficiencies (including an invalid PAN in the confirmation of Ms. Neha Madan and absence of lenders' bank statements) but did not proceed to verify source of funds or summon the lenders for corroboration. Given that the statutory test under section 68 requires proof of identity, genuineness of transaction and creditworthiness, and that the Assessing Officer had at his disposal powers to make enquiries which were not exercised, the Tribunal found it appropriate to set aside the adverse findings in respect of Ms. Neha Madan and Shri R.N. Arora and remit the matter to the file of the Assessing Officer. The Assessing Officer was directed to afford the assessee reasonable opportunity and to cause necessary inquiries from the lenders, recording clear findings on genuineness and creditworthiness. [Paras 6]

Findings sustaining additions qua loans from Ms. Neha Madan and Shri R.N. Arora set aside and matter remitted to the Assessing Officer for fresh inquiry and decision after affording reasonable opportunity to the assessee.

Final Conclusion: The appeal is allowed for statistical purposes by setting aside the assessments in respect of the two challenged unsecured loans and remitting those issues to the Assessing Officer for fresh adjudication after making necessary inquiries and affording reasonable opportunity to the assessee; the deletion in respect of the loan from Shri K.L. Arora as recorded by the CIT(A) stands reflected in the proceedings.

Deductibility of interest under section 36(1)(iii) where advances are made out of interest free funds - Taxability as deemed dividend under section 2(22)(e) and its levy only in the hands of the shareholder - Disallowance under section 40A(ia) based on tax auditor's report and verification of TDS computation - Allowability under section 43B for statutory dues (PF) paid after year end subject to proof

Deductibility of interest under section 36(1)(iii) where advances are made out of interest free funds - Addition of interest under section 36(1)(iii) in respect of interest free advance to M/s Temptation Foods. - HELD THAT: - The Tribunal recorded that identical disallowance in an earlier year had been remanded to the AO by the ITAT with directions to ascertain the nature of funds used to make the advance. On such remand the AO found that the advance had been given out of the assessee's current account (interest free funds), that no interest bearing funds were used and no cash credit facility was availed. Having accepted the AO's factual finding that interest free funds funded the advance, the Tribunal held there was no basis for disallowing interest under section 36(1)(iii) in the impugned year and therefore deleted the addition. [Paras 8]

Addition under section 36(1)(iii) in respect of the advance to M/s Temptation Foods is deleted.

Taxability as deemed dividend under section 2(22)(e) and its levy only in the hands of the shareholder - Treatment of amount received from M/s Punjab Metallics as deemed dividend under section 2(22)(e) and whether taxable in the assessee's hands. - HELD THAT: - The Tribunal considered precedent holding that deemed dividend under section 2(22)(e) can be taxed only in the hands of the person who is a shareholder of the lending company and not in the hands of a concern which merely has a member or partner holding substantial interest. Applying this principle, and on the admitted fact that the assessee company was not a shareholder of M/s Punjab Metallics, the Tribunal concluded that although the payment qualifies as deemed dividend under the provision, it is not taxable in the hands of the assessee and the addition must be deleted. [Paras 19]

Addition treated as deemed dividend under section 2(22)(e) is deleted insofar as its taxation in the hands of the assessee company is concerned.

Disallowance under section 40A(ia) based on tax auditor's report and verification of TDS computation - Alleged disallowance reported by tax auditor under section 40A(ia) on account of incorrect computation of TDS and the assessee's plea that the auditor's figure was a mistake. - HELD THAT: - The assessee explained that the tax auditor had erroneously computed the disallowable amount by assuming a lower TDS rate, producing an inflated figure in the audit report. The Tribunal found the explanation plausible but noted that the facts required verification and that the assessee had attempted but failed to procure an affidavit from the auditor. In the interest of justice the Tribunal remanded the issue to the AO for fresh examination of the contentions, verification of relevant records and affording the assessee an opportunity of hearing. [Paras 23]

Issue remitted to the AO for fresh examination and verification of the tax auditor's computation and supporting documents.

Allowability under section 43B for statutory dues (PF) paid after year end subject to proof - Disallowance under section 43B of amounts claimed as PF/service tax payable and whether payments were made so as to claim deduction. - HELD THAT: - The assessee produced ledger entries for the succeeding year and asserted that PF had been paid, but did not place third party corroborative evidence before the appellate authority. The Tribunal held that the assessee should be afforded an opportunity to produce conclusive documentary proof. Accordingly, the Tribunal restored the issue to the AO to examine afresh the claim under section 43B, verify documents and give the assessee opportunity to substantiate payment. [Paras 29]

Claim under section 43B (PF) remanded to the AO for verification; issue partly allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed: additions under section 36(1)(iii) (interest on advance) and under section 2(22)(e) (deemed dividend) are deleted in respect of the assessee for AY 2013 14; matters relating to disallowance under section 40A(ia) and allowability under section 43B (PF) are restored to the Assessing Officer for fresh adjudication after verification and opportunity to the assessee.

Obligations of Customs Broker under Regulation 10(n) of CBLR, 2018 - standard of due diligence and KYC verification - reliance on government-issued certificates and registrations - limits of Customs Broker's responsibility with respect to admissibility of ITC - revocation of customs broker licence and consequential forfeiture/penalty - assessment of departmental verification reports (RUDs) as evidence

Obligations of Customs Broker under Regulation 10(n) of CBLR, 2018 - standard of due diligence and KYC verification - assessment of departmental verification reports (RUDs) as evidence - Whether the Customs Broker violated Regulation 10(n) of CBLR, 2018 by failing to verify correctness of IEC, GSTIN, identity and functioning of its clients. - HELD THAT: - The Tribunal examined the three Relied Upon Documents (RUD-2, RUD-3, RUD-4) and the KYC documents obtained by the Customs Broker. RUD-3 recorded no physical verification and RUD-4 confirmed existence of the exporter; both merely observed alleged inadmissibility of ITC, which the Tribunal held is not within the Customs Broker's power or responsibility to verify. With respect to RUD-2, the report did not specify timing of verification or whether the exporter ceased operations before or after the exports, and the Broker had relied on multiple government-issued documents (GST registration, IEC, PAN, electricity bill, Aadhaar) not alleged to be forged. The Tribunal held that Regulation 10(n) does not cast an obligation on the Broker to second-guess or physically verify every government-issued certificate or to investigate the admissibility of ITC claimed by the exporter; the Broker would be at fault only if documents were forged or if the Broker had reason to believe the documents were inauthentic. On the facts, the Tribunal found no failure of due diligence by the Broker and that the RUDs do not support a finding of violation of Regulation 10(n). [Paras 27, 28, 30, 31, 32]

The Customs Broker did not violate Regulation 10(n) of CBLR, 2018.

Revocation of customs broker licence and consequential forfeiture/penalty - limits of Customs Broker's responsibility with respect to admissibility of ITC - reliance on government-issued certificates and registrations - Whether the revocation of the Broker's licence, forfeiture of security deposit and imposition of penalty could be sustained in view of the finding on Regulation 10(n). - HELD THAT: - The impugned order revoked the licence, forfeited the security deposit and imposed a penalty solely on the ground of violation of Regulation 10(n). Having held that there was no violation, the Tribunal concluded that the consequential punitive measures lacked a sustaining foundation. The Tribunal therefore set aside the impugned order in its entirety and granted consequential relief to the Broker. The Revenue's separate appeal against the earlier revocation-revocation order was held infructuous in view of the subsequent impugned order. [Paras 8, 31, 32, 33]

The revocation of licence, forfeiture of security deposit and imposition of penalty cannot be sustained; the impugned order is set aside and consequential relief granted.

Final Conclusion: The Tribunal held that on the material before it the Customs Broker had discharged the required KYC/due diligence and did not contravene Regulation 10(n) of CBLR, 2018; accordingly the revocation of licence, forfeiture of security and penalty imposed were set aside, and the Revenue's earlier appeal was dismissed as infructuous.

Penalty under Section 112(a) for acts, omissions or abetment rendering goods liable to confiscation - penalty under Section 114A where penalty is leviable on person determined liable to pay duty/interest - penalty under Section 114AA for false electronic records or signatures in relation to Customs transactions - confiscation of imported goods as prohibited or undeclared under Section 111 - inadmissibility of electronic evidence without compliance with statutory safeguards - reliance on statements of co noticee and requirement of independent corroboration - right to defence and obligation to supply non relied upon documents (non RUDs)

Penalty under Section 112(a) for acts, omissions or abetment rendering goods liable to confiscation - reliance on statements of co noticee and requirement of independent corroboration - Sustainability of penalty under Section 112(a) as imposed on the appellant - HELD THAT: - The Tribunal found no material to establish that the appellant committed any act or omission which rendered the imported goods liable to confiscation or that he abetted such acts with the necessary mens rea. The adjudication predominantly relied upon statements (of the proprietor and of the appellant) and documents allegedly from a pen drive; those statements were not supported by independent corroborative evidence. The appellant's role was found to be of a consultant/liaison who received nominal remuneration for clearance related services and there was no evidence of profit sharing, arranging the import, disposal of goods, or prior knowledge of mis declaration by the actual importer. In these circumstances penalty under Section 112(a) was not attracted and the imposition was set aside. [Paras 34]

Penalty under Section 112(a) as applied to the appellant is not attracted and the penalty imposed thereunder is set aside.

Penalty under Section 114A where penalty is leviable on person determined liable to pay duty/interest - Applicability of penalty under Section 114A to the appellant - HELD THAT: - The Tribunal held that Section 114A is applicable only where a person is liable to pay duty or interest as determined under Section 28(8). It was not established that the appellant was the importer or that any duty or interest had been determined and made payable by him. Consequently Section 114A could not be validly invoked against the appellant. [Paras 34]

Penalty under Section 114A is not attracted and its imposition on the appellant is unsustainable.

Penalty under Section 114AA for false electronic records or signatures in relation to Customs transactions - inadmissibility of electronic evidence without compliance with statutory safeguards - Sustainability of penalty under Section 114AA based on alleged electronic documents recovered from a pen drive - HELD THAT: - The adjudication relied on documents said to have been retrieved from a pen drive allegedly in the appellant's possession. The Tribunal found procedural lapses in recovery and extraction (no panchnama, failure to follow prescribed procedures), reducing the evidentiary value of those electronic materials. No document containing the appellant's signature was produced and no forensic verification was undertaken. In view of absence of compliance with statutory safeguards and lack of corroborative proof, penalty under Section 114AA could not be sustained. [Paras 34]

Penalty under Section 114AA is not attracted on the present record and its imposition is set aside.

Right to defence and obligation to supply non relied upon documents (non RUDs) - ex parte adjudication where document access is denied - Effect of failure to furnish non RUDs and denial of adjournment on the adjudication against the appellant - HELD THAT: - The Tribunal recorded that non relied upon documents (non RUDs) were not provided to the appellant despite directions and that the appellant's request for re fixation/adjournment to collect those documents from DRI was refused. The adjudicating authority proceeded ex parte and framed issues and penalties without affording the appellant the opportunity to receive and consider non RUDs. The Tribunal considered this denial of a proper opportunity to defend as vitiating the adjudication against the appellant. [Paras 34]

Adjudication is vitiated by failure to supply non RUDs and by ex parte adjudication; the order is set aside on this ground.

Invalidity of imposing a composite or consolidated penalty without statutory basis - Validity of the consolidated/composite penalty of a fixed sum imposed on the appellant - HELD THAT: - The Tribunal observed that the impugned order imposed a consolidated penalty on the appellant without allocating or quantifying how much penalty was imposed under each statutory provision and noted that there is no provision for imposing such a consolidated penalty in the manner adopted. On this ground, the order was held to be bad in law. [Paras 34]

The imposition of a consolidated penalty in the manner adopted is without legal basis and the order is set aside.

Reliance on statements of co noticee and requirement of independent corroboration - inadmissibility of electronic evidence without compliance with statutory safeguards - Evidentiary weight of statements and electronic materials relied upon by adjudicating authority - HELD THAT: - The Tribunal stressed that the adjudication heavily depended on statements of co noticees and the appellant, and on alleged extracts from a pen drive; it found absence of corroborative material and procedural infirmities in seizure/extraction of electronic evidence (no panchnama, no compliance with statutory provisions). In such circumstances, reliance solely on those statements and electronic materials was insufficient to sustain penal liability. [Paras 34]

Statements and electronic extracts relied upon lack independent corroboration and evidentiary value on the present record; they do not sustain the penalties.

Jurisdiction of DRI to issue show cause notices - Question whether DRI had jurisdiction to issue the impugned show cause notice - HELD THAT: - The Tribunal expressly refrained from deciding the question of DRI's jurisdiction to issue the show cause notice. That question was left open for consideration. [Paras 35]

Left open for determination; the Tribunal did not adjudicate the jurisdictional question.

Final Conclusion: The appeal is allowed. The Tribunal set aside the adjudication order imposing consolidated penalties on the appellant, holding that penalties under Sections 112(a), 114A and 114AA were not attracted on the available evidence, that electronic material retrieved from the pen drive lacked requisite procedural safeguards and corroboration, that non RUDs were not furnished thereby vitiating ex parte adjudication, and that the composite penalty imposed had no proper statutory basis. The question of DRI's jurisdiction to issue the show cause notice was left open.

Provisional assessment - final assessment - limitation period for refund claims - date of payment of duty to be computed from date of final assessment - Explanation II to Section 27

Provisional assessment - final assessment - limitation period for refund claims - date of payment of duty to be computed from date of final assessment - Explanation II to Section 27 - Whether the refund claim filed on 4th April 2012 was barred by time under Notification No. 102/2007 given that the bill of entry remained unfinalized till 27th February 2012. - HELD THAT: - The Tribunal accepted the undisputed factual position that the goods were provisionally released on 29th March 2011 and that the bill of entry remained finally unassessed until 27th February 2012, while the refund claim was filed on 4th April 2012. Relying on the reasoning in Pioneer India Electronics (P) Ltd v. Union of India , the Tribunal applied the principle that, where duty is paid provisionally under a provisional-assessment regime, the relevant 'date of payment' for computing the limitation period is to be read with Explanation II to Section 27 and is the date of adjustment of duty after final assessment rather than the date of provisional payment. The Tribunal observed that until final assessment duty remains unascertained and any refund entitlement can be quantified only upon final assessment. Applying that principle to the undisputed chronology, the refund claim filed on 4th April 2012 was within one year from the date on which final assessment was recorded as pending on 27th February 2012, and therefore could not be rejected as time-barred under the Notification. [Paras 5, 8, 9]

Refund claim not barred by limitation; impugned rejection set aside and appeal allowed with consequential relief.

Final Conclusion: The Tribunal set aside the order rejecting the refund claim on limitation grounds and allowed the appeal, holding that where a bill of entry remains provisionally assessed the limitation period for refund is computed from the date of final assessment (per Explanation II to Section 27) and that the claim filed on 4th April 2012 was within time.

Exemption for requisites for games and sports - condition No.85 of Notification No.21/2002-Cus - certificate of the apex body - end-use condition / end-use bond - preparatory use in India for international championship abroad - strict interpretation of notification

Condition No.85 of Notification No.21/2002-Cus - certificate of the apex body - exemption for requisites for games and sports - Certificate issued by the All India Football Federation satisfies condition No.85 and entitles the respondent to exemption under the Notification. - HELD THAT: - The Tribunal examined condition No.85 which requires certification by the apex body in relation to the sport that the imported requisites are required to be used in a national or international championship or competition in India or abroad. The All India Football Federation, being the apex body, issued an eligibility certificate dated 4.7.2005 certifying the artificial turf as a requisite for national or international football championships and for use by all-India national teams. The Commissioner (Appeals) correctly held that the notification's legal requirement is the certificate of the apex body and that no separate end-use certification by a State Sports Authority or additional documentary proof of actual event conduct is prescribed. The Tribunal found no ambiguity in the condition and upheld that the AIFF certificate sufficed to fulfil the statutory condition for exemption. [Paras 6, 7]

Certificate of the All India Football Federation fulfils condition No.85 and the respondent is entitled to the exemption.

End-use condition / end-use bond - preparatory use in India for international championship abroad - strict interpretation of notification - Department could not lawfully impose an end-use bond or insist on additional proof of actual hosting of a national/international championship where the apex body's certificate is produced. - HELD THAT: - The assessing authority had required a bond and bank guarantee and treated exhibition or preparatory use as insufficient. The Commissioner (Appeals) reviewed additional documents and contemporaneous material showing that the Indian team trained on the turf before participating in an international tournament abroad, and observed that the notification contemplates use in India even where the championship is held abroad. The Tribunal agreed that the department had gone beyond the legal requirements by imposing end-use conditions not prescribed by condition No.85. Consequently, the assessing authority's demand for differential duty founded on the absence of proof of an event on the turf was rejected. [Paras 6, 7]

Imposition of end-use bond and demand for further proof were beyond the notification's requirements and cannot be sustained.

Final Conclusion: The appeal is dismissed; the order of the Commissioner (Appeals) allowing exemption under the Notification is upheld.

Interim protection from arrest - quashing of First Information Report - Companies Act, 2013 grievance redressal and investigation scheme - exclusive investigation by Serious Fraud Investigation Office (SFIO) - special court jurisdiction under the Companies Act - malafide institution of criminal proceedings - Bhajan Lal guidelines

Interim protection from arrest - investigation to continue - Grant of interim relief restraining arrest of the petitioners in respect of the impugned FIR pending further orders, while permitting investigation to continue. - HELD THAT: - Having considered rival submissions and prima facie material, the Court found that the petitioners had made out a case for interim protection. The Court noted the pendency of related proceedings before the National Company Law Tribunal and the existence of multiple FIRs lodged in succession by the complainant. Applying the principles governing exercise of writ and inherent jurisdiction to quash criminal proceedings and having regard to the guidelines in Bhajan Lal, the Court concluded that interim restraint on arrest was warranted at this stage. The Court made clear that the investigation into the FIR may proceed, and the interim protection is limited in duration until the next listing.

Petitioners shall not be arrested in connection with the impugned FIR until the next date of listing, but investigation shall continue.

Quashing of First Information Report - Companies Act, 2013 grievance redressal and investigation scheme - exclusive investigation by Serious Fraud Investigation Office (SFIO) - malafide institution of criminal proceedings - Bhajan Lal guidelines - Whether the impugned FIR should be finally quashed in view of the Companies Act, 2013 scheme and allegations of malafide prosecution was not finally adjudicated; the matter requires detailed consideration. - HELD THAT: - The Court examined the statutory machinery under the Companies Act, 2013 - including provisions for inquiry/investigation by the Registrar, investigation by SFIO, and prosecution and trial before special courts - and observed that under the Act mismanagement and fraud in company affairs are to be investigated and prosecuted through that scheme. The Court noted precedent distinctions between decisions under the old Act and the 2013 Act and observed that, prima facie, the Companies Act, 2013 contemplates investigation by statutory authorities (including SFIO) and trial in special courts. The Court also observed prima facie indicia of malafide prosecution (serial FIRs after adverse NCLT orders) bringing the case within Bhajan Lal guidelines permitting quashing. However, these conclusions were expressed as prima facie and the Court declined to quash the FIR at this stage, directing detailed consideration on the merits in due course.

Final determination on quashing the FIR was left open for detailed consideration; the Court recorded a prima facie view favouring examination of the Companies Act scheme and malafide allegation but did not quash the FIR.

Final Conclusion: Interim relief granted: petitioners shall not be arrested in connection with the impugned FIR until the next listing date while investigation may continue; the substantive question of quashing the FIR in light of the Companies Act, 2013 regime and alleged malafide prosecution is left for detailed consideration on the next date.

Protection of shareholders' interests - exemption for private companies under GSR 464(E) - short notice for AGM - notice under Section 101 of the Companies Act, 2013 - validity of resolutions passed at AGM

Protection of shareholders' interests - exemption for private companies under GSR 464(E) - short notice for AGM - validity of resolutions passed at AGM - Validity of the AGM held on 18.09.2021 convened on short notice for a private company under the GSR 464(E) notification and the consequent validity of resolutions passed thereat. - HELD THAT: - The Tribunal examined the proviso in GSR 464(E) which permits reduced notice periods for private companies subject to the condition that "the interests of their shareholders are protected." Where certain shareholders - here the petitioners and Respondent No. 4 - raised objections to convening the AGM, proceeding with the meeting without considering their request was held to be contrary to the protective requirement of the notification. The Tribunal found that the mere classification of the company as a private company and the existence of a short-notice provision does not override the protective mandate; reduced notice is permissible only where the shareholders' interests are protected in fact. Because objections from shareholders were not addressed, the statutory tolerance for short notice could not be invoked to validate the AGM. [Paras 14, 15]

The AGM of the company held on 18.09.2021 is declared null and void; the respondents are restrained from implementing any resolutions passed at that AGM until further orders.

Final Conclusion: The Tribunal set aside the AGM of 18.09.2021 as void for failure to meet the notification's protective requirement when shareholders objected to the short notice, and stayed implementation of any resolutions passed therein pending further orders.

Scheme of Amalgamation - dispensing with meetings of shareholders - dispensing with meetings of creditors - appointment of chairman to conduct creditors' meeting - voting by proxy/postal ballot/electronic means - conduct of meetings through video conferencing - compliance with Companies Act, 2013 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016

Dispensing with meetings of shareholders - Scheme of Amalgamation - Dispensation of holding of meetings of shareholders of the Transferor Company and the Transferee Company for approval of the Scheme of Amalgamation. - HELD THAT: - The Tribunal examined the affidavits of shareholders filed by both applicant companies and noted that the Transferor Company has two shareholders and the Transferee Company has seven shareholders, each having furnished affidavits expressing their consent to the Scheme. Having regard to the unanimous affidavits and that calling such meetings would not serve any purpose, the Tribunal concluded that the statutory requirement of convening shareholders' meetings could be dispensed with in each company for the purpose of considering the Scheme of Amalgamation. [Paras 10, 15, 19, 20]

Holding of meetings of the equity shareholders of both companies is dispensed with and their consents by affidavit accepted.

Dispensing with meetings of creditors - Scheme of Amalgamation - Dispensation of holding of meetings of unsecured creditors of the Transferor Company and requirement to hold meeting(s) of creditors of the Transferee Company. - HELD THAT: - The Tribunal considered the affidavits of unsecured creditors. The Transferor Company had three unsecured creditors who had filed affidavits constituting 100% of the outstanding amount, and no secured creditors; consequently, the Tribunal found that convening a creditors' meeting in the Transferor Company was unnecessary and dispensed with it. In contrast, the Transferee Company had 108 unsecured creditors and one secured creditor; the Tribunal therefore directed that meetings of unsecured and secured creditors of the Transferee Company be held and prescribed the procedure for the same. [Paras 10, 15, 18, 20]

Meeting of unsecured creditors of the Transferor Company dispensed with; meetings of unsecured and secured creditors of the Transferee Company directed to be held as ordered.

Appointment of chairman to conduct creditors' meeting - voting by proxy/postal ballot/electronic means - conduct of meetings through video conferencing - Appointment of a Chairman to conduct the Transferee Company's creditors' meetings, fixation of fees, and modalities for voting and meeting conduct (including video conferencing). - HELD THAT: - Having directed that creditors' meetings of the Transferee Company be held, the Tribunal appointed a named insolvency professional as Chairman to conduct the meetings and fixed the Chairman's and Scrutinizer's fees and incidental expenses. The Tribunal specified permitted modes of voting (in person, by proxy, postal ballot or electronic means as applicable), allowed conducting meetings via video conferencing when physical meetings are not feasible due to COVID-19 with preservation of unedited footage, and required the Chairman to file his report within two weeks of the meeting's conclusion. [Paras 20]

Mr. Sankar P. Panicker appointed as Chairman; fees fixed; voting modalities and video-conferencing option authorized; Chairman to report results within two weeks.

Compliance with Companies Act, 2013 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - notice and publication requirements - Directions as to service of notices, publication, supply of scheme documents, filings with regulatory authorities and overall statutory compliance in relation to meetings and the Scheme. - HELD THAT: - The Tribunal issued detailed directions requiring the Transferee Company to send individual notices to creditors by prescribed modes at least 30 days in advance, to publish advertisements in English and Malayalam newspapers with specified content, to furnish copies of the Scheme free of charge to unsecured creditors, to file affidavits of service and compliance prior to the meeting, and to send notices to specified governmental and regulatory authorities with requisite documents. The Tribunal emphasised strict compliance with the Companies Act and the relevant Rules and forms. [Paras 20]

Applicants directed to comply with the prescribed notice, publication, document supply, filings and other procedural requirements in accordance with the Companies Act and Rules.

Final Conclusion: The Tribunal disposed of CA(CAA)/04/KOB/2021 by directing that shareholders' meetings be dispensed with for both companies (consents on record), that creditors' meetings of the Transferor Company be dispensed with (consents on record) while creditors' meetings of the Transferee Company be convened with an appointed Chairman and specified fees, and by issuing comprehensive procedural directions regarding notices, voting, video-conferencing and compliance with the Companies Act and the Rules.

Time-bar under Regulation 12 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - finality of an approved resolution plan - extinguishment of claims not part of an approved resolution plan - prohibition on reopening claims after CoC approval and adjudicating authority's sanction

Time-bar under Regulation 12 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - prohibition on reopening claims after CoC approval and adjudicating authority's sanction - Whether the claim filed by the appellant on 1.1.2020 was within the time permitted by the public announcement and Regulation 12 and whether a belated claim could be considered after the resolution plan had been finalised and approved. - HELD THAT: - The Tribunal found on the materials and affidavit of the erstwhile Resolution Professional that the 90 day period for submission of proof of claims after the public announcement expired on 9.2.2019, whereas the appellant's claim was filed on 1.1.2020 and was rejected by the RP by letter dated 3.1.2020. The Resolution Plan had been finalised by the Committee of Creditors and submitted for approval before the Adjudicating Authority prior to the belated claim; the RP stated that the appellant's claim did not form part of the Resolution Plan. Reliance was placed on the principles in Ghanashyam Mishra & Sons (that claims not part of an approved resolution plan stand extinguished) and Essar Steel (that undecided or belated claims cannot be allowed to unsettle an approved plan), to hold that claims filed after the prescribed period and not included in the approved plan cannot be revived or admitted at this stage. In view of the finality afforded to an approved resolution plan and the need for time bound closure of CIRP, the Tribunal concluded that the belated claim could not be considered and intervention in the approved plan was not warranted. [Paras 9, 10, 11, 12, 13]

The belated claim filed on 1.1.2020 was time barred, was not part of the approved resolution plan and therefore could not be considered; the appeal is rejected.

Final Conclusion: The Tribunal dismissed the appeal, holding that the appellant's claim was filed after the Regulation 12 period, was rejected by the Resolution Professional and not included in the approved resolution plan; by reason of the finality of an approved plan, the belated claim could not be admitted or allowed to disturb the implementation of the plan.

Unilateral termination of licence under contractual clause - validity of termination incorporated in a resolution plan - duty of resolution professional and adjudicating authority under section 30(2)(e) and section 31(1) of IBC - effect of insolvency resolution plan on pre-existing contractual rights - equitable relief of continuance and phased vacation where displacement is onerous

Unilateral termination of licence under contractual clause - validity of termination incorporated in a resolution plan - Whether the termination of the Appellant's Leave and Licence Agreement effected pursuant to the approved Resolution Plan was permissible and violated the Appellant's contractual rights. - HELD THAT: - The Licence Agreement expressly provided for unilateral termination by either party on six months' written notice (clause 12(a)) and for liabilities on termination (clause 12(c)). The Approved Resolution Plan envisaged termination of existing licence agreements including the Appellant's. Communications from the Successful Resolution Applicant in November 2020 put the Appellant on notice that Sify had taken over management and did not wish to continue the rental business; a formal termination notice was sent in April 2021. The Adjudicatory Tribunal found that the Successful Resolution Applicant terminated the Licence Agreement by following the contractual mechanism of clause 12(a) and observed that more than six months elapsed after the notice was sent. On these facts the Tribunal held that the termination complied with the express contractual right of unilateral termination and therefore did not infringe the Appellant's rights under the Licence Agreement. [Paras 17, 18, 20, 21, 22]

Termination of the Licence Agreement as effected by the Successful Resolution Applicant was permissible under the Licence Agreement and is not set aside.

Duty of resolution professional and adjudicating authority under section 30(2)(e) and section 31(1) of IBC - effect of insolvency resolution plan on pre-existing contractual rights - Whether the Resolution Professional's recommendation and the Adjudicating Authority's approval of the Resolution Plan offended section 30(2)(e) / section 31(1) of the IBC or contravened other law such as the Contract Act or section 238 of the IBC. - HELD THAT: - The Appellant contended that the Resolution Plan and its approval unilaterally novated or rescinded the Licence Agreement in contravention of contract law and section 30(2)(e)/31(1). The Tribunal noted that because the termination was effected by the Successful Resolution Applicant in accordance with the Licence Agreement, there was no need to examine or decide the broader contention of contravention of law in formulation of the Plan. The Tribunal therefore did not adjudicate the alleged statutory or contractual contravention on merits, concluding that the practical effect complained of had been achieved by following contractual termination rights. [Paras 22, 23]

No separate finding is required on alleged contravention of section 30(2)(e)/section 31(1) or other law because termination was effected in accordance with the Licence Agreement.

Equitable relief of continuance and phased vacation where displacement is onerous - What interim relief or directions should be granted to the Appellant given displacement from premises used for regulated laboratory operations. - HELD THAT: - The Tribunal acknowledged the practical difficulty faced by the Appellant in shifting laboratory operations and the investments made by the Successful Resolution Applicant to implement the Resolution Plan. Balancing these considerations, the Tribunal exercised its discretion to afford the Appellant time to relocate. It directed that the Appellant be allowed two months from the date of the order to vacate, remain liable to pay licence fee, water and electricity until vacation, and that the Successful Resolution Applicant return the security deposit in accordance with the lease agreement upon handover. [Paras 24, 25, 26]

Appellant permitted two months to vacate; liable to pay dues until vacation; Successful Resolution Applicant to return security deposit on handover.

Final Conclusion: The appeal is disposed of: the Tribunal upheld termination of the Licence Agreement as effected under its contractual clause by the Successful Resolution Applicant, declined to adjudicate alleged contraventions of the Resolution Plan once termination complied with the contract, and directed that the Appellant be allowed two months to vacate while remaining liable for dues and entitled to refund of the security deposit on handover; no order as to costs.

Existence of financial debt and default - maintainability of Section 7 application by debenture holders without debenture trustee - scope of CIRP in real estate - project-wise maximisation - principles of natural justice / audi alteram partem in admission proceedings - amendment of Section 7 application and effect of name/change of financial creditor - directory character of time-limits under Section 7

Existence of financial debt and default - Existence of financial debt and default by the Corporate Debtor was established and justified admission of the Section 7 application. - HELD THAT: - The Tribunal examined the Section 7 pleadings and supporting particulars of disbursements, securities and the computation of amounts due and recorded that the Corporate Debtor's default was admitted and not genuinely disputed. The record showed disbursements by the applicants, particulars of security and the amounts claimed as default; the adjudicatory task at admission is limited to ascertaining existence of debt and default and not deciding disputed claims on merits. Applying these principles, the Tribunal held that the financial debt and default were established and that the Adjudicating Authority's finding of admission was free from legal infirmity. [Paras 33, 34, 35, 43, 50]

Admission of the Section 7 application was justified because the debt and default stood established.

Maintainability of Section 7 application by debenture holders without debenture trustee - amendment of Section 7 application and effect of name/change of financial creditor - Debenture holders (100% debenture holders) were entitled to file the Section 7 application without impleading the debenture trustee and the subsequent name-change/amendment did not vitiate maintainability. - HELD THAT: - The Tribunal held that the transaction documents and Trust Deed did not fetter the statutory right of debenture holders to invoke Section 7; in any event the Debenture Trust Deed preserved the right of the debenture holders to act. The application for amendment of cause title to reflect name-change was allowed by the Adjudicating Authority and the Tribunal found no prejudice to the Corporate Debtor arising from the change. The Tribunal therefore upheld the Adjudicating Authority's view that the applicants had locus to file the petition and that the amendment/name change did not affect the finding of default. [Paras 44, 46, 47, 48]

The Section 7 application by the debenture holders was maintainable notwithstanding absence of the debenture trustee and the permitted amendment/name-change did not impair the application.

Scope of CIRP in real estate - project-wise maximisation - The Tribunal declined to apply the project-wise limitation relied upon from the Winter Hills order to the facts of this case. - HELD THAT: - The appellant invoked this Tribunal's earlier observations in the Winter Hills matter to contend that CIRP in a real estate company must be confined to the project for which the insolvency petition is filed. The Tribunal examined that order and observed it arose from a specific settlement where a promoter agreed to remain outside CIRP and perform a lender role; on the facts before it the present case differed materially and the Winter Hills observations were not applicable. Accordingly, the Tribunal rejected the submission that assets beyond the projects funded by the applicants had to be kept outside CIRP. [Paras 5, 49]

The Winter Hills precedent was inapplicable on the facts and did not preclude admission of the present Section 7 petition.

Principles of natural justice / audi alteram partem in admission proceedings - directory character of time-limits under Section 7 - No breach of natural justice or fatal procedural infirmity arose from the manner of admission; statutory time-limits under Section 7 are directory and did not invalidate admission. - HELD THAT: - The appellant complained that an opportunity to file additional written submissions was denied and that an order was passed contrary to the registry direction. The Tribunal observed the overall record, including that written submissions had been filed and that the alleged procedural irregularity did not cause prejudice sufficient to vitiate the admission. The Tribunal also noted precedent that the time-limits for ascertainment and rectification in Section 7 are of a directory character. Applying these principles, the Tribunal concluded the impugned admission order did not suffer from illegality on grounds of denial of audi or timing defects. [Paras 9, 10, 39, 40, 50]

There was no actionable breach of natural justice or fatal non-compliance with Section 7 time-limits that rendered the admission invalid.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Adjudicating Authority's order admitting the Section 7 application: the financial debt and default were established, the debenture holders were entitled to pursue the petition without the debenture trustee and permitted amendments/name-change did not vitiate maintainability; the Winter Hills observation was inapplicable on the facts and no prejudice from procedural aspects was shown.

Interest on deposit during litigation - pre-deposit - entitlement to interest from date of deposit till refund - refund of deposited amount - erstwhile Section 35FF: interest on delayed refunds - applicability of precedents (Sandvik Asia Ltd. and Parle Agro) - rate of interest payable on refund

Interest on deposit during litigation - pre-deposit - entitlement to interest from date of deposit till refund - applicability of precedents (Sandvik Asia Ltd. and Parle Agro) - Whether the amount deposited by the assessee during investigation/pending litigation constitutes a pre-deposit entitling the assessee to interest from the date of deposit till the date of refund, and at what rate such interest is payable. - HELD THAT: - The Tribunal accepted the assessee's position following the Division Bench decision in Parle Agro which, relying on the Apex Court in Sandvik Asia Ltd., held that amounts deposited during investigation and/or pending litigation operate as ipso facto pre-deposit. Consequently, where the assessee succeeds in appeal or the demand is dropped, the depositor is entitled to interest on the deposited amount from the date of deposit until the date of refund. The Revenue's contention that the deposit made in 2015 was not a pre-deposit and that the erstwhile Section 35FF (as amended w.e.f. 06.08.2014) governed interest obligations was rejected; the Tribunal applied the settled precedents to allow interest. The Tribunal further directed payment of interest at the rate held in Parle Agro, namely 12% per annum, to be disbursed within 45 days of receipt of the order copy. [Paras 7, 8, 9]

Appeal dismissed; interest on the deposited amount is payable from date of deposit till date of refund and shall be paid at 12% per annum within 45 days.

Final Conclusion: The Revenue's appeal is dismissed. The Adjudicating Authority is directed to pay interest on the amount deposited during litigation from the date of deposit until refund at 12% per annum, to be disbursed within 45 days from receipt of this order.

Valuation of taxable services - inclusion of reimbursable expenditure in consideration - pure agent - service tax liability on business support services - prospective operation of statutory amendment

Valuation of taxable services - inclusion of reimbursable expenditure in consideration - service tax liability on business support services - prospective operation of statutory amendment - Whether reimbursable expenses recovered by the assessee from related group companies formed part of the value of taxable services for the periods up to March 2015 - HELD THAT: - The Tribunal found the determinative legal question to be the valuation of taxable services and whether reimbursable expenditures could be included in the gross amount charged for 'such' taxable services. Relying on the Supreme Court's decision in Intercontinental Consultants and Technocrats, which upheld the High Court's quashing of Rule 5 of the Valuation Rules, the Tribunal accepted that Rule 5 went beyond the mandate of Section 67 and could not validly import reimbursable expenses into the valuation prior to the legislative amendment. The Finance Act, 2015 subsequently amended the definition of consideration to include reimbursable expenditure with effect from May 14, 2015; that amendment was substantive and therefore prospective. Applying this principle to the facts, and noting that the periods in dispute fall before the 2015 amendment, the Tribunal held that reimbursable expenses could not be included in the value of taxable services for the periods before the amendment and accordingly the demands based on such inclusion lacked merit.

Demand of service tax based on inclusion of reimbursable expenses for the periods up to March 2015 is unsustainable; the impugned adjudication on that basis is set aside.

Final Conclusion: Appeal allowed. The impugned order confirming service tax demands by including reimbursable expenses for the periods Oct 08 to Mar 13, 2013-14 and 2014-15 is set aside in view of the Supreme Court's ruling that reimbursable expenditures could not be included in valuation prior to the Finance Act, 2015 amendment; no remand was made.

Relevancy of statements under Section 9D of the Central Excise Act - Right to cross-examination in adjudication proceedings not at show-cause stage - Admissibility of statements recorded during investigation only after examination-in-chief and admission in evidence - Principles of natural justice in adjudication

Right to cross-examination in adjudication proceedings not at show-cause stage - Relevancy of statements under Section 9D of the Central Excise Act - Principles of natural justice in adjudication - Whether the petitioner was entitled to have witnesses, whose statements were recorded before issuance of the show-cause notice, produced for cross-examination at the stage of filing a reply to the show-cause notice. - HELD THAT: - The Court held that statements recorded prior to issuance of a show-cause notice cannot be regarded as recorded in the course of an inquiry or proceeding under the Act for purposes of Section 9D. A stage prior to issuance of a show-cause notice is not an adjudication; the show-cause is a step which invites a reply to a prima facie case. Reliance on statements recorded during investigation becomes relevant only when those statements are sought to be admitted in evidence in adjudication. Absent admission in evidence after examination-in-chief before the adjudicating authority, the noticee has no right to insist on cross-examination of makers of such statements at the reply-to-show-cause stage. If the Revenue intends to rely on such statements in adjudication, natural justice requires that the makers be examined in chief before the adjudicating authority, the examination-in-chief be placed on record and made available to the noticee, and only then the noticee may seek and be afforded opportunity to cross-examine. [Paras 11, 12]

Petitioner was not entitled to cross-examine the witnesses at the stage of filing reply to the show-cause notice; the right to cross-examination arises in adjudication after statements are examined and admitted in evidence.

Admissibility of statements recorded during investigation only after examination-in-chief and admission in evidence - Relevancy of statements under Section 9D of the Central Excise Act - Principles of natural justice in adjudication - The procedure to be followed by the adjudicating authority when statements recorded during investigation are relied upon and the consequential directions concerning adjudication of the show-cause notice. - HELD THAT: - The Court directed that the petitioner be permitted to file a final reply and that the adjudicating authority shall then decide whether to continue proceedings. If the Revenue wishes to rely on statements recorded under Section 14, the makers must be summoned and examined in chief before the adjudicating authority; a copy of that examination-in-chief must be made available to the assessee; statements not so examined-in-chief before the authority shall be eschewed from evidence and cannot support the show-cause notice; if examination-in-chief is recorded, the assessee shall be given suitable and reasonable opportunity to cross-examine and the evidence shall be recorded in the presence of the petitioner; thereafter the authority shall pass final order in accordance with law. The Court remanded the matter for fresh adjudication in accordance with Section 9D and these principles, leaving merits open. [Paras 9, 13, 14]

Show-cause notice proceedings remanded for de novo adjudication; specific directions given on summoning, examination-in-chief, availability of that record to the assessee, right to cross-examine, and recording of evidence in presence of the petitioner, with final order to follow in accordance with law.

Final Conclusion: Writ petition disposed by permitting the petitioner to file final reply; proceedings remanded for fresh adjudication in accordance with Section 9D and principles of natural justice - witness statements recorded pre-show-cause cannot be relied upon unless examined in chief before the adjudicating authority and the petitioner is afforded opportunity to cross-examine; all contentions on merits left open.

Interpretation of exemption notification - classification under tariff/HSN - parts or components of machinery - benefit of concessional notification - precedential reliance in classification disputes

Interpretation of exemption notification - classification under tariff/HSN - parts or components of machinery - benefit of concessional notification - Entitlement of the appellant to the benefit of notification no. 06/2011-CE (List 2 Sr. 41) for goods classified under CTH 84425031 as parts or components of textile printing machinery. - HELD THAT: - The Tribunal found that the appellant's goods were admitted by both parties to be classified under CTH 84425031 (plates and cylinders for textile printing machines) and the Revenue did not dispute that classification. The Revenue's denial of notification benefit was founded on reliance upon a precedent where the issue was one of tariff classification (Harish Industries Engineers), but the Tribunal noted the binding principle from the Apex Court (CCE Jaipur v. Mewar Bartan Nirman Udyog) that interpretation of an exemption notification must follow the plain language of the notification and not the rules of classification applied under the tariff/HSN. Given that List 2 Sr. 41 of notification no. 06/2011-CE expressly extends the concession to "Parts or components of the machinery specified at item nos. (1) to (40)", and the appellant's goods fall within a tariff heading embracing "plates, cylinders and other printing components" for textile printing machinery, the entitlement to concessional duty could not be denied without challenging the accepted classification. Consequently, the demand, interest and penalties founded on denial of the notification were unsustainable. [Paras 5, 6]

Appellant entitled to benefit of List 2 Sr. 41 of notification no. 06/2011-CE dated 01.03.2011; impugned demands and penalties set aside.

Final Conclusion: Appeals allowed; impugned orders set aside and benefit of notification no. 06/2011-CE (List 2 Sr. 41) granted to the appellant for the period March 2011-September 2011, with consequent deletion of demands and penalties.

Assessable value for excise duty - Pre-Delivery Inspection (PDI) charges - After Sales Service (ASS) charges - charges incurred by dealer from profit margin - binding precedent - application of Supreme Court ratio in TVS Motors

Assessable value for excise duty - Pre-Delivery Inspection (PDI) charges - After Sales Service (ASS) charges - charges incurred by dealer from profit margin - application of Supreme Court ratio in TVS Motors - Whether PDI and ASS charges, when incurred by dealers out of their profit margin, are includible in the assessable value of motor vehicles sold to dealers. - HELD THAT: - The Tribunal held that the question is no longer open in the appellant's favour, relying on an earlier coordinate bench decision in the appellant's own case which applied the Supreme Court's ratio in Commissioner of Central Excise, Mysore v. TVS Motors Co. Ltd. That ratio, as summarised by the Tribunal, establishes that PDI charges and free ASS charges are not to be included in the assessable value under the relevant excise provisions. Applying that binding precedent, the Tribunal concluded that such charges-being expended by dealers from their profit margin-do not form part of the assessable value of the motor vehicles. [Paras 4]

The impugned order is set aside and the appeal is allowed; PDI and ASS charges incurred by dealers from their profit margin are not includible in the assessable value of the motor vehicles.

Final Conclusion: The Tribunal allowed the appeal, setting aside the impugned order, holding that Pre Delivery Inspection and After Sales Service charges borne by dealers from their profit margin are not includible in the assessable value for excise, in view of the binding Supreme Court ratio applied by the Tribunal.

Remission of duty under Rule 21 of Central Excise Rules - Reversal of CENVAT credit - Applicability of Rule 3(5B) of the CENVAT Credit Rules to goods destroyed by fire - Operation of Rule 3(5C) where remission under Rule 21 is allowed - Interpretation of 'goods' for remission purposes - Principle of intended use/'for use' doctrine (as in BPL Display Devices) - Levy of interest and penalty under Sections 11AA and 11AC

Applicability of Rule 3(5B) of the CENVAT Credit Rules to goods destroyed by fire - Reversal of CENVAT credit - Principle of intended use/'for use' doctrine (as in BPL Display Devices) - Whether the demand for reversal of CENVAT credit under Rule 3(5B) in respect of inputs, packing materials and semi finished goods destroyed in the fire is sustainable. - HELD THAT: - The Tribunal held that Rule 3(5B) applies to inputs or capital goods which have been written off in the books (obsolescence) and is not the provision to be invoked where inputs or work in progress/semi finished goods have been destroyed by fire while intended for or in the process of manufacture. The court analysed the CENVAT scheme and the deeming/operational interplay between Rule 3(5), (5B), (5C) and Rule 21 of the Central Excise Rules, and concluded that once inputs are procured/held for intended use in manufacture and credit is legitimately taken, the loss of those inputs in an unavoidable accident does not automatically attract reversal under Rule 3(5B). Reliance was placed on the principle that credit/benefits availed for goods intended 'for use' cannot be denied merely because they could not be used, following the reasoning in the Supreme Court decision referred to in the judgment. Applying that principle to the facts, the Tribunal rejected the Commissioner's invocation of Rule 3(5B) to demand reversal of credit for the destroyed inputs/semi finished goods and set aside the related demand. [Paras 4]

Demand for reversal of CENVAT credit under Rule 3(5B) in respect of inputs/packing materials and semi finished goods destroyed in the fire is not sustainable and is set aside.

Remission of duty under Rule 21 of Central Excise Rules - Operation of Rule 3(5C) where remission under Rule 21 is allowed - Interpretation of 'goods' for remission purposes - Levy of interest and penalty under Sections 11AA and 11AC - Whether remission under Rule 21 can extend to goods other than finished goods and the consequence for reversal of credit, interest and penalty. - HELD THAT: - The Tribunal interpreted Rule 21 as using the word 'goods' in a wide sense and not being confined to finished goods only. It held that once the amount payable under provisions such as Rule 3(5) is treated as duty payable by reason of the deeming fiction, a claim for remission under Rule 21 could be considered if the statutory satisfaction (loss by natural causes or unavoidable accident) is recorded. Separately, where remission under Rule 21 is properly allowed for finished goods, Rule 3(5C) requires reversal of credit on inputs used in manufacture of those remitted finished goods. However, because the Tribunal held the Commissioner erred in invoking Rule 3(5B) and that the inputs/semi finished goods were within the ambit of the 'intended use' principle, the impugned demands, and hence the consequential interest and penalty under Sections 11AA and 11AC, could not be sustained. The Tribunal therefore set aside the demands and the interest and penalty imposed. [Paras 4, 5]

Rule 21 is not confined to 'finished goods' in terminology and remission claims may extend to goods lost by unavoidable accident; where remission/credit interaction was improperly applied by invoking Rule 3(5B), the consequential demands, interest and penalty are set aside.

Final Conclusion: The appeal is allowed: the Tribunal set aside the Commissioner's demands for reversal of CENVAT credit in respect of inputs, packing materials and semi finished goods destroyed in the fire (Rule 3(5B) held inapplicable), and accordingly quashed the related interest and penalty; the treatment of reversal under Rule 3(5C) remains applicable only where remission under Rule 21 is properly allowed for goods on which duty is payable.

Legally enforceable liability for the purposes of Section 138 of the Negotiable Instruments Act - object and consideration unlawful under Section 23 of the Indian Contract Act, 1872 - agreement void ab initio for being opposed to public policy

Legally enforceable liability for the purposes of Section 138 of the Negotiable Instruments Act - object and consideration unlawful under Section 23 of the Indian Contract Act, 1872 - agreement void ab initio for being opposed to public policy - Whether the cheque and the underlying agreement constituted a legally enforceable liability within the meaning of Section 138 of the Negotiable Instruments Act, having regard to the object and consideration of the agreement. - HELD THAT: - The court applied the test in Section 23 of the Contracts Act to determine whether the object or consideration of the agreement was lawful. The complainant, a member of the Committee of Creditors, accepted consideration from the accused to refrain from preferring an appeal against an NCLT order. Such an agreement-inducing omission to pursue a statutory remedy and thereby defeating the provisions of law or being opposed to public policy-falls within the categories of unlawful consideration set out in Section 23. The court relied on settled principle that an agreement offending public policy is void ab initio and cannot give rise to legally enforceable obligations. Consequently, where the agreement is void from inception, no debt or liability arising from it can be treated as a lawful debt or liability for the purposes of Section 138 NIA. Having found the agreement void, the liability which the complainant sought to enforce under the negotiable instrument was not legally enforceable and the complaint under Section 138 was not maintainable. [Paras 10, 11, 13, 14]

Agreement held void ab initio as opposed to public policy; cheque did not represent a legally enforceable liability under Section 138 and the complaint was quashed.

Final Conclusion: The petition under Section 482 Cr.P.C. is allowed; the complaint under Section 138 of the Negotiable Instruments Act and the summons issued thereunder are quashed on the ground that the underlying agreement was void as opposed to public policy and therefore did not give rise to a legally enforceable liability.

Quashing of FIR under Section 482 Cr.P.C. - Cheating requiring dishonest intention from inception - Mere breach of contract not amounting to cheating - Arraying of company and liability of directors/individuals - Scope of interference at investigation stage - Concurrent civil remedies and parallel criminal proceedings

Quashing of FIR under Section 482 Cr.P.C. - Scope of interference at investigation stage - Validity of quashing the FIR at the pre-investigation stage in a commercial transaction alleged to involve cheating and criminal breach of trust. - HELD THAT: - The Court observed that the power under Section 482 Cr.P.C. must be exercised sparingly and that mere availability of civil remedy does not preclude a criminal complaint if the complaint discloses ingredients of the offence. At the FIR stage the court must not go into the evidentiary value of allegations; the test is whether the prima facie allegations attract the offence. Applying these principles to the allegations that supplies were made on promises and cheques issued and dishonoured, the Court found that the FIR contains prima facie material from which deception from the inception could be inferred and therefore interfered with only limitedly. On the material placed in the FIR, quashing was not warranted at this stage and investigation should proceed. [Paras 10, 21, 28]

FIR not liable to be quashed at the stage; investigation must proceed.

Cheating requiring dishonest intention from inception - Mere breach of contract not amounting to cheating - Whether the allegations in the FIR disclose offence of cheating (Section 420 IPC) where the dispute arises from a commercial transaction and there were alleged defaults in payment. - HELD THAT: - The Court reiterated the established principle that mere breach of contract does not amount to cheating unless a fraudulent or dishonest intention existed at the inception of the transaction. However, whether such intention existed is a question of evidence. The FIR in this case alleges that supplies were made on promises and assurances, multiple cheques were issued and dishonoured, and fresh assurances followed; viewed prima facie, these allegations can support an inference of deception from the outset. Given that the presence or absence of initial dishonest intention is a matter for investigation and evidence, the Court declined to quash the FIR on the ground that the dispute is commercial. [Paras 13, 21, 23, 28]

Allegations are prima facie sufficient to require investigation into whether dishonest intention existed from inception; FIR not quashed on ground of being merely a commercial dispute.

Arraying of company and liability of directors/individuals - Concurrent civil remedies and parallel criminal proceedings - Whether non-arraying of the company as an accused mandates quashing of proceedings against the husband and wife. - HELD THAT: - The Court noted precedents where prosecutions against individual directors were quashed when the company, as the primary alleged wrongdoer, was not made a party and the complaint targeted the company. However, the Court distinguished those authorities on the facts: in the present FIR the allegations expressly target the first and second accused in their individual capacity for making false assurances and obtaining supplies. Therefore the mere fact that the company was not arrayed does not automatically absolve the petitioners where the FIR contains allegations against them individually. The availability of parallel remedies, including civil suits or proceedings under the Negotiable Instruments Act, does not by itself preclude criminal investigation where prima facie ingredients of offences are alleged. [Paras 18, 19, 20, 25, 28]

Non-arraying of the company does not require quashing the FIR against the individuals where prima facie allegations are made against them personally; criminal investigation permitted to proceed.

Final Conclusion: The Criminal Original Petition seeking quashing of FIR No.1656 of 2017 is dismissed; the Court finds that the FIR contains prima facie allegations of deceptive assurances and dishonoured cheques sufficient to require investigation, that questions of initial dishonest intention are for evidence, and that absence of the company as an accused does not automatically invalidate prosecution of persons alleged to have acted in their individual capacity.

Admissibility of confessions recorded under Section 67 NDPS - inadmissibility of simplicitor statements under Section 25 Indian Evidence Act - relevance of disclosures leading to discovery under Section 27 Indian Evidence Act - presumption as to documents and material produced under Section 66 NDPS Act - requirement of certificate for electronic records under Section 65B Indian Evidence Act - bail bar under Section 37 NDPS Act in cases of international trafficking

Admissibility of confessions recorded under Section 67 NDPS - inadmissibility of simplicitor statements under Section 25 Indian Evidence Act - relevance of disclosures leading to discovery under Section 27 Indian Evidence Act - presumption as to documents and material produced under Section 66 NDPS Act - bail bar under Section 37 NDPS Act in cases of international trafficking - Whether the petitioners could be released on bail despite statements recorded under Section 67 NDPS and other seized material - HELD THAT: - The Court acknowledged that simplicitor statements recorded under Section 67 NDPS may not be admissible as evidence under Section 25 of the Indian Evidence Act, particularly in light of the decision in Tofan Singh, but held that disclosures which lead to discovery of facts within the accused's knowledge are relevant under Section 27 of the Indian Evidence Act. The charge-sheet and seized electronic material (mobile phones, laptops, mirror-image data) prima facie demonstrate involvement in large-scale trafficking and external trading in Tramadol and related psychotropic substances; such incriminating material seized from the petitioners' devices supports the prosecution case. Further, the Court noted that Section 66 of the NDPS Act creates a presumption that documents and material produced by a person are to be treated as proved unless the contrary is established. Considering the nature of the allegations (international trafficking), the statutory bail bar under Section 37 NDPS Act and the prima facie material on record, the petitioners were not entitled to bail at this stage. [Paras 5, 10, 11, 12, 13]

Bail petitions dismissed on merits; no ground to grant bail at this stage.

Requirement of certificate for electronic records under Section 65B Indian Evidence Act - admissibility of electronic evidence - Whether electronic records extracted from devices could be relied upon in absence of Section 65B certificates - HELD THAT: - The Court addressed the contention that mobile chats, mails and other electronic data are inadmissible without a certificate under Section 65B. It referred to the Supreme Court's observations in Arjun Panditrao Khotkar permitting relief where a party has done everything possible to obtain a certificate from a third party beyond its control, and observed that the NCB had in fact collected Section 65B certificates from the cyber forensic expert who examined the instruments and extracted the data. On that basis the Court did not find the lack of admissibility under Section 65B to be a ground for granting bail. [Paras 14, 15]

Electronic evidence challenge on 65B grounds did not warrant bail; certificates were obtained and the objection did not disentitle prosecution material at this stage.

Final Conclusion: Both petitions for grant of bail are dismissed; liberty granted to move afresh after examination of public witnesses qua recovery. Nothing expressed amounts to an opinion on the merits.

Dishonour of cheque under Section 138 of the Negotiable Instruments Act - Legally enforceable debt - Presumption under Section 139 of the Negotiable Instruments Act - Rebuttal of presumption by preponderance of probabilities - Onus of proof in cheque dishonour prosecutions - Scope of interference in appeals against acquittal

Legally enforceable debt - Dishonour of cheque under Section 138 of the Negotiable Instruments Act - Onus of proof in cheque dishonour prosecutions - Debt alleged by the complainant is a legally enforceable debt - HELD THAT: - The Court upheld the trial Court's finding that the complainant failed to prove that the sums claimed constituted a legally enforceable debt. The complainant admitted in cross-examination that he did not produce the account-books or date-wise particulars of advances that he asserted were maintained by him in respect of the accused. The complainant also failed to supply a copy of the cheque in response to the accused's request made on receipt of the legal notice. In the absence of any material particulars or ledger/account entries to substantiate the asserted debt, the trial Court correctly found that the essential precondition for prosecution under Section 138 - a legally enforceable debt or liability - was not established beyond reasonable doubt. [Paras 6]

The debt was not proved to be a legally enforceable debt and thus the offence under Section 138 NI Act was not made out.

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttal of presumption by preponderance of probabilities - Whether the presumption under Section 139 was rebutted by the accused - HELD THAT: - Applying the settled principle that Section 139 raises a rebuttable evidentiary presumption, the Court accepted the magistrate's conclusion that the accused had raised a probable defence on the preponderance of probabilities. The record (including bank statement Exh. 12) showed that the relevant account had been closed on 28.02.2003 and the cheque was presented on 16.05.2003 and returned with endorsement "Account Closed." The accused, by leading evidence and material, succeeded in rebutting the statutory presumption; once rebuttal succeeded, the onus returned to the complainant, who failed to discharge it. Consequently, Section 139 afforded no aid to the complainant in the present facts. [Paras 6]

The presumption under Section 139 was successfully rebutted by the accused and therefore did not assist the complainant.

Scope of interference in appeals against acquittal - Whether this Court should interfere with the trial Court's order of acquittal - HELD THAT: - The Court reviewed the law on appellate interference in acquittal appeals, noting the double presumption in favour of an accused and the principle that appellate interference is warranted only if the trial Court's approach was perverse, manifestly illegal or unsustainable. On re-appreciation of the evidence, the High Court found that the trial Magistrate had considered depositions and documents and reached a reasoned conclusion that the essential ingredients of Section 138 were not proved. The High Court concluded there was no perversity or manifest illegality in the trial Court's approach and therefore declined to disturb the acquittal. [Paras 5, 9]

No interference with the order of acquittal; the trial Court's judgment is confirmed.

Final Conclusion: The appeal is dismissed. The High Court affirms the trial Court's acquittal because the complainant failed to prove a legally enforceable debt and the accused successfully rebutted the statutory presumption under Section 139; there is no perversity or manifest illegality warranting interference.

Right to cross-examine - recall of witnesses under Section 311 Cr.P.C. - closure of defence evidence - non-bailable warrants and process under Section 82 Cr.P.C. - power under Article 227 and Section 482 Cr.P.C. - fair trial and adequate opportunity to the accused - delay in trial and prejudice to parties

Right to cross-examine - recall of witnesses under Section 311 Cr.P.C. - closure of defence evidence - fair trial and adequate opportunity to the accused - delay in trial and prejudice to parties - Whether the petitioner, despite prolonged absence and delay, could be permitted to recall/cross-examine the complainant and lead defence evidence after the trial court had closed his right to cross-examine and to lead defence evidence. - HELD THAT: - The Court found that the petitioner remained absent for substantial periods, causing delay and leading to closure of his right to cross-examine and to lead defence evidence; change or death of previous counsel does not automatically entitle recall of witnesses, and mere delay or change of counsel cannot alone establish prejudice warranting recall. However, balancing the need for an expeditious trial and the accused's right to a fair trial, the Court concluded that a final, limited opportunity should be granted. The Court noted that the petitioner was given prior chances (including specific dates for cross-examination and a final opportunity to lead defence evidence), that the application under Section 311 Cr.P.C. was filed belatedly when the right had already been closed, and that the petitioner only sought recall after issuance of processes. Applying the principle that supervisory jurisdiction under Article 227 and Section 482 Cr.P.C. is to be exercised sparingly and only to prevent patent error or gross injustice, the Court exercised its discretion to allow one last opportunity to lead defence evidence, subject to strict conditions to prevent further delay and prejudice to the complainant. [Paras 14, 16, 17, 18, 19]

Petitioner granted one final opportunity to lead defence evidence and have defence witnesses examined and cross-examined on a single day; the opportunity is subject to payment of costs to the respondent and failure to avail it will permit the trial court to proceed; trial to be expedited.

Final Conclusion: Writ petition under Section 482 Cr.P.C. disposed of by permitting one last, single-day opportunity to the petitioner to lead defence evidence and for cross-examination of those witnesses, subject to payment of costs to the respondent and directions to the trial court to conclude the trial within three months; further non-compliance will result in the trial court proceeding in accordance with law.