TaxTMI Updates e-Newsletter
Dec 09,2020

Classification of goods - Nonwovens (spun-bonded polypropylene) - made-up textile articles - meaning of "made up" (Section Note 7 of Section XI) - sacks and bags used for packing of goods (Chapter Heading 6305) - exclusion by Chapter Note 2(a) of Chapter 63 - garments made of fabrics of specified headings (Chapter Heading 6210) - headgear and caps classification (Chapter Heading 6505) - other made up articles including dress patterns (Chapter Heading 6307) - classification unaffected by manufacture of raw material in same unit

Nonwovens (spun-bonded polypropylene) - classification of goods - Classification of polypropylene spun-bonded nonwoven fabric. - HELD THAT: - The Authority examined the manufacturing process from polypropylene granules to continuous filaments and thermal bonding resulting in spun-bonded nonwoven fabric. Having regard to the nature of the finished fabric and its characterization in the First Schedule to the Customs Tariff, the nonwoven fabric falls within the description of "Nonwovens" and is classifiable under Chapter Heading 5603. The ruling records this classification as the answer to the first question. [Paras 5, 6]

PP spun-bonded nonwoven fabric is classifiable under 5603.

Made-up textile articles - meaning of "made up" (Section Note 7 of Section XI) - sacks and bags used for packing of goods (Chapter Heading 6305) - garments made of fabrics of specified headings (Chapter Heading 6210) - headgear and caps classification (Chapter Heading 6505) - other made up articles including dress patterns (Chapter Heading 6307) - classification of finished products manufactured from nonwoven fabric - Classification of finished articles made from PP nonwoven fabric: bags, 3 ply masks, surgical caps, surgical gowns and surgical shoe covers. - HELD THAT: - Applying the definition of "made up" in Section Note 7 of Section XI, the Authority treated articles cut to size and stitched or otherwise processed from nonwoven fabric as "made-up textile articles." Sacks and bags used for packing, produced by cutting and stitching the nonwoven fabric, fall under Chapter Heading 6305 (tariff item 6305 33 00). Disposable surgical gowns made of fabrics of headings 5602/5603 designed for medical use are classifiable under Chapter Heading 6210 (subheading 6210 10). Disposable surgical caps, being headgear made up from textile fabric, are classifiable under Chapter Heading 6505 (subheading 6505 90). Disposable surgical masks and shoe covers, being other made up articles, are classifiable under Chapter Heading 6307. The Authority applied these tariff headings to each product accordingly. [Paras 5, 6]

Nonwoven fabric bag = 6305; 3 ply mask = 6307; Surgical cap = 6505; Surgical gown = 6210; Surgical shoe cover = 6307.

Classification unaffected by manufacture of raw material in same unit - classification of goods - Whether classification of the finished products changes if PP spun bonded nonwoven fabric is manufactured in the same unit. - HELD THAT: - The Authority held that classification is determined by the raw material used and the character of the final product. The fact that the PP spun bonded nonwoven fabric (raw material for subsequent articles) is manufactured in the same establishment does not alter the classification of the final products. The two processes produce distinct final products for tariff purposes: the first process yields the fabric (5603) and the second yields the made up articles classifiable under the headings identified above. [Paras 5, 6]

No change in classification if the nonwoven fabric is also manufactured in the same unit; classification remains as ruled.

Final Conclusion: Advance ruling: PP spun bonded nonwoven fabric is classifiable under 5603; nonwoven fabric bags under 6305, 3 ply masks and surgical shoe covers under 6307, surgical caps under 6505, and surgical gowns under 6210; manufacture of the fabric in the same unit does not affect these classifications.

Advance ruling application fee requirement - applicability of CGST and SGST fee heads - power to admit or reject an advance ruling application under section 98(2) - requirement of opportunity of hearing before rejection

Advance ruling application fee requirement - applicability of CGST and SGST fee heads - power to admit or reject an advance ruling application under section 98(2) - requirement of opportunity of hearing before rejection - Whether the advance ruling application could be admitted where the prescribed fee under CGST and HPGST Rules was not paid. - HELD THAT: - The Authority noted that an advance ruling applicant must file the application in the prescribed form and manner and pay the prescribed fee. Rule 104 prescribes a fee of Rs. 5,000 under the CGST head and Rs. 5,000 under the SGST head where both Central and State Acts are invoked, making the total prescribed fee payable before admission. The application before the Authority was not accompanied by the requisite fee and the applicant was given an opportunity to remedy the defect and to be heard. Having examined the statutory scheme and after affording hearing as mandated by the proviso to section 98(2), the Authority exercised the power under section 98(2) to reject the application for non-payment of the prescribed fee. The Authority clarified that the rejection does not bar the applicant from filing a fresh application that complies with section 97(1) and the relevant rules. [Paras 2, 4, 5, 6]

Application rejected for non-payment of the prescribed fee (Rs. 5,000 each under CGST and SGST); applicant may file a fresh application upon payment of the requisite fee.

Final Conclusion: The Authority rejected the advance ruling application for non-payment of the prescribed CGST and SGST fees after affording opportunity of hearing; the applicant remains entitled to file a fresh application in compliance with the statutory fee requirement.

Admissibility of input tax credit of tax paid or deemed to have been paid - jurisdiction of advance ruling on admissibility of input tax credit - deeming fiction of tax being deemed to have been paid - non-maintainability of advance ruling where tax is not paid or not deemed to have been paid

Admissibility of input tax credit of tax paid or deemed to have been paid - jurisdiction of advance ruling on admissibility of input tax credit - non-maintainability of advance ruling where tax is not paid or not deemed to have been paid - Whether the Advance Ruling Authority can entertain a ruling on admissibility of input tax credit where the supplier has not paid the tax (either in cash or by way of eligible credit) and the tax is therefore not paid or not deemed to have been paid. - HELD THAT: - The authority examined the scope of questions permissible under the advance ruling provisions and found that advance rulings on admissibility of input tax credit are maintainable only where tax has been paid or is deemed to have been paid. The applicant's queries expressly concern situations where the supplier has not paid tax in cash or has paid through utilisation of ineligible input tax credit; in either scenario tax has not actually been paid or must be regarded as not having been paid. Because the questions therefore relate to cases where tax is not paid or not deemed to have been paid, they fall outside the matters on which an advance ruling may be given. The Authority accordingly declined to enter into the substantive merits or cited case law and concluded that it lacked jurisdiction to decide the raised questions. [Paras 5]

The application for advance ruling is non-maintainable and is rejected because the questions relate to input tax credit where tax has not been paid or deemed to have been paid, which falls outside the Advance Ruling Authority's jurisdiction.

Final Conclusion: The Advance Ruling Authority rejected the application as non-maintainable: questions on admissibility of input tax credit where the supplier has not paid tax (or has paid by utilisation of ineligible credit) are beyond the scope of advance rulings because they do not concern tax that has been paid or deemed to have been paid.

Service under Section 169 of the GST Act - manner of service - deemed service - ex-parte proceedings - failure of natural justice - remand for fresh consideration

Service under Section 169 of the GST Act - manner of service - deemed service - ex-parte proceedings - Validity of service of notices/orders issued in proceedings under Section 129 and Section 130 of the U.P. Goods and Services Tax Act. - HELD THAT: - The Court examined the modes of service prescribed by Section 169 and held that service must conform to the specific methods enumerated therein. Service effected on the driver of the truck and fixation of the order on the truck were not among the prescribed modes of service. Consequently the orders impugned were treated as not having been properly served and the proceedings were effectively ex-parte against the petitioner.

Service was invalid; proceedings held without valid service are ex-parte and the impugned orders are set aside on this ground.

Failure of natural justice - remand for fresh consideration - Whether the Appellate Authority afforded the petitioner an opportunity of hearing and properly considered the grounds raised in the appeal dated 05.08.2020. - HELD THAT: - The impugned appellate order records that the grounds raised were afterthoughts because no reply had been filed to notices; however, the Court found that the petitioner was never granted an opportunity to file a reply or to be heard before the Appellate Authority considered and rejected the grounds. This shortcoming amounted to a failure of natural justice. In view of invalid service and absence of opportunity, the Court exercised its supervisory jurisdiction to set aside the orders and remand the matter for fresh consideration in accordance with law.

The appellate order dated 05.08.2020 (and the order dated 23.01.2020) is set aside and the matter is remanded for fresh proceedings; petitioner permitted to file fresh reply within three weeks and respondents to decide afresh expeditiously, preferably within four weeks of filing of objections.

Final Conclusion: The orders dated 05.08.2020 and 23.01.2020 are set aside for invalid service and failure to afford opportunity of hearing; the matter is remanded for fresh adjudication in accordance with law with liberty to the petitioner to file objections within three weeks and for respondents to decide the matter preferably within four weeks thereafter. The petition is disposed of.

Regular bail under Section 439 Code of Criminal Procedure, 1973 - Entitlement to bail where maximum sentence does not exceed five years - Custodial period and delay in trial as a ground for grant of bail - Pre-charge evidence stage and limited necessity of custody for investigation - Seriousness of allegations versus balance of convenience for bail - Conditions of bail including execution of bond, surety and travel restriction

Regular bail under Section 439 Code of Criminal Procedure, 1973 - Entitlement to bail where maximum sentence does not exceed five years - Custodial period and delay in trial as a ground for grant of bail - Pre-charge evidence stage and limited necessity of custody for investigation - Seriousness of allegations versus balance of convenience for bail - Conditions of bail including execution of bond, surety and travel restriction - Whether the petitioner, accused in proceedings filed by Directorate General of GST Intelligence, was entitled to regular bail while in custody for over two years where maximum punishment is five years and trial is at pre-charge evidence stage. - HELD THAT: - The Court accepted that allegations against the petitioner were serious but observed that the petitioner had been in custody for more than two years and that the trial was at the stage of recording pre-charge evidence. The Court relied on the legal principle that prolonged custody and delay in conclusion of trial, particularly where investigation is complete and the matter is at pre-charge evidence stage, are relevant considerations in the exercise of discretion under Section 439 CrPC. Noting that the maximum sentence capable of being imposed was five years, the Court held that continued incarceration was not justified solely by the gravity of the allegations. Applying a balancing exercise between the seriousness of the case and the custodial period/delay, the Court found it just and expedient to release the petitioner on bail subject to stringent conditions to allay prosecution concerns, without expressing any opinion on merits of the allegations.

Petition allowed; petitioner admitted to bail on furnishing a bond and one surety in the prescribed amount and subject to condition of not leaving the country without prior permission of the Court.

Final Conclusion: Bail granted under Section 439 CrPC on the basis of prolonged custody and pendency of pre-charge evidence, with imposed conditions including bond, surety and prohibition on leaving the country, without expressing any view on merits.

Inventory of seized goods - issuance of GST MOV-04 - intimation regarding tax or penalty by issuance of GST MOV-07 - release of goods after payment of due tax and penalty - issuance of GST MOV-05 for release of vehicle - assessment order indicating due tax and penalty under Section 129 - determination of parking/haltage charges in the assessment order

Assessment order indicating due tax and penalty under Section 129 - intimation regarding tax or penalty by issuance of GST MOV-07 - Respondents to pass an assessment order indicating the due tax and penalty and to intimate the petitioner accordingly within two weeks as per the undertaking accepted by the Court. - HELD THAT: - The respondents' counsel furnished an unequivocal undertaking before the Court that, although the vehicle had been seized on 28 August, 2020 and a theft occurred within twenty-four hours of seizure which delayed assessment, an assessment order indicating the due tax and penalty would be passed within a period of two weeks. The Court accepted this undertaking and held the respondents bound by it, thereby directing them to pass the assessment order and furnish intimation of tax/penalty to the petitioner by issuing the appropriate document (GST MOV-07) or otherwise communicating the assessment result within the stipulated time.

Direction recorded that respondents shall pass the assessment order indicating due tax and penalty and intimate the petitioner within two weeks; respondents bound by the undertaking.

Inventory of seized goods - issuance of GST MOV-04 - release of goods after payment of due tax and penalty - issuance of GST MOV-05 for release of vehicle - Petition seeking inventory of goods, issuance of GST MOV-04, intimation and release of goods and vehicle after payment of due tax/penalty disposed of by recording the undertaking and directions to the respondents. - HELD THAT: - The petitioner sought directions for preparation of an inventory and issuance of GST MOV-04, for intimation regarding tax/penalty and issuance of GST MOV-07, and for release of goods and vehicle upon payment by issuance of GST MOV-05. In light of the respondents' undertaking to conclude assessment and indicate tax/penalty within two weeks, the Court recorded that undertaking, accepted the assurance, and disposed of the writ petition while directing compliance. The Court further directed that release-related formalities and communications follow the assessment and payment process as per the respondents' undertaking.

Writ petition disposed of after recording the respondents' undertaking to complete assessment and effect intimations and releases in accordance with GST procedures.

Determination of parking/haltage charges in the assessment order - Respondents directed to decide parking/haltage (parking charges) in the assessment order to be passed. - HELD THAT: - The Court specifically recorded that the respondents shall include a decision on parking/haltage charges within the assessment order that they have undertaken to pass. This direction makes clear that such charges are to be considered and adjudicated contemporaneously with the assessment of tax and penalty.

Direction that parking/haltage charges be decided in the assessment order.

Final Conclusion: The Court accepted the respondents' undertaking to pass an assessment order indicating due tax and penalty within two weeks, directed that inventory, intimations and release formalities be completed in accordance with that assessment (including issuance of the relevant GST MOV forms), and ordered that parking/haltage charges be decided in the assessment order; the writ petition was disposed of on these terms.

Refund of input tax credit - refund under Section 54 of the CGST Act - sanction of refund - competent authority to sanction refund - electronic credit ledger - opportunity of hearing - direction to release sanctioned refund

Refund of input tax credit - sanction of refund - competent authority to sanction refund - direction to release sanctioned refund - opportunity of hearing - Release of the sanctioned SGST portion of the refund to the petitioner. - HELD THAT: - The petitioner filed applications for refund of input tax credit for specified tax periods and the amounts were debited from its Electronic Credit Ledger. The refund applications were scrutinized and sanctions were issued; the IGST and CGST portions have been paid but the SGST portion amounting to the sum sanctioned was not released. The Court, without adjudicating the merits of the refund claim, observed that the 5th respondent is the competent authority to sanction and disburse the refund. In exercise of writ jurisdiction the Court directed the 5th respondent to release the sanctioned SGST amount in accordance with law, after affording the petitioner an opportunity of hearing if necessary, and within the specified time frame. The Court did not express any view on the substantive correctness of the refund claim and left open the authority's statutory decision-making role subject to compliance with law and hearing.

The 5th respondent is directed to release the sanctioned SGST refund amount in accordance with law, after affording an opportunity of hearing if need be, within one month from receipt of this judgment.

Final Conclusion: Writ petition disposed of by directing the competent authority to release the sanctioned SGST refund amount after affording hearing if necessary, within one month; liberty granted to the petitioner to seek implementation if directions are not complied with.

Provisional attachment of bank accounts under the Central Goods and Services Tax Act, 2017 - lack of prior enquiry before provisional attachment - requirement of appropriate authority for ordering attachment (Commissioner v. subordinate officer) - balance of convenience in granting interim relief against provisional attachment

Provisional attachment of bank accounts under the Central Goods and Services Tax Act, 2017 - balance of convenience in granting interim relief against provisional attachment - interim relief to unfreeze a part of the petitioner's bank funds while provisional attachment continues over other accounts - HELD THAT: - The petition challenges a provisional attachment dated 9 November 2020 claiming a large presumptive demand, while the petitioner asserts that no enquiry has been initiated against it and that attachment has paralysed its business. Without adjudicating the merits, the Court balanced competing interests by observing that the claimed demand substantially exceeds the frozen balances and that continuing a complete freeze would unduly hamper the petitioner's operations. Consequently, the Court ordered a limited interim relaxation by directing release of funds in one current account and one savings account while maintaining attachment of the remaining accounts until the next date, as a measure to balance the parties' interests pending further proceedings. [Paras 11, 12]

Directed respondents to unfreeze one current account and one savings account of the petitioner while continuing attachment of the remaining accounts as an interim measure

Leave to amend pleadings - grant of leave to amend the writ petition and dispensation of re-verification - HELD THAT: - The Court granted the petitioner leave to amend the writ petition and dispensed with re-verification, permitting the petitioner to correct or supplement pleadings at this stage. [Paras 2]

Leave granted to the petitioner to make amendment in the petition and re-verification dispensed with

Final Conclusion: Interim order: limited relief granted by unfreezing one current account and one savings account of the petitioner while maintaining provisional attachment over the remaining accounts; leave to amend the petition allowed; matter stood over for further hearing.

Provisional attachment - Section 83 of the Central Goods and Services Tax Act, 2017 - compliance with conditions for provisional attachment - jurisdictional requirement as to authority ordering attachment - interim relief by partial unfreezing of bank accounts

Provisional attachment - Section 83 of the Central Goods and Services Tax Act, 2017 - compliance with conditions for provisional attachment - jurisdictional requirement as to authority ordering attachment - Challenge to the validity of the provisional attachment of the petitioner's bank accounts under Section 83 was taken on file and notice issued; merits of the attachment were not finally adjudicated at this stage. - HELD THAT: - Petitioner contended that the statutory conditions for provisional attachment under Section 83 had not been complied with and that the order of attachment was by the Assistant Commissioner rather than by the Commissioner as required in law. The Court considered these contentions but did not decide them on the merits; instead the Court issued notice to the respondents and directed service. The challenge to the substantive validity of the provisional attachment therefore remains pending for adjudication on hearing of the writ petition. [Paras 2, 4, 5, 7]

Notice issued; substantive challenge to the provisional attachment left open for adjudication.

Interim relief by partial unfreezing of bank accounts - proportionality in provisional measures - Interim relief balancing the parties' interests by unfreezing all bank accounts except one current account approximately equal to the claimed presumptive demand. - HELD THAT: - The Court noted the respondents' presumptive claim of Rs. 2,71,40,055.00 and the petitioner's submission that multiple accounts totalling a larger sum had been frozen, crippling business operations. Without adjudicating other aspects, the Court exercised its equitable power to preserve the status quo while balancing interests: it identified one current account whose balance roughly corresponded to the claimed amount and directed that only that account remain frozen as an interim measure, while the remaining accounts at the same bank be unfrozen. This measure was ordered as a temporary arrangement until the next date of hearing. [Paras 6, 9, 10, 11]

All accounts of the petitioner with Kotak Mahindra Bank are to be unfrozen except current account No.2511818181, which shall remain frozen until the next date.

Final Conclusion: Writ petition issued; notice directed to respondents. As an interim measure the Court ordered unfreezing of the petitioner's bank accounts at Kotak Mahindra Bank except one specified current account, and the matter was adjourned for further hearing.

Cancellation of registration for non-filing of returns - Revocation of cancellation of registration - Duty of the department to verify portal records - Validity and sufficiency of show cause notice - Appellate review and verification of factual assertions - Exercise of quasi adjudicatory power by legally trained mind

Cancellation of registration for non-filing of returns - Revocation of cancellation of registration - Duty of the department to verify portal records - Whether cancellation of the petitioner's GST registration under the provision for non-filing of returns was sustainable when returns had been filed and tax liabilities discharged up to November 2019, and whether the application for revocation should have been allowed. - HELD THAT: - The Court examined the statutory scheme permitting cancellation where returns are not furnished for a continuous six month period and the remedy of revocation provided under Section 30 read with Rule 23 of the U.P. GST Rules, 2017. Rule 23(1) casts on the applicant the burden to furnish outstanding returns and pay dues, but once the applicant stated that returns were filed and dues cleared, the Department was obliged to verify those assertions from its own portal records. The orders rejecting the revocation application and the appellate dismissal proceeded without any effective verification, despite the portal showing returns and payments up to November 2019. The rejection order thus amounted to an arbitrary exercise of power because no coherent finding was recorded refuting the petitioner's submissions and the Department failed to consult its records before issuing the show cause and rejecting the application. In these circumstances, the Court concluded that revocation ought to have been allowed and set aside the cancellation and the impugned orders, restoring registration from the date of filing of the revocation application.

Order cancelling registration and order rejecting revocation set aside; registration revoked with effect from the date of the application, since returns and dues were shown to have been filed/paid up to November 2019 and the Department failed to verify its records before rejecting revocation.

Validity and sufficiency of show cause notice - Appellate review and verification of factual assertions - Exercise of quasi adjudicatory power by legally trained mind - Whether the show cause notice and the appellate authority's reasonings were legally adequate and whether the officials exhibited required adjudicatory care. - HELD THAT: - The show cause notice served on the petitioner was found to be vague and did not specify any deficiency to be answered. The Assistant Commissioner's order rejecting the revocation and the Appellate Authority's dismissal relied on the absence of uploaded documents and stated inability to verify facts at the appellate level, without recording any substantive reasons discrediting the petitioner's evidence. The Court observed that such quasi adjudicatory functions require a legally trained mind and a minimum standard of reasoned inquiry, including verification from departmental records where available. The concurrent administrative and appellate decisions were therefore held to be manifestly arbitrary and legally unsatisfactory. Given that the Department later accepted that returns were filed and no dues remained up to November 2019, the Court found that the petitioner had been unjustifiably harassed.

Show cause notice and appellate reasoning held legally inadequate and arbitrary; departmental failure to verify records condemned; petitioner awarded relief for harassment.

Final Conclusion: Writ petition allowed: orders cancelling registration and rejecting revocation quashed; registration treated as revoked from date of the revocation application; findings of departmental and appellate arbitrariness recorded; cost of Rs.10,000 awarded to the petitioner to be paid by respondent no.2 from his salary within 30 days.

Grant of bail in serious economic offences - custodial interrogation and necessity for detention - relevance of accused's health and family hardship in bail - documentary evidence in possession of investigating agency - imposition of conditional bail to protect investigation

Grant of bail in serious economic offences - prima facie satisfaction at bail stage - Accused entitled to bail despite allegations of a serious economic offence - HELD THAT: - The Court applied established bail principles and held that even in cases involving alleged grave economic offences bail is not to be withheld as a mode of pre conviction punishment. The Court referred to the need to indicate reasons for prima facie conclusions when granting bail and considered nature of accusation, supporting evidence, and conduct of the accused during investigation. The accused had no earlier involvement in similar offences shown by the prosecution, did not evade arrest, and the prosecution did not demonstrate that custodial interrogation remained necessary. The Court also noted that the investigating agency possessed documentary material and that detailed assessment of evidence at the bail stage was not required. On these considerations the Court concluded that bail was appropriate.

Bail granted to the accused subject to conditions.

Custodial interrogation and necessity for detention - documentary evidence in possession of investigating agency - Custodial detention not necessary for further interrogation or preservation of evidence - HELD THAT: - The Court found that the accused had been in custody since 29.10.2020 and that the prosecution had ample opportunity to interrogate him but did not do so, indicating custodial interrogation was no longer necessary. The Court observed the investigating agency already had in its possession the documentary material and other seized items which could be scrutinized without continuing the accused in custody. Consequently, continued detention solely for further interrogation or documentary scrutiny was held to be unreasonable in the facts of the case.

Custody not necessary; accused to be released on bail.

Relevance of accused's health and family hardship in bail - Accused's and his mother's medical condition and the accused's role as sole breadwinner were relevant factors favoring bail - HELD THAT: - The Court considered the accused's asserted frail health and susceptibility to Covid 19, together with his mother's bedridden condition and his position as sole family provider, as valid considerations in deciding bail. These humanitarian and socio economic considerations, coupled with the accused's cooperative conduct, weighed in favour of granting bail.

Health and family hardship accepted as relevant grounds supporting grant of bail.

Imposition of conditional bail to protect investigation - Bail to be granted subject to conditions safeguarding the investigation and ensuring attendance - HELD THAT: - While granting bail, the Court imposed conditions tailored to protect the investigation and public interest: joining investigation as directed, not tampering with evidence or influencing witnesses, not leaving the country without court permission, refraining from similar offences, and appearing on all hearing dates. The conditions were deemed sufficient to balance the accused's liberty with the interest of the investigating agency.

Bail granted on furnishing PB/SB and on the specified conditions.

Final Conclusion: Bail application allowed; accused released on furnishing the stipulated P.B./S.B. and subject to specified conditions aimed at securing investigation and ensuring attendance.

Interim bail - release of under-trial prisoners on interim bail during COVID-19 - High Powered Committee guidelines - custody period criterion for interim bail - discretionary jurisdiction to grant bail - serious economic offences exclusion - cases investigated by central agencies excluded

Interim bail - High Powered Committee guidelines - custody period criterion for interim bail - discretionary jurisdiction to grant bail - serious economic offences exclusion - Whether the applicant was entitled to interim bail for 45 days under the High Powered Committee guidelines issued for decongestion of jails during the COVID-19 pandemic - HELD THAT: - The Court examined the successive guidelines of the High Powered Committee (including those dated 28.03.2020 and subsequent clarifications) which permitted interim bail for 45 days to UTPs meeting specified criteria: cases with maximum sentence of seven years or less, custody for one month or more (15 days for women), and being on bail in other cases if involved in more than one matter. The Court noted that the Committee expressly excluded certain categories from the relaxed criterion, including serious economic offences and cases investigated by agencies listed in the guidelines (CBI/ED/NIA/Special Cell Police, and later Crime Branch and SFIO), and that the grant of bail remains a discretionary judicial function. Applying those principles, the Court considered the allegations against the applicant - involvement as an active director in issuance and passing of alleged fake input tax credits causing substantial revenue loss and a prior banking-fraud involvement - and the observations of the High Court in Malvinder Mohan Singh regarding exclusion of serious economic offences from the relaxed regime. On that basis, the Court concluded that the applicant's case did not fall within the class of UTPs intended to be covered by the interim-bail guidelines and that discretion to grant interim bail was properly exercised to refuse relief.

Application for interim bail for 45 days dismissed.

Final Conclusion: The application for interim bail under the High Powered Committee guidelines is refused because the allegations disclose a serious economic offence and prior involvement in fraud, placing the applicant outside the category of UTPs intended to be released under the COVID-19 interim-bail relaxations; the grant of bail remained a matter of judicial discretion.

Assessment of AOP - Addition adopting net profit ratio @ 11.59% of the gross receipts - distribution of business receipts directly among its constituents members - requirements of CBDT circular referred to hereinabove are duly satisfied in the case of the assessee and hence, once the amount has been offered to tax by its members, the assessee could not be saddled with the liability to pay tax in respect of the same amount - HELD THAT:- SLP dismissed.

Disallowance under Section 14A read with Rule 8D(2)(iii) - estimation of administrative expenditure under Rule 8D(2)(iii) as 0.5% of average investment income - disallowance under Rule 8D(2)(ii) and relevance of interest free funds - prior period income adjustments - netting off prior period income and prior period expenditure - remand for verification of factual crystallisation of prior period items

Disallowance under Section 14A read with Rule 8D(2)(iii) - estimation of administrative expenditure under Rule 8D(2)(iii) as 0.5% of average investment income - disallowance under Rule 8D(2)(ii) and relevance of interest free funds - Whether the disallowance under Section 14A read with Rule 8D should be limited to 0.5% of average investment income which actually yields exempt income and whether the interest disallowance under Rule 8D(2)(ii) could be deleted in view of interest free funds. - HELD THAT: - The Tribunal and the CIT(A) found on the material that not all investments shown in Schedule F yielded exempt income and that the assessee had substantial interest free funds (share capital and reserves & surplus), which justified deleting the interest disallowance under Rule 8D(2)(ii). As regards administrative expenditure under Rule 8D(2)(iii), the CIT(A) held that some administrative cost must be attributable to exempt investments in a large organisation and therefore estimated such expenditure at 0.5% of the average investment income. However, the CIT(A) restricted the base to the average of investment income that actually yields exempt income (irrespective of whether the exempt income was received in AY 2011-12). The ITAT upheld these factual conclusions and the approach of limiting the 0.5% calculation to investments/income that produce exempt income. The High Court found no perversity in these fact based findings and declined to interfere. [Paras 7, 8]

The Tribunal's factual conclusion and computation methodology - deleting the Rule 8D(2)(ii) interest disallowance in view of interest free funds and restricting the Rule 8D(2)(iii) estimate to 0.5% of average investment income that yields exempt income - is upheld.

Prior period income adjustments - netting off prior period income and prior period expenditure - remand for verification of factual crystallisation of prior period items - Whether the addition of prior period income should be deleted without netting off prior period expenses, or whether the matter should be remanded for the Assessing Officer to net off prior period income and expenditure and tax only the net amount. - HELD THAT: - The Tribunal observed that the assessee had shown prior period income and prior period expenses and that these adjustments were made below the line in the profit and loss account; accordingly, the correct approach is to compute any tax effect by netting prior period income against prior period expenditure. The ITAT remanded the matter to the AO with directions to net off the items and tax only the net amount, directing that the assessee be afforded an opportunity of hearing in accordance with natural justice. The High Court found the issue to be fact centric and that remand for verification and computation by the AO was appropriate, and accordingly refused to interfere with the remand direction. [Paras 9, 10]

The matter is remanded to the Assessing Officer to net off prior period income and prior period expenditure and to tax only the net income after providing the assessee an opportunity of hearing; the Tribunal's remand is upheld.

Final Conclusion: The appeal is dismissed. The Tribunal's factual findings on the limitation and computation of disallowance under Section 14A/Rule 8D are upheld, and the Tribunal's remand to the Assessing Officer to net off prior period income and expenditure for taxation, with opportunity of hearing, is sustained; no substantial question of law warrants interference.

Treatment of share application money as unexplained income u/s. 68 - treatment of unsecured loans as unexplained income u/s. 68 - cash deposits treated as unexplained u/s. 68 - addition on account of interest on unsecured loans - disallowance under section 14A - remand for fresh consideration after opportunity to be heard

Treatment of share application money as unexplained income u/s. 68 - remand for fresh consideration after opportunity to be heard - Addition of Rs. 10,77,00,000 treated as unexplained share application money remanded to Ld. CIT(A) for fresh adjudication. - HELD THAT: - The Tribunal recorded that the assessee had filed documentary evidence before the AO and Ld. CIT(A) to substantiate the receipt treated as share application money and that the AO's remand report did not comment negatively on the claim. The Tribunal refrained from adjudicating the merits to avoid prejudicing the Ld. CIT(A)'s consideration and directed a fresh decision after affording the assessee adequate opportunity to be heard. [Paras 5, 6]

Matter set aside to the file of Ld. CIT(A) for fresh decision after giving the assessee adequate opportunity of being heard.

Treatment of unsecured loans as unexplained income u/s. 68 - remand for fresh consideration after opportunity to be heard - Addition of Rs. 57,72,41,461 treated as unexplained unsecured loans remanded to Ld. CIT(A) for fresh adjudication. - HELD THAT: - The Tribunal noted that documentary evidence was placed on record by the assessee and that the AO did not record adverse comments in the remand report. Rather than expressing a view on the merits, the Tribunal directed reconsideration by the Ld. CIT(A) so that the evidentiary material may be examined and decided afresh after hearing the assessee. [Paras 5, 6]

Set aside to Ld. CIT(A) for fresh decision after affording the assessee adequate opportunity to be heard.

Addition on account of interest on unsecured loans - remand for fresh consideration after opportunity to be heard - Addition of Rs. 1,55,15,178 on account of interest on unsecured loans remanded to Ld. CIT(A) for fresh adjudication. - HELD THAT: - Having found that the assessee produced documentary evidence before the authorities and that the AO's remand report lacked adverse findings, the Tribunal declined to decide the substantive question and directed the Ld. CIT(A) to reconsider the claim and the supporting documents and decide the issue afresh after hearing the assessee. [Paras 5, 6]

Remitted to Ld. CIT(A) for fresh decision after giving the assessee adequate opportunity of being heard.

Cash deposits treated as unexplained u/s. 68 - remand for fresh consideration after opportunity to be heard - Addition of Rs. 13,00,000 treated as unexplained cash deposit remanded to Ld. CIT(A) for fresh adjudication. - HELD THAT: - The Tribunal observed that the assessee had submitted documents and that the AO's remand report did not negatively comment on the explanation. To preserve impartiality and allow full consideration of the evidentiary material, the Tribunal directed the Ld. CIT(A) to re-examine the issue and decide it anew after hearing the assessee. [Paras 5, 6]

Directed to Ld. CIT(A) for fresh decision after affording the assessee adequate opportunity to be heard.

Disallowance under section 14A - remand for fresh consideration after opportunity to be heard - Disallowance of Rs. 6,88,872 under section 14A remanded to Ld. CIT(A) for fresh adjudication. - HELD THAT: - The Tribunal recorded that the assessee had contended that no specific expenditure attributable to earning tax free dividend was incurred and had produced supporting material; the AO's remand report did not record adverse findings. The Tribunal therefore refrained from deciding the question on merits and remitted the issue for fresh consideration by the Ld. CIT(A) after hearing the assessee. [Paras 5, 6]

Issue set aside to Ld. CIT(A) to be decided afresh after giving the assessee adequate opportunity of being heard.

Final Conclusion: The appeal is allowed for statistical purposes; all issues raised in the grounds of appeal have been set aside and remitted to the file of the Ld. CIT(A) for fresh adjudication after affording the assessee adequate opportunity of being heard.

Power of the Tribunal to recall or rectify its own order - limitation under Section 254(2) of the Act and commencement of cause of action - remand for adjudication of grounds left undecided - doctrine of merger and its limited application - inherent jurisdiction to prevent miscarriage of justice - application of Section 5 of the Limitation Act to condone delay

Power of the Tribunal to recall or rectify its own order - limitation under Section 254(2) of the Act and commencement of cause of action - remand for adjudication of grounds left undecided - inherent jurisdiction to prevent miscarriage of justice - Whether the Tribunal can recall its earlier order beyond the statutory four year period under Section 254(2) to adjudicate grounds left undecided when the original order had annulled the assessment but that annulment was later reversed by the High Court. - HELD THAT: - The Tribunal held that in the particular and rare factual matrix - where the ITAT had annulled the block assessment on a jurisdictional point and thereby did not adjudicate substantial grounds on merits, and where the High Court subsequently reversed the jurisdictional finding restoring the assessment - the Tribunal may exercise its powers to recall its earlier order for the limited purpose of deciding the undecided grounds. The court explained that the doctrine of merger applies only insofar as the subject matter of the ITAT's order and the High Court's order are the same and does not extend to merits issues which remained undecided by the Tribunal. The Tribunal further reasoned that the express statutory power under Section 254 carries with it incidental powers necessary for effective exercise of its functions, and that where a mistake apparent from the record - viz., non disposal of grounds attributable solely to the Tribunal - causes prejudice to a party, the Tribunal can, consistent with the object of preventing miscarriage of justice, revisit its earlier incomplete disposal despite the lapse of the four year period. The Tribunal also observed that Section 5 of the Limitation Act may be applied by analogy to condone delay in appropriate circumstances and relied on precedents recognising the Tribunal's inherent jurisdiction to rectify its own mistakes when injustice would otherwise result. The application was filed promptly after the High Court judgment, and no culpable negligence on the part of the assessee was found; consequently, limitation could not be allowed to defeat substantive justice in this case. [Paras 14, 15, 24, 25]

Miscellaneous application allowed; ITAT order dated 15.05.2009 recalled for the limited purpose of adjudicating the grounds which remained undecided by the Tribunal.

Final Conclusion: The Tribunal recalled its earlier order and directed re hearing of the substantive appeal on grounds left undecided, holding that in the exceptional facts where the Tribunal's own omission caused prejudice and the High Court's later ruling restored the assessment, limitation under Section 254(2) would not bar the Tribunal from exercising its powers (including inherent and analogous powers under the Limitation Act) to prevent miscarriage of justice.

Fee for Technical Services 'make available' test - intermediary services vs. FTS - Permanent Establishment - secondment of employees - binding effect of coordinate-bench precedent

Fee for Technical Services 'make available' test - intermediary services vs. FTS - binding effect of coordinate-bench precedent - Whether the fees received by the assessee for intermediary services rendered to its Indian associated enterprise constitute taxable Fee for Technical Services under the India-Sweden DTAA - HELD THAT: - The Tribunal, following the coordinate-bench decision in the assessee's own case for AY 2011-12, held that intermediary services rendered by the assessee did not 'make available' technical knowledge, skill or know how to the Indian recipient and therefore did not qualify as Fee for Technical Services. The Tribunal articulated that FTS requires transmission and absorption of technical knowledge enabling the recipient to apply the technology independently; mere provision of services involving technical inputs does not satisfy the 'make available' condition. On the facts - the assessee acting as a HUB and rendering intermediary services to BTIN - the twin test of rendering services and making technical knowledge available was not satisfied, and the addition on account of FTS was therefore not sustainable. The Tribunal expressly relied on and applied paragraphs 21-26 of the coordinate-bench order addressing this question. [Paras 22, 23, 24, 25, 26]

Addition on account of Fee for Technical Services deleted; Department's appeal dismissed on this issue.

Permanent Establishment - secondment of employees - binding effect of coordinate-bench precedent - Whether BTIN constituted a Permanent Establishment of the assessee in India in respect of Contract BS-02 - HELD THAT: - The Tribunal observed that the question of existence of a PE on identical facts was decided in favour of the assessee by the coordinate-bench in AY 2011-12 (paragraphs 35, 36, 37 and 44 reproduced). Respectfully following that co ordinate bench precedent, the Tribunal agreed with the assessee that, on the facts before it, the PE finding was not sustainable. However, the Tribunal directed limited verification by the AO/TPO as to whether any employees of the assessee were seconded to India in relation to contract BS 02; if no secondment is found, the AO/TPO was to delete the addition attributable to the alleged PE. The AO/TPO was also directed to afford the assessee an adequate opportunity in the verification process. Thus, while the Tribunal adopted the coordinate-bench reasoning favouring the assessee, it remitted the factual question of secondment for verification and consequential deletion if established. [Paras 7, 35, 36, 37, 44]

PE issue followed in favour of the assessee as per coordinate-bench precedent but remanded to the AO/TPO for factual verification of any employee secondment to India; deletion of addition directed if no secondment is found.

Final Conclusion: The Tribunal dismissed the Department's appeal challenging the deletion of the FTS addition and allowed the assessee's appeal for statistical purposes on the PE issue, following the coordinate bench decisions for AY 2011 12; the PE question was remanded to the AO/TPO solely for verification of any employee secondment to India, with deletion directed if none is found.

Reopening of assessment - reasons recorded for reopening - notice under section 148 requiring reasons in writing - validity of reassessment in absence of reasons - deemed service and objection under section 292BB - admission of new legal grounds before the Tribunal - right to obtain copy of reasons recorded

Reopening of assessment - reasons recorded for reopening - right to obtain copy of reasons recorded - validity of reassessment in absence of reasons - admission of new legal grounds before the Tribunal - deemed service and objection under section 292BB - Additional ground challenging reopening of assessment for A.Y. 2002-03 was admitted and the appeal was allowed because the reasons recorded for reopening were not furnished or produced. - HELD THAT: - The Tribunal exercised its power to admit an additional legal ground challenging the reopening of assessment, following authoritative precedent permitting consideration of questions of law arising from facts on record (para 6). The assessee had requested a copy of the reasons recorded for issue of notice under section 148 and, by RTI application, was informed that the assessment record containing those reasons was presently not traceable (paras 7-8). The revenue was unable to furnish the reasons recorded either before the authorities below or before the Tribunal and stated it could not produce them at this stage (para 11). Given that the reasons recorded for reopening were not supplied or available for scrutiny, the Tribunal found it untenable to sustain the reassessment and therefore allowed the appeal, while granting liberty to the revenue to approach the Tribunal if and when the reasons are traced and made available (para 11). The revenue's reliance on deemed service under section 292BB and non-raising of objection before the AO/CIT(A) was noted in submissions, but the determinative fact was non-production/non-furnishing of the reasons recorded, which prevented meaningful adjudication of the reopening's validity (paras 9-11). [Paras 6, 7, 8, 11, 12]

Appeal allowed as reasons recorded for reopening were not furnished or produced; liberty granted to the revenue to approach the Tribunal if the reasons are later traced.

Final Conclusion: The Tribunal admitted the additional ground challenging reopening, found that the reasons recorded for reopening (A.Y. 2002-03) were not furnished or traceable, and allowed the appeal while leaving the revenue free to restore proceedings if the reasons are subsequently located and produced.

Reopening of assessment as change of opinion - Limits on reopening beyond four years for failure to disclose fully and truly - Rectification under section 154 for mistake apparent from record - Taxability of capital gains where sale deeds are subsequently cancelled - Application of section 50 on block of assets where depreciation has not been claimed - Mesne profits as a capital receipt and non-applicability of section 56(2)(ix)

Reopening of assessment as change of opinion - Limits on reopening beyond four years for failure to disclose fully and truly - Validity of reopening assessment under section 147/148 where notice issued beyond four years - HELD THAT: - The Tribunal held that the assessment for AY 2009-10, completed u/s 143(3), was reopened by notice dated 30/03/2015 (beyond four years). The material relied upon by the AO (returns, depreciation charts, rental receipts and assessment record) were already on file and had been examined at the original assessment; no new information or fresh material was brought to the AO's notice. Reopening on the same set of facts therefore amounted to a mere change of opinion which is impermissible. Consequently the reopening was invalid and the reassessment framed thereon was quashed. [Paras 31]

Reopening held invalid and Revenue's ground challenging quashing of reassessment dismissed

Application of section 50 on block of assets where depreciation has not been claimed - Taxability of capital gains where sale deeds are subsequently cancelled - Whether section 50 can be invoked and depreciation disallowed where the asset sold was not subjected to depreciation and sale was declared as long-term capital gain - HELD THAT: - On the material in record (returns, depreciation charts and tax audit schedules) it was found that the property was let out and no depreciation had ever been claimed on it; its book value remained unchanged. Section 50 applies only where the asset forms part of a block on which depreciation has been claimed/allowed. Since no depreciation was claimed or allowed on the property, section 50 could not be invoked and there was no basis to treat the declared long-term capital gain as short-term capital gain or to disallow depreciation on the block. For these reasons the assessing officer's additions and disallowance on these grounds were unsustainable. [Paras 17, 32]

Additions under section 50 and disallowance of depreciation deleted; Revenue's grounds in this regard dismissed

Rectification under section 154 for mistake apparent from record - Taxability of capital gains where sale deeds are subsequently cancelled - Whether the assessee's letter dated 29/02/2016 (filed during reassessment) amounting to production of High Court decree and cancellation deeds could be treated as an application under section 154 or otherwise lead to exclusion of the earlier assessed LTCG - HELD THAT: - All documents evidencing cancellation of the sale (settlement deed, Delhi High Court decree and registered cancellation deeds) were placed on record before the AO and were not controverted. A decree of the High Court approving a settlement has the force of a court order; once the sale was legally cancelled and possession reverted to the assessee, no capital gain could be said to have accrued. Section 154 is not confined to mere arithmetical errors; a mistake apparent from the record may be one of law or fact discernible from the record. The Tribunal held that the AO committed an error apparent from record by ignoring the High Court decree and cancellation deeds and by thus including LTCG in the assessed income. The letter of 29/02/2016 is to be treated as an application under section 154 (it was within the four year period) and the AO was directed to pass an order u/s 154 within three months to exclude the LTCG and refund tax paid thereon. [Paras 84, 85, 86, 93]

Letter dated 29/02/2016 treated as application under section 154; AO directed to exclude the long-term capital gain from income for AY 2009-10 and refund tax paid thereon

Mesne profits as a capital receipt and non-applicability of section 56(2)(ix) - Taxability of amounts retained by the assessee (approx. Rs.36 crores) in consequence of settlement/cancellation - whether taxable under section 56(2)(ix) - HELD THAT: - The Tribunal accepted the assessee's contention that the amount retained pursuant to the settlement and decree represented mesne profits/liquidated damages in nature of compensation for deprivation of the property and was not an advance forfeited or an amount received 'in course of negotiations for transfer' as envisaged by section 56(2)(ix). The twin conditions of that provision were found not to be satisfied on the facts. Consequently, that amount was not taxable under section 56(2)(ix). [Paras 94]

Amount treated as mesne profit/capital receipt and not taxable under section 56(2)(ix)

Final Conclusion: For AY 2009-10 the Tribunal dismissed the Revenue's appeal holding the reassessment void as a mere change of opinion; confirmed that section 50 was inapplicable as no depreciation had been claimed; treated the assessee's filing (including the High Court decree and cancellation deeds) as an application under section 154 and directed the AO to exclude the long-term capital gain from taxable income and refund tax paid; and held the retained amount to be mesne profit not taxable under section 56(2)(ix).

Assumption of jurisdiction under Section 153A - Incriminating material found during search - Statement recorded under Section 132(4) not constituting incriminating material - Completed assessments and finality vis-a -vis proceedings under Section 153A - Addition under Section 68 (unexplained share capital/share premium) - Validity of approval under Section 153D

Assumption of jurisdiction under Section 153A - Incriminating material found during search - Completed assessments and finality vis-a -vis proceedings under Section 153A - Validity of initiation of proceedings and framing of assessments under Section 153A/143(3) when the assessments for the relevant years had attained finality and no incriminating material relating to the additions was found during search. - HELD THAT: - The Tribunal examined whether assessments which had been completed before the search could be reopened under Section 153A where the additions were founded on post-search enquiries and statements rather than on seized incriminating material. Noting that the original assessments for the years in issue had attained finality, and that the Assessing Officer did not identify any seized documents or other incriminating material that directly related, document wise, to the share capital/share premium additions, the Tribunal followed the line of authority (including Kabul Chawla, Meeta Gutgutia, and subsequent High Court decisions) holding that completed assessments cannot be disturbed under Section 153A in the absence of incriminating material found in the course of search that relates to the additions sought to be made. Where the additions were based solely on post search inquiries and statements, and no seized material corroborated those additions, the jurisdictional requirement for invoking Section 153A was not satisfied and the assessments framed under Section 153A/143(3) were therefore void ab initio and liable to be quashed. [Paras 46, 49, 51, 52]

Proceedings and assessments framed under Section 153A/143(3) are quashed for the listed assessment years because no incriminating material relating to the additions was found during the search and the original assessments had attained finality.

Statement recorded under Section 132(4) not constituting incriminating material - Incriminating material found during search - Whether statements recorded under Section 132(4) of the Income tax Act by themselves constitute 'incriminating material' sufficient to sustain jurisdiction under Section 153A. - HELD THAT: - The Tribunal held, following the decisions of the jurisdictional High Court and co ordinate benches of the Tribunal, that statements recorded under Section 132(4) do not by themselves amount to incriminating material which can validate the exercise of Section 153A jurisdiction where no seized documents or other corroborative seized material relate to the additions. The impugned additions were predominantly founded on statements and post search enquiries; absent seized material connecting those statements to the specific impugned additions, such statements cannot serve as the requisite incriminating material to disturb completed assessments. [Paras 46, 51]

Statements under Section 132(4) are not, without corroborative incriminating seized material, sufficient to constitute incriminating material for purposes of invoking Section 153A; therefore additions based solely on such statements cannot be sustained.

Addition under Section 68 (unexplained share capital/share premium) - Validity of approval under Section 153D - Disposition of merits of additions under Section 68 and challenge to the validity of approval under Section 153D. - HELD THAT: - Because the Tribunal upheld the legal ground that the Section 153A assessments were void for want of incriminating material, it did not adjudicate the merits of the additions under Section 68 nor the contention regarding the manner of approval under Section 153D. Those contentions, being consequential on the primary jurisdictional finding, were treated as academic and were not decided on merits by the Tribunal. [Paras 50]

Merits of the additions under Section 68 and the challenge to the approval under Section 153D were not adjudicated as they became academic in view of the quashing of the Section 153A assessments.

Final Conclusion: The Tribunal allowed the assessees' cross objections, holding that where no incriminating material relating to the impugned additions was found in the search and the original assessments had attained finality, proceedings and assessments framed under Section 153A/143(3) were without jurisdiction and are quashed for the listed assessment years; consequential challenges on merits and to approvals under Section 153D were rendered academic and left undecided.

Reopening of assessment - notice under section 148 - reassessment under section 147 - reasons to believe - borrowed information - independent application of mind - validity of reassessment proceedings - evidence seized from third party corroborated by admissions and surrounding circumstances - charging interest under section 234

Reopening of assessment - notice under section 148 - reasons to believe - borrowed information - independent application of mind - validity of reassessment proceedings - Validity of reopening assessment by issuance of notice under section 148 based on information received from search/seizure (borrowed information) and whether the Assessing Officer applied independent mind to form reasons to believe that income had escaped assessment. - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer and the material on file and found no contemporaneous record demonstrating that the Assessing Officer conducted independent verification or applied his own mind to the information received from the Investigation Circle, Meerut. In the absence of any material on file showing independent enquiries or satisfaction, the reopening was held to be founded merely on borrowed information and not on a reasoned subjective satisfaction. The Tribunal followed and adopted the detailed reasoning in its coordinate decision in M/s. J.M.D. Astrological Consultancy Services Pvt. Ltd. (as relied upon in the file) and the line of authorities discussed therein, observing that at the stage of issuance of notice under section 148 the Assessing Officer must have relevant material on which a reasonable person could form the requisite belief and must record reasons showing application of mind. Because such independent application of mind and necessary supporting material were not on record in the present case, the reassessment proceedings initiated under section 147/148 were quashed. [Paras 7, 8]

Reopening under section 148/147 quashed for lack of independent verification and absence of recorded reasons to believe; lead appeal allowed.

Evidence seized from third party corroborated by admissions and surrounding circumstances - Whether the addition for alleged understatement of long term capital gains (based on documents seized from third party premises and other seized material) could be sustained after quashing of reopening. - HELD THAT: - The Assessing Officer and CIT(A) had, on the basis of documents seized from the premises of a third party and corroborative material (demand drafts, minutes and an admission by the power of attorney holder), proceeded to compute capital gains on a higher sale consideration. However, having quashed the reopening for want of valid notice under section 148/147, the Tribunal held that all consequential proceedings and additions premised on that reopening became infructuous. The tribunal did not adjudicate the merits of the addition since the jurisdictional foundation for reassessment was set aside. [Paras 8, 9]

Addition confirmed by lower authorities rendered infructuous by quashing of reassessment; merits not adjudicated.

Charging interest under section 234 - Validity of charging interest under section 234 in respect of the impugned assessment year in view of quashing of reassessment proceedings. - HELD THAT: - The CIT(A) had upheld levy of interest as mandatory. The Tribunal, having quashed the reopening under section 148/147 and thereby setting aside the reassessment, observed that consequential matters including interest levied in the reassessment proceedings stand rendered infructuous and do not survive the quashing of jurisdictional proceedings. [Paras 8]

Interest charge in the reassessment proceedings rendered infructuous by quashing of the reassessment; no separate adjudication on section 234 required.

Final Conclusion: Both appeals (ITA Nos. 795/Chd/2017 and 796/Chd/2017) are allowed: the notices and reassessment proceedings under section 148/147 for A.Y. 2010-11 are quashed for failure to show independent application of mind to borrowed information, and all consequential additions and interest in the reopened proceedings are rendered infructuous.

Incriminating material requirement for reassessment under section 153A in unabated assessments - unexplained cash credit u/s 68 - disallowance of interest under section 69C - onus of proof under section 68 read with section 106 of the Evidence Act - use of third party statements and rule of natural justice - non service of summons not decisive where documentary evidence exists

Incriminating material requirement for reassessment under section 153A in unabated assessments - Whether additions could be made in unabated assessments under section 153A in absence of incriminating material unearthed during search. - HELD THAT: - Tribunal followed binding precedents and held that for assessment years which had not abated on the date of search (unabated assessments) the Assessing Officer's power to interfere under section 153A is restricted: additions to completed assessments are permissible only if based on tangible, cogent and relevant incriminating material discovered in the course of the search. The Bench reviewed appellate and High Court authorities reasoning that section 153A draws a distinction between abated and unabated years and that third party or post search material not found in the course of the search cannot be used to re-open concluded assessments unless it qualifies as incriminating material discovered by the search team or connected thereto. [Paras 6, 14]

Held that additions in respect of unabated assessment years are impermissible unless grounded on incriminating material found during the search; grounds 1 & 2 for AYs 2011-12 to 2013-14 allowed.

Use of third party statements and rule of natural justice - Whether statements of alleged entry operators, departmental appraisal reports or statements of group persons constituted incriminating material found in the course of search and could justify additions. - HELD THAT: - Tribunal examined the statements and appraisal material relied on by AO/CIT(A) and found that (i) the referred third party statements were not recorded in the course of the search on the assessee's premises nor were they recorded by the AO in proceedings connected with that search; (ii) the statements did not name the assessee nor admit providing accommodation entries to the assessee; (iii) the AO had not independently examined the makers nor furnished the statements to the assessee before framing assessment, thereby violating principles of natural justice. Appraisal reports relied upon by CIT(A) were not placed on record by the AO as materials unearthed during search and therefore could not be treated as incriminating material. [Paras 9, 10, 11, 30]

Held that the third party statements and appraisal reports did not constitute incriminating material found in the course of search and could not sustain additions; relevant additions deleted.

Non service of summons not decisive where documentary evidence exists - onus of proof under section 68 read with section 106 of the Evidence Act - Whether failure to serve summons on certain lenders and non appearance of creditors justified treating loans as unexplained cash credits under section 68 and disallowing interest under section 69C where assessee had produced documentary evidence. - HELD THAT: - Tribunal analysed the evidence produced by the assessee - loan confirmations, PAN, addresses, bank statements, audited accounts of lenders, TDS on interest and MCA records - and observed that the assessee had produced the material ordinarily required to discharge its initial onus under section 68. Reliance on authorities (including Supreme Court and jurisdictional High Court decisions) led to the conclusion that once the assessee adduces prima facie evidence of identity, genuineness and creditworthiness of creditors, the burden shifts to Revenue to rebut; mere non service of summons or non appearance of creditors is not a decisive factor when adequate documentary evidence exists and the creditors are income tax assessees. [Paras 16, 17, 18, 19]

Held that non service of summons alone could not justify additions where assessee had furnished sufficient documentary evidence; onus had been discharged by assessee.

Unexplained cash credit u/s 68 - disallowance of interest under section 69C - Whether the specific additions under section 68 and disallowances under section 69C made in AYs 2011-12 to 2014-15, 2016-17 and 2017-18 were sustainable. - HELD THAT: - On facts the Tribunal found that (a) for several lenders (serial nos. 1-8 and one carried forward) the loans had been accepted in earlier scrutiny assessments and no adverse inference was drawn, hence the AO could not now treat principal or interest as unexplained; (b) for remaining lenders the assessee had produced comprehensive records (confirmations, PAN, bank payments, audited financials, TDS evidence) and the creditors' audited positions showed sufficient investible funds; (c) AO's reliance on uncorroborated third party statements and selective appraisal observations was inadequate; (d) therefore the statutory presumption under section 68 was rebutted and section 69C disallowances were not warranted. [Paras 27, 28, 31, 32, 34]

Held that aggregate additions of principal loan amounts and interest as made by AO were not sustainable; additions under section 68 and disallowances under section 69C deleted and appeals allowed.

Final Conclusion: Appeals allowed. Tribunal held that no additions could be sustained in respect of unabated assessment years in absence of incriminating material found in the course of search; third party statements and appraisal material relied upon did not qualify as such; the assessee had discharged its initial onus under section 68 by documentary evidence and the additions under section 68 and disallowances under section 69C were deleted.

Application of deeming provision in the definition of "international transaction" under section 92B(2) - arm's length pricing and benchmarking using comparable uncontrolled price (CUP) methodology - characterisation of commission vis-a -vis "fees for technical services" under section 9(1)(vii) and withholding obligation under section 195 - operation of Double Taxation Avoidance Agreement (Indo-UK DTAA) and the "make available" criterion - disallowance of expenditure attributable to exempt income under section 14A and computation under Rule 8D - treatment of penalty proceedings as premature where underlying assessment issues remain to be finally adjudicated

Application of deeming provision in the definition of "international transaction" under section 92B(2) - arm's length pricing and benchmarking using comparable uncontrolled price (CUP) methodology - Whether the purchase of gas by the assessee fell within the deeming limb of "international transaction" under section 92B(2) and whether the transfer pricing adjustment made by AO was justified. - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the associated enterprise (BGEH) had no prior agreement with the seller and had only rendered negotiation services; the formal contract for purchase was between Indian parties and subsequently assigned to the assessee. On these facts the deeming clause in section 92B(2) was not attracted. The Tribunal also accepted the appellate conclusion that, even if the transaction were regarded as an international transaction, the price paid by the assessee (which matched prices paid to other operators from the same field and included the commission) was at arm's length; the AO's comparison with US well head spot prices and month by month comparisons did not displace that conclusion. The Tribunal found no infirmity in deletion of the addition and dismissed the revenue appeal on this ground. [Paras 6]

Addition of Rs. 4,73,06,676/ made on account of transfer pricing adjustment deleted; revenue appeal dismissed on this point.

Characterisation of commission vis-a -vis "fees for technical services" under section 9(1)(vii) and withholding obligation under section 195 - operation of Double Taxation Avoidance Agreement (Indo-UK DTAA) and the "make available" criterion - Whether the payments of purchase and corporate guarantee commission to the UK resident associated enterprise constituted taxable "fees for technical services" in India attracting withholding under section 195. - HELD THAT: - Following the CIT(A)'s analysis and a coordinate bench decision on identical facts, the Tribunal agreed that the payments were in the nature of commission (remuneration for negotiation/agency services) and not managerial or consultancy services falling within section 9(1)(vii)/Explanation 2. The services were rendered outside India and did not 'make available' technical knowledge to the recipient in the sense required by the Indo-UK DTAA; no PE existed. Accordingly, the payments did not constitute taxable FTS in India and there was no obligation on the assessee to withhold tax under section 195. The Tribunal found the revenue's contention covered by earlier contrary decisions and dismissed the addition. [Paras 10]

Disallowance under section 40(a)(ia) r.w. section 195 (on account of alleged FTS) deleted; revenue appeal dismissed on this point.

Disallowance of expenditure attributable to exempt income under section 14A and computation under Rule 8D - Whether the Assessing Officer was justified in computing disallowance under section 14A by applying Rule 8D and in upholding the amount thus worked out. - HELD THAT: - The Tribunal upheld the CIT(A)'s confirmation of the AO's application of Rule 8D. The assessee's internally computed apportionment was held not to be a reliable, documentary or 'scientific' basis for excluding the administrative expenditure from the Rule 8D computation. The Tribunal also directed verification of the investment figures by AO as noted by CIT(A), and, following a coordinate bench precedent on similar facts, sustained the disallowance computed under Rule 8D. [Paras 12, 13, 14]

Disallowance under section 14A computed by applying Rule 8D upheld; assessee's appeal dismissed on this issue.

Treatment of penalty proceedings as premature where underlying assessment issues remain to be finally adjudicated - Whether initiation of penalty under section 271(1)(c) could be adjudicated at this stage. - HELD THAT: - The Tribunal recorded that the ground challenging initiation of penalty proceedings was premature at this stage and therefore not amenable to adjudication in the current proceedings. No substantive determination on the merits of penalty was made. [Paras 15]

Ground against initiation of penalty under section 271(1)(c) treated as premature and dismissed at present.

Set off of brought forward business losses and effect of regularisation of assessment for earlier year on carry forward - Whether set off of brought forward business loss from AY 2010 11 against business income of AY 2011 12 (and carry forward) was permissible in view of the assessment actions. - HELD THAT: - The Tribunal noted that the Assessing Officer, by giving effect to the income determined in the regular scrutiny assessment for AY 2010 11, disallowed the set off and the CIT(A) confirmed that action. The assessee's challenge was dismissed since the appellate authority had correctly upheld the AO's assessment adjustments and consequential denial of set off/ carry forward. [Paras 17, 18]

Assessee's grounds on set off and carry forward of business loss dismissed; CIT(A)'s confirmation of AO's action upheld.

Final Conclusion: The Tribunal dismissed the revenue appeals regarding transfer pricing and withholding tax (finding in favour of the assessee on applicability of section 92B(2) and on characterization of commission/withholding under section 195), upheld the disallowance under section 14A computed by Rule 8D (against the assessee), treated the penalty challenge as premature, and dismissed the assessee's plea on set off/carry forward of business loss; the remaining appeals between the parties for the years 2010 11 to 2013 14 were disposed applying these conclusions.

Penalty under section 271(1)(c) - Approval under section 274 - Minimum penalty equal to 100% of the tax sought to be evaded - Levy of penalty without requisite statutory approval is invalid

Penalty under section 271(1)(c) - Approval under section 274 - Minimum penalty equal to 100% of the tax sought to be evaded - Levy of penalty without requisite statutory approval is invalid - Validity of the penalty of Rs. 17,242/- levied under section 271(1)(c) where the minimum penalty leviable on the concealed income was Rs. 25,051/- and no prior approval under section 274 was obtained. - HELD THAT: - The Tribunal examined the assessment additions and penalty proceedings and noted that only the addition of Rs. 81,072/- (income from other sources) remained for penalty. The Department's RTI response established that the minimum penalty leviable (100% of the tax sought to be evaded) on that concealed income was Rs. 25,051/-, which exceeds the monetary threshold requiring approval under section 274(2). Since no approval from the Joint/Additional Commissioner was obtained before imposing the penalty, the penalty actually levied (Rs. 17,242/-) was inconsistent with the statutory minimum and was imposed without the mandatory prior sanction. The Tribunal held that there is no provision in section 271(1)(c) to impose a penalty below 100% of the tax sought to be evaded, and that imposing a lesser amount without securing the requisite approval under section 274 renders the penalty unjustified. [Paras 12, 13]

Penalty of Rs. 17,242/- under section 271(1)(c) deleted for want of required approval under section 274 and for being below the statutory minimum penalty.

Final Conclusion: The appeal is allowed and the penalty levied under section 271(1)(c) is deleted for having been imposed without the mandatory prior approval under section 274 and for being inconsistent with the minimum penalty (100% of tax sought to be evaded) applicable to the concealed income for A.Y. 2011-12.

Allowability of commission expenses paid to related/holding company - verificatory scope of appellate set aside directions - limitation on Assessing Officer's power when assessment is set aside - acceptance of documentary submissions and quantification by AO by implication - non-deduction of TDS under section 195 and its impact on allowability

Allowability of commission expenses paid to related/holding company - acceptance of documentary submissions and quantification by AO by implication - Deduction of commission expenses of Rs.4,65,12,087/- claimed by the assessee for AY 2004-05 (and applied to AY 2005-06) was allowable. - HELD THAT: - The ITAT in the earlier round had restored the matter to the Assessing Officer with a limited direction to verify the quantum of commission and the nature of services as evidenced by agreements. In the set aside proceedings the assessee produced the agreements and quantified the commission in accordance with the contractual formula. The Assessing Officer did not point out any defect in those submissions and made no adverse finding on the nature of services, which indicates acceptance of the quantum and nature of the expenditure. Under the settled constraint that an AO in set aside proceedings must act within the appellate direction and cannot expand the scope, the AO had no jurisdiction to disallow the commission for reasons outside the limited verification directed by the ITAT. The Revenue's grounds attacking arm's length or business expediency were not the subject matter of the set aside and therefore did not survive. Consequently the deletion of the addition by the CIT(A) was upheld and the revenue's ground dismissed. [Paras 11]

Grounds challenging the allowability of the commission were dismissed and the commission deduction was sustained.

Non-deduction of TDS under section 195 and its impact on allowability - verificatory scope of appellate set aside directions - limitation on Assessing Officer's power when assessment is set aside - Objection based on non deduction of TDS under section 195 did not warrant separate adjudication and was treated as infructuous in the set aside proceedings. - HELD THAT: - The ITAT's directions on set aside did not raise the question of TDS under section 195 and confined the AO to verify quantum and nature of services. The assessee also made an alternate submission as to timing of payment. The AO refused the alternate plea on the ground that identical issues for later years were pending before the ITAT, but did not follow the limited verification mandated. Because the authorities below failed to adjudicate within the bound of the set aside direction and the TDS issue was not within that mandate, the revenue's contention regarding non deduction of TDS was dismissed as infructuous. [Paras 12, 13, 14]

Grounds based on non deduction of TDS under section 195 were dismissed as infructuous.

Final Conclusion: Both appeals filed by the Revenue for AY 2004-05 and AY 2005-06 were dismissed: the commission expenditure claimed by the assessee was sustained in accordance with the ITAT's set aside directions and the Revenue's contention regarding non deduction of TDS was held not to require separate adjudication.

Section 68 - identity, genuineness and creditworthiness - double addition / double taxation - valuation of shares for premium (Rule 11UF) - admission of evidence on direction of appellate authority (Rule 46A)

Section 68 - identity, genuineness and creditworthiness - valuation of shares for premium (Rule 11UF) - Validity of addition under section 68 for share application money of Rs. 20,17,00,000/- for A.Y. 2011-12 - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the assessee had discharged the onus to prove identity, genuineness and creditworthiness of the six investor companies. The AO's own records showed the investors to be group/related companies and, in several other assessment years (including preceding and succeeding years), investments from those parties were accepted in orders under section 143(3). The AO had not conducted independent enquiries to rebut the documentary evidence (confirmations, PAN, ITRs, bank statements, balance sheets) placed on record and had relied upon an inspector's report which the Tribunal found to be not credible or not properly confronted to the assessee. The Tribunal also accepted the assessee's valuation exercise invoking Rule 11UF to show the premium was not exorbitant and held that the question of excessive premium was not germane to sustaining an addition under section 68 once identity, genuineness and creditworthiness were proved. On these grounds the addition was held unsustainable. [Paras 29, 30, 31, 32, 33]

Addition under section 68 for A.Y. 2011-12 deleted; revenue appeal dismissed on this ground.

Section 68 - identity, genuineness and creditworthiness - admission of evidence on direction of appellate authority (Rule 46A) - valuation of shares for premium (Rule 11UF) - Validity of addition under section 68 for share application money of Rs. 28,98,25,000/- for A.Y. 2012-13 - HELD THAT: - The Tribunal agreed with the CIT(A) that the assessee had furnished confirmations, PAN, ITRs, bank statements and balance sheets in respect of the eight investor companies and had given the names of principal officers; several principal officers appeared before the AO though their statements were not recorded. The AO did not carry out adequate independent enquiries to dislodge the documentary proof and relied on an inspector's report that the Tribunal found to be infirm and not fairly placed before the assessee. The Tribunal also held that the prima facie objection as to premium was addressed by the assessee's Rule 11UF-based valuation and that the question of premium did not justify treating the credits as unexplained once the three ingredients under section 68 were proved. The CIT(A)'s admission of affidavit and other documents at his direction did not infringe Rule 46A. Consequently the addition was unsustainable. [Paras 28, 33, 34]

Addition under section 68 for A.Y. 2012-13 deleted; revenue appeal dismissed on this ground.

Double addition / double taxation - Sustainability of addition of Rs. 20,24,39,341/- as income from undisclosed sources for A.Y. 2011-12 on account of alleged bogus purchases/sales with SEL Manufacturing Co. Ltd. - HELD THAT: - The AO treated the difference between trading receipts and payments as undisclosed income on the premise that purchases and sales with SEL Group were bogus. The Tribunal (following the CIT(A)) found that the assessee had already offered to tax the net difference in its trading results and the AO had neither rejected the books of account under section 145 nor passed an assessment under section 144. The Tribunal held that taxing the same difference again would amount to double addition/double taxation. Further, the AO had not undertaken adequate independent verification of other parties or corroborative evidence to sustain a finding that the entire trading turnover was bogus. On these grounds the addition was held unsustainable. [Paras 14, 28, 35]

Addition on account of alleged bogus purchases/sales deleted as amount already offered to tax; revenue appeal dismissed on this ground.

Final Conclusion: The Tribunal dismissed both appeals filed by the Revenue: additions under section 68 for A.Y. 2011-12 and 2012-13 were deleted after finding the assessee had proved identity, genuineness and creditworthiness of investors and the AO had not rebutted the evidence by adequate enquiry; the addition on account of alleged bogus trading with SEL Group for A.Y. 2011-12 was deleted as amount had already been offered to tax and the AO had not rejected books or produced corroborative evidence to justify a further addition.

Transfer pricing - Arm's length price - Comparable selection and exclusion - Rejection of taxpayer's transfer pricing study under Section 92C(3) - Interest on trade receivables as an international transaction after amendment to Section 92B

Comparable selection and exclusion - Transfer pricing - Validity of TPO/AO/DRP final comparable set and exclusion of specified comparables - HELD THAT: - The Tribunal examined challenges to the TPO's final comparable list and directed deletion of specific large or functionally dissimilar comparables following earlier decisions in the assessee's own case and coordinate-bench precedents. Infosys Ltd., Larsen & Toubro Infotech Ltd. and Mindtree Ltd. were excluded on the ground that they are giant companies with turnover and functional profile not comparable to the assessee, applying the Tribunal's earlier reasoning. Tata Elxsi Ltd., Thirdware Solutions Ltd. and Persistent Systems Ltd. were excluded for want of segmental details and because they undertake product development, relying on prior Tribunal rulings. Cybage Software Pvt. Ltd. was excluded because its margins were abnormally high and the authorities had not explained reasons for such margins; in absence of adequate information it could not be retained. Several comparables which the assessee had initially listed were not pressed at hearing and those grounds were dismissed as not pressed. The Tribunal therefore directed the TPO/AO to delete the identified companies from the final comparable set. [Paras 6]

Directed deletion of Infosys Ltd., Larsen & Toubro Infotech Ltd., Mindtree Ltd., Tata Elxsi Ltd., Thirdware Solutions Ltd., Persistent Systems Ltd., and Cybage Software Pvt. Ltd. from the final list of comparables; certain other pleas dismissed as not pressed.

Inclusion of potential comparables - Persistent loss and persistent high margin filters - Requests for inclusion of certain companies in the comparable list - HELD THAT: - The assessee sought inclusion of several companies. Many inclusion requests were not pressed at hearing and thus dismissed as not pressed. The specific request to include SagarSoft India Ltd. was rejected because that company is a persistent loss-maker; the Tribunal applied the persistent-loss exclusion rationale consistently with its reasoning in excluding abnormally high-margin comparables. [Paras 7]

Inclusion requests either dismissed as not pressed or rejected (SagarSoft India Ltd.) because of persistent losses.

Computation of comparable margins - Arm's length price - Computation of correct margins for certain comparables remitted for verification - HELD THAT: - The Tribunal observed that the margin computations for Nihilent Technologies Ltd. and Sasken Communication Technologies Ltd. required reconsideration. Thirdware Solutions Ltd. was already ordered excluded. For Nihilent and Sasken the matter was remitted to the TPO/AO for recomputation of correct margins after giving the assessee opportunity to be heard, allowing the ground for statistical purposes. [Paras 8]

Matter remitted to TPO/AO to compute correct margins for Nihilent Technologies Ltd. and Sasken Communication Technologies Ltd.; ground allowed for statistical purposes.

Interest on trade receivables as an international transaction after amendment to Section 92B - Credit period and benchmark rate for interest adjustment - Whether interest on receivables requires ALP adjustment and the parameters for computing such interest - HELD THAT: - Following the Tribunal's earlier decisions in the assessee's own case, the Tribunal held that interest on trade receivables is an international transaction post-amendment to Section 92B and is subject to ALP adjustment. The Tribunal directed that a credit period of 90 days or the industry average be allowed (or the credit period specified in agreement), and that interest be computed only for deviation beyond such credit period. The Tribunal further held, following its earlier view, that SBI short-term deposit rates should be used as the benchmark for computing interest (LIBOR rejected), and remitted the matter to the TPO/AO to recompute interest accordingly. [Paras 9]

Directed allowance of credit period (90 days or industry average / agreement-specific), use of SBI short-term deposit rates for interest benchmarking, and remittance to TPO/AO for recomputation of interest on receivables; appeal on this ground treated as allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed: the Tribunal directed exclusion of specified comparables from the TPO's final set, refused certain inclusion requests, remitted computation of margins for specified comparables to the TPO/AO, and upheld that interest on trade receivables is an international transaction requiring ALP adjustment but directed computation using an appropriate credit period and SBI short-term deposit rates; the assessee's stay application was dismissed.

Confiscation under section 111(d) of the Customs Act, 1962 - redemption under section 125 of the Customs Act, 1962 - right to notice under section 124 of the Customs Act, 1962 and its waiver - competence of first appellate authority to remand - scope for stipulating re export as condition for redemption - power to destroy confiscated goods and statutory limitations on disposition of confiscated goods - application of the principle in Commissioner of Customs v. Atul Automations Pvt Ltd

Competence of first appellate authority to remand - application of the principle in Commissioner of Customs v. Atul Automations Pvt Ltd - right to notice under section 124 of the Customs Act, 1962 and its waiver - Whether the first appellate authority was justified in remanding the matter to the original authority for de novo consideration. - HELD THAT: - The Tribunal held that the first appellate authority was entitled to remand because the original orders had not considered the principles in re Atul Automations Pvt Ltd, including the quantification of fine and restrictions on treatment of confiscated goods. In addition, the importer had waived the right to be issued notice under section 124, and therefore a direction to decide all issues afresh could not be faulted. Given these omissions in the original proceedings, remand for de novo consideration was appropriate. [Paras 6, 8]

Remand to the original authority for de novo proceedings was upheld.

Confiscation under section 111(d) of the Customs Act, 1962 - redemption under section 125 of the Customs Act, 1962 - Whether the appellant remained liable to confiscation for import of old and used goods in the absence of prescribed authorisation. - HELD THAT: - The appellant conceded non possession of the authorisation required under the Foreign Trade Policy and did not contest confiscation under section 111(d). The Tribunal recorded that liability to confiscation was not in dispute. While redemption under section 125 permits levy of a fine in lieu of confiscation, the legality and quantification of any redemption/fine needed fresh consideration in light of re Atul Automations Pvt Ltd. [Paras 1, 6]

Liability to confiscation for non possession of required authorisation is accepted; quantification and scope for redemption to be considered afresh.

Scope for stipulating re export as condition for redemption - power to destroy confiscated goods and statutory limitations on disposition of confiscated goods - redemption under section 125 of the Customs Act, 1962 - Whether the imposition of re export as a condition of redemption and the option of destruction on default were permissible absent specific statutory authority. - HELD THAT: - The Tribunal observed that the original order had limited options to re export on redemption or destruction in default. It noted the Customs Act itself does not provide for destruction and that destruction may arise only under authority of some other law which was not invoked. The adjudicating authority must therefore consider whether it could lawfully stipulate re export when the importer did not seek it, and whether destruction could be ordered without statutory empowerment. These questions required fresh consideration on remand. [Paras 7, 8]

Question of imposing re export as condition and of destruction in default is not finally decided and must be addressed by the original authority on remand.

Final Conclusion: The appeals are disposed of by remanding the matters to the original adjudicating authority for de novo consideration of (a) quantification of fine and entitlement to redemption in light of re Atul Automations Pvt Ltd, and (b) the lawfulness of stipulating re export or ordering destruction absent statutory authority; the de novo proceedings are to be completed within eight weeks of receipt of this order. Confiscation liability arising from non possession of the required authorisation was not disputed.

Right of persons other than retiring directors to stand for directorship - deposit for candidature under section 160 - refund on election or attainment of prescribed vote threshold - interim relief to waive statutory requirement

Deposit for candidature under section 160 - interim relief to waive statutory requirement - Whether the petitioner should be permitted, by interim order, to contest election to directorship without depositing the statutory amount required under Section 160. - HELD THAT: - The Court examined Section 160, which permits a non retiring person to be eligible for appointment as a director if a notice is left at the registered office not less than fourteen days before the meeting together with a deposit of one lakh rupees (or such higher amount as prescribed), subject to refund if the candidate is elected or secures more than twenty five percent of valid votes. The petitioner sought interim relief to dispense with the deposit. The Court observed that the statutory requirement of deposit is unambiguous and that it was not open to the Court, on interim application, to waive a clear statutory precondition for candidature. Having considered submissions and the provision's refund mechanism, the Court declined to grant the interim waiver sought by the petitioner. [Paras 8, 10]

Interim prayer to contest without deposit declined.

Final Conclusion: The petitioner's interim request to be allowed to contest the directorship election without making the statutory deposit was refused; the matter is adjourned to 2nd February, 2021.

Rectification of order under Rule 154 of the National Company Law Tribunal Rules, 2016 - clerical or arithmetical mistake arising from an accidental slip or omission - mistake apparent on the face of the record and power to amend under Section 420(2) of the Companies Act, 2013 - limits on Tribunal's power to correct errors and inability to substitute its view on merits

Rectification of order under Rule 154 of the National Company Law Tribunal Rules, 2016 - clerical or arithmetical mistake arising from an accidental slip or omission - limits on Tribunal's power to correct errors and inability to substitute its view on merits - Whether IA/75/KOB/2020 seeking rectification of the order dated 05.03.2020 in CP/93/KOB/2019 is maintainable under Rule 154 of the NCLT Rules, 2016. - HELD THAT: - The Tribunal examined Rule 154 which permits correction only of clerical or arithmetical mistakes or errors arising from accidental slips or omissions. The application sought substantive correction of perceived factual conclusions in the order rather than correction of any clerical or arithmetical error. The Bench reiterated that the power under Rule 154 (and the cognate concept of mistake apparent on the face of the record under Section 420(2) of the Companies Act, 2013) is confined to manifest, self-evident errors that do not require reappraisal of evidence or traversing beyond the record. Reliance placed on the authority cited in the order was applied to emphasize that an error is rectifiable only if it is patent on the face of the record and does not call for elaborate argument or examination of merits. In the present case the applicants sought to substitute the Tribunal's view on factual and legal questions decided earlier, which is beyond the scope of Rule 154; no accidental slip, clerical mistake or arithmetical error was shown to exist. Accordingly the application was not maintainable and could not be entertained as a vehicle for review or rehearing of the merits. [Paras 11, 12, 14]

IA/75/KOB/2020 rejected as the rectification sought does not pertain to a clerical or arithmetical mistake or an error arising from an accidental slip or omission and cannot be entertained to revisit the merits of the earlier order.

Final Conclusion: The interlocutory application for rectification of the order dated 05.03.2020 is dismissed: Rule 154 confines the Tribunal to correcting only clerical/arithmetical mistakes or errors from accidental slips or omissions, and the present application impermissibly seeks substantive alteration of findings rather than correction of an apparent error on the face of the record.

Waiver of past liabilities upon approval of a resolution plan - binding effect of an approved resolution plan on stakeholders - statutory character of electricity dues - provisions of the Code to override other laws (section 238) vis-a -vis inconsistent statutory provisions - security deposit as a statutory precondition for sanction of HT power connection - plan non contravention requirement under Section 30(2)(e) - distinction between extinguishment of past liabilities and compliance with continuing statutory requirements post-approval - one year period under Section 31(4) for obtaining approvals not equating to waiver of statutory preconditions

Waiver of past liabilities upon approval of a resolution plan - binding effect of an approved resolution plan on stakeholders - provisions of the Code to override other laws (section 238) vis-a -vis inconsistent statutory provisions - Whether SPDCL could revive and enforce its claim for pre CIRP electricity dues after the Resolution Plan was approved - HELD THAT: - The Tribunal held that an approved resolution plan under the Code determines the liabilities of the corporate debtor and is binding in rem on all stakeholders. Although Section 238 of the Code is textually similar to the overriding provision in the SARFAESI Act, the statutory fields and mechanisms differ; SARFAESI governs creditor action whereas the Code governs the resolution or liquidation process carried out by a Resolution Professional/liquidator with the imprimatur of the Adjudicating Authority. The purpose of the insolvency regime is to effect a one time determination of liabilities so that a company may be revived free from past baggage or wound up definitively. Consequently, claims in respect of past dues that are not provided for in the approved plan cannot be entertained after approval, and SPDCL could not make its claim post approval in these proceedings. [Paras 10]

SPDCL's claim for past electricity dues made after approval of the Resolution Plan could not be sustained and was barred.

Security deposit as a statutory precondition for sanction of HT power connection - statutory character of electricity dues - one year period under Section 31(4) for obtaining approvals not equating to waiver of statutory preconditions - plan non contravention requirement under Section 30(2)(e) - distinction between extinguishment of past liabilities and compliance with continuing statutory requirements post-approval - Whether SPDCL was bound to restore HT electricity connections to the Resolution Applicant without insisting on payment of past dues or fresh security deposit - HELD THAT: - The Tribunal distinguished extinguishment of past liabilities under an approved plan from continuing statutory obligations that govern the sanction and supply of electricity. Security deposit for HT industrial connections is a statutory and commercial precondition designed to secure payment and cover supply risks; it cannot be dispensed with by an order approving a resolution plan. Section 30(2)(e) requires that a plan not contravene applicable law and Section 31(4)'s limited time to obtain approvals does not equate to waiving statutory preconditions such as security deposits. Restoration of HT connections therefore cannot be ordered without compliance with the Electricity Act and payment of any required security deposit; approval of the plan does not authorize violation or non observance of such statutory requirements. [Paras 11, 13]

Restoration of HT connections without insisting on fresh security deposit could not be ordered; the Resolution Applicant must comply with statutory requirements (including payment of security deposit) to obtain power supply.

Final Conclusion: Application disposed: SPDCL's claim for pre CIRP electricity dues could not be entertained after approval of the Resolution Plan, but restoration of HT power connections cannot be ordered without the Resolution Applicant complying with statutory requirements under the Electricity Act, including payment of any fresh security deposit; the approved plan does not waive such continuing statutory preconditions.

Offer of shares to co venturers under joint sector agreement - duties of liquidator to effectuate efficacious disposition of assets consistent with existing contracts and laws - interim restraint on disposal of assets pending adjudication - prohibition on indefinite stay of liquidation process

Offer of shares to co venturers under joint sector agreement - duties of liquidator to effectuate efficacious disposition of assets consistent with existing contracts and laws - Whether the Liquidator is prima facie bound to offer the Corporate Debtor's shares in NPRL to the other parties to the Joint Sector Agreement before selling to outsiders - HELD THAT: - The Tribunal noted the Joint Sector Agreement's clauses requiring that a party wishing to dispose of its shareholding must first offer the shares to the other parties and that the liquidator, in carrying out the liquidation, must act in accordance with statutory obligations and existing agreements. On the materials before it the Tribunal found that the question whether the Liquidator complied with the JSA and effected valuation as required raised a prima facie case warranting protection of the applicants' rights pending fuller hearing. The Tribunal did not finally determine merits but recognised the liquidator's obligation to make offers to the co venturers in accordance with the JSA before completing disposal to outside purchasers. [Paras 4, 6]

Prima facie the Liquidator must offer the shares to the other JSA parties and the matter requires further hearing; an interim protection is appropriate.

Interim restraint on disposal of assets pending adjudication - prohibition on indefinite stay of liquidation process - Whether the liquidation process should be stayed pending adjudication and, if so, the extent of interim relief - HELD THAT: - Balancing the need for protection of contractual rights under the JSA against the imperative of efficacious liquidation, the Tribunal held that the liquidation process could not be halted indefinitely. However, to preserve the applicants' prima facie rights and to enable determination of whether the JSA's pre emptive rights were respected, the Tribunal granted a limited ad interim restraint. The restraint prevents the Liquidator from selling the Corporate Debtor's shares in NPRL to outsiders for a period of two weeks, during which pleadings and affidavits are to be filed for final adjudication. [Paras 6]

Interim stay granted restraining sale to outsiders for two weeks; liquidation cannot be put on indefinite hold.

Interim restraint on disposal of assets pending adjudication - Procedural directions for further adjudication and filing of affidavits - HELD THAT: - The Tribunal directed respondents to file affidavits in reply within seven days with service on the applicant, and permitted the applicant to file a rejoinder limited to five pages within seven days thereafter. The matter was listed for further consideration on the stated date. These directions facilitate expedited final determination of the contested questions concerning compliance with the JSA and the propriety of the sale process. [Paras 7, 8]

Respondents to file affidavits within seven days; applicant to file rejoinder within seven days thereafter; matter adjourned for further consideration.

Final Conclusion: The Tribunal granted limited interim protection: the Liquidator is prima facie required to offer the Corporate Debtor's shares in NPRL to the other JSA parties and was restrained from selling those shares to outsiders for two weeks. The liquidation process was not stayed indefinitely. Parties were directed to file affidavits and rejoinder within stipulated short timelines and the matter was adjourned for further consideration.

Operational debt - default - service of demand notice under Section 8 - no pre-existing dispute - limitation - admission of application under Section 9 - moratorium under Section 14 - public announcement and call for submission of claims - appointment of Interim Resolution Professional

Operational debt - default - service of demand notice under Section 8 - no pre-existing dispute - limitation - admission of application under Section 9 - Whether the Section 9 petition by the operational creditor is maintainable and liable to be admitted on the ground of existence of operational debt, occurrence of default, valid service of demand notice, absence of dispute and compliance with limitation - HELD THAT: - The Tribunal examined the documents filed by the applicant and found that the demand notice in Form 3 was served on the corporate debtor and no dispute was raised by the respondent; the applicant filed an affidavit of no dispute. Documentary records (invoices, ledger entries and bank statements) were held to establish the existence of the operational debt and non-payment by the corporate debtor. The petition was held to be within limitation. Applying the tests articulated in Mobilox Innovative Pvt. Ltd. v. Kirusa Software Pvt. Ltd., the adjudicating authority concluded that the three conditions - existence of operational debt, documentary evidence showing the debt to be due and payable, and absence of any pre existing dispute or pending suit/arbitration prior to the demand notice - were satisfied. On that basis the Authority was satisfied that default had occurred and the application under Section 9 is complete and maintainable. [Paras 10, 11, 12, 13, 15]

The Section 9 petition is admitted as the operational debt and default are established, the demand notice was served, no pre-existing dispute exists and the claim is within limitation.

Moratorium under Section 14 - public announcement and call for submission of claims - appointment of Interim Resolution Professional - Reliefs to follow on admission - declaration of moratorium, direction for public announcement and appointment of Interim Resolution Professional - HELD THAT: - Having admitted the application, the Tribunal exercised the discretion to initiate the corporate insolvency resolution process. It directed the Interim Resolution Professional to make the public announcement and call for submission of claims as required. The Tribunal declared the moratorium prohibiting institution or continuation of suits, transfer or disposition of assets, enforcement of security interests and recovery of property occupied by the corporate debtor, with the moratorium to operate from receipt of the authenticated copy of the order until completion of the CIRP or until approval of a resolution plan or an order for liquidation. The applicant had not proposed an IRP; accordingly the Tribunal appointed the named practitioner as Interim Resolution Professional. [Paras 17, 18, 19, 20, 21]

Moratorium is declared, public announcement and claim submission are directed, and the named Interim Resolution Professional is appointed; the corporate insolvency resolution process is initiated.

Final Conclusion: The petition under Section 9 is admitted: the Tribunal found that operational debt and default were proved, no pre-existing dispute existed and the claim was within limitation; it ordered initiation of the corporate insolvency resolution process, declared the moratorium, directed public announcement and claim submission, and appointed an Interim Resolution Professional.

Corporate Insolvency Resolution Process - maintainability of petition under Section 9 - debt and default not a sufficient basis for CIRP - satisfaction of the Adjudicating Authority as to insolvency - IBC not a substitute for recovery proceedings

Maintainability of petition under Section 9 - debt and default not a sufficient basis for CIRP - Whether the Company Petition filed under Section 9 of the IBC, 2016 is maintainable where the petitioner has established debt and default but has not substantiated that the corporate debtor is insolvent and the petition appears to be a recovery attempt. - HELD THAT: - The Tribunal examined the pleadings and material and concluded that although debt and default were pleaded and admitted in part, the petitioner failed to demonstrate that the corporate debtor is insolvent. The Adjudicating Authority must be satisfied that a petition under Section 9 is not merely a recovery mechanism and requires assessment of whether initiation of CIRP is warranted. Reliance on authorities was considered, but the Tribunal found the facts of those cases inapplicable. Applying the principle that IBC is not intended as a substitute for ordinary recovery forums, and having regard to the petitioner's conduct (including delay in proceedings and not pursuing remedy under the Negotiable Instruments Act for the dishonoured cheque), the Tribunal held the petition to be instituted primarily for recovery rather than to initiate CIRP. Consequently the petition was held not maintainable. [Paras 7, 9, 10, 11]

C.P.(IB)No.193/BB/2020 is not maintainable and is disposed of; petitioner granted liberty to pursue remedy under other laws.

Final Conclusion: The Tribunal dismissed the Section 9 petition as not maintainable, holding that mere debt and default without substantiation of insolvency and where the petition appears to be a recovery attempt cannot justify initiation of CIRP; petitioner is at liberty to pursue alternate remedies.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - commercial wisdom of the Committee of Creditors - appointment of the Resolution Professional as Liquidator - cessation of moratorium on liquidation - public announcement of liquidation - vested powers of the Liquidator and cessation of board powers - prohibition on suits against the corporate debtor during liquidation - obligation to notify the Registrar of Companies and registered office

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - commercial wisdom of the Committee of Creditors - The application under Section 33(2) for liquidation was maintainable and the Adjudicating Authority would not interfere with the commercial wisdom of the Committee of Creditors which resolved for liquidation. - HELD THAT: - The Committee of Creditors (CoC), in its meeting, resolved with 100% voting in favour of liquidation on the ground that the corporate debtor had no tangible or intangible assets and was not carrying on business, and invited liquidation to minimise costs. The Adjudicating Authority observed that it lacks jurisdiction to overturn the commercial decision of the CoC, following the principle affirmed in K. Sasidhar and the Supreme Court's view in Essar Steel that the commercial wisdom exercised by the CoC is not to be interfered with by the Adjudicating Authority. Applying these precedents and having regard to the CoC resolution and the facts recorded, the Authority allowed the IA under Section 33(2) and ordered liquidation.

IA under Section 33(2) allowed and the corporate debtor ordered to be liquidated; the CoC's resolution for liquidation sustained.

Appointment of the Resolution Professional as Liquidator - cessation of moratorium on liquidation - public announcement of liquidation - vested powers of the Liquidator and cessation of board powers - prohibition on suits against the corporate debtor during liquidation - obligation to notify the Registrar of Companies and registered office - The Adjudicating Authority issued consequential directions for the liquidation process, including appointment of the RP as Liquidator and ancillary procedural steps. - HELD THAT: - On allowing liquidation, the Authority directed that the moratorium under the Code cease to have effect from the date of the liquidation order and required the Liquidator to issue a public announcement that the corporate debtor is in liquidation. The Liquidator was directed to send a certified copy of the order to the authority where the corporate debtor is registered and the Registry was directed to communicate the order to the Registrar of Companies and the corporate debtor's registered office. The order further provided that suits against the corporate debtor are barred except as permitted under the Code and that the Liquidator may institute proceedings with prior approval of the Authority. The order declared that officers, employees and workmen are discharged by virtue of the order (subject to continuation of business, if any) and that all powers of the board and key managerial personnel cease and vest in the Liquidator, who shall exercise duties and powers under the Code and the Liquidation Regulations, and be entitled to charge fees as specified by the Board. Personnel of the corporate debtor were directed to cooperate with the Liquidator.

CA Tejas Shah (the RP) shall act as Liquidator and the specified directions for commencement and conduct of the liquidation process are to be complied with.

Final Conclusion: The application for liquidation of Devansh International Private Limited under Section 33(2) of the IBC, 2016 is allowed; the CoC's resolution for liquidation is upheld, CA Tejas Shah is appointed Liquidator, and the consequential directions for cessation of moratorium, notification, vesting of powers, prohibition on suits and other procedural steps are issued.

Admissibility of an application under Section 9 of the IBC, 2016 - pre-existing dispute - prima facie existence of a dispute - notice under Section 8 and reply within 10 days - effect of dishonoured cheque as admission of liability - unqualified work/completion certificate as evidence of performance - ascertainment of undisputed operational debt exceeding threshold - appointment of Interim Resolution Professional and declaration of moratorium

Effect of dishonoured cheque as admission of liability - admissibility of an application under Section 9 of the IBC, 2016 - Whether issuance and subsequent dishonour of a cheque by the Corporate Debtor constitutes evidence of admission of liability sufficient to support admission of the Section 9 application. - HELD THAT: - The Tribunal found that the Corporate Debtor issued a cheque for the claimed amount which was subsequently dishonoured for insufficiency of funds. Having considered the parties' submissions and precedent relied upon by the Operational Creditor, the Tribunal held that issuance and delivery of a cheque after analysing disputes indicates recognition that the amount was payable. This conduct, viewed along with other material, supports admission of the Section 9 application. [Paras 11]

Issuance and dishonour of the cheque by the Corporate Debtor is evidence of admission of liability and favours admission of the Section 9 application.

Unqualified work/completion certificate as evidence of performance - ascertainment of undisputed operational debt exceeding threshold - Whether the work completion/experience certificate issued by the Corporate Debtor and subsequent confirmations/payments establish an undisputed amount payable to the Operational Creditor so as to render the petition maintainable. - HELD THAT: - The Tribunal noted the work experience certificate dated 17.04.2017 issued by the Corporate Debtor, its subsequent confirmation (23.10.2018), and payments made after the Operational Creditor left the project. A typographical error in the certificate's date was treated as immaterial given the later confirmation. The Tribunal analysed the running account bills (13 certified bills), payments received, and the Corporate Debtor's own computations, and concluded that even after accounting for claimed recoveries and retention, there remained an undisputed balance exceeding the statutory threshold of Rs. 1 lakh. The Tribunal rejected the Corporate Debtor's challenge to the certificate as an accommodation entry in view of subsequent confirmation and payments. [Paras 12, 13]

The work certificate and post-termination payments, together with the accounting analysis, establish an undisputed amount payable to the Operational Creditor and support admission of the petition.

Pre-existing dispute - prima facie existence of a dispute - notice under Section 8 and reply within 10 days - Whether there existed a pre-existing dispute prior to service of the Section 8 demand notice which would render the Section 9 application liable to be rejected. - HELD THAT: - The Tribunal reviewed the statutory definition of 'dispute' and the Supreme Court's test in Mobilox for prima facie existence of a dispute that is not patently feeble, hypothetical or illusory. It explained that routine commercial correspondence and supervisory communications in long-term running contracts do not automatically convert into a pre-existing dispute unless the difference crystallises into an asserted claim not admitted by the other party. On the facts, the Tribunal examined the e-mails relied upon by the Corporate Debtor, the certified running bills, subsequent payments, and the work certificate. It found that the communications were largely supervisory, corrective and did not establish a bona fide pre-existing dispute; any alleged differences had been effectively resolved or did not show that the Corporate Debtor had brought the dispute to the Operational Creditor's notice within the statutory 10-day window. The Tribunal further emphasised that the Adjudicating Authority may examine materials to the extent necessary to differentiate spurious defences from genuine disputes and that timelines under Section 8 are sacrosanct. [Paras 21, 22, 23, 24, 25]

No pre-existing dispute existed prior to service of the Section 8 notice that would bar admission; the claimed e-mails do not establish a bona fide dispute and the Corporate Debtor's late reply cannot be relied on to defeat the application.

Admissibility of an application under Section 9 of the IBC, 2016 - ascertainment of undisputed operational debt exceeding threshold - Whether the Section 9 application was complete, defect-free and otherwise liable to be admitted. - HELD THAT: - After considering completeness of the application, the documentary record including invoices, running account bills, payments, the dishonoured cheque and the work certificate, and having found absence of a pre-existing dispute and existence of an undisputed debt above the threshold, the Tribunal concluded the application complied with statutory requirements. The Tribunal noted that the Operational Creditor had served notice under Section 8 and that replies by the Corporate Debtor were not within the prescribed time to attract rejection under Section 9(5)(ii)(d)/(c). [Paras 8, 9, 30]

The Section 9 application is admitted as complete and satisfying the statutory tests for admission.

Appointment of Interim Resolution Professional and declaration of moratorium - Appointment of Interim Resolution Professional and consequential orders upon admission of the Section 9 application. - HELD THAT: - The Tribunal recorded that the proposed IRP had given consent, no disciplinary proceedings were pending against him, and the application complied with other regulatory requirements. Consequent to admission, the Tribunal appointed the named IRP, directed public announcement and communication, declared moratorium and recorded ancillary directions relating to conduct of the CIRP and advance fee to the IRP. The Tribunal listed the matter for progress report accordingly. [Paras 27, 30]

The proposed IRP is appointed and moratorium and related directions are imposed as part of admitting the Section 9 application.

Final Conclusion: The Tribunal admitted the Operational Creditor's application under Section 9 of the IBC, 2016, holding that (i) issuance and dishonour of a cheque and an unqualified work/experience certificate, together with payments and the parties' own accountings, established an undisputed operational debt above the statutory threshold; (ii) the e-mails relied upon by the Corporate Debtor did not prima facie constitute a bona fide pre-existing dispute prior to the Section 8 notice and the Corporate Debtor's belated reply could not defeat the application; and (iii) the nominated Interim Resolution Professional was appointed and moratorium was declared to initiate the CIRP.

Jurisdiction of NCLT under Section 60(5)(a) - overriding effect of Section 238 of the IBC - moratorium under Section 14(1) of the IBC - assets of the corporate debtor - original share certificates - possession versus ownership under an Agreement to Sell

Jurisdiction of NCLT under Section 60(5)(a) - overriding effect of Section 238 of the IBC - moratorium under Section 14(1) of the IBC - Adjudicating authority under the IBC has jurisdiction to entertain the applications by the Resolution Professional despite pending proceedings under Sections 241-242 of the Companies Act. - HELD THAT: - The Tribunal first considered whether it had jurisdiction to adjudicate the applications filed by the Resolution Professional during the CIRP. It held that the moratorium under Section 14(1) of the IBC prohibits continuation of civil proceedings against the corporate debtor while the moratorium is in force, and that proceedings under Sections 241-242 of the Companies Act do not constitute an exception to that moratorium. Further, Section 60(5)(a) vests the NCLT with jurisdiction to entertain any application or proceeding by or against the corporate debtor, and Section 238 gives the IBC an overriding effect over inconsistent laws. In light of these provisions, the Tribunal concluded that it had jurisdiction to entertain and dispose of the present applications filed by the Resolution Professional. [Paras 21, 22, 23]

This Bench has jurisdiction to entertain the applications filed by the Resolution Professional and the objections based on proceedings under Sections 241-242 are not a bar.

Assets of the corporate debtor - original share certificates - possession versus ownership under an Agreement to Sell - Original share certificates and other original documents in the respondent's custody are assets of the corporate debtor and must be handed over to the Resolution Professional. - HELD THAT: - On the merits the Tribunal examined the Agreements to Sell and the conduct of the parties. It noted that the respondent had only temporary physical possession of the share certificates under Clause 6 of the Agreements and that no ownership rights in the certificates were transferred to the respondent. Although the respondent relied on non-payment of consideration and asserted that required approvals were not obtained by the corporate debtor, the Tribunal observed that such contentions did not entitle the respondent to retain the share certificates in perpetuity. As the documents are assets of the corporate debtor and the Resolution Professional is charged with taking custody of the corporate debtor's assets to maximize value, the Tribunal directed surrender of the original share certificates and related documents to the Resolution Professional. [Paras 24, 25, 26, 27]

The respondent is directed to hand over the original share certificates and other original documents to the Resolution Professional within seven days; the applications are allowed.

Final Conclusion: The Tribunal upheld its jurisdiction under the IBC to entertain the Resolution Professional's applications during moratorium and directed the respondent to deliver the original share certificates and related documents, allowing IA 2102/2020 and IA 2276/2020.

Liquidation under Section 33(2) of the IBC, 2016 - Commercial wisdom of the Committee of Creditors - Moratorium under Section 14 ceasing on liquidation - Powers and duties of the Liquidator and cessation of board powers - Stay on suits subject to Section 52 - Public announcement and communication to Registrar - Liquidator's entitlement to fees

Liquidation under Section 33(2) of the IBC, 2016 - Commercial wisdom of the Committee of Creditors - Application under Section 33(2) of the IBC, 2016 for initiation of liquidation was allowed following the CoC resolution to liquidate. - HELD THAT: - The Committee of Creditors in its Second meeting dated 12.12.2019 resolved to liquidate the Corporate Debtor on the stated grounds that there were no assets, plant and machinery, inventories, investments, or ongoing business operations. The Adjudicating Authority recorded that it has no jurisdiction to override the commercial wisdom of the CoC, relying on established precedent that the Adjudicating Authority cannot reverse a CoC decision taken in exercise of its commercial judgment. Applying these principles to the material on record, the Tribunal found the CoC's resolution for liquidation to be dispositive and permitted the RP to file the Section 33 application resulting in initiation of liquidation.

IA 255 of 2020 in CP (IB) No. 386 of 2019 is allowed and an order for initiation of liquidation of Bansal International Private Limited is passed; Bhavi Shreyans Shah shall act as Liquidator.

Moratorium under Section 14 ceasing on liquidation - Stay on suits subject to Section 52 - Consequences of the liquidation order on moratorium and institution of suits and other legal proceedings. - HELD THAT: - The Tribunal directed that the moratorium declared under Section 14 of the IBC shall cease to have effect from the date of the liquidation order. Further, subject to Section 52 of the Code, no suit or other legal proceedings shall be instituted by or against the Corporate Debtor after the liquidation order; however, the Liquidator may institute suits or legal proceedings on behalf of the Corporate Debtor with the prior approval of the Adjudicating Authority. The order also clarified that this restriction does not apply to proceedings in relation to transactions notified by the Central Government in consultation with any financial sector regulator.

Moratorium ceases on liquidation; institution of suits/proceedings by or against the Corporate Debtor is stayed subject to Section 52 and the stated exceptions and approvals.

Powers and duties of the Liquidator and cessation of board powers - Public announcement and communication to Registrar - Liquidator's entitlement to fees - Directions as to the Liquidator's powers, duties and administrative steps consequent to liquidation were issued and applied to the RP. - HELD THAT: - The Tribunal directed that the powers of the Board of Directors, Key Managerial Personnel and partners shall cease and vest in the Company Liquidator, who shall exercise powers and duties as enumerated in the Code and the Liquidation Process Regulations. The Liquidator was ordered to issue a public announcement declaring the Corporate Debtor in liquidation and to send a certified copy of the order to the authority with which the Corporate Debtor is registered. Personnel of the Corporate Debtor were directed to extend assistance to the Liquidator. The Tribunal further recorded that the Company Liquidator shall be entitled to charge fee in proportion to the value of the liquidation estate assets as may be specified by the Board. The Registry was directed to communicate the order to the concerned Registrar of Companies, the registered office, and the Company Liquidator for compliance.

All managerial powers vest in the Liquidator; the Liquidator must make public announcement, notify the registrar, obtain cooperation of personnel, and is entitled to charge fees as provided.

Final Conclusion: The Tribunal allowed the Section 33 application and ordered initiation of liquidation of Bansal International Private Limited in accordance with the CoC resolution; consequential directions were issued regarding cessation of moratorium, vesting of powers in the Liquidator, restriction on suits subject to Section 52, public announcement, communication to the Registrar, cooperation from personnel, and the Liquidator's entitlement to fees.

Clear and undisputed debt - default under Section 9 of the Insolvency and Bankruptcy Code, 2016 - agreement for payment terms - one-sided invoices not substitute for mutual agreement - interest claim founded on express agreement - I & B Code not a substitute for recovery forum - misuse of insolvency remedy to jeopardise a solvent company

Clear and undisputed debt - agreement for payment terms - one-sided invoices not substitute for mutual agreement - Existence of a debt and default sufficient to trigger proceedings under Section 9 of the Code - HELD THAT: - The Tribunal found that, although there was a delay in payment, the Petitioner has not placed any document demonstrating a mutual agreement on payment terms between the parties. Other than the invoices, there is no evidence of an express contract that created a right to payment of interest at the rate claimed or fixed payment terms. In the absence of an agreement establishing the terms, there is no clear and undisputed debt or right to interest at the Petitioner's chosen rate; one sided invoices and e mails cannot substitute for a mutual contractual obligation and therefore do not suffice to establish default under Section 9 of the Code. [Paras 5]

No clear and undisputed debt or default was established on the materials produced; therefore the statutory threshold for initiating CIRP under Section 9 was not met.

I & B Code not a substitute for recovery forum - misuse of insolvency remedy to jeopardise a solvent company - interest claim founded on express agreement - Whether the Petition was a permissible invocation of the Code or an impermissible attempt to use CIRP as a recovery mechanism against a solvent company - HELD THAT: - Applying established principles that the Code is not intended to be a substitute for ordinary debt recovery and must not be used to push a fundamentally solvent company into insolvency, the Tribunal noted that the Corporate Debtor continued as a going concern with ongoing projects and turnover, and had manifested willingness and a proposed schedule to repay. The Petitioner had rejected the repayment proposal insisting on charging interest at an exorbitant rate and sought to trigger CIRP to enforce recovery. Relying on the principle that insolvency proceedings should not be used prematurely or for extraneous considerations, the Tribunal held that initiating CIRP in these circumstances would be contrary to the spirit of the Code. [Paras 6, 7]

Petition was an improper use of the Code as a recovery device against an otherwise solvent company and is therefore not maintainable.

Final Conclusion: Company Petition C.P. (IB) No. 10/BB/2020 dismissed for want of a clear and undisputed debt and as an improper invocation of the Code; no order as to costs.

Prima facie case in stay applications - consideration of financial hardship in grant of interim relief - obligation of Tribunal/Appellate Authority to record reasons while deciding stay applications - security other than cash or bank guarantee as condition for interim protection - rejection of books of accounts under Section 28(2)(ii) of U.P. Value Added Tax Act, 2008

Prima facie case in stay applications - obligation of Tribunal/Appellate Authority to record reasons while deciding stay applications - Legality of the Tribunal dismissing the appeal against stay order without considering the prima facie case and without recording reasons. - HELD THAT: - The Court held that while deciding an application for stay the Appellate Authority and the Tribunal are bound to consider the existence of a prima facie case and any plea of financial hardship advanced by the assessee. The Tribunal's refusal to consider prima facie case on the ground that such consideration may affect the final adjudication is contrary to settled law. Prima facie satisfaction is an independent parameter for exercising discretion in stay applications and does not prejudice the ultimate decision on merits. Therefore the Tribunal's non reasoned dismissal for want of consideration of prima facie case is ex facie erroneous and liable to be set aside.

Order of the Tribunal is set aside; questions framed answered in favour of the assessee and against the revenue.

Consideration of financial hardship in grant of interim relief - security other than cash or bank guarantee as condition for interim protection - Appropriate interim direction pending disposal of appeals and the condition to be imposed for grant of stay. - HELD THAT: - Having found the Tribunal's order contrary to law, the Court proceeded to dispose of the revisions on merits by directing the revisionists to deposit 10% of the disputed tax amounts for the specified assessment years and to furnish security other than cash or bank guarantee for the balance disputed liability. The Court directed that amounts already deposited by the revisionists shall be adjusted against the 10% requirement and that the appellate authorities shall decide the appeals on merits expeditiously. The directions reflect the Court's exercise of discretion to balance the interests of revenue and assessee while ensuring consideration of prima facie case and financial condition during adjudication.

Revisionists to deposit 10% of disputed tax for the listed assessment years (amounts already deposited to be adjusted) and furnish non cash/non bank guarantee security for balance; appeals to be decided on merits expeditiously.

Final Conclusion: The Tribunal's order refusing to consider the prima facie case while deciding stay applications was set aside. Revisions disposed by directing 10% deposit of disputed tax (with adjustment of amounts already deposited) and furnishing of security other than cash or bank guarantee for the balance; appeals to be heard and decided on merits.

Jurisdiction to levy tax - proof of tax paid in another State - failure to apply mind / non-application of mind - principles of natural justice - personal hearing mandatory - remand for fresh consideration

Proof of tax paid in another State - failure to apply mind / non-application of mind - Assessment orders were passed despite the petitioner having produced Gujarat VAT Form-201 A and tax invoices showing sales and tax liability in Gujarat. - HELD THAT: - The Court examined the notice dated 27.08.2020 and the petitioner's reply dated 19.09.2020 with enclosures which included Gujarat VAT Form 201 A for August 2014 and tax invoices. The Form 201 A and the enclosed invoices corresponded with each other and showed the sales in Gujarat for which tax liability was discharged before the Gujarat authorities. The impugned assessment orders ignored these documents, recorded that only annexure details were produced and that tax invoices were not placed, and treated the invoices as unconnected with the sales. The Court concluded that the respondent did not apply its mind to the Form 201 A and the invoices produced and therefore the assessments were passed by total non-application of mind. [Paras 13, 14, 15]

Impugned assessment orders quashed for failure to consider the Gujarat VAT Form-201 A and accompanying tax invoices; matter remanded for fresh consideration on merits.

Principles of natural justice - personal hearing mandatory - remand for fresh consideration - Whether the petitioner was afforded personal hearing before passing the assessment orders and the consequence of its absence. - HELD THAT: - The respondent asserted that a personal hearing was afforded by video conferencing, but the impugned assessment orders do not record any such hearing. The Court referred to the departmental circular dated 03.02.2014 which states that personal hearing is mandatory before passing assessment orders. In the absence of any record in the orders and given the mandatory nature of personal hearing as per the circular, the Court concluded that the petitioner was not afforded the requisite personal hearing, constituting a violation of principles of natural justice. Accordingly, the Court directed that on remand the petitioner must be given sufficient opportunity, including personal hearing, before fresh orders are passed. [Paras 10, 16, 17]

Assessments set aside for breach of natural justice; respondent to grant personal hearing and decide afresh within twelve weeks.

Final Conclusion: The High Court quashed the impugned assessment orders for 2014-2015 and 2015-2016 on grounds of non-application of mind and denial of mandatory personal hearing; the matters are remanded to the respondent for fresh adjudication after affording the petitioner personal hearing and deciding the issues on merits within twelve weeks.