TaxTMI Updates e-Newsletter
Dec 10,2021

Limitation for filing appeal - communication of order as commencement of limitation - application of subsection (1) and (4) of Section 107 of the Maharashtra Goods and Services Tax Act, 2017 - electronic filing requirements under Rule 108 of the Maharashtra GST Rules, 2017 - condonation of delay limited to further one month under Section 107(4) - exclusive statutory remedy and prohibition on bypassing special remedy by writ - principles of natural justice not extending limitation period

Limitation for filing appeal - communication of order as commencement of limitation - electronic filing requirements under Rule 108 of the Maharashtra GST Rules, 2017 - condonation of delay limited to further one month under Section 107(4) - Date from which limitation for filing an appeal under Section 107(1) of the Act is to be reckoned and whether upload on the GSTN portal alone can be treated as communication for that purpose. - HELD THAT: - Sub-section (1) of Section 107 prescribes that the appeal must be filed within three months from the date on which the decision or order is communicated to the person; sub-section (4) permits condonation for a further period of one month on sufficient cause. The scanned assessment order was emailed to the petitioner's General Manager on April 20, 2019 and there is no suggestion that the General Manager lacked authority to receive communication on behalf of the petitioner. The statutory language is clear and unambiguous: limitation commences on communication of the order and not on subsequent upload to the GSTN portal. Rule 108 permits electronic filing in Form GST APL-01 and allows submission of a certified copy within seven days, but it does not mandate that the limitation period shall run only from upload on the portal; the proviso to Rule 108(3) contemplates consequences of early or late submission of the certified copy and explains final acknowledgement, without displacing the statutory commencement date of limitation. Consequently, the petitioner's appeal filed after the expiry of the prescribed period (and beyond the one-month extension under Section 107(4)) was time-barred and rightly not accepted by the appellate authority. [Paras 5, 8, 12, 16]

Limitation for filing the appeal under Section 107(1) began on April 20, 2019, the date of communication of the assessment order by email; upload on the GSTN portal does not defer commencement of limitation, and the appeal was therefore time-barred beyond the statutory and extended period.

Exclusive statutory remedy and prohibition on bypassing special remedy by writ - principles of natural justice not extending limitation period - Whether the petitioner could bypass the statutory appellate mechanism by invoking writ jurisdiction under Article 226 when the statutory appeal remedy had become time-barred. - HELD THAT: - Where a statute creates a special remedy to enforce rights and liabilities, that remedy must ordinarily be availed of; the court relied on established authority recognizing the exclusivity of the statutory remedial scheme. The petitioner's grievance that the assessment order violated principles of natural justice did not excuse non-compliance with the limitation prescribed by Section 107 nor convert the case into one fit for exercise of writ jurisdiction to circumvent the statutory time bar. The facts show the petitioner received communication on April 20, 2019 but delayed pursuing the statutory appeal and only sought certified copy after recovery proceedings; this belated conduct disentitles the petitioner to have the writ entertained as an alternative to the statutory appeal which had become time-barred. [Paras 16, 17, 18]

Petitioner cannot invoke writ jurisdiction to circumvent the statutory appellate remedy once that remedy is time-barred; the writ petition is not entertainable on that ground.

Final Conclusion: The High Court held that limitation for filing an appeal under Section 107(1) commenced on April 20, 2019-the date the assessment order was communicated by email-and that the petitioner's appeal was time-barred even after the one-month extension under Section 107(4); consequently the writ petition was dismissed for want of merit.

Input tax credit - TRAN-1 form - time-limit for transitional credit under Rule 117 - technical glitches on GST portal - vested right of unutilized input tax credit - reasonable opportunity to file or revise TRAN-1 - arbitrariness and proportionality under Articles 14 and 300A - manual/physical submission as remedy for portal failure

TRAN-1 form - technical glitches on GST portal - manual/physical submission as remedy for portal failure - reasonable opportunity to file or revise TRAN-1 - input tax credit - Petitioner entitled to opportunity to submit TRAN-1 (online or manually) and to have claim for input tax credit processed despite non-filing within prescribed timeline due to compelling circumstances and portal glitches. - HELD THAT: - Taking note of the petitioner's pleaded inability to upload TRAN-1 because of the death of the original proprietor during the transition and repeated technical difficulties on the common portal, and having regard to the consistent decisions of several High Courts and the reasoning that unutilized pre-GST credit is a vested right which ought not to be defeated by procedural or technical impediments, the Court held that registered persons obstructed from filing TRAN-1 due to factors beyond their control must be given a reasonable opportunity to submit the form. The Court endorsed precedents recognising that mechanical failures of the portal, and circumstances such as the proprietor's death, justify permitting filing or re-filing (including by manual submission) and that denial of legitimate ITC claims on such grounds would be arbitrary. Accordingly, the respondents were directed to allow the petitioner to submit TRAN-1 either by reopening the portal or by accepting a manual/physical form and to process the petitioner's claim for input tax credit with liberty to verify genuineness in accordance with law. The direction is a remedial measure limited to addressing the procedural barrier, without declaring the challenged rule invalid. [Paras 11, 12]

Writ petition allowed; respondents directed to permit online or manual submission of TRAN-1 and to process the input tax credit claim, to be completed within 60 days from receipt of the order.

Final Conclusion: The writ petition is allowed; respondents shall permit the petitioner to submit the TRAN-1 form (by opening the portal or accepting manual submission) and process the claim for input tax credit, with verification as permissible in law, to be completed within 60 days from receipt of the order.

Goods and services tax regime - petroleum products exclusion from GST - adequacy of administrative reasons - deliberative decision-making by the GST Council - pandemic not a bar to policy decision

Petroleum products exclusion from GST - adequacy of administrative reasons - pandemic not a bar to policy decision - The reasons furnished by the GST Council for not bringing petroleum products within the GST regime are inadequate and the pandemic cannot be accepted as a sole justification. - HELD THAT: - The Court examined the letter of the Director of the Goods and Services Tax Council and noted that the Council recorded three reasons for not bringing petroleum products under GST: significant revenue implications, need for larger deliberations, and difficulty during the pandemic. The Court held that these stated reasons, as recorded, are unsatisfactory and lack the requisite discussion and genuine justification expected of a deliberative body. The Court specifically rejected the proposition that the pandemic period, by itself, constitutes a valid reason for deferring consideration, observing that important revenue-related decisions were taken during the pandemic after deliberation. In consequence, the Court directed the respondent (Central Board of Indirect Taxes and Customs) to file a detailed statement addressing the observations made and the prayers in the petition so that the matter can be considered further.

Respondent directed to file a detailed statement addressing the inadequacy of reasons given by the GST Council; matter listed for further hearing in the second week of December 2021.

Final Conclusion: The Court found the reasons given for excluding petroleum products from the GST regime inadequate (pandemic alone unacceptable) and directed the respondent to submit a detailed statement; the petition is listed for further consideration.

Classification of goods by reference to Chapter and Heading of the Customs Tariff - Interpretative Rules for the First Schedule to the Customs Tariff (rules of classification) - Meaning and scope of "preparations of a kind used in animal feeding" - Chapter Note to Chapter 23 regarding loss of essential characteristics - Concentrates for compound animal feed - Exemption under Entry Sl.No.102 of Notification No.2/2017-Central Tax (Rate)

Classification of goods by reference to Chapter and Heading of the Customs Tariff - Interpretative Rules for the First Schedule to the Customs Tariff (rules of classification) - Meaning and scope of "preparations of a kind used in animal feeding" - Chapter Note to Chapter 23 regarding loss of essential characteristics - Concentrates for compound animal feed - Whether the product 'poultry meal' is classifiable under Tariff Item 2301 (meat meals and pellets) or under Tariff Item 2309 (preparations of a kind used in animal feeding / concentrates). - HELD THAT: - Applying the Rules for Interpretation of the First Schedule and the HSN Explanatory Notes, the authority examined the product description, manufacturing process and trade usage. Heading 2301 expressly covers "flours, meals and pellets, of meat or meat offal, unfit for human consumption" and the HSN explanatory notes describe products obtained by steam-heating, pressing, oil removal, drying and grinding - processes matching the appellant's manufacturing description. Heading 2309 applies to finished products "used in animal feeding" obtained by processing to the extent that essential characteristics of the original material are lost; it contemplates ready-to-feed products (eg. compounded feeds, retail dog/cat food) rather than raw materials sold to feed manufacturers. The appellant's product was admittedly supplied as a raw material to animal/aqua feed manufacturers and no persuasive technical evidence was furnished to establish that the product functions as a "concentrate" in the sense contemplated by Heading 2309. The Chapter Note requirement that the original material's essential characteristics be lost to the extent exemplified in the HSN (e.g., cellular structure not recognizable) was not satisfied on the material on record. Under Rule 1 and rule 3(b) of the interpretative rules, the more specific heading 2301 (which even contains the specific term "meat meals") is preferred to a more general entry. On these grounds the authority concluded that the correct classification is under Tariff Item 2301 10 10 (meat meals and pellets). [Paras 10, 12, 13]

The product 'poultry meal' is classifiable under Tariff Item No. 2301 10 10 of the Customs Tariff.

Exemption under Entry Sl.No.102 of Notification No.2/2017-Central Tax (Rate) - Concentrates for compound animal feed - Meaning and scope of "preparations of a kind used in animal feeding" - Whether 'poultry meal', as classified under Heading 2301, is eligible for exemption under Sl.No.102 of Notification No.2/2017-Central Tax (Rate). - HELD THAT: - Entry Sl.No.102 links specific Chapters/Headings (column 2) with enumerated descriptions in column 3. Although Heading 2301 appears in column 2 of the entry, the exempted descriptions in column 3 expressly enumerate certain items including "concentrates & additives". The impugned goods, having been held to fall under Heading 2301 (meat meals), do not appear in the descriptive list in column 3 and the appellant's contention that the product is a 'concentrate' was found unsubstantiated. The authority further observed that peripheral arguments about the applicability of TRU circulars or precedents do not alter the textual linkage required by the exemption entry. Consequently, poultry meal, as classified, does not qualify for the exemption under Sl.No.102. [Paras 15, 16]

The product 'poultry meal' is not eligible for exemption under Sl.No.102 of Notification No.2/2017-Central Tax (Rate).

Final Conclusion: The Appellate Authority modified the impugned advance ruling: 'poultry meal' is classifiable under Tariff Item 2301 10 10 (meat meals and pellets) and is not eligible for exemption under Sl.No.102 of Notification No.2/2017-Central Tax (Rate); the appeal is disposed accordingly.

Classification under HSN 8537 - Chapter 86 - parts of railway or tramway locomotives or rolling-stock - Note 2(f) to Section XVII - exclusion of electrical machinery and equipment from 'parts' - Circular No. 30/4/2018-GST - supplies to Indian Railways classified outside Chapter 86 attract general rates - applicability of rates under Notification No. 1/2017-Central Tax (Rate)

Classification under HSN 8537 - Chapter 86 - parts of railway or tramway locomotives or rolling-stock - Note 2(f) to Section XVII - exclusion of electrical machinery and equipment from 'parts' - Circular No. 30/4/2018-GST - supplies to Indian Railways classified outside Chapter 86 attract general rates - applicability of rates under Notification No. 1/2017-Central Tax (Rate) - Classification of 'Switch Board Cabinet' supplied for fitment on railway coaches and locomotives and the applicable GST rate. - HELD THAT: - The Authority examined the composition and function of the Switch Board Cabinet and observed that it is equipped with two or more apparatus of headings 8535 or 8536 (power/control switchgear, fuses, MPCB, MCB, relays etc.), bringing it squarely within the description of boards, panels, consoles, desks, cabinets and other bases for electric control or distribution of electricity covered by HSN 8537. Chapter 86 (heading 8607) lists parts of railway rolling-stock such as bogies, axles, wheels, brake gear and coachwork and does not include switchboard cabinets. Note 2(f) to Section XVII expressly excludes electrical machinery and equipment (Chapter 85) from being treated as 'parts' for Chapters 86-89. Circular No.30/4/2018-GST clarifies that only goods classifiable under Chapter 86 supplied to Indian Railways attract the concessional treatment, and goods falling in other chapters attract the general rates under the notifications. Consequently, the Switch Board Cabinet, though manufactured for and supplied to railways, is not a part of Chapter 86 but is classifiable under HSN 8537. The Authority further applied the rate notifications, noting that the product falls under the entry in Schedule III (Entry No. 388B) of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 and thus attracts the general GST rate prescribed thereunder. [Paras 17, 18, 19, 21, 22]

Switch Board Cabinet merits classification under HSN 8537 and is liable to GST at the rate applicable under Notification No.1/2017 (Schedule III entry), rather than under Chapter 86 concessional treatment.

Final Conclusion: The Authority ruled that Switch Board Cabinet manufactured for fitment on railway coaches and locomotives is classifiable under HSN 8537 and not under Chapter 86, and accordingly attracts the general GST rate applicable under Notification No.1/2017 rather than the concessional rate available only to goods genuinely falling in Chapter 86.

Bail under Section 439 CrPC - Offence under GST involving fraudulent availment of Input Tax Credit - Pre-trial detention and personal liberty - Conditions for grant of bail

Bail under Section 439 CrPC - Offence under GST involving fraudulent availment of Input Tax Credit - Pre-trial detention and personal liberty - Conditions for grant of bail - Whether the applicant accused charged for offences under the CGST/SGST involving alleged fraudulent availment of Input Tax Credit is entitled to be released on regular bail - HELD THAT: - The Court considered settled principles governing bail, including that pre-trial detention is exceptional and liberty is the norm, and applied factors such as prima facie case, nature and gravity of offence, prescribed punishment, risk of absconding, likelihood of tampering with evidence, and the public interest. The evidence on record shows allegations that the applicant participated in a modus operandi for fraudulent availment/passing of ITC amounting to the stated sum and that voluminous documents have been seized; punishment for the alleged offences is imprisonment up to five years. The Court found that the case is documentary in nature, the applicant is a permanent resident with deep roots locally and the risk of fleeing is remote, the offence is triable by Magistrate, and denial of bail would amount to pre-trial punishment. The Court concluded that apprehensions about tampering or absconding could be addressed by imposing stringent conditions. Applying these considerations, the Court exercised its discretion under Section 439 CrPC to release the applicant on bail subject to specified conditions to safeguard investigation and trial. [Paras 9, 10]

Application allowed; applicant released on bail on furnishing bond and surety, subject to conditions including disclosure of residence, surrender of passport, availability for interrogation, restriction on leaving Gujarat, non-contact with witnesses, and compliance with the lower court's requirements.

Final Conclusion: The bail application is allowed; the applicant is released on bail subject to conditions imposed by the Court to secure attendance and protect the integrity of the investigation and trial.

Eligibility for deduction under section 80IA for infrastructure development by advertising companies - scope of "infrastructure facility" in the Explanation to subsection (4) of section 80IA - classification of hoardings as temporary structures versus plant and machinery for depreciation - allowability of 100% depreciation for assets put to use for less than 180 days - threshold limit for Revenue appeals under CBDT circular - exercise of judicial discretion to condone delay in filing appeals

Eligibility for deduction under section 80IA for infrastructure development by advertising companies - scope of "infrastructure facility" in the Explanation to subsection (4) of section 80IA - Whether the assessee (an advertising company erecting bus shelters, foot over bridges and similar structures) was entitled to deduction under section 80IA of the Income Tax Act. - HELD THAT: - The Court treated substantial questions of law nos.1 to 4 together and accepted the concurrent findings of the CIT(A) and the Tribunal that the assessee was engaged in infrastructure development by constructing foot over bridges and bus shelters, and that profits from advertisement on such structures fall within the expression "derived from infrastructure facility" as contemplated in the Explanation to subsection (4) of section 80IA. The Tribunal followed a prior Division Bench decision of this Court in Commissioner of Income Tax, Kolkata-IV v. Selvel Advertising Pvt. Ltd., which had upheld entitlement to the deduction in a similar factual matrix and has attained finality. On that basis the Court sustained the Tribunal's conclusion and answered the substantial questions against the Revenue.

Substantial questions of law nos.1 to 4 answered against the Revenue; deduction under section 80IA allowed for the assessment year(s) in question.

Allowability of 100% depreciation for assets put to use for less than 180 days - Whether 100% depreciation could be allowed on hoardings which were put to use for less than 180 days instead of 50% as per section 32(1). - HELD THAT: - The Court observed that in the assessee's own case for an earlier year the decision was rendered in favour of the assessee and that the Revenue has not pressed a contrary substantial question in the present proceedings. The Court treated that earlier acceptance by the Revenue as determinative and therefore upheld the treatment favourable to the assessee.

Substantial question no.5 decided against the Revenue; the assessee's depreciation claim sustained.

Classification of hoardings as temporary structures versus plant and machinery for depreciation - Whether the Tribunal was correct in allowing depreciation at 100% by treating hoardings as temporary structures instead of as plant and machinery attracting 15%. - HELD THAT: - The Court noted that the question was covered by the assessee's own subsequent decision in Principal Commissioner of Income Tax, Kolkata-IV vs. Vantage Advertising Pvt. Ltd., where the same substantial questions were decided against the Revenue. Following that binding outcome, the Court upheld the Tribunal's treatment in favour of the assessee for the assessment year under consideration.

Substantial question no.6 answered against the Revenue; depreciation treatment affirmed in favour of the assessee.

Threshold limit for Revenue appeals under CBDT circular - exercise of judicial discretion to condone delay in filing appeals - Whether the appeals for assessment years 2006-07, 2007-08 and 2008-09 were maintainable and whether the delay of 470 days in filing the appeal should be condoned. - HELD THAT: - The Court accepted the Revenue's concession or submission that for three of the four assessment years the tax effect was below the threshold limit prescribed by CBDT, rendering those appeals not maintainable; accordingly the appeals insofar as those years stood dismissed. As to delay, although the explanation by the Revenue for 470 days' delay was unsatisfactory, the Court exercised its discretion to condone the delay in order to decide the substantive appeal under section 260A, thereby permitting consideration of the remaining assessment year 2009-10.

Appeals for 2006-07, 2007-08 and 2008-09 dismissed as below threshold; delay in filing condoned to enable adjudication of the appeal for 2009-10.

Final Conclusion: The appeal by the Revenue fails. The Court dismissed the appeal insofar as assessment years 2006-07, 2007-08 and 2008-09 as below the CBDT threshold; for assessment year 2009-10 the Tribunal's findings were sustained and substantial questions of law were answered against the Revenue, the delay in filing the appeal having been condoned.

Exemption of income of a registered educational trust under section 11 - application of section 13(1)(c) - diversion or application of trust funds to a person referred to in section 13(3) - disallowance under section 40(a)(ia) for failure to deduct tax at source - levy of interest for default in furnishing return or payment under sections 234A and 234B

Application of section 13(1)(c) - diversion or application of trust funds to a person referred to in section 13(3) - exemption of income of a registered educational trust under section 11 - Addition of Rs. 72,45,000 as income of the Trust on account of advance to M/s. VUS Timbers treated as diversion in contravention of section 13(1)(c), and taxation of notional interest thereon. - HELD THAT: - The advance was made to a proprietary concern of the Managing Trustee's wife and the payments (dated 16.02.2012) preceded steps relied upon by the Trust to establish a medical college. Documents subsequently produced by the Trust show that approvals and applications post date the advance, undermining the Trust's explanation that the advance was for purchase of timber for construction. No timber was received and repayment by cheque of portions of the advance does not negate the earlier application of funds to a person specified in section 13(3). On these factual findings the Tribunal correctly held that the advance fell within the mischief of section 13(1)(c) and that notional interest was taxable; the findings are supported by the record and do not warrant interference. [Paras 7]

Confirmed the addition of the advance of Rs. 72,45,000 as income under section 13(1)(c) and taxation of notional interest; questions answered in favour of the Revenue.

Disallowance under section 40(a)(ia) for failure to deduct tax at source - Disallowance of Rs. 21,27,846 claimed as expenditure for payments to contractor Varghese Innocent on account of failure to deduct TDS under section 40(a)(ia). - HELD THAT: - It is admitted that no tax was deducted on the payments to Varghese Innocent and the assessee failed to prove that section 40(a)(ia) had no application. The Tribunal and the authorities correctly applied the statutory test and disallowed the expenditure. The factual and legal record does not disclose perversity or error warranting interference. [Paras 8]

Confirmed the disallowance of the payment of Rs. 21,27,846 under section 40(a)(ia); questions answered in favour of the Revenue.

Levy of interest for default in furnishing return or payment under sections 234A and 234B - Validity of levy of interest under sections 234A and 234B consequential to the assessments and additions upheld. - HELD THAT: - Given that the additions and disallowances which increased the tax liability were upheld, the Assessing Officer's exercise of discretion to levy interest under the statutory provisions was in accordance with law. There is no challenge to the legal principle that interest follows from the tax determined, and no basis for interference. [Paras 9]

Confirmed levy of interest under sections 234A and 234B; questions answered in favour of the Revenue.

Final Conclusion: All findings of the Tribunal are affirmed: the advance to the proprietary concern of the Managing Trustee's wife is liable to be treated as diversion under section 13(1)(c) and brought to tax (with notional interest); the expenditure to the contractor is disallowed for failure to deduct TDS under section 40(a)(ia); consequential interest under sections 234A and 234B is upheld. Appeal dismissed.

Revisional jurisdiction under section 263 - limitation under section 263(2) - intimation under section 143(1) - corpus donation / building fund as corpus - exemption under section 11(1)(d)

Revisional jurisdiction under section 263 - limitation under section 263(2) - intimation under section 143(1) - Whether the Commissioner's exercise of revisional jurisdiction under section 263 to set aside the assessment for AY 2010-11 was barred by limitation. - HELD THAT: - The Tribunal held that where revisional proceedings under section 263 relate to corpus donation (which was not subject-matter of reassessment proceedings under sections 147 read with 148), the period of limitation prescribed by section 263(2) must be reckoned from the date of intimation under section 143(1) and not from the date of any subsequent reassessment order. Applying that principle it found the Commissioner initiated revisionary proceedings after the period of limitation and therefore the exercise of jurisdiction was time barred and void. This Court examined the Tribunal's conclusion and found no infirmity in the legal approach adopted by the Tribunal or in its application to the facts of the case, and accepted the Tribunal's finding that the revisional order in Annexure B was barred by limitation. [Paras 9]

The revisional proceedings under section 263 were barred by limitation and the Tribunal rightly held the Commissioner's order to be a nullity.

Corpus donation / building fund as corpus - exemption under section 11(1)(d) - Whether the amounts collected as 'building fund' by the assessee constituted corpus donations eligible for exemption under section 11(1)(d). - HELD THAT: - On merits the Tribunal found the contributions to the building fund were voluntary, capital in nature and formed part of the corpus of the trust; donor communications and receipts indicated the donations were for infrastructure development and partook of corpus character. The Tribunal relied on precedents and reasoning that 'corpus fund' denotes a permanent, capital fund and concluded that such voluntary contributions qualify for exclusion under section 11(1)(d). This Court reviewed the Tribunal's factual and legal conclusions, accepted the Tribunal's findings regarding the nature of the receipts as corpus donations and its conclusion that initiation of section 263 proceedings to disallow the claim was not in accordance with law. [Paras 9]

The building fund receipts were corpus donations entitled to exemption under section 11(1)(d), and the Commissioner's attempt to disallow them by invoking section 263 was not in accordance with law.

Final Conclusion: The High Court upheld the Tribunal's order: the Commissioner's revision under section 263 was time barred and, on the merits, the building fund receipts were corpus donations eligible for exemption; no substantial question of law arises in favour of the Revenue and the appeal is dismissed.

Reassessment under Section 148/147 of the Income Tax Act - reason to believe - change of opinion - tangible material - reopening of assessment

Reassessment under Section 148/147 of the Income Tax Act - reason to believe - change of opinion - tangible material - Validity of the notice under Section 148 reopening assessment for AY 2009-10 where reasons relied on records already considered in original scrutiny assessment. - HELD THAT: - The Court found that the reasons furnished for reopening began with "On verification of records..." and merely revisited the same statement of accounts and documents which had been placed before the Assessing Officer at the original scrutiny assessment under Section 143(3). The original assessment record shows the AO had applied his mind to the balance sheet, profit & loss accounts and other documents and had estimated businesswise profits after rejecting or accepting particulars. In absence of any new or independent material, the formation of a belief that income had escaped assessment amounted to a mere change of opinion. Applying the legal principle that reassessment under Section 147/148 requires "tangible material" and a live link between reasons and formation of belief (as explained in Kelvinator of India Ltd.), the Court concluded the reopening was impermissible where no new material was produced to justify revisiting the earlier adjudication. [Paras 7, 9, 10, 12]

The notice dated 16th September, 2013 under Section 148 reopening assessment for AY 2009-10 is quashed and the writ petition is allowed; no order as to costs.

Final Conclusion: The High Court quashed the reassessment notice for AY 2009-10 on the ground that reassessment was founded on a mere change of opinion without any new tangible material, and allowed the writ petition, recording no order as to costs.

Additional depreciation - use of motor buses in a business of running them on hire - user test for entitlement to higher depreciation - inclusion of receipts in business income not determinative - charitable trust running an educational institution

Additional depreciation - use of motor buses in a business of running them on hire - inclusion of receipts in business income not determinative - Whether the assessee (a trust running a residential school) was entitled to additional depreciation in respect of school buses provided for students and staff. - HELD THAT: - The Court accepted the Tribunal's finding that the assessee is a trust registered under Section 12A carrying on charitable educational activity and is not in the business of running buses on hire. The determinative test for claiming the higher rate of depreciation is the user of the vehicles in the assessee's business of running them on hire; mere inclusion of receipts from transport in the head "business income" is not by itself decisive. The Supreme Court's decision in Gupta Global Exim P. Ltd. was applied: entitlement to the higher rate depends on whether the vehicles were used in a business of running them on hire. The Tribunal's conclusion that the buses were not used in such a business (and that amounts received could be reimbursements rather than consideration for a hiring business) was upheld. Consequently the claim for additional depreciation was properly rejected. [Paras 5]

Tribunal's and lower authorities' rejection of the claim for additional depreciation affirmed; appeal dismissed.

Final Conclusion: The appeal is dismissed: the higher rate of depreciation was not available because the vehicles were not found to be used in a business of running them on hire, and inclusion of the transport receipts in business income did not convert the use into a hiring business.

Tax deduction at source under Section 194C and proviso to Section 194C(3) - Disallowance under Section 40(a)(ia) for failure to deduct TDS - Obligation to furnish particulars under Section 194C(7) - Characterisation of discounts vis-a -vis rent and applicability of Section 194I - Beneficial ownership and entitlement to depreciation under Section 32

Tax deduction at source under Section 194C and proviso to Section 194C(3) - Obligation to furnish particulars under Section 194C(7) - Disallowance under Section 40(a)(ia) for failure to deduct TDS - Whether payments to transporters attracted disallowance under Section 40(a)(ia) for non-deduction of tax under Section 194C where PAN details were obtained and furnished in TDS returns but prescribed authority for filing particulars under Section 194C(7) was not shown to exist - HELD THAT: - The Tribunal's deletion of the disallowance was upheld. The Court applied the established principle that once the conditions of the proviso to Section 194C(3) are satisfied (production of the prescribed declaration and compliance with the ownership condition regarding goods carriages), the liability to deduct tax under Section 194C ceases and Section 40(a)(ia) cannot be invoked. The requirement to furnish particulars to the prescribed income-tax authority under Section 194C(7) is a later procedural obligation; non-compliance with that procedural requirement does not convert a non-deduction into an occasion for disallowance under Section 40(a)(ia). In the present case the assessee had obtained PAN details of transporters and furnished them with the TDS return; the Tribunal correctly found no prescribed authority had been nominated so as to attribute fault to the assessee, and therefore the disallowance could not be sustained. [Paras 4, 10, 11]

Disallowance under Section 40(a)(ia) for alleged failure to deduct TDS under Section 194C deleted; Tribunal's view upheld.

Characterisation of discounts vis-a -vis rent and applicability of Section 194I - Substance of business transaction and assesssee's business decision - Whether additional discounts given to customers as reimbursement/adjustment for godown rent amounted to rent attractable to TDS under Section 194I and therefore liable for disallowance - HELD THAT: - The Tribunal's deletion of the addition was maintained. The Court accepted the Tribunal's conclusions that the Assessing Officer could not substitute his view for the assessee's commercial decision as to how discounts were structured; the assessee had claimed the amounts as discounts in the course of business and they could not be equated with rent so as to attract the provisions of Section 194I. The CIT(Appeals) had directed verification but ultimately deleted the disallowance; the High Court found no reason to interfere with the Tribunal's reasoning that the discounts were not taxable as rent requiring TDS under Section 194I. [Paras 5, 6, 8, 9]

Addition on account of additional discount treated as not constituting rent for TDS under Section 194I; disallowance deleted.

Beneficial ownership and entitlement to depreciation under Section 32 - Dominion and use for business as test for 'owned' asset - Whether depreciation and related car expenses could be disallowed where cars were registered in the names of directors but funds for purchase were provided by the company and cars were used for company business - HELD THAT: - The Tribunal's acceptance of the assessee's claim to depreciation was affirmed. Applying the principle that entitlement to depreciation hinges on who for the time being vests with dominion and who is entitled to use the asset for business purposes, the Court accepted that where the company supplied funds for acquisition and the vehicles were used for business, the company is the beneficial owner entitled to claim depreciation even if legal title stood in directors' names. The Tribunal relied on precedents and found the assessee had demonstrated beneficial ownership and use (including the concept that 'use' may mean kept ready for use), warranting allowance of depreciation and related expenses. [Paras 11, 15, 16, 17]

Depreciation and car-related expenses allowed notwithstanding registration in directors' names; assessee held beneficial owner entitled to depreciation.

Final Conclusion: All substantial questions of law raised by the Revenue were answered against it; the Tribunal's deletions of the disallowances and allowance of depreciation were held to be legally sustainable and the appeal is dismissed.

Registration under section 12AA - genuineness of activities - onus of proof on applicant for registration - remand for fresh consideration

Registration under section 12AA - genuineness of activities - Validity of the order rejecting registration under section 12AA for failure to produce books, bank statements and vouchers and for alleged absence of charitable activities - HELD THAT: - The Tribunal found that the assessee did not participate in the proceedings before the CIT(Exemption) and that the impugned order does not record or address the stated Aims and Objects or the supporting documents which the assessee contended were filed. The CIT(Exemption) recorded that books of account, bank statements and vouchers were not produced and that genuineness of activities could not be verified; however, the Tribunal observed patent contradictions in the factual matrix and absence of specific discussion on relevant facts in the order. In view of these deficiencies, the Tribunal held that the rejection could not be sustained and that the matter requires fresh consideration with all relevant materials brought on record so that the decision to grant or deny registration can be made on settled legal and factual footing. [Paras 5]

Impugned order set aside and the matter remanded to the CIT(Exemption) for fresh consideration after bringing on record the Aims and Objects and all available supporting documents so that genuineness of activities may be adjudicated.

Onus of proof on applicant for registration - remand for fresh consideration - Obligations of the assessee and extent of inquiry on remand - HELD THAT: - The Tribunal emphasised that the onus to produce documents and to participate in proceedings lies on the applicant seeking registration; inability to engage counsel or non-participation does not absolve the assessee of this duty. The Tribunal directed the assessee to ensure full and proper participation and to place all necessary documents before the adjudicating authority. Simultaneously, the Tribunal made clear that on remand the CIT(Exemption) is at liberty to pass an order on the basis of material available on record if the assessee fails to comply. The remand is therefore for verification and adjudication of the substantive claim in light of the documents and aims/objects to be placed on record. [Paras 5, 6]

Assessee directed to participate and produce records; remand made for fresh adjudication and verification, with liberty to the CIT(Exemption) to decide on available material if non-compliance continues.

Final Conclusion: The appeal is allowed for statistical purposes; the order rejecting registration under section 12AA is set aside and remitted to the CIT(Exemption) for fresh consideration after the assessee places its Aims and Objects and supporting records on file, with directions that the assessee must participate and that the authority may decide on the material available if compliance is not made.

Addition under section 68 - cash deposits not recorded in cash book - bank statement as evidence of deposit - ascertained liability versus contingent liability - allowability of provision for interest - precedential value of tribunal order in assessee's own case

Addition under section 68 - cash deposits not recorded in cash book - bank statement as evidence of deposit - Whether cash deposits totalling Rs. 15,81,100/- which were not recorded in the assessee's cash book but appeared in bank statements could be added as unexplained credit under section 68. - HELD THAT: - The Tribunal noted that a survey led to impounding of loose sheets showing withdrawals and bank deposits and the AO formed a chart asserting that Rs. 15,81,100/- of deposits were not reflected in the cash book and therefore represent unexplained credit. The assessee explained that as a government contractor managers at various project sites made cash withdrawals and subsequent deposits of surplus cash in the assessee's bank account; the bank statements reflecting those deposits were on record. The Tribunal observed that mere omission from the cash book due to oversight of the accountant, when the deposits are reflected in the bank statement and are part of the withdrawn/deposited cash of the business, cannot be a sole ground to treat the amounts as unexplained credits. In exercise of its discretion and having regard to the parties' contentions and the approach of the AO in accepting a normative profit percentage, the Tribunal restricted the addition and directed the AO to treat only 1% of the impugned deposits as taxable, deleting the balance.

Addition under section 68 confirmed by authorities is partly deleted; addition restricted to 1% of the impugned deposits and the balance deleted.

Ascertained liability versus contingent liability - allowability of provision for interest - precedential value of tribunal order in assessee's own case - Whether provision for interest payable to contractees is an allowable expenditure or a contingent liability requiring disallowance. - HELD THAT: - The Tribunal observed that identical issue had been decided in the assessee's own case for Assessment Year 2013-14 by a coordinate Bench, which held that where the assessee follows mercantile system and liability for interest is ascertained as per terms of contract/agreements, such provision is allowable and is not a contingent liability. The Revenue did not point to any change in facts or law warranting departure from that decision. Following the precedent in the assessee's own case, the Tribunal held that the disallowance was not justified and directed deletion of the addition.

Addition made by the AO in respect of interest payable to contractees is deleted.

Final Conclusion: Appeal partly allowed: addition of Rs. 15,81,100/- treated partly, restricted to 1% (balance deleted); addition relating to provision for interest payable to contractees deleted following the assessee's earlier favourable Tribunal decision.

Revision under section 263 of the Income-tax Act - Erroneous and prejudicial to the interests of Revenue - Scope to interfere with assessment where assessing officer has taken a possible view - Requirement of independent examination of evidence before invoking revision jurisdiction - Borrowed satisfaction and audit objection

Revision under section 263 of the Income-tax Act - Requirement of independent examination of evidence before invoking revision jurisdiction - Scope to interfere with assessment where assessing officer has taken a possible view - Reliance on investigation report versus evaluation of documentary evidence - Whether the Principal Commissioner of Income Tax was justified in invoking revision jurisdiction under section 263 to set aside the assessment for treating losses on specified scrips as bogus - HELD THAT: - The Tribunal found on the record that the assessee had furnished comprehensive details of share transactions, contract notes, demat statements, bank statements and statements recorded from the partner during assessment proceedings, and that the Assessing Officer had examined those materials and disallowed losses only in respect of three scrips after detailed enquiry. The PCIT, however, set aside the assessment in respect of four additional scrips solely by placing reliance on the DIT (Investigation), Kolkata report without examining or disputing the documentary evidence produced by the assessee. Where the AO has examined the material and taken a possible view, section 263 cannot be invoked merely because the PCIT entertains a different view; the revisional power cannot be used to substitute the PCIT's opinion for that of the AO unless the order is shown to be erroneous and prejudicial on the basis of independent analysis. The PCIT did not demonstrate that the documents were false or that the AO failed to make requisite enquiries; instead the PCIT relied on the investigation report without applying independent scrutiny to the evidence before him. Applying these principles, the Tribunal concluded that the PCIT's exercise of jurisdiction was unjustified and that the revision order was to be quashed. [Paras 3]

Revision order under section 263 quashed insofar as it seeks to treat the losses on the four scrips as bogus; the assessment order cannot be set aside on the basis relied upon by the PCIT.

Borrowed satisfaction and audit objection - Requirement of independent application of mind by revisional authority - Whether the revision by the PCIT was vitiated as a mere exercise of borrowed satisfaction based on an audit objection - HELD THAT: - The Tribunal examined the audit objection and the sequence of events. Although the revision proceedings were initiated after an audit objection was on record, the PCIT perused the records and issued a show-cause and order after examining the matter; the Tribunal found that the PCIT had applied his mind and had not acted merely on the audit party's objection. Accordingly, the contention that the revision was wholly a case of borrowed satisfaction was rejected. [Paras 3]

The plea of borrowed satisfaction was dismissed; the PCIT had independently applied his mind in initiating revision proceedings.

Final Conclusion: The revisional order passed by the Principal Commissioner of Income Tax under section 263 was quashed because the PCIT failed to independently examine or displace the documentary evidence and the possible view taken by the Assessing Officer; the assessee's appeal is allowed.

Impounding and release of passport - Applicability of the Passports Act to foreign nationals and travel documents issued by foreign states - Right to hearing before impounding passport / civil consequences of impoundment - Effect of adjudication not attaining finality on release of passport - Deposit as condition for release of passport pending challenge to adjudication under the Customs law

Applicability of the Passports Act to foreign nationals and travel documents issued by foreign states - Right to hearing before impounding passport - Whether the Passports Act, 1967 and the principles in Suresh Nanda apply to a foreign national and permit judicial intervention for release of an impounded passport. - HELD THAT: - The Court held that the Passports Act, 1967 extends to regulation of departure from India of "other persons" and, by virtue of the Explanation to Section 3, includes passports and travel documents issued by foreign governments which satisfy the conditions under the Passport (Entry into India) Act, 1920. Accordingly, the legal principles requiring an opportunity of hearing before impoundment and recognising the civil consequences of impounding a passport (as stated in Suresh Nanda) are applicable to the petitioner, who is a foreign national. The Court rejected the submission that the Passports Act is limited to Indian citizens, noting the preamble and the statutory explanation which bring passports/travel documents issued by foreign states within the statute's regulatory domain. The consequence is that the CMM's blanket refusal to release the passport could be subject to judicial review in light of the statutory scheme and the petitioner's entitlement to protections under the Act.

The court held that the Passports Act applies to the petitioner and that principles governing impoundment and release of passports are available to a foreign national.

Effect of adjudication not attaining finality on release of passport - Deposit as condition for release of passport pending challenge to adjudication under the Customs law - Whether the petitioner's passport should be released and on what conditions, having regard to the adjudication order, the pendency of any appeal, and the Department's apprehension of flight. - HELD THAT: - The Court examined the factual matrix: adjudication proceedings had culminated in an order of confiscation and imposition of penalty but, in law, the adjudication had not attained finality because the period for filing an appeal under the Customs Act had not yet expired. The Court distinguished precedents relied upon by the respondent where adjudication had attained finality or criminal investigation was pending and might be hampered by travel. Taking into account that the petitioner was prepared to deposit the penalty and that coercive recovery is circumscribed during pendency of an appeal where prescribed pre-deposit arrangements are complied with, the Court exercised its supervisory jurisdiction to set aside the CMM order to the extent it refused release. As a condition for release, and in the exercise of its discretion to balance departmental interests and the petitioner's rights, the Court directed release of the passport by the seizing authority only upon deposit of the total penalty imposed by the adjudicating authority within a stipulated timeframe.

The petition was allowed insofar as the CMM's refusal to release the passport was set aside; the passport was permitted to be released to the petitioner by the seizing authority only upon deposit of the total penalty imposed within three weeks.

Final Conclusion: The impugned order refusing release of the petitioner's passport was set aside. The passport is to be released by the seizing authority to the petitioner provided the total penalty imposed by the adjudicating authority is deposited within three weeks; other contentions and departmental rights remain preserved.

Refund of anti-dumping duty - scope of show cause notice - Section 9A sub-section (2) clause (b) of the Customs Tariff Act - refund provision for anti-dumping duty - time limit for claiming refund - requirement to challenge assessment of bill of entry for refund

Scope of show cause notice - The adjudicating authority exceeded the scope of the Show Cause Notice by rejecting the refund claim on grounds not charged in the SCN. - HELD THAT: - The adjudicating authority rejected the refund on the ground that the appellant had not challenged the assessment of the bill of entry, a ground which was not pleaded in the Show Cause Notice. The learned Commissioner (Appeals) likewise held the refund to be time-barred though the SCN did not charge delay. Orders which travel beyond the charges in the Show Cause Notice are not sustainable. Accordingly, the impugned findings based on grounds outside the SCN cannot stand.

The findings of the adjudicating authority and Commissioner (Appeals) premised on matters not charged in the Show Cause Notice are unsustainable.

Section 9A sub-section (2) clause (b) of the Customs Tariff Act - refund provision for anti-dumping duty - requirement to challenge assessment of bill of entry for refund - No requirement to challenge the assessment of the bill of entry to claim refund of differential anti-dumping duty when refund arises under Section 9A(2)(b). - HELD THAT: - Section 9A(2)(b) itself provides for refund in respect of anti-dumping duty. Where the reduction in ADD rate gives rise to a refund under that provision, there is no further statutory requirement to first challenge the assessment of the bill of entry. The Tribunal examined the provision and concluded that the refund claim arises directly under the refund provision and is not contingent upon separate challenge of the assessment.

The appellant need not challenge the assessment of the bill of entry to claim the refund under Section 9A(2)(b).

Time limit for claiming refund - refund of anti-dumping duty - The refund claim was not time-barred; no specific time-limit is prescribed in Section 9A(2)(b) and the claim was filed within a reasonable time after issuance of the Notification reducing the rate. - HELD THAT: - Notification No. 04/2016-Cus (ADD) reducing the ADD rate was issued on 29.01.2016 and the appellant filed the refund claim on 27.10.2016. Section 9A(2)(b) contains no express time-limit for claiming such refunds. Given that the refund could only be claimed after the notification was issued, and the claim was made within about one year thereafter, the Tribunal found the claim to have been filed within reasonable time and accordingly not time-barred. The fact that other ports had granted refund on identical facts reinforces this conclusion.

The refund claim is not time-barred and was wrongly held so by the Commissioner (Appeals).

Refund of anti-dumping duty - administrative remand for verification - The matter is remanded to the adjudicating authority for processing the refund claim and verifying documents in accordance with law and the Tribunal's observations. - HELD THAT: - Although the Tribunal set aside the impugned conclusions, it noted that the factual aspects of the refund claim were not examined by the lower authorities. The appropriate course is to remit the matter to the adjudicating authority to process the refund claim afresh, verify the relevant documents and records, and pass an order in accordance with law while keeping in view the Tribunal's findings that the refund provision applies and that the claim is not time-barred.

Appeal allowed by way of remand to the adjudicating authority to process and verify the refund claim in accordance with law and the Tribunal's observations.

Final Conclusion: The appeal is allowed in part: the orders of the adjudicating authority and Commissioner (Appeals) are set aside to the extent they relied upon grounds outside the Show Cause Notice and held the claim time-barred; the Tribunal holds that no challenge to the bill of entry assessment is required to claim refund under Section 9A(2)(b) and that the claim is not time-barred; the matter is remanded to the adjudicating authority to process the refund claim and verify the documents in accordance with law and the observations made herein.

Summary order. Notice issued returnable on 01.12.2021; service permitted additionally by speed post and e-mode.

Duty to ensure authorised employee approval under Regulation 10(b) of CBLR, 2018 - obligation to advise client and report non-compliance under Regulation 10(d) of CBLR, 2018 - due diligence in ascertaining correctness of information imparted to a client under Regulation 10(e) of CBLR, 2018 - verification of KYC, IEC and GSTIN and identity of client under Regulation 10(n) of CBLR, 2018 - provisional assessment by the proper officer and its binding character - forfeiture of security deposit under Regulation 14 of CBLR, 2018 - imposition of penalty under Regulation 18 of CBLR, 2018

Duty to ensure authorised employee approval under Regulation 10(b) of CBLR, 2018 - verification of KYC, IEC and GSTIN and identity of client under Regulation 10(n) of CBLR, 2018 - obligation to advise client and report non-compliance under Regulation 10(d) of CBLR, 2018 - due diligence in ascertaining correctness of information imparted to a client under Regulation 10(e) of CBLR, 2018 - provisional assessment by the proper officer and its binding character - Whether the Customs Broker violated Regulations 10(b), 10(d), 10(e) and 10(n) of CBLR, 2018 - HELD THAT: - The Tribunal examined evidence and the findings of the inquiry officer in light of the provisional assessment that had been made by the proper officer. On Regulation 10(b) the Tribunal found that the material did not establish that the person who facilitated the export (Shri Babul Dey) was functioning as an unauthorised representative of the broker; the balance of evidence supported the conclusion that the broker had not clearly employed him in a manner requiring prior approval. Regarding Regulation 10(d), there was no record evidence of advice withheld or of active collusion by the broker; provisional assessment and subsequent DRI conclusions do not of themselves establish failure to advise or report by the broker. On Regulation 10(e) the Tribunal held that the obligation is to exercise due diligence in information given to the client; there was no allegation or evidence that the broker imparted incorrect information to the exporter, and the DRI's valuation conclusion against the exporter did not demonstrate a breach of this duty by the broker. Concerning Regulation 10(n), the identity and functioning of the exporter were not shown to be doubtful and receipt/verification of KYC was not legally shown to be deficient merely because of differing accounts about how documents were handed over; the requirement is verification of identity, which the record did not disprove. The Tribunal also noted the legal position that a provisional assessment by the proper officer retains validity and cannot be unilaterally re interpreted by DRI to found automatic broker culpability. Applying these principles to the facts, the Tribunal set aside the impugned findings of violation of Regulations 10(b), 10(d), 10(e) and 10(n). [Paras 12, 13, 14, 15, 16]

Findings that the Customs Broker violated Regulations 10(b), 10(d), 10(e) and 10(n) are set aside; the broker did not commit those violations.

Forfeiture of security deposit under Regulation 14 of CBLR, 2018 - imposition of penalty under Regulation 18 of CBLR, 2018 - licence cancellation and restoration - Whether the penalty, forfeiture of security deposit and failure to cancel the licence could be sustained consequent to the alleged violations - HELD THAT: - The Tribunal treated the consequential orders as dependent on the primary finding of regulatory violations. Having held that the broker did not violate Regulations 10(b), 10(d), 10(e) and 10(n), the Tribunal concluded that the imposition of penalty under Regulation 18 and forfeiture of the entire security under Regulation 14 could not be sustained. The Tribunal therefore answered the related questions on penalty, forfeiture and licence cancellation in the negative and set aside the impugned orders imposing those consequences. The earlier corrigendum restoring licence (which had been the subject of High Court interference) was not material to the Tribunal's primary conclusion on violations and consequences. [Paras 16, 17, 18]

Penalty and forfeiture ordered in the impugned order cannot be sustained; Revenue's appeal rejected and Customs Broker's appeal allowed with consequential relief.

Final Conclusion: The Tribunal set aside the impugned findings of violation of Regulations 10(b), 10(d), 10(e) and 10(n) of CBLR, 2018 and, as a consequence, quashed the penalty and forfeiture imposed; Revenue's appeal is rejected and the Customs Broker's appeal is allowed.

Refund of SAD under Notification No.102/2007 - condition 2(b) - requirement of invoice indicating non-admissibility of credit - admissibility of computer-generated invoices and statutory auditor's certificate as evidence - rejection of appeal for non-submission of additional submissions

Rejection of appeal for non-submission of additional submissions - procedural compliance with post-hearing filings - Additional written submissions filed after personal hearing were on record and Commissioner (Appeals) erred in treating them as not submitted. - HELD THAT: - The record contains Annexure P-3 bearing departmental receipt dated 12 February 2020, which shows that the appellant's additional written submissions were received after the personal hearing held on 28 January 2020. The Tribunal found this contemporaneous receipt sufficient to establish that the submissions were filed and considered part of the appeal record. Therefore the Commissioner (Appeals)'s conclusion that the appellant failed to submit additional submissions is incorrect and cannot sustain rejection of the refund claim on that ground. [Paras 6]

Ground of rejection based on non-submission of additional submissions is unsustainable and set aside.

Condition 2(b) - requirement of invoice indicating non-admissibility of credit - admissibility of computer-generated invoices and statutory auditor's certificate as evidence - refund of SAD under Notification No.102/2007 - Invoices, though not physically stamped with the prescribed remark, and certificates of the statutory auditor sufficiently satisfy condition 2(b) of Notification No.102/2007 so as to entitle the appellant to refund of SAD subject to correct quantum. - HELD THAT: - Condition 2(b) requires production of invoices or sale documents indicating non-admissibility of credit of additional duty of customs. The department did not dispute production of the invoices; their objection was limited to absence of a physical stamp. The Tribunal observed the invoices were computer-generated and that the statutory auditor issued certificates certifying that the 4% burden was not passed to buyers and that the refund amount was shown in the books as liable to be refunded. In absence of any material on record by the department rebutting these certificates or the invoices, the auditor's certificate and the computer-generated invoices were held to be admissible evidence satisfying the notification's requirement. The department itself accepted that the correct refundable amount is less than claimed, and the appellant conceded entitlement to refund of the lesser amount. [Paras 6, 7]

Ground of rejection based on absence of stamped invoices is not sustainable; invoices and auditor's certificates satisfy Notification No.102/2007 for purposes of refund, subject to correct quantification.

Final Conclusion: The order of Commissioner (Appeals) is set aside. The appellant is entitled to the refund of SAD, quantified by the Tribunal as Rs. 1,58,685, and the appeal is disposed accordingly.

Maintainability of appeals under Section 10F of the Companies Act and Section 434 of the Companies Act, 2013 - execution of Company Law Board orders under Section 634A and the CLB's power to execute/vest property - scope and non-absolute nature of protection under Section 22(1) of the SICA, 1985 - doctrine of functus officio in relation to execution and modification of decrees - application (or non-application) of Order XXI CPC to execution by the Company Law Board - proportionality and vesting of security property in execution of an exit scheme

Maintainability of appeals under Section 10F of the Companies Act and Section 434 of the Companies Act, 2013 - Appeals filed under Section 10F of the Companies Act, 1956 against CLB orders dated prior to 01/06/2016 are maintainable before the High Court and are not to be transferred to NCLT/NCLAT under Section 434(1)(c). - HELD THAT: - The Court held that appeals filed within the limitation period under Section 10F of the 1956 Act relating to CLB orders made before 01/06/2016 fall under Section 434(1)(b) of the 2013 Act and remain within the jurisdiction of the High Court. Section 434(1)(b) operates as a saving/sunset provision for appeals against CLB decisions made before transfer to NCLT; such appeals must be filed in the High Court and cannot be treated as proceedings to be transferred under Section 434(1)(c). The Court relied on the scheme of the 2013 Act and precedent to conclude that the High Court is the appropriate appellate forum for the subject appeals.

Appeals are maintainable before the High Court; plea for transfer to Tribunal under Section 434(1)(c) rejected.

Scope and non-absolute nature of protection under Section 22(1) of the SICA, 1985 - Section 22(1) SICA does not afford blanket immunity from execution; the protection may be refused where its invocation would be an abuse or would torpedo judicial orders. - HELD THAT: - The Court affirmed established authorities that immunity under Section 22(1) is not absolute and must be exercised judicially. Applying those principles to the facts, the Court found Vasantha Mills Limited's applications under Section 22(1) to stay execution were filed after arguments were reserved, were belated and appeared mala fide or an abuse of process; therefore the CLB properly dismissed those applications and proceeded with execution.

CLB's rejection of stay under Section 22(1) SICA was upheld; stay plea dismissed as meritless and abusive.

Execution of Company Law Board orders under Section 634A and the CLB's power to execute/vest property - CLB possessed power under Section 634A to execute its prior orders including directing conveyance and vesting of VML land to decree-holders as part of enforcement of the exit scheme. - HELD THAT: - The Court examined the CLB's original order, its modification and the High Court's appellate clarification, and concluded that the execution order of 31/12/2015 gives effect to the exit scheme as clarified by the High Court. The CLB's power under Section 634A to execute its orders was held competent; the execution did not add or subtract relief in a manner that altered the spirit of the decree but enforced the composite scheme including conveyance in default of repayment.

CLB had jurisdiction and authority to execute and vest the specified properties pursuant to its earlier order and the High Court's clarification; execution order sustained.

Doctrine of functus officio in relation to execution and modification of decrees - The CLB was not functus officio in the circumstances: execution and clarification consistent with the appellate order did not amount to improper modification of the decree by the original tribunal. - HELD THAT: - The Court distinguished authorities cited by appellants where a court improperly varied its final decree post-disposal. Here, the CLB's original order had been modified/clarified on appeal; the execution order gave effect to the High Court's clarification and appellate cure. Consequently, the CLB's execution action did not amount to an impermissible post-decree variation or a nullity under the functus officio doctrine.

Functus officio argument rejected; CLB's execution was lawful and not a nullity.

Application (or non-application) of Order XXI CPC to execution by the Company Law Board - CLB as master of its procedure under Companies Act and Regulations - Order XXI CPC does not bind the CLB when executing its orders; CLB executes under statutory power and its procedures and inherent/regulatory powers govern execution. - HELD THAT: - The Court held that CLB is a statutory creation with execution powers under Section 634A and is guided by the Companies Act and CLB Regulations (including Regulations 44 and 48). The Companies Act confers powers of a civil court for specified pre-trial matters but does not make Order XXI CPC automatically applicable to CLB execution; CLB may regulate its procedure and has inherent power to ensure effective execution.

Order XXI CPC is not applicable as a fetter on CLB's execution powers; CLB's execution under Companies Act and its regulations is valid.

Proportionality and vesting of security property in execution of an exit scheme - The proportionality challenge to conveyance of VML land (value exceeding money decree) fails where the conveyance was part of the agreed exit scheme accepted by parties and not challenged on those grounds earlier. - HELD THAT: - The Court observed that the exit scheme was a composite arrangement where land conveyance formed part of the quit-claim/exit consideration and not merely a simple money decree. Parties had accepted the linkage between investment, relinquishment of rights and specified land; appellants had not attempted repayment or sought extension earlier. Weighing present market value against original consideration was not an appropriate test of proportionality in this context and, having been accepted earlier, the proportionality objection was held untenable in execution proceedings.

Proportionality objection rejected; vesting/transfer as enforcement of the exit scheme sustained.

Final Conclusion: The High Court dismissed Company Appeals Nos.5 to 10 of 2016 as devoid of merits, holding the appeals maintainable before the High Court under Section 10F/Section 434(1)(b); upholding CLB's dismissal of SICA stay applications; finding CLB competent to execute and vest VML land under Section 634A in accordance with the exit scheme as clarified by the High Court; rejecting functus officio, nullity, Order XXI CPC and proportionality challenges; interim orders vacated and miscellaneous petitions closed.

Winding up for inability to pay debts - Deeming fiction created by Section 434 - Bona fide dispute defence in winding up petitions - Three pronged test in Mathusudan Gordhandas (good faith, likelihood of success, prima facie proof) - Scope of scrutiny of stamping and admissibility of documents at threshold of winding up - Enforceability of assigned debts and validity of endorsements - Public policy and illegality arising from lack of regulatory approval (DGCA) as a defence to recovery

Deeming fiction created by Section 434 - Winding up for inability to pay debts - Existence of debt and the effect of a demand notice under Section 434 in leading to a presumption of inability to pay for the purpose of a winding up petition. - HELD THAT: - The Court found that a demand under Section 434 had been made and neglected, thereby activating the deeming fiction of inability to pay. Once the deeming fiction operates, the existence of the debt is established for the limited purpose of considering issuance of a winding up notice or admission of a petition. That presumption shifts the onus to the debtor to show the debt is unenforceable or that there is a bona fide dispute. The Court applied the settled three pronged test derived from Mathusudan Gordhandas - whether the defence is in good faith and of substance, likely to succeed on a point of law, and supported by prima facie proof of facts - when considering whether to admit the petition. [Paras 8, 9, 11]

The deeming fiction under Section 434 is attracted and the existence of the debt is sufficiently established for admission of the winding up petition; the burden shifts to the respondent to satisfy the three pronged test to resist winding up.

Scope of scrutiny of stamping and admissibility of documents at threshold of winding up - Whether the Company Court must decide the question of stamping and admissibility of instruments at the stage of issuing a winding up notice or admitting a winding up petition. - HELD THAT: - The Court held that the scope of examination of such defences at the threshold is limited. It refrained from determining questions of adequacy of stamping or detailed admissibility of documents, observing that such issues pertain to the eventual proof and enforcement of the debt and are ordinarily to be examined by the Official Liquidator or in appropriate proceedings after admission. The Court relied on precedents where insufficiency of stamping or production of original documents were held not to be decisive at the winding up admission stage. [Paras 13, 14, 16]

The Court declined to decide stamping/admissibility issues at the admission stage and held they are to be examined later when the debt is proved or in proceedings before the Official Liquidator.

Enforceability of assigned debts and validity of endorsements - Bona fide dispute defence in winding up petitions - Whether the assignment/endorsement of the bills of exchange to the petitioner validly invested it with the right to recover and whether the respondent's challenge to the form of endorsements is a bona fide defence. - HELD THAT: - The Court examined the supplemental agreement which expressly enabled SR Technics to endorse bills of exchange to the petitioner and required execution of certificates of acceptance by the respondent in support of the deferred payment scheme. The respondent did not dispute execution of the certificates of acceptance. Given that the respondent had executed the certificates and availed the benefit of deferred payment terms, the Court found the respondent's challenge to the form of endorsements to be technical and not bona fide. The respondent's conduct in entering into and benefiting from the arrangement undermined its contention that endorsements were invalid. [Paras 17, 18]

The assignment/endorsements and certificates of acceptance support the petitioner's claim; the respondent's objection to the form of endorsements is not a bona fide defence and does not prevent admission of the petition.

Public policy and illegality arising from lack of regulatory approval (DGCA) as a defence to recovery - Whether absence of DGCA authorization for SR Technics during the relevant period and alleged illegality/public policy violation absolves the respondent of liability and bars winding up. - HELD THAT: - Although SR Technics lacked DGCA authorisation during the relevant period, the Court noted that the respondent continued to avail itself of SR Technics' services and did not terminate the contract under the contractual termination clause. Clause 14.4 of the agreement preserved obligations incurred prior to termination and permitted claims for breaches. The arbitral award recorded the respondent's awareness of SR Technics' lack of approval. On these facts the Court held that the respondent could not plead public policy or regulatory illegality to avoid liability where it elected to continue receiving and benefiting from the services. [Paras 19, 20, 21, 22]

Lack of DGCA authorization by SR Technics does not operate as a defence sufficient to defeat the winding up petition where the respondent continued to avail services and contractual clauses preserved pre termination obligations; the defence is not bona fide.

Final Conclusion: The Company Petition is allowed. Applying the deeming fiction of Section 434 and the three pronged test, the Court found the respondent's defences not bona fide or of substance and directed winding up of the respondent company; the Official Liquidator is directed to take over the respondent's assets.

Disqualification by operation of law - vacation of office of director - Section 164(2)(a) read with Section 167(1)(a) of the Companies Act, 2013 - deactivation of Director Identification Number (DIN) as consequential action - principles of natural justice - Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014

Disqualification by operation of law - vacation of office of director - Section 164(2)(a) read with Section 167(1)(a) of the Companies Act, 2013 - principles of natural justice - Disqualification of directors and vacation of their office on account of non-filing of financial statements/annual returns for a continuous period of three years and whether notice or adjudication is required prior to such disqualification. - HELD THAT: - The Court held that under Section 164(2)(a) read with Section 167(1)(a) the disqualification of a person who is or has been a director of a company which has not filed financial statements or annual returns for any continuous period of three financial years, and consequent vacation of office, operate by virtue of the statute. Where the basic factual condition (non-filing for three continuous years) is admitted or established from Registrar/Ministry records or the company's e-portal, no separate adjudication or prior show-cause notice is required to attract the statutory consequences. The Court observed that certain earlier decisions (including a Division Bench view that some minimal notice may be required) contained internally inconsistent passages, but as the facts in these petitions admit non-filing, the question of application of principles of natural justice was not further examined and principles of natural justice were held not to impede operation of the statutory disqualification in the facts of these cases. The statutory scheme (including Sections 92, 137, 154-159, 167 and related rules) permits ascertainment of non-filing from records maintained by Registrar/Central Government and the disqualification consequences follow automatically.

Where non-filing for three continuous years is admitted or established from official records, the directors stand disqualified and their offices vacate by operation of law under Section 164(2)(a) read with Section 167(1)(a); in those circumstances no prior adjudication or notice is required.

Deactivation of Director Identification Number (DIN) as consequential action - Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014 - Section 167(1) proviso (effect on offices held in other companies) - Whether deactivation of the DIN of a disqualified director is sustainable in law as a consequential measure and whether specific Rule 11 grounds are a precondition for such deactivation. - HELD THAT: - The Court concluded that deactivation of DIN consequent to statutory disqualification is a natural and logical corollary of the director's disqualification because the purpose of allotting a DIN (to enable functioning as a director) ceases while the individual remains disqualified, and deactivation prevents misuse of the DIN and electronic filings by a person not authorised to act as director. Although Rule 11 enumerates distinct grounds for cancellation/deactivation, those grounds are independent eventualities; deactivation consequent to statutory disqualification is not an independent ground but a consequential step flowing from the operation of Sections 164 and 167. The Court held that belated filing and restoration mechanisms under the Act and Rules (including Form DIR-10, DIR-3-KYC and fees for belated filing) allow re-activation where disqualification is removed or compliance is completed. Noting conflicting High Court precedents that held deactivation impermissible absent specific rule-making, the Court respectfully disagreed with those views and upheld the concept of consequential deactivation as permissible and rational. However, recognising prior conflicting Division-Bench decisions of this Court and other High Courts, the Court referred the principal questions for consideration by a larger Bench.

Deactivation of DIN consequent to disqualification under Section 164(2)(a) read with Section 167(1)(a) was held to be a permissible consequential measure in law and not irrational; the matter is nonetheless referred to a larger Bench for authoritative determination on the broader legal question and on the correctness of earlier Division-Bench decisions.

Final Conclusion: The admitted non-filing of annual returns/financial statements for three continuous years results in statutory disqualification and vacation of office under Sections 164(2)(a) and 167(1)(a); deactivation of the disqualified director's DIN was held to be a permissible consequential step to prevent misuse and because the purpose of the DIN ceases during disqualification, but the broader questions concerning the permissibility of DIN deactivation and the correctness of conflicting Division-Bench precedents have been referred to a larger Bench for authoritative determination.

Validation of dispositions under Section 536(2) of the Companies Act, 1956 - voidness of dispositions after commencement of winding up - effect of winding up order and legal fiction in Section 441(2) - custody of assets and powers of the Official Liquidator under Section 456 - leave of the court required for sale of company property in winding up (Section 537(2)) - test of bona fides and interest of the company for validation - V.G.P. Finances eight-factor test for validation of transactions

Validation of dispositions under Section 536(2) of the Companies Act, 1956 - voidness of dispositions after commencement of winding up - effect of winding up order and legal fiction in Section 441(2) - leave of the court required for sale of company property in winding up (Section 537(2)) - custody of assets and powers of the Official Liquidator under Section 456 - Whether dispositions executed after the commencement of winding up (and in particular after the winding-up order) can be validated under Section 536(2) and the legal constraints on such validation once a winding-up order is made. - HELD THAT: - Section 536(2) provides that dispositions after the commencement of winding up shall be void unless the court otherwise orders. The winding up is deemed to commence at the time of presentation of the petition by virtue of Section 441(2); however the prescription that dispositions are void is not to be read as rendering them void ab initio so as to preclude judicial validation. Once a winding-up order is made, the assets are deemed in the custody of the court and the Official Liquidator must take custody under Section 456; the board of directors is superseded and loses authority to deal with company property. Read together with Section 537(2), which renders sales without the court's leave void, the statutory scheme establishes that after a winding-up order dispositions of the company's property will not be permitted to stand unless the court, in the exercise of its power, permits validation; validation after a winding-up order is therefore constrained and will not be appropriate where the disposition was not bona fide, was outside any authority, or otherwise prejudicial to the stakeholders. The Court therefore held that validation post-winding up is not barred in principle but is subject to the court's strict scrutiny in the light of the statutory custody of assets and requirement of leave. [Paras 5, 10, 14]

Validation after commencement of winding up is not precluded as a matter of form, but once a winding-up order is passed the court (bearing in mind Sections 456 and 537) will ordinarily not validate dispositions effected without its leave unless extraordinary circumstances, bona fides and the interest of the company justify it.

V.G.P. Finances eight-factor test for validation of transactions - test of bona fides and interest of the company for validation - Whether the particular Dispositions of the 65 hectares of land in this case should be validated under the principles and tests applied to requests for validation. - HELD THAT: - Applying the analytical questions distilled in V.G.P. Finances (including bona fides, whether in the ordinary course of business, commercial necessity, adequacy of consideration and whether the court would have permitted the transaction if asked at the time), the Court examined the factual matrix. The sale was of a very large extent of immovable property and not in the ordinary course of the Company's business; no independent valuation was obtained; the agreement was executed by a power of attorney rather than by directors authorised by the board resolution; the BIFR had by order prohibited sale of assets without its consent; key entries and endorsements show payments and endorsements spanning dates after commencement of liquidation; and the proceeds did not materially discharge admitted liabilities in liquidation. On these grounds the Dispositions failed the requisite threshold of bona fides and being in the interest of the company and, applying the test whether the court would have approved the transaction if permission had been sought when the transaction was entered into, the answer is that permission would not have been granted. [Paras 11, 12, 13, 15]

The Dispositions are not entitled to validation and are liable to be declared void.

Final Conclusion: C.A.No.150 of 2019 filed by the Official Liquidator is allowed and C.A.No.395 of 2019 filed for validation is dismissed; the Official Liquidator may file consequential applications; no order as to costs.

Scheme of Amalgamation - dispensing with meetings under Section 230(1) read with Section 232(1) of the Companies Act, 2013 - convening creditors' meeting via video conferencing/other audio visual means (VC/OAVM) - mode of voting by postal ballot, remote e voting and e voting during the meeting - appointment and powers of Chairperson under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - appointment of Scrutinizer and scrutiny of votes - service on Central Government and statutory authorities under Section 230(5) for representation

Dispensing with meetings under Section 230(1) read with Section 232(1) of the Companies Act, 2013 - Scheme of Amalgamation - Meetings of the equity shareholders of Applicant Companies Nos. 1 to 8 dispensed with - HELD THAT: - The Tribunal recorded that all equity shareholders of Applicant Company Nos. 1 to 8 had given their consent to the Scheme by way of affidavits annexed to the application (recorded in the application). Having perused the records and submissions, the Tribunal exercised its power under the Act to dispense with holding meetings of the equity shareholders of Applicant Companies Nos. 1 to 8 and ordered that such meetings be dispensed with in respect of the proposed Scheme of Amalgamation. [Paras 10, 13]

Meetings of the equity shareholders of Applicant Company Nos. 1 to 8 are dispensed with.

Dispensing with meetings under Section 230(1) read with Section 232(1) of the Companies Act, 2013 - Scheme of Amalgamation - Meetings of the creditors of Applicant Company Nos. 1 to 7 dispensed with - HELD THAT: - The Tribunal recorded that the creditors of Applicant Company Nos. 1 to 7 had given their consent to the Scheme by affidavits annexed to the application. On perusal of the records and submissions, the Tribunal found it appropriate to exercise its power to dispense with the convening of meetings of those classes of creditors and ordered that the meetings of creditors of Applicant Company Nos. 1 to 7 be dispensed with under the statutory provisions invoked. [Paras 11, 13]

Meetings of the creditors of Applicant Company Nos. 1 to 7 are dispensed with.

Convening creditors' meeting via video conferencing/other audio visual means (VC/OAVM) - mode of voting by postal ballot, remote e voting and e voting during the meeting - Separate meeting of secured and unsecured creditors of Applicant Company No. 8 (Transferee Company) to be convened by VC/OAVM with specified voting modes and notice/publication directions - HELD THAT: - The Tribunal directed that separate meetings of the creditors (secured and unsecured) of Applicant Company No. 8 be convened through VC/OAVM on the date and time fixed in the order for considering the Scheme. The Tribunal prescribed the mode of voting to include postal ballot, remote e voting and e voting during the meeting, and mandated that notices (with copies of the Scheme and explanatory statement) be issued to creditors at least 30 clear days before the meeting and that advertisement be published in the specified newspapers, in accordance with the statutory rules governing convening of meetings under the Companies Act and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. [Paras 12, 13]

A meeting of the creditors of Applicant Company No. 8 shall be convened by VC/OAVM on the date fixed, with voting by postal ballot, remote e voting and e voting during the meeting, and notices and advertisement to be issued as directed.

Appointment and powers of Chairperson under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Appointment of Chairperson for the creditors' meetings and conferral of powers, including procedural decisions and amendments at the meeting - HELD THAT: - The Tribunal appointed a Chairperson (and a named alternate) to preside over the creditors' meetings and authorised the Chairperson to exercise all powers under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 for conduct of the meetings, including deciding procedural questions, any adjournment, or any amendment to the Scheme proposed at the meeting. Remuneration for the Chairperson for conducting the meetings was fixed by the Tribunal. [Paras 13]

A Chairperson (with alternate) is appointed for the meetings with powers under the Rules and with the remuneration specified.

Appointment of Scrutinizer and scrutiny of votes - Appointment of a Scrutinizer for the meetings and directions for scrutiny and reporting of votes - HELD THAT: - The Tribunal appointed a Scrutinizer to scrutinise votes cast by all permitted modes, directed consolidation of votes, and required the Scrutinizer to prepare and submit reports along with related papers to the Chairperson within two days after conclusion of the meetings. The Chairperson was directed to declare results after receipt of the Scrutinizer's report. The Tribunal also fixed the consolidated remuneration for the Scrutinizer. [Paras 13]

A Scrutinizer is appointed to scrutinise votes, consolidate results and report to the Chairperson as directed.

Service on Central Government and statutory authorities under Section 230(5) for representation - Directions for service of notice and accompanying documents on statutory authorities under Section 230(5) and procedure for filing representations - HELD THAT: - The Tribunal directed that notices and all accompanying documents, including the Scheme and statement required under the Act, be served on the Central Government (through the Regional Director), Registrar of Companies, Official Liquidator and the Income Tax Department forthwith after notices are sent to creditors, by electronic mail or messenger or post, in the prescribed form, and that those authorities may file representations within 30 days of receipt of the notice. The Tribunal clarified that absence of representation within the period will be presumed as no objection. This direction follows the procedural requirement for statutory consultation under the Companies Act. [Paras 14]

Notices and documents to be served on the statutory authorities as directed and representations, if any, to be filed within 30 days.

Filing of affidavit proving service and report of Chairperson - Applicants and Chairperson to file affidavits proving service/compliance and to report meeting results within prescribed timelines - HELD THAT: - The Tribunal ordered the Applicants to file an affidavit proving service of notices and publication at least one week before the meetings. It further directed the Chairperson to file an affidavit at least seven days before the meeting certifying compliance with notice and advertisement directions and to report the results of the meeting to the Tribunal within 30 working days of conclusion, the report to be verified by affidavit as per the Rules. These directions implement the verification and reporting requirements under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. [Paras 13, 15]

Applicants and Chairperson to file affidavits proving compliance and the Chairperson to report meeting results within the prescribed time and manner.

Final Conclusion: The Tribunal allowed the first stage application under the Companies Act for the proposed Scheme of Amalgamation: it dispensed with holding shareholders' meetings for Applicant Companies 1-8 and creditors' meetings for Applicant Companies 1-7, directed convening of creditors' meetings for Applicant Company No. 8 by VC/OAVM with specified voting, appointed the Chairperson and Scrutinizer with stated powers and reporting obligations, ordered service on statutory authorities for representations, and required affidavits proving compliance; the Company Application CAA No. 23/ALD/2021 is disposed of accordingly.

Payment of liquidation costs by secured creditor on realisation of security interest - Regulation 21A presumption of security interest - Liquidator's fees entitlement on amounts realised or distributed - Regulation 4(2)(b) clarification on liquidator's fee - Distribution under Section 52/53 of the Code

Payment of liquidation costs by secured creditor on realisation of security interest - Regulation 21A presumption of security interest - Liquidator's fees entitlement on amounts realised or distributed - Regulation 4(2)(b) clarification on liquidator's fee - Whether a secured creditor realising its security interest is liable to pay liquidation costs, including the liquidator's fees. - HELD THAT: - On a conjoint reading of Regulation 21A(2) of the Liquidation Regulations and the Clarification in Regulation 4(2)(b), when a secured creditor proceeds to realise its security interest it is obliged to pay the liquidation costs, which include amounts payable under the distribution provisions and the liquidator's fees. Regulation 21A(2) requires the secured creditor to pay its share of amounts falling under the distribution provisions within prescribed periods and to remit any excess realised value as specified; the Regulation 4(2)(b) Clarification confirms that the liquidator is entitled to a fee corresponding to amounts realised by him or amounts distributed by him even where he has not realised those amounts. Applying these provisions, the secured creditor cannot avoid liability to the liquidator's fee merely because it realises the asset on its own. [Paras 11]

A secured creditor realising its security interest must pay the liquidation costs, including the liquidator's fees, as governed by Regulation 21A(2) and Regulation 4(2)(b).

Distribution under Section 52/53 of the Code - Compliance with Liquidation Regulations prior to realisation - Whether the Applicant may realise the mortgaged property and the court's disposition in respect of the Applicant's prayers for directions and to set aside the liquidator's communications. - HELD THAT: - The respondent recorded no objection to the application so long as the procedure in the Liquidation Regulations and the Code is followed. The Tribunal did not decide the merits of the Applicant's substantive prayers (such as setting aside the liquidator's communications or mandating handing over of physical possession) but disposed of the application by directing compliance with the relevant provisions. The Applicant undertook to pay liquidation costs and workmen's dues from prospective sale proceeds; however, the Tribunal required payment of the liquidator's fees and strict adherence to Regulations 2(ea), 2A, 21A, 37 and Sections 52/53, and left implementation to be carried out in accordance with law. [Paras 12, 13]

Application disposed of with directions to make payment of the liquidator's fees and to ensure compliance with Regulations 2(ea), 2A, 21A, 37 of the Liquidation Regulations and Sections 52/53 of the Code; substantive reliefs were not adjudicated on merits and must be effected only in accordance with those provisions.

Final Conclusion: The Tribunal held that a secured creditor realising its security interest is liable to pay liquidation costs, including the liquidator's fees, under Regulation 21A(2) read with Regulation 4(2)(b), and disposed of the application by directing payment of such fees and compliance with the specified Liquidation Regulations and Sections 52/53 of the Code; substantive prayers were not decided on merits.

Admissibility of section 9 petition after withdrawal pursuant to settlement - enforceability of settlement agreement and default thereunder as cause of action - pre-existing dispute - requirement and its application to suit filed prior to notice - abuse of process and mala fide invocation of litigation to frustrate insolvency proceedings - initiation of corporate insolvency resolution process on admitted operational debt - appointment of interim resolution professional and declaration of moratorium

Admissibility of section 9 petition after withdrawal pursuant to settlement - enforceability of settlement agreement and default thereunder as cause of action - Petition under section 9 is maintainable notwithstanding earlier withdrawal of a prior petition pursuant to a settlement, where the corporate debtor defaulted in performance of the settlement. - HELD THAT: - The Tribunal examined the settlement dated October 11, 2018 which recorded the parties' compromise and the withdrawal of the earlier petition by joint request. The settlement specifically provided that in the event of default the operational creditor would be entitled to issue a fresh notice and initiate fresh proceedings. The Adjudicating Authority held that failure by the corporate debtor to comply with the terms of the settlement revived the operational creditor's right to seek enforcement of the admitted debt and to file a fresh petition; the right to sue subsists on default of the settlement and the present petition is a continuation in that regard. The Tribunal therefore treated the admitted debt under the settlement as an operational debt and found the petition maintainable. [Paras 33, 34, 35]

Maintainable; petition under section 9 admitted as the corporate debtor defaulted on the settlement thereby giving rise to cause of action.

Pre-existing dispute - requirement and its application to suit filed prior to notice - abuse of process and mala fide invocation of litigation to frustrate insolvency proceedings - The plea of a pre-existing dispute based on the suit filed by the corporate debtor was rejected as not constituting a genuine pre-existing dispute capable of defeating the section 9 petition. - HELD THAT: - The Tribunal considered the timing and substance of the suit filed by the corporate debtor and the correspondence between the parties. It was satisfied on the material before it that the corporate debtor had admitted liability earlier, entered a settlement which it thereafter failed to perform, and that the subsequent civil suit was instituted with ulterior motive and mala fide intention to frustrate recovery. The Tribunal found the alleged letter purporting to repudiate the settlement to be unproved and possibly manufactured, and that the suit did not raise a plausible pre-existing dispute which would require rejection of the petition under the Mobilox test. Accordingly the defence was held not to bar admission. [Paras 33, 34, 35]

Rejected; the suit did not establish a genuine pre-existing dispute and was held to be an abuse of process.

Initiation of corporate insolvency resolution process on admitted operational debt - appointment of interim resolution professional and declaration of moratorium - On finding default of an admitted operational debt under the settlement, the Tribunal admitted the section 9 petition, directed initiation of corporate insolvency resolution process, declared moratorium and appointed an interim resolution professional. - HELD THAT: - Having concluded that default under the settlement constituted non-payment of an admitted operational debt and that no genuine dispute barred the claim, the Adjudicating Authority exercised its power under the IBC to admit the petition. Consequential directions were given: declaration of moratorium, requirement for public announcement and claims, and appointment of the named interim resolution professional subject to consent. The Tribunal also directed deposit by the operational creditor and set timelines for the IRP and CoC processes. [Paras 35, 36]

Petition admitted; CIRP ordered, moratorium declared and IRP appointed.

Final Conclusion: The section 9 petition was admitted: the Tribunal held that default of an admitted settlement obligation revived the creditor's right to initiate fresh insolvency proceedings, rejected the plea of a pre-existing dispute as mala fide, declared moratorium and appointed an interim resolution professional to commence the corporate insolvency resolution process.

Liquidation under section 33(2) of the Insolvency and Bankruptcy Code - appointment of liquidator under section 34(1) - Committee of Creditors' decision by requisite voting share - moratorium under section 33(5) - cessation of powers of board and vesting in liquidator - liquidator's obligations - public notice, filing with Registrar of Companies, preliminary report - fees and priority of distribution under section 53

Liquidation under section 33(2) of the Insolvency and Bankruptcy Code - Committee of Creditors' decision by requisite voting share - Liquidation of Chaudhary Ingots Pvt. Ltd. ordered in terms of section 33(2) of the Code. - HELD THAT: - The Resolution Professional, acting on the CoC's recommendation, intimated to the Adjudicating Authority that the Committee of Creditors, with 97.04% voting share, resolved to liquidate the Corporate Debtor after no resolution plan was received despite issuance of Form G. Section 33(2) requires the Adjudicating Authority to pass a liquidation order where the RP intimates a CoC decision to liquidate approved by not less than sixty-six percent of the voting share; the CoC's resolution therefore satisfies the statutory threshold and the Authority permitted liquidation. [Paras 5, 7]

Application under section 33(2) is allowed and the Corporate Debtor is ordered to be liquidated.

Appointment of liquidator under section 34(1) - moratorium under section 33(5) - cessation of powers of board and vesting in liquidator - liquidator's obligations - public notice, filing with Registrar of Companies, preliminary report - fees and priority of distribution under section 53 - Mr. Sandeep Goel appointed as liquidator subject to possession of a valid Authorisation for Assignment; consequential directions for commencement and conduct of liquidation issued. - HELD THAT: - Pursuant to section 34(1), the RP who has given written consent is appointed as liquidator, subject to his holding a valid Authorisation for Assignment issued by his IPA in terms of the Regulations. The order directs the liquidator to commence the liquidation process under Chapter III and applicable Liquidation Process Regulations, publish a public notice in the same newspapers, cause filing of the order with the Registrar of Companies, and prepare and submit a Preliminary Report within seventy-five days from the liquidation commencement date, with quarterly progress reports thereafter. The earlier moratorium under section 14 ceases and a fresh moratorium under section 33(5) commences; powers of the board and key managerial personnel cease and vest in the liquidator. The liquidator's remuneration and payment shall follow the Regulations and the priority prescribed in section 53. [Paras 7]

Mr. Sandeep Goel is appointed liquidator subject to AFA; directions issued for public notice, filing with RoC, submission of preliminary and quarterly reports, commencement of fresh moratorium, cessation of board powers, and payment of liquidator's fees as per Regulations and section 53.

Liquidation under section 33(2) of the Insolvency and Bankruptcy Code - liquidator's obligations - admission of claims - Application by a claimant seeking direction to the RP to admit its claim is dismissed as infructuous; claimant may file fresh claim with the liquidator. - HELD THAT: - Following the liquidation order, the Corporate Insolvency Resolution Process has given way to the liquidation process; consequently there is no purpose in directing the erstwhile RP to admit claims under CIRP procedures. The claimant is at liberty to present its claim to the liquidator for consideration in accordance with the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations. [Paras 9, 10, 11]

IA No. 308/2021 dismissed as infructuous; claimant may file its claim before the liquidator in the liquidation process.

Final Conclusion: The Tribunal allowed the application for liquidation under section 33(2) on the basis of the CoC's 97.04% resolution, appointed the consenting Resolution Professional as liquidator subject to regulatory authorisation, issued consequential directions for commencement and conduct of liquidation (including fresh moratorium, public notice, RoC filing, preliminary report and fee regime), and dismissed the pending claim-admission application as infructuous while permitting the claimant to file its claim with the liquidator.

Admission of Section 10 application - Existence of default - Completeness of application under Form 6 including books of accounts and special resolution - Appointment of Interim Resolution Professional - Moratorium under Section 14

Existence of default - Admission of Section 10 application - Application under Section 10 of the IBC, 2016 admitted on finding existence of default and corporate insolvency triggers - HELD THAT: - The Tribunal examined the corporate applicant's averments and provisional financial statements and found that the company was in financial distress since January 2019 and was unable to pay its debts. Applying the statutory requirement that the corporate debtor must have committed a default, the Bench concluded that the essential ingredient of default was present. Having found default and having regard to the available financial documents, the application was complete for admission under Section 10(4)(a) and was therefore admitted.

The Section 10 petition is admitted.

Completeness of application under Form 6 including books of accounts and special resolution - Application treated as complete by satisfying requirements of Form 6 and related filings and no disciplinary bar to admission - HELD THAT: - The Tribunal considered whether the statutory formalities required for admission under Section 10 were complied with: submission of books of accounts, placement of provisional financial statements, a special resolution passed by the shareholders authorising the filing, and consent of the proposed resolution professional. The Bench noted the special resolution dated 20.07.2019 and the consent form of the proposed IRP on record, and observed no disciplinary proceedings pending against the proposed IRP. On this basis the Tribunal held the application to be complete and eligible for admission.

The application is complete in the required statutory respects and admissible.

Appointment of Interim Resolution Professional - Interim Resolution Professional appointed and directed to perform duties under the Code; applicant directed to deposit funds to meet IRP's immediate costs - HELD THAT: - The corporate applicant had proposed the name of an empanelled insolvency professional and furnished his consent. The Tribunal appointed the proposed person as Interim Resolution Professional and directed him to take steps mandated by the Code, specifically under the provisions governing the IRP's duties. The Bench further directed the corporate applicant to deposit a sum to meet immediate IRP expenses, to be accounted for and treated as part of CIRP costs and reimbursable by the Committee of Creditors.

The proposed IRP is appointed and the corporate applicant must deposit funds for immediate IRP expenses.

Moratorium under Section 14 - Moratorium under Section 14 of the IBC, 2016 is imposed with its statutory consequences - HELD THAT: - Upon admission of the Section 10 petition, the Tribunal ordered the statutory moratorium to operate forthwith. The moratorium stays institution or continuation of suits or proceedings against the corporate debtor, restrains transfer or disposition of assets by the corporate debtor, prohibits actions to enforce security interests, and restricts recovery of property occupied by the corporate debtor, subject to statutory exceptions. The order clarified that the moratorium shall remain in effect until completion of the CIRP or until approval of a resolution plan or liquidation order as provided in the Code.

A moratorium in the terms of Section 14 is declared with immediate effect.

Final Conclusion: The Tribunal admitted the Section 10 application on the finding of default and completeness of statutory formalities, appointed the proposed Interim Resolution Professional with directions as to his duties and interim costs (to be deposited by the corporate applicant and treated as CIRP costs), and declared the statutory moratorium to operate forthwith.

Replacement of liquidator - maintenance of timelines - approval of scheme - maximisation of value - submission and withdrawal of schemes - dereliction of duty - disciplinary proceedings by IBBI

Replacement of liquidator - maintenance of timelines - approval of scheme - Prayer to replace the incumbent Liquidator was declined. - HELD THAT: - The Tribunal declined to entertain the application seeking replacement of the Liquidator at this stage on the ground that adjudicating the allegations would adversely affect timelines already fixed by the Tribunal for completion of the scheme process (IA/839/IB/2020). The bench observed that two competing schemes and related proceedings were pending and that re-opening or re-appreciating matters already placed before the Adjudicating Authority would impede the ongoing process intended to maximise the value of the corporate debtor's assets. Accordingly, the substantive request for appointment of another liquidator was not granted at present.

Application for replacement of the Liquidator refused without adjudication of the allegations to protect the ongoing timeline for scheme processes.

Dereliction of duty - disciplinary proceedings by IBBI - Only the Insolvency Regulator (IBBI) is empowered to initiate disciplinary proceedings against a Resolution Professional/Liquidator for alleged dereliction of duty. - HELD THAT: - The Tribunal recorded that issues of professional misconduct or dereliction by the Resolution Professional/Liquidator fall within the regulatory domain of the Insolvency and Bankruptcy Board of India. Consequently, initiation of disciplinary action against the RP/Liquidator is a matter for the IBBI and not for the Tribunal in the exercise of the present adjudicatory process. This was relied upon as a reason for declining to entertain the replacement prayer at this stage.

Tribunal declined to substitute disciplinary jurisdiction with regulatory proceedings and noted that IBBI alone may initiate disciplinary action against the RP/Liquidator.

Submission and withdrawal of schemes - maximisation of value - remand for consideration - The Applicant's allegations were left open for consideration in connected applications (IA/844/IB/2020 and IA/846/IB/2020) rather than being decided in the present petition. - HELD THAT: - While the Tribunal declined to adjudicate the present complaints so as not to disrupt the timetable fixed for completing the scheme process, it expressly permitted the Applicant to raise and substantiate alleged lapses of the Liquidator when the connected applications concerning withdrawn scheme proponents (IA/844/IB/2020 and IA/846/IB/2020) are taken up. The Tribunal thus did not finally determine the factual complaints but reserved the right of the Applicant to pursue those contentions in the linked proceedings.

Allegations of lapses were not finally adjudicated and were retained for consideration in the hearings of the related IAs.

Final Conclusion: The application seeking removal of the Liquidator is dismissed at this stage to protect the timelines and ongoing scheme processes; disciplinary concerns, if any, are a matter for the IBBI, and the Applicant may raise specific lapses in the connected applications when they are heard.

Corporate Insolvency Resolution Process - Operational Creditor - default in payment / operational debt - pecuniary jurisdiction and threshold for initiation of CIRP - appointment of Interim Resolution Professional - moratorium on suits, proceedings and enforcement and its exceptions - continuation of supply of essential goods or services during moratorium

Operational Creditor - default in payment / operational debt - Admission of the Section 9 application on the ground of default and existence of operational debt - HELD THAT: - The Tribunal found that the Operational Creditor had furnished invoices, ledger extracts, bank statements, correspondence, the captive supply agreement and other documents evidencing supplies and running accounts for the period 2012-2017. Payments made by the Corporate Debtor on indulgence were recorded but material default remained. No pre existing dispute was established by the Corporate Debtor before the Bench. The default predated the Covid 19 pandemic. On these materials the Tribunal concluded that default by the Corporate Debtor was proved and the petition required admission under the Code. [Paras 9, 10, 11, 12, 14]

The petition under Section 9 is admitted as default and operational debt are established.

Pecuniary jurisdiction and threshold for initiation of CIRP - Maintainability of the application in view of the subsequent increase in the pecuniary threshold for CIRP initiation - HELD THAT: - The Tribunal noted that the threshold limit for initiation of CIRP had been raised to Rs. 1 crore by notification effective 24.03.2020, but the present application was filed on 24.08.2018 (prior to the notification). Therefore the petition as filed fell within the Tribunal's pecuniary jurisdiction and could be entertained. The Tribunal proceeded to decide the application on that basis. [Paras 13]

The application is maintainable and the Tribunal has pecuniary jurisdiction to admit the petition as filed before the threshold change.

Appointment of Interim Resolution Professional - Interim Resolution Professional's duties - Appointment of an Interim Resolution Professional and directions as to his role and reporting - HELD THAT: - As the Operational Creditor had not proposed an IRP, the Tribunal appointed an Interim Resolution Professional from the IBBI list subject to statutory disclosures and absence of disciplinary proceedings. The IRP was directed to take steps required under the Code, specifically perform duties under the provisions dealing with the IRP/Resolution Professional and to file his report within 30 days before the Bench. The Tribunal also declared that the powers of the board of directors of the Corporate Debtor would stand superseded upon initiation of CIRP. [Paras 3, 14]

An Interim Resolution Professional is appointed and directed to perform statutory functions and file his report; management powers of the board are superseded.

Moratorium on suits, proceedings and enforcement and its exceptions - continuation of supply of essential goods or services during moratorium - Imposition of moratorium consequent to admission and clarification of its scope and exceptions - HELD THAT: - Upon admission under the Code, the moratorium envisaged under the statute was held to follow, restraining institution or continuation of suits, transferring or disposing of assets, enforcement of security, and recovery of property in possession of the Corporate Debtor. The Tribunal reproduced the statutory provisions and noted exceptions: supply of essential goods or services specified shall not be terminated during the moratorium, and where the IRP/Resolution Professional considers supply critical for preservation and management as a going concern such supplies shall not be interrupted except in specified circumstances. [Paras 15, 16, 17]

Moratorium is imposed on the Corporate Debtor with statutory exceptions for continued supply of essential goods or services as articulated.

Operationalization expenses for Interim Resolution Professional - Direction to the Operational Creditor to deposit funds to meet IRP's expenses - HELD THAT: - The Tribunal directed the Operational Creditor to deposit a specified sum with the Interim Resolution Professional upon his filing of the required declaration, to meet expenses necessary for performance of his functions in accordance with the applicable regulations. This was ordered to enable the IRP to discharge his statutory duties. [Paras 18]

The Operational Creditor is directed to furnish funds to the Interim Resolution Professional to meet expenses for performing his functions.

Final Conclusion: The Section 9 petition filed by the Operational Creditor is admitted; an Interim Resolution Professional is appointed, the moratorium under the Code is imposed with statutory exceptions, the Operational Creditor is directed to deposit funds to meet IRP expenses, and the IRP is directed to undertake statutory steps and file his report within the prescribed time.

Admission of petition under Section 9 of Insolvency and Bankruptcy Code, 2016 - Initiation of Corporate Insolvency Resolution Process (CIRP) - Appointment of Interim Resolution Professional - Declaration of moratorium under Section 14 of the Code - Obligation of management to cooperate with the IRP under Section 19 of the Code

Admission of petition under Section 9 of Insolvency and Bankruptcy Code, 2016 - Initiation of Corporate Insolvency Resolution Process (CIRP) - Company Petition under Section 9 is admitted and CIRP against the Corporate Debtor is initiated. - HELD THAT: - The Tribunal found that the Operational Creditor presented a demand notice and that the Corporate Debtor did not meaningfully dispute the debt, having admitted the amount claimed in its pleadings and conceded inability to discharge the liability. On the material before it and the parties' admissions, the Tribunal held the Petition fit for admission and ordered initiation of the Corporate Insolvency Resolution Process to commence forthwith, to be completed within 180 days.

The Company Petition is admitted and CIRP is ordered to commence and be completed within 180 days.

Appointment of Interim Resolution Professional - Appointment of an Interim Resolution Professional (IRP) due to absence of a nominee from the Operational Creditor. - HELD THAT: - The Operational Creditor did not propose a name for the IRP. The Tribunal appointed Mr. Srinivas Gudla Rao as the Interim Resolution Professional, noting his registration and absence of pending disciplinary proceedings on the IBBI website, and directed him to take charge and perform functions prescribed under the Code and Rules.

Mr. Srinivas Gudla Rao is appointed as Interim Resolution Professional and directed to take charge and perform duties under the Code.

Declaration of moratorium under Section 14 of the Code - Moratorium in respect of the Corporate Debtor is declared. - HELD THAT: - Consequent to admission of the Petition and initiation of CIRP, the Tribunal invoked the moratorium provision to prohibit specified actions against the Corporate Debtor during the CIRP period in accordance with the Code, thereby protecting the corporate debtor's assets and the resolution process.

Moratorium under Section 14 of the Code is declared in respect of the Corporate Debtor.

Obligation of management to cooperate with the IRP under Section 19 of the Code - IRP's authority to take charge of management under Sections 13(2), 15, 17, 18 and 20 - Directors, promoters and management must extend cooperation to the IRP, and the IRP is empowered to take charge and perform functions under the Code. - HELD THAT: - The Tribunal directed that the Corporate Debtor's directors, promoters or other persons associated with management shall extend all assistance and cooperation to the IRP as stipulated under the Code, and ordered the IRP to take charge of the Corporate Debtor's management and undertake necessary steps in furtherance of the CIRP in terms of the relevant provisions of the Code and Rules.

Management is obliged to cooperate with the IRP, who shall take charge and perform functions under the Code.

Final Conclusion: The Tribunal admitted the Section 9 petition, initiated CIRP against the Corporate Debtor, appointed an Interim Resolution Professional, declared a moratorium, and directed cooperation by the Corporate Debtor's management with the IRP for conduct of the resolution process.

Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 - time limit for completion or compliance - extension of limitation under the Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020 - payment pursuant to Form-3 and grant of settlement certificate in Form-4 - delay, laches and condonation in filing for relief under statutory scheme

Extension of limitation under the Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020 - time limit for completion or compliance - Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 - The time-limit for payment of taxes quantified in Form-3 issued under the SVLDR Scheme stood extended to 30.09.2020 under Section 6 of Central Act 38 of 2020, and thus compliance falling within the extended period is excused from being dismissed as delayed. - HELD THAT: - The Court accepted that Chapter V of Central Act 38 of 2020 operates to extend time-limits for completion or compliance of actions under the statutes listed therein. Given that Chapter V includes the Finance Act, 1994 and relates to matters covered by the SVLDR Scheme, the time prescribed for remittance of taxes as quantified in Form-3 must be construed as a time-limit for completion/compliance and therefore falls within the extension to 30.09.2020. Applying a liberal interpretation to Section 6, the Court held that an application or approach made on 29.09.2020-30.09.2020 could not be disallowed solely on grounds of delay or laches where the extended period covered the payment obligation. [Paras 4, 5]

Time for payment under Form-3 was extended to 30.09.2020 and the appellants' approach within that period is not barred by delay.

Payment pursuant to Form-3 and grant of settlement certificate in Form-4 - Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 - delay, laches and condonation in filing for relief under statutory scheme - Whether the appellants should be permitted to remit the taxes as quantified in Form-3 despite earlier non-payment, and the conditions upon which the authority should consider settlement. - HELD THAT: - Having held that the due date was extended, the Court directed that the appellants be permitted to remit the taxes quantified in Form-3 subject to payment of interest at 15% from 01.07.2020 until the date of remittance, and fixed a compliance deadline of on or before 17.09.2021. Upon such compliance the appropriate authority under the SVLDR Scheme was directed to consider the application and proceed in accordance with the Scheme. The Court therefore set aside the writ court's dismissal and granted conditional relief rather than finally adjudicating entitlement to Form-4 until compliance is effected. [Paras 6, 7]

Appellants may remit the quantified taxes with interest at 15% from 01.07.2020 by 17.09.2021, after which the competent authority shall consider the SVLDR application and proceed under the Scheme.

Final Conclusion: Writ appeals allowed; impugned order set aside. Appellants permitted to remit taxes as quantified in Form-3 subject to payment of interest at 15% from 01.07.2020 by 17.09.2021, and upon such payment the authority to consider and proceed under the SVLDR Scheme. No costs.

Classification of service as supply of tangible goods - erection/works contract service - exemption for construction of roads and bridges - sub-contractor covered by mega exemption

Classification of service as supply of tangible goods - erection/works contract service - exemption for construction of roads and bridges - sub-contractor covered by mega exemption - Whether the appellant's contracts for erection of PSC girders fall within supply of tangible goods services or are erection/works contract services exempt as construction of roads and bridges, and whether the impugned adjudication order levying service tax on supply of tangible goods is sustainable. - HELD THAT: - The Tribunal examined the work orders and found that they described the services as erection of girders, required the appellant to provide cranes, manpower, tools, tackles and transportation, and linked payment to the number of girders erected. The contracts did not stipulate supply or lease of cranes or equipment measured by number of machines or duration of use. The phrase "by providing" must be read harmoniously with the contract as a whole and, on plain reading, the tenor of the contracts was for erection of girders and not for supply/lease of tangible goods. Reliance by Revenue on isolated words in the work orders and on circulars and precedents was rejected as the factual matrix in those authorities differed. Further, since the clients were engaged in construction of roads and bridges, the subcontractor's services fell within the exemption applicable to works contract services provided to main contractors engaged in exempt construction activity. For these reasons the adjudication holding the appellant liable under supply of tangible goods was not tenable. [Paras 5, 6]

Impugned order setting aside the classification as erection/works contract and imposing service tax as supply of tangible goods is unsustainable; appeal allowed and order set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant's work contracts were for erection of girders (works contract/erection service) and not supply of tangible goods; the adjudication imposing service tax on supply of tangible goods was set aside.

Entitlement to interest under Section 11BB - merger by operation of law - doctrine of mutuality - status of inter-company transactions post-merger - requirement to return deficient refund claim with deficiency memo

Entitlement to interest under Section 11BB - merger by operation of law - doctrine of mutuality - status of inter-company transactions post-merger - requirement to return deficient refund claim with deficiency memo - Whether the respondent-assessee was entitled to interest on the sanctioned refund from the expiry of three months from the date of the refund claim notwithstanding that the NCLT order of merger was produced before the Adjudicating Authority at a later date. - HELD THAT: - The Tribunal held that the NCLT order merged the companies effective 01.01.2015 and, by operation of law, transactions between the constituent companies during the intervening period partake the character of mutuality and are not taxable. Amounts deposited as tax by the separate companies during that period thus amount to a "revenue deposit" which attracts interest under Section 11BB. The Tribunal agreed with the Commissioner (Appeals) that mere non-production of the NCLT order before the Adjudicating Authority does not disentitle the assessee to statutory interest where the refund claim was not returned as deficient with a deficiency memo; the Board's instruction requiring return of deficient claims was relied upon in support of this position. The Tribunal noted and followed the jurisprudence relied upon below, including Ranbaxy Lab. and Union of India vs. Hamdard (Waqf) Laboratories , which support payment of interest where Revenue delays refund on grounds of alleged defect that should have been remedied by returning the claim. Applying these principles, the Tribunal found no error in the Commissioner (Appeals) allowing interest from the end of three months from the date of the refund claim and upheld that conclusion. [Paras 6, 7]

The appeal is dismissed; the impugned order allowing interest from the end of three months from the date of the refund claim is upheld and the respondent-assessee is entitled to consequential benefits in accordance with law.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, holding that following the NCLT merger effective 01.01.2015 inter-company transactions were mutual and taxes paid became revenue deposits; interest under Section 11BB is payable from the end of three months from filing of the refund claim, and failure to produce the NCLT order earlier did not defeat the statutory entitlement where the claim was not returned as deficient.

Applicability of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Meaning of "where the excisable goods are not sold by the assessee" - Transaction value under Section 4(1)(a) of the Central Excise Act, 1944 - Rule 8 of the Valuation Rules - valuation for captive consumption - Precedential effect of Larger Bench decision in Ispat Industries Ltd. - Prospective amendment to valuation rules recognising partial captive consumption

Applicability of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Meaning of "where the excisable goods are not sold by the assessee" - Transaction value under Section 4(1)(a) of the Central Excise Act, 1944 - Precedential effect of Larger Bench decision in Ispat Industries Ltd. - Rule 7 of the Valuation Rules cannot be invoked in respect of removals to consignment agents where the assessee also sells part of its production to unrelated buyers at the factory gate; Rule 7 is limited to situations where no sales are made at the factory gate and all goods are transferred for sale from other premises. - HELD THAT: - The Tribunal examined Rules 7 and 8 which both commence with the expression "Where the excisable goods are not sold by the assessee" and applied the Larger Bench's construction in Ispat Industries that the phrase restricts applicability to cases where the entire production is not sold (i.e., goods are not sold at all at the factory gate). The Tribunal held that the same linguistic limitation applies to Rule 7: it is attracted only where the assessee does not sell any goods to unrelated buyers at the place of removal and transfers goods exclusively for sale from depots/consignment premises. The Tribunal relied on subsequent decisions applying Ispat Industries (including Bharat Petroleum and Steel & Metal Tubes) and observed that earlier contrary decisions (e.g., Spice Systems) are distinguishable by reference to the law as it stood before amendment of the definition of "place of removal". The Tribunal further noted that the Government has, prospectively, amended Rule 8 to acknowledge situations of part consumption, reinforcing the interpretive approach. Having applied this principle, the Tribunal found it unnecessary to examine other grounds and set aside the adjudicating authority's demand which was grounded on Rule 7 for periods in dispute. [Paras 23, 24, 25, 26, 27]

Rule 7 is not applicable where the assessee makes sales at the factory gate to unrelated buyers; the impugned demand based on Rule 7 is therefore unsustainable and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the Order-in-Original confirming the demand based on invocation of Rule 7 for the periods in dispute, and declined to examine other contentions in view of the determinative finding on applicability of Rule 7.

CENVAT credit on common inputs - Reversal of credit under Rule 6 of CENVAT Credit Rules, 2004 - Provisional and final reversal procedure under Rule 6(3A) - Application of Rule 6(3)(b) - duty payment on steam as fulfillment of reversal obligation - Treatment of steam as the exempted/final product for inputs used as fuel - Remand for verification of quantum of reversal and duty paid

Provisional and final reversal procedure under Rule 6(3A) - Substantive entitlement to benefit despite procedural non compliance - Whether failure to follow the procedural steps prescribed in Rule 6(3A) entitled the Department to deny the substantive benefit of proportionate reversal claimed by the appellant for the period April 2008 to September 2008. - HELD THAT: - The Tribunal found that the appellants had been reversing CENVAT credit on an estimated (monthly) basis and had not followed the specific procedural steps of provisional ascertainment and finalisation under Rule 6(3A). However, the Tribunal held that substantial benefit available under the Rules cannot be denied merely for non observance of the procedural formula, where the appellants contend that the amount reversed equals the amount required under Rule 6. The Tribunal therefore set aside the demand and remanded the matter to the original adjudicating authority to permit the appellant to submit final data and for the Commissioner to verify and decide the correctness of the amount required to be reversed under Rule 6(3A). [Paras 5]

Demand set aside and matter remanded for verification and final determination of the amount to be reversed in terms of Rule 6(3A); substantive benefit not to be denied solely for procedural non compliance.

CENVAT credit on packing material (HDPE/Jumbo bags) - Duty payment on captively consumed soda ash - Remand for verification of reversal and duty compliance - Whether CENVAT credit taken on HDPE/Jumbo bags used for packing soda ash captively consumed in manufacture of salt required reversal for the period April 2008 to September 2008. - HELD THAT: - The appellants asserted that they had paid excise duty on the soda ash captively consumed for purification of brine and had reversed the entire credit on HDPE bags. The Tribunal noted that identical demands for prior periods had been set aside and that the factual contentions regarding payment of duty on captively consumed soda ash and reversal of credit on HDPE bags require verification. Accordingly, the Tribunal remanded the issue to the original authority to verify whether duty was discharged on the captively consumed soda ash and whether credit on HDPE bags was indeed reversed. [Paras 5]

Matter remanded to the original adjudicating authority for verification of duty payment on captively consumed soda ash and reversal of credit on HDPE bags; no final adjudication on merits in this order.

Application of Rule 6(3)(b) - Treatment of steam as exempted/final product for inputs used as fuel - Scope of reversal - steam value versus value of exempted salt - Whether reversal/obligation under Rule 6 should be computed on the value of steam (used/generated from fuel) or on the value of the exempted salt produced - issue arising in appeals E/12446/2019 and E/10699/2020. - HELD THAT: - The Tribunal referred to its earlier decision in the appellant's own case (reported at 2008 (232) ELT 737) where it accepted that payment of duty on steam would fulfil the requirement of Rule 6(3)(b) and that steam should be regarded as the exempted/final product for fuel inputs, obviating any need to compute reversal on the value of the final exempted salt. However, both Revenue and the appellant have challenged that earlier decision before the High Court and the matter remains pending. Given that the fundamental legal question is sub judice before the High Court, the Tribunal set aside the impugned order and remanded the matters to the original adjudicating authority to be decided afresh after the High Court determines the issue. [Paras 5, 7]

Issue remanded to original adjudicating authority to await and act in accordance with the High Court's decision on whether duty payment on steam satisfies the reversal obligation under Rule 6 and whether reversal must be calculated on steam value or on value of exempted salt.

Final Conclusion: The appeals are allowed by setting aside the impugned orders and remanding the matters to the original adjudicating authority for (i) verification and final computation of the amount to be reversed under Rule 6(3A) in respect of April 2008 to September 2008, (ii) verification of duty payment on captively consumed soda ash and reversal of credit on HDPE bags, and (iii) fresh decision on the steam versus salt reversal issue after resolution by the Hon'ble High Court.

Clandestine removal of excisable goods without payment of duty - invocation of Section 11A for determination of duty on clandestine removal - imposition of penalty under Rule 25 of the Central Excise Rules - penalty liability despite payment of duty prior to issuance of show cause notice - separate penalty on company and its director - reduction of penalty to 25% on payment within 30 days from finality of proceedings

Clandestine removal of excisable goods without payment of duty - penalty liability despite payment of duty prior to issuance of show cause notice - Whether penalty could be imposed where the assessee admitted clandestine removal and paid duty prior to issuance of the show cause notice. - HELD THAT: - The Court recorded that the undisputed material established clandestine removal and admission by the director. Payment of duty by cheque prior to issuance of the show cause notice did not entitle the assessee to be exonerated from penalty and interest. The adjudicating and appellate authorities found the payment was made only after detection and that the evasion was deliberate. The Court accepted those findings and held that voluntary payment before show cause notice does not automatically negate penalty liability where clandestine removal and admission of evasion exist.

Penalty and interest were rightly imposed notwithstanding prior payment of duty; appeal on this ground dismissed.

Invocation of Section 11A for determination of duty on clandestine removal - imposition of penalty under Rule 25 of the Central Excise Rules - Whether Rule 25 could be read with Section 11AC/Section 11A (as invoked) and whether the show cause notice was fatally defective because the two operate in different fields. - HELD THAT: - The Court noted that the alleged defect in the show cause notice was not raised before the adjudicating authority. On the merits the Court accepted the Tribunal's conclusion that the assessee had contravened the Act and Rules by clandestine clearance. The Court therefore declined to sustain a challenge based on separating Rule 25 and the statutory provisions invoked, and upheld the imposition of penalty after considering the factual admissions and detection by the department.

Challenge to the reading together of Rule 25 and the statutory provisions failed; penalty imposition sustained.

Imposition of penalty under Rule 25 of the Central Excise Rules - penalty mandatory or discretionary - Whether the Tribunal's finding that imposition of penalty was proper (and not perverse) though penalty under Rule 25 is not mandatory. - HELD THAT: - The Court examined the factual matrix and the authorities below and found no perversity in the Tribunal's conclusion. Even if Rule 25 contemplates contingencies, the factual findings of deliberate evasion and admission by the director justified exercise of authority to impose penalty. The Tribunal's approach was not perverse given the admitted violations.

Tribunal's confirmation of penalty under Rule 25 was not perverse and stands affirmed.

Separate penalty on company and its director - Whether a separate penalty could be imposed on the director in addition to penalty on the company. - HELD THAT: - The Court proceeded on the admitted fact that the director had made statements admitting clandestine removal and that the contravention involved officers of the company. On the material before it the Court found no error in imposing penalty on the director in addition to the company and did not disturb the concurrent findings of liability.

Separate penalty on the director alongside the company was upheld.

Reduction of penalty to 25% on payment within 30 days from finality of proceedings - Whether the assessee was entitled to the benefit of the adjudicating authority's provision reducing penalty to 25% of duty if paid within 30 days, given payment of duty pre notice and the pendency of appeals. - HELD THAT: - The Court held that the condition for reduced penalty - payment of duty and reduced penalty within 30 days - must be construed in light of the statutory right of appeal. The period of 30 days for payment of the reduced penalty begins from the date the matter attains finality. As the appeal to the High Court continued, the Court exercised its discretion to permit the assessee to pay 25% of the duty determined within 30 days from receipt of the certified copy of this judgment, thereby allowing the mitigation to enure in favour of the assessee provided compliance is within that period.

Assessee granted benefit to pay 25% of the duty within 30 days from receipt of certified copy of this order; failure to do so will forfeit the benefit.

Final Conclusion: Appeal dismissed; concurrent findings of clandestine removal, liability for duty, interest and penalty affirmed; however, the assessee is permitted to avail the adjudicating authority's reduced penalty scheme by paying 25% of the duty determined within 30 days from receipt of the certified copy of this judgment, failing which the concession will be lost and the appeal will stand dismissed in full.

Refund of excise duty - limitation under Section 11B - starting point of limitation - Explanation (f) and Explanation (eb) to Section 11B - price variation clause - effect on limitation - department's knowledge of provisional prices - no extension of limitation

Refund of excise duty - limitation under Section 11B - starting point of limitation - Explanation (f) to Section 11B - Applicability of Explanation (f) to Section 11B as the starting point for limitation for refund claims and consequent rejection of the refund as time-barred. - HELD THAT: - The Court examined whether the claim for refund made by the appellant was barred by limitation. The authorities below applied Explanation (f) to Section 11B, treating the date of payment of duty as the relevant starting point for the one-year limitation period. The Court found no merit in the appellant's contention that the starting point should be deferred until a final assessment; there was no final assessment in the case and the facts did not bring the matter within Explanation (eb). Given that the refund claim was made beyond one year from the date of payment relied upon under Explanation (f), the Court agreed with the findings below that the claim was time-barred and could be legitimately rejected on that ground.

Claim for refund rejected as barred by limitation; Explanation (f) to Section 11B governs the starting point and the period had expired.

Price variation clause - effect on limitation - department's knowledge of provisional prices - no extension of limitation - starting point of limitation - Explanation (eb) to Section 11B - Whether the existence of a price variation clause and the department's awareness of provisional prices postponed the commencement of the limitation period under Explanation (eb). - HELD THAT: - The appellant relied on the contractual price variation clause and argued that, because prices were provisional and the department knew of that fact, the limitation should commence only upon finalisation of the price (invoking Explanation (eb)). The Court held that applicability of each explanation under Section 11B depends on facts relatable to that explanation. On the material before it there was no final assessment or other fact bringing the case within Explanation (eb). Acceptance of the appellant's argument would render limitation indefinitely extendable in the absence of final assessment, which the Court rejected. Consequently, the department's prior knowledge of provisional pricing did not alter the statutory starting point applicable under Explanation (f).

Explanation (eb) not attracted; the department's awareness of provisional prices does not postpone the limitation period in this case.

Final Conclusion: The appeal is dismissed; the refund claim was correctly held time-barred under Section 11B (Explanation (f)) and Explanation (eb) is not attracted on the facts, accordingly the Tribunal's and authority's orders are upheld.

Admissibility of cenvat credit - time-bar and limitation linked to completion of audit - interest liability for intervening period on denied credit and supplementary invoices - penalty for non-payment after adjudication under Section 11AC

Time-bar and limitation linked to completion of audit - The show cause notice issued on 11.02.2016 was within limitation having regard to the audit conducted during 3-13 February 2015. - HELD THAT: - The audit for the financial year 2013-14 was carried out from 3rd February to 13th February 2015 and the show cause notice was issued on 11.02.2016. The Tribunal held that the facts revealing inadmissible cenvat credit and non-payment of service tax would only arise upon completion of that audit, and since the notice was issued within one year from completion of the audit, it was not time-barred. [Paras 6]

Show cause notice held to be issued within time.

Admissibility of cenvat credit - interest liability for intervening period on denied credit and supplementary invoices - Appellant is liable to pay interest for the intervening period on inadmissible cenvat credit and on amounts disclosed by supplementary invoices. - HELD THAT: - The appellant admitted having availed inadmissible cenvat credit and non-payment of service tax on legal services and also not having paid interest on supplementary invoices. Given this admission and that interest remained unpaid up to adjudication, the Tribunal confirmed the demand of interest for the intervening period. [Paras 6]

Demand of interest confirmed.

Penalty for non-payment after adjudication under Section 11AC - Penalty under Section 11AC is leviable where duty and interest due on adjudication are not paid within thirty days of the adjudication order. - HELD THAT: - Relying on the statutory provision prescribing penal consequences for failure to pay duty and interest within thirty days of adjudication, the Tribunal observed that the appellant had not paid interest as required and therefore was liable to the penal consequence set out in the provision. Consequently, the imposition of penalty in the adjudicating order was upheld. [Paras 7]

Penalty imposed in the adjudication sustained.

Final Conclusion: Appeal dismissed; show cause notice held timely, demand of interest confirmed, and penalty under Section 11AC sustained.

Extended period of limitation - divergent views of the Revenue as bar to invocation of extended limitation - availability of input tax credit against supplies from units availing exemption notification

Extended period of limitation - divergent views of the Revenue as bar to invocation of extended limitation - Denial of input credit was barred by limitation because the Revenue invoked the extended period despite having divergent views on the legal issue. - HELD THAT: - The Tribunal declined to decide the substantive question of entitlement to credit and confined its decision to limitation. It was found that similarly placed assessees had been allowed credit and that the Revenue had filed appeals against those favourable orders, thereby demonstrating divergent views on the point. In such circumstances the Tribunal held that the Revenue could not invoke the extended period of limitation. As the show cause notice in this case was issued by invoking the extended limitation, the denial of credit was held to be time-barred.

Impugned order set aside; appeal allowed on limitation grounds with consequential relief, if any.

Final Conclusion: The appeal succeeds on limitation grounds: where the Revenue maintains divergent views and has appealed favourable orders, invocation of the extended period is not permissible and the denial of credit, challenged by a show cause notice issued under extended limitation, is time barred; impugned order set aside and appeal allowed with consequential relief.

Interest on delayed refund under section 40(2) of the U.P. Value Added Tax Act, 2008 - refund entitlement arising under the repealed Uttar Pradesh Trade Tax Act, 1948 and effect of repeal - application of the principle of unjust enrichment to refund claims - adjustment of refund against outstanding demands - availability of non statutory/equitable interest and constructive res judicata

Refund entitlement arising under the repealed Uttar Pradesh Trade Tax Act, 1948 and effect of repeal - application of the principle of unjust enrichment to refund claims - Whether the petitioner's refund claim (for A.Ys. 2004-05 to 2007-08) arising from entitlement under the Erstwhile Act could be treated as a refund under the VAT Act. - HELD THAT: - The Court held that the refund claim originated under the Erstwhile Act and that repeal of the Erstwhile Act by the VAT Act did not operate to create a new statutory refund under section 40(1) of the VAT Act for those deposits which pre dated the VAT Act. Section 81(2)(b) of the VAT Act and section 6 of the U.P. General Clauses Act preserve rights and proceedings but do not transmute an Erstwhile Act claim into one arising under section 40(1) of the VAT Act. The judicially evolved principle of unjust enrichment remains a just exception applicable to the refund claim, but that principle does not convert the nature of the underlying statutory entitlement so as to attract section 40(1) or (2) of the VAT Act where the disputed payment was not made 'under this Act'. [Paras 17, 18, 21, 22, 23]

The petitioner's refund, though allowed on litigation under the Erstwhile Act, cannot be treated as a refund arising under section 40(1) of the VAT Act and therefore section 40(2) is not directly applicable to convert that entitlement into a statutory claim for interest under the VAT Act.

Interest on delayed refund under section 40(2) of the U.P. Value Added Tax Act, 2008 - availability of non statutory/equitable interest and constructive res judicata - Whether the petitioner was entitled to interest from 16.04.2010 (date when the writ was allowed) under section 40(2) of the VAT Act or otherwise. - HELD THAT: - The Court found that on 16.04.2010 the Erstwhile Act had been repealed and the VAT Act was then in force; however, there was no statutory provision in the VAT Act or the General Clauses Act entitling the petitioner to interest under section 40(2) for a refund that arose under the Erstwhile Act. The petitioner could have sought interest in the earlier proceedings but did not do so; having failed to pray for interest in the original litigation and appeals, the claim for interest was barred by constructive res judicata. The Court rejected reliance on authorities concerning amendment of law that are inapposite where a repeal and replacement with a different statutory scheme has occurred. [Paras 21, 24, 25, 26, 27]

The petitioner was not entitled to interest from 16.04.2010 under section 40(2) of the VAT Act or on any non statutory basis, the claim being precluded by the statutory scheme and by failure to seek such relief earlier.

Adjustment of refund against outstanding demands - interest on delayed refund under section 40(2) of the U.P. Value Added Tax Act, 2008 - Whether interest became payable where the assessing authority quantified the refund on 29.06.2020 and adjusted the refund against an outstanding demand on 07.07.2020. - HELD THAT: - The Court recorded that the order quantifying the refundable amount was dated 29.06.2020 and that the assessing authority adjusted the refund against outstanding entry tax demands by communication dated 07.07.2020. Since the adjustment occurred within thirty days of the refund order, no statutory interest under section 40(2) became payable for the period up to 07.07.2020. The Court noted that the merits of the adjustment had been considered in the related writ decided earlier, but for purposes of interest liability the adjustment within the statutory period defeated a claim for interest for that initial period. [Paras 10, 11, 28]

No interest was payable to the petitioner up to 07.07.2020 because the refund was adjusted against outstanding demands within the thirty day period from the refund order.

Interest on delayed refund under section 40(2) of the U.P. Value Added Tax Act, 2008 - availability of non statutory/ equitable interest and constructive res judicata - Whether interest was payable for the period after 07.07.2020 and, if so, at what rate. - HELD THAT: - While denying entitlement to interest for the period prior to 07.07.2020, the Court exercised its equitable powers under Article 226 to direct payment of interest for the subsequent period. Although the right to interest under section 40(2) was not available for the pre VAT refund, the Court awarded interest for the post adjustment period at a rate equal to the statutory rate of interest, observing that such a direction could be referable to the Court's inherent equitable jurisdiction and to a concession made in related proceedings. [Paras 29]

The Court directed payment of interest for the period after 07.07.2020 at a rate equal to the statutory rate of interest.

Final Conclusion: All four writ petitions are dismissed. The petitioner is not entitled to interest under section 40(2) of the VAT Act for the period beginning 16.04.2010 up to 07.07.2020; interest for the period after 07.07.2020 is directed to be paid at a rate equal to the statutory rate. No order as to costs.

Locus standi / person aggrieved - acceptance of Form C - directory not mandatory - concessional rate under Section 8(1) read with Section 8(3) and 8(4) of the Central Sales Tax Act - refund of excess tax collected - obligation of State under Article 265 and Article 14 principles - unjust enrichment and State's duty to refund - assessing officer's arbitrary refusal to accept declaration forms - power of High Court to mould relief under Article 226

Locus standi / person aggrieved - Petitioners purchasing HSD oil have locus standi as persons aggrieved to challenge assessment of the selling dealer and seek refund. - HELD THAT: - The Court held that petitioners, though not the assessed dealer, suffered and bore the excess tax collected from them and deposited with the State. In these circumstances they are 'persons aggrieved' entitled to invoke writ jurisdiction under Article 226 to challenge the assessment order insofar as it deprives them of the statutory concessional rate and a refund, and to seek appropriate reliefs, since no alternate efficacious remedy lay available to them.

Petitioners have locus standi and may maintain the writ petitions.

Acceptance of Form C - directory not mandatory - assessing officer's arbitrary refusal to accept declaration forms - Filing of Form C along with returns by the selling dealer is directory; Form C may be filed belatedly and accepted at assessment stage. - HELD THAT: - Relying on Rule 12(7) of the CST Rules and authoritative decisions, the Court held that the statutory scheme contemplates acceptance of declaration forms up to assessment and, where sufficient cause is shown, within such further time as the authority permits. The proviso to Rule 12(7) and precedents establish that non-filing with the return is a curable/ directory defect and cannot be used to deny substantive entitlement. The assessing officer's refusal to accept Form C produced during assessment was therefore arbitrary and unlawful.

Form C filing requirement is directory; assessing officer wrongly refused belatedly produced Form C.

Concessional rate under Section 8(1) read with Section 8(3) and 8(4) of the Central Sales Tax Act - Petitioners satisfied statutory conditions for concessional rate and thereby entitled to purchase HSD at concessional rate for the disputed period on production of Form C. - HELD THAT: - On admitted facts the petitioners and IOCL were registered and the declared goods and uses were certified in registration; Form C declarations were produced before the assessing authority. There was no finding that the forms were defective or that statutory conditions under Section 8(1), (3) or (4) were unmet. Therefore entitlement to concessional rate matured on production of Form C and could not be negated by technical objections.

Petitioners fulfilled conditions and are entitled to concessional rate for the relevant period.

Refund of excess tax collected - obligation of State under Article 265 and Article 14 principles - unjust enrichment and State's duty to refund - State of West Bengal is not justified in withholding refund; it must refund excess tax collected in excess of statutory concessional rate with interest after verification. - HELD THAT: - The Court found that the excess tax was collected and deposited with the State, the delay in filing Form C was due to compelling circumstances beyond petitioners' control (intervening circulars later quashed) and the petitioners bore the burden of tax. Article 265 and principles of equality require refund of tax collected without authority; retention would amount to unjust enrichment. Precedents support refund and that procedural defaults of the seller cannot defeat the buyer's substantive right. Accordingly, the State was directed to process refund with interest following formal verification.

State must refund excess tax to petitioners (or to IOCL to be passed on) with interest after verification.

Power of High Court to mould relief under Article 226 - High Court may mould relief and direct refund directly to petitioners or to IOCL (with conditions) to do complete justice. - HELD THAT: - Given the facts - inability of IOCL to revise returns due to time bar, issuance of Form C belatedly following quashing of impugned circulars and IOCL's deposit of tax with the State - the Court exercised its prerogative jurisdiction to fashion relief. It ordered acceptance of Form C subject to formal verification and directed the State to refund the excess tax within a time-frame with 10% per annum interest, permitting alternative refund to IOCL subject to IOCL passing the refund to petitioners and appropriate indemnities.

Relief moulded: accept Form C on verification; State to refund directly to petitioners within three months, or alternatively to IOCL who must remit to petitioners.

Final Conclusion: Writ petitions allowed: impugned assessment set aside pro tanto for refusal to accept Form C; Court directs verification and acceptance of the Forms, and directs the State of West Bengal to refund the excess tax collected (Assessment Year 2017-18; period 01.07.2017 to October, 2018) with 10% p.a. interest within prescribed time, with alternative mechanism for refund through IOCL where necessary.

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - quashing of criminal proceedings under Section 482 Cr.P.C. - presumption of legally enforceable debt on admitted cheque - inadmissibility of trial level factual determination in quashing petitions

Presumption of legally enforceable debt on admitted cheque - rebuttable presumption under Section 139 of the Negotiable Instruments Act - Whether, in view of the admitted issuance and signature on the cheque, the presumption under Section 139 arises and its effect on a petition to quash proceedings under Section 138. - HELD THAT: - The court found that the accused admitted issuance of the cheque bearing his signature and that the cheque was returned for insufficient funds. Once execution of the negotiable instrument is admitted, the presumption under Section 139 that the cheque was issued for discharge of a debt or liability arises. That presumption is rebuttable, and the accused must lead evidence to discharge it by proving that no debt remained (for example, by proving payment or that the cheque was given only as security). At the quashing stage under Section 482 Cr.P.C., such factual contentions cannot be finally adjudicated without evidence; consequently the existence of the presumption militates against allowing the petition to quash on the basis of the accused's affidavits or pleadings alone. [Paras 7, 8, 11]

The admitted issuance of the cheque gives rise to the rebuttable presumption under Section 139, which the accused must rebut by leading evidence; this cannot be done on a quashing petition without trial.

Quashing of criminal proceedings under Section 482 Cr.P.C. - inadmissibility of trial level factual determination in quashing petitions - Whether the criminal complaint and issuance of process under Section 204 Cr.P.C. in Criminal Case No. 2208 of 2017 should be quashed on the grounds that the cheque was given as security and the amount had been paid. - HELD THAT: - The court observed that questions whether the cheque was given as security and whether payments/receipts relied upon by the accused are genuine are disputed questions of fact which require oral evidence and cannot be resolved in proceedings under Section 482 Cr.P.C. Reliance on documentary receipts by the accused does not permit the High Court to pre try the factual disputes. Applying settled principles, the court declined to enter into factual controversies at the quashing stage and held that the trial court alone, after recording evidence, can determine whether the presumption under Section 139 is rebutted. [Paras 8, 9, 10, 12]

The petition to quash Criminal Case No. 2208 of 2017 is not maintainable on the pleaded factual grounds; the matter must proceed to trial for evidence to be led and the presumption to be tested.

Final Conclusion: The application to quash the complaint and the order issuing process in Criminal Case No. 2208 of 2017 is dismissed; the rule is discharged and any interim relief is vacated, leaving the trial court to decide disputed factual issues after recording evidence.

Concurrent sentence - consecutive sentence - Sentence on offender already sentenced - Section 427 CrPC - discretion to order concurrency under Section 427 - different transactions rule (separate crime numbers and judgments) - NDPS offences and societal interest in sentencing - Enhanced punishment after previous conviction - Section 31(ii) NDPS Act

Sentence on offender already sentenced - Section 427 CrPC - different transactions rule (separate crime numbers and judgments) - concurrent sentence - consecutive sentence - Whether the subsequent sentence imposed in a later trial should run concurrently with the earlier sentence or consecutively. - HELD THAT: - The Court applied Section 427 CrPC and established that the general rule is that where a person already undergoing a sentence is subsequently convicted, the subsequent sentence ordinarily commences on expiry of the earlier sentence and thus runs consecutively unless the sentencing court directs concurrency, or subsection (2) of Section 427 applies (life sentence already being served). The Court noted the established principle that concurrency is exceptional where there are different transactions, different crime numbers and convictions by different judgments. Exercise of the discretionary power under Section 427(1) to direct concurrent operation must be judicious, fact-sensitive and not mechanical. Applying these principles, the Court found that the appellant was convicted in two separate trials arising from distinct transactions (recoveries of 4 kg and 750 g of heroin), under different crime numbers and by different judgments; the trial court in the subsequent conviction did not direct that the sentence run concurrently. Given these facts, and bearing in mind the gravity of NDPS offences and the statutory enhancement under Section 31(ii) NDPS Act, the Court concluded that concurrency should not be directed and that the normal rule of consecutive sentences applies. [Paras 8, 9, 10, 11, 12]

The appeal is dismissed; the subsequent sentence shall run consecutively with the earlier sentence and no direction for concurrency is warranted.

Final Conclusion: The Supreme Court dismissed the appeal and affirmed that, on the facts of this case involving separate transactions and convictions, the subsequent sentence will run consecutively with the earlier sentence; the discretion under Section 427 CrPC to order concurrency was not exercised in favour of the appellant given the seriousness of NDPS offences and absence of any direction for concurrent sentences.

Vicarious liability under Section 141 of the Negotiable Instruments Act - essential averment of being in charge of and responsible for conduct of company's business - liability of directors who did not sign the cheques - quashing of criminal proceedings under Section 482 Cr.P.C.

Vicarious liability under Section 141 of the Negotiable Instruments Act - essential averment of being in charge of and responsible for conduct of company's business - liability of directors who did not sign the cheques - Proceedings against the petitioners (A5, A7, A8 and A9) in CC No.1043 of 2010 were liable to be quashed for lack of requisite averments and absence of cheque-signature by them. - HELD THAT: - The complaint merely alleged that the petitioners were directors of the company and described their presence during selection of jewellery, but did not specifically aver that at the time of the offence they were "in charge of, and responsible for, the conduct of the business of the company", a statutory requirement under Section 141. The dishonoured cheques were shown to be issued and signed by the Managing Director; the petitioners did not sign the cheques. Reliance on the apex court authorities establishes that mere directorship or recital of the wording of Section 141 in the complaint is insufficient to fasten vicarious criminal liability: a complaint must disclose the necessary facts showing that the accused were in overall control or responsible for day-to-day conduct of the company's business, or otherwise bring them within the specific categories (eg. Managing Director or cheque signatory) that attract liability. The petitioners' alleged resignation and filing of Form 32 were found not material for the decision because the determinative defects are the absence of specific averments and lack of signing of the cheques. In view of these deficiencies, continuing criminal proceedings against the petitioners would cause unwarranted harassment absent the statutory factual foundation required to proceed under Section 141 read with Section 138. [Paras 6, 7, 8, 9, 10]

Proceedings against A5, A7, A8 and A9 in CC No.1043 of 2010 are quashed.

Final Conclusion: The Criminal Petition under Section 482 Cr.P.C. is allowed and the proceedings in CC No.1043 of 2010 insofar as they relate to the petitioners A5, A7, A8 and A9 are quashed; connected miscellaneous petitions stand closed.

Vicarious liability under Section 141 of the Negotiable Instruments Act - requirements for prosecuting company directors in cheque dishonour cases - liability of an independent director vis a vis day to day management - quashing of criminal proceedings under Section 482 Cr.P.C.

Vicarious liability under Section 141 of the Negotiable Instruments Act - requirements for prosecuting company directors in cheque dishonour cases - Whether the complaint disclosed specific averments sufficient to fasten vicarious criminal liability on the petitioners as directors for the offence under Section 138 read with Section 141 of the Negotiable Instruments Act. - HELD THAT: - The Court examined the complaint and found no specific averments attributing to the petitioners any role in or responsibility for the conduct of the company's business; liability was premised only on their being directors and on a statutory reference. Relying on the settled principle that Section 141 creates vicarious penal liability which must be strictly construed, the Court held that bald or cursory allegations that a director was "in charge of" and "responsible to" the company are inadequate. The Court applied precedents requiring that a complaint must spell out how and in what manner the director was in charge of, or responsible for, the company's business at the relevant time. As the complaint lacked such particulars, it did not satisfy the statutory and judicially explicated prerequisites to proceed against directors under Section 141. [Paras 6, 7, 8, 9]

Complaint does not disclose the necessary specific allegations to fasten vicarious liability on the petitioners under Section 141; proceedings cannot be sustained on the material before court.

Liability of an independent director vis a vis day to day management - quashing of criminal proceedings under Section 482 Cr.P.C. - Whether, in view of the petitioners' resignation prior to the date of the dishonoured cheque and their status as independent directors not involved in day to day affairs, continuation of proceedings against them should be quashed. - HELD THAT: - The petitioners produced resignation letters and company records showing resignation and cessation of directorship prior to the cheque presentation, and material establishing their status as independent directors not responsible for daily management. The Court treated uncontested unimpeachable material together with the contents of the complaint and concluded that, as they were neither managing directors nor authorised signatories and no specific role was alleged, continuing criminal proceedings would be an abuse of process. The Court followed authority holding that independent directors who are not at the helm of affairs and who have not been specifically alleged to have consented, connived or been negligent cannot be criminally prosecuted under the NI Act merely by virtue of their office. [Paras 10, 11, 12, 13]

Proceedings against the petitioners, who were independent directors and had resigned before the offending cheque, are quashed as an abuse of process.

Final Conclusion: On the complaint's failure to make the specific averments required to fasten vicarious liability under Section 141 of the Negotiable Instruments Act, together with uncontested material showing the petitioners were independent directors who had resigned before the cheque date and were not involved in day to day management, the High Court quashed the criminal proceedings against the petitioners under its inherent jurisdiction.

Closure of proceedings under Section 138 of the Negotiable Instruments Act - Compensatory object of Section 138 and compounding - Discretion of the court to close proceedings in absence of complainant's consent - Summary trial procedure under Chapter XVII of the Negotiable Instruments Act - Assessment of interest and costs for closure/compounding

Closure of proceedings under Section 138 of the Negotiable Instruments Act - Compensatory object of Section 138 and compounding - Summary trial procedure under Chapter XVII of the Negotiable Instruments Act - Whether payment of the cheque amount to the complainant permits closure of criminal proceedings under Section 138 N.I. Act and the scope of M/s. Meters and Instruments (AIR 2017 SC 4594) on compounding and discharge. - HELD THAT: - The court accepted that Section 138 proceedings are primarily compensatory and that the Apex Court in M/s. Meters and Instruments recognised that compounding and closure should be encouraged where the complainant is compensated, and that summary procedure is the norm for such trials. The High Court noted, however, that subsequent observations in the SUO MOTU Writ Petition (Cri.) No.2 of 2020 hold that Section 258 Cr.P.C. is not applicable to summons cases and that the aspect of M/s. Meters and Instruments conferring power on the trial court to discharge an accused is not good law to that extent. Applying these principles to the facts, the court recorded that the petitioners had paid the cheque amounts by RTGS and that receipt of payment was not denied by the complainant; the only dispute related to interest and costs. In view of the compensatory object and the guidance to encourage settlement/compounding subject to assessment of interest and costs, the court directed cooperative steps to be taken before the trial court rather than insisting on personal presence of the parties. [Paras 8, 9, 11, 12]

The observations in M/s. Meters and Instruments (to the extent relevant) are applied to hold that payment of the cheque amounts militates in favour of closure, but assessment of interest and costs is required; parties should assist the trial court and personal presence need not be insisted upon.

Assessment of interest and costs for closure/compounding - Discretion of the court to close proceedings in absence of complainant's consent - Whether the trial court should be directed to assess interest and costs and proceed to close the proceedings in the light of payment by the accused, and whether parties' personal presence should be dispensed with. - HELD THAT: - The High Court observed that the petitioners had paid the cheque amounts by RTGS shortly after receipt of the legal notice and before trial progressed. Given that the complainant does not deny receipt but disputes interest, the court held it appropriate that both parties, through their advocates, assist the trial court in assessing interest and costs to achieve closure. The court recorded that presence of parties need not be insisted upon and directed the trial court to endeavour expeditious closure by assessing the compensatory amount (including interest/cost) and dealing with any valid objection of the complainant, following the procedural guidance in M/s. Meters and Instruments to the extent it remains applicable. [Paras 12, 13]

Parties directed to approach the trial court to assist in assessment of interest and costs; the trial court to endeavour closure without insisting on personal appearance and to act expeditiously.

Interim exemption from personal appearance - Whether interim exemption from personal appearance before the trial court should continue. - HELD THAT: - Pursuant to the earlier order recorded on 28.02.2019, the High Court had granted interim relief exempting the petitioners from personal appearance before the learned Additional Chief Metropolitan Magistrate, N.I. Act Court No.27. Having directed that parties need not be insisted upon to appear and should assist through their advocates, the court maintained that personal presence need not be required while the trial court proceeds to assess interest and costs and consider closure. [Paras 2, 3]

Interim exemption from personal appearance is recognised and parties' physical presence need not be insisted upon while the trial court assesses interest/costs and considers closure.

Final Conclusion: The petitions are disposed of with directions that the parties, through their advocates, assist the trial court in assessing interest and costs necessary for compounding/closure; the trial court is directed to endeavour expeditious closure of the Section 138 proceedings without insisting on personal presence of the petitioners and after considering any valid objection of the complainant.

Statutory presumption under Section 139 of the Negotiable Instruments Act - rebuttal on preponderance of probability - proof of defence that document was given only as security/surety for third party loan - creditor entitled to presumption where cheque issued from accused's account and signature not disputed - failure to put suggestion in cross-examination and afterthought defence at revision stage

Statutory presumption under Section 139 of the Negotiable Instruments Act - creditor entitled to presumption where cheque issued from accused's account and signature not disputed - Whether the statutory presumption under Section 139 of the Negotiable Instruments Act in favour of the complainant arises and is available where the cheque and signature are not disputed. - HELD THAT: - The Court found that the cheque (Ex.P6) was issued from the accused's account and that the accused did not dispute the signature on Ex.P6. Oral evidence of the complainant and attesting witnesses (PW1, PW2 and PW3) supported the presentation and the related promissory notes (Exs.P1-P3) and endorsements. In these circumstances the Courts below were correct to draw the statutory presumption in favour of the complainant under Section 139. Having regard to that presumption, the burden lay upon the accused to rebut it. The High Court accepted the factual findings that the requirements for invoking the presumption were satisfied and that the presumption accordingly arose. [Paras 10, 17]

The statutory presumption under Section 139 arises and was rightly drawn in favour of the complainant.

Rebuttal on preponderance of probability - proof of defence that document was given only as security/surety for third party loan - failure to summon bank officials to substantiate defence - Whether the accused successfully rebutted the presumption by proving that the promissory notes/cheques were given only as security or as surety for a loan obtained by the complainant. - HELD THAT: - The accused advanced a defence that the documents were handed over as security because of a landlord-tenant relationship and that the complainant obtained bank loan using those documents. The accused led defence witnesses (DW1-DW4) and relied on an account opening form (Ex.D1) showing the complainant introduced the accused to the bank. However, the accused did not produce evidence from bank officials or any documentary proof of a loan taken by the complainant, nor did she summon officials to confirm that the complainant obtained a loan on the basis of the accused's documents. The Court observed that the standard to rebut the statutory presumption is preponderance of probability, and on the evidence adduced the defence failed to probabilize the suggested case. The Trial Court's disbelief of the defence and the Lower Appellate Court's confirmation were upheld as not susceptible to interference. [Paras 11, 12, 13, 14]

The accused failed to rebut the statutory presumption on the preponderance of probability; the defence that the documents were given only as security/surety was not established.

Failure to put suggestion in cross-examination and afterthought defence at revision stage - Whether the contention regarding omission of a prior legal notice or other proceedings, raised at the revision stage, detracts from the prosecution case. - HELD THAT: - The accused contended that a second transaction or earlier proceedings were not mentioned in the first legal notice and that this omission amounted to fraud. The Court noted that no suggestion on this point was put to PW1 during cross-examination and treated the contention as an afterthought raised only at the revision stage. The Court found that non-mentioning of other proceedings in a subsequent legal notice did not materially affect the complainant's case in the present complaint and that the argument was not a credible basis to upset the findings of the Courts below. [Paras 15, 16]

The late-raised contention about non-mentioning of other legal proceedings is an afterthought and does not vitiate the prosecution case.

Final Conclusion: The High Court dismissed the criminal revision and confirmed the conviction and sentence imposed by the Courts below, holding that the statutory presumption under Section 139 rightly arose, that the accused failed to rebut that presumption on the preponderance of probability, and that the late objections raised at the revision stage did not warrant interference.

Moratorium under the Insolvency and Bankruptcy Code and its effect on proceedings under the Negotiable Instruments Act - Survival of criminal liability of natural persons under Chapter XVII of the Negotiable Instruments Act despite moratorium - Quashing of criminal proceedings against corporate debtor in view of moratorium - Section 482 Cr.P.C. - limited scope to quash where issue is triable and requires appreciation of evidence

Moratorium under the Insolvency and Bankruptcy Code and its effect on proceedings under the Negotiable Instruments Act - Quashing of criminal proceedings against corporate debtor in view of moratorium - Whether criminal proceedings under Chapter XVII of the Negotiable Instruments Act against the corporate accused (company) must be quashed in view of commencement of Corporate Insolvency Resolution Process and the moratorium. - HELD THAT: - The Court applied the legal principle laid down by the Supreme Court in P. Mohanraj (paragraph 103) that the moratorium declared under the IBC operates as a statutory bar to continuation or initiation of proceedings under Sections 138/141 of the Negotiable Instruments Act against the corporate debtor during the corporate insolvency resolution process. On the facts, insolvency proceedings against the first petitioner (the company) were initiated and moratorium declared by the NCLT on 10.07.2017, and the cheques in question were presented after that communication. Consequently the statutory impediment created by the moratorium renders continuation of criminal prosecution against the corporate debtor legally unsustainable. The High Court therefore interfered under its powers to quash the proceedings insofar as they relate to the first petitioner company and directed quashing of the listed S.T.C. cases against the company. [Paras 9, 10, 11, 13]

Proceedings against the first petitioner (company) quashed on account of moratorium under the IBC; relevant S.T.C. cases against the company are quashed.

Survival of criminal liability of natural persons under Chapter XVII of the Negotiable Instruments Act despite moratorium - Section 482 Cr.P.C. - limited scope to quash where issue is triable and requires appreciation of evidence - Whether the moratorium shields the directors/natural persons (petitioners 2 and 3) from prosecution under Sections 138/141 of the Negotiable Instruments Act, and whether their trials should be quashed under Section 482 Cr.P.C. - HELD THAT: - Relying on the Supreme Court's holding that the moratorium under Section 14 IBC applies only to the corporate debtor and does not affect the statutory liability of natural persons covered by Section 141 of the Negotiable Instruments Act, the Court held that criminal liability of the directors/management survives. The High Court found that the question of prosecuting petitioners 2 and 3 involves triable issues and appreciation of evidence, which cannot be resolved in exercise of writ jurisdiction under Section 482 Cr.P.C. The court therefore declined to quash proceedings against petitioners 2 and 3, left open their rights to raise all grounds before the trial court, and directed expeditious disposal of the trials with limited appearance directions for the accused. [Paras 10, 11, 12]

Proceedings against petitioners 2 and 3 are not quashed; trials to continue before the trial court which was directed to dispose them expeditiously, while appearance of the accused is restricted to specified stages.

Final Conclusion: The petitions are allowed insofar as the corporate accused (first petitioner) is concerned and the specified S.T.C. cases against the company are quashed in view of the moratorium under the IBC; however, criminal proceedings against the directors/natural persons are not quashed, being triable issues and because personal liability under the Negotiable Instruments Act survives the moratorium, and the trial court is directed to proceed expeditiously with limited appearance directions.

Holder in due course - endorsement under the Negotiable Instruments Act - proof of authority/partnership to sue on behalf of a firm - bearing of criminal proceedings on civil suit where cause of action overlaps

Proof of authority/partnership to sue on behalf of a firm - The person suing on behalf of the plaintiff firm has not proved that he is a partner of the firm. - HELD THAT: - The 1st defendant had specifically pleaded that K. Venkatesh was not a partner of the plaintiff firm. The plaintiff did not produce the registered list of partners maintained with the Registrar of Firms, and failed to discharge the evidentiary burden to establish that Venkatesh was a partner. Non-production of the register warranted an adverse inference. The Trial Court's finding that Venkatesh was not proved to be a partner is supported by the record and does not call for interference. [Paras 18]

Finding that the plaintiff failed to prove that the person suing is a partner is upheld.

Endorsement under the Negotiable Instruments Act - holder in due course - The cheques were not endorsed in the manner contemplated by the Negotiable Instruments Act and the plaintiff is not a holder in due course entitled to sue on them. - HELD THAT: - Sections defining holder in due course and indorsement (including endorsements 'in blank' and 'in full') require that endorsement and delivery show transfer of title and, where applicable, right to further negotiate. Examination of the pleaded and admitted materials (Exs. A-1 to A-7) shows only a seal and signature without express words of endorsement evidencing passing of consideration or proper endorsement as envisaged by the Act. Precedent of this Court and subsequent decisions were applied to hold that mere signature on the back of a cheque, without particulars evidencing consideration or endorsement, cannot establish the complainant as a holder in due course. The Criminal proceedings relating to the cheques culminated in acquittal on the ground that passing of consideration was not proved; that finding reinforces the conclusion that endorsement and transfer were not established. The Trial Court's detailed findings on these points are sustainable. [Paras 22, 23, 24, 25, 26]

The cheques were not validly endorsed; the plaintiff is not a holder in due course and cannot maintain the suit on the cheques.

Bearing of criminal proceedings on civil suit where cause of action overlaps - The findings in the criminal proceedings bearing on passing of consideration and endorsement have relevance and weigh against the plaintiff's case in the civil suits. - HELD THAT: - The criminal complaints under Section 138 resulted in acquittal on the basis that passing of consideration and endorsement were not proved; this evidentiary outcome is relevant to the civil dispute where the cause of action and issues are substantially similar. The Trial Court considered the criminal record and associated evidence; having found lack of proof of endorsement and passing of consideration, the civil suits could not be sustained. No error is shown in treating the criminal findings and related evidence as bearing upon the civil claims. [Paras 11, 26, 27]

The Trial Court correctly took into account the criminal proceedings and associated findings as relevant to the civil suits.

Final Conclusion: Appeals dismissed; the Judgment and Decree of the I Additional District Judge, Erode, in O.S.Nos. 48 of 2007 and 50 of 2007 are confirmed. No order as to costs.

Presumption under Section 118 of the Negotiable Instruments Act - rebuttal of presumption - due execution of promissory note - onus of proof - credibility of attestors and witness testimony - influence and mental condition vitiating consent

Presumption under Section 118 of the Negotiable Instruments Act - signature authenticity - Signature in Ex.A.1 is that of the defendant and, on that basis, the trial Court was justified in raising the presumption under Section 118 of the Negotiable Instruments Act. - HELD THAT: - The Court found that the signature appearing in Ex.A.1 belonged to the appellant; accordingly the legal presumption available under Section 118 of the Negotiable Instruments Act was properly raised by the trial Court. The existence of the signature engaged the statutory evidentiary presumption which shifted the evidentiary burden to the defendant to rebut it. [Paras 11]

Presumption under Section 118 was rightly raised as the signature in Ex.A.1 was that of the appellant.

Rebuttal of presumption - onus of proof - influence and mental condition vitiating consent - The defendant successfully rebutted the presumption raised under Section 118 on the balance of probabilities. - HELD THAT: - The Court held that the presumption may be rebutted either by positive evidence or by eliciting appropriate answers that undermine the plaintiff's case. On reappraisal, the defendant's evidence and supporting material showed that the plaintiff lacked the financial wherewithal to lend the asserted sum, that the defendant had psychiatric issues and was under the plaintiff's influence, and that signed blank documents had been misused. The cumulative effect of these circumstances, together with deficiencies in the plaintiff's testimony, led the Court to conclude that the defendant had rebutted the statutory presumption and the onus reverted to the plaintiff to prove the loan. [Paras 12, 13]

On a balance of probabilities the defendant rebutted the presumption; the onus remained on the plaintiff to prove the transaction, which he failed to do.

Due execution of promissory note - credibility of attestors and witness testimony - Due execution of Ex.A.1 as a promissory note was not established by the plaintiff. - HELD THAT: - The Court scrutinised the attestors' evidence and found discrepancies in their testimonies and inconsistencies in the plaintiff's account about authorship of the document. The plaintiff also failed to prove his financial capacity to have advanced the alleged loan. Given the unimpressive and inconsistent testimony of the attestors and the plaintiff, and the plausible explanation offered by the defendant about misuse of signed blank papers, the Court concluded that the plaintiff did not establish due execution of Ex.A.1. [Paras 9, 13]

Due execution of Ex.A.1 was not proved; the plaintiff failed to establish the alleged loan and promissory note.

Final Conclusion: The trial Court's decree is set aside; after reappreciation of evidence the appeal is allowed and the suit dismissed, the Court finding that although the signature on Ex.A.1 was the appellant's, the statutory presumption was rebutted and due execution of the promissory note was not established.