TaxTMI Updates e-Newsletter
Dec 16,2022

Seizure of documents, books or things and their retention for examination and proceedings - seizure of goods and return of seized goods within six months - distinction between seizure of goods and seizure of documents - determination of wrongly availed input tax credit in cases of fraud, wilful misstatement or suppression - time limit for issuance of show-cause notice prior to five-year determination period - conjoint reading of retention and limitation provisions permitting retention up to four and a half years plus thirty days

Seizure of documents, books or things and their retention for examination and proceedings - distinction between seizure of goods and seizure of documents - Whether the six-month return rule for seized goods under the statutory scheme applies to documents, books or other things seized by tax authorities. - HELD THAT: - The Court held that the statutory regime draws a clear distinction between seizure of goods and seizure of documents, books or things. Section 67(7) (the six-month return rule) applies to goods; by contrast the second proviso to Section 67(2) permits retention of documents, books or things for so long as may be necessary for their examination and for any inquiry or proceedings under the Act. Consequently, the shorter prescription applicable to goods does not automatically govern documents or electronic devices seized for investigation; documents and things may be retained while they are required for examination or proceedings. [Paras 10]

Section 67(7) is not applicable to documents, books or things; such items may be retained for the duration necessary for examination and inquiry under the Act.

Determination of wrongly availed input tax credit in cases of fraud, wilful misstatement or suppression - time limit for issuance of show-cause notice prior to five-year determination period - conjoint reading of retention and limitation provisions permitting retention up to four and a half years plus thirty days - Whether the seized computers, laptops and documents ought to be released at this stage having regard to the limitation and procedural timelines governing determination under the Act. - HELD THAT: - The Court concluded that the investigation fell within the scope of determination under the provision addressing wrongful availment of input tax credit by reason of fraud, wilful misstatement or suppression. Under that scheme the proper officer must issue the show-cause notice at least six months prior to the outer five-year period for issuance of the final order. Read with Section 67(3) (which mandates return of documents not relied upon for issuance of notice within thirty days of such notice), a conjoint reading of the retention and limitation provisions permits retention of documents and things for a maximum period corresponding to four and a half years from the date of erroneous refund plus thirty days. As that maximum period had not elapsed in the present matter, the Court declined to direct release of the seized electronic devices and documents at this stage, while observing that authorities must proceed in accordance with law and prescribed timelines. [Paras 11]

Because the case falls under the fraud/wilful misstatement provisions and the statutory timelines for issuance of notice and determination have not expired, the seized items need not be released at this stage.

Final Conclusion: Writ petitions dismissed. The seized computers, laptops, documents and other things are not directed to be released since the statutory retention and limitation periods applicable to documents seized in connection with alleged fraudulent availment of input tax credit have not yet expired; authorities to proceed in accordance with law and timelines.

Power to restrict utilisation of electronic credit ledger under Rule 86A - Ineligibility of input tax credit under Section 16(2) provisos - Strict construction of statutory provisions authorising assets/credit freezing - Reversal mechanism under Rule 37 - Temporal limit on restrictions under Rule 86A(3)

Power to restrict utilisation of electronic credit ledger under Rule 86A - Ineligibility of input tax credit under Section 16(2) provisos - Reversal mechanism under Rule 37 - Strict construction of statutory provisions authorising assets/credit freezing - Validity of blocking the petitioner's ITC under Rule 86A where the only asserted ground was ineligibility under the proviso to Section 16(2) for non-payment to the supplier within 180 days - HELD THAT: - The court held that Rule 86A(1) permits imposing a restriction on debit of the electronic credit ledger only where the ITC has been "fraudulently availed" or is "ineligible" for the specific reasons enumerated in the sub-clauses of Rule 86A(1). The expression "inasmuch as" qualifies and restricts the meaning of "ineligible" to those specified conditions. The provisos to Section 16(2) permit a recipient to initially avail ITC even where payment to the supplier is on credit; in the event of non-payment within 180 days the law prescribes addition of the credit to output liability with interest and a mechanism for reversal and re availment on payment. Rule 37 prescribes the procedure for reversal and addition to output liability. Thus, mere assertion that a recipient has not paid the supplier within 180 days does not ipso facto render the ITC ineligible under Rule 86A(1) so as to justify blocking the ECL without appropriate adjudication or recorded reasons satisfying the conditions of Rule 86A(1). Statutory provisions authorising drastic measures like freezing utilisation of ITC must be strictly construed. Applying these principles to the facts, the continued blocking of the petitioner's ITC for an extended period without authority of law was held to be impermissible. [Paras 18, 21, 24, 27, 28]

Blocking of the petitioner's ITC on the stated basis was without authority of law and the respondents were directed to forthwith unblock the ITC in the petitioner's electronic credit ledger.

Temporal limit on restrictions under Rule 86A(3) - Whether successive orders can extend the restriction under Rule 86A beyond one year was not decided and left open for consideration - HELD THAT: - The court observed that Rule 86A(3) provides that such restriction shall cease to have effect after one year from the date of imposition and noted that there may be merit in the petitioner's contention that successive orders cannot be used to extend the restriction beyond one year. However, the respondents did not press this issue in the petition and, given the court's interpretation of the provisos to Section 16(2) and Rule 86A(1), the court refrained from deciding the question and did not determine whether successive orders could lawfully extend the restriction beyond one year. [Paras 26]

Question left undecided for fresh consideration; court refrained from adjudicating on extension of restrictions beyond one year.

Final Conclusion: The respondents' continued blocking of the petitioner's ITC in the electronic credit ledger was without authority of law; the ITC is to be unblocked forthwith, subject to the respondents' right to pursue recovery of any ITC and interest by following the statutory procedure under Section 16(2) proviso and Rule 37.

Cancellation of GST registration for non-filing of returns - restoration of GST registration upon compliance and self-assessment - requirement to file GSTR-1 to enable adjudication - extension of limitation period due to COVID-19

Cancellation of GST registration for non-filing of returns - Validity of cancellation of the petitioner's GST registration under section 29(2) of the CGST Act for continuous non-filing of returns - HELD THAT: - The Court found that the registration was cancelled for non-filing of returns and that the adjudicating authority had the power to cancel under section 29(2). However, the order of cancellation and the appellate order were quashed in view of the petitioner subsequently filing the outstanding returns and making self-assessment payments. Although the original cancellation proceedings were cryptic, the Court did not reopen the factual finding that returns had not been filed; instead it granted relief because compliance had been made and other equitable considerations applied.

Order cancelling the registration is quashed and set aside.

Restoration of GST registration upon compliance and self-assessment - Entitlement to restoration of registration after filing returns and payment by self-assessment - HELD THAT: - The Court accepted that the petitioner filed returns for the period from September, 2018 till March, 2021 and paid the self-assessed liability and late fees. Relying on precedents where restoration was permitted when cancellation arose solely from non-filing and the taxpayer subsequently paid outstanding tax, and having regard to Covid-related extension of limitation, the Court directed immediate restoration of the registration subject to the petitioner filing an undertaking to cooperate with assessment and to fulfill liabilities determined on assessment.

Registration directed to be restored forthwith upon the terms ordered by the Court.

Requirement to file GSTR-1 to enable adjudication - Obligation to file GSTR-1 after restoration and its role in assessment - HELD THAT: - The Court observed that GSTR-1 filing is necessary for the authority to compare and adjudicate liabilities. Given the petitioner's readiness and that restoration is being permitted, the Court required the petitioner to file GSTR-1 within a short specified period to facilitate completion of assessment. This obligation was imposed as part of the restoration process to enable proper adjudication without prejudice to revenue.

Petitioner to file GSTR-1 within 15 days of restoration to enable assessment.

Extension of limitation period due to COVID-19 - Application of COVID-19 related extension of limitation in deciding restoration - HELD THAT: - The Court took notice of the extension of limitation by higher authorities and orders of the Apex Court during the pandemic and treated that extension as relevant to the petitioner's entitlement to seek restoration. The Court relied on that principle and precedent to justify considering the petitioner's belated application and compliance for restoration.

COVID-19 limitation extension applied in the context, supporting restoration.

Final Conclusion: The writ petition is allowed: the cancellation order and appellate order are quashed and set aside; the respondent is directed to restore the petitioner's GST registration forthwith; the petitioner shall file GSTR-1 within 15 days of restoration and shall cooperate so that the authority completes assessment within six weeks, subject to the petitioner's undertaking to comply with liabilities determined on assessment.

Exemption under Section 54 for reinvestment in new residential property - Requirement of construction commencement/completion within the three year window - Investment in vacant plots versus constructed residential house for Section 54 eligibility - Taxation of unutilized capital gains under the proviso to Section 54 - Purposive and beneficial construction of exemption provisions

Exemption under Section 54 for reinvestment in new residential property - Requirement of construction commencement/completion within the three year window - Investment in vacant plots versus constructed residential house for Section 54 eligibility - Whether the assessee was entitled to exemption under Section 54 in respect of capital gains reinvested in residential plots where no construction activity had commenced within the prescribed period - HELD THAT: - The Tribunal analysed Section 54 as providing a three year window for construction and observed that the statute treats amounts actually utilised for purchase/construction or deposited in the specified account as cost of the new asset; the proviso contemplates taxation of unutilized amounts in the year when the three year period expires. While earlier decisions favour a liberal, purposive approach and hold that commencement or substantial investment may suffice, the facts here show that the assessee ultimately pressed claim only to the extent of a specified part investment in one plot and that there was no evidence of construction activity or of depositing sale proceeds in the statutory account followed by utilisation for construction within the relevant period. The Tribunal held that the plot remained a vacant plot for the relevant period and that mere intention or later possession/approval (occurring well after the stipulated period) did not satisfy the statutory requirement in the facts of this case. Having applied the legal principles and authorities cited, the Tribunal found no error in the tax authorities' conclusion denying the exemption to the extent claimed. [Paras 9, 11, 13]

Exemption under Section 54 was not allowable to the assessee in respect of the claimed capital gains on the facts: the partial investment did not demonstrate commencement of construction or statutory utilisation within the three year period and the claim was therefore rejected.

Taxation of unutilized capital gains under the proviso to Section 54 - Purposive and beneficial construction of exemption provisions - Whether the assessment was vitiated for want of reasonable opportunity / breach of natural justice in relation to reliance on the inspector's report and show cause notice - HELD THAT: - The Tribunal considered the contention that the assessing officer relied on an inspector's report which was not confronted to the assessee and that the show cause notice predated the report. The record before the appellate authorities included remand reports and rejoinders, and the CIT(A) examined the factual matrix including the developer's approvals and the assessee's submissions. On applying the principles of fair opportunity and having regard to the materials on record and the submissions before it, the Tribunal found no merit in the contention that the assessment was invalid for breach of natural justice or that the authorities erred in relying on the material available to them. [Paras 5, 13]

The plea of violation of principles of natural justice was rejected and no infirmity in the assessment process was found.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the denial of the claimed exemption under Section 54 on the facts that the reinvestment in vacant plots did not demonstrate requisite utilisation/commencement of construction within the statutory period, and it found no breach of procedural fairness in the assessment proceedings.

Disallowance under Section 14A when no exempt income earned - Retrospective operation of Finance Act 2022 amendment to Section 14A - Condonation of delay in re-filing appeals - Filing of legible annexures

Condonation of delay in re-filing appeals - Delay of 80 days in re-filing the appeal was condoned. - HELD THAT: - The application filed by the appellant seeking condonation of delay in re-filing the appeal was considered. The respondent did not oppose the prayer. In view of the non-opposition and the submissions placed, the Court allowed the application and condoned the delay in re-filing the appeal. [Paras 1, 2, 3, 4]

Delay condoned; application disposed of.

Filing of legible annexures - Appellant directed to file legible copies of annexures prior to next hearing. - HELD THAT: - The Court allowed the application CM No.52412/2022 subject to the appellant filing legible copies of the annexures at least three days before the next date of hearing. This was made a condition of proceeding with the appeal. [Paras 5]

Allowed subject to filing legible annexures as directed.

Disallowance under Section 14A when no exempt income earned - Retrospective operation of Finance Act 2022 amendment to Section 14A - No substantial question of law arises; appeal disposed in favour of the assessee as the Tribunal's view was upheld. - HELD THAT: - The appeal challenged the Tribunal's order on whether disallowance under Section 14A could be made where the assessee had not earned exempt income (AY 2010-2011). The Court noted a coordinate bench's decision that the amendment to Section 14A made by Finance Act 2022 does not operate retrospectively, and referred to earlier coordinate-bench decisions relied upon by that bench. Having regard to these decisions and the fact that a Division Bench ruling adverse to the revenue is the subject of a pending SLP, the Court concluded that no substantial question of law arises in the present case and disposed of the appeal accordingly. The Court recorded that, should the revenue succeed in the pending SLP, the parties will abide by the Supreme Court's decision. [Paras 6, 7, 8, 9, 10]

Appeal disposed of; Tribunal's view in favour of the assessee upheld and no substantial question of law found.

Final Conclusion: Application for condonation of delay granted; appellant directed to file legible annexures; appeal concerning disallowance under Section 14A for AY 2010-2011 disposed of in favour of the assessee as no substantial question of law arose, with parties to abide by any later Supreme Court decision in the pending SLP.

Provisional attachment under Section 132(9B) of the Income tax Act - cessation of provisional attachment after six months under Section 132(9C) - recording of reasons for attachment and court's satisfaction with reasons - protection of the interest of the revenue as a justification for provisional attachment - use of bank guarantee or security as alternative to continued attachment - undertaking and disclosure by directors/assessee to secure revenue interest

Provisional attachment under Section 132(9B) of the Income tax Act - recording of reasons for attachment and court's satisfaction with reasons - protection of the interest of the revenue as a justification for provisional attachment - Validity of provisional attachment of the petitioner's bank accounts following search and seizure and whether the authorized officer recorded sufficient reasons to justify provisional attachment to protect the interest of the revenue. - HELD THAT: - The Court examined the material produced by the department pursuant to its direction and held that the authorised officer had recorded reasons and obtained requisite approvals before provisionally attaching the petitioner's bank accounts after the search/survey. The affidavit in reply and the documents produced disclosed allegations of transactions through alleged shell concerns, transfers to holding entities abroad and other material relied upon by the department; on perusal the Court was satisfied that attachment was not effected without any reasons. While recognition was given to the drastic nature of powers under Section 132(9B)/Section 281(B), the Court found that, on the material placed before it, the authority had recorded reasons and secured prior approval consistent with the statutory scheme and Board instructions, and that the initial exercise of provisional attachment was not shown to be wholly without basis. [Paras 8, 9]

Provisional attachment was not set aside on the ground of absence of recorded reasons; the Court was preliminarily satisfied that reasons and approvals existed to justify the initial provisional attachment.

Cessation of provisional attachment after six months under Section 132(9C) - use of bank guarantee or security as alternative to continued attachment - undertaking and disclosure by directors/assessee to secure revenue interest - Whether continuation of provisional attachment beyond the statutory period required for protection of revenue and the appropriate interim measure to balance revenue protection and the assessee's right to carry on business. - HELD THAT: - The Court acknowledged the proviso in Section 132(9C) that provisional attachments cease after six months, and noted the drastic character of continuing attachments. Applying the balancing principle, the Court held that continued provisional attachment of the HSBC account was not necessary to protect revenue given that the respondent had already converted funds in DBS into a fixed deposit which, on the material before the Court, would suffice for current protection of revenue. The Court directed that the interest of the revenue could be adequately secured by an alternative mechanism: filing of specified undertakings by the directors (including personal undertakings by the Indian director and disclosure of immovable assets) and verification of those disclosures by the department within a short timeframe, failing which the department could proceed. Upon satisfactory verification, the attachment of the HSBC account was to be released. The Court also indicated that a bank guarantee or equivalent security would be an acceptable protective measure. [Paras 11, 12]

Attachment of the HSBC account to be released after the assessee furnishes undertakings, disclosure of immovable assets and related verification; the fixed deposit in DBS was held sufficient to protect revenue in the interim and alternative security (bank guarantee) was accepted as a means to protect the revenue interest.

Final Conclusion: Petition disposed. On the material produced, the Court declined to quash the provisional attachments for want of recorded reasons but directed conditional relief: the DBS fixed deposit was held sufficient to protect revenue for now and, upon the petitioner filing the prescribed undertakings and asset disclosures within one week and verification by the department, the HSBC bank account shall be released; the original file returned to the department and observations made are without prejudice to further proceedings.

Disallowance under Section 40(1)(ia) for failure to deduct tax at source - proviso to section 40(1)(ia) read with proviso to section 201(1) - conditions for relief under proviso to section 201(1) - allowability of business expenditure where TDS obligation not complied with

Disallowance under Section 40(1)(ia) for failure to deduct tax at source - proviso to section 40(1)(ia) read with proviso to section 201(1) - conditions for relief under proviso to section 201(1) - Whether expenses claimed by the assessee in respect of payments to three entities are allowable where tax was not deducted at source and whether the proviso to section 40(1)(ia) read with proviso to section 201(1) affords relief. - HELD THAT: - The Tribunal examined the finding of the Commissioner (Appeals) that the assessing officer had computed differences in TDS for payments to three entities and that the assessee admitted an inadvertent accounting error leading to non-deduction. The assessee sought to invoke the proviso to section 40(1)(ia) read with the proviso to section 201(1), but failed to satisfy the statutory conditions set out therein. Specifically, the assessee did not produce evidence that the resident recipients had (a) furnished returns of income under section 139(1), (b) taken the relevant amounts into account in computing income in those returns, and (c) paid tax on the income declared in such returns. Given the absence of compliance with these conditions and the admission of failure to deduct tax at source, the Tribunal found no error in the Commissioner (Appeals)'s conclusion that the expenses are not allowable under section 40(1)(ia). [Paras 9]

The disallowance under Section 40(1)(ia) in respect of payments where TDS was not deducted is upheld and the claim of relief under the proviso to section 40(1)(ia) read with proviso to section 201(1) is rejected.

Final Conclusion: The appeal is dismissed and the disallowance under Section 40(1)(ia) in relation to payments where tax was not deducted at source is upheld.

Typographical error / clerical error - rectification under Section 154 of the Income tax Act - appellate jurisdiction not appropriate for rectification of clerical errors - liberty to file rectification application - condonation of delay

Typographical error / clerical error - rectification under Section 154 of the Income tax Act - appellate jurisdiction not appropriate for rectification of clerical errors - liberty to file rectification application - Additions made on account of difference in exempt income which the assessee admitted arose from a clerical/typographical error were to be corrected by a rectification application under Section 154 and not by invoking appellate jurisdiction. - HELD THAT: - The Tribunal recorded that the assessee admitted before the Assessing Officer that the addition of Rs. 7,50,096 arose from a clerical error in the return, and had sought permission before the CIT(A) to rectify the mistake under Section 154. The CIT(A) observed the admitted nature of the error and rightly granted liberty to the assessee to file a rectification application under Section 154 with the AO. The Tribunal agreed that typographical or clerical mistakes committed while filing the return are to be rectified under the statutory rectification remedy and not by exercising appellate jurisdiction, and accordingly found no infirmity in the CIT(A)'s order providing liberty for rectification. [Paras 10]

Liberty to file a rectification application under Section 154 was rightly afforded; the appellate forum was not the appropriate remedy for the clerical error and the ground was dismissed.

Deduction under Section 24 - assessment determined under the Act - Ground challenging disallowance of deduction claimed under the head 'income from house property' (restricted to the allowable amount) was not accepted. - HELD THAT: - The assessee had claimed a deduction under Section 24 which the AO disallowed; the assessee raised the matter before the CIT(A). The Tribunal, after considering the record and the CIT(A)'s confirmation of the assessment, found no merit in the assessee's grounds of appeal and dismissed them. No separate intervention was warranted by the Tribunal on this point in the appellate proceedings before it. [Paras 11]

The ground disputing the disallowance under Section 24 was dismissed.

Final Conclusion: The appeal is dismissed; the CIT(A)'s order granting liberty to the assessee to seek rectification under Section 154 is upheld and the grounds challenging the additions and disallowance are rejected.

Penalty under section 271(1)(c) - concealment or furnishing inaccurate particulars of income - omnibus show-cause notice / non-striking off irrelevant parts - requirement to specify the exact limb of penalty notice - strict construction of penal provisions and prejudice

Penalty under section 271(1)(c) - omnibus show-cause notice / non-striking off irrelevant parts - requirement to specify the exact limb of penalty notice - strict construction of penal provisions and prejudice - Validity of penalty imposed under section 271(1)(c) where the assessing officer issued an omnibus notice without specifying which limb (concealment or furnishing inaccurate particulars) was invoked. - HELD THAT: - The Tribunal held that Section 271(1)(c) penalises either concealment of income or furnishing of inaccurate particulars and the two limbs carry distinct meanings; consequently, the assessing officer must indicate the exact limb relied upon so that the assessee can respond. The assessment order and penalty proceedings in this case did not specify the relevant limb and an omnibus notice with inapplicable portions not struck off was issued. Reliance was placed on the Full Bench decision of the Bombay High Court in Mr. Mohd. Farhan A. Shaikh v. ACIT, which treats omnibus show-cause notices as suffering from vagueness and non-application of mind and emphasises that a penal provision must be construed strictly and ambiguity resolved in the assessee's favour. The Tribunal applied that ratio to the present facts, observing that the assessing officer failed to intimate the specific charge under Section 271(1)(c), thereby vitiating the penalty proceedings. [Paras 9, 11, 12, 13]

Penalty under section 271(1)(c) set aside and penalty order deleted for failure to specify the relevant limb in the notice; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal and deleted the penalty imposed under section 271(1)(c) on the ground that the assessing officer issued an omnibus notice without specifying the exact limb of the provision relied upon, thereby vitiating the penalty proceedings.

Rejection of books of account under section 145(3) - assessment by estimation under section 144 - valuation of stock for excise element under section 145A - estimation of income as percentage of turnover - reliability of accounts and requirement to produce stock registers and supporting vouchers - use of comparable companies' profit margins as evidence

Rejection of books of account under section 145(3) - reliability of accounts and requirement to produce stock registers and supporting vouchers - Whether the Assessing Officer was justified in rejecting the assessee's books of account. - HELD THAT: - The Tribunal found that the assessee failed to produce stock registers, invoices, bills, vouchers and excise records despite specific requests and multiple opportunities, and that the auditor's statements and profit and loss account showed inconsistencies (notably adjustment of excise duty in receipts while stock was not valued as required). The learned CIT(A) and the Tribunal applied established fact-based principles that accounts regularly maintained may be accepted unless cogent reasons show they are unreliable; here the cumulative circumstances - absence of stock records, non-inclusion of excise element in stock valuation and unexplained large cash withdrawals - furnished sufficient basis to conclude that the books did not reflect the true state of affairs. On that basis the books were validly rejected under section 145(3) and the finding of the lower authorities was upheld. [Paras 5, 6, 9]

The rejection of the assessee's books of account was justified and upheld.

Assessment by estimation under section 144 - estimation of income as percentage of turnover - use of comparable companies' profit margins as evidence - valuation of stock for excise element under section 145A - Whether estimating the assessee's income at 1% of turnover was appropriate. - HELD THAT: - The AO initially estimated income at 2% of turnover after rejecting the books; the learned CIT(A) reduced the estimate to 1% after examining the facts. The assessee's submission invoking profit margins of other companies was not supported by sufficient comparability data or evidence as to similarity of business and operations, and there was no material on the assessee's past performance. Given the unreliability of the assessee's accounts (absence of stock records, non-compliance with section 145A valuation requirements, and unexplained cash withdrawals), the Tribunal found no infirmity in the CIT(A)'s exercise of judgment in fixing the estimated income at 1% of turnover, viewing that percentage as reasonable in the circumstances. [Paras 6, 9]

The estimation of income at 1% of turnover was appropriate and is sustained.

Final Conclusion: The Tribunal dismissed the assessee's appeal: the books of account were rightly rejected and the income rightly estimated at 1% of turnover for AY 2004-05.

Revision under Section 263 - interest disallowance under Section 36(1)(iii) - explanation (2) to Section 263 - exemption disallowance under Section 14A read with Rule 8D - deemed rental income under Section 23 - income under Section 56(2)(vii) on difference between stamp valuation and consideration - application of provisos allowing prior non-cash payments - distinction between Section 50C and Section 56(2)(vii)

Revision under Section 263 - interest disallowance under Section 36(1)(iii) - explanation (2) to Section 263 - Malabar Industrial Co. principle - Validity of the Pr. CIT's revision direction under Section 263 insofar as it criticises the assessing officer's treatment of interest under Section 36(1)(iii). - HELD THAT: - The Tribunal found that the Pr. CIT correctly characterised the assessment as erroneous for want of adequate enquiries into the applicability of Section 36(1)(iii). The record did not show any specific enquiries by the Assessing Officer alleging diversion of interest-bearing funds for non-business purposes. In view of Explanation (2) to Section 263 (as inserted) and the principles in Malabar Industrial Co. Ltd. v. CIT, the Pr. CIT was justified in directing fresh examination on the issue of interest disallowance under Section 36(1)(iii). The Tribunal therefore upheld the revision direction on this limited point. [Paras 7]

Pr. CIT's revision direction requiring the Assessing Officer to examine applicability of Section 36(1)(iii) is upheld.

Exemption disallowance under Section 14A read with Rule 8D - Whether the Pr. CIT's direction to re-examine applicability of Section 14A r.w. Rule 8D should be sustained. - HELD THAT: - The Tribunal noted that the Assessing Officer had already made a disallowance under Section 14A (an amount being disallowed in the assessment). Because the assessment itself recorded a disallowance, the Pr. CIT's direction to treat the original assessment as devoid of enquiry in respect of Section 14A/Rule 8D was not justified. The Tribunal therefore limitedly reversed the Pr. CIT's direction insofar as it required re-framing the assessment on that ground. [Paras 7]

Pr. CIT's revision direction to re-examine Section 14A read with Rule 8D is reversed to the limited extent indicated.

Deemed rental income under Section 23 - Whether the Pr. CIT was justified in directing reassessment to examine deemed rent under Section 23. - HELD THAT: - The Tribunal observed that the assessee failed to clarify the number of house properties in the relevant year and could not satisfactorily rebut computations in the subsequent year. The Assessing Officer had not enquired into or examined the question of rental income under Section 23. Given the absence of requisite enquiry and the assessee's inability to explain relevant facts, the Tribunal sustained the Pr. CIT's direction that the Assessing Officer should examine the issue of deemed rent. [Paras 8]

Pr. CIT's revision direction to examine deemed rental income under Section 23 is upheld.

Income under Section 56(2)(vii) on difference between stamp valuation and consideration - application of provisos allowing prior non-cash payments - distinction between Section 50C and Section 56(2)(vii) - Validity of the Pr. CIT's direction to frame assessment afresh under Section 56(2)(vii) for difference between stamp duty valuation and consideration. - HELD THAT: - The Tribunal examined the sale deed and payment schedule and noted payments made prior to the agreement date in non-cash mode. The provisos permit acceptance of consideration where whole or part has been paid other than cash on or before the date of the agreement. The Tribunal further noted the legislative and judicial treatment distinguishing Section 50C (vendor/capital asset cases) from Section 56(2)(vii) (purchaser/vendee cases). Applying these principles, the Pr. CIT's direction to reopen the assessment under Section 56(2)(vii) was found to be erroneous on facts and in law and was therefore reversed to that extent. [Paras 9, 10]

Pr. CIT's revision direction insofar as it directed reassessment under Section 56(2)(vii) is reversed.

Final Conclusion: The appeal is partly allowed: the Pr. CIT's revision direction under Section 263 is upheld insofar as it requires fresh examination of interest disallowance under Section 36(1)(iii) and deemed rent under Section 23, but is reversed insofar as it directed reassessment under Section 14A/Rule 8D (limitedly) and under Section 56(2)(vii).

Deduction under section 80P(2)(d) - Interest and dividend from surplus deposits with a co-operative bank - Binding effect of obiter dicta of the jurisdictional High Court - Scope and characterisation of income for 80P purposes

Deduction under section 80P(2)(d) - Interest and dividend from surplus deposits with a co-operative bank - Binding effect of obiter dicta of the jurisdictional High Court - Whether interest and dividend earned by the assessee from surplus funds deposited with a co-operative bank are eligible for deduction under section 80P(2)(d) and whether the CIT(A) erred in treating the jurisdictional High Court's observations as non-binding. - HELD THAT: - The Tribunal held that the CIT(A) was incorrect in treating the Gujarat High Court's observations in State Bank of India v. CIT as non-binding. Reliance was placed on authority recognising that obiter of the jurisdictional High Court carries binding force on subordinate authorities. The Tribunal noted subsequent decisions of the Gujarat High Court and Tribunals (including Surat Vankar Sahakari Sangh Ltd. and ITAT decisions) which support the view that interest and dividend earned by a co-operative society on surplus funds deposited with a co-operative bank fall within the ambit of deduction under section 80P(2)(d). The Tribunal therefore concluded that the characterisation adopted by the jurisdictional High Court - that such income is eligible for deduction under section 80P(2)(d) - is persuasive and binding on the Revenue authorities in the same jurisdiction. Applying this legal position to the facts, the Tribunal held that the assessee's interest and dividend income from deposits with the Rajkot District Co-operative Bank Ltd. qualify for deduction under section 80P(2)(d). [Paras 4, 5]

Assessee entitled to deduction under section 80P(2)(d) in respect of dividend and interest earned on surplus funds deposited with a co operative bank; CIT(A)'s contrary conclusion set aside and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that dividend and interest earned by the assessee on surplus funds deposited with a co operative bank are deductible under section 80P(2)(d), and that the CIT(A) erred in treating the jurisdictional High Court's observations as non-binding.

Tax deduction at source under section 195 - Short payment of TDS due to incorrect challan - Challan correction mechanism on TRACES / CPC-TDS - Intimation issued under section 200A/206CB - Relief contingent on rectification of challan

Tax deduction at source under section 195 - Short payment of TDS due to incorrect challan - Challan correction mechanism on TRACES / CPC-TDS - Relief contingent on rectification of challan - Whether demand raised for short payment of TDS (intimation under section 200A/206CB) arising from deposit under an incorrect challan should be sustained or relief granted upon correction of the challan. - HELD THAT: - The assessee deducted tax under Tax deduction at source under section 195 on dividend paid to a non-resident but erroneously deposited the amount under a challan applicable to other tax heads instead of the TDS minor head. The assessee filed TDS returns and pursued correction requests with the TDS authorities, including communications seeking rectification of the challan from minor head 106 to minor head 200. The TDS office attempted online correction but encountered TRACES system limitations requiring TAN change; the matter was escalated to CPC-TDS for backend correction or to enable the TDS-AO to perform the change. Having regard to these facts and to the assessee's proactive steps to obtain rectification, the Tribunal directed the concerned authority to make every possible endeavour to effect the necessary correction in the challan within two months from receipt of the order and to grant relief to the assessee in accordance with law. Consequently the grounds challenging the demand were allowed for statistical purposes. [Paras 8, 9]

Demand not to be upheld pending completion of challan correction; authority directed to effect correction within two months and grant relief as per law; appeal allowed for statistical purposes.

Final Conclusion: Appeal allowed for statistical purposes; Tribunal directs the concerned TDS authorities (including escalation to CPC-TDS/TRACES) to endeavour correction of the challan within two months from receipt of this order and to grant such relief to the assessee as may follow from that rectification.

Cost inflation index and date of acquisition under Explanation III to Section 48 - indexation of cost of acquisition - date of agreement as date of acquisition for capital gains - deduction under section 54 and its inapplicability to investment in land

Cost inflation index and date of acquisition under Explanation III to Section 48 - date of agreement as date of acquisition for capital gains - indexation of cost of acquisition - Indexation of cost of acquisition must be computed with reference to the year in which the asset was held - the date of agreement of transfer of ownership (19.07.2010) - and not from earlier installments paid pursuant to allotment letter. - HELD THAT: - The Assessing Officer and the Commissioner (Appeals) treated the date of the registered transfer/agreement (19.07.2010) as the date of acquisition for computing indexation, applying Explanation III to Section 48 and relying on the ratio in Gulshan Malik vs. CIT. The assessee claimed indexation from earlier installment payments from 2007 based on the allotment letter, but produced no material or legal proposition to distinguish or rebut the departmental authorities' application of the cited precedent. In absence of any rebuttal, the Tribunal found no reason to interfere with the conclusion that indexation is to be taken from the year of the transfer/agreement and upheld the apportionment and computation made by the Assessing Officer and sustained by the Commissioner (Appeals). [Paras 6]

The appeal is dismissed insofar as the claim for indexation from earlier installment years; indexation is to be taken from financial year 2010-11 based on the agreement dated 19.07.2010.

Deduction under section 54 and its inapplicability to investment in land - Claim for deduction under section 54 was not allowed because it was not made in the return and, in any event, investment in purchase of land does not qualify for deduction under section 54/54F as applied by the Assessing Officer. - HELD THAT: - The Assessing Officer disallowed the section 54 claim on two grounds: (i) the claim was not made in the return of income and therefore could not be allowed, following the principle in Goetze (India) Ltd. vs. CIT; and (ii) even on merits, deduction under section 54/54F is available when sale proceeds are used for purchase or construction of a residential house, whereas the assessee invested in land which does not qualify. The Commissioner (Appeals) upheld the assessment and the Tribunal, noting no rebuttal from the assessee, did not interfere with these conclusions. [Paras 4, 6]

The claim for deduction under section 54 is not allowed; the Assessing Officer's disallowance, sustained by the Commissioner (Appeals), is upheld.

Final Conclusion: Appeal dismissed; the Tribunal upholds the assessment computations and disallowances (indexation to be from the agreement date and section 54 deduction disallowed) for Assessment Year 2016-17.

Rectification of mistake and condonation of limitation under CBDT Circular No.4 of 2012 - entitlement to exemption for non-resident under section 5(1)(c) read with section 6 - remand for fresh adjudication on merits - processing of intimation under section 143(1)

Rectification of mistake and condonation of limitation under CBDT Circular No.4 of 2012 - remand for fresh adjudication on merits - Whether the rectification application, filed beyond the statutory four year period, should be adjudicated on merits in view of CBDT Circular No.4 of 2012 and remitted to the Assessing Officer for fresh decision. - HELD THAT: - The Tribunal recorded that the assessee's return for the relevant year was filed belatedly by his authorised Chartered Accountant firm and omitted to claim non resident status and the corresponding exemption. The rectification application filed subsequently was rejected by the AO as barred by the limitation in section 154(7) and the first appellate authority upheld that view. Having regard to the CBDT Circular No.4 of 2012, which permits consideration of genuine rectification claims beyond the four year period if there is merit, and on the consent of the parties, the Tribunal restored the matter to the file of the Assessing Officer for readjudication on merits. The AO is directed to examine whether the assessee was a non resident for the relevant period and whether he is entitled to the exemption under section 5(1)(c) read with section 6; if the claim is found correct, the AO shall decide the rectification application on merits in accordance with law. [Paras 5, 6]

Matter remitted to the Assessing Officer for fresh adjudication of the rectification application on merits, including determination of non resident status and entitlement to the claimed exemption.

Final Conclusion: Appeal partly allowed for statistical purposes; the rectification application is restored to the Assessing Officer for fresh decision on merits in accordance with CBDT Circular No.4 of 2012 and applicable provisions regarding non resident exemption.

Applicability of Explanation 2 to Section 37(1) - Allowability of Corporate Social Responsibility expenditure as business expenditure - Due date for filing return under Explanation 2 to Section 139(1) - Interest under section 234A

Applicability of Explanation 2 to Section 37(1) - Allowability of Corporate Social Responsibility expenditure as business expenditure - Explanation 2 to section 37(1) is not applicable to assessment years prior to A.Y. 2015-16 and CSR expenditure for A.Y. 2014-15 is allowable. - HELD THAT: - Following a coordinate bench decision in the assessee's own case for A.Y. 2013-14 and after considering authorities relied upon, the Tribunal held that Explanation 2 to section 37(1) was introduced with effect from 01.04.2015 (applicable from A.Y. 2015-16) and therefore could not be invoked to disallow CSR expenditures incurred in earlier years. The Tribunal noted that the assessee, being a public sector undertaking, was directed by the Bureau of Public Enterprises/Government to spend a specified percentage of profits for social objectives and that various precedents and earlier Tribunal decisions sustained the revenue character of such expenditures. On that basis the disallowance of CSR expenditure for A.Y. 2014-15 was set aside.

Grounds 1.1 and 1.2 for A.Y. 2014-15 allowed and the disallowance of CSR expenditure deleted.

Due date for filing return under Explanation 2 to Section 139(1) - Interest under section 234A - No interest under section 234A was leviable for A.Y. 2015-16 because the return and Form 3CEB were filed on the due date applicable to the assessee. - HELD THAT: - The Tribunal examined the filing dates for the return and Form 3CEB for A.Y. 2015-16. It accepted that the assessee-company is a joint venture owned by two Central Public Sector Undertakings and therefore the extended due date under Explanation 2 to section 139(1) applied, making the due date 30.09.2015. The assessee electronically uploaded Form 3CEB and the return on 30.09.2015 (acknowledgment noted), and consequently there was no breach of the due date that would attract interest under section 234A. The Tribunal accordingly held that interest charged under section 234A was not justified. The CSR grounds for A.Y. 2015-16 were not pressed by the assessee and were dismissed as not pressed.

Ground No. 2 for A.Y. 2015-16 allowed (no interest under section 234A); CSR grounds for A.Y. 2015-16 dismissed as not pressed.

Final Conclusion: Appeals of the assessee allowed: the disallowance of CSR expenditure for A.Y. 2014-15 set aside as Explanation 2 to section 37(1) did not apply to that year; for A.Y. 2015-16 the challenge to interest under section 234A succeeds (no interest payable), while CSR grounds for that year were not pressed.

Assessment under section 153C - incriminating material - concluded assessment - jurisdictional fact - notice under section 143(2) - capital gains vs business income - addition for unaccounted receipts (car parking and on money)

Assessment under section 153C - incriminating material - jurisdictional fact - concluded assessment - Validity of assessment framed under section 153C in absence of incriminating material found during search - HELD THAT: - The Tribunal followed its coordinate bench decision in the assessee's own case for A.Y. 2011 12 and applied the Supreme Court authority on jurisdictional facts to hold that the AO had no identifiable incriminating material belonging to the assessee retrieved in the search. The authorities below relied on group level material and statements of persons not shown to be connected to the assessee; the satisfaction note did not specify any material pertaining to the assessee for the impugned year. On that basis the Tribunal found a jurisdictional defect in invoking section 153C and concluded that a returned (concluded) assessment could not be disturbed in the absence of such material. [Paras 13, 14, 20]

Ground no.1 allowed; assessment under section 153C set aside for lack of incriminating material and additions do not survive.

Notice under section 143(2) - assessment under section 153C - Validity of assessment where no notice under section 143(2) was issued - HELD THAT: - The appellant did not press this ground before the Tribunal. The Tribunal noted the coordinate bench treatment and record showing that this contention was factually incorrect in the related proceedings; accordingly the ground was dismissed. [Paras 21, 22]

Ground no.2 dismissed.

Assessment under section 153C - approval under section 153D - Challenge to assessment on the ground that valid approval under section 153D was not obtained - HELD THAT: - Ground no.3 was not argued before the Tribunal. The Tribunal recorded that the ground was not pressed and dismissed it for want of argument. [Paras 23]

Ground no.3 dismissed.

Capital gains vs business income - incriminating material - Whether long term and short term capital gains (sale of land and development rights) could be treated as business income - HELD THAT: - Neither the AO nor the CIT(A) identified any incriminating material specific to the assessee to justify reopening the concluded return and recharacterising capital gains as business income. Applying the principle that invocation of section 153C requires material relating to the assessee, and following the Supreme Court decision relied upon, the Tribunal held that in absence of such material the recharacterisation was not sustainable. [Paras 24]

Grounds no.4 and 5 allowed; the amounts taxed as business income to be treated as capital gains.

Addition for unaccounted receipts (car parking and on money) - incriminating material - concluded assessment - Sustainability of additions made for alleged unaccounted car parking receipts and on money on sale of flats - HELD THAT: - The Tribunal followed its coordinate bench reasoning which found that the additions were founded on group level materials and statements of persons not shown to belong to the assessee; electronic evidence relied upon was not shown to be attributable to the assessee. The Tribunal noted the absence of specific incriminating material tying these receipts to the assessee and, having found no manifest error in the coordinate bench decision, held that the additions could not be sustained. [Paras 25]

Grounds no.6 and 7 allowed; additions on account of car parking and on money deleted.

Final Conclusion: The appeal is partly allowed: the assessment under section 153C for A.Y. 2010 11 is set aside for want of incriminating material, and the additions and recharacterisations (capital gains treated as business income, car parking and on money additions) are deleted; the contentions on notice under section 143(2) and on approval under section 153D were dismissed as recorded.

Deduction under Section 80HHC - netting off 90% of net interest - Charging of interest under Section 234B - applicability of sub section (3) as against sub section (4) - Remand for verification of interest computation

Deduction under Section 80HHC - netting off 90% of net interest - Direct nexus of interest paid on security deposit - Reduction of 90% of net interest is to be allowed while computing deduction under Section 80HHC; absence of proven direct nexus of specific interest payments is not decisive after the Supreme Court rulings relied upon by the assessee. - HELD THAT: - The Tribunal held that the law as enunciated by the Hon'ble Apex Court in Vikas Kalra and ACG Associated Capsules Pvt. Ltd. mandates that 90% of net interest (interest received less interest paid) must be reduced in computing deduction under Section 80HHC. The CIT(A) erred in placing emphasis on the direct nexus of the interest paid on security deposit; that nexus question does not survive in view of the controlling Supreme Court precedent. Following those decisions, the Assessing Officer is directed to reduce 90% of the net interest from the net profit for calculating the Section 80HHC deduction. [Paras 8]

Grounds 1 and 2 allowed; Assessing Officer directed to reduce 90% of net interest when computing deduction under Section 80HHC.

Charging of interest under Section 234B - applicability of sub section (3) as against sub section (4) - Effect of assessment order type on interest computation cut off date - Interest under Section 234B must be charged in accordance with sub section (4) (not sub section (3)) where the assessment has been varied by orders under sections such as 250, 254 or 263 rather than by reassessment or recomputation under sections 147/153A; accordingly the cut off date for charging interest is December 2006 in the present case. - HELD THAT: - On examining the statutory language, the Tribunal found Section 234B(3) applies only where interest is increased as a result of reassessment/recomputation under section 147 or 153A. Section 234B(4) governs adjustments consequent to appellate or rectification orders under sections such as 154, 250, 254, 263 etc., and provides for increase or reduction of interest accordingly. The assessee's assessment was not framed under section 147 or 153A but was the subject of orders falling within clauses contemplated by sub section (4). Therefore the Assessing Officer should have applied Section 234B(4) and charged interest only up to December 2006. The CIT(A)'s reliance on sub section (3) was incorrect and is reversed. [Paras 12, 13]

Grounds 3, 4 and 5 allowed; interest under Section 234B to be adjusted as per sub section (4), with the cut off date being December 2006.

Remand for verification of interest computation - Rectification/verification of calculation errors in successive assessment orders - Discrepancy in the amount of interest charged between two assessment orders appears to be a calculation error and is remanded to the Assessing Officer for verification and rectification. - HELD THAT: - The Tribunal observed that the earlier assessment order dated 21/12/2009 charged interest under Section 234B at a lower figure, whereas the subsequent order dated 23/12/2010 charged a higher amount despite only a marginal change in assessed income. The difference in interest appears to result from a computational mistake. In view of this apparent error, the Tribunal restored the matter to the Assessing Officer for necessary verification and rectification of the interest calculation. [Paras 14]

Grounds 6 and 7 allowed for statistical purposes and remanded to the Assessing Officer for verification and correction of the interest computation.

Final Conclusion: The appeal is partly allowed: the deduction under Section 80HHC is to be computed after reducing 90% of net interest; interest under Section 234B must be adjusted pursuant to sub section (4) with the cut off being December 2006; and the discrepancy in interest computation between successive orders is remanded to the Assessing Officer for verification and correction.

Proof of smuggled nature of goods - burden of proof under Section 123 of the Customs Act - foreign origin of gold - procedure of search and seizure - appellate interference with findings of fact

Proof of smuggled nature of goods - foreign origin of gold - procedure of search and seizure - appellate interference with findings of fact - Whether the Tribunal's factual findings that the seized gold was not shown to be of foreign origin or smuggled goods should be disturbed by this Court. - HELD THAT: - The High Court examined the record of the Tribunal which had considered the explanation of the person in possession, the documents produced (including GST and purchase invoices) and the results of subsequent investigation. The Tribunal found that no evidence was adduced by the Department to establish foreign origin or smuggling, and that procedural aspects of the city seizure and statements were addressed in the factual narrative. The High Court held that these conclusions are essentially factual determinations by the Tribunal and do not give rise to a substantial question of law for interference. Given that the dispute is one of fact on the materials considered by the Tribunal, appellate interference was not warranted.

Appeal dismissed as the Tribunal's factual findings that the seized gold was not established to be smuggled or of foreign origin are not disturbed.

Burden of proof under Section 123 of the Customs Act - reasonable belief - Status of the substantial questions of law framed by the revenue concerning burden of proof, necessity of foreign inscription on gold, and precision of 'reasonable belief'. - HELD THAT: - The Court recorded the substantial questions of law advanced by the revenue but expressly observed that those questions did not require decision in view of the factual conclusion reached by the Tribunal. The High Court therefore did not decide or formulate a legal ratio on these contested legal propositions and left them open for future consideration.

The substantial questions of law raised by the revenue are left open.

Final Conclusion: The appeal is dismissed on the ground that the Tribunal's factual findings that the seized gold was not shown to be smuggled or of foreign origin stand; the substantial legal questions raised by the revenue are not decided and are left open, and the application for stay is closed.

Jurisdiction of the Settlement Commission to grant immunity from interest where liability arises under a bond - contractual nature of bonds executed for concessional customs duty - application of Section 56 of the Indian Contract Act (frustration/impossibility of performance) - interest liability pursuant to statutory notification incorporated into a bond

Jurisdiction of the Settlement Commission to grant immunity from interest where liability arises under a bond - contractual nature of bonds executed for concessional customs duty - interest liability pursuant to statutory notification incorporated into a bond - Whether the Settlement Commission had jurisdiction to waive or grant immunity from payment of interest claimed pursuant to the bond executed by the Petitioner. - HELD THAT: - The Court held that the Petitioner's liability to pay interest originated from the bond furnished at the time of import and was therefore contractual. Although the bond referred to payment of "interest as applicable as per law" rather than specifying a rate, the Court found that reference to the statutory rate did not alter the contractual character of the obligation. The Court relied on the principles in Rexnord Electronics and Controls Ltd and related authority to conclude that where interest is payable pursuant to a bond, the Settlement Commission lacks jurisdiction to waive that interest. The Court observed that the applicable rate had been prescribed by notification and was thus known, making specification in the bond surplusage; this does not convert a contractual obligation into a purely statutory one. The Settlement Commission's conclusion that it had no power to grant immunity from interest was therefore correct. [Paras 11, 12, 14, 15]

Held that interest liability arose from the contractual bond and the Settlement Commission had no jurisdiction to waive or grant immunity from that interest; view of Settlement Commission upheld.

Application of Section 56 of the Indian Contract Act (frustration/impossibility of performance) - frustration of contract by economic crisis - Whether the Petitioner's contract was frustrated under Section 56 of the Indian Contract Act by the East Asian economic crisis, excusing performance and eliminating liability for interest. - HELD THAT: - The Court accepted the Settlement Commission's finding that the East Asian recession was of limited duration, confined to a region, and not so unforeseeable or unavoidable as to render performance impossible. The Commission's view that prudent businessmen are expected to anticipate and endeavour to overcome such business cycles was held to be a permissible factual conclusion. The Court found no perversity or absurdity in the Commission's assessment that the circumstances did not amount to the kind of contingency that would frustrate the contract; consequently Section 56 did not apply to excuse performance or relieve the Petitioner of interest liability. [Paras 16, 17, 18, 19]

Held that the economic crisis did not frustrate the contract under Section 56; the Settlement Commission's factual conclusion was maintained and the plea of frustration was rejected.

Final Conclusion: Writ petition dismissed. The Settlement Commission's order refusing waiver of interest was upheld on the ground that the interest obligation arose from the contractual bond and the plea of frustration under Section 56 was not established; no interference with the Commission's factual findings.

Prohibition of retrospective operation of fiscal notifications - prospective operation of amendment to tariff duty by notification - date of filing of bill of entry as determinative for applicable customs duty - entitlement to release of imported goods on payment of duty applicable at time of filing

Prohibition of retrospective operation of fiscal notifications - date of filing of bill of entry as determinative for applicable customs duty - entitlement to release of imported goods on payment of duty applicable at time of filing - Notification No. 05/2019-Cus. dated 16.02.2019 could not be applied retrospectively to imports which entered India and for which checklist bill of entry/job was filed prior to the issuance/uploading of the notification, and the petitioner was entitled to release of goods on payment of duty as applicable at the time of filing of the bill of entry. - HELD THAT: - The Court applied the view taken by a Co-ordinate Bench in M/s Rasrasna Food Pvt. Ltd. (supra), which was affirmed by the Supreme Court, that where import orders were placed prior to 16.02.2019 and goods entered India on or before 16.02.2019 before the impugned notification was uploaded at 8:45 p.m. on 16.02.2019, making the notification applicable would amount to retrospective application not permissible in law. The petitioner averred and placed on record a checklist bill of entry and Job No. 3568 dated 16.02.2019 filed on the online EDI Portal; the reply did not deny these factual assertions. The Court rejected a technical objection that the formal bill of entry number had not been generated on that day, treating generation of the bill number as a procedural fallout and holding the date of filing (as evidenced by the checklist and job number) and the date of entry of goods as determinative. Applying the settled principle that fiscal notifications imposing higher duty cannot be given retrospective effect to affect completed transactions, the Court directed that duty be assessed and paid as applicable at the time of filing of the bill of entry and ordered release of the goods, ignoring the impugned Notification No. 05/2019-Cus.

Writ petition allowed in terms of the judgment dated 26.08.2019 in M/s Rasrasna Food Pvt. Ltd.; goods to be released on payment of duty as declared and assessed at the time of filing of the bill of entry, disregarding Notification No. 05/2019-Cus.

Final Conclusion: The writ petition was allowed by applying the Co-ordinate Bench's holding (affirmed by the Supreme Court) that the impugned notification could not be applied retrospectively; the petitioner is entitled to have duty fixed as at the time of filing of the bill of entry and to release of goods on payment of that duty.

Classification under Customs Tariff Heading 84714190 - applicability of exemption notification - assessment of additional duty based on Retail Sales Price under Section 3A - mis-declaration of Retail Sales Price - confiscation and penalties consequent to classification and valuation - remand for fresh examination by adjudicating authority

Classification under Customs Tariff Heading 84714190 - Claim for re classification of the imported goods under CTH 84714190 is to be examined afresh by the Principal Commissioner. - HELD THAT: - A new plea of change of classification to CTH 84714190 was raised before the Tribunal though it was not urged before the Principal Commissioner and was not considered in the impugned order. The Tribunal found the claim significant because acceptance would render the contested exemption notification unnecessary (the basic customs duty under the tariff would be NIL) and alter the basis for assessing Additional Duty of Customs. Since the classification issue was neither decided below nor considered in the impugned order, the Principal Commissioner must be given an opportunity to examine the claim and its correctness in the first instance. [Paras 5, 10, 11]

The matter is remanded to the Principal Commissioner for fresh examination of the appellant's claim for classification under CTH 84714190.

Assessment of additional duty based on Retail Sales Price under Section 3A - mis-declaration of Retail Sales Price - confiscation and penalties consequent to classification and valuation - Consequential issues relating to Additional Duty assessment (based on RSP), alleged mis declaration of RSP, demand of differential duty, confiscation, fine and penalties require re examination in light of any revised classification. - HELD THAT: - The Tribunal observed that if the goods are held to fall under CTH 84714190 they would not be notified under Section 3A of the Central Excise Act and therefore Additional Duty might not be determined on the basis of RSP; this would also affect the allegation of mis declaration of RSP and the resultant demand. Given the interdependence between classification, valuation/notification status and the consequential imposition of confiscation, fines and penalties, these matters were remanded so that the Principal Commissioner may reassess duty liability and ancillary penal consequences after deciding the classification claim. [Paras 4, 7, 10, 11]

The Principal Commissioner is directed to re examine and adjudicate the consequential issues of Additional Duty determination, alleged mis declaration of RSP, demand, confiscation, fine and penalties in the light of his decision on classification.

Final Conclusion: Both appeals are allowed to the extent that the matters are remanded to the Principal Commissioner for fresh consideration of the claimed classification under CTH 84714190 and for re adjudication of all consequential issues including Additional Duty assessment, alleged mis declaration of RSP, demand, confiscation, fine and penalties.

Self-assessment of duty under Section 17(1) - re-assessment by proper officer under Section 17(4) - mis-classification versus mis-declaration - confiscation under Section 111(m) - penalty under Section 112(a)(ii) - penalty under Section 114AA - binding effect of a Commissioner (Appeals) order pending further appeal - customs RMS clearance and post-clearance audit

Self-assessment of duty under Section 17(1) - re-assessment by proper officer under Section 17(4) - mis-classification versus mis-declaration - Legal effect of classifying goods in Bills of Entry in accordance with an existing Commissioner (Appeals) order and whether incorrect classification amounts to mis-declaration attracting confiscation under Section 111(m). - HELD THAT: - The Tribunal held that classification entered in the Bill of Entry is part of the importer's self-assessment under Section 17(1) and is subject to re-assessment by the proper officer under Section 17(4). Mere mis-classification or incorrect self-assessment does not, by itself, constitute a mis-declaration such as would render goods liable to confiscation under Section 111(m). Section 111(m) applies where goods do not correspond in value or other particulars with the entry made, and there was no allegation or evidence that the goods did not correspond to the declarations of fact. Where, as here, the Commissioner (Appeals) order held the field at the time nine of the ten Bills of Entry were filed, the importer and customs broker acted in conformity with the binding order then in force. The RMS-based clearance and post-clearance audit mechanism does not alter this legal position; it only provides a mechanism for later detection and demand. On these grounds the finding that the goods were liable to confiscation under Section 111(m) was erroneous. [Paras 11, 13, 14, 20, 21]

The classification in the Bills of Entry constituted permissible self-assessment and did not amount to mis-declaration making the goods liable to confiscation under Section 111(m).

Penalty under Section 112(a)(ii) - penalty under Section 114AA - binding effect of a Commissioner (Appeals) order pending further appeal - Whether penalties under Section 112(a)(ii) and Section 114AA could be sustained against the customs broker for filing Bills of Entry classifying the goods as per the Commissioner (Appeals) order. - HELD THAT: - Penalty under Section 112(a)(ii) is leviable where a person does or omits to do any act which would render goods liable to confiscation under Section 111. Because the Tribunal concluded that the goods were not liable to confiscation under Section 111(m) (mis-declaration was not established) the foundational premise for imposing Section 112(a)(ii) did not exist. Further, Section 114AA penalises knowingly or intentionally making or using a false or incorrect declaration in any material particular. There was no evidence that the customs broker made a false factual declaration; the contested matter was one of classification (an opinion) made in conformity with the then-binding Commissioner (Appeals) order. The Tribunal therefore found no material to sustain penalties under Section 112(a)(ii) or Section 114AA and set them aside. [Paras 18, 20, 21, 22]

Penalties imposed under Section 112(a)(ii) and Section 114AA on the appellant are unsustainable and are set aside.

Final Conclusion: The appeal is allowed; the penalties imposed on the customs broker under Section 112(a)(ii) and Section 114AA are set aside because the contested classification was a matter of self-assessment made in conformity with the then binding Commissioner (Appeals) order and did not amount to mis-declaration or falsity attracting confiscation or the said penalties.

Reappointment not a vested right - eligibility and consideration for reappointment - rational and transparent appointment policy - independence of judicial institutions and expeditious appointments - compliance with directions of the Supreme Court

Reappointment not a vested right - eligibility and consideration for reappointment - Whether the Court should direct completion of the petitioner's reappointment process to the NCLT. - HELD THAT: - The petitioner had sought a writ directing the respondent to complete her reappointment as Member (Judicial) of the NCLT after she expressed willingness to be reappointed. The Court observed that clause 7 of the impugned circular contemplates eligibility for reappointment and the petitioner may be considered on merits. However, mere expression of willingness, eligibility to be considered, or prior service for a five-year term does not confer a vested right to reappointment. The Court declined to give a direction specific to the petitioner to complete her reappointment process, noting that her case may be considered along with other aspirants in accordance with law and on its merits, and that specific relief in her favour could not be granted given competing candidates and the collective selection process. [Paras 5]

Prayer for direction to complete the petitioner's reappointment process is refused; reappointment is not a vested right and the petitioner must be considered in accordance with law and on merits.

Rational and transparent appointment policy - independence of judicial institutions and expeditious appointments - compliance with directions of the Supreme Court - Whether the Court should direct framing of a rational and transparent policy for reappointments and give further directions to the respondents on appointment process. - HELD THAT: - The petitioner sought a writ directing formulation of a policy emphasizing the legislative mandate to preserve independence of judicial officers. The Court noted the importance of expeditious appointments to safeguard institutional independence and referred to the Supreme Court's observations urging prompt completion of reappointment and selection processes. Nonetheless, the High Court found no need to frame additional directions, observing that authorities are presumed to act to sub-serve the interests of the Tribunal and to follow the Supreme Court's directions. The Court therefore refrained from issuing further directions but reminded the authorities that, if vacancies are to be filled, they must act in accordance with law and comply with the Supreme Court's directions in letter and spirit. [Paras 4, 5, 6]

Prayer for direction to frame a policy is not granted; authorities are directed to act in accordance with law and to comply with the Supreme Court's directions regarding expeditious appointments.

Final Conclusion: The petition is dismissed: no writ directing completion of the petitioner's reappointment or requiring framing of a policy is issued; the authorities are, however, directed to act lawfully and to comply with the Supreme Court's directions for expeditious filling of NCLT vacancies.

Reactivation of DIN and DSC - Disqualification under Section 164(2)(a) of the Companies Act, 2013 - Proviso to Section 167(1)(a) and non-retroactivity established in Mukut Pathak - CFSS-2020 as basis for permitting reactivation qua active companies

Reactivation of DIN and DSC - Disqualification under Section 164(2)(a) of the Companies Act, 2013 - CFSS-2020 as basis for permitting reactivation qua active companies - DINs and DSCs of the petitioners to be reactivated and their disqualification set aside in respect of active companies - HELD THAT: - The Court applied its earlier reasoning in Mukut Pathak and Anjali Bhargava, and the purpose and scope of CFSS-2020, to conclude that disqualifications incurred prior to 7 May 2018 do not attract the proviso to Section 167(1)(a) so as to cause vacation of office in companies other than the defaulting company. Having regard to the fact that the petitioners' disqualification arose for the period 2015-16 to 2017-18 and that the companies of which they are directors are pleaded to be active, the Court held that their disqualification qua those active entities must be set aside. In furtherance of the remedial purpose of CFSS-2020 and the prior decisions permitting a 'fresh start' for defaulting companies and their directors, the Court directed reactivation of the DINs and DSCs to enable statutory filings and compliance. [Paras 8]

The DINs and DSCs of the petitioners are to be reactivated within two weeks and their disqualification under Section 164(2)(a) is set aside in respect of the active entities so that they may effect requisite compliances.

Final Conclusion: Writ petition allowed; DINs/DSCs reactivated within two weeks and disqualification under Section 164(2)(a) set aside insofar as it affects the petitioners' directorships in active companies; petition disposed of.

Settlement between disputing parties and setting aside of judicial order - restraint on alienation of shares by Recovery Officer / Debts Recovery Tribunal - lifting the corporate veil - enforcement of Recovery Certificate and execution proceedings - limited scope of DRT order confined to specific shares

Settlement between disputing parties and setting aside of judicial order - Allowability of the joint application to set aside the impugned NCLT order and dispose of the appeals pursuant to the parties' settlement - HELD THAT: - The parties to Company Petition No. 110(ND) of 2013 (and the corresponding appeals) filed a joint application (I.A. No. 1540 of 2019) seeking to set aside the NCLT order dated 13.07.2017 and dispose of the appeals on the basis of a negotiated settlement. HUDCO opposed the settlement on grounds of its independent recovery proceedings. The Tribunal examined HUDCO's contentions and the material on record concerning the Recovery Certificate and the status of amounts deposited with the DRT. The Tribunal held that HUDCO had not made out sufficient grounds to reject the joint application and that HUDCO's entitlement to pursue its recovery proceedings did not, by itself, preclude the parties from settling their inter se dispute and seeking vacation of the impugned order. Accordingly, the joint application was allowed and the impugned NCLT order was set aside, with the appeals disposed of in terms of the settlement application. [Paras 11, 12, 20, 21]

I.A. No. 1540 of 2019 is allowed; impugned order dated 13.07.2017 is set aside; Company Appeals (AT) Nos. 275 of 2017 and 280 of 2017 are disposed of in terms of the settlement.

Restraint on alienation of shares by Recovery Officer / Debts Recovery Tribunal - enforcement of Recovery Certificate and execution proceedings - limited scope of DRT order confined to specific shares - Whether HUDCO's Recovery Officer orders and Recovery Certificate precluded the Tribunal from accepting the parties' settlement - HELD THAT: - HUDCO relied on orders of the DRT/Recovery Officer (02.02.2016 and 09.05.2019) that restrained transfer or alienation of 3100 shares in the name of Vikram Bakshi and directed deposit of settlement proceeds for satisfaction of the Recovery Certificate. The Tribunal examined those orders and the record showing that the monetary equivalent for the 3100 shares had been deposited with the DRT (with part withdrawal by HUDCO). The Tribunal interpreted the 02.02.2016 restraint as being confined to the 3100 shares held in the name of Vikram Bakshi, noting there was no material to show that other shares held by Bakshi through Bakshi Holdings Pvt. Ltd. were restrained by that order. While recognising HUDCO's right to pursue recovery under Recovery Certificate No. 330/2015 and that execution proceedings were ongoing, the Tribunal held that HUDCO's remedy under the RDDB Act did not by itself suffice to deny the joint application to set aside the NCLT order. [Paras 14, 15, 16, 17, 20]

HUDCO's DRT orders and recovery rights do not preclude acceptance of the parties' settlement; the 02.02.2016 restraint is confined to the 3100 shares in the name of Vikram Bakshi.

Lifting the corporate veil - Whether the corporate veil ought to be pierced to treat shares held by Bakshi Holdings Pvt. Ltd. as covered by the DRT restraint/order - HELD THAT: - HUDCO urged that the corporate veil of Bakshi Holdings Pvt. Ltd. should be lifted so as to bring within the DRT restraint the shares held through that company, relying on Supreme Court precedent on piercing the corporate veil where corporate form is used to evade obligations. The Tribunal accepted the legal proposition that lifting the veil is permissible in appropriate cases but found that the present record did not disclose use of the corporate form by Bakshi Holdings for evading HUDCO's recovery such as would justify piercing the veil. The 02.02.2016 order related specifically to shares in the name of Vikram Bakshi and there was no material to extend that restraint to the separate corporate entity Bakshi Holdings Pvt. Ltd. [Paras 18, 19, 20]

No occasion to lift the corporate veil of Bakshi Holdings Pvt. Ltd.; the veil is not pierced and the DRT order is not held to govern shares held by Bakshi Holdings.

Enforcement of Recovery Certificate and execution proceedings - Disposition of HUDCO's interlocutory application (I.A. No. 1600 of 2019) seeking directions related to the settlement proceeds - HELD THAT: - HUDCO sought disclosure of settlement particulars and directions for deposit of settlement proceeds with the DRT towards satisfaction of its Recovery Certificate. The Tribunal considered HUDCO's prayer in the context of the overall record, the restraint orders, and the fact that some proceeds/values had already been deposited with the Recovery Officer and were subject to separate recovery/execution processes. Finding that HUDCO had not shown sufficient cause to block the parties' joint application to set aside the NCLT order, the Tribunal rejected I.A. No. 1600 of 2019 while leaving HUDCO's statutory remedies under the RDDB Act intact. [Paras 5, 16, 20, 21]

I.A. No. 1600 of 2019 is rejected; HUDCO may continue to pursue its recovery proceedings but its interlocutory relief did not warrant denial of the settlement application.

Final Conclusion: The joint settlement application filed by McDonald's India Pvt. Ltd. and Vikram Bakshi (I.A. No. 1540 of 2019) is allowed and the NCLT order dated 13.07.2017 is set aside; Company Appeals (AT) Nos. 275 and 280 of 2017 are disposed of in terms of the settlement. HUDCO's application (I.A. No. 1600 of 2019) is rejected; the DRT's restraint relates to the 3100 shares in Vikram Bakshi's name and there is no occasion on the record to pierce the corporate veil of Bakshi Holdings Pvt. Ltd., though HUDCO remains entitled to pursue its recovery remedies under the RDDB Act.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Invocation/encashment of bank guarantees during moratorium - Forfeiture of security deposit during insolvency moratorium

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Invocation/encashment of bank guarantees during moratorium - Forfeiture of security deposit during insolvency moratorium - Whether the moratorium under the NCLT order continues to prohibit invocation/encashment of bank guarantees and forfeiture of the security deposit despite the NCLAT order directing the IRP not to take steps. - HELD THAT: - The NCLT order imposed a moratorium in terms of Section 14, including prohibitions on institution or continuation of proceedings and actions to enforce security interests. The NCLAT order of 26.09.2022 restrained the IRP from taking steps but did not stay the moratorium itself. Therefore the moratorium continues to operate as regards actions such as invocation/encashment of bank guarantees and forfeiture of security deposit. In consequence, banks are directed not to give effect to invocation/encashment of the bank guarantees until 4 January 2023; if the petitioner files an application before the NCLT by that date, the protection against encashment shall continue until the first listing before the NCLAT. Amounts, if already encashed, shall not be disbursed to the counterparty, subject to any order of the NCLT in the petition to be filed. [Paras 11, 12]

The moratorium remains in force and invocation/encashment of the bank guarantees shall not be given effect to by the banks till 4 January 2023, with further protection if an application is filed before the NCLT by that date; amounts already encashed shall not be disbursed to the respondent pending orders of the NCLT.

Final Conclusion: The petition is disposed of with interim directions preserving the effect of the moratorium qua invocation/encashment of bank guarantees and forfeiture of the security deposit until 4 January 2023 (or further as ordered), and with liberty to the petitioner to seek appropriate orders before the NCLT.

Security deposit as a pre-condition for sanction of High Tension power connection - effect of approved resolution plan in extinguishing pre-plan claims - overriding effect of the Insolvency and Bankruptcy Code over inconsistent statutory regulations (Section 238) - payment of electricity dues during moratorium to be met from CIRP costs

Security deposit as a pre-condition for sanction of High Tension power connection - Restoration of HT electricity connection cannot be ordered without payment of security deposit required for sanctioning the connection. - HELD THAT: - The Adjudicating Authority correctly held that a security deposit is a pre-condition for sanction of High Tension power connections to industries and that the applicant, being a heavy industry requiring large supply, cannot be granted restoration of connection without making the security deposit. This Tribunal has previously rejected similar contention in Company Appeal (AT) (Ins.) No. 110 of 2020 (Damodar Valley Corporation v. Cosmic Ferro Alloys Ltd.), where it was held that any security deposit or other charges for increase in contract demand or enhanced supply line must be paid to the discom in accordance with extant laws and regulations, and that payments for electricity supplied during the moratorium should be met from CIRP costs. Applying that precedent, the appeal seeking restoration without payment of security deposit is liable to be dismissed. [Paras 2, 3, 4]

The claim for restoration of supply without payment of the security deposit is rejected and the appeal in respect of this relief is dismissed.

Effect of approved resolution plan in extinguishing pre-plan claims - overriding effect of the Insolvency and Bankruptcy Code over inconsistent statutory regulations (Section 238) - payment of electricity dues during moratorium to be met from CIRP costs - An electricity supplier cannot insist on payment of past dues after the Resolution Plan has been approved because pre-plan claims stand extinguished on approval of the plan; inconsistent regulatory provisions cannot prevail over the Code. - HELD THAT: - When the Resolution Plan was approved on 14.02.2020, claims in respect of pre-CIRP dues stood extinguished as against the corporate debtor. The Adjudicating Authority's direction that the discom cannot insist on payment of past dues is sustained. The Tribunal referred to its earlier reasoning that while supply-code regulations (e.g., deeming of termination and need to clear outstanding dues for new connections) apply generally, they cannot be pressed into service to override an approved Resolution Plan because the Code, by virtue of its overriding provision, displaces any inconsistent law. The Tribunal therefore upheld the Adjudicating Authority's partial allowance of I.A. No. 2477/2020 insofar as it restrained the discom from insisting on past dues and rejected the discom's appeal. [Paras 5, 6, 7]

The direction preventing the discom from insisting on payment of past dues after approval of the Resolution Plan is upheld; the appeal by the discom on this ground is dismissed.

Final Conclusion: Both appeals are dismissed: the request for restoration of HT supply without payment of required security deposit is refused, and the discom is restrained from insisting on pre-plan dues after approval of the Resolution Plan.

Approval of Resolution Plan under the Insolvency and Bankruptcy Code - Commercial wisdom of the Committee of Creditors and distributive decisions - Challenge to initiation of CIRP on ground of limitation estopped by dismissal of Special Leave Petition - Secured creditor's entitlement to value of security versus CoC's distribution - Consequential orders for implementation including release of title deeds

Challenge to initiation of CIRP on ground of limitation estopped by dismissal of Special Leave Petition - Whether the appellant could challenge initiation of the CIRP on the ground that the Section 7 application was time barred. - HELD THAT: - The Tribunal held that the appellant had earlier challenged the order admitting the Section 7 application before the Supreme Court by filing a Special Leave Petition which was dismissed both on merits and for delay. Having had the legality of initiation of CIRP considered and rejected by the Supreme Court, the appellant is precluded from reopening the same contention in these appeals. The Tribunal therefore declined to entertain the objection that the Section 7 application was barred by limitation and that the adjudicating authority's order was a nullity on that ground. [Paras 8, 9, 10, 11, 14]

The appellant cannot challenge initiation of the CIRP on limitation grounds in these appeals as that challenge was rejected by the Supreme Court.

Approval of Resolution Plan under the Insolvency and Bankruptcy Code - Commercial wisdom of the Committee of Creditors and distributive decisions - Secured creditor's entitlement to value of security versus CoC's distribution - Whether the adjudicating authority erred in approving the Resolution Plan and in rejecting the appellant's objections about the plan and distribution to the dissenting secured creditor. - HELD THAT: - The Tribunal recorded that the adjudicating authority considered the appellant's objections, found equitable treatment between similarly situated secured creditors, and held the Resolution Plan to be compliant with the statutory requirements including provisions of Section 30. The Committee of Creditors approved the plan by the requisite majority, and the distribution among financial creditors reflects the CoC's commercial decision. Reliance was placed on the principle that decisions regarding amounts payable to different classes of creditors are essentially commercial wisdom of the CoC and not ordinarily subject to interference. In view of these findings and the absence of successful challenge to the adjudicating authority's prior order dismissing objections, there was no ground to interfere with approval. [Paras 12, 15, 16]

The approval of the Resolution Plan and rejection of the appellant's objections are sustained; there is no ground to interfere.

Consequential orders for implementation including release of title deeds - Approval of Resolution Plan under the Insolvency and Bankruptcy Code - Whether the adjudicating authority's consequential order directing release of original title deeds pursuant to the approved Resolution Plan was liable to be set aside. - HELD THAT: - The Tribunal treated the order allowing the application for implementation directions as consequential to the valid approval of the Resolution Plan. Since the underlying approval was upheld, the consequential direction for releasing documents and implementing the plan did not call for interference. The appellate forum found no error in permitting the Resolution Professional to seek directions for implementation and in the adjudicating authority granting such relief. [Paras 17]

The consequential order directing release of title deeds and other implementation directions is upheld.

Final Conclusion: Both appeals are dismissed; the adjudicating authority's orders approving the Resolution Plan and granting consequential implementation directions (including release of title deeds) are affirmed.

Admission of application under Section 9 - existence of default - pre-existing dispute - effect of pendency of proceedings under Section 138 of the Negotiable Instruments Act - summary nature of insolvency proceedings under the IBC - prima facie reliance on ledger and invoices - illusory or mala fide defence

Admission of application under Section 9 - existence of default - prima facie reliance on ledger and invoices - illusory or mala fide defence - summary nature of insolvency proceedings under the IBC - Whether the Adjudicating Authority was justified in admitting the Section 9 application filed by the Operational Creditor - HELD THAT: - The Tribunal examined the ledger and invoices relied upon by the Operational Creditor and noted that the ledger for the period 01.04.2019 to 31.03.2020 recorded a substantial sum as due and also reflected an earlier payment. The Corporate Debtor's defences - allegations of fictitious invoices, lack of delivery acknowledgments, poor quality of goods, and goods lying in godown - were found to be unsupported by prior correspondence or satisfactory material. The Tribunal reiterated that proceedings under the Code are summary in nature and the Adjudicating Authority is not a civil court to try contractual disputes; a defence must be real and substantiated, not a mere ipse dixit or an illusory contention. Having considered the impugned order and the material on record, the Tribunal concluded that the Adjudicating Authority's view to admit the application was free from legal infirmity. [Paras 22, 23, 24, 26, 27]

The Adjudicating Authority was justified in admitting the Section 9 application; the admission is free from legal flaws.

Pre-existing dispute - effect of pendency of proceedings under Section 138 of the Negotiable Instruments Act - admission of debt by filing criminal complaint under Section 138 - Whether the pendency of proceedings under Section 138 of the Negotiable Instruments Act or the Corporate Debtor's asserted quality/quantity disputes prevented admission of the Section 9 petition - HELD THAT: - The Tribunal agreed with the Adjudicating Authority's reasoning that pendency of a criminal proceeding under Section 138 does not constitute a pre-existing dispute for the purposes of Section 9 and, in fact, may indicate admission of debt. The Tribunal observed that the Corporate Debtor's complaint about quality and requests to uplift goods were, as per the record, raised for the first time in reply to the demand notice and lacked antecedent correspondence to substantiate a bona fide dispute. Consequently, neither the pendency of the Section 138 proceeding nor the belated quality/possession complaints were held to be impediments to admission. [Paras 3, 21, 22, 25]

Pendency of Section 138 proceedings and belated/unsupported complaints about quality or possession do not amount to a pre-existing dispute preventing admission of the Section 9 petition.

Final Conclusion: The Company Appeal is dismissed; the Adjudicating Authority's order admitting the Section 9 application is affirmed as free from legal infirmity, and connected interlocutory applications are closed.

Commercial wisdom of the Committee of Creditors - limited judicial review under Section 30(2) and Section 30(4) - differential treatment of classes of creditors and homebuyers - liquidation value not a mandatory floor for approval of a resolution plan - permissibility of financial support/funding arrangements between a financial creditor and a resolution applicant - estoppel of class members who voted in favour of a resolution plan

Commercial wisdom of the Committee of Creditors - limited judicial review under Section 30(2) and Section 30(4) - differential treatment of classes of creditors and homebuyers - estoppel of class members who voted in favour of a resolution plan - Validity of refusal to admit certain homebuyers' claims, permissibility of lower percentage recovery to homebuyers vis-a -vis financial creditor, and permissibility of differential premium demands from different classes of homebuyers under the approved resolution plan. - HELD THAT: - The Tribunal held that distribution under a resolution plan is governed by the commercial wisdom of the Committee of Creditors and is largely beyond judicial intervention, subject only to the statutory scrutiny identified in Section 30(2) and Section 30(4). The Committee's evaluation of feasibility and viability pursuant to the evaluation matrix and its commercial assessment cannot be re examined on merits by the Adjudicating Authority or this Appellate Tribunal. Time value differences between homebuyers who entered at different periods justify differential treatments and premium demands, and such differential treatment, if approved by the Committee of Creditors (which included homebuyers holding a majority of voting shares in this case), cannot be faulted. Further, where members of a class (homebuyers) voted in favour of the plan, individual constituents of that class are estopped from opposing the plan. Applying these principles, the Tribunal found no error in the adjudicating authority's decision to decline certain claims and to approve the resolution plan as having been accepted by the requisite majority. [Paras 29]

No illegality in refusal to admit the association's claims; lower recovery to homebuyers and differential premiums sanctioned by the Committee of Creditors do not invalidate the approved resolution plan.

Liquidation value not a mandatory floor for approval of a resolution plan - commercial wisdom of the Committee of Creditors - Whether a resolution plan amount must match or exceed the liquidation value. - HELD THAT: - Relying on precedent, the Tribunal observed there is no statutory requirement that a resolution applicant's bid match the liquidation value calculated under the regulations. The liquidation valuation assists the Committee of Creditors but does not fetter their commercial choice; once the Committee approves a plan by the prescribed majority, the Adjudicating Authority's role is to ensure compliance with Section 30(2) and 30(4), not to substitute its own quantitative assessment. On the facts, the Committee approved the plan after considering valuers' inputs and other factors, and the adjudicating authority rightly accepted the plan despite the petitioner's contention that the plan amount was lower than the liquidation value. [Paras 30]

A resolution plan need not equal or exceed the liquidation value; the adjudicating authority correctly approved the plan on the record before it.

Permissibility of financial support/funding arrangements between a financial creditor and a resolution applicant - limited judicial review under Section 30(2) and Section 30(4) - estoppel of class members who voted in favour of a resolution plan - Whether the successful resolution applicant could be barred from submitting a plan on the ground that it was a close associate or was financed by a financial creditor. - HELD THAT: - The Tribunal accepted that a resolution applicant may enter into formal financial support arrangements with a financial creditor and that such funding, including part funding by a financial creditor, is not prohibited by the Code. There was no material establishing that the successful applicant was merely a special purpose vehicle of the creditor or that the arrangement amounted to impermissible collusion. The Code does not place an embargo on a financial creditor voting on a plan that it funds, and where the Committee (including homebuyers who formed a majority) approved the plan, challenges based on alleged association were not sustainable. The Tribunal also noted the principle that class constituents who voted in favour cannot thereafter oppose the plan. [Paras 31]

No bar existed on the successful resolution applicant submitting the plan due to funding by the financial creditor; the allegation of impermissible collusion was not established.

Final Conclusion: The appeal is dismissed as devoid of merit. The Appellate Tribunal found no material irregularity or patent illegality in the adjudicating authority's approval of the resolution plan, and declined to interfere with the Committee of Creditors' commercial decision or with the adjudicating authority's statutory scrutiny.

Maintainability of application under Section 33 read with Section 34 of the IBC - Whether a scheme sanctioned under SICA is a deemed approved resolution plan - Validity and scope of the Insolvency and Bankruptcy Code (Removal of Difficulties) Order, 2017 (Notification dated 24.05.2017) - Scope of power under Section 242 to remove difficulties - Effect of the Supreme Court s order in Spartek Ceramics (25.10.2018) on Notification dated 24.05.2017

Validity and scope of the Insolvency and Bankruptcy Code (Removal of Difficulties) Order, 2017 (Notification dated 24.05.2017) - Scope of power under Section 242 to remove difficulties - Effect of the Supreme Court s order in Spartek Ceramics (25.10.2018) on Notification dated 24.05.2017 - Notification dated 24.05.2017 issued as a Removal of Difficulties Order is beyond the scope of Section 242 and cannot be given effect to. - HELD THAT: - The Central Government s power under Section 242 is limited to making provisions not inconsistent with the Code for removing difficulties in giving effect to the provisions of the IBC. The Notification dated 24.05.2017 identified difficulties arising from the repeal of SICA and omission of certain Companies Act provisions, which do not constitute difficulties in giving effect to the IBC itself. This Tribunal s earlier view that the Notification travels beyond the scope of Section 242 was approved by the Hon ble Supreme Court in its order dated 25.10.2018. That order upheld the NCLAT s conclusion that the Notification is in excess of the Central Government s power under Section 242 and should not be given effect to. Consequently, the Notification cannot be relied upon to deem SICA schemes as approved resolution plans under the IBC.

Notification dated 24.05.2017 is not a valid exercise of power under Section 242 and cannot be acted upon.

Whether a scheme sanctioned under SICA is a deemed approved resolution plan - Deemed approved resolution plan - Maintainability of application under Section 33 read with Section 34 of the IBC - A scheme sanctioned under SICA cannot be treated as a deemed approved resolution plan under the IBC in the absence of a valid Notification dated 24.05.2017. - HELD THAT: - The Appellant s case was founded on the contention that the sanctioned rehabilitation scheme dated 07.01.2005 is a deemed approved resolution plan by virtue of the Notification of 24.05.2017. Given the Notification has been held invalid, there is no legal basis to characterise the SICA-sanctioned rehabilitation scheme as a resolution plan within the meaning of the IBC. The Adjudicating Authority therefore correctly rejected the premise that the scheme is an approved resolution plan and declined to treat alleged contravention of that scheme as a ground for invoking liquidation under Section 33.

The sanctioned rehabilitation scheme dated 07.01.2005 is not a resolution plan under the IBC for the purposes of Sections 33 and 34.

Maintainability of application under Section 33 read with Section 34 of the IBC - The Application under Section 33 read with Section 34, predicated on the sanctioned SICA rehabilitation scheme, was not maintainable and was rightly rejected by the Adjudicating Authority. - HELD THAT: - Because the foundation of the application s claim-the characterization of the SICA-sanctioned rehabilitation scheme as an approved resolution plan-was removed by the invalidation of the Notification, the Adjudicating Authority properly found there was no occasion to hold that the respondent had breached a resolution plan under the IBC. The Appellant s reliance on earlier orders or decisions that did not take into account the Supreme Court s disposition in Spartek Ceramics could not sustain the application. Orders of various tribunals or High Courts rendered without regard to the Supreme Court s binding conclusion on the Notification do not bind the Adjudicating Authority in the present matter.

The Adjudicating Authority s rejection of the Section 33/34 application was correct and the application is not maintainable.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority correctly rejected the application under Sections 33 and 34 because the Notification dated 24.05.2017 cannot be relied upon to deem a SICA-sanctioned rehabilitation scheme as an approved resolution plan; the Supreme Court s order in Spartek Ceramics confirmed that the Notification exceeded the scope of Section 242, and therefore the impugned application was not maintainable.

Existence of dispute - notice of dispute under Section 8 of the Insolvency and Bankruptcy Code - admission of Section 9 application - plausible dispute test as laid down in Mobilox Innovations - role of adjudicating authority at initial stage of Section 9

Existence of dispute - notice of dispute under Section 8 of the Insolvency and Bankruptcy Code - plausible dispute test as laid down in Mobilox Innovations - Whether the Reply to the Demand Notice constituted a pre existing and plausible dispute which barred admission of the Section 9 application. - HELD THAT: - The Corporate Debtor served a Reply to the Demand Notice asserting that accounts were settled up to 31 March 2016, that the last invoice dated 02 June 2016 related to allegedly inferior goods which the Corporate Debtor asked the Operational Creditor to take back, and that only a small interest demand (interest up to April 2016) had been communicated by email on 03 June 2016. The Tribunal examined these averments against the statutory scheme and the established test: the adjudicating authority must determine at the admission stage whether a dispute is bona fide and plausible (not a patently feeble or spurious defence) as articulated in Mobilox and subsequent decisions. The email of 03 June 2016 and the contents of the Reply were held to support the Corporate Debtor's contention and to show more than a mere afterthought. The Adjudicating Authority had failed to consider the email and the Reply's specific allegations and therefore did not apply the Mobilox test correctly. Given that the defence raised matters (settlement up to a specified date, quality complaint, offer to return goods, and conduct indicating settlement) which required further adjudication by a competent forum, the dispute could not be characterised as illusory or wholly spurious at the admission stage.

The Reply constituted a plausible pre existing dispute and therefore the Section 9 application ought not to have been admitted.

Admission of Section 9 application - role of adjudicating authority at initial stage of Section 9 - Whether the Adjudicating Authority erred in admitting the Section 9 application despite the notice of dispute. - HELD THAT: - Applying the statutory scheme and the jurisprudence requiring rejection of Section 9 applications where a genuine dispute has been communicated, the Tribunal found that the Adjudicating Authority, although referring to Mobilox, did not apply its ratio to the facts. The Adjudicating Authority overlooked material placed by the Corporate Debtor - notably the email of 03 June 2016 and the Reply to the Demand Notice - and treated the dispute as an afterthought without adequate analysis. The correct approach at the admission stage is not to resolve the dispute on merits but to assess whether the defence raises a plausible contention warranting further adjudication; that threshold was met here.

The Adjudicating Authority erred in admitting the Section 9 application; its admission order is set aside and the Section 9 application is dismissed.

Final Conclusion: Appeal allowed. The order admitting the Section 9 application is set aside and the Section 9 application is dismissed on the ground that the Corporate Debtor had communicated a plausible pre existing dispute. The Operational Creditor remains free to pursue its remedies in an appropriate forum; amounts deposited by the Appellant shall be refunded.

Avoidance transaction - related party transaction - transactions in the ordinary course of business - intention to defraud creditors - transaction audit and forensic audit - section 66 of the Insolvency and Bankruptcy Code, 2016 - section 69 of the Insolvency and Bankruptcy Code, 2016

Related party transaction - avoidance transaction - transactions in the ordinary course of business - intention to defraud creditors - transaction audit and forensic audit - section 66 of the Insolvency and Bankruptcy Code, 2016 - section 69 of the Insolvency and Bankruptcy Code, 2016 - Whether the payments/transfers made by the corporate debtor to Y2Y Fashions Pvt. Ltd. constituted avoidable preferential/fraudulent transactions with intention to defraud creditors, attracting liability under section 66 of the IBC and criminal prosecution under section 69. - HELD THAT: - The Tribunal examined the T Commerce Vendor Agreement and the surrounding commercial context, including the sealing of the corporate debtor's warehouse and cancellation of prior teleshopping arrangements, and noted that the term 'commission' in the agreement encompassed multiple services (hosting, technology, customer support, logistics, packing etc.). The Tribunal found the increase in commission percentage (from 5% to 20% to 32% across FY 2016 17 to FY 2018 19) to be explicable by the expanded scope of services under the agreement and by the legitimate commercial need to sell the corporate debtor's inventory after the warehouse sealing. While the Transaction and Forensic Audit Reports recorded higher commission and identified amounts receivable and adjustments, the Tribunal held that the Adjudicating Authority had relied in a bald manner on those audit conclusions without adequately considering the contractual terms and commercial justification. On this basis the Tribunal concluded that the transactions were effected in the normal course of business and that the inference of diversion with an intention to defraud creditors was not supported by the facts. Consequently, the finding that Rs.83.97 lakhs had been diverted to Y2Y Fashions as avoidance transactions was held to be erroneous, and no liability or criminal prosecution under sections 66 and 69 of the IBC was warranted in respect of these transactions. [Paras 19, 20, 21, 22, 23]

Impugned order set aside; ex directors and Y2Y Fashions Pvt. Ltd. not liable to deposit Rs.83.97 lakhs and no prosecution under section 69 of the IBC to be instituted in relation to these transactions.

Final Conclusion: The appeal is allowed: the Tribunal set aside the Adjudicating Authority's order directing deposit of Rs.83.97 lakhs and found that the impugned transfers to Y2Y Fashions were transactions in the ordinary course of business not attracting avoidance or criminal liability under the IBC; appeal disposed of with no order as to costs.

Operational debt - default - Section 9 admission under IBC - acknowledgement of debt - pre-existing dispute - effect of settlement/compromise on operational debt - limitation of enquiry by adjudicating authority - admission and ledger as evidence

Operational debt - Section 9 admission under IBC - admission and ledger as evidence - The Section 9 application was correctly admitted because the Operational Creditor proved existence of operational debt and default. - HELD THAT: - The Tribunal held that the Memorandum of Compromise and the ledger entries, together with admissions in the appeal papers, established that an unpaid principal amount remained due and payable by the Corporate Debtor. The Adjudicating Authority's role is limited to ascertaining whether a debt is due and a default has occurred; it need not undertake a detailed quantification or resolve all contested issues of interest or ancillary disputes at the admission stage. In the present case defaults had occurred prior to the pandemic and the claimed unpaid sum exceeded the statutory threshold, and there was no material on record demonstrating a pre-existing dispute capable of defeating the Section 9 application. Accordingly, the admission under Section 9 (and consequent moratorium) was held free from legal infirmity. [Paras 59, 60, 61, 62, 66]

The admission of the Section 9 application was upheld and the finding of operational debt and default was confirmed.

Pre-existing dispute - effect of settlement/compromise on operational debt - acknowledgement of debt - limitation of enquiry by adjudicating authority - Acceptance of part payments, existence of a settlement and alleged waiver did not constitute a pre-existing dispute sufficient to defeat admission under Section 9. - HELD THAT: - The Tribunal analysed the appellant's plea that the Memorandum of Compromise and subsequent part payments operated as a novation, waiver or estoppel precluding the Operational Creditor's claim. It observed that an acknowledgement of liability in the compromise and ledger entries serves as evidence of the debt and operates to show the debt remained payable; mere acceptance of part payments or ongoing settlement talks did not, on the record, amount to a pre-existing dispute which would bar admission. The appellant failed to place material before the Adjudicating Authority establishing a plausible dispute prior to issuance of the demand notice; therefore the adjudicatory requirement to admit the Section 9 application was met and detailed contentious questions could be left for later stages. [Paras 62, 63, 64, 65, 66]

The pleas of waiver, novation, estoppel and pre-existing dispute were rejected for want of supporting material; they did not preclude admission.

Final Conclusion: The appeal is dismissed. The admission of the Section 9 application by the Adjudicating Authority was affirmed as legally valid; the Section 9 proceedings (and moratorium) stand and no costs were ordered.

Liquidation as a last resort - preservation of corporate debtor as a going concern - duty of the resolution professional to maximise value and preserve going concern - bias and conflict of interest of the resolution professional - commercial wisdom of the committee of creditors - judicial review of procedural fairness in insolvency proceedings - remand for fresh consideration and change of resolution professional - inquiry by the Insolvency and Bankruptcy Board of India into conduct of the resolution professional

Liquidation as a last resort - preservation of corporate debtor as a going concern - duty of the resolution professional to maximise value and preserve going concern - judicial review of procedural fairness in insolvency proceedings - Validity of the order of the Adjudicating Authority allowing liquidation of the corporate debtor under Section 33(2) of the IBC. - HELD THAT: - The Appellate Tribunal examined the conduct of the Resolution Professional (RP) and the course of the CIRP and concluded that liquidation was ordered without adequate regard to the statutory objective of preserving the corporate debtor as a going concern. The Tribunal recorded multiple indicia of the RP's failure to act independently and to take steps required by the Code to maximise value: holding CoC meetings at the premises of the principal financial creditor; appearing through common counsel with that creditor and filing joint pleadings; creating or relying upon procedural impediments (stringent eligibility criteria, late amendment of Form G) which deterred prospective resolution applicants; rejecting viable offers including an offer from a promoter and a higher offer from a prospective applicant; not taking steps to recover dues from government agencies; and failing to comply with or implement a direction of the Delhi High Court to consider re-opening the hospital during the Covid pandemic. The Tribunal found that these factors showed pre-determination towards liquidation rather than genuine efforts to revive the corporate debtor, and that the Adjudicating Authority had reproduced an earlier order without fresh consideration. For these reasons the order permitting liquidation could not stand.

The impugned NCLT order dated 31.05.2021 allowing liquidation is set aside.

Remand for fresh consideration and change of resolution professional - commercial wisdom of the committee of creditors - Relief to be granted after setting aside the liquidation order. - HELD THAT: - Having found infirmities in the CIRP conduct and in the impugned order, the Tribunal did not itself direct revival or pass a resolution plan. Instead, recognising the need for fresh adjudication, the Tribunal remitted the matter to the Adjudicating Authority for re-examination of the issues underlying the Section 33(2) application. The Tribunal specifically directed the Adjudicating Authority to re-open consideration of the liquidation application and to consider, as part of that fresh enquiry, whether the RP should be replaced in view of the defects and apparent bias in the RP's conduct. The Tribunal's remand thus preserves the scope for the CoC's commercial wisdom to operate afresh but requires that the process be conducted free from the procedural and fairness defects identified.

Matter remitted to the NCLT for re-examination and consideration of change of the Resolution Professional.

Inquiry by the Insolvency and Bankruptcy Board of India into conduct of the resolution professional - bias and conflict of interest of the resolution professional - Whether regulatory inquiry into the RP's conduct should be directed. - HELD THAT: - On finding multiple infirmities in the RP's conduct during CIRP and in the process leading to the Section 33(2) filing, the Tribunal directed the Insolvency and Bankruptcy Board of India (IBBI) to enquire into the RP's conduct and related circumstances. The Tribunal required the IBBI to examine whether any cognisable offence prima facie emerged during its enquiry and, if so, to take appropriate steps including lodging an FIR. The direction was made to ensure accountability of the RP acting in his public-capacity role and to secure the integrity of insolvency processes.

IBBI directed to conduct an enquiry into the RP's conduct and, if prima facie cognisable offences are found, to take appropriate action including lodging FIR.

Final Conclusion: The Tribunal set aside the NCLT order directing liquidation, finding the RP and the CIRP process deficient and biased, remitted the matter to the Adjudicating Authority for fresh consideration (including possible change of RP) and directed the IBBI to enquire into the RP's conduct and take further action if prima facie offences are found.

Initiation of corporate insolvency resolution process by a financial creditor under Section 7 - form and manner of filing Form 1 as prescribed under Rule 4 - requirement of proposed interim resolution professional and consent in Form 2 - evidence of financial debt and existence of default - intercorporate deposit falling within definition of financial debt - no mechanical admission of Section 7 petitions - adjudicating authority to examine prima facie evidence

Form and manner of filing Form 1 as prescribed under Rule 4 - requirement of proposed interim resolution professional and consent in Form 2 - Whether the Section 7 application was complete in Form 1 having regard to Part III (particulars of proposed IRP) and the late tendering of consent in Form 2. - HELD THAT: - The Bench held that Section 7(2) requires the application to be made in the prescribed form and manner (Rule 4). Part III of Form 1 required the name and particulars of the proposed IRP and Rule 9 required enclosure of consent in Form 2 where the financial creditor proposes an IRP. The Appellant had marked Part III as 'N.A.' when filing Form 1 and thereafter sought to place on record a consent dated after admission was decided. The Tribunal found that the lacuna in the pleadings could not be cured by filing extraneous evidence after the application stood rejected and that the procedure of furnishing Form 2 after the fact did not remedy the original incompleteness of the application. Consequently, the application to place on record the IRP consent (Annexure A2) was refused and the absence of requisite particulars justified rejecting the Section 7 petition on the completeness ground. [Paras 4, 11, 12]

Part III of Form 1 having been left blank and consent in Form 2 not pleaded or filed in time, the omission could not be cured at this stage; Annexure A2 is not allowed and incompleteness justified rejection.

Evidence of financial debt and existence of default - intercorporate deposit falling within definition of financial debt - no mechanical admission of Section 7 petitions - adjudicating authority to examine prima facie evidence - Whether the Appellant produced sufficient evidence to establish the existence of a financial debt and the occurrence of default so as to merit admission of the Section 7 application. - HELD THAT: - The Tribunal examined the material produced before the Adjudicating Authority and noted multiple infirmities: no contemporaneous request letter or other request establishing the loan transaction; failure to produce bank proof of RTGS transfer despite specific insistence; the alleged acknowledgement dated 25.10.2017 was found partially typed and partially handwritten with handwritten insertions (date, interest rate, PAN) that raised doubt about authenticity; the post dated cheque asserted to have been issued was not produced; and no satisfactory explanation was given for fixation of the date of default. The Bench reiterated the settled principle that Section 7 applications must not be mechanically admitted and the Adjudicating Authority must be satisfied on the basis of available evidence that a prima facie case of financial debt and default exists. On the record, the Appellant failed to establish that the transaction was a disbursement for the time value of money constituting a financial debt or to prove default from the evidence before the Adjudicating Authority. [Paras 2, 3, 11, 12]

The evidence before the Adjudicating Authority was insufficient to establish a financial debt and occurrence of default; the finding of dismissal was upheld.

Evidence of financial debt and existence of default - no mechanical admission of Section 7 petitions - adjudicating authority to examine prima facie evidence - Whether the additional documents sought to be placed on record (Annexure A1 - bank extract showing RTGS; Annexure A2 - IRP consent) should be admitted on appeal. - HELD THAT: - The Tribunal considered the interlocutory application filed during the appeal. It refused to permit Annexure A2 (the IRP consent given after filing) because Part III was left blank in the original pleadings and such post hoc supplementation could not cure the incompleteness. Annexure A1 (bank extract) was kept open for consideration at final hearing by the earlier order, but the Bench in the final disposal returned to the core question of sufficiency of evidence as available before the Adjudicating Authority and found that the overall record did not establish the financial debt/default. The appeal was dismissed on merits, and no separate admission of Annexure A1 was allowed to alter that outcome. [Paras 5, 12, 13]

Application to place on record Annexure A2 dismissed; Annexure A1 was not permitted to cure the original defects so as to overturn the Adjudicating Authority's dismissal.

Final Conclusion: The National Company Law Appellate Tribunal affirmed the Adjudicating Authority's dismissal of the Section 7 petition: the Form 1 application was incomplete in material particulars (Part III/Form 2 consent), and the Appellant failed to place sufficient credible evidence to establish a financial debt and the occurrence of default; appeal dismissed, no costs.

Limitation for filing appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - obligation to obtain certified copy and annexure requirement under Rule 22(2) of the NCLAT Rules - overriding effect of the Insolvency and Bankruptcy Code over other enactments (Section 238) - time is the essence of the Code

Limitation for filing appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - obligation to obtain certified copy and annexure requirement under Rule 22(2) of the NCLAT Rules - overriding effect of the Insolvency and Bankruptcy Code over other enactments (Section 238) - Whether the appeals are barred by limitation and whether delay could be condoned - HELD THAT: - The Appellate Tribunal held that appeals under the IBC must be filed within thirty days from the pronouncement of the order, with a discretionary extension not exceeding fifteen days, and that the Code's special and overriding scheme displaces the Companies Act provision which counts limitation from the date a copy is made available. Reliance was placed on the Supreme Court's reasoning that the IBC requires aggrieved parties to exercise due diligence to obtain a certified copy on pronouncement and that Rule 22(2) mandates annexing a certified copy; failure to make efforts to obtain that copy does not suspend limitation. Applying these principles to the facts, the impugned order was pronounced on 13.12.2019, the primary thirty-day period and the fifteen-day extension expired before the appellants filed their appeals, and the appellants did not show sufficient cause or diligence in obtaining the certified copy. The Tribunal emphasised that the IBC is a self-contained code where "time is the essence" and procedural formality cannot be used to frustrate its summary objectives; consequently the Tribunal had no power to condone delay beyond the statutory outer limit. [Paras 17, 18, 20, 28, 29]

The appeals are dismissed as barred by limitation; applications for condonation of delay are refused and the Tribunal did not examine the merits.

Final Conclusion: All nine appeals (including the associated application in TA No.50/2021) were dismissed for being barred by limitation; condonation applications were refused and no costs were awarded; the Tribunal did not adjudicate the merits.

Provisional attachment under Section 5(1) of the PMLA - period of validity of attachment (180 days) - extension of limitation by orders in SMW (C) No. 3 of 2020 - effect of quashing provisional attachment on adjudication under Section 8 of the PMLA - right to opportunity of hearing before adjudication

Provisional attachment under Section 5(1) of the PMLA - period of validity of attachment (180 days) - extension of limitation by orders in SMW (C) No. 3 of 2020 - Validity period of the provisional attachment order under Section 5(1) of the PMLA and applicability of the Supreme Court's extension of limitation in SMW (C) No. 3 of 2020 to that period - HELD THAT: - The attachment under Section 5(1) was provisionally made on 30th September 2021 and, by operation of Section 5(3), ceased to have effect upon expiry of the prescribed 180 days, i.e., 31st March 2022, because no order under Section 8(3) was made earlier (recorded finding). The Supreme Court's orders in SMW (C) No. 3 of 2020 extended periods of limitation for instituting judicial or quasi judicial proceedings to address filing difficulties during the pandemic; those orders were intended to preserve remedies by enabling litigants to file pleadings and were not directed at altering the substantive temporal validity of statutory orders which govern continuation or cessation of executive actions. Relying on S. Kasi v. State and construing the object and scope of the suo motu orders, the court found that Section 5(1) relates to the period of validity of an attachment order (not to filing of pleadings) and therefore the limitation extension orders do not operate to extend the 180 day life of a provisional attachment under Section 5(1). Application of the extension to the present attachment would be contrary to the statutory scheme whereby the order ceases automatically on expiry. The learned Single Judge therefore correctly concluded that SMW (C) No. 3 of 2020 does not extend the life of the provisional attachment and was justified in setting aside the attachment on expiry. [Paras 11, 19, 22]

The 180 day validity of the provisional attachment under Section 5(1) expired on 31st March 2022 and the Supreme Court's limitation extension orders in SMW (C) No. 3 of 2020 do not extend that statutory period; the learned Single Judge correctly set aside the provisional attachment on that basis.

Effect of quashing provisional attachment on adjudication under Section 8 of the PMLA - separation of executive attachment and adjudicatory proceedings - Whether quashing the provisional attachment under Section 5(1) necessarily terminates or impacts the adjudication proceedings under Section 8 of the PMLA - HELD THAT: - The court examined the relationship between Sections 5 and 8 and followed the binding exposition in Kaushalya Infrastructure Development Corporation Ltd. v. Union of India that quashing a provisional attachment under Section 5(1) does not, by itself, affect the adjudication process under Section 8 which must proceed on its own merits. The learned Single Judge had granted consequential relief which effectively terminated the Section 8 proceedings; the Division found that to be an error because Section 8 adjudication is an independent statutory process and must continue notwithstanding the quashing of the provisional attachment. [Paras 23, 24, 25, 28]

Quashing the provisional attachment does not invalidate or bring to an end the adjudication proceedings under Section 8; the consequent relief insofar as it terminated Section 8 proceedings was set aside.

Right to opportunity of hearing before adjudication - procedure before passing interlocutory orders - Allegation that the learned Single Judge decided the writ petition at the first hearing without permitting the Enforcement Directorate to file affidavit in opposition or present its case - HELD THAT: - The Division Bench examined the court file and proceedings which showed that the writ petition was heard on multiple dates in the presence of the Directorate's counsel and there was no recorded request to file an affidavit in opposition. The Single Judge heard submissions of the parties before pronouncing the order. On these facts the contention that no opportunity was given to the appellants is unfounded and the Division found no procedural infirmity in that respect. [Paras 27]

There was no denial of opportunity to the Enforcement Directorate; the challenge to the procedural conduct of the Single Judge fails.

Final Conclusion: The Division Bench affirms the Single Judge's conclusion that the Supreme Court's limitation extension orders do not extend the 180 day life of a provisional attachment under Section 5(1) PMLA and therefore the provisional attachment stood expired and was rightly set aside; however, the Division Bench sets aside the Single Judge's grant of all consequential relief insofar as it terminated adjudication under Section 8, directing that Section 8 proceedings may continue, and dismisses the contention of denial of opportunity to the Directorate.

Direction to investigative agency to examine allegations and proceed in accordance with law - transmission of writ petition records to Enforcement Directorate for consideration - investigation into alleged money laundering and connected entities

Transmission of records to investigating agency - duty of Enforcement Directorate to consider complaints and proceed in accordance with law - scope of investigation to include connected private entities alleged to have conspired with Karvy - Contents of the writ petition, annexures and documents to be transmitted to the Enforcement Directorate and the ED to consider the allegations and take action in accordance with law; petition disposed. - HELD THAT: - The petitioners alleged that various private respondents, in concert with the Karvy group, floated ponzi schemes and duped investors, and had lodged complaints with the Enforcement Directorate. The ED stated that a money laundering investigation into Karvy and connected entities is underway and that the petitioners' complaint had been taken on record. Having regard to these facts and the nature of the allegations, the High Court directed transmission of the writ petition and its annexures to the ED so that the ED may consider the additional allegations therein and proceed as per law. The Court did not undertake independent adjudication of the underlying allegations but required the investigative agency to examine the material and take appropriate action within its statutory remit. [Paras 6, 8, 9]

The petition and its annexures shall be transmitted to the Enforcement Directorate; the ED shall consider the allegations and proceed in accordance with law; petition disposed of.

Final Conclusion: Writ petition disposed by directing transmission of the petition and annexures to the Enforcement Directorate for consideration; ED to proceed in accordance with law and take appropriate action on the allegations.

E-filing of government appeals and proceedings - exclusive electronic filing for a tribunal - paperless tribunal operations - ICT initiatives in revenue litigation - High-Powered Committee to implement e-filing

E-filing of government appeals and proceedings - High-Powered Committee to implement e-filing - Union government to ensure filing of all appeals and proceedings by the government before High Courts and revenue tribunals (including CESTAT and ITAT) is conducted by e-filing and made universal within three months where the government is in appeal. - HELD THAT: - The Court received an updated note on ICT initiatives in revenue litigation and directed the Union government to take all expeditious steps so that filings by the Union government in appeals and proceedings before the High Courts and revenue tribunals, including CESTAT and ITAT, shall take place in the e-filing mode. The High-Powered Committee is tasked to proceed with necessary measures to achieve universal e-filing within a period of three months in cases where the government is the appellant. The direction is administrative and implementation-focused, intended to facilitate wide public dissemination and to modernise revenue litigation procedures through technology. [Paras 2]

Direction issued to the Union government and the High-Powered Committee to implement universal e-filing for government appeals and proceedings within three months.

Exclusive electronic filing for a tribunal - paperless tribunal operations - ICT initiatives in revenue litigation - All filings before the proposed GST tribunal shall be in electronic form exclusively and the tribunal shall operate as paperless while its modalities are being put in place. - HELD THAT: - On the respondent's submission that the GST tribunal is a green field institution, the Court accepted that all filings from inception should be electronic. The Union government is directed to include, in the modalities for the GST tribunal, the requirement of exclusive electronic filing and the objective that the tribunal functions paperlessly. The Court requested that the government apprise it on the next listing about steps taken in this regard. The direction is prospective and administrative, aimed at ensuring technology-enabled, paperless operations for the newly constituted tribunal. [Paras 3, 4]

Direction issued that the GST tribunal's filings shall be exclusively electronic and that the tribunal should be paperless in its operations; the government to report back on steps taken.

Final Conclusion: The Supreme Court directed the Union government and the High-Powered Committee to implement universal e-filing for government appeals and proceedings (including CESTAT and ITAT) within three months, and ordered that the GST tribunal be constituted to require exclusive electronic filing and operate as a paperless institution, with the government to report progress on the next listing.

Quantification of tax dues - eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - exception in Section 125(1)(e) of SVLDRS, 2019 - relief under Section 124(1)(d) and Section 124(1)(c)(iii)(A) of SVLDRS, 2019 - definition of "amount in arrears" and "tax dues" under Sections 121 and 123 of SVLDRS, 2019 - effect of filing declaration after scheme closure and remedial jurisdiction under Article 226 (ubi jus ibi remedium) - voluntary disclosure exclusion under Section 125(1)(f) - jurisdiction of officers of the Directorate (DGGI/ DGCEI) as "Central Excise Officers" and validity of Notification No.22/2014-ST

Effect of filing declaration after scheme closure and remedial jurisdiction under Article 226 (ubi jus ibi remedium) - Whether writ petitions challenging rejection of SVLDRS declarations filed in time but adjudicated after the scheme period are maintainable despite closure of the Scheme. - HELD THAT: - The Court held that rejection of declarations and communication of rejection after the Scheme's prescribed period does not bar judicial review where the claimant was entitled to the benefit of the Scheme and was wrongly denied it. The object and remedial purpose of SVLDRS, 2019 and the principle ubi jus ibi remedium support entertaining challenges on merits; therefore the writ petitions challenging rejection of timely-filed declarations were not to be dismissed as barred solely because the Scheme had expired. The Court emphasised that entitlement to relief under the Scheme must be examined on merits and that delay in approaching the Court was not so excessive as to preclude relief in the circumstances. The Court accordingly answered the reference in favour of the petitioners and permitted adjudication on merits.

The writ petitions challenging rejection of timely-filed SVLDRS declarations are maintainable and must be decided on merits rather than rejected merely because the Scheme period had expired.

Jurisdiction of officers of the Directorate (DGGI/ DGCEI) as "Central Excise Officers" and validity of Notification No.22/2014-ST - Whether Notification No.22/2014-ST and consequent issuance of Show Cause Notice by the Principal Additional Director General, DGGI (Chennai) was without jurisdiction. - HELD THAT: - The Court held that officers of the Directorate (earlier DGCEI, presently DGGI) are capable of being appointed as "Central Excise Officers" under the statutory scheme and relevant notifications. The impugned Notification No.22/2014-ST was to be read in conjunction with prior Notifications conferring pan-India powers; there was no valid restriction rendering the Directorate officers incapable of exercising powers nationwide. Consequently, the challenge to the impugned Notification and to the jurisdiction of the issuing officer was rejected as without merit. The Court declined to quash the Show Cause Notice on jurisdictional grounds.

Challenge to Notification No.22/2014-ST and to the jurisdiction of the DGGI officer was dismissed; the Show Cause Notice was held not to be without jurisdiction.

Quantification of tax dues - exception in Section 125(1)(e) of SVLDRS, 2019 - relief under Section 124(1)(d) of SVLDRS, 2019 - definition of "tax dues" under Section 123 and "audit" under Section 121(g) - Whether M/s. Win Power Engineering's communications and payments (including letter dated 24.10.2018) amounted to quantification of tax dues on or before 30.06.2019 so as to make it eligible for relief under SVLDRS for the periods covered by that quantification. - HELD THAT: - The Court found that the petitioner had made an adhoc/partial quantification by letter dated 24.10.2018 in respect of April 2017 to June 2017 and had made payments corresponding to that quantification. That limited quantification qualified for acceptance under the Scheme for the specific period April 2017 to June 2017, and the Designated Committee was directed to accept and settle the declaration for that period and issue the appropriate discharge certificate. However, the Court held that the petitioner failed to quantify the tax liability for the earlier period (March 2016 to March 2017) on or before 30.06.2019; the exception in Section 125(1)(e) therefore operated for that earlier period and relief under SVLDRS could not be granted for it. The Court directed the department to proceed with show cause proceedings in respect of the balance amounts and permitted corrigendum and adjudication subject to hearing.

Declaration accepted and case to be settled under SVLDRS only for the quantified period April 2017 to June 2017; relief for earlier periods denied and departmental proceedings to continue for the balance.

Quantification of tax dues - definition of "amount in arrears" under Section 121(c)(iii) and relief under Section 124(1)(c)(iii)(A) - exception in Section 125(1)(e) - Whether M/s. True Value Homes' reply dated 07.05.2019 and related returns constituted quantification on or before 30.06.2019 so as to entitle it to relief under SVLDRS for the amounts admitted in returns and quantified in that communication. - HELD THAT: - The Court concluded that the petitioner had, by returns filed on 10.05.2017, 19.11.2018 and 11.01.2019 and by its communication dated 07.05.2019, made quantification in respect of amounts falling within the definition of "amount in arrears" and "tax dues" prior to commencement of the Scheme. Those portions (as admitted/quantified and remaining unpaid prior to implementation of SVLDRS) fall within Section 124(1)(c)(iii)(A) and the petitioner was entitled to settle those quantified and unpaid amounts under the Scheme. Small differences between the petitioner's quantified figure and departmental estimate did not disentitle the petitioner in respect of amounts properly quantified before the cut-off. The Court directed the respondents to accept the declaration to the extent of that quantification, issue the appropriate discharge certificate and to proceed with departmental adjudication (or corrigendum) for the balance amounts.

Declaration accepted and case to be settled under SVLDRS for amounts quantified by petitioner on 07.05.2019 that remained unpaid before implementation; departmental proceedings to continue for the balance.

Final Conclusion: The Court declined to dismiss challenges to rejection of timely-filed SVLDRS declarations solely because the Scheme period had expired and proceeded to decide on merits. It upheld the DGGI officers' jurisdiction and dismissed jurisdictional challenges. On merits, M/s. Win Power Engineering was entitled to settlement under SVLDRS only for the period April 2017 to June 2017 as quantified by its communication of 24.10.2018; the balance demands remain subject to departmental proceedings. M/s. True Value Homes was entitled to settlement under SVLDRS in respect of amounts quantified in its communication of 07.05.2019 and admitted in returns prior to the cut-off, while remaining amounts are to be adjudicated by the authorities. Associated writs challenging the impugned Show Cause Notice and Notification No.22/2014-ST were dismissed.

Real estate agent - real estate consultant - taxable service - contractual characterisation of service - development charges as profit

Real estate agent - real estate consultant - taxable service - contractual characterisation of service - development charges as profit - Receipts of the appellant as development charges are not exigible to service tax as "Real Estate Agent" services. - HELD THAT: - The Tribunal examined the statutory definitions of "real estate agent" and "real estate consultant" and directed that taxation under that category requires (a) that the provider be acting as a real estate agent/consultant and (b) that the service rendered be in relation to sale, purchase, leasing or renting of real estate. The material on record, including development agreements, consistently described the appellant as a "Developer" and the amounts received as development charges or profit entitlement under the agreements, not as consultancy or commission. There was no evidence that the appellant acted in the capacity of a real estate agent or rendered services in the nature specified by the definitions. The Tribunal held that classification of a service depends on the true nature of the service shown by contractual documents and not merely on the appellant's self-characterisation. The Tribunal also relied on its earlier decision in Safal Construction Pvt. Limited where similar co-development arrangements were held not to attract service tax as agent/ business support service. Applying that reasoning to the present contracts and factual matrix, the demand confirmed by the adjudicating and appellate authorities was held unsustainable on merits and set aside. [Paras 11, 12, 13, 15]

The demand of service tax under the head "Real Estate Agent" services is rejected; the impugned order is set aside and the appeal allowed on merits.

Final Conclusion: The Tribunal allowed the appeal on merits, holding that the amounts received as development charges were in the nature of developer's profit and did not constitute taxable "Real Estate Agent" services; the impugned order confirming service tax demand is set aside with consequential relief, if any.

Principle of mutuality - taxability of services between an incorporated society and its members - refund of amounts paid under a mistake of law - inapplicability of limitation under Section 11B to refunds paid under mistake of law - Article 265 of the Constitution

Principle of mutuality - taxability of services between an incorporated society and its members - Services provided by the appellant (a registered co-operative housing society) to its members do not constitute a taxable service and the service tax paid is not leviable. - HELD THAT: - The Tribunal applied the settled principle that where an incorporated club or society exists for the exclusive purpose of catering to the requirements of its members, there is no two party service relationship and the transactions fall within the principle of mutuality. The Tribunal referred to decisions of the Supreme Court and various High Courts and earlier Tribunal rulings, including the Larger Bench decision in Calcutta Club Ltd. (following Young Men's Indian Association ), which held that from 2005 onwards the Finance Act, 1994 does not levy service tax on incorporated members' clubs; consequently show cause notices and demands in that regard are void. The Tribunal examined the Maharashtra Co operative Housing Societies Act, 1960 and the bye laws to find that on registration the society is a body corporate but was constituted to meet members' common requirements and collects contributions for communal charges rather than consideration for a taxable service. Applying these principles, the Tribunal concluded that the appellant's activities do not satisfy the statutory requirement of a service provider and a distinct service receiver and therefore the service tax charged was not exigible. [Paras 5, 7, 9, 10]

Appellant's services to members are not taxable under the principle of mutuality; amounts paid as service tax are not leviable.

Refund of amounts paid under a mistake of law - inapplicability of limitation under Section 11B to refunds paid under mistake of law - Article 265 of the Constitution - Amounts paid as service tax by the appellant were paid under a mistake of law and are refundable; the limitation under Section 11B does not bar the refund claim. - HELD THAT: - Having held that no service tax was leviable, the Tribunal treated the payments as made under a mistake of law. It relied on precedents (including High Court and Tribunal decisions) holding that refund claims for tax paid under a mistake of law are not governed by the limitation provisions of Section 11B as applicable to service tax, and that retention of such amounts by the revenue would be contrary to Article 265 of the Constitution. The Tribunal observed that where retention of revenue is without authority of law, limitation under Section 11B does not apply and the assessee may claim refund even if the statutory period under Section 11B has expired. In the circumstances, the Tribunal did not find it necessary to determine whether the appellant had produced contemporaneous protest communications. [Paras 7, 10, 11]

Refund claim is maintainable despite expiry of Section 11B limitation because the payments were made under a mistake of law; revenue must refund the amount.

Final Conclusion: Appeal allowed. The Tribunal set aside the impugned order, held that the appellant's payments of service tax were not leviable under the principle of mutuality and were made under a mistake of law, and directed grant of refund with consequential relief as per law.

Surrender charge not taxable as consideration for service - taxable service under section 65(105) of Finance Act, 1994 - transaction in an actionable claim - double taxation of the same consideration - binding precedent of Tribunal decisions

Surrender charge not taxable as consideration for service - taxable service under section 65(105) of Finance Act, 1994 - transaction in an actionable claim - double taxation of the same consideration - binding precedent of Tribunal decisions - Whether the amounts retained as 'surrender charge' upon premature withdrawal from unit linked insurance policies are liable to service tax as consideration for taxable services. - HELD THAT: - The Tribunal examined earlier decisions, particularly Bharti-AXA Life Insurance Company Ltd, which held that amounts retained as surrender/discontinuance charges are not consideration for any service but form part of a transaction in an actionable claim and thus fall outside the levy under the Finance Act, 1994. The court found that the premiums transmitted to the insurer had already been subjected to tax as consideration for the taxable service enumerated in section 65(105) and that treating the subsequent retention on surrender as fresh consideration would amount to taxing the same consideration again. The Tribunal emphasised that for levy under the Finance Act a quid pro quo of service and consideration is essential; any purported service in the past would have had to be taxed when rendered, and the surrender event cannot retrospectively create a new taxable service. Reliance on the parallel decisions (including those which followed or considered Reliance Life) was warranted because the conclusions in Bharti-AXA and related decisions were reached independently and address the same factual matrix. Applying that reasoning to the surrendered policies for the stated periods, the Tribunal concluded that the impugned demand, which treats the retained surrender amounts as taxable consideration, was unsustainable. [Paras 6, 7, 8]

The impugned order holding the surrendered amounts liable to tax is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that surrender charges retained on premature withdrawal from ULIPs (for the periods specified) are not taxable as consideration for service since the underlying premiums had already been subjected to tax and the retained amounts represent an actionable claim rather than fresh consideration.

Construction of complex - works contract - taxability prior to June 1, 2007 - separation of value in works contract - definition of residential complex - service tax levy under wrong category post June 1, 2007

Taxability prior to June 1, 2007 - separation of value in works contract - Levy of service tax on composite works contracts prior to June 01, 2007 - HELD THAT: - The Tribunal held that service tax could not be levied on composite works contracts involving supply of goods/materials prior to June 01, 2007. Relying on the Constitution Bench decision in Commissioner of Central Excise, Kerala v. Larsen & Toubro, the Tribunal recorded that the charging provisions before June 01, 2007 applied to service contracts simpliciter and did not provide the bifurcation required to exclude the value of goods transferred in execution of an indivisible works contract. The Larsen & Toubro principle-that the value of a works contract must be split by applying specified deductions and that, absent legislative provision, composite works contracts cannot be taxed under other service heads-was applied to conclude that demands under 'construction of complex' for periods prior to June 01, 2007 cannot be sustained. [Paras 8, 10, 11]

Levy of service tax on the appellant's composite works contract prior to June 01, 2007 is unsustainable.

Works contract - service tax levy under wrong category post June 1, 2007 - Appropriate classification of service for periods after June 01, 2007 - HELD THAT: - The Tribunal concluded that for periods after June 01, 2007 the taxable activity in question would fall under the statutory category of 'works contract' (as introduced by the amendment) and not under 'construction of complex'. The adjudicating authorities erred in confirming demands under the 'construction of complex' head for the post-amendment period when the legislative scheme treats composite works contracts under the 'works contract' entry. [Paras 6, 11]

Demands for the post-June 01, 2007 period could not be sustained under 'construction of complex' as the activity is taxable as 'works contract'.

Definition of residential complex - construction of complex - Whether the appellant's activity constituted 'construction of complex' as defined in the Finance Act - HELD THAT: - The Tribunal examined the statutory definition of 'residential complex' and concluded that a 'residential complex' means a building or buildings having more than twelve residential units along with common areas and specified facilities. Independent single residential units or independent buildings each containing a single residential unit do not fall within the definition even if more than twelve such independent houses exist within the same scheme. Relying on earlier Tribunal precedents (including Macro Marvel and A.S. Sikarwar) and on the statutory language, the Tribunal accepted the appellant's contention that the construction of independent houses each constituting a single residential unit does not amount to 'construction of complex'. [Paras 16, 17, 22]

The appellant's construction of independent single residential units does not qualify as 'construction of complex'; therefore service tax under that head cannot be levied.

Final Conclusion: The impugned order confirming service tax, penalty and interest under the 'construction of complex' category is set aside: levy for the period prior to June 01, 2007 is unsustainable on composite works contracts; for the post amendment period the activity is taxable as a 'works contract' and not under 'construction of complex'; and, in any event, the appellant's construction of independent single residential units does not meet the statutory definition of 'residential complex'. The appeal is allowed.

CENVAT credit - input service - rule 2(l) of CENVAT Credit Rules, 2004 - nexus with manufacturing activity - Cost Accounting Standard-4 (CAS-4) - employee cost (CAS-7) - Voluntary Separation Scheme (VRS) / VSS

CENVAT credit - input service - rule 2(l) of CENVAT Credit Rules, 2004 - Voluntary Separation Scheme (VRS) / VSS - nexus with manufacturing activity - Eligibility of CENVAT credit for service tax paid on insurance premium for medical cover provided under the appellant's Voluntary Separation Scheme to employees who ceased to be on the payroll. - HELD THAT: - The Larger Bench construed rule 2(l) of the 2004 Rules as covering the insurance service procured for providing medi-claim benefits to employees who opted for the VRS, holding that such service amounted to an input service in relation to activities relating to business. Prior decisions cited in the Larger Bench and adopted by the Division Bench have settled that medical insurance for employees, including benefits arising on separation/retirement under VRS, falls within eligible input services. The Division Bench held that the controversy is thus conclusively resolved in favour of availment of credit and there is no scope for re examination of the admissibility of the credit by the lower authority in the present dispute. [Paras 3, 6, 8]

Credit of service tax paid on the premium for continuation of medical cover for employees who opted for VRS is eligible as CENVAT credit and the impugned disallowance is set aside.

Cost Accounting Standard-4 (CAS-4) - employee cost (CAS-7) - CENVAT credit - Whether inclusion in Cost Accounting Standard-4 (CAS-4) suffices for determination of eligibility to CENVAT credit and the effect of CAS-7 definitions on that determination. - HELD THAT: - The Larger Bench examined the relevance of CAS-4 and observed that paragraph 5.2 of CAS-4 (dealing with direct wages and salaries) is only one component of the CAS-4 certificate; CAS-4 generally aggregates multiple cost heads that include employee costs. The Larger Bench further held that CAS-7 defines "employee cost" broadly to include current and future employee benefits (including VRS, retirement benefits and benefits to dependents), and therefore references to employee costs in CAS-4 must be read in light of CAS-7. The Division Bench noted that the CAS-4 point arose from a submission and that CAS-4 is primarily relevant in captive consumption contexts; having accepted the Larger Bench's clarification, there was no requirement for fresh factual scrutiny of CAS statements by the adjudicating authority in this case. [Paras 4]

Inclusion of the cost in CAS-4 (read with CAS-7's definition of employee cost) supports eligibility for CENVAT credit; no fresh factual determination of CAS-4 is required in the present appeal.

Final Conclusion: The appeal is allowed: the impugned order disallowing CENVAT credit of service tax paid on insurance premium for medical cover under the VRS is set aside, the Larger Bench's interpretation of rule 2(l) and the elucidation of CAS-4/CAS-7 having resolved the controversy in favour of the appellant.

Form appended to a rule as part of the rule - reading of subordinate legislation as a whole - pre-conditions for claiming statutory exemption - strict construction of taxing statute - manufacture in the State as a condition for deduction under Rule 33A

Form appended to a rule as part of the rule - pre-conditions for claiming statutory exemption - manufacture in the State as a condition for deduction under Rule 33A - strict construction of taxing statute - Whether the certificate form appended to Rule 33A is inconsistent with or subordinate to Rule 33A and whether the form may impose a condition that the goods must be used in manufacture of jewellery in West Bengal. - HELD THAT: - The Court examined Rule 33A in its entirety and held that sub rule (3) makes provision of a certificate in the form appended to the rule a mandatory pre condition for claiming the deduction under clause (c) of sub section (1) of Section 16. Rule 33A(1) requires both selling and purchasing dealers to be registered in West Bengal and entitles deduction only subject to the conditions in sub rule (3). The form of certificate is therefore embodied in and integral to Rule 33A rather than being a separate lower rank instrument that can impose new conditions inconsistent with the rule. The Court applied the principle that a person claiming a tax concession must comply with statutory pre conditions and that taxing provisions are to be construed strictly. Reading the rule as a whole shows the legislature intended that the goods purchased be used in manufacture of jewellery in West Bengal for export and that the purchasing dealer's certificate to that effect is a necessary part of the entitlement. The Court rejected submissions that such a requirement would violate Articles 301/304 and declined to import or ignore the certificate requirement because the rule itself incorporates it. [Paras 9, 11, 12, 13, 14]

The certificate form appended to Rule 33A is part of the rule and not inconsistent with it; the requirement that the purchasing dealer certify use in manufacture of jewellery in West Bengal for export is a mandatory pre condition for the deduction, and the tribunal's rejection of the revision petition was upheld.

Final Conclusion: Writ petition dismissed; the tribunal's order rejecting the revision was held just and proper because Rule 33A, read as a whole, incorporates the appended certificate as a mandatory condition for claiming the deduction and requires that the goods be used in manufacture of jewellery in West Bengal for export.

Transit sale exemption under Section 3(b) read with Section 6(2) of the Central Sales Tax Act, 1956 - Distinction between sales under Section 3(a) and sales under Section 3(b) (A & G Projects interpretation) - Proof of exemption by production of Forms E-1, E-2 and Form C and challenge to their genuineness - Incidence of tax where Central Sales Tax has been discharged to the appropriate State

Transit sale exemption under Section 3(b) read with Section 6(2) of the Central Sales Tax Act, 1956 - Proof of exemption by production of Forms E-1, E-2 and Form C and challenge to their genuineness - Validity of rejection of petitioner's claim of transit sale and consequent levy of tax by assessing and appellate authorities - HELD THAT: - The Court held that the Tribunal and the appellate authority erred in rejecting the claim of transit sale. The petitioner produced statutory forms (E-1, E-2 and Form C), purchase orders, delivery challans, lorry receipts and invoices to demonstrate transfer of documents of title during inter-state movement. The Tribunal's reliance on a time gap between delivery and invoicing and on lack of date endorsement on lorry receipts was not a sufficient basis to deny exemption where authenticity of the statutory certificates was not otherwise impugned. The Court found that the Tribunal misread and misapplied the Apex Court's decision in A & G Projects by treating the existence of pre-contractual arrangements or purchase orders automatically as precluding transit sale status, without properly analysing whether a sale (by endorsement during transit) had in fact been effected that converted an agreement to sell into a sale. The Court also relied on its earlier decision in Tata Steel Limited v. State of Jharkhand, which interpreted A & G Projects and supported the view that mere pre-existing agreement to purchase does not necessarily defeat a subsequent sale effected by endorsement during transit. Applying these principles to the material before it, the Court concluded that the denial of transit sale treatment was unsustainable. [Paras 7, 11, 12]

The rejection of the petitioner's claim of transit sales under Section 3(b) read with Section 6(2) CST Act and the consequential levy of tax were set aside.

Distinction between sales under Section 3(a) and sales under Section 3(b) (A & G Projects interpretation) - Incidence of tax where Central Sales Tax has been discharged to the appropriate State - Effect of characterising the transaction as a sale under Section 3(a) (inter-state sale under pre-existing contract) and whether additional tax liability can be fastened on the State of Jharkhand - HELD THAT: - The Court observed that even if the transactions were to be characterised as inter-state sales under Section 3(a) because of pre-existing contracts, the petitioner had already purchased the goods from outside the State and discharged central sales tax liability to the concerned States. In that eventuality, no further tax liability could be validly imposed by the State of Jharkhand. This alternative consideration reinforced the conclusion that the revenue could not sustain the demand against the petitioner. [Paras 9, 12]

No additional tax liability can be imposed by the State of Jharkhand in respect of the transactions, and the demand insofar as it relates to the rejected transit sale claim was quashed.

Final Conclusion: Writ petition allowed; the Tribunal's order, the appellate order and the assessment order are quashed and set aside insofar as they reject the claim of transit sales under Section 3(b) read with Section 6(2) CST Act and consequentially levy tax; the revenue is directed to refund amounts already paid in accordance with law.

Deemed sale by transfer of the right to use goods - situs of sale determined by place where contract transferring the right to use is executed - location or delivery of goods immaterial to the locus of deemed sale - legal fiction deeming sale where goods are within the State irrespective of contract location - State not competent to levy tax where deemed sale takes place outside the State

Deemed sale by transfer of the right to use goods - situs of sale determined by place where contract transferring the right to use is executed - location or delivery of goods immaterial to the locus of deemed sale - Validity of levy of VAT on lease charges received by the petitioner where the lease contracts were executed and goods were delivered outside the State of Chhattisgarh. - HELD THAT: - The Court held that VAT under the VAT Act is leviable only on a deemed sale arising from the transfer of the right to use goods. Relying on the principles laid down in 20th Century Finance Corpn. Ltd., the taxable event for transfer of the right to use goods is the execution of the contract effecting that transfer, and the situs of such deemed sale is the place where that contract is executed. Where the legislature has not created a legal fiction fixing another situs, the mere location or delivery of the goods for use within a State is immaterial to the locus of the deemed sale. Consequently, a State cannot tax a deemed sale if the transfer of the right to use took place outside the State. Applying these principles to the facts, since the contracts and the transfers occurred outside Chhattisgarh and the wagons were not delivered or stationed within Chhattisgarh at the time of transfer, the assessment and revisional orders imposing VAT on the lease charges were contrary to law and unsustainable. [Paras 22, 23, 24]

Assessment order dated 22.12.2014 and revisional order dated 30.5.2015 quashed; writ petition allowed.

Final Conclusion: The High Court set aside the assessment and revisional orders imposing VAT on lease charges for AY 2009-10, holding that the taxable event (deemed sale by transfer of the right to use goods) occurred outside Chhattisgarh and therefore the State had no jurisdiction to levy tax; the writ petition was allowed with consequences to follow.

Reassessment proceedings - statutory notice in Form XIV - invalidity of show-cause/notice for non-conformity with statutory form - opportunity to adduce evidence / principles of natural justice - conditional interim stay subject to deposit

Procedural defect in filing certified copy - power to ignore procedural defects - Surviving defect in the writ petition related to filing of certified copy of Annexure-9 was ignored and the interlocutory application disposed of. - HELD THAT: - The Court, on the materials placed before it and the explanation that records of the inferior authorities were before the Tribunal, exercised its discretion to ignore the defect pertaining to the absence of a certified copy of the appellate order. The interlocutory application filed for ignoring the defect was accordingly disposed of. [Paras 2]

Defect ignored; I.A. No. 9617/2022 disposed of.

Conditional interim stay subject to deposit - coercive steps restrained - security by deposit as interlocutory relief - Whether coercive action in respect of the reassessment demand should be restrained pending adjudication. - HELD THAT: - The Court considered the petitioner's challenge to the reassessment proceedings and the plea regarding infirmity in the statutory notice, but did not adjudicate the merits of the reassessment. As an interim measure, and without deciding the substantive contentions, the Court restrained coercive steps pending further proceedings on the condition that the petitioner deposit 20% of the tax claimed in the reassessment demand in the State Exchequer within 15 days. The Court also directed filing of counter-affidavit by the State within four weeks and permitted the petitioner two weeks thereafter to file a reply. [Paras 5, 6]

No coercive steps to be taken subject to deposit of 20% of the tax in the State Exchequer within 15 days; I.A. No. 9618/2022 disposed of; timeline fixed for filing counter-affidavit and reply.

Final Conclusion: The High Court ignored the procedural defect in the petition and granted interim protection against coercive action in respect of the reassessment demand for Assessment Year 2002-03 on condition of depositing 20% of the tax demanded within 15 days, while directing the State to file its counter-affidavit and permitting the petitioner to reply. The Court did not decide the merits of the reassessment or the validity of the notice.

Presumption under Section 139 of the Negotiable Instruments Act - valid negotiable instrument and material alteration - cheque issued as security versus cheque in discharge of liability - authority of holder to complete an inchoate cheque - effect of material alteration under the Negotiable Instruments Act - simultaneous civil and criminal proceedings

Presumption under Section 139 of the Negotiable Instruments Act - cheque issued as security versus cheque in discharge of liability - Whether the presumption under Section 139 was rightly drawn and whether the accused successfully rebutted that presumption. - HELD THAT: - The Court examined the Memorandum of Understanding, correspondence between the parties and the sequence of events and concluded that when the cheques were issued on 09/05/2003 a liability existed between the developer and the financer. The Court held that prosecution under Section 138 is maintainable where a cheque is issued towards discharge of an existing debt or liability and that mere characterization of cheques as being given 'by way of security' by the accused does not ipso facto rebut the statutory presumption. The trial Court's finding that there was no liability when cheques were issued was not accepted; the material showed admissions by the accused of liability and did not establish that payments said to have been made were appropriated to defeat the claimed debt. Consequently the complainant had proved existence of liability and the statutory presumption was not successfully rebutted on that factual basis.

The presumption under Section 139 could apply because an existing liability was established and the accused did not satisfactorily rebut that presumption on the evidence presented.

Valid negotiable instrument and material alteration - authority of holder to complete an inchoate cheque - effect of material alteration under the Negotiable Instruments Act - Whether completion of the blank cheques by the complainant (insertion of payee name and date) amounted to material alteration rendering the cheques void and thereby defeating prosecution under Section 138. - HELD THAT: - The Court addressed the fact that the cheques were signed and handed over without payee and date and were later completed by the complainant. While recognising authorities that a holder may fill in particulars of a signed blank cheque and that doing so does not automatically invalidate it, the Court examined the surrounding facts here. The Court found that the complainant unilaterally filled in the date and payee while a civil dispute between the parties was pending and without any evidence of the accused's consent or instruction to complete the cheques on the deposited dates. Applying the statutory test for material alteration, the Court held that the unilateral filling in of date and particulars, in the circumstances shown, amounted to material alteration not authorised by the drawer and therefore rendered the instruments invalid for the purpose of Section 138. On that ground the complainant failed to establish compliance with a valid negotiable instrument required for prosecution.

The cheques were materially altered by the complainant in the absence of drawer's consent or clear common intention; such alteration vitiated the instruments and precluded maintenance of prosecution under Section 138.

Simultaneous civil and criminal proceedings - Whether civil proceedings for recovery and criminal prosecution under Section 138 can proceed simultaneously. - HELD THAT: - The Court reiterated that civil action for recovery and criminal prosecution under Section 138 may be instituted and proceed concurrently, and that the criminal offence under Section 138 is quasi criminal with a distinct statutory cause of action beginning with presentation of the cheque and failure to pay within the statutory period. The Court accepted the proposition that intention to deceive under general criminal law is not an ingredient of Section 138 and that simultaneous remedies are permissible.

Simultaneous civil and criminal proceedings are permissible; the Court accepted that principle but found the prosecution failed for reasons of material alteration in this case.

Final Conclusion: The appeals are dismissed. Although an existing liability was established and simultaneous civil and criminal proceedings are permissible, the cheques were materially altered by completion of date and payee without the drawer's consent or a demonstrable common intention; that alteration rendered the negotiable instruments invalid for prosecution under Section 138, and the complainant failed to satisfy the statutory requirements for conviction.