TaxTMI Updates e-Newsletter
Dec 18,2021

Classification of goods - HSN 84.13 - pumps for dispensing fuel - HSN 90.32 - automatic regulating or controlling instruments - Section/Chapter Notes and rules of interpretation (Note 1(m), Note 4 to Section XVI; General Rules of Interpretation)

HSN 84.13 - pumps for dispensing fuel - HSN 90.32 - automatic regulating or controlling instruments - Classification of goods - Section/Chapter Notes and rules of interpretation (Note 1(m), Note 4 to Section XVI; General Rules of Interpretation) - Whether the CNG Dispenser manufactured and supplied by the applicant is covered under Sr. No. 422, Schedule III (HSN 90.32) or is classifiable under HSN 84.13 as a pump for dispensing fuel. - HELD THAT: - The Authority examined the functional character of the impugned CNG Dispenser and the applicable classificatory notes. Definitions from standard dictionaries show a 'pump' may move liquids or gases. The product catalog and technical description demonstrate that the CNG Dispenser forms a complete dispensing system with hoses, regulators, valves, nozzles, actuators and measuring/price mechanisms and causes flow of CNG from the station to the vehicle. Chapter Heading 8413.11 expressly covers pumps for dispensing fuel used in filling stations; the WCO Explanatory Notes to subheading 8413.11 include pumps delivering motor fuels and pumps fitted with measuring devices. Section Note 1(m) to Section XVI excludes Chapter 90 articles from Chapters 84 and 85 only where appropriate; Note 4 to Section XVI provides that a machine consisting of components contributing together to a clearly defined function covered by Chapter 84 should be classified under that heading. Applying these notes and the rules of interpretation, the Authority held that the primary function of the impugned product is dispensing CNG fuel and that it operates as a pump for that purpose despite having regulating/measuring features. Consequently, the CNG Dispenser falls within HSN 84.13 and not within HSN 90.32. [Paras 5]

The CNG Dispenser is not covered by Sr. No. 422, Schedule III (HSN 90.32) and is classifiable under HSN 84.13 as a pump for dispensing fuel.

Final Conclusion: The Authority answered the question in the negative: the CNG Dispenser is not covered under Sr. No. 422, Schedule III (HSN 90.32) and is classifiable under HSN 84.13 as a fuel dispensing pump.

Classification of goods - Tariff heading 2106 - Tariff heading 1106 - Chapter 11 notes on starch and ash content - mixtures and essential character - Rule 3(a) of the General Rules for interpretation of the Customs Tariff - Rule 3(b) of the General Rules for interpretation of the Customs Tariff - Advance Ruling under Section 97

Tariff heading 1106 - Chapter 11 notes on starch and ash content - mixtures and essential character - Rule 3(a) of the General Rules for interpretation of the Customs Tariff - Tariff heading 2106 - Classification of the product "Rava Idli Mix" for GST purposes. - HELD THAT: - The Authority examined whether the product is classifiable under chapter 11 (notably heading 1106) or as a miscellaneous food preparation under heading 2106. Chapter 11 headings (1101-1104 and 1106) relate to flours, meals and powders of individual cereals, leguminous vegetables, roots, tubers or products of Chapter 8 and require specific compositional and physical criteria (starch and ash content and particle-size requirements) to be met by the dry product. The applicant did not disclose specific constituent details or proportions; the product is an admitted mixture of flours of cereals and pulses with spices and condiments and thus does not correspond to products of individual raw materials envisaged in chapter 11. The circular relied on by the applicant applies to flours of individual pulses with very small additives, not to mixtures of different flours producing a distinct product. Given that the impugned product is a mixture resulting in a different character, it does not satisfy the Chapter 11 requirements and therefore cannot be classified under heading 1106. Applying the General Rules, Rule 3(a) directs preference to the most specific heading where applicable; however, the product is not prima facie classifiable under the specific chapter 11 headings. Rule 3(b) (classification by essential character) is not required to be applied once the product is not classifiable under the specific headings; on the facts the product is properly classifiable under the residual description for miscellaneous edible preparations. Consequently, the product falls in tariff heading 2106 as a food preparation not specified elsewhere. [Paras 16, 17, 18, 19, 20]

The product "Rava Idli Mix" is classifiable under tariff heading 2106 and not under tariff heading 1106.

Final Conclusion: The Advance Ruling declares that "Rava Idli Mix" merits classification under tariff heading 2106 and attracts GST at 18% in terms of the relevant notification.

Taxability of commission agent services for sale or purchase of agricultural produce - Definition of "agricultural produce" under Notification No.12/2017-C.T.(Rate) - Processing not done by cultivator alters essential characteristics - Exemption under Entry No.54 - services by a commission agent for sale or purchase of agricultural produce - Taxability of branded and unbranded goods - Registration requirement under section 22 of CGST Act, 2017

Definition of "agricultural produce" under Notification No.12/2017-C.T.(Rate) - Commission agent services-Entry No.54 - Processing not done by cultivator alters essential characteristics - Commission agent services for sale or purchase of rice do not qualify as exempt services relating to agricultural produce under Entry No.54 and are taxable. - HELD THAT: - The Notification defines "agricultural produce" to include produce on which either no further processing is done or such processing is usually done by the cultivator/producer and which does not alter the essential characteristics but makes it marketable for the primary market. Rice is the outcome of milling processes (de-husking, steaming, de-browning, polishing, sorting etc.) normally undertaken by millers and not by cultivators. Those processes change the essential character of paddy into a distinctly identifiable and separately marketable commodity, namely rice. Because the processing is not usually done by the producer and the essential characteristics are altered, rice does not satisfy the criteria in paragraph 2(d) of the Notification. Further, the Entry is aimed at services linked directly to cultivation and primary-market marketing; the applicant assists rice millers and traders (manufacturers), not cultivators, so the necessary link to cultivation is absent. Consequently, the commission-agent activity in respect of rice is not covered by Entry No.54 and is not eligible for the exemption. The Authority therefore treats the services as taxable under the applicable SAC (notified as SAC 9961) and directs taxability under CGST/KGST at the rates applicable to such services. [Paras 10, 11, 12]

Commission agent services for sale or purchase of rice are taxable and do not enjoy exemption under Entry No.54 of Notification No.12/2017-C.T.(Rate).

Taxability of branded and unbranded goods - Liability to collect GST on commission for branded goods - Canvassing or commission-agent services for both branded and unbranded rice are taxable and the applicant is liable to collect CGST and KGST on the commission received. - HELD THAT: - The Authority found no distinction in the exemption analysis between branded and unbranded rice: since rice generally does not qualify as "agricultural produce" under the Notification for the reasons given (processing not by cultivator and alteration of essential characteristics), services of canvassing/commission for sale of rice-whether branded or unbranded-fall outside the exempt entry. Accordingly, the applicant must register as required and discharge CGST and KGST on the commission consideration at the prescribed rates. [Paras 11, 12, 13]

Canvassing and commission-agent services for both branded and unbranded rice are taxable; the applicant is liable to collect CGST @ 9% and KGST @ 9% on the commission.

Final Conclusion: The Authority rules that the applicant's commission-agent services for sale or purchase of rice are not exempt as services relating to "agricultural produce" under Entry No.54 of the rate Notification; the services-including canvassing for branded and unbranded rice-are taxable and the applicant must register and collect CGST @ 9% and KGST @ 9% on the commission received.

Classification as parts of vessels attracting concessional rate - warranty replacements not a supply under Section 7 of the CGST Act, 2017 - composite supply and determination of principal (dominant) supply - classification of goods under Customs Tariff Heading for rate determination

Classification as parts of vessels attracting concessional rate - classification of goods under Customs Tariff Heading for rate determination - Rate of GST on marine engines (HSN 8407) and spare parts when supplied for use as parts of fishing vessels (heading 8902). - HELD THAT: - The Authority found that the applicant supplies marine engines classifiable under CTH 8407 21 00 as outboard motors and that fishing vessels fall under CTH 8902. By virtue of Sl. No. 252 of Schedule I to Notification No.01/2017-Central Tax (Rate) (and CBIC Circular No.52/26/2018-GST), goods of any chapter that are parts of goods of headings including 8902 attract GST at the concessional combined rate of 5% (2.5% CGST + 2.5% KGST). The Authority accordingly ruled that marine engines and their spare parts supplied for use as parts of fishing vessels will attract GST at 5%; if supplied for use otherwise, the applicable rate will be the rate under the respective Customs Tariff Heading. [Paras 9, 10, 15]

Marine engines and spare parts supplied for use as parts of fishing vessels (CTH 8902) attract GST at 5% (2.5% CGST + 2.5% KGST); otherwise applicable tariff rates apply.

Warranty replacements not a supply under Section 7 of the CGST Act, 2017 - Whether GST is leviable on supply of materials and labour provided free of cost during the warranty period. - HELD THAT: - The Authority accepted that replacements/repairs provided free of charge under a warranty are furnished without separate consideration and that the consideration for such eventualities is included in the price of the principal supply. Applying the statutory concept of 'supply' under Section 7, the Authority held that such free-of-cost replacements/services during the warranty period do not constitute a supply attracting GST and therefore no GST is leviable on them. [Paras 11, 15]

Provision of materials and labour free of cost under warranty does not amount to a supply under Section 7 and is not subject to GST.

Composite supply and determination of principal (dominant) supply - Rate of tax on charges collected for supply of materials and labour for repair of fishing vessels where goods and services are supplied together. - HELD THAT: - On the material before it the Authority observed that repair/maintenance of fishing vessels involves both goods (spare parts) and services bundled in the ordinary course of business and thus constitutes a composite supply. Absent a contract showing separate charging, the supply remains composite; the dominant element is the repair/maintenance service because spare parts supplied do not involve transfer of title and are ancillary. Accordingly the composite supply is classifiable under Heading 9987 (maintenance and repair of transport machinery and equipment) and attracts GST at 18% (9% CGST + 9% KGST) as per Sl. No.25(ii) of Notification No.11/2017-Central Tax (Rate). [Paras 12, 15]

Repair of fishing vessels, being a composite supply with service as the predominant element, is classifiable under Heading 9987 and taxable at 18% (9% CGST + 9% KGST).

Classification of goods under Customs Tariff Heading for rate determination - Rate of GST on puff insulated ice boxes used by fishermen on fishing vessels. - HELD THAT: - The Authority classified the puff insulated ice boxes under Customs Tariff Heading 3923 10 30 (insulated ware made of plastics). Such articles under CTH 3923 are covered by Sl. No.108 of Schedule III to Notification No.01/2017-Central Tax (Rate) and attract GST at 18% (9% CGST + 9% KGST). The Authority further held that the ice boxes cannot be considered parts of fishing vessels under CTH 8902 and therefore are not eligible for the concessional rate under Sl. No.252. [Paras 13, 15]

Puff insulated ice boxes are classifiable under CTH 3923 and taxable at 18% (9% CGST + 9% KGST); they do not qualify as parts of fishing vessels for the concessional rate.

Classification as parts of vessels attracting concessional rate - classification of goods under Customs Tariff Heading for rate determination - Rate of GST on marine engines (HSN 8407) supplied for use as parts of vessels falling under heading 8906 (vessels used by Defence and other agencies for patrol, relief and rescue). - HELD THAT: - The Authority noted that vessels used by Defence and other agencies for patrol, relief and rescue fall under CTH 8906. Sl. No.252 of Schedule I provides that parts of goods of headings including 8906 attract GST at the concessional combined rate of 5% (2.5% CGST + 2.5% KGST). Hence when marine engines are supplied for use as part of vessels classifiable under 8906, they will attract GST at 5% as parts of those vessels. [Paras 14, 15]

Marine engines supplied for use as parts of vessels under CTH 8906 (used by Defence/other agencies for patrol, relief and rescue) attract GST at 5% (2.5% CGST + 2.5% KGST).

Final Conclusion: The Authority ruled that (i) marine engines and spare parts supplied as parts of fishing vessels (CTH 8902) or vessels under CTH 8906 attract concessional GST at 5% (2.5% CGST + 2.5% KGST); (ii) free-of-cost replacements/services during warranty do not constitute a supply under Section 7 and are not taxable; (iii) repair of fishing vessels is a composite supply with the service as the dominant element and is taxable at 18% (9% CGST + 9% KGST); and (iv) puff insulated ice boxes are classifiable under CTH 3923 and taxable at 18% (9% CGST + 9% KGST).

Classification of services - composite supply - mixed supply - declared tariff - exemption of accommodation with declared tariff below one thousand rupees - supply of food taxable at 5% without input tax credit - SAC 9963

Classification of services - SAC 9963 - Applicable GST Service Accounting Code (SAC) for the services supplied by the applicant and the applicable rate of tax. - HELD THAT: - The Authority examined the nature of supplies rendered to AMSL and concluded that the services fall under the hotel/ lodging service grouping identified by SAC 9963. The record shows separate invoicing and separate contractual allocation for accommodation and for food/other facilities. Applying the relevant notifications, the Authority held that accommodation services qualify under the declared tariff concept and food supply falls under the entry dealing with supply of food by restaurants/eating joints. Consequently, accommodation is covered by the exemption entry for declared tariff below one thousand rupees per unit per day, whereas the supply of food attracts the concessional rate specified for such supplies. [Paras 16, 17, 18, 19]

SAC 9963 is applicable; accommodation (SAC 99632) is exempt (declared tariff below Rs. 1,000 per day) and supply of food (SAC 99633) attracts GST at 5%.

Composite supply - mixed supply - Whether the services supplied to AMSL constitute a composite supply or a mixed supply. - HELD THAT: - The Authority applied the statutory definitions of composite supply and mixed supply. It noted that the applicant issues separate invoices and the agreement demarcates charges separately for accommodation and for food/other facilities, including different prices for each. Because the supplies are not provided to AMSL as a bundled package for a single price nor as inherently 'naturally bundled' by the applicant, they do not meet the definition of composite supply; nor do they qualify as mixed supply which requires a single price for multiple individual supplies. The factual finding of distinct invoicing and separate pricing is determinative. [Paras 13, 14, 15, 19]

The transactions are neither a composite supply nor a mixed supply but two separate supplies.

Declared tariff - exemption of accommodation with declared tariff below one thousand rupees - supply of food taxable at 5% without input tax credit - Whether the accommodation service is exempt under Notification No.12/2017-CT (Rate) and the GST treatment of the food supply. - HELD THAT: - Applying the definition of declared tariff and the conditions of Notification No.12/2017-CT (Rate), the Authority found that the consideration charged per candidate per month translates to a declared tariff below Rs. 1,000 per unit per day. On that basis the accommodation service meets the exemption condition in the notification and is taxable at nil rate. The Authority further examined the notification entry applicable to supply of food and concluded that the applicant's supply of food falls under the relevant entry for restaurants/eating joints as amended, attracting GST at 5% without input tax credit. [Paras 16, 17, 18, 19]

Accommodation is exempt under Notification No.12/2017 (declared tariff below Rs. 1,000 per day); supply of food attracts GST at 5% (without input tax credit) as per the relevant notification.

Final Conclusion: The Advance Ruling holds that the services supplied to AMSL fall under SAC 9963; they constitute two separate supplies (accommodation and food), with the accommodation service exempt under Notification No.12/2017 (declared tariff below Rs. 1,000 per day) and the food supply taxable at 5% without input tax credit.

Revocation of cancellation of registration - Condonation of delay under Section 107(4) - Cancellation of GST registration for failure to file returns - Compliance with Rule 23 of the CGST Rules - furnishing returns and payment of tax, interest, penalty as condition for revocation - Proper officer's power to revoke or reject revocation application under Rule 23(2) - Circular No.99/18/2019-GST - interpretation of proviso to Rule 23(1)

Condonation of delay under Section 107(4) - Appeal filed beyond three months - Whether the delay in filing the appeal was liable to be condoned so as to enable adjudication on merits - HELD THAT: - The Appellate Authority examined Section 107 of the CGST Act, 2017 and noted the power in sub rule (4) to allow a further period of one month where sufficient cause is shown. Having considered the appellant's explanations about personal illness of a partner, COVID related disruptions and the factual assertion that pending returns and dues were subsequently filed and paid, the Authority found sufficient cause to condone the 23 day delay and proceeded to decide the appeal on merits. [Paras 7]

Delay in filing the appeal condoned and appeal admitted for adjudication on merits.

Revocation of cancellation of registration - Cancellation of GST registration for failure to file returns - Compliance with Rule 23 of the CGST Rules - furnishing returns and payment of tax, interest, penalty as condition for revocation - Circular No.99/18/2019-GST - interpretation of proviso to Rule 23(1) - Proper officer's power to revoke or reject revocation application under Rule 23(2) - Whether the appellant's registration should be considered for revocation by the proper officer - HELD THAT: - The Authority noted that the registration was cancelled because returns were not filed for a continuous period of six months. The appellant produced copies of GSTR 3B for October 2020 to December 2020 and multiple challans evidencing payment of taxes, interest and penalty. Rule 23 of the CGST Rules requires that where cancellation is for failure to furnish returns, no revocation application shall be filed unless returns are furnished and amounts due are paid; Circular No.99/18/2019 GST clarifies that all returns due till date of cancellation must be furnished before filing for revocation. The Authority found that the appellant had filed returns up to the date of cancellation and had substantially complied with the statutory/ rule requirements. Accordingly, the Authority directed that the proper officer may consider the appellant's revocation application after due verification of payment particulars, taxes, late fee, interest and status of returns. [Paras 10, 11, 12, 13]

Appeal allowed; order directs the proper officer to consider the application for revocation of cancellation after verification of payments and returns.

Final Conclusion: The Appellate Authority condoned the delay in filing the appeal, allowed the appeal against cancellation of GST registration, and directed the proper officer to consider the revocation application after due verification of payments, interest, penalty and the status of returns.

Deduction under Section 80IB of the Income Tax Act - Apportionment of common expenses - Treatment of income from sale of scrap as profits and gains of industrial undertaking - Disallowance under Section 14A read with Rule 8D of the Income Tax Rules - Reliance on precedent decisions

Deduction under Section 80IB of the Income Tax Act - Apportionment of common expenses - Reliance on precedent decisions - Allowability of deduction under Section 80IB in respect of claimed common expenses of the assessee's units at Pandicharry, Goa and Jammu. - HELD THAT: - The Tribunal upheld the CIT(A)'s allowance of the Section 80IB deduction by following the assessee's earlier successful treatment in the assessment years 2000-01 and 2001-02, and by reference to the tribunal's decision for assessment year 2002-03 which this Court declined to disturb on appeal. The High Court found no infirmity in the Tribunal applying the same approach to apportionment for the year under appeal and recorded that the revenue had not shown any error warranting interference.

Deduction under Section 80IB in respect of the claimed common expenses upheld; no interference with the Tribunal's order.

Treatment of income from sale of scrap as profits and gains of industrial undertaking - Deduction under Section 80IB of the Income Tax Act - Reliance on precedent decisions - Whether interest income on sale of scrap qualifies as income derived from profits and gains of industrial undertaking for the purpose of Section 80IB. - HELD THAT: - The Court observed that the question is not res integra and the Tribunal followed the legal position earlier laid down by this Court in Reckitt Benckiser (India) Ltd. . Having regard to those decisions, the Tribunal rightly treated the income from sale of scrap as falling within income derived from profits and gains of the industrial undertaking and allowed the Section 80IB deduction. The revenue failed to demonstrate any misapplication of law by the Tribunal.

Interest income on sale of scrap treated as income of the industrial undertaking for Section 80IB; deduction allowed and sustained.

Disallowance under Section 14A read with Rule 8D of the Income Tax Rules - Reliance on precedent decisions - Validity of deletion of addition under Section 14A read with Rule 8D where borrowed funds were alleged to have funded investments yielding exempt income. - HELD THAT: - The Tribunal deleted the Section 14A addition relying on the principle enunciated in Commissioner of Income Tax, Central-I, Calcutta -vs- Ashish Jhunjhunwala . The High Court accepted that the cited decision lays down the correct legal principle and concluded there was no error in the Tribunal's approach or its application of law to the facts of the case. The revenue did not establish any basis for overturning the Tribunal's reliance on those precedents.

Addition under Section 14A read with Rule 8D deleted; Tribunal's order sustained.

Final Conclusion: The revenue's appeal is dismissed; the substantial questions of law are answered against the revenue and the Tribunal's order for Assessment Year 2008-09 is upheld.

Classification of Net Present Value payment as revenue expenditure - one-time payment made to remove an impediment to exercise a pre-existing licence - distinction between payments for obtaining a licence and payments to enable exercise of an existing licence - application of the ratio in Bikaner Gypsum Ltd. to NPV payments - precedential relevance of R.B. Seth Moolchand Sugam Chand on prospecting licence fees

Classification of Net Present Value payment as revenue expenditure - one-time payment made to remove an impediment to exercise a pre-existing licence - application of the ratio in Bikaner Gypsum Ltd. to NPV payments - The Net Present Value (NPV) payment made by the assessee was to be treated as a revenue expenditure and not capital expenditure. - HELD THAT: - The Court applied the principle in Bikaner Gypsums Ltd. that a one-time payment made to remove an obstacle to the assessee carrying on its business pursuant to a pre-existing licence must be regarded as revenue expenditure. The Tribunal's finding that the assessee's right to carry on mining operations pre-existed the NPV payment, and that the payment merely removed an impediment to exercise that right under the licence, was accepted. The NPV was characterized as a compensation for using forest land for non-forest purpose pursuant to a judicial order and not as consideration for obtaining a new or enlarged right. On that basis the payment falls within revenue expenditure rather than a capital outlay.

NPV payment held to be revenue expenditure; addition deleted upheld.

Distinction between payments for obtaining a licence and payments to enable exercise of an existing licence - precedential relevance of R.B. Seth Moolchand Sugam Chand on prospecting licence fees - The Tribunal did not err in not treating the decision in R.B. Seth Moolchand Sugam Chand as controlling; that decision was distinguishable. - HELD THAT: - The Court noted that R.B. Seth Moolchand Sugam Chand involved a fee paid to obtain a prospecting licence which conferred the right to conduct business in the area, and therefore was capital in nature. By contrast, in the present case the licence already existed and the NPV did not create or confer the licence or extend its rights; it only removed an impediment. The distinction between payment to obtain a right (capital) and payment to enable exercise of an existing right (revenue) was decisive, and the Tribunal's reliance on Bikaner Gypsums Ltd. was therefore appropriate.

R.B. Seth distinguished; Tribunal correctly followed Bikaner Gypsums Ltd. and was not in error.

Final Conclusion: The appeal is dismissed; the substantial questions of law are answered against the revenue and the Tribunal's deletion of the addition treating the NPV as revenue expenditure is sustained; the connected application for stay stands closed.

Receipt of on-money on sale of flats - seized document as primary evidentiary basis - corroboration of statements recorded under section 132(4) - proceedings under section 153C of the Income Tax Act - re-adjudication/remand for fresh consideration in light of co-ordinate bench decision - opportunity of being heard before fresh adjudication

Seized document as primary evidentiary basis - corroboration of statements recorded under section 132(4) - receipt of on-money on sale of flats - re-adjudication/remand for fresh consideration in light of co-ordinate bench decision - opportunity of being heard before fresh adjudication - Whether additions on account of alleged receipt of on-money could be sustained by reference to the seized document and associated statements, and whether the matter required fresh adjudication. - HELD THAT: - The Tribunal found that the additions for alleged on-money across the assessment years were founded on a seized document (page No.114 of Annexure I) recovered during a search in respect of Rohan Group entities and on statements recorded under section 132(4). The seized document mentions the assessee's project (Siddhesh Jyoti Wings E and F) but, on its face, does not itself conclusively prove receipt of on-money. The only corroborative material available to the Assessing Officer were the statements recorded from group directors and employees, some of which were subsequently retracted; one employee explained the figures in the seized document as quoted and built-up area rates. Given the evidentiary slenderness and the fact that identical material has produced decisions in appeals of other group entities (including Rohan Developers Pvt. Ltd.), the Bench concluded that the matter should undergo fresh adjudication. The AO is directed to reconsider the issue in the light of the co-ordinate Bench's decision in the Rohan Developers appeals and other relevant orders, and must confine the reassessment to the extent of additions sustained by the Commissioner (Appeals). The assessee must be afforded a reasonable opportunity of being heard before the AO re-opines. [Paras 8, 9, 10, 11]

Issue remanded to the Assessing Officer for fresh adjudication limited to the scope of additions sustained by the Commissioner (Appeals), to be decided in light of the co-ordinate Bench's decision and after giving the assessee an opportunity of hearing.

Final Conclusion: All appeals are disposed of for statistical purposes by remanding the issue of additions on account of alleged on-money to the Assessing Officer for fresh adjudication confined to the additions sustained by the Commissioner (Appeals), and after affording the assessee a reasonable opportunity of being heard; appeals allowed for statistical purposes.

Revisionary jurisdiction under section 263 of the Income-tax Act - reopening of assessment under section 147 of the Income-tax Act - bogus purchases and addition by applying a gross profit rate - erroneous and prejudicial to the interests of revenue - plausible or reasonable view of the Assessing Officer - quashing of revisionary proceedings where AO has examined the issue

Revisionary jurisdiction under section 263 of the Income-tax Act - bogus purchases and addition by applying a gross profit rate - plausible or reasonable view of the Assessing Officer - quashing of revisionary proceedings where AO has examined the issue - Whether the revisionary order under section 263 setting aside the reassessment framed under section 143(3) read with section 147 insofar as it applied a gross profit rate of 12.5% on alleged bogus purchases was sustainable. - HELD THAT: - The Tribunal found that the Assessing Officer reopened the assessment under section 147 after receiving information, called for explanations and documents, and in reassessment proceedings applied a gross profit rate (12.5%) to the alleged bogus purchases after relying on judicial decisions. That course represented a plausible, tenable view taken by the AO. The Principal Commissioner of Income Tax set aside the assessment under section 263 on the ground of alleged contradiction between holding purchases to be bogus and taxing them at a GP rate, and directed fresh examination. The Tribunal held that where the AO has examined the issue in reassessment and adopted a reasonable view supported by precedent and co-ordinate authorities, the Pr.CIT cannot, under section 263, substitute another view merely because an alternative view exists. The Tribunal relied on a co-ordinate Bench decision (Rahul Cables Pvt. Ltd. v. PCIT) which quashed similar revisionary proceedings, and concluded that the revisionary order was not a case of a conclusion that was clearly erroneous or based on erroneous assumption of law or fact leading to loss to the revenue. Consequently, the direction to set aside the assessment was unsustainable and liable to be quashed. [Paras 6, 7]

Revisionary order under section 263 quashed; reassessment order restored as the AO had taken a reasonable view in applying 12.5% GP on alleged bogus purchases.

Final Conclusion: The Tribunal allowed the appeals, quashed the revisionary proceedings and order passed under section 263, and restored the reassessment framed by the Assessing Officer for AY 2011-12.

Conclusive effect of an order under Section 245D(4) of the Income Tax Act - reopening of assessment by issuance of notice under Section 148 after a 245D(4) order - issuance of notice under Section 142(1) subsequent to a Section 148 notice - interim restraint on further proceedings in response to statutory notices

Conclusive effect of an order under Section 245D(4) of the Income Tax Act - reopening of assessment by issuance of notice under Section 148 after a 245D(4) order - interim restraint on further proceedings in response to statutory notices - Interim restraint granted preventing respondents from proceeding further under the notices issued under Section 148 and under Section 142(1) in respect of assessment year 2014-15, pending the writ petitions. - HELD THAT: - Petitioners showed that an order under Section 245D(4) for the block of assessment years (including 2014-15) had been passed and had become final on 29th September, 2016, and contended that such an order is conclusive and not open to re-opening in subsequent proceedings. They challenged the impugned notice issued under Section 148 (and a subsequent notice under Section 142(1)) for assessment year 2014-15 on the ground that reopening after a final order under Section 245D(4) is impermissible. The court issued notice in the writ petitions and, as an interim measure, restrained the respondents from taking further action pursuant to the said notices until the next listed date, thereby preserving the petitioners' contentions for adjudication on the returnable date.

Respondents restrained from proceeding further in furtherance of the notices under Section 148 and the notice under Section 142(1) in respect of assessment year 2014-15; matters listed for hearing on 24.01.2022.

Final Conclusion: Interim order issued: notice granted in the writ petitions and respondents restrained from proceeding on the Section 148 and Section 142(1) notices in respect of AY 2014-15 until the matters are heard on 24.01.2022.

Article 22 Payments Received by Professors, Teachers and Research Scholars - Certificate of Residence / Tax Residency Certificate (TRC) - Section 90(4) of the Income Tax Act, 1961 - condition precedent for DTAA relief - Double Taxation Avoidance Agreement relief subject to production of TRC

Article 22 Payments Received by Professors, Teachers and Research Scholars - Section 90(4) of the Income Tax Act, 1961 - condition precedent for DTAA relief - Certificate of Residence / Tax Residency Certificate (TRC) - Whether the petitioner is entitled to exemption under Article 22 of the India-US DTAA without producing a Tax Residency Certificate from the United States. - HELD THAT: - Section 90 of the Income Tax Act, 1961 is an enabling provision empowering the Central Government to enter into treaties for avoidance of double taxation; however Section 90(4) expressly provides that an assessee who is not a resident shall not be entitled to claim relief under such an agreement unless he obtains a certificate of residence from the Government of the other country. Article 22 of the India-US Treaty exempts remuneration of an individual visiting a Contracting State for teaching or research for a period not exceeding two years, but the entitlement to treaty relief in India remains subject to the condition in Section 90(4). The petitioner did not possess the Tax Residency Certificate from the United States required by Section 90(4) and therefore could not invoke Article 22 to claim exemption in India. The objective of the Treaty is to avoid double taxation and not to avoid taxation; absent the TRC, the statutory precondition for claiming DTAA relief is not satisfied despite the petitioner's factual position regarding period of stay and appointment.

Petitioner is not entitled to exemption under Article 22 of the Treaty in the absence of a Tax Residency Certificate from the United States; the claim for TRC was rightly rejected.

Final Conclusion: Writ petition dismissed; petitioner cannot claim exemption under Article 22 of the India-US DTAA without producing the Tax Residency Certificate from the United States as required by Section 90(4) of the Income Tax Act, 1961.

Bogus or colourable share transactions - Application of Section 68 of the Income Tax Act, 1961 to accommodation entries - Admissibility of investigation reports and requirement of independent inquiry - Reappreciation of evidence and scope of appellate interference in second appeals - Substantial question of law versus findings of fact

Bogus or colourable share transactions - Application of Section 68 of the Income Tax Act, 1961 to accommodation entries - Admissibility of investigation reports and requirement of independent inquiry - Whether the Tribunal was justified in deleting the additions made by the Assessing Officer under Section 68 treating the long term capital gain and commission as arising from bogus/accommodation entries - HELD THAT: - The Tribunal found that no independent inquiry had been conducted and the assessee's broker was not examined before making the additions; it also recorded that the scrip of M/s CCL International Ltd. was freely traded on the Bombay Stock Exchange during 2011-2014 and that the assessee's transactions (purchase in 2011 and sale in 2012) occurred during a period when the company showed substantial revenue and its share price rose substantially. The High Court found no perversity in these factual findings and accepted the Tribunal's conclusion that the Assessing Officer had not made the requisite enquiry to sustain a finding of accommodation entry despite references to an investigation report. The Court applied the established principle that a second appellate forum (or the High Court in appeal) must not re-appreciate evidence or disturb concurrent findings of fact unless a substantial question of law arises or the findings are perverse. [Paras 5, 6, 7, 8, 9]

Tribunal's deletion of the additions under Section 68 and the related commission addition is upheld; no interference warranted.

Final Conclusion: Appeal dismissed; High Court upheld the ITAT's deletion of the additions under Section 68 and refused to re-appreciate evidence or disturb the Tribunal's factual findings, observing that interference in a second appeal is impermissible absent a substantial question of law or perversity.

Applicability of Protocol as integral part of DTAA without separate notification - Most-Favoured-Nation clause in DTAA Protocol - lower withholding tax rate under DTAA on dividend - certificate under Section 197 for lower deduction of tax - binding effect of High Court precedent on Revenue pending appeal

Applicability of Protocol as integral part of DTAA without separate notification - Most-Favoured-Nation clause in DTAA Protocol - lower withholding tax rate under DTAA on dividend - Petitioner entitled to apply the 5% withholding rate on dividend under the India-Switzerland DTAA by invocation of benefits available under other DTAAs through the Protocol/MFN clause. - HELD THAT: - The Court held that the Protocol signed between India and Switzerland forms an integral part of the Convention and, by virtue of the MFN clause in the Protocol, the Petitioner could claim the lower 5% rate available under the India-Colombia DTAA. The Court relied on earlier decisions of this Court which held that no separate notification by the Government is required for the applicability of such Protocol provisions and that the Protocol operates automatically as part of the DTAA to confer the negotiated benefit. The Court therefore found the rejection of the Petitioner's request for lower withholding on the ground of absence of a government notification to be unsustainable. [Paras 8]

The request for lowering the withholding rate to 5% under the India-Switzerland DTAA (by application of the Protocol/MFN clause) is accepted.

Certificate under Section 197 for lower deduction of tax - binding effect of High Court precedent on Revenue pending appeal - Impugned certificate under Section 197 and the order directing deduction at 10% set aside; respondent directed to issue a certificate indicating the rate of tax on dividend as 5% and to act in conformity with binding High Court decisions. - HELD THAT: - The Court observed that the Revenue cannot refuse to follow binding jurisdictional decisions merely because it proposes to file appeals. Relying on the principle that orders of higher appellate authorities must be followed unreservedly, the Court set aside the impugned certificate and order and directed the respondent to issue a certificate under Section 197 specifying the applicable 5% rate on dividend payments to the Petitioner under the India-Switzerland DTAA, as applied in prior High Court decisions. [Paras 9, 10]

Impugned certificate and order set aside; respondent directed to issue Section 197 certificate stating 5% as the applicable rate.

Final Conclusion: Writ petition allowed: the impugned order and certificate directing deduction at 10% are set aside and the respondent is directed to issue a certificate under Section 197 indicating that the applicable withholding rate on dividend for the petitioner is 5% under the India-Switzerland DTAA, in accordance with High Court precedent.

Notice under Section 148 - reopening of assessment - amalgamation - non-existing company - objections to reassessment - quash and set aside - administrative enquiry against officers

Notice under Section 148 - amalgamation - non-existing company - objections to reassessment - quash and set aside - Validity of notice issued under Section 148 and of the order rejecting objections where the notice and order were addressed to a company which had ceased to exist on amalgamation - HELD THAT: - The Court found that Vadinar Power Company Limited had ceased to exist on filing of Form INC-28 on 30th November 2018 consequent to the NCLT-sanctioned scheme of amalgamation with the petitioner, and that the petitioner repeatedly informed the revenue of the amalgamation and that Vadinar Power Company Limited was merged into Nayara Energy Limited. Notwithstanding those communications, notices under Section 148 and the order disposing of objections were issued and recorded in the name of Vadinar Power Company Limited, a non-existing entity. Applying the established principle that a notice issued to a non-existent entity is invalid, and having regard to the communications and filings demonstrating the cessation of the merged company, the Court concluded that the notice dated 31st March 2019 and the impugned order dated 4th December 2019 are legally infirm and liable to be quashed. The Court noted prior authorities relied upon by the petitioner, including Principal Commissioner of Income Tax, New Delhi V/s. Maruti Suzuki India Ltd., and observed that the factual position here (intimation and filing of INC-28, and repeated notices addressed to the ceased entity) compelled quashing of the proceedings for the assessment year 2014-2015. [Paras 2, 3, 4, 5, 6]

Notice dated 31st March 2019 under Section 148 and the order dated 4th December 2019 rejecting objections are quashed and set aside.

Administrative enquiry against officers - Directive to Principal Chief Commissioner to hold enquiry into continued issuance of notices and passing of order in name of a non-existing company - HELD THAT: - Having quashed the notice and order for being addressed to a non-existing entity despite being informed of the amalgamation, the Court directed the Principal Chief Commissioner to hold an enquiry into why notices continued to be issued and the objections order was passed in the name of Vadinar Power Company Limited. The Court required the enquiry to be completed within six weeks and authorized the Principal Chief Commissioner to take appropriate action against erring officers if culpability is established. A copy of the order is to be sent to the Principal Chief Commissioner, Chairman CBDT and the Law Minister for information and necessary action. [Paras 7, 8]

Principal Chief Commissioner to hold enquiry within six weeks and take appropriate action if officers are found guilty; copy of order to be sent to specified authorities.

Final Conclusion: Writ petition allowed: the notice under Section 148 dated 31st March 2019 and the order rejecting objections dated 4th December 2019 for Assessment Year 2014-2015 are quashed; Principal Chief Commissioner directed to hold an enquiry into the issuance of notices and order in the name of the non-existing company and to take action if required.

Capital receipt vs revenue receipt - taxability of sale of carbon credits - deduction under Section 80IA - precedential authority and stare decisis - power of appellate tribunal to adjust tax liability

Capital receipt vs revenue receipt - taxability of sale of carbon credits - precedential authority and stare decisis - deduction under Section 80IA - Sale of Carbon Emission Reductions (carbon credits/CER) is a capital receipt and not taxable as business income; consequently such receipts fall outside computation of total income and cannot be included for deduction under Section 80IA. - HELD THAT: - The Court, following earlier High Court and Tribunal decisions (as extracted in S.P. Spinning Mills (P) Ltd.), held that receipts from sale of carbon credits arise as an offshoot of environmental concerns and do not generate an asset in the course of the assessee's business, and therefore constitute capital receipts rather than business income. The judgment applies established principles from appellate authorities including the approach in Maheshwari Devi Jute Mills and Empire Jute Co. Ltd. regarding the tests for distinguishing capital and revenue receipts/expenditure, and relies on the Andhra Pradesh High Court's conclusion in My Home Power Ltd. that carbon credits are not directly linked to power generation and are capital in nature. The Court further held that an assessee's attempt to claim deductions under Section 80IA does not alter the character of the receipt; if the receipt is capital it is excluded from total income and cannot be admitted under Section 80IA. The later legislative insertion of Section 115BBG (effective 01.04.2018) is noted as evidencing prior uncertainty, and that prior claims under Section 80IA made amid that uncertainty cannot defeat the capital nature of the receipts. Applying these precedents and principles, the Court found no substantial question of law to be decided in favour of Revenue and affirmed the Tribunal's conclusion that the receipts are capital and not taxable. [Paras 2, 3, 4, 6, 7]

Appeal dismissed; substantial question of law answered against Revenue and in favour of the assessee - sale of carbon credits treated as capital receipt and not taxable.

Final Conclusion: The High Court, applying binding precedents and established tests for distinguishing capital and revenue, held that proceeds from sale of carbon credits/CER are capital receipts not includible in taxable business income; the Revenue's appeal is dismissed for Assessment Year 2010-11.

Refund under Section 237 - power under Section 119 to condone delay - Board's Circular No. 9/2015 - six years limit for condonation of refund claims - belated return under Section 139 - notice under Section 148 for reopening assessment - finalisation of assessment as condition for adjudication of refund

Refund under Section 237 - belated return under Section 139 - power under Section 119 to condone delay - Board's Circular No. 9/2015 - six years limit for condonation of refund claims - finalisation of assessment as condition for adjudication of refund - Petitioner's claim for refund of tax for assessment year 2011-12 cannot be finally adjudicated without completion of assessment; Section 237 entitles refund of excess tax paid but the claim must be considered after assessment is finalised and subject to applicable condonation guidelines under Section 119 and the Board's Circular. - HELD THAT: - The Court observed that Section 237 is a substantive right to refund where tax paid exceeds the amount for which the person is properly chargeable, and that Section 119 empowers the Board to issue directions, including condonation of delay to avoid genuine hardship. The Board's Circular No.9/2015 prescribes procedural limits (including a six year bar) and conditions for admission of belated refund claims under Section 119(2)(b). However, where no return was filed within the statutory period and the assessment for the year was not reopened, the proper procedural step was for the jurisdictional assessing officer to issue a notice under Section 148 and complete assessment to determine whether tax is payable or a refund is due. Consequently, the first respondent's rejection of the refund request without the assessment being finalised was improper. The Court therefore remitted the matter: directing the assessing officer to complete assessment for AY 2011-12 within three months and thereafter to examine and decide the refund claim on merits in accordance with law, applying Section 237 and the Board's Circular/Section 119 as appropriate; the Court also permitted appropriation of any refund towards penalty and recognised that interest/penalty consequences for belated filing may follow. [Paras 15, 16, 20, 21, 22]

Matter remitted: assessing officer to issue notice/reopen and complete assessment for AY 2011-12 within three months and thereafter examine and decide the refund claim under Section 237 and Section 119/Circular No.9/2015 within three months, with liberty to impose penal consequences as permissible.

Final Conclusion: Writ petition allowed in part; the assessment for AY 2011-12 is to be finalised by the assessing officer within three months, and thereafter the refund claim must be examined and decided on merits in accordance with Sections 237 and 119 and Board's Circular No.9/2015, with directions for refund or appropriation and penal consequences as applicable; no order as to costs.

Refund and sanction of tax refund - mandamus for expeditious processing of refund claim - interest under Section 244A

Refund and sanction of tax refund - mandamus for expeditious processing of refund claim - interest under Section 244A - Direction to respondents to process and sanction the petitioners' refund claim for the excess amount (with interest) as expeditiously as possible. - HELD THAT: - The petition sought a writ directing respondent authorities to process and sanction a claimed refund for Assessment Year 2009-10, including interest under the statutory provision relied upon by the petitioners. Respondents' counsel accepted notice and requested reasonable time to process the claim; that concession was placed on record. Having considered the submissions and documents produced, the High Court found it appropriate to direct the respondents to proceed in accordance with law and to process the refund claim without further delay. The Court specified a limited, concrete timeline for action and disposed of the petition subject to that direction. [Paras 5]

Respondents directed to process the petitioners' refund claim for AY 2009-10 (including interest) in accordance with law expeditiously, within three months from receipt of the order.

Final Conclusion: Writ petition disposed of by directing the respondent tax authorities to process and sanction the refund claim (including interest) for Assessment Year 2009-10 in accordance with law within three months from receipt of the order.

Reopening assessment beyond four years and application of the first proviso to Section 147 - reassessment under Section 147/148 - presumption under Section 68 regarding genuineness of share capital - need for proximate link between investor and assessee before treating investment as undisclosed income - onus on the assessee to prove source of share capital - mere suspicion insufficient to convert investment by a foreign entity into assessee's undisclosed income

Presumption under Section 68 regarding genuineness of share capital - need for proximate link between investor and assessee before treating investment as undisclosed income - mere suspicion insufficient to convert investment by a foreign entity into assessee's undisclosed income - Whether the Assessing Officer was justified in treating share capital received from a foreign entity as the assessee's undisclosed income on the basis that the investor was a 'shell company' and applying the presumption under Section 68. - HELD THAT: - The Court examined whether a finding that the investor appeared to be a shell company necessarily permitted treating the monies received as the assessee's undisclosed income under the presumption in Section 68. The Tribunal and Commissioner had recorded that the assessee had furnished documents and explanations during original assessment proceedings and that reopening was effected beyond four years with the first proviso to Section 147 being attracted. Even if the investor could be characterized as a shell, the Court held that such a characterization alone does not establish a link between the investor and the assessee sufficient to attract the Section 68 presumption. The presumption can operate only where material establishes a proximate relationship or link enabling inference that the credited sums are the assessee's income; mere suspicion or subsequent information, without such connecting material, is insufficient. In the circumstances, the Assessing Officer's conclusion that the investment represented undisclosed income of the assessee was not sustainable.

The addition of the investment as the assessee's undisclosed income was set aside; the findings of the Commissioner (Appeals) and the Tribunal rejecting the reassessment were upheld.

Reopening assessment beyond four years and application of the first proviso to Section 147 - reassessment under Section 147/148 - Whether the reopening of assessment and consequential reassessment were permissible in the facts of the case. - HELD THAT: - The Tribunal noted that the reassessment was initiated after the four-year period and after a delay following receipt of information from the Foreign Tax Division; the Department did not satisfactorily explain the delay in acting on that information. The Tribunal applied the first proviso to Section 147, observed that the assessee had furnished all material during the original assessment and that there was no failure to disclose material facts. The Court found no error in these conclusions and agreed that the reopening was not sufficient to sustain the addition where the statutory proviso and the assessee's prior disclosures were operative.

Reopening and reassessment were held not to justify the addition; the orders of the Commissioner (Appeals) and the Tribunal quashing the reassessment were affirmed.

Final Conclusion: The revenue's appeal is dismissed; the orders of the Commissioner (Appeals) and the Income Tax Appellate Tribunal setting aside the Assessing Officer's additions are upheld and the related miscellaneous application stands disposed of.

Deductibility of employees' contribution to ESI and PF under section 36(1)(va) of the Income tax Act - effect of payment before the due date of filing return under section 139(1) on deduction of employees' contribution - interaction of section 43B with section 36(1)(va) and its effect on timing of allowable deduction - applicability of amendment by the Finance Act, 2021 to assessment years prior to 2021-22

Deductibility of employees' contribution to ESI and PF under section 36(1)(va) of the Income tax Act - effect of payment before the due date of filing return under section 139(1) on deduction of employees' contribution - Deduction of employees' contribution to ESI and PF paid after the statutory due date but before the due date for filing return under section 139(1) for the impugned assessment years. - HELD THAT: - The Tribunal found as an undisputed fact that the employees' contributions collected by the assessee were deposited before the due date for filing the return under section 139(1). Applying the law as interpreted by several High Courts and coordinate Benches of the Tribunal, the Bench held that where such contributions are paid before the due date for filing the return, they are admissible as deduction under section 36(1)(va) (read with section 43B) for the assessment years before the Finance Act, 2021 amendment. The Tribunal followed binding and persuasive precedents which have held that payment before filing the return cures delay under the relevant enactments for purposes of claiming the deduction, and therefore the disallowance made while processing the return under section 143(1) was directed to be deleted. [Paras 8, 9]

Addition made by CPC disallowing employees' contribution towards ESI and PF for the impugned assessment years is deleted and the appeals are allowed.

Applicability of amendment by the Finance Act, 2021 to assessment years prior to 2021-22 - interaction of section 43B with section 36(1)(va) and its effect on timing of allowable deduction - Whether the Explanation/amendment introduced by the Finance Act, 2021 altering the timing requirement for allowance of employees' contribution applies to the impugned assessment years. - HELD THAT: - The Tribunal examined the explanatory memorandum to the Finance Act, 2021 and observed that the amendments were expressly stated to take effect from 1st April, 2021 and to apply to assessment year 2021-22 and subsequent years. The Bench therefore concluded that the amended statutory position cannot be applied to assessment years 2018-19 and 2019-20. In consequence, the pre-amendment jurisprudence permitting deduction where payment was made before filing the return governs the impugned years and the Finance Act, 2021 amendment does not operate retrospectively to alter that outcome. [Paras 6, 8]

The Finance Act, 2021 amendment is prospective and not applicable to the impugned assessment years; hence it does not sustain the disallowance for those years.

Final Conclusion: Following binding and coordinate decisions holding that employees' contribution to ESI and PF paid before the due date for filing the return under section 139(1) is allowable for deduction for the assessment years before the Finance Act, 2021 amendment, and holding that the 2021 amendment applies prospectively from A.Y.2021-22, the Tribunal deleted the disallowances and allowed both appeals.

Deletion of addition made on account of exchange rate difference - treatment of foreign exchange loss in trading accounts - booking of import purchases at customs/industry rate vis-a -vis prevailing RBI rate - use of bank debit/payment exchange rate for quantification of exchange difference - re-opening of assessment under the Income-tax Act - allegation of suppression and circulation of unaccounted/black capital

Deletion of addition made on account of exchange rate difference - treatment of foreign exchange loss in trading accounts - booking of import purchases at customs/industry rate vis-a -vis prevailing RBI rate - use of bank debit/payment exchange rate for quantification of exchange difference - allegation of suppression and circulation of unaccounted/black capital - Whether the addition of exchange loss debited by the assessee should be sustained on the basis that the assessee manipulated purchase and payment exchange rates to suppress loss and circulate black capital - HELD THAT: - The Assessing Officer disallowed the exchange loss claimed by the assessee on the premise that the assessee booked purchases at a lower dollar rate and used a different higher rate at payment, resulting in an understated loss and alleged circulation of unaccounted funds. The assessee explained that purchases were booked at the customary/customs industry rate and that the actual exchange difference crystallised on payment, which was reflected by the bank debit/advice. The CIT(A) accepted that booking purchases at the customs/industry rate is a recognised trading practice, that the bank payment rates represent actual settlement rates, and that any difference arising from choice of booking rate is ultimately neutralised when payment is made, producing the same net effect in profit or loss. The Tribunal found no infirmity in the appellate fact finding that the addition was made without proper appreciation of accounting practice and documentary evidence (including bank advices) relied upon by the assessee, and that the assertion of suppression/circulation of black capital was baseless. On this basis the Tribunal affirmed the CIT(A)'s deletion of the addition. [Paras 10, 11]

The order of the CIT(A) deleting the addition made on account of exchange rate difference is affirmed and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal affirmed the appellate finding that the assessee's method of booking import purchases at customary/customs rates and recognising exchange difference on actual bank payment was acceptable; the Assessing Officer's addition and allegation of suppression/circulation of black capital were held to be unsustainable, and the Revenue's appeal was dismissed.

Return of passport - retention of passport pending adjudication - apprehension of flight risk - payment of penalty - no pending prosecution - right to leave the country - overstay and visa validity

Return of passport - apprehension of flight risk - payment of penalty - no pending prosecution - right to leave the country - overstay and visa validity - Whether the passport of the petitioner should be returned to him despite prior apprehension that he might abscond and after payment of the penalty in the adjudication proceeding. - HELD THAT: - The Court found the respondents' repeated assertion of an apprehension that the petitioner would flee the country to be without substance, noting that the apprehension merely reproduced an earlier observation made when the adjudication proceeding was pending. The respondent stated that no prosecution is pending against the petitioner under any other enactment; in that factual position there is no justification to continue to withhold the passport. The petitioner had paid the penalty imposed in the adjudication proceeding, and the Court observed that returning the passport was necessary to enable the petitioner, a foreign national, to leave India - particularly because he had been in India for nearly four years and his visa validity was uncertain, creating a separate reason to permit departure rather than prolonging potential overstay. On these grounds the Court directed return of the passport upon approach by the petitioner with a copy of the order. [Paras 5, 6, 7, 8, 9]

The passport of the petitioner shall be returned by respondent no.2 to the petitioner within a fortnight from the date an approach is made together with a copy of this order.

Final Conclusion: Writ petition disposed; passport to be returned within a fortnight on presentation of this order, no costs.

Non-imposition of penalty - exercise of discretion under Section 112 of the Customs Act - monetary/fiscal limits for filing appeals - maintainability of appeal despite monetary threshold where pure question of law arises - remand for fresh consideration by the Tribunal

Non-imposition of penalty - exercise of discretion under Section 112 of the Customs Act - monetary/fiscal limits for filing appeals - maintainability of appeal despite monetary threshold where pure question of law arises - Whether the Tribunal erred in dismissing the Revenue's appeal as not maintainable on the ground that the revenue involved was less than Rs. 10 lakhs because no penalty was imposed on the respondent, thereby applying the Department's monetary limits despite the Revenue challenging the legality of non-imposition of penalty. - HELD THAT: - The Court held that the central question before the Tribunal was whether the Commissioner properly exercised the discretion conferred by Section 112 in refraining from imposing any penalty on the officers; this is a pure question of law and is de hors the fiscal limits prescribed by Revenue circulars. The Tribunal's reliance on monetary thresholds to decline to entertain the appeal was unsustainable where the appeal raised the legality of non-imposition of penalty rather than merely a dispute about quantification of duty or the amount of penalty. Consequently, the question cannot be treated as falling within routine monetary limits that bar departmental appeals; the matter requires adjudication on merits by the Tribunal. The Court therefore set aside the CESTAT order to the extent it dismissed the appeal on the monetary-limit ground and remitted the appeal to the CESTAT for consideration on merits, to be heard along with the pending appeal relating to the other officer. The Court expressly refrained from adjudicating any merits issues and left all substantive questions open for the Tribunal's fresh decision. [Paras 6]

Tribunal's dismissal of Revenue's appeal on the basis of monetary limits is set aside; question of legality of non-imposition of penalty is remitted to CESTAT for fresh consideration on merits (along with the appeal in respect of Anil Kumar), merits left open.

Final Conclusion: The High Court allowed the challenge to the CESTAT's refusal to entertain the departmental appeal on monetary-limit grounds, set aside the impugned order in that respect, and remitted the matter to the CESTAT for fresh adjudication on the legality of the non-imposition of penalty, leaving all merits issues open.

Refund under Section 27 of the Customs Act, 1962 - payment made under protest - show cause notice before rejecting refund claim - intra-departmental communication insufficient to reject refund - remand for fresh consideration and personal hearing

Refund under Section 27 of the Customs Act, 1962 - show cause notice before rejecting refund claim - intra-departmental communication insufficient to reject refund - Validity of the impugned communication rejecting the petitioner's refund claim without issuance of a show cause notice and relying on an intra-departmental communication of DRI. - HELD THAT: - The court held that the impugned communication could not be treated as a final order rejecting the refund claim and that the respondent was obliged to issue a proper show cause notice setting out grounds for rejection. The payments made by the petitioner during the DRI investigation were to be treated as paid "under protest", and therefore the mere reliance on an intra-departmental communication that the petitioner had voluntarily admitted availing concessional duty was insufficient to reject the refund. The merits of the refund claim require factual determination and could not be finally disposed of in the absence of issuance of a show cause notice and opportunity to be heard. [Paras 7]

Impugned communication is not a valid order to reject the refund claim; respondent must issue a show cause notice and afford opportunity to the petitioner to reply and be heard.

Payment made under protest - remand for fresh consideration and personal hearing - Appropriate remedy and procedural course where refund claim was rejected without notice. - HELD THAT: - The court directed that the matter be remitted to the second respondent to issue a proper show cause notice preferably within 60 days from receipt of the order, calling upon the petitioner to reply within the time prescribed. The second respondent was directed to afford personal hearing to the petitioner after receipt of the reply and to pass appropriate orders on merits and in accordance with law preferably within 30 days after conclusion of the personal hearing. These directions treat the amounts paid during investigation as paid under protest and require adjudication on merits with procedural fairness. [Paras 8, 9]

Writ petition allowed by remitting the refund claim to the second respondent with directions to issue show cause notice, afford personal hearing and decide the claim on merits within the stipulated timeframes.

Final Conclusion: Writ petition allowed; impugned communication rejecting the refund claim set aside to the extent that no show cause was issued, payments treated as under protest, and the matter is remitted to the second respondent to issue a show cause notice, provide personal hearing and decide the refund claim on merits within the directed timelines; no costs.

Expunction of objectionable judicial observations - professional conduct of advocates - duty and privilege of the legal profession - judicial restraint in use of reproving language

Expunction of objectionable judicial observations - judicial restraint in use of reproving language - Objectionable expression in the Commissioner of Customs (Appeals) order expunged while leaving the remainder of the order intact. - HELD THAT: - The Court recognised the vital constitutional and societal role of the legal profession, emphasising that advocacy is a privileged vocation accompanied by duties to the court, the client and the profession. While novel or robust arguments may displease an adjudicatory authority, orders and judgments should avoid language that unduly reflects upon an advocate's professional conduct. Where an observation in an appellate order was found to be expressed in unduly pejorative terms directed at the advocate, the High Court exercised its power to expunge the objectionable portion as being unnecessary to the determination and as bearing adversely on the dignity of the profession. The Court held that expunction would better serve the interests of both Bar and Bench and would not affect the operative findings of the impugned order.

The highlighted reproving expression in the impugned order is expunged; the rest of the order remains intact.

Final Conclusion: Writ petition allowed insofar as the objectionable expression in the Commissioner of Customs (Appeals) order is expunged; the balance of the order is affirmed.

Refund of Special Additional Duty (SAD) - limitation period for refund claims - conditional nature of SAD refund (accrual upon subsequent sale) - interaction of the Customs Tariff Act with the Customs Act 'so far as may be' doctrine - Section 27 of the Customs Act prescribing one year limitation - applicability of Notification No. 93/2008 amending limitation

Refund of Special Additional Duty (SAD) - conditional nature of SAD refund (accrual upon subsequent sale) - limitation period for refund claims - applicability of Notification No. 93/2008 amending limitation - Whether refund claims of SAD were rightly rejected as time barred where claims were filed after one year from payment of SAD - HELD THAT: - The Tribunal held that the right to claim refund of SAD under the Notification accrues only upon subsequent sale of the imported goods and deposit of sales tax/VAT; therefore limitation tied to date of payment of SAD cannot be mechanically applied. The decision in Sony India (Delhi High Court) that the provisions of the Customs Act and its limitation in Section 27 apply to the Customs Tariff Act "so far as may be" was followed on the ground that the conditional nature of SAD (levied under Section 3(5) of the CTA) means the refund right is market driven and accrues only on resale. The Tribunal observed that the one year limitation was introduced by Circular No.6/2008 and Notification No.93/2008 and that the Bombay High Court decision distinguishing Sony India did not disturb the core findings relied upon. Applying this reasoning, the Tribunal concluded that the refund claims could not be rejected as time barred where the right to claim had not yet accrued within the statutory/notification framework. [Paras 7, 9, 10, 11]

Refund claims allowed; rejection as time barred set aside and appellant entitled to refund in accordance with law.

Final Conclusion: The appeal is allowed; the impugned order rejecting SAD refund claims as time barred is set aside and the appellant is entitled to consequential benefits in accordance with law.

Disclosure of interest by director in prescribed form (Section 184(1)) - Disclosure of interest at the board meeting and non-participation (Section 184(2)) - Automatic vacation of office upon statutory contravention versus penal consequences - Power to grant interim orders regulating conduct of company affairs under Section 242(4) - Interim relief, status quo and status quo ante in company petitions

Disclosure of interest by director in prescribed form (Section 184(1)) - Automatic vacation of office upon statutory contravention versus penal consequences - Whether R 1 contravened Section 184(1) and the consequences thereof - HELD THAT: - The Tribunal found, and this Appellate Tribunal agrees, that R 1 informed the company secretary and other directors in writing about his directorship and shareholding in AGT shortly after acquisition (emails of 03.05.2019 and 28.06.2019 etc.), although he did not file Form MBP 1 in the exact prescribed format at the initial point. On the facts the disclosure obligation under Section 184(1) was substantially complied with. Further, non compliance with Section 184(1) attracts penal consequences under Section 184(4) and does not automatically lead to vacation of directorship under Section 167; Section 184(1) non compliance therefore does not itself cause automatic cessation of office. [Paras 31, 33, 34, 39, 40]

R 1 substantially complied with Section 184(1); non compliance of Section 184(1) would not cause automatic vacation of office but only penal consequences.

Disclosure of interest at the board meeting and non-participation (Section 184(2)) - Automatic vacation of office upon statutory contravention versus penal consequences - Whether R 1 contravened Section 184(2) and is liable to vacation of office under Section 167 - HELD THAT: - The appointment of AGT premises on rent was considered at the board meeting of 07.11.2019. R 1 was not present at that meeting; directors present (including R 5 and R 6) and the company secretary were aware of R 1's interest and raised no objection. The Tribunal was not persuaded by the submission that constructive presence rendered R 1 liable under Section 184(2). On these facts R 1 did not contravene Section 184(2) and therefore is not liable to the consequences under Section 167(1)(c) or (d). [Paras 41, 42]

R 1 did not contravene Section 184(2); no vacation of office under Section 167 follows.

Power to grant interim orders regulating conduct of company affairs under Section 242(4) - Interim relief, status quo and status quo ante in company petitions - Whether the Tribunal ordered reinstatement of R 1 as director under Section 242(4) - HELD THAT: - The impugned order restrained implementation of the notice dated 30.07.2020 and enjoined respondents from preventing R 1 from acting as director. The Appellate Tribunal notes that the Tribunal did not pass an order of reinstatement; rather it exercised its interim power under Section 242(4) to make just and equitable orders regulating company affairs. The interim order examined the legality of the 30.07.2020 notice and was confined to that purpose. [Paras 43]

The Tribunal did not order reinstatement; it granted an interim injunction under Section 242(4) against implementation of the 30.07.2020 notice.

Interim relief, status quo and status quo ante in company petitions - Power to grant interim orders regulating conduct of company affairs under Section 242(4) - Whether the Tribunal could grant the interim relief without first deciding the question of quasi partnership - HELD THAT: - The Tribunal's interim order was limited to examining the legality of the 30.07.2020 notice; it did not rest its grant of interim relief on a final determination that the company is a quasi partnership. The Appellate Tribunal held that a final finding on quasi partnership was not a precondition to the limited interim relief granted while the main petition is decided on merits. The Tribunal must, however, deal with the petition independently and should not be influenced by observations in the interim order. [Paras 44, 45, 46]

Interim relief could be granted without a prior finding on quasi partnership since the order related to the legality of the notice; the Tribunal's grant of interim relief was not impermissible on that ground.

Final Conclusion: The appeal is dismissed. The Appellate Tribunal found no error in the Tribunal's exercise of interim powers under Section 242(4) to restrain implementation of the notice dated 30.07.2020; R 1 was held to have substantially complied with disclosure obligations under Section 184(1) and not to have contravened Section 184(2). The interim order of the Tribunal is sustained; however, the interim order passed by this Appellate Tribunal is vacated. No order as to costs.

Scope of Section 7(5) - pre-admission disposal - abdication of jurisdiction - settlement versus statutory adjudication - encouragement of settlements without equitable compulsion - restoration of proceedings for fresh consideration

Scope of Section 7(5) - pre-admission disposal - abdication of jurisdiction - settlement versus statutory adjudication - Whether the Adjudicating Authority and the Appellate Authority could dispose of a Section 7 petition at the pre-admission stage by directing the corporate debtor to settle claims instead of either admitting or rejecting the application under Section 7(5). - HELD THAT: - The Court held that Section 7(5) provides only two statutory courses - admit the application if satisfied a default has occurred and the application is complete, or reject it if no default is established or the application is incomplete. The Adjudicating Authority exceeded its statutory remit by disposing of the petition at the pre-admission stage and directing the corporate debtor to settle outstanding claims within a time-frame, thereby compelling settlement and abdicating its function to determine whether admission or rejection was appropriate. While settlements are to be encouraged in furtherance of the IBC's objective of revival and value maximisation, the Adjudicating Authority and the Appellate Authority have no residual equitable jurisdiction to direct settlements in place of the statutorily enumerated options. The Appellate Authority erred in treating the NCLT's order as a harmless pre-admission disposal and in declining to exercise appellate jurisdiction despite the NCLT's failure to exercise its jurisdiction under Section 7(5). The Court relied on the statutory language of Section 7, the interpretation in Innoventive Industries that the Adjudicating Authority's satisfaction of default is the determinative enquiry, and subsequent authorities cautioning against judicial intervention beyond the IBC framework. [Paras 26, 27, 28, 29, 32]

The Adjudicating Authority acted beyond its jurisdiction in disposing of the Section 7 petition by directing settlement; the Appellate Authority erred in not exercising its appellate jurisdiction to correct that abdication.

Restoration of proceedings for fresh consideration - encouragement of settlements without equitable compulsion - Remedy to be granted where the Adjudicating Authority abdicated jurisdiction by pre-admission disposal directing settlement. - HELD THAT: - Given the NCLT's failure to exercise the jurisdiction conferred by Section 7(5) and the NCLAT's consequent erroneous dismissal of the appeal as not maintainable, the Court concluded that the appropriate remedy was to set aside both impugned orders and restore the original Section 7 petition to the Adjudicating Authority for fresh adjudication. The Court expressly left open all rights and contentions of the parties for decision by the Adjudicating Authority, noting the amendments to Section 7 and related jurisprudence would be available for consideration on fresh hearing. [Paras 33, 34, 35]

Impugned orders of the NCLT and NCLAT set aside; CP(IB) No.188/BB/2019 restored to the NCLT for fresh disposal and impleadment applications disposed with liberty to act in accordance with law.

Final Conclusion: Appeal allowed. Orders of the NCLT dated 28 February 2020 and the NCLAT dated 30 July 2020 set aside; the Section 7 petition is restored to the Adjudicating Authority for fresh consideration consistent with the statutory scheme of the IBC, with liberty preserved to the parties to urge all their contentions before the Adjudicating Authority.

Prospective operation of delegated subordinate legislation - scope and effect of Section 10A (suspension of initiation of CIRP) - date of default versus initiation date/insolvency commencement date distinction - threshold for minimum amount of default and applicability of notification S.O. 1205(E)

Threshold for minimum amount of default and applicability of notification S.O. 1205(E) - prospective operation of delegated subordinate legislation - The notification dated 24.03.2020 (S.O. 1205(E)) specifying the minimum amount of default as Rs. One Crore is prospective in operation and does not have retrospective effect. - HELD THAT: - The Tribunal accepted the settled principle that subordinate legislation will not be given retrospective effect unless expressly or by necessary implication authorised to do so. Having regard to the language and tenor of the notification, and consistent judicial authorities cited, the Tribunal held that the notification does not expressly provide for retrospective application. Consequently the change in the threshold effected by the notification is prospective and cannot be read as altering substantive rights already accrued unless explicitly so provided. The Tribunal therefore treated the notification as prospective in nature when addressing the maintainability issues arising under the Code. [Paras 80]

Notification S.O. 1205(E) is prospective in nature and not retrospective.

Scope and effect of Section 10A (suspension of initiation of CIRP) - date of default versus initiation date/insolvency commencement date distinction - Section 10A bars initiation of CIRP for defaults arising on or after 25.03.2020 for the specified period; the Section applies to the present Section 9 application because the Tribunal concluded the debt was due and payable on or after 25.04.2020. - HELD THAT: - Applying the purposive construction endorsed by the Supreme Court, the Tribunal observed that Section 10A was enacted to suspend filing of applications in respect of defaults occurring on or after 25.03.2020 to meet extraordinary circumstances arising from the COVID-19 pandemic. The Tribunal analysed the contract communications and the parties' own pleadings and concluded that, in law, the amount was due and payable on 25.04.2020 (and the claim included interest disputed by the corporate debtor). Because the default as pleaded and necessarily arising for purposes of Section 10A falls on or after the cut off date, the embargo contained in Section 10A operates to render the Section 9 application not maintainable. The Tribunal therefore set aside the Adjudicating Authority's order admitting the Section 9 application and dismissed the petition under Section 9. [Paras 81]

Section 10A applies to the claimed default date and the Section 9 application is not maintainable; the impugned admission is set aside and the Section 9 application is dismissed.

Final Conclusion: The appeal is allowed. The admission order under Section 9 (IBA/35/KOB/2020) is set aside and the Section 9 application is dismissed as not maintainable by reason of Section 10A; consequential orders (appointment of IRP, moratorium, actions by the IRP and related steps) are declared illegal and set aside. No costs.

Initiation of liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - appointment of the resolution professional as liquidator under Section 34 of the Insolvency and Bankruptcy Code, 2016 - cessation of moratorium under Section 14 and commencement of moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - notice of discharge to officers, employees and workmen under Section 33(7) of the Insolvency and Bankruptcy Code, 2016 - public announcement of liquidation under Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - preliminary report by the liquidator under Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016 - investigation by the liquidator into undervalued and preferential transactions - fee entitlement of liquidator governed by Regulation 4(2) of the IBBI (Liquidation Process) Regulations, 2016

Initiation of liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - appointment of the resolution professional as liquidator under Section 34 of the Insolvency and Bankruptcy Code, 2016 - fee entitlement of liquidator governed by Regulation 4(2) of the IBBI (Liquidation Process) Regulations, 2016 - Liquidation of the corporate debtor ordered and the existing Resolution Professional appointed as Liquidator. - HELD THAT: - The Committee of Creditors (CoC), comprising the sole financial creditor, passed a unanimous resolution approving filing of an application for initiation of liquidation and proposing appointment of the existing Resolution Professional as Liquidator, with entitlement to fees as per the applicable IBBI Regulation. The Resolution Professional furnished written consent to act as Liquidator. Having considered the CoC's unanimous decision and the RP's consent, the Bench accepted the CoC resolution and ordered liquidation of the corporate debtor and appointment of the Resolution Professional as Liquidator in terms of the Code and relevant Regulations. [Paras 9, 10]

Application allowed; corporate debtor ordered into liquidation and Mr. Aishwarya Mohan Gahrana appointed as Liquidator.

Cessation of moratorium under Section 14 and commencement of moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - notice of discharge to officers, employees and workmen under Section 33(7) of the Insolvency and Bankruptcy Code, 2016 - public announcement of liquidation under Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - preliminary report by the liquidator under Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016 - investigation by the liquidator into undervalued and preferential transactions - Incidental directions in respect of the liquidation process issued to the Liquidator and registry. - HELD THAT: - On ordering liquidation, the Bench directed that the moratorium previously in place under Section 14 shall cease and a fresh moratorium under Section 33(5) shall commence. The order operates as a notice of discharge to officers, employees and workmen under Section 33(7). The Liquidator was directed to issue the public announcement of liquidation in accordance with Regulation 12, to continue investigation into the corporate debtor's financial affairs (including possible undervalued and preferential transactions), and to submit a Preliminary Report to the Adjudicating Authority within the time prescribed by Regulation 13. The Registry and Liquidator were further directed to communicate the order to the Financial Creditor, Corporate Debtor, IBBI and Registrar of Companies for updating records. [Paras 10]

Directions issued for cessation and recommencement of moratorium, discharge notice to employees, public announcement, investigation, submission of preliminary report, and statutory communications to registry, IBBI and ROC.

Final Conclusion: The application under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 is allowed; the corporate debtor is ordered into liquidation, the existing Resolution Professional is appointed as Liquidator with fees as per IBBI Regulations, and ancillary directions concerning moratorium, discharge of employees, public announcement, investigation and statutory communications are issued.

Dissolution of corporate debtor - complete liquidation of assets - liquidator's application under Section 54 of the Insolvency and Bankruptcy Code, 2016 - distribution to stakeholders under Section 53 of the Insolvency and Bankruptcy Code, 2016 - intimation to Registrar of Companies

Dissolution of corporate debtor - complete liquidation of assets - liquidator's application under Section 54 of the Insolvency and Bankruptcy Code, 2016 - distribution to stakeholders under Section 53 of the Insolvency and Bankruptcy Code, 2016 - intimation to Registrar of Companies - Application by the liquidator under Section 54 for dissolution of the corporate debtor after completion of the liquidation process and related formalities. - HELD THAT: - The Tribunal found that the corporate debtor's assets had been fully liquidated: a public invitation for claims was made, claims were received and updated, and the liquidation account was operated. The liquidator realized proceeds by a private sale of the sole immovable property and issued certificate of sale and possession. The amount realized exceeded the liquidation value and the available funds were distributed to stakeholders in accordance with Section 53. On these findings the Tribunal held that the condition for invoking Section 54(1) - complete liquidation of assets - was satisfied. Consequential administrative steps were ordered: dissolution of the corporate debtor under Section 54(2), relief of the liquidator from office, and direction to forward a copy of the dissolution order to the Registrar of Companies within seven days as required by Section 54(3). [Paras 9, 11, 12]

The corporate debtor, M/s. MCCL Petrochem Private Limited, is dissolved with effect from the date of the order; the liquidator is relieved and the liquidator/registry shall send a copy of the order to the Registrar of Companies within seven days.

Final Conclusion: Application under Section 54 allowed: having held that the assets of the corporate debtor were completely liquidated and distributions made under Section 53, the Tribunal ordered dissolution of the company, relieved the liquidator, and directed intimation of the dissolution to the Registrar of Companies.

Limitation - Article 137 of the Limitation Act - Section 7 of the Insolvency and Bankruptcy Code, 2016 - acknowledgement of debt - cause of action arising from decree or certificate of recovery - dismissal of Company Petition as time-barred

Article 137 of the Limitation Act - Section 7 of the Insolvency and Bankruptcy Code, 2016 - limitation - Application under Section 7 of IBC is time-barred as limitation runs from the date of declaration of NPA under Article 137. - HELD THAT: - The admitted fact is that the corporate debtor was declared a non-performing asset on 30.06.2002. For a petition under Section 7 of the IBC, Article 137 of the Limitation Act applies and the three-year period begins to run from the date on which the right to apply accrues, namely the date of declaration of NPA. The Company Petition filed on 05.06.2020 was therefore filed long after the expiry of the three-year period. The court relied on the ratio in Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Limited [as cited in the judgment] and applied that principle to conclude that the petition is barred by limitation. [Paras 4, 5, 6, 12]

The Company Petition is barred by limitation under Article 137 and is dismissed.

Cause of action arising from decree or certificate of recovery - acknowledgement of debt - limitation - Pending decree at the DRT does not give rise to a fresh three-year limitation period and the balance-sheet entry does not amount to an acknowledgment that extends limitation. - HELD THAT: - The respondent relied on the principle that a judgment or decree of the DRT or issuance of a certificate of recovery would give rise to a fresh cause of action and trigger a new three-year limitation period; however, that principle applies only from the date of such judgment, decree or certificate. Here the Original Application before the DRT is pending and no decree or certificate has been passed; therefore that principle cannot be invoked to render the present petition within limitation. The respondent further relied on the corporate debtor's balance sheet showing the liability as an acknowledgment extending limitation. The Tribunal found that the entry is shown under non-current liabilities while the dispute is pending before the DRT, and thus cannot be treated as an acknowledgement of debt for extending limitation. The Tribunal also noted that the amount shown falls below the pecuniary jurisdiction of this Tribunal as on the date of filing. [Paras 8, 9, 10, 11, 12]

Since there is no decree or certificate from the DRT and the balance-sheet entry does not constitute an acknowledgement extending limitation, those contentions fail and do not save the petition from being time-barred.

Final Conclusion: I.A. No. 119/2021 is allowed and CP(IB) No. 82/7/AMR/2020 is dismissed as time-barred under Article 137; liberty granted to file a fresh application, if entitled, after a decree or judgment of the DRT.

Anticipatory bail under Section 438 CrPC - exercise of discretion under the first proviso to Section 45(1) of the PMLA, 2002 - cognizable offence under the PMLA, 2002 - custodial interrogation and its necessity - conditions incident to grant of bail - overriding effect of PMLA provisions vis-a -vis Code of Criminal Procedure

Anticipatory bail under Section 438 CrPC - custodial interrogation and its necessity - conditions incident to grant of bail - exercise of discretion under the first proviso to Section 45(1) of the PMLA, 2002 - Anticipatory bail granted to the applicants in relation to the PMLA complaint. - HELD THAT: - The High Court, while noting that the offence alleged falls within the PMLA and is cognizable, recorded the prosecution's concession that no custodial interrogation of the applicants was necessary. The applicants are bank officials accused of having processed account-opening forms without following prescribed procedures; statements under Section 50 of the PMLA were already recorded and no further custodial interrogation was required. Without adjudicating the merits, and applying the Court's discretion (including regard to the first proviso to Section 45(1) of the PMLA, 2002 and the absence of need for custody), the Court held that anticipatory bail could be granted. The order imposes standard protective and procedural conditions - bond and surety, availability for interrogation, prohibition on tampering or influencing witnesses, preservation of fair trial, and personal attendance at trial dates - and leaves open adjudication on merits to the trial court.

Applicants are granted anticipatory bail on execution of bond and subject to specified conditions; the Court observed no custodial interrogation of applicants is necessary and made no comment on merits.

Final Conclusion: Anticipatory bail allowed: applicants to be released on execution of bond and one surety, and to comply with conditions (availability for interrogation, non-interference with witnesses, preservation of fair trial, and attendance at trial); order without prejudice to the trial court's adjudication on merits.

Refund of accumulated Cenvat Credit under Rule 5 of Cenvat Credit Rules - Formula-based refund regime under substituted Rule 5 (post-01.04.2012) - Requirement of nexus between input services and exported output services - Denial or recovery of irregularly availed Cenvat Credit only by invoking Rule 14

Refund of accumulated Cenvat Credit under Rule 5 of Cenvat Credit Rules - Requirement of nexus between input services and exported output services - Denial or recovery of irregularly availed Cenvat Credit only by invoking Rule 14 - Formula-based refund regime under substituted Rule 5 (post-01.04.2012) - Whether refund under Rule 5 can be denied on the ground of non-establishment of nexus between input services and export services when Rule 14 has not been invoked - HELD THAT: - The Tribunal held that substituted Rule 5 prescribes a formula-based entitlement to refund and does not require establishment of a nexus between input services and exported output services. The court observed that denial of Cenvat credit itself is a separate process which can be effected only by issuing notice under Rule 14, and that refund proceedings under Rule 5 are confined to verifying compliance with the prescribed formula and not to adjudicating correctness of credit availment. Reliance was placed on the Tribunal's earlier decisions in the appellant's own case and in other precedents recognizing that post-amendment Rule 5 dispenses with the correlation requirement and that any attempt to vary or deny the quantum of credit in refund proceedings is impermissible unless Rule 14 is invoked. In consequence, where the department has not questioned availment of credit by issuing proceedings under Rule 14, rejection of refund on the ground of 'no nexus' is unsustainable. [Paras 5, 6]

Refund under Rule 5 cannot be denied on nexus grounds in the absence of proceedings under Rule 14; the appellants' refund claims are admissible.

Final Conclusion: The appeals are allowed; since Rule 14 proceedings were not invoked, the department cannot deny refund under Rule 5 on the ground of non-establishment of nexus and the claimed refunds are admissible with consequential relief.

Transitional right to credit - refund of CENVAT credit paid under reverse charge - protection of accrued rights by repeal and savings clause - disposal of refund claims under existing law - refund in cash of erstwhile CENVAT credit under transitional provisions

Refund of CENVAT credit paid under reverse charge - transitional right to credit - protection of accrued rights by repeal and savings clause - disposal of refund claims under existing law - refund in cash of erstwhile CENVAT credit under transitional provisions - Whether the appellant is entitled to refund in cash of the service tax (CENVAT credit) paid under reverse charge for services received during January 2017 to June 2017 notwithstanding introduction of GST w.e.f. 1.7.2017 - HELD THAT: - The appellants paid service tax under reverse charge for services received from a foreign provider for the period January 2017 to June 2017 and could not avail CENVAT credit after GST commencement. Section 174(2) (repeal and savings) preserves rights, privileges and liabilities accrued under the repealed enactments, and Section 142(3) of the GST Act mandates that refund claims of any amount of CENVAT credit or duty paid under the existing law shall be disposed of in accordance with the provisions of the existing law and any amount accruing shall be paid in cash. There is no allegation that the claimed credit was ineligible; the only reason for denial was that the tax was voluntarily paid and that no credit exists under GST. The Tribunal accepted that the tax was paid under self-assessment and that under the erstwhile CENVAT Credit Rules, the appellants were eligible to claim credit for tax paid under reverse charge. Relying on the statutory protection for accrued rights and the specific transitional mechanism for refund under Section 142(3), the denial of refund on the ground of voluntary payment and non-availability of credit under GST was held unjustified. The Tribunal set aside the impugned order and allowed the appeal, directing refund in cash as per the transitional provision. [Paras 9, 11, 12, 13]

Refund claim of CENVAT credit for service tax paid under reverse charge for January 2017 to June 2017 to be processed under the erstwhile law and refunded in cash; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal held that the appellants' accrued right to CENVAT credit for service tax paid under reverse charge (for January 2017 to June 2017) is protected by the repeal and savings provision and Section 142(3) requires such refund to be disposed under the existing law and paid in cash; the rejection was set aside and the appeal allowed.

Pre-deposit under Section 35-F - retrospective application of amendment to pre-deposit requirement - entertainment of appeals conditional on pre-deposit

Retrospective application of amendment to pre-deposit requirement - pre-deposit under Section 35-F - Amendment introducing Section 35 F applies despite show cause notice having been issued before the amendment, and the pre deposit requirement is applicable. - HELD THAT: - The court examined the contention that Section 35 F, introduced with effect from 6.8.2014, is prospective and thus inapplicable where the show cause notice was issued prior to the amendment. Relying on and agreeing with the view in Ganesh Yadav v. Union of India as noted by the High Court of Allahabad, the court held that the amended provision applies notwithstanding that the show cause notice preceded the Finance Act, 2014. The statutory scheme restrains the Commissioner (Appeals) and the Tribunal from entertaining appeals unless the prescribed pre deposit is made, and the appellant had not made that deposit. [Paras 8, 9, 10]

The pre deposit obligation under Section 35 F is applicable and must be complied with despite the earlier issuance of the show cause notice.

Entertainment of appeals conditional on pre-deposit - pre-deposit under Section 35-F - Validity of CESTAT's order directing the appellant to make the pre deposit and the procedural consequence that the Commissioner (Appeals) will thereafter decide the appeal on merits. - HELD THAT: - The CESTAT disposed of the appeal by directing the appellant to make the mandatory pre deposit under Section 35 F before the Commissioner (Appeals) and provided that upon such deposit the Commissioner (Appeals) would decide the appeal on merits. The High Court found that the CESTAT's order did not foreclose the appellant's case but correctly applied the mandatory pre deposit requirement, and therefore confirmed the CESTAT's direction. The court, while upholding the requirement, granted a limited opportunity to the appellant to comply by permitting a three month period to make the pre deposit. The court further directed that if the deposit is made, the Commissioner (Appeals) shall dispose of the appeal on merits within six months from receipt of a copy of the judgment. [Paras 5, 7, 10]

The CESTAT's direction to make the pre deposit is confirmed; the appellant is allowed three months to make the pre deposit, and upon compliance the Commissioner (Appeals) shall decide the appeal on merits within six months.

Final Conclusion: The High Court confirmed the CESTAT's order requiring the mandatory pre deposit under Section 35 F (holding the amendment applicable despite an earlier show cause notice), granted the appellant three months to make the pre deposit, and directed that on such compliance the Commissioner (Appeals) shall decide the appeal on merits within six months.

Applicability of amended Section 11AB to erroneous refunds - Meaning of 'duty had become payable or ought to have been paid' - Liability for erroneous refund arises on date of grant of refund - Mens rea/intention to evade not required under amended Section 11AB(1) - Incorporation of Central Excise provisions into AED recovery via Section 133(3) Finance Act, 1999

Applicability of amended Section 11AB to erroneous refunds - Mens rea/intention to evade not required under amended Section 11AB(1) - Whether interest under the amended Section 11AB(1) could be demanded in respect of erroneous refunds relating to clearances up to May 2001 where there was no intent to evade. - HELD THAT: - The Tribunal observed that Section 11AB originally required intention to evade but the amended Section 11AB(1) (effective 11 May 2001) removed that requirement. However, amended Section 11AB(2) expressly excludes cases where the duty "had become payable or ought to have been paid" before the date on which the Finance Bill, 2001 received Presidential assent. In the absence of any fraud, collusion or suppression (i.e., no intent to evade) the pre-amendment provision would not have applied; and the restriction in sub-section (2) prevents application of the amended sub-section (1) to duties which became payable before the amendment date. Consequently, the Tribunal held that the departmental demand for interest could not be sustained by invoking the amended provision in cases where the duty liability (as defined by the statute and interpreted) arose prior to 11 May 2001, except as otherwise indicated in relation to refunds granted after that date. [Paras 6, 7, 8]

Demand for interest under amended Section 11AB(1) cannot be invoked in respect of erroneous refunds the duty liability for which arose before 11 May 2001 where there is no intent to evade.

Meaning of 'duty had become payable or ought to have been paid' - Liability for erroneous refund arises on date of grant of refund - Whether the expression 'duty had become payable or ought to have been paid' is to be determined by reference to the date of adjudication/payment or by reference to the date when the duty liability arose (specifically in the context of erroneous refunds). - HELD THAT: - Relying on the Board Circular dated 26 June 2002 and the Tribunal's earlier view in Narmada Chematur, the Tribunal held that the expression relates to the date of arising of the duty liability and not the date when the duty was actually paid. Conversely, in the special context of erroneous refunds, the duty liability is held to arise on the date the refund was granted; therefore, where refunds were granted before 11 May 2001 the amended exclusion in Section 11AB(2) would apply, whereas refunds granted after that date could attract interest under the amended provision. The Tribunal specifically noted that the department's reliance on the date of adjudication (February 2002) cannot import the amended Section to refunds granted earlier. [Paras 7, 8]

The expression is to be judged by reference to the date when the duty liability arose; for erroneous refunds the duty liability arises on the date of grant of the refund.

Applicability of amended Section 11AB to erroneous refunds - Liability for erroneous refund arises on date of grant of refund - Whether the amended Section 11AB(1) applies to the respondent's erroneous refunds for April 2001 and May 2001 which were sanctioned after 11 May 2001. - HELD THAT: - The Tribunal found that the refunds for April 2001 and May 2001 were granted only after 11 May 2001; consequently the liability to repay such erroneous refunds arose after the amendment date. Since Section 11AB(2) excludes only duties which had become payable before assent, the amended Section 11AB(1) would apply to those particular refunds and interest could be recovered under the amended provision in respect of April 2001 and May 2001. [Paras 8]

Amended Section 11AB(1) applies to the erroneous refunds granted for April 2001 and May 2001 (sanctioned after 11 May 2001); interest can be recovered in respect of those months.

Incorporation of Central Excise provisions into AED recovery via Section 133(3) Finance Act, 1999 - Whether provisions of the Central Excise Act, including Section 11AB, can be invoked for recovery of interest on Additional Excise Duty (AED) levied under the Finance Act, 1999. - HELD THAT: - The Tribunal rejected the respondent's alternate contention that there was no substantive provision for recovery of interest in the statute charging AED. It held that Section 133(3) of the Finance Act, 1999 incorporates by reference the relevant provisions of the Central Excise Act in relation to levy and collection of AED; the term 'collection' is broad enough to encompass recovery of erroneous refunds. The Tribunal therefore concluded that Section 11AB could be applied mutatis mutandis to recovery of interest on AED refunds. [Paras 9]

Section 133(3) of the Finance Act, 1999 incorporates Central Excise provisions for levy and collection of AED; Section 11AB may be invoked for recovery of interest on AED refunds.

Final Conclusion: The Revenue appeal is partly allowed. The Tribunal upheld that the amended Section 11AB(1) cannot be applied to erroneous refunds the duty liability for which arose before 11 May 2001 in the absence of intent to evade, but held that interest under the amended provision is payable in respect of the respondent's erroneous refunds for April 2001 and May 2001 which were granted after 11 May 2001; Section 133(3) Finance Act, 1999 permits invocation of Central Excise provisions for recovery of AED refunds.

Finality of payment under Section 11A(2) of Central Excise Act, 1944 - refund of excess payment of Cenvat Credit - requirement of issuance of show cause notice before treating payment as final - self-assessment versus adjudication for refund remedy

Finality of payment under Section 11A(2) of Central Excise Act, 1944 - requirement of issuance of show cause notice before treating payment as final - Payment of Cenvat Credit made pursuant to an audit objection did not attain finality under Section 11A(2) of the Central Excise Act, 1944. - HELD THAT: - The Tribunal found on the material of the audit report and the appellant's written intimation that the payment was made only in response to an audit objection and was not agreed to by the appellant. The audit summary expressly recorded that the Jurisdictional Officer was to issue a show cause notice, and the appellant's letter did not seek settlement or waiver of a show cause notice under Section 11A(2). On these facts the payment remained provisional and could not be treated as having closed the case under Section 11A(2). The Tribunal distinguished decisions where the assessee had itself opted for closure after payment or where the department issued a show cause notice and the assessee sought settlement; those authorities were held factually different and inapplicable to the present case. [Paras 4]

Payment was provisional and did not attain finality under Section 11A(2); therefore the Revenue's contention that the case stood closed on that basis was rejected.

Refund of excess payment of Cenvat Credit - self-assessment versus adjudication for refund remedy - Claim for refund of the payment made in response to the audit objection was maintainable and the appellant was not required to have filed an appeal challenging any assessment before seeking refund. - HELD THAT: - The Tribunal held that because no show cause notice was issued and no departmental assessment made, there was nothing that the appellant could have challenged by way of appeal to Commissioner (Appeals). The payment being provisional and not part of a finalized assessment meant the proper remedy was to pursue refund. Consequently, the earlier rejections of the refund claim on the ground that an appeal should have been filed (relying on Priya Blue and Flock India, where facts differed) were found untenable. [Paras 4, 5]

Refund claim must be processed in accordance with law; the requirement to file an appeal did not arise as there was no finalized assessment or show cause notice to challenge.

Final Conclusion: Impugned orders rejecting the refund were set aside; the appeal is allowed and the appellant's refund claim is to be processed in accordance with law, having found the payment provisional and not final under Section 11A(2).

Transitional refund of CENVAT credit - procedural bar to carry forward of credit under TRAN 1 - Section 142(3) of the CGST Act, 2017 - seamless flow of input tax credit - unjust enrichment

Transitional refund of CENVAT credit - procedural bar to carry forward of credit under TRAN 1 - seamless flow of input tax credit - Entitlement to refund of unavailed CENVAT credit relating to inputs and input services received prior to GST (March-June 2017) though credit was not availed or carried forward via TRAN 1 before the cut off. - HELD THAT: - The Tribunal found no dispute on the substantive admissibility of the credit; the appellant would have been entitled to take the credit under the CENVAT Credit Rules but for the introduction of GST and the consequent cessation of the CENVAT account and expiry of the TRAN 1 filing window. Reliance was placed on authorities holding that transitional credit is a vested substantive right which cannot be defeated by procedural technicalities and on decisions recognising the principle of seamless flow of credit. Applying those principles, the Tribunal held that denial of refund on the ground that TRAN 1 was not filed within the prescribed period would impermissibly frustrate a substantive right to credit; procedural non compliance could not be used to defeat the claim for refund of the tax element borne by the appellant on inputs/input services. The Tribunal therefore set aside the rejection of the refund claim and allowed the appeal with consequential relief.

Rejection of refund on the ground of failure to carry forward credit via TRAN 1 is not justified; refund of the eligible CENVAT credit is allowed.

Section 142(3) of the CGST Act, 2017 - procedural bar to carry forward of credit under TRAN 1 - Whether refund claims of amounts paid under the erstwhile law must be processed under the erstwhile law and whether rejection by reference to other transitional provisions was justified. - HELD THAT: - The Tribunal accepted the submission that Section 142(3) is the relevant transitional provision prescribing that refund claims in respect of amounts paid under the erstwhile law are to be processed according to the erstwhile law and paid in cash. The authority's reliance on other sub sections was held to be misplaced where only a refund claim (and not assessment/adjudication proceedings) was involved. Prior decisions of the Tribunal and courts applying Section 142(3) were followed to conclude that the refund ought to have been adjudicated under the erstwhile law and not rejected on procedural grounds arising under the GST transitional framework.

Section 142(3) governs refund claims of amounts paid under the erstwhile law; rejection of the refund by referencing other transitional provisions was incorrect.

Final Conclusion: The impugned order rejecting the refund claim is set aside; the appellant's claim for refund of the eligible CENVAT credit (relating to inputs and input services received before GST) is allowed and shall be granted with consequential relief, applying the erstwhile law and the principle that substantive transitional credit cannot be defeated by procedural technicalities.

Proof of documents kept in the ordinary course of business - onus of proof where transactions are alleged to be fictitious or fraudulent - proof by invoices, debit notes and ST-1 declarations as evidence of dealer-to-dealer sale - claim of deduction from turnover for sale to a registered dealer under the Delhi Sales Tax statutory scheme - requirement for ST-1 declaration under the Delhi Sales Tax Rules for inter-dealer exemption

Proof of documents kept in the ordinary course of business - proof by invoices, debit notes and ST-1 declarations as evidence of dealer-to-dealer sale - Sufficiency of the invoices, debit notes and ST-1 Forms produced by the plaintiff to prove the sales and receipt of goods. - HELD THAT: - The Court held that the invoices, debit notes and ST-1 Forms, bearing the sales-tax registration number, stamps and signatures of the defendants and produced from the plaintiff's records, were proved by evidence that they were maintained in the ordinary course of business. It was unnecessary that the witness who produced them be a signatory or that the documents were executed in his presence. The defendants' witness admitted signatures on invoices, debit notes and ST-1 Forms. The Division Bench's contrary reasoning (that the plaintiff failed to summon authors of documents or that the plaintiff's witness was not in Delhi when transactions occurred) was held to be irrelevant and legally untenable. Consequently, the documents were treated as admissible and sufficient to establish the sales and receipt of goods for the purposes of the claim. [Paras 12, 14, 21]

The invoices, debit notes and ST-1 Forms produced by the plaintiff were duly proved and were sufficient evidence of the sales and receipt of goods.

Onus of proof where transactions are alleged to be fictitious or fraudulent - Which party bore the onus to prove that the transactions were fictitious or fraudulent. - HELD THAT: - The Court explained that because the defendants pleaded that the transactions were fictitious and tainted with fraud, the onus to prove those allegations lay upon the defendants. The defendants failed to discharge that onus: they did not produce corroborative evidence (for example, books of account) and relied on self-serving averments of duress. Prior authorities cited by respondents were found distinguishable. Where the attacker of the transaction asserts sham or fraud, that party must prove it; here the defendants could not do so and their denial of receipt of goods without supporting evidence was held to be insufficient. [Paras 13, 15, 16, 20]

The onus to prove that the transactions were fictitious or fraudulent was on the defendants, who failed to discharge it; therefore their allegation of sham transactions was rejected.

Claim of deduction from turnover for sale to a registered dealer under the Delhi Sales Tax statutory scheme - requirement for ST-1 declaration under the Delhi Sales Tax Rules for inter-dealer exemption - Whether the plaintiff had established its status as a registered dealer in Delhi and entitlement to claim dealer-to-dealer sale treatment under the Delhi Sales Tax law. - HELD THAT: - The Court considered the statutory scheme (exclusion from taxable turnover of sales to a registered dealer and the Rule requiring ST-1 declaration) and the evidence. The plaintiff produced a registration certificate showing registration as a reseller dealer in Delhi and a mention of a godown (Annexure P/12). The defendants' admissions (that dealer-to-dealer sales do not attract sales tax) and the stamped and signed ST-1 Forms and invoices supported the conclusion that the sales were dealer-to-dealer transactions and that the plaintiff was a registered dealer for the relevant statutory purpose. The Division Bench's finding that the plaintiff had not proved registration or a godown was held to be erroneous and to introduce a new case not pleaded by defendants. [Paras 10, 17, 18, 19]

The plaintiff had proved registration as a dealer in Delhi and the statutory prerequisites for dealer-to-dealer treatment were satisfied by the documentary evidence.

Final Conclusion: The Division Bench's order setting aside the Single Judge's decree was set aside. The suit was decreed in favour of the plaintiff for the claimed amount and future interest on the principal at the rate directed by the Court; the appeal is allowed.

One Time Settlement (OTS) is not a matter of right - Eligibility criteria under an OTS scheme - Commercial wisdom of the bank in recovery decisions - Writ of mandamus restrain - cannot direct bank to grant OTS - Principle of natural justice in administrative/committee decisions - Relevance of recoverability and SARFAESI proceedings in OTS eligibility

One Time Settlement (OTS) is not a matter of right - Eligibility criteria under an OTS scheme - Grant of benefit under an OTS scheme cannot be claimed as a matter of right and is subject to the eligibility criteria of the scheme. - HELD THAT: - The Court held that the OTS scheme, as framed, prescribes express eligibility criteria and exclusions (including wilful defaulters and accounts classified as NPA) and contemplates consideration by a Settlement Advisory Committee and the bank's management. The scheme contemplates that settlement is discretionary, and permitting a borrower to claim OTS as of right would incentivise deliberate default and allow dishonest debtors to obtain a premium. Consequently, a borrower cannot compel grant of OTS merely by expressing willingness to pay; entitlement depends on satisfying the scheme's conditions and the bank's assessment of recoverability. [Paras 5, 9, 10, 11]

OTS benefit is discretionary under the scheme and not a vested right of the borrower; eligibility must be satisfied before grant.

Writ of mandamus restrain - cannot direct bank to grant OTS - Commercial wisdom of the bank in recovery decisions - Relevance of recoverability and SARFAESI proceedings in OTS eligibility - Principle of natural justice in administrative/committee decisions - High Court erred in issuing a writ of mandamus directing the bank to positively consider/grant OTS; such coercive relief is not permissible where the bank has taken a conscious, reasoned decision in accordance with the scheme and after affording opportunity. - HELD THAT: - The Court found that the bank and its Settlement Advisory Committee had taken a conscious decision, recorded in resolution and communications, that the borrower was not eligible for OTS because recoverability remained and secured assets were sufficient. Personal hearing had been afforded; therefore there was no breach of natural justice. The decision to refuse OTS falls within the commercial judgment of the bank, particularly where recovery by auction or through SARFAESI proceedings is possible. The High Court's mandamus directing positive consideration/grant of OTS substituted judicial whim for the bank's commercial discretion and was thus beyond its jurisdiction under Article 226. [Paras 6, 7, 8, 11, 12]

The High Court's writ of mandamus directing the bank to grant/positively consider OTS was unsustainable and is set aside.

Final Conclusion: The appeal is allowed; the High Court order directing the bank to positively consider/grant OTS is quashed and set aside. No order as to costs.

Presumption under Section 139 of the Negotiable Instruments Act - Presumption of consideration under Section 118(a) of the Negotiable Instruments Act - Proof of signature, execution and handing over of cheque - Burden of proof and reverse onus on the accused to rebut statutory presumption - Scope of revision jurisdiction under Sections 397 and 401 Cr.P.C. - no re-appreciation of evidence

Presumption under Section 139 of the Negotiable Instruments Act - Presumption of consideration under Section 118(a) of the Negotiable Instruments Act - Proof of signature, execution and handing over of cheque - Burden of proof and reverse onus on the accused to rebut statutory presumption - Whether the conviction under Section 138 of the Negotiable Instruments Act is sustainable on the evidence and statutory presumptions - HELD THAT: - The Court found that the complainant proved the transaction, and the signature, execution and handing over of the cheque by oral evidence of PW1 (supported by PW2), thereby invoking the statutory presumptions under Section 118(a) and Section 139 of the Negotiable Instruments Act. Authorities cited in the judgment establish that once signature and delivery are proved, a legal presumption arises that the cheque was issued for consideration and in discharge of debt, shifting the onus onto the accused to produce cogent evidence to show the non-existence of consideration. The accused disputed the signature and asserted misuse of a blank cheque allegedly given in an earlier, separate transaction, but adduced no scientific or other evidence to scrutinise the signature or otherwise probabilise the defence. The accused also failed to reply to the statutory notice. In these circumstances, the concurrent findings of the trial and appellate courts accepting the complainant's evidence and applying the statutory presumptions were held to be justified, and the accused did not discharge the reverse onus. Consequently, the conviction under Section 138 was held to be sustainable. [Paras 7, 8, 9]

Conviction under Section 138 NI Act affirmed; accused failed to rebut statutory presumptions once signature, execution and delivery were proved.

Scope of revision jurisdiction under Sections 397 and 401 Cr.P.C. - no re-appreciation of evidence - Whether this Court in revision should re-appreciate the evidence which has been concurrently found by the courts below - HELD THAT: - The Court observed that both the trial and appellate courts had concurrently accepted the oral testimony proving the transaction and issuance of the cheque. Exercising revision jurisdiction under Sections 397 and 401 Cr.P.C., this Court declined to re-appreciate or re-evaluate the evidence in view of concurrent findings, and found no justifiable ground to interfere with the conclusions recorded by the courts below. [Paras 9]

Revision jurisdiction not exercisable to re-appreciate concurrent findings; no interference with convictions recorded by the courts below.

Final Conclusion: Revision petition dismissed; conviction and sentence under Section 138 NI Act affirmed. Revision petitioner granted three months to deposit the fine and appear in the trial court to suffer sentence until rising of court, and the trial court shall release the fine to the complainant.

Presumption under Section 139 of the Negotiable Instruments Act - offence under Section 138 of the Negotiable Instruments Act - rebuttable presumption - burden of proof on the accused to rebut presumption - preponderance of probabilities as standard for rebuttal - interference with acquittal - exceptional circumstances

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable presumption - preponderance of probabilities as standard for rebuttal - interference with acquittal - exceptional circumstances - Whether the accused successfully rebutted the presumption under Section 139 of the Negotiable Instruments Act and whether the appellate court should interfere with the trial court's order of acquittal. - HELD THAT: - The Court summarised the legal position that once the foundation for Section 139 is established the presumption arises and the evidential burden shifts to the accused to prove absence of debt or liability (para 9). On reappreciation the defence case - including oral testimony of the accused and two independent witnesses and production of Exts. D1 and D2 - was found probable. The accused established, on the preponderance of probabilities, that the cheque was issued in blank as security for earlier transactions and that entries in Exts. D1 and D2 supported the defence version; cross-examination of PW1 and the testimony of DW1-DW3 fortified this conclusion (para 10, para 12). Given that two views were possible and that the accused's rebuttal evidence was acceptable, there were no compelling or substantial reasons to disturb the acquittal; interference with an order of acquittal is warranted only in exceptional cases of perversity, which are absent here (para 12-13). [Paras 9, 10, 12, 13]

The accused successfully rebutted the presumption under Section 139 on the preponderance of probabilities; the appellate court declines to interfere with the trial court's acquittal.

Adverse inference for non-compliance with court order - expert opinion on questioned documents - Whether the complainant should be permitted at this stage to send Exts. D1 and D2 for expert handwriting opinion despite earlier non-compliance with the trial court's direction. - HELD THAT: - The accused obtained an order in the trial court to compare entries in Exts. D1 and D2 with the complainant's admitted handwriting; the complainant failed to produce the admitted handwriting before the trial court, leading the trial court to close the petition and draw an adverse inference (para 11). Although this Court earlier directed the Magistrate to send the documents for expert opinion, the complainant thereafter still did not produce the admitted handwriting. In these circumstances the complainant cannot now seek a fresh opportunity to obtain expert opinion, and the trial court's course on the petition stands (para 11-12). [Paras 11, 12]

No fresh opportunity is granted to send Exts. D1 and D2 for expert opinion due to prior non-compliance and the course adopted by the trial court.

Final Conclusion: The appeal is dismissed; the conviction was not established and the trial court's order of acquittal is upheld.

Admission of additional evidence under Section 391 Cr.P.C. - authority of partner to file complaint under Section 138 of the Negotiable Instruments Act - maintainability of Section 138 proceedings by a partner of an unregistered partnership firm - remand for fresh evidence and cross-examination

Admission of additional evidence under Section 391 Cr.P.C. - authority of partner to file complaint under Section 138 of the Negotiable Instruments Act - Application to place on record partnership deed and related authorisations was allowed and the matter was remitted for fresh consideration of those documents and evidence on authority to file the complaint. - HELD THAT: - The trial Court had acquitted the accused primarily because the complainant had not produced on record the firm's registration certificate and there was no proof that Rinchen Thomas was the managing partner who authorised Hem Raj to file the complaint. The High Court found the controversy squarely covered by the decision in M/s. Uttam Traders Ranghri, which permitted the complainant an opportunity to place and prove the partnership deed and related authorisations after an acquittal premised on lack of proof of authority. Applying that ratio, the High Court allowed Cr. MP No. 758 of 2019 and set aside the trial Court's judgment insofar as it rested on absence of proof of partnership/authority, remitting the matter to the trial Court to afford the appellant an opportunity to lead evidence on the factum of partnership and due authorisation and permitting the respondent corresponding rights of cross-examination and to lead evidence. [Paras 4, 6]

Cr. MP allowed; impugned judgment set aside to the extent noted; matter remitted for fresh evidence on partnership and authorisation, with rights of cross-examination and to lead evidence preserved.

Maintainability of Section 138 proceedings by a partner of an unregistered partnership firm - Proceedings under Section 138 of the Negotiable Instruments Act are not to be treated as a civil suit for recovery barred by non-registration of a firm; the appellant was entitled to an opportunity to prove partnership and authorisation notwithstanding non-registration. - HELD THAT: - Relying on the reasoning and conclusions in M/s. Uttam Traders Ranghri, the Court accepted that although an unregistered partnership may be barred from certain civil remedies under the Partnership Act, proceedings under Section 138 of the NI Act are distinct and cannot be equated with a civil suit for recovery. Consequently, lack of registration did not automatically preclude the appellant from prosecuting the complaint; instead the proper course was to permit production and proof of partnership and authorisation at the trial level. The Court therefore followed the coordinate bench's exposition and granted relief by remitting the matter for fresh consideration after allowing the additional evidence. [Paras 5, 6]

Held that Section 138 proceedings are maintainable in the circumstances indicated and the appellant shall be permitted to prove partnership and authorisation; matter remitted for fresh adjudication.

Final Conclusion: Appeal allowed; impugned judgment of acquittal set aside to the extent it rested on absence of proof of partnership/authority; appellant permitted to place and prove partnership deed and authorisations and the trial Court directed to rehear those issues with opportunity for cross-examination and to lead evidence; parties to appear before the trial Court on the date directed.